United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 99-3962

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Jon B. Roeder, *

*

Plaintiff - Appellant, *

* Appeal from the United States

v. * District Court for the

* District of Nebraska.

Metropolitan Insurance and Annuity *

Company, *

*

Defendant - Appellee. *

___________

Submitted: October 18, 2000

Filed: January 8, 2001

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Before BOWMAN, LOKEN, and HANSEN, Circuit Judges.

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LOKEN, Circuit Judge.

This is an action to recover the proceeds of a life insurance policy issued to

Norman E. Roeder, a Nebraska resident. Although the policy lapsed for nonpayment

of premiums before Roeder died, his son, the policy beneficiary, asserts a right to

recover the proceeds because the insurer, Metropolitan Insurance & Annuity Company,

failed to provide a lapse notice required by the policy and the Nebraska insurance

regulations. Metropolitan moved for summary judgment, conceding for purposes of its

motion that it failed to give the required notice. The district court granted summary
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judgment, concluding that Roeder’s failure to pay any premium for 245 days after the

policy lapsed was unreasonable as a matter of law. The beneficiary appeals.

Concluding that the district court erred in failing to analyze this issue under the

Nebraska law of equitable estoppel, we reverse and remand.

Roeder purchased the flexible premium policy in February 1984, when he was

57-years old. The policy provided $300,000 of term life insurance for an annual

planned premium of $6,575, scheduled to be paid in semi-annual installments of

$3,287.50 on February 7 and August 7 of each year. Metropolitan deposited each

premium payment in an accumulation fund and withdrew the cost of insurance from that

fund on a monthly basis. In the policy’s early years, the planned premiums exceeded

the cost of insurance. That excess, together with earned interest and the continuing

semi-annual payments, were projected (but not guaranteed) to cover the rising cost of

the term insurance until the policy expired when Roeder reached age 95. However, the

policy was flexible -- Roeder could skip scheduled premium payments, change their

frequency and amount, or withdraw from the accumulation fund, so long as the amount

in that fund remained sufficient to keep the policy in force. 

Because the accumulation fund’s earnings were affected by interest rate changes,

the policy warned Roeder that “the planned premium . . . may need to be increased to

keep this policy and coverage in force.” In addition, the policy provided that, if the

accumulation fund became insufficient to pay the monthly cost of insurance --

there will be a grace period of 61 days . . . to pay an amount that will

cover the monthly deduction. We will send you a notice at the start of the

grace period. . . . If we do not receive a sufficient amount by the end of

the grace period, your policy will then end without value.

Roeder made the scheduled semi-annual premium payments from 1984 until

1993, when he withdrew $27,115 from the accumulation fund. This withdrawal
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decreased both the face amount of the policy and the excess previously built up in the

fund. Metropolitan’s annual statement for the 1993-1994 policy year reported the

precipitous drop in the accumulation fund and advised Roeder that continued payment

of the scheduled premiums would only keep the policy in force until January 1997. 

Roeder continued making the scheduled semi-annual payments in 1994, 1995,

and 1996. In December 1996, Metropolitan sent him a regular billing statement

advising that the next semi-annual payment was due on February 7, 1997. On January

7, 1997, Metropolitan sent a lapse notice advising Roeder that the accumulation fund

was insufficient to pay that month’s insurance charge, and he must pay $1,630.97 by

March 16, 1997, to keep the policy in force. On January 21, Roeder made a regular

semi-annual payment of $3,287.50. Shortly thereafter, Metropolitan sent him an annual

statement for the 1996-1997 policy year. That statement reflected his January premium

payment and advised: 

If you continue to pay premiums as scheduled, on the basis of current

interest rates and cost of insurance charges, your coverage will remain in

effect until December 1997.

* * * * *

If you make no further premium payments, on the basis of current interest

rates and cost of insurance charges, your coverage will remain in effect

until May 1997.

Because Roeder had already made the February 1997 scheduled payment, no further

premium payments were “scheduled” until August 1997. Thus, the above-quoted

reference to “further premium payments” is less than self-explanatory. A person

familiar with this type of insurance could figure out the underlying problem from these

annual statements -- Roeder was now 70 years old, the cost of the term insurance

exceeded the scheduled premium payments, and his accumulation fund was too
1This policy provision complied with notice and grace-period requirements in the

Nebraska insurance regulations. See NEB. ADMIN. CODE tit. 210, ch. 40, § 007.06. 

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depleted to make up the difference during the entire period covered by a semi-annual

payment. But it would have been difficult if not impossible to discern from the annual

statements alone just when the accumulation fund would become insufficient to pay the

next monthly insurance deduction. Thus, the policy sensibly obligated Metropolitan

to provide Roeder a 61-day grace period to pay any premium shortfall and a notice of

when that period would begin.1 

Roeder made no further premium payments. He died of lung cancer in January

1998. Following his death, the beneficiary filed a claim for the policy proceeds,

$272,115. Metropolitan denied the claim on the ground that the policy had lapsed on

July14, 1997. Metropolitan’s policy records include reproductions of a May 7, 1997,

“lapse pending” letter advising Roeder that, to keep the policy in force, he must pay

$1,742.16 by July 14, 1997, the end of a 61-day grace period; and a July 14, 1997,

lapse notice advising Roeder that his coverage terminated that day for nonpayment of

premium. The beneficiary asserts that Roeder never received these notices.

Metropolitan did not send Roeder a regular billing statement for the August 1997

scheduled semi-annual payment because the policy lapsed on July 14.

In claiming a right to the policy proceeds, the beneficiary pleaded an estoppel

theory. Metropolitan may not argue the policy lapsed or was cancelled, the beneficiary

alleged, because Roeder’s failure to pay any premiums due before his death was caused

by Metropolitan’s failure to send him (i) the May 1997 notice that additional premiums

must be paid or the policy would terminate on July 14, and (ii) a regular billing

statement for the August 1997 scheduled semi-annual payment. Metropolitan moved

for summary judgment. Conceding for purposes of its motion that it failed to send

Roeder a contractually required notice in May 1997, Metropolitan argued that the
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policy was not thereby extended indefinitely; rather, it terminated as a matter of law

prior to Roeder’s death in January 1998. 

Applying Nebraska law, the district court granted summary judgment in favor

of Metropolitan, concluding that its failure to provide the required lapse notice

extended the policy’s coverage only for a reasonable time, and that the policy lapsed

before Roeder’s death because his failure to pay any premiums for 245 days following

the lapse was unreasonable as a matter of law. We review the grant of summary

judgment de novo, viewing the facts in the light most favorable to the nonmoving party.

Summary judgment is appropriate if there is no material fact in dispute and the evidence

would not allow a reasonable jury to return a verdict for the nonmoving party. See

Derickson v. Fidelity Life Ins. Ass’n, 77 F.3d 263, 264 (8th Cir. 1996). We review the

district court’s interpretation and application of state law de novo. See Salve Regina

Coll. v. Russell, 499 U.S. 225, 231 (1991). 

Although Nebraska law does not favor the forfeiture of an insurance policy, “[a]

condition in a policy of life insurance, that if the stipulated premium shall not be paid

on or before a certain day the policy shall cease and determine, is of the very essence

and substance of the contract. Against a forfeiture caused by failure so to pay, a court

of equity cannot relieve.” Howie v. Cosmopolitan Old Line Life Ins. Co., 272 N.W.

207, 209 (Neb. 1937), citing Klein v. Insurance Co., 104 U.S. 88, 90-91 (1881); accord

St. Paul Mercury Ins. Co. v. Hurst, 301 N.W.2d 352, 355 (Neb. 1981). However,

“[t]he burden of establishing an effective cancellation before a loss is on the insurer,

and notice of cancellation must be in accord, and in substantial compliance, with the

provisions of the policy relating thereto.” Baker v. St. Paul Fire & Marine Ins. Co.,

480 N.W.2d 192, 197 (Neb. 1992). “[A] provision for forfeiture for nonpayment of

premiums is self-executing [unless] a notice of forfeiture [is required] by statute, by the

terms of the contract, or by course of dealing.” Tighe v. Security Nat. Life Ins. Co.,

214 N.W.2d 622, 625 (Neb. 1974). The issue, then, is whether Metropolitan’s failure
2As to the party estopped, (1) making a false representation, concealing material

facts, or conveying the impression the facts are other than those the party subsequently

asserts, (2) intending or expecting this conduct will influence the other party, and (3)

knowledge of the true facts. As to the other party, (4) lack of knowledge and the

means of knowledge of the true facts, (5) good faith reliance on the conduct or

statements of the estopped party, and (6) a detrimental change of position.

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to provide the required May 1997 lapse notice relieved Roeder of his obligation to keep

the policy in force by making additional premium payments prior to his death. 

The Supreme Court of Nebraska addressed a very similar issue in Pester v.

American Family Mutual Insurance Co., 186 N.W.2d 711 (Neb. 1971). In Pester, an

auto insurer failed to send its regular notice that a six-month premium was due. The

insured failed to pay the premium, suffered an accident eight days later, and the insurer

denied coverage because the policy had lapsed. In affirming judgment for the insured

after a court trial, the Supreme Court of Nebraska first stated precisely what the trial

court had decided: 

The court found that defendant was estopped to assert that the

policy had lapsed and, in so doing, necessarily found that plaintiffs had

not received the usual notice of premium due with reference to the one

accruing on January 30, 1966; that plaintiffs relied and depended upon

receipt of such notice; and that they could and would have paid the

premium without defaulting had the notice been received.

186 N.W.2d at 713. After reviewing the facts as found by the trial court, the Supreme

Court stated the six elements of equitable estoppel2 and concluded the insured had

established each of those elements. See 186 N.W.2d at 714-15.

In this case, without citing Pester, the district court relied primarily on a First

Circuit case in concluding that Metropolitan’s failure to give the required lapse notice

extended the policy only for a reasonable period of time. See Bezanson v.
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Metropolitan Ins. & Annuity Co., 952 F.2d 1 (1st Cir. 1991), cert. denied, 505 U.S.

1205 (1992). But the court in Bezanson, a bankruptcy case, looked to Maine law and

did not analyze the issue under the doctrine of equitable estoppel. Although Pester

involved a liability insurance policy, rather than a life insurance policy, equitable

estoppel is a doctrine of general application under Nebraska law. Therefore, we

conclude the Supreme Court of Nebraska would apply the elements of equitable

estoppel as identified in Pester in deciding this case. 

Without question, the length of time between Metropolitan’s failure to give the

required lapse notice, the lapse of the policy, and Roeder’s death are relevant in

applying estoppel factors (4) and (5) summarized in footnote 2 -- whether Roeder knew

or had the means of knowing the policy was about to lapse, and his good faith reliance

on the lack of notice. But equitable estoppel turns on all the facts and circumstances

of a particular case, not just a single factor such as whether 245 days is an

unreasonably long period to extend the coverage of a life insurance policy. See, e.g.,

Franksen v. Crossroads Joint Venture, 515 N.W.2d 794, 803 (Neb. 1994). We agree

with the district court that the Supreme Court of Nebraska would not extend a life

insurance policy indefinitely because the insurer failed to give a required lapse notice.

Cf. Nederland Life Ins. Co. v. Meinert, 199 U.S. 171, 181 (1905) (a statutory notice

requirement should not be construed so as to make it a “trap” for either the insurer or

the insured). But the doctrine of equitable estoppel avoids this harsh and unreasonable

result by focusing on the insured’s lack of knowledge, good faith reliance, and

detrimental change of position. Cf. Norwest Bank, N.A. v. Federal Kemper Life Ins.

Co., 110 F. Supp. 2d 774, 783-84 (N.D. Ind. 2000) (discussing this issue in terms of

promissory estoppel under Indiana law). 

Under Nebraska law, the party asserting an estoppel, here the beneficiary, must

prove each element by clear and convincing evidence. See Double K, Inc. v.

Scottsdale Ins. Co., 515 N.W.2d 416, 422 (Neb. 1994). Though it is an equitable

doctrine, estoppel is an issue of fact under Nebraska law, see Woodard v. City of
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Lincoln, 588 N.W.2d 831, 836-37 (Neb. 1999), and where the underlying action is one

traditionally at law, such as an action to recover insurance proceeds, estoppel issues

may be submitted to a jury. See Chadron Energy Corp. v. First Nat’l Bank of Omaha,

459 N.W.2d 718, 730, 736 (Neb. 1990); Lydick v. Gill, 77 N.W. 340 (Neb. 1898). In

this case, assuming Metropolitan did not send the May 1997 lapse notice, whether the

beneficiary can establish an estoppel turns on issues such as what Roeder should have

learned from the January 1997 lapse notice and the various annual statements, and

whether Roeder could have reasonably relied on the absence of an August 1997 semiannual billing statement in making no further premium payments or inquiries before he

died in January 1998. Although there are many Nebraska cases rejecting claims of

equitable estoppel as a matter of law, in these circumstances we conclude the district

court erred in granting summary judgment without expressly analyzing the disputed

elements of equitable estoppel. 

The judgment of the district court is reversed, and the case is remanded for

further proceedings not inconsistent with this opinion.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.