Court Opinion

ID: 6340393
Source: CourtListenerOpinion
Date Created: 2022-05-13 00:00:26.353389+00
Date Added: 2024-06-11T15:49:14.934973
License: Public Domain

Case: 21-30254      Document: 00516317266         Page: 1     Date Filed: 05/12/2022

            United States Court of Appeals
                 for the Fifth Circuit
                                                                    United States Court of Appeals
                                                                             Fifth Circuit

                                                                           FILED
                                   No. 21-30254                        May 12, 2022
                                                                      Lyle W. Cayce
                                                                           Clerk
   Russell Thomas,

                                                              Plaintiff—Appellee,

                                       versus

   Ameritas Life Insurance Corp.,

                                                           Defendant—Appellant.

                   Appeal from the United States District Court
                       for the Middle District of Louisiana
                            USDC No. 3:19-CV-00741

   Before Smith, Costa, and Wilson, Circuit Judges.
   Cory T. Wilson, Circuit Judge:
          In Louisiana, the errors and omissions of an insurance agent in filling
   out an application for insurance on behalf of an insured are attributable to the
   insurer. Johnny Alfred, a producer for Ameritas Life Insurance Corporation,
   erroneously completed a life insurance application and bound Ameritas to a
   temporary insurance agreement covering the life of Deshon Murphy.
   Deshon died, and his father, Russell Thomas, sought to recover as the policy
   beneficiary. After a bench trial, the district court concluded Ameritas was
   bound by Alfred’s errors and omissions and found for Thomas. We affirm.
Case: 21-30254     Document: 00516317266           Page: 2   Date Filed: 05/12/2022

                                    No. 21-30254

                                        I.
          As neither party challenges the factual findings of the district court,
   the facts of this case are represented as that court found them. In 2018,
   D’Sha Murphy and Russell Thomas sought insurance covering the life of
   their adult son, Deshon Murphy. They met with Johnny Alfred in his office
   in Baton Rouge to apply for the life insurance. Alfred had been a producer
   with Ameritas since earlier that year, and he walked D’Sha and Thomas
   through an application for insurance with Ameritas. Based on responses
   from D’Sha and Thomas, Alfred actually filled out the application, as well as
   a temporary insurance agreement (the TIA) to cover Deshon’s life while the
   application was pending. After completing the application and the TIA on
   his laptop, Alfred gave Thomas the opportunity to review them. Alfred
   subsequently submitted the application and authorized the TIA.
          Despite that D’Sha and Thomas answered Alfred’s questions
   accurately, the application and TIA contained multiple erroneous
   statements, including omissions of Deshon’s history of ADHD, asthma, and
   chest pain. Both documents omitted that there was other life insurance
   covering Deshon. Deshon’s name was signed to both documents, even
   though he was not present, and Thomas’s name was not listed as owner of
   the policy.
          Before the policy application was processed, Deshon died in a car
   accident. After receiving notice of the death, Ameritas sent Thomas a letter
   notifying him that the application had not been processed and delineating the
   procedure for filing a claim under the TIA. Ameritas subsequently denied
   coverage. Its basis for doing so was the misrepresentation and omission of
   key parts of Deshon’s medical history. Thomas then filed suit in Louisiana
   state court against Alfred and Ameritas.

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                                     No. 21-30254

          Ameritas removed the case to federal district court on the basis of
   diversity. Thomas subsequently filed an amended complaint that dropped all
   claims against Alfred from the suit. Both parties filed cross-motions for
   summary judgment; the district court denied both motions. The parties then
   filed motions in limine. Thomas sought to bar Ameritas from arguing that
   Alfred was not its agent. He argued that, based on Louisiana law, Alfred had
   to be Ameritas’s agent and any argument to the contrary would be specious.
   Conversely, Ameritas sought to bar Thomas from introducing any evidence
   that would establish Alfred was its agent. Ameritas argued that while
   Thomas’s initial complaint referenced Alfred’s agency relationship, the
   amended complaint made no reference to agency, so Thomas could not
   proceed under that theory at trial. The district court determined that neither
   motion was properly a motion in limine and denied them both.
          After a bench trial, the district court enumerated its findings of fact
   and conclusions of law. It found that D’Sha and Thomas had not made any
   of the misrepresentations in the application or the TIA and that Alfred was
   responsible for the errors and omissions in those documents. Then, finding
   that Alfred was Ameritas’s agent, the district court imputed Alfred’s actions
   to Ameritas and estopped Ameritas from denying coverage. Finally, the
   district court determined that Ameritas denied coverage without just cause
   and assessed statutory interest against Ameritas as a result. Ameritas
   appeals.
                                         II.
          As this is a diversity case arising from Louisiana, this court applies the
   substantive law of that state. Klocke v. Watson, 936 F.3d 240, 244 (5th Cir.
   2019) (citing Hanna v. Plumer, 380 U.S. 460, 465 (1965)). Ameritas levies
   four arguments on appeal: First, that the district court erred by denying its
   motion in limine; next, that the TIA was not formed properly, and even if it

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   was, that it violated Louisiana law; then, that Thomas cannot rely on Alfred’s
   apparent authority to recover; and finally, that the district court erred in
   assessing statutory interest against Ameritas. We address each in turn.
                                         A.
          “The grant or denial of a motion in limine is considered discretionary,
   and thus will be reversed only for an abuse of discretion and a showing of
   prejudice.” Hesling v. CSX Transp., Inc., 396 F.3d 632, 643 (5th Cir. 2005)
   (citing Buford v. Howe, 10 F.3d 1184, 1188 (5th Cir. 1994)). “A trial court
   abuses its discretion when its ruling is based on an erroneous view of the law
   or a clearly erroneous assessment of the evidence.” Knight v. Kirby Inland
   Marine, Inc., 482 F.3d 347, 351 (5th Cir. 2007) (internal quotation marks
   omitted) (quoting Bocanegra v. Vicmar Servs., Inc., 320 F.3d 581, 584 (5th Cir.
   2003)). In assessing a motion in limine, “[t]he trial court must weigh the
   evidence’s contribution to the case against any potential prejudice or
   confusion.” FDIC v. Wheat, 970 F.2d 124, 131 (5th Cir. 1992).
          Ameritas’s motion in limine sought to preclude Thomas
          from asserting or contending at . . . trial that a principal-agency
          relationship exist[ed] between Johnny Alfred . . . and
          Ameritas, that Alfred’s actions or inactions may be imputed to
          Ameritas under an agency theory of liability, that Ameritas is
          liable for actions or inactions of Alfred and/or that
          Ameritas’[s] defenses are somehow limited or not viable based
          on Plaintiff’s contention that a principal-agency relationship
          exist[ed] between Alfred and Ameritas because Plaintiff has
          asserted no such allegations in his Complaint . . . . Because any
          such contention(s) is beyond the scope of Plaintiff’s
          allegations, any such contention is not properly before the
          Court, and Plaintiff should be precluded from raising or
          asserting any such theory or contention . . . .

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   The district court concluded that “[t]he Defendant’s Motion is not properly
   a Motion in Limine.       The purported Motion in Limine seeks a legal
   determination of whether an agency relationship exists. It does not challenge
   the admissibility of any discreet or particular evidence on evidentiary
   grounds, and is DENIED.”
          Contrary to the district court’s conclusion, Ameritas raised a valid
   evidentiary concern, namely, that Thomas sought to offer evidence irrelevant
   to the claim he asserted in his complaint. See Fed. R. Evid. 402 advisory
   committee’s note to 1972 proposed rules (quotation omitted) (stating that
   the relevancy of evidence is the threshold consideration for admissibility).
   Ameritas is correct that Thomas’s amended complaint excised all references
   to Alfred’s alleged role as Ameritas’s agent. From there, Ameritas reasons
   that Thomas should not have been allowed to offer evidence related to
   Alfred’s agency relationship.
          But we only require that “a pleading allege[] facts upon which relief
   can be granted,” and we have acknowledged that a pleading “states a claim
   even if it ‘fails to categorize correctly the legal theory giving rise to the
   claim.’” Sanchez Oil & Gas Corp. v. Crescent Drilling & Prod., Inc., 7 F.4th
   301, 309 (5th Cir. 2021) (internal quotation marks omitted) (quoting Homoki
   v. Conversion Servs., Inc., 717 F.3d 388, 402 (5th Cir. 2013)); see also Fed. R.
   Civ. P. 8. While Thomas’s two complaints were fairly barebones, and he
   deleted what agency allegations about Alfred he had pled in the original
   complaint when he filed his amended complaint, he retained two statements
   about Alfred in the live pleading: First, he alleged that “Alfred electronically
   submitted an application for life insurance . . . to Ameritas[,]” and second,
   that “Alfred completed the Policy’s application which indicates that Murphy
   and Thomas signed electronically.” These statements articulate facts upon
   which relief could be granted on an agency theory. Sanchez Oil & Gas Corp.,
   7 F.4th at 309. The allegations are sufficient to outline a claim that Alfred

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   filled out the documents and submitted them, logically leaving him to blame
   for any errors or inconsistencies in the applications.                    Thus, Thomas
   preserved, if barely, this theory for trial. It follows that because Ameritas’s
   motion would have been properly denied even if the district court had
   construed it as a motion in limine, Ameritas cannot demonstrate prejudice
   from the district court’s denial of its motion, and this issue is without merit.
                                                 B.
          Ameritas next challenges the district court’s legal conclusion that the
   TIA was enforceable between Thomas and Ameritas. We review this
   question de novo. Lehmann v. GE Global Ins. Holding Corp., 524 F.3d 621,
   624 (5th Cir. 2008) (quoting Teco Barge Line, Inc. v. Exmar Lux (In re Mid-
   South Towing Co.), 418 F.3d 526, 531 (5th Cir. 2005)). 1 In Louisiana, the four
   elements of a valid contract are “capacity, consent, a lawful cause, and a valid
   object.” Granger v. Christus Health Cent. La., 2012-1892 (La. 6/28/13); 144
   So. 3d 736, 760. Ameritas contends that the TIA lacked both a lawful cause
   and consent. Ameritas first argues that because Deshon never signed the
   TIA, the cause of the TIA was unlawful. Next, it argues that because
   Ameritas and Deshon were the only parties listed on the TIA, Thomas was
   not a party, and, because Deshon never actually signed the TIA, there was
   no consent to form the agreement.
                                                 1.
          “Cause is the reason why a party obligates himself.” La. Civ.
   Code art. 1967. “[I]n Louisiana, the common law tradition that requires
   ‘consideration’ to effect an enforceable contract has not been adopted;
   ‘cause’ is sufficient for a party to enter into a contract.” Granger, 144 So. 3d

          1
              As noted above, Ameritas does not contest the district court’s factual findings.

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   at 760 n.27 (citing Aaron & Turner, L.L.C. v. Perret, 2007-1701 (La. App. 1
   Cir. 5/4/09), 22 So. 3d 910). “Consideration is an objective element
   required to form a contract, whereas cause is a more subjective element that
   goes to the intentions of the parties.” Perret, 22 So. 3d at 915.
          “The cause of an obligation is unlawful when the enforcement of the
   obligation would produce a result prohibited by law or against public policy.
   Examples of obligations with unlawful causes include those that arise from
   gaming, gambling, and wagering not authorized by law.” La. Civ. Code
   art. 1968. Another example of an unlawful cause is an individual’s agreeing
   to “boycott, coerce, or intimidate” another as part of a noncompetition
   agreement. Citizens Bank & Trust Co. v. West Bank Agency, Inc., 540 So. 2d
   440, 443-44 (La. Ct. App. 1989).
          Ameritas’s argument regarding cause is simple. First, Louisiana
   requires that “[n]o life . . . insurance contract upon an individual . . . shall be
   made or effectuated unless at the time of the making of the contract the
   individual insured . . . in writing applies therefor or consents thereto[.]” La.
   Stat. Ann. § 22:856. Second, the district court found that Deshon, the
   insured under the putative contract, never signed the contract or otherwise
   evinced consent in writing. On those two premises, the cause of the
   contract—insuring an individual’s life who has not consented to the
   insurance—was unlawful because it directly contradicts a Louisiana statute.
          “In the state of Louisiana, the principles of the common law are not
   recognized . . . . They have a system peculiar to themselves, adopted by their
   statutes[.]” Wright v. Paramount-Richards Theatres, 198 F.2d 303, 306 (5th
   Cir. 1952) (internal quotation marks omitted) (quoting Parsons v. Bedford,
   Breedlove, & Robeson, 28 U.S. (3 Pet.) 433, 450 (1830) (McLean, J.,
   dissenting)). “The sources of law are legislation and custom.” La. Civ.
   Code art. 1. Louisiana’s system requires that “courts look first and

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   foremost to the statutory law.” Chevron USA, Inc. v. Vermilion Parish Sch.
   Bd., 377 F.3d 459, 462 (5th Cir. 2004). Mindful of the unique importance of
   Louisiana’s positive statutory law, Thomas contends that because the record
   is devoid of any argument related either to section 22:856 or, more generally,
   to improper cause, Ameritas has forfeited its argument that under section
   22:856, the cause of the TIA was improper, such that the contract was never
   confected.
          “A party forfeits an argument by failing to raise it in the first instance
   in the district court—thus raising it for the first time on appeal[.]” Rollins v.
   Home Depot USA, 8 F.4th 393, 397 (5th Cir. 2021). This rule exists for a
   simple reason: It is “an efficient approach that allows a full consideration of
   all the parties’ arguments in the district court . . . . A thorough ruling might
   avoid an appeal by making clearer the unlikelihood of appellate success based
   on the strengths of the district court decision.” In re Crescent Energy Servs.,
   L.L.C., 896 F.3d 350, 354-55 (5th Cir. 2018). “[I]n order to preserve an
   argument for appeal, the argument (or issue) not only must have been
   presented in the district court, a litigant also ‘must press and not merely
   intimate the argument during proceedings before the district court.’”
   Templeton v. Jarmillo, 28 F.4th 618, 622 (5th Cir. 2022) (quoting FDIC v.
   Mijalis, 15 F.3d 1314, 1327 (5th Cir. 1994)).
          Of course, there is a significant difference between raising an issue or
   argument for the first time on appeal and supplementing an argument with
   new authority. A party can produce new authority on appeal provided that it
   “[m]a[de] an issue clear, or as the First Circuit stated the point . . . ,

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   present[ed] the issue ‘face up and squarely in the trial court[.]’” Id. (quoting
   Alston v. Town of Brookline, 997 F.3d 23, 44 (1st Cir. 2021)). 2
           Ameritas’s illegal-cause argument is appealingly straightforward, but
   not preserved for appeal. Ameritas contends that its argument is not forfeited
   because both section 22:856 and the notion of unlawful cause were
   referenced in its argument for judgment on partial findings during the bench
   trial. But the portion of the bench trial motion Ameritas references in its
   briefing on appeal is related to Ameritas’s own internal requirements and
   definitions of an insurable interest, not the relevant provisions of positive
   Louisiana law. Scrutinizing the record, we cannot find any argument related
   to section 22:856 or unlawful cause. Simply put, Ameritas did not present
   any argument that the TIA ran afoul of section 22:856’s written consent
   requirement “face up and squarely” in the district court. Id. We therefore
   decline further to address this forfeited argument.
                                               2.
           Ameritas’s second argument, that Deshon was the only named party
   other than Ameritas and that he did not consent to the TIA, while not
   waived, is defeated on appeal by the district court’s unchallenged factual
   findings. The district court found that Alfred filled out the application and
   TIA erroneously, which included erroneously placing Deshon as the
   contracting party rather than Thomas and then signing the agreement for the
   contracting parties. The district court also found that Alfred was Ameritas’s

           2
            Because this is a procedural rule, we have at times relaxed its bar and exercised
   our discretion to hear forfeited arguments. Generally, though, we only do so when the
   argument is “a purely legal matter and failure to consider the issue will result in a
   miscarriage of justice.” Rollins, 8 F.4th at 398 (internal quotation marks omitted) (quoting
   Essinger v. Liberty Mut. Fire Ins. Co., 534 F.3d 450, 453 (5th Cir. 2008)). As our later
   discussion demonstrates, declining to reach Ameritas’s forfeited argument here results in
   no miscarriage of justice.

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   agent. Ameritas has not challenged these findings on appeal. Thus, under
   Louisiana law, Alfred’s errors and omissions in this context are wholly
   attributable to Ameritas. Rudd v. Carpenter, (La. App. 2 Cir. 1/13/21); 311
   So. 3d 568, 573 (citing Harris v. Guar. Life. Ins. Co., 75 So. 2d 227 (La. 1954);
   Miller v. Preferred Life Ins. Co., 107 So. 2d 323 (La. Ct. App. 1958)). As a
   result, the district court did not err by estopping Ameritas from arguing that
   Thomas was not a party to the TIA, that Deshon had never consented to the
   agreement, and, therefore, that the parties never consented to enter the TIA.
                                         C.
          Ameritas also attacks Alfred’s apparent authority. It asserts that
   because Thomas had the chance to review the insurance documents and
   likely saw Alfred’s errors, Thomas cannot rely on Alfred’s apparent
   authority to ratify the errors because no one represented that Alfred had the
   authority to do so. Ameritas analyzes apparent authority in its briefing but
   under Louisiana law, this is not the relevant consideration. As outlined
   above, the actions of an insurance agent in completing an application for an
   insured are imputed to the insurer, and that insurer is bound by its agent’s
   actions “provided the insured has no actual or implied knowledge thereof.”
   Rudd, 311 So. 3d at 573 (citing Harris, 75 So. 2d 227; Miller, 107 So. 2d 323).
   This was the basis of the district court’s holding, not Alfred’s apparent
   authority.    Ameritas’s arguments, while couched in terms of apparent
   authority, amount to a contention that Thomas had actual or constructive
   knowledge that the application was filled out improperly such that the
   responsibility for the errors fall not on Ameritas, but on Thomas. Again, the
   district court’s factual findings defeat Ameritas’s argument.
          The district court found that Thomas “was provided the opportunity
   to read the policy application on Alfred’s laptop computer screen.”
   Critically, the court also found that “Thomas made no changes because he

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   relied on Alfred’s experience and expertise in completing the Ameritas policy
   application form[.]”      It is well-established in Louisiana law that “an
   insurance applicant may rely upon and sign an application as completed by
   the agent and may rely upon the agent’s expertise in interpreting the nature
   of the information sought by the company he represents.” Toups v. Equitable
   Life Assurance, 94-1232 (La. App. 3 Cir. 5/3/95); 657 So. 2d 142, 147 (citing
   Economy Auto Salvage, Inc. v. Allstate Ins. Co., 499 So. 2d 963 (La. Ct. App.
   1986)).
          As Ameritas has not challenged the district court’s factual finding that
   Thomas relied on Alfred’s expertise, Thomas’s cursory review of the
   insurance application and TIA, via Alfred’s laptop computer screen, does
   not without more satisfy the actual or implied knowledge requirement.
   Therefore, we cannot conclude that the district court erred in finding that
   Ameritas was bound by Alfred’s errors and omissions in the application and
   the TIA, such that Ameritas could not deny Thomas coverage under the
   TIA on that basis.
                                          D.
          Ameritas concludes by arguing that the district court improperly
   assessed statutory interest against it. Under Louisiana’s insurance statutes,
   “claims . . . shall be settled by the insurer within sixty days after the date of
   receipt of due proof of death, and if the insurer fails to do so without just
   cause, the amount due shall bear interest at the rate of eight percent . . . .”
   La. Stat. Ann. § 22:1811. Ameritas asserts that it had just cause to deny
   Thomas’s claim because of the material misrepresentations in the application
   and the TIA. But as the district court found, the false information was
   attributable to Alfred.     Because Alfred’s actions were attributable to
   Ameritas, and “[a]n investigation of its own agent’s actions in issuing the
   policy would have revealed to [Ameritas] that” it could not maintain its

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   defenses, we discern no reversible error in the district court’s determination
   that Ameritas acted without just cause. Swain ex rel. Estate of Swain v. Life
   Ins. Co. of La., 537 So. 2d 1297, 1304 (La. Ct. App. 1989); see also Ryan v.
   Security Indus. Ins. Co., 386 So. 2d 939, 943-45 (La. Ct. App. 1980). The
   district court’s imposition of statutory interest pursuant to section 22:1811
   was appropriate.
                                        III.
          The district court acted within its discretion to deny Ameritas’s
   pretrial motion in limine. On substance, Ameritas forfeited its argument
   related to the contractual element of “cause,” as provided by Louisiana’s
   positive law, by not first presenting it to the district court. As for the
   insured’s “consent” to the contracts, Alfred’s actions, errors and omissions
   in completing the insurance application and TIA were properly imputed to
   Ameritas, such that Ameritas was estopped from raising Deshon’s lack of
   consent. Finally, the district court acted within its discretion in assessing
   penalty interest against Ameritas.
                                                                 AFFIRMED.

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