Court Opinion

ID: 4536657
Source: CourtListenerOpinion
Date Created: 2020-05-26 21:00:25.765077+00
Date Added: 2024-06-11T08:48:56.464669
License: Public Domain

Case: 19-11178       Date Filed: 05/26/2020      Page: 1 of 21

                                                                                  [PUBLISH]

                  IN THE UNITED STATES COURT OF APPEALS

                            FOR THE ELEVENTH CIRCUIT
                              ________________________

                                    No. 19-11178
                              ________________________

                           D.C. Docket No. 4:00-cv-217-CDL

TVPX ARS, INC.,

                                                       Plaintiff-Appellant/Cross-Appellee,

                                            versus

GENWORTH LIFE AND ANNUITY INSURANCE COMPANY,

                                                     Defendant-Appellee/Cross-Appellant.

                              ________________________

                     Appeals from the United States District Court
                         for the Middle District of Georgia
                            ________________________

                                       (May 26, 2020)

Before MARTIN, NEWSOM, and O’SCANNLAIN,* Circuit Judges.

MARTIN, Circuit Judge:

*
 Honorable Diarmuid F. O’Scannlain, United States Circuit Judge for the Ninth Circuit, sitting
by designation.
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      In 2018, TVPX ARS, Inc. (“TVPX”) filed an amended class action

complaint in the Eastern District of Virginia against Genworth Life and Annuity

Insurance Company (“Genworth”). The amended complaint alleged that Genworth

had violated the terms of one of its life insurance policies by imposing inflated

“cost of insurance” charges on its insureds. Genworth brought this action in the

Middle District of Georgia (the “District Court”), seeking to enjoin TVPX’s

Virginia lawsuit and arguing that TVPX’s claims were barred by a 2004 agreement

settling a prior class action about the same life insurance policies. The District

Court granted Genworth’s motion to enjoin TVPX’s Virginia action. It found that

TVPX’s complaint was barred by the doctrine of res judicata because its claims

were premised on a continuation of the same conduct at issue the 2004 settlement.

After careful consideration, and with the benefit of oral argument, we vacate the

order enjoining TVPX’s Virginia lawsuit and remand for factfinding consistent

with this opinion.

                                          I.

      At issue in this appeal are Genworth’s flexible premium, universal life

insurance policies. A universal policy is a type of life insurance that, in addition to

paying out a death benefit, includes an interest-bearing account that builds cash

value during the insured’s life. Policyholders can pay premiums into their account

to add to the cash value, and Genworth draws monthly deductions from the

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account’s cash value. So long as the cash value is high enough to cover the

following month’s deductions, the policy remains in force. If the cash value is

insufficient to cover the next month’s deductions, the policy lapses unless the

policyholder pays a premium that covers the deficit. Relevant here, one of

Genworth’s monthly deductions is a “cost of insurance” charge (“COI”), which,

according to Genworth’s policy terms, is determined “according to expectations of

future mortality.” Often referred to as a “mortality charge,” COI is intended to

compensate life insurers for the risk that the insured will die in a given policy year.

COI rates are recalculated by Genworth on a monthly basis.

      A. The McBride Class Action

         In 2000, Robert McBride filed a putative class action against Genworth, then

known as Life Insurance Company of Virginia, over the administration and

marketing of its universal life insurance policies. Complaint, McBride v. Life

Insurance Co. of Virginia, No. 4:00-cv-217 (M.D. Ga.) (“McBride”), ECF No. 1-

2. 1 The second amended complaint in McBride (the “McBride complaint”), which

was the operative complaint when that case settled, alleged that Genworth

deceived customers purchasing universal life policies by representing that their

premiums would remain level, vanish, or not be required in the future. It also

alleged that Genworth “wrongfully and improperly” assessed premiums in amounts

1
    For the sake of clarity, we refer to Life Insurance Company of Virginia as “Genworth.”
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higher than the premiums contracted for by the parties by “applying an increased

cost of insurance to cash value as policy holders grew older over time.” The

McBride complaint further alleged that Genworth engaged in deceptive marketing

practices by failing to disclose it charged cost of insurance rates, “or that cost of

insurance is determined at the whim or discretion of [Genworth’s] management on

a monthly basis.”

      In 2004, the parties entered into a settlement agreement that contained a

broad release. Among other things, class members agreed to release all “past,

present and future” causes of action that were “based upon, related to, or connected

with, directly or indirectly, in whole or in part (a) the allegations, facts, subjects or

issues set forth or raised in the [McBride action] or (b) the Released Conduct.”

The release also provided that class members were precluded and estopped from

bringing any future causes of action “related to in any way, directly or indirectly,

in whole or in part (a) the allegations, facts, subjects or issues set forth or raised in

the [McBride action] or (b) the Released Conduct, regardless of whether such

Causes of Action accrue after the [settlement agreement] is approved.” “Released

Conduct” was defined broadly to encompass essentially every aspect of

Genworth’s universal life policies, including “the design, development, marketing,

sale, suitability, administration, servicing, modification, underwriting, lapse,

termination, performance, payments, cash values, premiums, cost of insurance

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rates and charges, death benefits, coverage, maturity date, policy loans,

replacements, commissions, taxes, surrender charges, credited interest, expense

charges, or other costs of any Class Policy” (emphasis added).

      A court-approved settlement notice was sent to the McBride class members.

It described the issues in the lawsuit, including the allegation that Genworth

breached the insurance policy by “increasing policy charges, including cost of

insurance rates.” The notice also said that if class members did not opt out of the

McBride settlement agreement, they might surrender claims relating to “cost of

insurance charges” and “cost of insurance rates.”

      No class members objected to the settlement, and only 652 of over 350,000

total class members opted out. The final judgment, which adopted the McBride

settlement, said the terms of the settlement would be “forever binding on the

Plaintiffs, all other Class Members and all Releasors, and shall have res judicata

and other preclusive effect in all pending and future claims, lawsuits or other

proceedings . . . to the extent those claims, lawsuits or other proceedings involve

matters that were or could have been raised in this Action or are otherwise

encompassed by the Release.”

      Also relevant to this appeal, the McBride settlement provided that “Nothing

in this Agreement shall prevent [Genworth] from increasing any Class Member’s

monthly policy deductions (i.e., the monthly cost of insurance charges and

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expenses of the Class Policy) in accordance with Pre-Settlement Policy

Administration.” The definition of Pre-Settlement Policy Administration

(“PSPA”) states that Genworth will

      administer a Class Member’s Class Policy in the same manner that
      [Genworth] administered flexible premium adjustable life insurance
      policies prior to the Settlement. In particular, [Genworth] will
      administer a Class Member’s Class Policy in accordance with the terms
      of such policy and in accordance with [Genworth]’s interpretation of
      that policy’s provisions, such that the policy will stay in force only so
      long as the Class Policy’s cash value or cash value less surrender
      charges (whichever is applicable in the particular Class Policy) is
      sufficient to cover the monthly deductions (i.e. the monthly cost of
      insurance charges and expenses of the Class Policy), and that a Class
      Member may have to pay premiums in an amount or at a frequency
      greater than the Planned Premium or any other premium that the Class
      Member was paying or expected to pay in order to keep his/her Class
      Policy from lapsing.

   B. The TVPX Class Action

      TVPX purchased a Genworth life insurance policy for Lucius Whitaker in

2017. The policy was originally issued in 1984, with Arlene Whitaker as the

policy owner and Lucius Whitaker as the insured. In 2018, TVPX filed a putative

class action against Genworth in the Eastern District of Virginia, alleging that

Genworth had breached its insurance policies by failing to calculate COI rates in

accordance with mortality expectations. In TVPX’s original complaint, it alleged

that Genworth had “left its COI rates unchanged for decades,” notwithstanding the

fact that mortality expectations had improved significantly. The complaint cited

“mortality tables” published by the Society of Actuaries and the American
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Academy of Actuaries which showed that mortality rates that improved at a rate of

roughly 1% each year over the past three decades. TVPX asserted that, “[d]espite

these continuously improved mortality expectations . . . Genworth has never once

lowered the COI rates it charges its customers.

       TVPX amended its complaint, and the new complaint largely mirrored its

original complaint, with two key differences. First, the amended complaint

narrowed the class period to the five years leading up to the amended complaint,

i.e. from 2013 through 2018. Second, TVPX deleted its allegation that Genworth

had “left its COI rates unchanged for decades,” and instead charged that Genworth

actually increased its COI rates from 2013 through 2018, even though mortality

expectations improved during that same time period.

    C. District Court Proceedings

       After TVPX filed its original complaint, Genworth filed a motion to dismiss

and a motion to stay in the Eastern District of Virginia. At the same time,

Genworth filed a motion in the Middle District of Georgia seeking to enjoin

TVPX’s Virginia action under the All Writs Act, 28 U.S.C. § 1651(a). 2 In its

motion to enjoin, Genworth argued that TVPX’s complaint was precluded by the

2
  The All Writs Act grants district courts jurisdiction to “issue all writs necessary or appropriate
in aid of their respective jurisdictions and agreeable to the usages and principles of law.” 28
U.S.C. § 1651(a). Under this statute, a district court may “issue such commands . . . as may be
necessary or appropriate to effectuate and prevent the frustration of orders it has previously
issued in its exercise of jurisdiction otherwise obtained.” United States v. N.Y. Tel. Co., 434
U.S. 159, 172, 98 S. Ct. 364, 372 (1977).
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2004 settlement and release because the two cases arose from the same factual

predicate. That is, Genworth asserted that whatever violations TVPX alleged

about its COI rates was merely a continuation of conduct Genworth was engaging

in at the time of the McBride settlement. Such conduct, according to Genworth,

was therefore necessarily covered by the McBride release. Separately, Genworth

filed a motion for leave to file a counterclaim against TVPX for breaching the

McBride settlement’s covenant not to sue.

      TVPX made two arguments in response to Genworth’s motion to enforce.

First, it said the PSPA “carves out” a class member’s right to bring the claims

raised in TVPX’s complaint by requiring Genworth to “administer a Class

Member’s Class Policy in accordance with the terms of such policy.” And second,

TVPX argued that the McBride complaint could not preclude TVPX’s complaint

because the McBride action “target[ed] disparate rights, duties, and time frames

creating different facts and legal conclusions.”

      The District Court granted Genworth’s motion to enjoin on res judicata

grounds. It found that TVPX’s Virginia complaint was premised on a continuation

of the same conduct that was at issue in McBride. If Genworth was engaging in

the same conduct in 2004, the District Court reasoned, then TVPX’s complaint was

necessarily precluded by the McBride settlement and judgment. The District Court

rejected TVPX’s argument that its claims were preserved by the PSPA. It found to

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the contrary that the PSPA allowed Genworth to “continue what it had been doing”

with regard to monthly deductions such as cost of insurance. Finally, the District

Court denied Genworth’s motion for leave to file a counterclaim on futility

grounds. This appeal followed.

                                          II.

      “In reviewing the district court’s decision to grant an injunction, including

an injunction under the All Writs Act, we apply an abuse-of-discretion standard.”

Adams v. S. Farm Bureau Life Ins. Co., 493 F.3d 1276, 1285 (11th Cir. 2007)

(quotation marks omitted). “A district court abuses its discretion if it applies an

incorrect legal standard, follows improper procedures in making the determination,

or makes findings of fact that are clearly erroneous.” Klay v. United Healthgroup,

Inc., 376 F.3d 1092, 1096 (11th Cir. 2004) (quotation marks omitted). A finding

of fact is clearly erroneous “when although there is evidence to support it, the

reviewing court on the entire evidence is left with the definite and firm conviction

that a mistake has been committed.” Anderson v. City of Bessemer City, 470 U.S.
564, 573, 105 S. Ct. 1504, 1511 (1985) (quotation marks omitted). And while we

review the grant of an injunction for an abuse of discretion, underlying questions

of law are nevertheless reviewed de novo. Adams, 493 F.3d at 1285.

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                                          III.

      On appeal, TVPX says its claims arise from a different factual predicate than

the claims in McBride, and thus are not barred by res judicata. Alternatively,

TVPX says the District Court order turned on the impermissible factual finding

that Genworth was engaged in the same conduct during the McBride action.

TVPX argues that because there was no evidence supporting such a finding, our

Court must, at a minimum, remand for discovery on that issue. Second, TVPX

says the PSPA expressly reserved TVPX’s right to bring claims raised in its

complaint. Genworth responds that TVPX’s complaint is not only barred under res

judicata, but also by a straightforward application of the McBride release.

A.    Res Judicata

      To invoke res judicata—also called claim preclusion—a party must establish

four elements: that the prior decision (1) was rendered by a court of competent

jurisdiction; (2) was final; (3) involved the same parties or their privies; and

(4) involved the same causes of action. Trustmark Ins. Co. v. ESLU, Inc., 299
F.3d 1265, 1269 (11th Cir. 2002). Here, the dispute is about the fourth element,

which asks whether a case “arises out of the same nucleus of operative facts, or is

based upon the same factual predicate, as a former action.” Griswold v. County of

Hillsborough, 598 F.3d 1289, 1293 (11th Cir. 2010) (quotation marks omitted).

This Court has recognized that res judicata applies not only to the precise legal

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theory presented in the previous litigation, but to all legal theories and claims

arising out of the same operative nucleus of fact. Trustmark, 299 F.3d at 1270 n.3.

When determining whether two cases arise out of a common nucleus of fact, “the

analysis centers on whether the primary right and duty are the same.” Adams, 493
F.3d at 1289 (quotation marks omitted). Beyond that, “[t]he most basic principles

of res judicata require that full relief must have been available in the first action in

order for the second action to be barred.” In re Atlanta Retail, Inc., 456 F.3d 1277,

1287 (11th Cir. 2006); see also Manning v. City of Auburn, 953 F.2d 1355, 1360

(11th Cir. 1992) (explaining that res judicata bars only those claims that “could

have been brought” in the original proceeding). These principles apply with equal

force when considering the preclusive effect of a prior class action settlement

agreement. Adams, 493 F.3d at 1290–91.

      1.     The primary right and duty at issue in TVPX’s complaint were also at
             issue in McBride.

      We reject TVPX’s argument that the rights and duties at issue in its

complaint were not at issue in McBride. TVPX says the two actions are

qualitatively distinct because McBride “was about sales practices, marketing, and

misrepresentations made to induce people to buy the policies,” whereas TVPX’s

claims address only Genworth’s COI practices. Br. of Appellant/Cross-Appellee at

27. But the McBride action was not so circumscribed. While it is true that the

McBride complaint focused on Genworth’s misleading marketing practices, it also
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alleged that Genworth breached its insurance policies by assessing premiums in

amounts higher than the premiums contracted for by the parties. And one of the

mechanisms by which Genworth overcharged its policyholders, according to the

McBride complaint, was by “applying an increased cost of insurance to cash value

as policy holders grew older over time.”

      When assessing the res judicata effect of a prior action, we are not limited to

the allegations raised in a prior complaint. See Adams, 493 F.3d at 1290–91

(determining res judicata effect of prior settlement by examining complaint, class

notice, and settlement). We may also consider the parties’ settlement documents to

determine the claims at issue in a prior action. See id. The McBride settlement

agreement said class members released Genworth from any causes of action

“related to or connected in any way with” various aspects of Genworth’s universal

life policies, including “cost of insurance rates and charges.” The class notice also

indicated that one of the issues in McBride was the allegation that Genworth

breached the insurance policy by “increasing policy charges, including cost of

insurance rates.”

      This Court confronted a similar scenario in Adams, which was a lawsuit

over deceptive marketing related to “‘increasing premium’ insurance policies—

that is, claims based on [an insurer’s] failure to disclose that their policy premiums

might increase in the event interest rates turned out to be lower than those

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projected.” 493 F.3d at 1289. The defendant insurer argued these claims were

precluded by a prior class action in which the plaintiffs alleged fraud with respect

to “‘vanishing premium’ policies, that is, where the policy holder expected the

premium to disappear once the cash value was large enough to cover the required

premiums.” Id. Notwithstanding the plaintiffs’ attempt to distinguish “increasing

premium” policies from “vanishing premium” policies, a panel of this Court found

the two actions concerned the same “primary right and duty” because the original

class action alleged an “overarching scheme of fraud and deception by [the insurer]

in connection with the sale of these flexible premium types of policies.” Id. at

1290. Similarly, the McBride complaint, settlement, and class notice, when taken

together, establish that McBride was not limited only to Genworth’s marketing

practices. Rather, it encompassed an “overarching scheme of fraud and deception”

that extended to the manner in which Genworth administered various aspects of its

universal life policies, including COI. Id. Precisely the same primary right and

duty are at issue in TVPX’s action.

      2.     The record does not support the District Court’s finding that
             Genworth’s COI practices remain unchanged since McBride.

      For res judicata to apply, however, it is not enough that the prior action

encompassed the same primary rights and duties as the subsequent complaint. The

plaintiff must have also been capable of bringing the same claims in the first

action. See In re Atlanta Retail, 456 F.3d at 1287. For this reason, a class release
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may not preclude a subsequent action unless “the released conduct arises out of the

‘identical factual predicate’ as the claims at issue in the case.” 6 Newberg on Class

Actions § 18:19 (5th ed. updated Dec. 2019). And an “identical factual predicate”

cannot exist unless the defendant was engaged in the same offending conduct

during the prior action. See Kilgoar v. Colbert Cty. Bd. of Educ., 578 F.2d 1033,

1035 (5th Cir. 1978) (“Subsequent conduct, even if it is of the same nature as the

conduct complained of in a prior lawsuit, may give rise to an entirely separate

cause of action.”)3; Manning, 953 F.2d at 1359 (holding that a common nucleus of

fact cannot exist where there has been a “modification of significant facts creating

new legal conditions” between the first and second suit).

       TVPX’s amended complaint alleges that from 2013 through 2018, Genworth

calculated COI in a way not consistent with mortality expectations. The operative

complaint says nothing about whether Genworth’s COI charges were similarly

untethered to mortality expectations prior to the class period. Nevertheless, the

District Court found that TVPX’s lawsuit was premised on “a continuation of the

same conduct” occurring during the McBride action. This finding was based

solely on the McBride complaint’s allegation that Genworth engaged in deceptive

marketing practices by failing to “disclose” or “illustrate” that “cost of insurance is

3
 In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh
Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed down
before October 1, 1981.
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determined at the whim or discretion of [Genworth’s] management on a monthly

basis.” According to the District Court, this allegation established that Genworth

was calculating COI “on something other than the insured’s . . . expectations of

future mortality” at the time of the McBride action.

      This record does not support this finding. The allegation relied on by the

District Court expressly referred to Genworth’s marketing practices. It says

nothing about how Genworth actually calculated COI at the time of the

McBride settlement. Indeed, Genworth itself has disclaimed the suggestion that it

has imposed or can impose “any [COI] rates it wants on a whim.” Br. of

Appellee/Cross-Appellant at 26. Therefore, the District Court’s reliance on this

allegation in the McBride complaint was misplaced.

      Genworth argues that the District Court’s finding is supported by TVPX’s

allegation, in its initial complaint (since amended), that Genworth “left its COI

rates unchanged for decades.” Genworth characterizes this as an “admission” by

TVPX that its claims are based on a continuation of the same COI-related practices

that existed at the time of the McBride complaint. Id. at 30. However, TVPX

amended its complaint and deleted this allegation. The operative complaint alleges

that Genworth’s COI rates increased each year from 2013 through 2018. And of

course, an amended complaint “supersede[s] the former pleadings.” Hoefling v.

City of Miami, 811 F.3d 1271, 1277 (11th Cir. 2016). Once an amended complaint

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is filed, the original pleadings are considered “abandoned” and are “no longer a

part of [the plaintiff’s] averments.” Id. Genworth is therefore incorrect that TVPX

admitted that Genworth had the same COI rate for “decades.”4 And as Genworth

conceded during oral argument, there is nothing else in the record to indicate that

the way Genworth calculates and charges COI has remained unchanged since the

McBride action. Oral Argument at 20:25–21:06 (Apr. 21, 2020).

      Because there is nothing in the record to suggest that Genworth’s COI-

related practices have remained the same since McBride, Genworth gets no help

from Freeman v. MML Bay State Life Insurance Company, 445 F. App’x 577 (3d

Cir. 2011) (unpublished). The plaintiff in that case brought a class action against a

life insurance company, alleging that it was “breaching the terms of [its policy] on

a monthly basis by deducting as mortality charges, amounts unrelated to

mortality.” Id. at 579. The defendant moved for summary judgment, arguing that

plaintiff’s claims were barred by a prior class settlement that released claims

“related to . . . cost of insurance.” Id. at 578. The district court granted the motion,

and the Third Circuit affirmed after concluding that the two cases had the “same

factual predicate.” Id. at 580. While Freeman bears similarities to this case, it

differs in one material respect. The complaint in Freeman “allege[d] that the

4
  During oral argument on Genworth’s motion to enjoin, TVPX acknowledged that it amended
this allegation after realizing it was “factually incorrect.”

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actions presently complained of (i.e. monthly breaches of contract with respect to

mortality charges) were occurring as early as 1999, which was during the

[previous] class period.” Id. Here, by contrast, there is nothing in the record to

indicate that Genworth engaged in the same offending conduct during the McBride

class period. Freeman is therefore inapposite.

       Because the record is not sufficient to support a finding that Genworth’s

COI-related practices have remained unchanged since the McBride action, the

District Court abused its discretion in so finding.5 Where the record at the

pleading stage was insufficient to determine whether a prior action bars a current

complaint under res judicata, we have remanded to the district court for further

factual development. See Concordia v. Bendekovic, 693 F.2d 1073, 1074, 1076

(11th Cir. 1982) (vacating and remanding “[i]n view of the insufficiency of the

record” on whether, in the previous action, an issue was “actually litigated” and

whether final judgment was rendered); Baloco ex rel. Tapia v. Drummond Co., 640
F.3d 1338, 1351 (11th Cir. 2011) (reversing and remanding for “further

factual development as to the scope, if any, of the [plaintiffs’] involvement in” the

5
  Genworth says that even if the District Court abused its discretion in concluding that TVPX’s
claims were barred under the doctrine of res judicata, we may nevertheless affirm under the
doctrine of release. Br. of Appellee/Cross-Appellant at 16. Even assuming a class settlement
can independently foreclose a subsequent action under the doctrine of release, Genworth
recognizes that the key question is whether the prior release and the new complaint arise from an
“identical factual predicate.” Id. at 18. The existing record does not allow us to make that
determination.

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prior litigation). Consistent with our past practice, we remand to the District Court

for limited discovery on whether Genworth has in any way changed how it

calculates and charges COI since the McBride settlement. 6

    B. Pre-Settlement Policy Administration

       Finally, we address TVPX’s argument that the PSPA expressly reserved its

claims by requiring Genworth to “administer a Class Member’s Class Policy in

accordance with the terms of such policy.” TVPX’s reading of this clause—as

preserving a class member’s right to sue Genworth for any alleged breach of its

universal life policy—is a strained one. We conclude instead that the PSPA

merely preserves Genworth’s right to administer its policies in the same manner as

it had before the McBride settlement.

       As part of a settlement agreement, a party may expressly reserve the right to

sue on a particular claim in the future. Cf. Norfolk S. Corp. v. Chevron, U.S.A.,

Inc., 371 F.3d 1285, 1290 (11th Cir. 2004). In determining whether such a

6
  Genworth claims TVPX failed to preserve its argument that discovery was needed before the
District Court could find that Genworth’s COI-related conduct had remained unchanged. This
argument fails for at least a couple of reasons. During oral argument before the District Court on
Genworth’s motion to enforce, TVPX said that any finding on whether Genworth was handling
COI charges in the same manner now as they did before was “at worst . . . a factual dispute . . .
that cannot be decided on the pleadings.” Nor are we persuaded by Genworth’s argument that
remand is unwarranted because TVPX did not formally move for discovery in the District Court.
Res judicata is an affirmative defense under Federal Rule of Civil Procedure 8. Concordia, 693
F.2d at 1075. The burden to seek discovery on this topic therefore would have been on
Genworth, as the moving party, rather than TVPX. See In re Piper Aircraft Corp., 244 F.3d
1289, 1296 (11th Cir. 2001) (“At all times the burden is on the party asserting res
judicata . . . .”).

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reservation has been made, we interpret the settlement agreement according to

traditional principles of contract law. Id. at 1289–90. Here, the McBride parties

agreed that their settlement would be interpreted under Virginia law. Under

Virginia rules of contract interpretation, contract terms are read in context, see

Babcock & Wilcox Co. v. Areva NP, Inc., 788 S.E.2d 237, 244 (Va. 2016), and

courts must attempt to give effect to the entire contract, see Condo. Servs., Inc. v.

First Owners’ Ass’n of Forty Six Hundred Condo., Inc., 709 S.E.2d 163, 170 (Va.

2011).

      TVPX’s proposed construction of the PSPA violates these basic principles

of contract interpretation. If, as TVPX claims, the PSPA reserves a class

member’s right to sue Genworth for any alleged policy violation, the PSPA would

render much of the McBride release inoperable. Under TVPX’s interpretation,

class members could sue Genworth for the precise policy violations at issue in

McBride, so long as those alleged violations continued beyond the date of the

McBride settlement agreement. This is directly at odds with the settlement’s

release of all “past, present and future” causes of action related to Genworth’s

administration of its policies.

      Beyond that, TVPX reads the phrase, “in accordance with the terms of such

policy,” out of context. The PSPA provides that Genworth will “administer a

Class Member’s Class Policy in the same manner that [it] administered flexible

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premium adjustable life insurance policies prior to the settlement.” This means,

“[i]n particular,” that Genworth will “administer a Class Member’s Class Policy in

accordance with the terms of such policy and in accordance with [Genworth]’s

interpretation of that policy’s provisions, such that the policy will stay in force

only so long as the Class Policy’s cash value . . . is sufficient to cover the monthly

deductions . . . , and that a Class Member may have to pay [higher or more

frequent] premiums” than “the Class Member was paying or expected to pay in

order to keep his/her Class Policy from lapsing.”

      To the extent the PSPA says Genworth will administer policies “in

accordance with the terms of such policy,” the rest of the PSPA makes clear that

those “terms” refer to Genworth’s right to continue charging monthly deductions

and to lapse a policy if the policyholder does not cover the monthly deductions.

Whether Genworth was permitted to impose monthly deductions on its

policyholders (and whether the failure to pay those deductions would result in the

cancellation of a policy) was a central dispute in McBride, and the PSPA appears

to resolve it in Genworth’s favor. When read in its entirety, therefore, the PSPA

does not constitute a preservation of rights, but instead clarifies that Genworth may

continue administering its policies in the same manner that it did before the

settlement.

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               Case: 19-11178        Date Filed: 05/26/2020       Page: 21 of 21

                                               IV.

       For these reasons, we VACATE the District Court’s order enjoining

TVPX’s complaint. We REMAND for further factual development of whether

Genworth has in any way altered how it calculates or charges COI since the

McBride settlement. 7

7
  We do not reach Genworth’s argument on cross-appeal that the District Court erred in denying
its motion for leave to file a counterclaim. Genworth’s proposed counterclaim alleges that
TVPX breached the McBride settlement’s covenant not to sue for released conduct. As
damages, Genworth seeks attorney’s fees and costs incurred in defending against TVPX’s
claims. The District Court held that Genworth’s claim would be futile under Virginia law, which
does not allow the recovery of attorney fees absent express statutory or contractual grant, neither
of which exists here. But it matters not whether Genworth would be entitled to damages if it
cannot first demonstrate that TVPX violated the covenant not to sue for released conduct.
Because we cannot determine, on this record, whether TVPX’s claims are premised on released
conduct, we need not now decide whether Genworth’s counterclaim is futile under Virginia law.
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