United States Court of Appeals

Fifth Circuit

FILED

March 2, 2007

Charles R. Fulbruge III

Clerk

UNITED STATES COURT OF APPEALS

for the FIFTH CIRCUIT

No. 05-51609

ASSURITY LIFE INSURANCE COMPANY, 

Plaintiff-Appellant-Cross-Appellee,

VERSUS

VARSHA GROGAN, individually and as independent

executrix of the estate of J.C. THOMAS GROGAN, deceased,

Defendant-Appellee-Cross-Appellant.

Appeals from the United States District Court

for the Western District of Texas

(1:03-CV-486)

Before BARKSDALE, DeMOSS, and PRADO, Circuit Judges.

DeMOSS, Circuit Judge:

INTRODUCTION

Plaintiff-Appellant Assurity Life Insurance Company

(“Assurity”) appeals the district court’s entry of final

judgment in favor of Varsha Grogan entitling her to

proceeds from her husband’s life insurance policy.

Assurity argues that, under Texas law, the policy it
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issued to Mr. Grogan never took effect because it

contains a “good health” condition precedent to its

effectiveness; and, Assurity contends, Mr. Grogan was not

in good health on the date relevant to the policy’s

effectiveness. In the alternative, Assurity argues that

the policy should be rescinded because Mr. Grogan made

material misrepresentations during the application

process regarding his general heath and medical history.

Because we find persuasive Assurity’s first argument,

we need not address its second argument. For the reasons

below, we reverse in entirety the district court’s

judgment in favor of Mrs. Grogan and render judgment in

favor of Assurity. 

FACTUAL BACKGROUND

On April 4, 2002, Mr. Grogan submitted to Assurity an

application for $1,000,000 of whole life insurance on his

own life. For reasons unimportant to this appeal, Mr.

Grogan’s application did not progress in a timely manner;

and in June 2002, Assurity notified Mr. Grogan that his

application had been closed. But on August 8, 2002, Mr.

Grogan sent to Assurity a letter reaffirming his desire
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to apply for the policy. 

On August 26, 2002, Mr. Grogan faxed to Assurity a

new application along with another request to reopen his

application. The new application is identical to the

first in all material respects. The last page of the

application provides the following paragraph in bold: 

C. In the event the first full premium on

the policy applied for is not paid upon

the date of this application, the insurance

under such policy shall not take effect

unless the application is approved by the

Company at its Home Office, such policy

issued and delivered to the Proposed 

Insured/Owner, and such first full premium

paid during the Proposed Insured’s lifetime

and continued good health . . . .

Assurity issued the policy on August 27, 2002, and

mailed it to Mr. Grogan, along with delivery

instructions, on August 30, 2002. Mr. Grogan completed

the delivery instructions by returning to Assurity a

“Delivery Certificate” he had signed and marked as

“received September 3.”

The Delivery Certificate provides: 

As requested, this policy has been issued

without the first premium having been collected

with the application.
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It is hereby certified that there has been no

change in the good health of the Insured since

the date of the application and it is understood

and agreed that the policy shall be effective as

of the date of issue only upon payment of the

first premium during the lifetime and continued

good health of the Insured. 

Mr. Grogan paid his first premium on September 6, 2002,

and Assurity received the signed Delivery Certificate on

September 20, 2002.

On October 7, 2002, Mr. Grogan found out that a lump

on his neck, which he had known about for at least a

year, most likely was cancerous. On October 24, 2002, he

began chemotherapy treatment for Hodgkin’s disease. Mr.

Grogan died on February 17, 2003, due to complications

stemming from chemotherapy treatment for his cancer. 

In March 2003, Mrs. Grogan as beneficiary applied for

the proceeds from the life insurance policy. However,

because Mr. Grogan died during the policy’s two-year

contestability period, Assurity requested his medical

records for the five years preceding his death. After

reviewing the records, Assurity determined that Mr.

Grogan was not in good health on the date relevant to the

policy’s effectiveness. Therefore, Assurity refused to
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pay the proceeds to Mrs. Grogan.

PROCEDURAL HISTORY

Assurity brought this action seeking a declaration

that the life insurance policy never took effect due to

the failure of a condition precedent. Mrs. Grogan

counterclaimed that Assurity, by refusing to pay the

proceeds, breached the terms of the alleged insurance

contract. She primarily sought to recover the proceeds

under the policy. Additionally, however, she sought

attorney’s fees and the enforcement against Assurity of

a Texas statutory penalty for failure to timely pay

proceeds. 

The district court held that the insurance policy did

take effect and that Mrs. Grogan was entitled to the

proceeds. The court also awarded Mrs. Grogan attorney’s

fees and imposed against Assurity the statutory penalty.

This timely appeal followed. 

DISCUSSION

We review de novo a district court’s interpretation

of an insurance policy. Riner v. Allstate Life Ins. Co.,

131 F.3d 530, 533 (5th Cir. 1997). The parties agree that
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Texas law governs our analysis. 

As we noted, Assurity’s policy in one part states

that “[the policy] shall not take effect unless . . .

[the] first full premium [is] paid during the Proposed

Insured’s lifetime and continued good health . . . .” The

policy in another part states that “[the policy] shall be

effective as of the date of issue only upon payment of

the first premium during the lifetime and continued good

health of the Insured.”

In short, we do not see how Assurity could have made

the policy language much clearer. The policy

unambiguously states that in order for it to take effect

the insured/proposed insured must make the first premium

payment while in good health. 

Although the policy’s plain language alone makes it

sufficiently clear that good health is a condition

precedent to effectiveness, we note that this Court and

the Texas Supreme Court numerous times have deemed

similar language a condition precedent. 

In Beck v. Conn. Gen. Life Ins. Co., this Court

surveyed Texas law and concluded that the following
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language qualified as a good health condition precedent:

“no insurance shall take effect unless . . . the first

premium [is] paid during the lifetime and good health of

the proposed insured . . . .” 456 F.2d 1040, 1041 (5th

Cir. 1971). The language in Beck is virtually identical

to the language in Assurity’s policy. 

Similarly, in Bryant v. Standard Ins. Co., we applied

Texas law and concluded that the following language was

a condition precedent: “no insurance shall be considered

in effect . . . until the first full premium is paid and

delivered . . . during the continued good health of the

Proposed Insured.” 348 F.2d 649, 654 n.6 (5th Cir. 1965).

As in Beck, the language in Bryant is identical in all

material respects to the language in Assurity’s policy.

In addition, the Texas Supreme Court has deemed

similar language a good health condition precedent. For

example, in Great Nat. Life Ins. Co. v. Hulme, the court

addressed whether a life insurance policy ever took

effect as an insurance contract. 136 S.W.2d 602, 603

(Tex. 1940). In deciding that the policy was void from

inception, the court took as a given that the following
1On the other hand, the language inAssurity’s policy is materially distinguishable

from policies that Texas courts have found did not contain conditions precedent. For

example, in Protective Life Ins. Co. v. Russell, a Texas appellate court held that the

following language was not a good health condition precedent: “[n]o insurance will

take effect unless . . . (3) there has been no change in health and insurability from that

described in this application . . . .” 119 S.W.3d 274, 281 (Tex. App.-Tyler 2003, pet.

denied) (emphasis added). Assurity’s policy, however, contains no such qualifying

language. Paragraph C states that good health is a prerequisite to effectiveness. It does

not purport to turn on any answers given by the applicant. Therefore, this case is

distinguishable from cases like Russell. 

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language was a good health condition precedent: “the

insurance hereby applied for shall not take effect until

. . . delivered to and accepted by me while I am in good

health.” Id. at 603.

We find unavoidable the conclusion that the language

in Assurity’s life insurance policy is materially

indistinguishable from the language in the policies in

Beck, Bryant, and Hulme.

1 Therefore, Assurity’s policy

contains a good health condition precedent to its

effectiveness. 

Having determined that the policy contained a

condition precedent, we turn now to whether the condition

was satisfied such that the policy ever took effect. For

the reasons below, we conclude that Mr. Grogan did not
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satisfy the good health condition precedent.

Again, for the policy to take effect, Mr. Grogan was

required to be in good health when he paid his first

premium. Mr. Grogan paid the premium on September 6,

2002. Therefore, we need only to determine whether he was

in good health on that date. 

Texas courts have consistently held that a person is

not in good health when he or she suffers from a serious

illness that continues and eventually causes their death.

See Great Am. Reserve Life Ins. Co. v. Britton, 406

S.W.2d 901, 905 (Tex. 1966) (citing Tex. Prudential Ins.

Co. v. Dillard, 307 S.W.2d 242, 247 (Tex. 1957). The

record facts stipulated to by the parties at the district

court make clear that Mr. Grogan indeed suffered from

such an illness when he paid his first premium.

Mr. Grogan ultimately died from complications

stemming from chemotherapy administered to combat his

cancer. Although Mr. Grogan was not diagnosed with

Hodgkin’s disease until October 2002, the record reveals

that he had cancer long before his formal diagnosis.

Mr. Grogan possibly had cancer as early as 2000, when
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he began seeking medical attention for a sore throat.

Over the next year and half, he sought medical attention

for a sore throat seven times. In any event, by September

4, 2001, Mr. Grogan had developed and sought medical care

for a painful lump on the left side of his neck. Mr.

Grogan again sought care for the lump on his neck on

August 26, 2002. By that time, the lump was the size of

a golf ball. On September 20, 2002, a biopsy was

conducted and later showed that the lump on the left side

of Mr. Grogan’s neck was Hodgkin’s lymphoma. Without

doubt, Mr. Grogan had cancer prior to September 6, 2002,

and therefore was not in good health when he paid his

first premium.

In sum, the life insurance policy contained a good

health condition precedent to its effectiveness. That

condition was not satisfied, and therefore the policy

never took effect. 

CONCLUSION

For the foregoing reasons, we REVERSE the district

court’s judgment in favor of Mrs. Grogan and RENDER

judgment in favor of Assurity.
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REVERSED and RENDERED.