Case Name: The PRUDENTIAL INSURANCE COMPANY OF AMERICA and Pruco Life Insurance Company v. Patty STEWART, Sally Stewart Hester, Giles Stewart, Larry Stewart, Individually, as Co-Executors of the Estate of Edsel Stewart; and Larry Stewart and Giles Stewart as Cotrustees of the Stewart Family Life Insurance Trust
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 2007-09-27
Citations: 969 So. 2d 17
Docket Number: No. 2006-CA-01105-SCT
Parties: The PRUDENTIAL INSURANCE COMPANY OF AMERICA and Pruco Life Insurance Company v. Patty STEWART, Sally Stewart Hester, Giles Stewart, Larry Stewart, Individually, as Co-Executors of the Estate of Edsel Stewart; and Larry Stewart and Giles Stewart as Cotrustees of the Stewart Family Life Insurance Trust.
Judges: SMITH, C.J., WALLER, P.J., CARLSON, DICKINSON AND LAMAR, JJ„ CONCUR. RANDOLPH, J., CONCURS IN PART AND IN RESULT. CARLSON, J., SPECIALLY CONCURS WITH SEPARATE WRITTEN OPINION JOINED BY SMITH, C.J., WALLER, P.J., DICKINSON, RANDOLPH AND LAMAR, JJ. GRAVES, J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY DIAZ, P.J.
Reporter: Southern Reporter, Second Series
Volume: 969
Pages: 17–35

Head Matter:
The PRUDENTIAL INSURANCE COMPANY OF AMERICA and Pruco Life Insurance Company v. Patty STEWART, Sally Stewart Hester, Giles Stewart, Larry Stewart, Individually, as Co-Executors of the Estate of Edsel Stewart; and Larry Stewart and Giles Stewart as Cotrustees of the Stewart Family Life Insurance Trust.
No. 2006-CA-01105-SCT.
Supreme Court of Mississippi.
Sept. 27, 2007.
Rehearing Denied Dec. 13, 2007.
Roy H. Liddell, Walter D. Willson, Richard Gerald Norris, II, Ridgeland, attorneys for appellants.
Alex A. Alston, Jr., Sheldon G. Alston, Sharon F. Bridges, Jackson, Elizabeth Lee Decoux, attorneys for appellees.

Opinion:
EASLEY, Justice, for the Court.
¶ 1. This action was instituted in the Circuit Court for the First Judicial District of Hinds County against Defendants Prudential Insurance Company of America, Pruco Life Insurance, James Bateman, and JMB Financial Group to recover proceeds from a life insurance policy allegedly due to the Plaintiffs, Patty Stewart, Sally Stewart Hester, Giles Stewart, and Larry Stewart, individually and as co-executors of the Estate of Edsel Stewart; and Larry Stewart and Giles Stewart as co-trustees of the Stewart Life Insurance Trust. The jury awarded compensatory and punitive damages to the Plaintiffs. The Plaintiffs filed a motion for attorneys' fees and costs, which the trial court granted. The trial court entered a judgment against the Defendants, Prudential and Pruco (collectively "the Defendants," or "Prudential") in the amount of $1,400,000 in compensatory damages, $35,000,000 in punitive damages, and $501,638.02 in attorneys' fees, for a final judgment of $36,901,638.02, at an 8% annual interest rate. The Defendants filed a motion for judgment notwithstanding the verdict (J.N.O.Y.), or in the alter native, motion to alter, amend and vacate the judgment, or for remittitur, which the court denied. The Defendants now appeal to this Court.
FACTS
¶2. Dr. Edsel Stewart (Dr. Stewart) retained James Bateman (Bateman), an independent broker, to handle estate planning and to procure a life insurance policy-in the amount of $1,000,000 to cover the expected tax liabilities of approximately $1,000,000. Several companies declined to cover Dr. Stewart due to his advanced age or agreed to consider providing coverage at a premium rate that Dr. Stewart deemed too high. Dr. Stewart's son, Dr. Larry Stewart (Larry), was the trustee of Dr. Stewart's trust and was involved with his father's procurement of life insurance. The "beneficiaries/ownership" listed in the application was The Stewart Family Life Insurance Trust (Trust), Lawrence Edsel Stewart, Trustee. Larry, as the trustee, signed the application as the "applicant" on the policy. Dr. Stewart was not listed as the applicant on the application. Dr. Stewart signed the application as the "proposed insured."
¶ 3. The Plaintiffs contend that by August 19, 1999, Prudential communicated an offer to Dr. Stewart, the insured, and Larry, the trustee of the trust established to receive the insurance proceeds on Dr. Stewart's death. The Plaintiffs assert that on August 31, 1999, the offer had been accepted and $20,000 was paid as the first payment on the annual premium. Bate-man testified that the $20,000 check issued to Bateman's company, JMB Financial Group, was for two years of estate planning provided to Dr. Stewart, and it was not a premium payment on any insurance coverage. Only Dr. Stewart and Bateman were present when the $20,000 check, dated August 31, 1999, from the bank account of Dr. or Mrs. Edsel Stewart, indicating for a "fee, " was tendered to JMB Financial Group. The check stated that it was payable to the order of "JMB Financial Group."
¶ 4. On September 1, 1999, Dr. Stewart had a stroke and fell into a coma. On September 9, 1999, Larry received a faxed document from Bateman that needed his signature. Larry signed and approved the "Supplement to the Application" form. The document stated that it was, "A Supplement to the Application for a variable contract in which Edsel Ford Stewart is named as the proposed insured." It directed, "Use this form to provide additional information needed in connection with the purchase of a variable life insurance product." The "Supplement to the Application" was signed by Larry, as the applicant, was dated September 10, 1999, and contained the application number V1016075. Larry did not inform Bateman that Dr. Stewart had had a stroke and was now in a coma and had been in a coma since September 1, 1999. Larry established a conservatorship over Dr. Stewart on September 9,1999.
¶ 5. According to the Defendants, on September 17, 1999, Pruco issued a policy that differed from the policy face amount of $1,000,000 applied for by Dr. Stewart. The policy required an annual premium of $105,000, not $100,000 as requested in the Trust's application. Prudential and Bate-man maintain that they were never notified of any change in Dr. Stewart's health before the policy was issued on September 17, 1999. The policy was delivered to Bateman with delivery instructions and restrictions. The instructions to the agent stated:
When delivering the policy you must personally see the proposed insured, verify that all answers to the questions on the application are unchanged, and collect the first full premium. If the answer to any question has changed, or if any person covered under the contract is ill, disabled, has died, or has been put in an institution or prison, do not deliver it.
(Emphasis added).
¶ 6. The contract date of the policy provided, "Coverage is effective on _ (the effective date), that is the date the initial premium was paid and the contract was delivered." On September 20, 1999, Prudential sent Bateman the policy, airborne, for Bateman to attempt delivery and satisfaction of the outstanding placement requirements. On September 21, 1999, Bateman attempted to contact Dr. Stewart. When Bateman could not locate Dr. Stewart, he contacted Larry and asked him to arrange a meeting with Dr. Stewart. Larry asked Bateman to fax or mail the policy to him rather than have a meeting. Bateman informed Larry that he was required personally to see Dr. Stewart and obtain a signed statement from him that his health was unchanged since the application process. The call ended with no meeting arranged.
¶ 7. On September 22, 1999, Larry contacted Bateman and inquired again about the delivery of the policy, informing him for the first time that Dr. Stewart was in a coma. Bateman told Larry that he had the policy, but he could not, under the circumstances of the changes in Dr. Stewart's health, deliver the policy. He informed Larry that there would be no insurance. On September 22, 1999, Bateman informed Prudential that Dr. Stewart was in a coma. Prudential requested Bateman return the policy with no attempt to place it. At trial, Larry testified that neither he, nor anyone else to his knowledge, informed Prudential before September 21, 1999, that Dr. Stewart was in a coma until he told Bateman. Larry stated that he agreed that an insurance company considering issuing insurance on an individual would be interested in knowing whether or not the individual was in a coma. Larry testified that the written policy was not in the possession of the Trust when Dr. Stewart went into a coma.
¶ 8. Dr. Stewart died on October 19, 1999. The Plaintiffs contend that Larry, via an attorney, sent a demand letter to Prudential on February 18, 2002, demanding that $1,000,000 be paid. The letter enclosed Dr. Stewart's death certificate and contained Dr. Stewart's social security number and all the details of the claim. The Plaintiffs assert that Prudential signed a return receipt. Receiving no response, Larry faxed another notice to the Claims Department of Prudential on April 5, 2002.
¶ 9. Prudential claims that on June 18, 2002, it received a letter from Larry demanding policy benefits, claiming a pre mium had been paid for the policy, and attaching the February and April 2002 correspondence, which Prudential contends it had never seen until that day. Prudential asserts that it responded to the letter three days later and began its investigation. Prudential also sent a request to Larry that he provide documentation that he represented the legal interests of the decedent. Prudential received no response until August 28, 2002. The Plaintiffs filed suit on September 24, 2002.
DISCUSSION
¶ 10. A review of the record in this case reveals that a contract for insurance was never formed, and therefore, no life insurance policy was in effect. Accordingly, we find that the trial court's denial of the Defendants' motion for J.N.O.V. to be error. When considering a trial court's denial of a motion for judgment notwithstanding the verdict, the standard of review is de novo. Poole v. Avara, 908 So.2d 716, 726 (Miss.2005). The trial court must view the evidence in the light most favorable to the non-moving party and look only to the sufficiency, and not the weight of the evidence. Id. at 727. When determining whether the evidence was sufficient, the critical inquiry is whether the evidence is of such quality that reasonable and fair-minded jurors in the exercise of fair and impartial judgment might reach different conclusions. Id. at 726.
¶ 11. When evaluating the denial of a motion for new trial, this Court will overturn the trial court only if it abused its discretion in that it denied a new trial though the verdict was against the overwhelming weight of the evidence. Id. at 727. We will not order a new trial unless we are convinced that the verdict was contrary to the substantial weight of the evidence so that justice requires that a new trial be granted. Id.
¶ 12. The issue before us is whether a contract was ever formed between the trust and Prudential Life Insurance for life insurance on Dr. Stewart. This Court stated:
[I]nsuranee policies are matters of contract and the interpretation of insurance contracts is according to the same rules which govern other contracts. In order to have an enforceable insurance contract, the essential elements are an offer and an acceptance, supported by consideration.
Krebs v. Strange, 419 So.2d 178, 181 (Miss. 1982) (emphasis added). "[F]or an insurance contract to exist the minds of the parties must meet as to the terms of the contract." Scottish Union & National Ins. Co. v. Warren Gee Lumber Co., 118 Miss. 740, 754-55, 80 So. 9 (1918).
¶ 13. The parties dispute whether there was an offer and an acceptance, and if so, which documents constituted the offer and the acceptance. The Plaintiffs assert that the application was an acceptance of Prudential's offer to insure. Prudential contends that the policy was the offer and that there can be no meeting of the minds because the policy was never delivered to Larry or Dr. Stewart.
¶ 14. The ability to make an offer for insurance lies with the potential insurer as well as the potential insured. Andrew Jackson Life Ins. Co. v. Williams, 566 So.2d 1172, 1177-78 (Miss.1990). Generally, through bargaining transactions conducted between the insurer's agent and the potential insured, the agent invites the potential insured to make an offer by submitting an application. Id. at 1177. In the alternative, the insurer may make the offer through the agent's express assent to the specific and definite terms of coverage. Id. at 1178. Such terms include all of the essential terms as delineated in the application-the subject matter of insurance, the period of coverage, the premium, and the amount of insurance. Id. There must be a complete understanding between the parties as to these terms in order for such assertions by the insurer or the agent to constitute an offer. Id.
¶ 15. Larry asserts that the insurer made the offer in this case. He states that Dr. Stewart already had been approved for Prudential's "Class H." He claims in his brief that this approval set the underwriting requirements before he submitted the application. However, Larry's trial testimony differs from the assertions in his brief. He testified that a decision had not yet been made regarding underwriting of the policy. Larry answered affirmatively to the question of whether an application is a request that the insurance company consider the applicant for insurance coverage. Id. Moreover, the means by which he understood that a contract would be formed in this case was that "[t]he company [had] to make the offer." Accordingly, his expectation was that "[t]he company issues the contract, I accept it, and then we pay the premium." He testified that the offer, which he conceded would come from Prudential, was a document he signed on August 31, 1999. However, as Larry eventually conceded, the document he signed on August 31, 1999, was a "Supplement to the Application" and was clearly titled as such on the first page of the document. He also understood that after the issuance of the policy, there was a process for acceptance, which included delivery, to be completed before the policy would be effective.
¶ 16. Prudential and Pruco, on the other hand, argue that the submission of the application was the offer to provide insurance coverage. The terms of the application included a face amount of $1,000,000 and a premium set at $100,000. Pruco contends thát it issued a policy which would have constituted a counteroffer since it contained a premium $5,000 higher than that quoted in the application. However, when Bateman called Larry to arrange for delivery of the policy, Larry told Bateman that Dr. Stewart was in a coma. Consequently, Bateman told Larry that he would be unable to deliver the policy and there would be no insurance.
¶ 17. The treatment of the policy as a counteroffer in this case is consistent with precedent. "To create a contract of insurance there must be an agreement between the insurer and the insured. There must be a meeting of the minds.... " Nunley v. Merrill, 513 So.2d 582, 586 (Miss.1987). Thus, if the terms in the policy issued "differ materially" or are "at variance" from those in the application, tender of such policy constitutes a counteroffer. Interstate Life & Ace. Ins. Co. v. Flanagan, 284 So.2d 33, 36-37 (Miss.1973). The policy may set the terms of acceptance for the proposed insured. Id. at 36. Upon acceptance according to the policy terms and the tendering of consideration, a contract is formed between the proposed insured and the insurance company. Id.; Krebs, 419 So.2d at 181.
¶ 18. The terms of acceptance of Prudential's counteroffer required Dr. Stewart's signature on the COD endorsement, receipt of the initial premium, and delivery of the policy. Clearly, Dr. Stewart was unable to accept Prudential's counteroffer since he was in a coma. Without an offer and acceptance, no contract was formed, and there is no need to address whether consideration was tendered.
¶ 19. The only possible conclusion from the evidence is that an initial offer was made when the proposed insured submitted an application, and the proposed insurer produced in response a policy, which differed in terms, and thus would have constituted a counteroffer. However, as Prudential never presented the policy to the applicant for acceptance, there was no possibility of the occurrence of both an offer and acceptance. For those reasons, the evidence is not of such quality that reasonable and fairminded jurors in the exercise of fair and impartial judgment might reach different conclusions with regard to the existence of a contract in this case. The evidence does not sufficiently support the establishment of the requisites of offer, acceptance, and consideration.
¶20. The evidence is insufficient to show a meeting of the minds as to whether an offer was made and what the terms of insurance coverage were. Thus, a contract was never formed between Larry, as representative of the Trust, and Prudential. Therefore, we reverse the jury verdict and render judgment in favor of the Defendants.
CONCLUSION
¶ 21. For the foregoing reasons, we find that the trial court erred in denying the Defendants' motion for J.N.O.V. Accordingly, the judgment of the Circuit Court of Hinds County, Mississippi, is reversed and judgment rendered in favor of the Defendants, The Prudential Insurance Company of America and Pruco Life Insurance Company, as the evidence does not demonstrate that a contract for insurance was ever formed between the parties.
¶ 22. REVERSED AND RENDERED.
SMITH, C.J., WALLER, P.J., CARLSON, DICKINSON AND LAMAR, JJ" CONCUR. RANDOLPH, J., CONCURS IN PART AND IN RESULT. CARLSON, J., SPECIALLY CONCURS WITH SEPARATE WRITTEN OPINION JOINED BY SMITH, C.J., WALLER, P.J., DICKINSON, RANDOLPH AND LAMAR, JJ. GRAVES, J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY DIAZ, P.J.
. The Prudential Insurance Company of America and Pruco Life Insurance Company were the only two defendants who appealed the judgment to this Court.
. Dr. Stewart was 73 years old at the time he died.
. The document was signed on September 10, 1999, by Lawrence E. Stewart, as the applicant.
.Prudential considered the changes in the policy issued as a counteroffer to Dr. Stewart's application. Prudential asserts that the Trust made an offer to Pruco on August 23, 1999, in the form of the application for a variable life policy with a face amount of $1,000,000 at a premium of $100,000. On September 1, 1999, unbeknown to Prudential, Dr. Stewart, the proposed insured, had a stroke and was comatose. On September 17, 1999, Pruco issued a policy that would have been a counteroffer, if it had been communicated or delivered, because it contained an annual premium $5,000 higher than that listed on the application.