Court Opinion

ID: 3063182
Source: CourtListenerOpinion
Date Created: 2015-10-14 20:57:05.778867+00
Date Added: 2024-06-11T07:38:19.830092
License: Public Domain

[DO NOT PUBLISH]

                 IN THE UNITED STATES COURT OF APPEALS

                           FOR THE ELEVENTH CIRCUIT
                                                                           FILED
                                      _____________               U.S. COURT OF APPEALS
                                                                    ELEVENTH CIRCUIT
                                       No. 08-12331                    MARCH 1, 2010
                                      _____________                      JOHN LEY
                                                                          CLERK
                      D.C. Docket No. 06-01741-CV-T-23-MAP

SUSAN KEMBERLING,
JOHN CIAMBRONE,
EDWARD KAUPLA,
as Co-Trustees of the Kemco Charitable
Trust Dated February 2, 1998,

                                           Plaintiffs-Counter-Defendants-Appellants,

                                           versus

METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT,

                                           Defendant-Counter-Claimant-Appellee.

                                      ____________

                     Appeal from the United States District Court
                         for the Middle District of Florida
                                   ____________
                                  (March 1, 2010)

Before MARCUS and HILL, Circuit Judges, and VOORHEES,* District Judge.

       *
       Honorable Richard L. Voorhees, United States District Judge for the Western District of
North Carolina, sitting by designation.
HILL, Circuit Judge:

       Sue Kemberling, John Ciambrone and Edward Kaupla, co-trustees of the

Kemco Charitable Trust dated February 2, 1998 (the “Trust”), brought this action

against MetLife Life and Annuity Company of Connecticut (“MetLife”) for breach

of contract by failure to pay the proceeds of a life insurance policy issued by

MetLife to Lee Kemberling, naming the Trust as beneficiary.1 MetLife

counterclaimed against the Trust for rescission of Kemberling’s life insurance

policy. After a trial, the jury returned a verdict for MetLife. The Trust appealed.

For the following reasons, we affirm.

                                             I.

       In 2005, Lee Kemberling was a seventy-nine-year-old successful engineer

and businessman. He was chief executive officer of Kemco Systems, Inc.

(“Kemco”), a 100-employee company in Clearwater, Florida, which he had

founded thirty years earlier. Kemberling had, however, a variety of serious

medical issues, including hypertensive cardiovascular disease, high and abnormal

cholesterol, high and abnormal triglycerides, and, high and abnormal blood

pressure.

       1
         The policy was issued by Travelers Life and Annuity Company (Travelers) to
Kemberling on April 13, 2005. MetLife acquired Travelers on July 1, 2005, and assumed all its
obligations under the policy.

                                              2
       As the bulk of Kemberling’s wealth was held in illiquid Kemco stock, his

estate planning portfolio consisted of a large percentage of life insurance, as a

means to pay estate taxes and to provide financial security for his family after his

death. However, most of these policies were second-to-die policies, leaving his

wife vulnerable should he predecease her, without adequate liquidity to maintain

her lifestyle and pay the premiums on the second-to-die policies.2 In 2004,

Kemberling’s advisors suggested additional term insurance to eliminate that

exposure.

       Kemberling consulted Wayne Weaver, an independent insurance broker

doing business as First Financial Resources, a sole proprietorship, in Clearwater,

Florida, who had previously secured life insurance policies for him. In fact, since

1997, Weaver had obtained approximately $40 million in life insurance coverage

for Kemberling, from at least seven different insurance carriers. MetLife was not

one of those carriers.

       Weaver approached at least five insurance carriers seeking to acquire $10

million in life insurance benefits on Kemberling’s life alone. Despite his multiple

health issues, he was pre-approved by MetLife for purchase of a life insurance

       2
         A second-to-die life insurance policy is a two-person life insurance policy which pays
only after both insureds have died.

                                                3
policy.3

       Upon his pre-approval, on March 10, 2005, Kemberling signed a blank

MetLife application form entitled “Part One Application for Life Insurance.” He

did not complete the form. Above Kemberling’s signature was a declaration

stating, in relevant part:

       (c) No agent is authorized: (1) to make, alter or discharge any
       contract; (2) to waive or change any condition or provision of any
       contract, application, or receipt; or (3) to accept any risk or make any
       decision concerning insurability.

       On that same day, Weaver executed a Life Producer Contract (the

“Contract”) with MetLife. In the Contract, MetLife and Weaver agreed that,

subject to the limitations in the Contract, Weaver would “act as [its] agent for the

purpose of soliciting applications for . . . [MetLife] products,” and to “collect the

first or single premiums with an application and any other premiums [MetLife]

may ask you to collect.” The Contract authorized Weaver to act as MetLife’s

“agent under applicable state insurance laws to solicit, negotiate and effect the

contracts contemplated hereunder.” Weaver submitted Kemberling’s insurance

       3
         The record is clear that MetLife’s underwriters pre-approved Kemberling based upon
their review and receipt of: a December 2004 medical questionnaire; a December 2004 EKG
stress test; a urinalysis; his blood test results; statements from Kemberling’s personal physician;
and, Kemberling’s medical records for the last ten years, which revealed his hypertension,
cardiovascular disease, cholesterol problems, and high blood pressure.

                                                 4
application to MetLife.

       Two days after submission of the application, on March 12, in response to a

newspaper ad, Kemberling drove to a church for a full body scan by Life Line

Screening, which included a screening of his carotid arteries. On March 23, 2005,

the Life Line Screening Report was delivered to Kemberling’s home by Federal

Express. The report described a “finding of possible significance” related to his

right carotid artery.

       One month later, on April 13, MetLife issued the $10 million life insurance

policy to Kemberling. The policy required an annual premium payment of

$720,000, with an initial payment of $60,000, due on the date of issuance. The

policy contained the following “Coverage Effective Date Endorsement”:

       No insurance will take effect prior to the later of the Issue Date or the
       Policy Date shown on the Policy Summary. Insurance issued will
       take effect on the later of the Issue Date or the Policy Date shown on
       the Policy Summary if, on the later of the Issue Date or the Policy
       Date, the health and other conditions relating to insurability remain
       complete and true as described in the application for this policy
       (emphasis added).

       On April 20, Weaver delivered the policy to Kemberling. One week after

that, on April 27, Kemberling had an appointment with his personal physician and

questioned him about the screening report. The physician referred him to a

specialist.

                                           5
       On May 11, Kemberling met with the specialist. Although the specialist

considered Kemberling asymptomatic of carotid disease, he recommended a

definitive ultrasound. On May 23, Kemberling had a definitive cerebrovascular

duplex scan. On July 14, the specialist informed Kemberling that he had carotid

stenosis of the right carotid artery, with a blockage ranging from 80% to 99%.

       On August 23, Kemberling informed Weaver of the carotid artery screening

and subsequent diagnosis.4 Three months later, in November , Kemberling died

from causes unrelated to his carotid artery. As Kemberling died prior to the

effective date of the policy’s two-year incontestability clause, MetLife conducted a

routine investigation into the circumstances surrounding Kemberling’s death and

the issuance of the policy.5 In July 2006, MetLife rescinded Kemberling’s policy,

denying coverage on the ground that the policy never went into effect as

Kemberling failed to disclose the Life Line Screening test. Two months later the

Trust brought this action.

       At the conclusion of the trial, the district court rejected the Trust’s request

       4
         As owner of the policy, the Trust paid MetLife a total of $675,000 in premiums from the
date the policy was issued in April 2005, to Kemberling’s death in November 2005. Of that,
some $615,000, or 90%, of these premiums were accepted by MetLife after August 2005, the
date Kemberling informed Weaver of the carotid artery screening and subsequent diagnosis.
       5
        An incontestability clause in an insurance policy prevents an insurer from revoking
coverage because of alleged misstatements by the insured after a specified period, in this case,
two years.

                                                 6
that it instruct the jury they could find that Weaver was MetLife’s actual or

apparent agent after delivery of the Policy so that his knowledge of the Life Line

Screening Test result could be imputed to MetLife, thereby effectuating coverage

under the policy. In so ruling, the court stated:

       Although an insurer has constructive knowledge of facts disclosed to
       its agent while acting within the scope of his agency, a reasonable
       jury could not have concluded from the evidence adduced at trial that
       Kemberling disclosed the pertinent information to Weaver when
       Weaver acted as MetLife’s authorized agent. Weaver’s actual
       authority to act for MetLife is defined in the Life Producer Contract,
       which authorizes Weaver to solicit applications, to submit completed
       applications to MetLife, to collect first or single premiums along with
       a policy application, and to collect such subsequent premiums as
       MetLife asks Weaver to collect. After Weaver completed the only
       acts he was authorized to perform, Weaver’s authority under the Life
       Producer Contract to act for MetLife with respect to the Kemberling
       policy ceased, and - absent some other source of actual or apparent
       authority - he reverted to the role of a broker acting solely on behalf
       of his long-time client Kemberling . . . Because the record includes no
       other evidence of Weaver’s actual or apparent authority to act for
       MetLife with respect to the Kemberling policy and no evidence that
       Weaver learned about the Life Line screening during his service as a
       soliciting agent, any information Weaver may have obtained from
       Kemberling after the issuance of the policy could not be imputed to
       MetLife.

       The district court, therefore, removed the issue of Weaver’s agency status

with MetLife from the jury’s consideration. This is the primary issue on appeal.6

       6
        The jury may have been entitled to find for the Trust on its other theory of coverage,
namely, that Kemberling had no duty to supplement the initial application. The jury found,
however, that Kemberling made a material misrepresentation to MetLife by failing to notify it of

                                               7
                                                  II.

       We review the district court’s denial of a motion for judgment as a matter of

law de novo, viewing the evidence in the light most favorable to the non-moving

party. D’Angelo v. School Bd., 497 F.3d 1203, 1208 (11th Cir. 2007). We review

the district court’s refusal to give a proposed jury instruction for abuse of

discretion. Palmer v. Bd. of Regents, 208 F.3d 969, 973 (11th Cir. 2000). Under

this deferential standard, we will reverse “if we are left with a substantial and

ineradicable doubt as to whether the jury was properly guided in its deliberations.”

Carter v. DecisionOne Corp., 122 F.3d 997, 1005 (11th Cir. 1997). The jury

charge must be considered as a whole. United States v. Starke, 62 F.3d 1374,

1381 (11th Cir. 1995). There is no requirement to submit a question to the jury

unless the evidence is of such a character that it could warrant the jury in finding a

verdict [on that question] in favor of the requesting party. Anderson v. Liberty

Lobby Inc., , 477 U.S. 242, 250-51 (1986). A district court does not abuse its

discretion in refusing to instruct the jury on an issue not properly supported by the

record. Id.

the Life Line screening or its results, and entered a verdict for MetLife on its counterclaim for
recision of the contract. We find no merit to the Trust’s appeal of the district court’s refusal to
direct a verdict for it on the duty to supplement issue. Nor do we find any merit in the claim that
the district court abused its discretion if refusing several requested jury instructions on this issue.
Nor did the district court abuse its discretion in permitting the testimony of Eugene Zimmerlink
as to industry underwriting guidelines, a topic well within his personal knowledge.

                                                   8
       Our review of the record in this case supports the district court’s ruling that

there was insufficient evidence upon which to instruct the jury that they were

entitled to find that Weaver was MetLife’s agent at the time he learned of

Kemberling’s Life Line test results. First, the record evidence is clear that Weaver

was an independent insurance agent/broker, not the general agent of MetLife. See

Amstar Ins. Co. v. Cadet, 862 So.2d 736, 739 (Fla. 3d DCA 1997).7 Weaver was

not bound by contract to work for or solicit insurance for MetLife only. Indeed,

Weaver had secured life insurance coverage from numerous other insurance

companies for Kemberling and his family over the prior seven years. Weaver

testified that he was a middleman acting in the best interests of Kemberling.

       Furthermore, the Contract between MetLife and Weaver specifically

identified Weaver as an independent contractor and not an employee of MetLife.

Weaver was not even able to directly contact MetLife, instead having to go

through his brokerage general agent, Albert Banks and a brokerage general agency

called Advanced Planning Services (“APS”). Of the hundreds of insurance

policies sold by Weaver, this was the first and only MetLife policy he sold.

Therefore, Weaver was an independent agent/broker.

       7
         Although the issue of the applicable law was never decided by the court, the parties agree
that the Florida and Wisconsin law of agency is “essentially the same” on agency and recession.

                                                9
      During the process of applying for the MetLife policy, the parties agree that

Weaver acted as MetLife’s agent. The Contract between Weaver and MetLife,

however, strictly limited Weaver’s authority to three things: the solicitation of

applications; the taking of applications; and, the collection of initial premiums.

Once these things were accomplished, the Contract specifically prohibited Weaver

from making, altering or discharging any contract of insurance; waiving or

changing any condition of any contract, application, or receipt; or accepting any

risk or making any decision concerning insurability.” MetLife, therefore,

explicitly disavowed any intention to be bound by Weaver’s actions after issuance

of the policy. The Contract gave Weaver no authority to bind MetLife or to

undertake any acts after issuance of the policy in the absence of an explicit request

by MetLife.

      In Amstar Ins. Co., the insurance application stated that the putative agent

had the “authority to solicit, receive, and transmit applications for insurance

contracts, but had “no right” to “make, alter, modify or discharge any contract or

policy issued on the basis of this application.” 862 So.2d at 740. This language

was found to put the insured on notice of the limitations on the putative agent’s

authority to act on behalf of the insurer. Id.

      This same language is found in the MetLife policy application signed by

                                          10
Kemberling. It, too, put Kemberling on notice that Weaver had no authority to act

on behalf of MetLife after the policy was issued. There was no evidence,

therefore, from which a reasonable jury could have concluded that Weaver was

either MetLife’s agent – actual or apparent – after the issuance of the policy.8

       In the absence of evidence that Weaver was some sort of agent for MetLife

after the policy issued, there is no basis for imputing Weaver’s knowledge of the

Life Line test results to MetLife. The Contract explicitly stated that Weaver could

not accept risks, make or alter policies, extend policy obligations, or incur

liabilities for MetLife. We have long ago recognized that “Florida case law

acknowledges the general principle of agency law that knowledge of, or notice to

an agent or employee is imputed to the principal [only] when it is received by the

employee within the scope of her employment, and when it is in reference to

matters over which the employee’s authority extends.” Computel, Inc. v. Emery

Air Freight Corp., 919 F.2d 678, 685 (11th Cir. 1990). As the district court held,

“[a]fter Weaver completed the only acts he was authorized to perform, Weaver’s

authority under the Life Producer contract to act for MetLife with respect to the

       8
         The Trust argues that Weaver’s provision to Kemberling of certain illustrations about
amendments to the policy after it was issued, on stationery bearing the MetLife letterhead, proves
their claim of apparent agency. The evidence is that Weaver ran these illustrations for his own
benefit and not at the request of MetLife. In fact, Weaver had to go through APS to even request
the illustrations. He could not go directly to MetLife. This evidence does not support apparent
agency.

                                               11
Kemberling policy ceased, and . . . he reverted to the role of a broker acting solely

on behalf of his long-time client Kemberling.”

      Since, one cannot bind the insurer when the insurance application makes it

clear that there is no authority to do so, the district court correctly held that there

was no evidence in the record that Weaver had any sort of authority to act for

MetLife after the policy was issued, and, therefore, information Weaver may have

obtained from Kemberling after the issuance of the policy could not be imputed to

MetLife.

      The jury found that Kemberling was obliged to tell MetLife about the

carotid artery screening and that his failure to do so entitled MetLife to rescind the

policy. We agree.

                                           III.

      We affirm the judgment of the district court in favor of MetLife and against

the Trust.

      AFFIRMED.

                                           12