Court Opinion

ID: 3002658
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:32:04.294642+00
Date Added: 2024-06-11T11:45:50.444251
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit

Nos. 08-1734 and 08-2377

JOHN R. M ALONE, JR., as Trustee of
the Gordon L. Beeler Irrevocable Trust,

                                                  Plaintiff-Appellant,
                                   v.

R ELIAS TAR L IFE INSURANCE C O . and
AXA E QUITABLE L IFE INSURANCE C O .,

                                               Defendants-Appellees.

              Appeals from the United States District Court
        for the Northern District of Indiana, South Bend Division.
                  No. 05 C 660—William C. Lee, Judge.1

      A RGUED O CTOBER 27, 2008—D ECIDED M ARCH 12, 2009

    Before K ANNE, W ILLIAMS, and S YKES, Circuit Judges.
  K ANNE, Circuit Judge. This is a case about death. To be
entitled to the death benefit payable under a life insur-

1
  Judge Allen Sharp, who presided during the jury trial in this
case, was later replaced in post-trial proceedings by Judge
William C. Lee.
2                                 Nos. 08-1734 and 08-2377

ance policy, a beneficiary must prove that the insured is
actually, or, in the alternative, perhaps only legally, dead.
There is a difference between the two. As is often the
case in the law, words and concepts so familiar in every-
day life assume esoteric identities when cloaked in legal
rhetoric. It should come as no surprise, then, that not
even death, perhaps the most sobering and forthright
fact in life, is immune from legal definition.
  A life insurance beneficiary may prove an insured’s
death in two ways. One avenue is for the beneficiary to
utilize direct or circumstantial evidence to prove, by a
preponderance of the evidence, that an insured is, in fact,
dead. In lieu of proving actual death, however, a benefi-
ciary may seek to prove death by means of a legal pre-
sumption. In other words, although the insured may, as a
matter of fact, be alive, in certain circumstances the law
permits one to presume he is dead. The mechanics of
this presumption are at the center of this case. For
the reasons that follow, we conclude that the district
court incorrectly instructed the jury and employed a
flawed special verdict form. Taken together, these
errors were prejudicial. We remand for a new trial.

                     I. B ACKGROUND
  Gordon Beeler, a husband, father, and businessman,
disappeared on January 31, 1998. At the time of his disap-
pearance, Beeler left behind a wife of almost thirty years,
Kathy; four living children, ranging in ages from twelve to
twenty-two; and a business partner, John Martin. None of
these individuals has seen or heard from Beeler since that
Nos. 08-1734 and 08-2377                                     3

day in 1998. Beeler was fifty-one years old at the time he
disappeared.
   Beeler had obtained no fewer than six different life
insurance policies, three of which are at issue in this
case. AXA Equitable Life Insurance Company 2 issued the
first policy to Gordon Beeler on September 20, 1991. The
policy carries a death benefit of $500,000. ReliaStar Life
Insurance Company 3 issued the other two disputed
policies. Beeler obtained the first, which carries a death
benefit of $600,000, on December 9, 1991. He took out the
second shortly thereafter, on January 29, 1992. The death
benefit of the second policy is $1.5 million. Added together,
these three policies are to pay a total of $2.6 million to
the named beneficiary upon the death of Gordon Beeler.
In November 1999, Kathy Beeler transferred ownership
of these policies to the Gordon L. Beeler Irrevocable
Trust, dated May 26, 1999 (“Beeler Trust”).
  Each of the three policies originally named Kathy Beeler
as the sole beneficiary. At the same time that she trans-
ferred policy ownership, however, Kathy Beeler also
amended the policies to name the Beeler Trust as benefi-
ciary. John Malone, Beeler’s former business partner,

2
  At the time it issued Policy 41-233-834, one policy at issue,
AXA Equitable Life Insurance Company was operating
under the name of Equitable Variable Life Insurance Company.
3
  At the time it issued Policies 7-011-915 and 7-014-919, two
policies at issue, ReliaStar Life Insurance Company was operat-
ing under the name of Northwestern National Life Insurance
Company.
4                                    Nos. 08-1734 and 08-2377

serves as trustee for the Beeler Trust; it is in the role of
trustee that Malone brought this action. Kathy Beeler and
the Beeler children are the Beeler Trust’s beneficiaries.
  The Beeler Trust first sought payment of death benefits
under the AXA policy in a claim filed in November 2003,4
which AXA denied the following February. In January
2004, the Beeler Trust filed similar claims for payment
on the two ReliaStar policies; ReliaStar denied these
claims in correspondence dated March 30, 2004. Both
companies noted that seven years had not yet passed,
which was the time required for the common law pre-
sumption of death to take effect in Indiana.
  In February 2005, the Beeler Trust submitted renewed
death claims to both AXA and ReliaStar. In separate
correspondence mailed in April, both companies declined
to pay the benefits under their respective policies. The

4
  As we referenced in the opening stanza of this opinion, death
can have many meanings under the law. For probate purposes,
Indiana law presumes a person to be dead after only a five-
year absence. See Ind. Code § 29-2-5-1. Accordingly, in July 2003,
Kathy Beeler filed an affidavit with the St. Joseph Probate
Court requesting that the court admit Beeler’s will to probate.
The court granted this request and declared Gordon Beeler
deceased in an order issued August 11, 2003. The State
of Indiana issued a death certificate that same day. Counter-
intuitive as it may be, these probate proceedings have no
effect on the matter presented to us, which concerns Indiana’s
common law presumption of death, not the state’s probate
law. See Prudential Ins. Co. of Am. v. Moore, 149 N.E. 718, 722
(Ind. 1925).
Nos. 08-1734 and 08-2377                                   5

insurance companies cited evidence they had obtained
suggesting that Beeler was either still alive or had not
died at the time of his disappearance.
  Eight months later, in October, the Beeler Trust filed a
complaint in Indiana’s St. Joseph Superior Court, alleging
that AXA and ReliaStar had breached their respective
contracts and seeking payment of the death benefits
payable thereunder. The defendants promptly removed
the case to the South Bend Division of the Northern
District of Indiana. In June 2006, the Beeler Trust filed
an amended complaint in the federal court, in which it
added a claim for punitive damages, alleging that the
companies had made unfounded refusals to pay death
benefits and had deceived the Beeler Trust, thereby
violating the insurance companies’ duties of good faith
and fair dealing. In an order dated March 21, 2007, the
district court granted summary judgment in favor of the
insurance companies on the plaintiff’s punitive damages
claims, leaving only the breach of contract claims for trial.
  At a jury trial held from May 21 to May 29, 2007, the
Beeler Trust presented evidence to demonstrate Beeler’s
death. The plaintiff showed that Beeler had been missing
since the day of his disappearance nine years earlier in
1998. The family, the authorities, and the life insurance
companies had conducted numerous fruitless investiga-
tions in an effort to locate Beeler. Beeler’s last known
communication was a letter to Kathy dated January 31,
1998, and postmarked in Key West, Florida. In the letter,
Beeler informed his wife of many arrangements he had
made to provide financial security for both Kathy and
6                                Nos. 08-1734 and 08-2377

their children long into the future. Finally, none of
Beeler’s family or friends had any communication with
Beeler since his disappearance.
  The insurance companies argued that Beeler could not
be presumed dead; they claimed that he had left simply
to extricate himself from an increasingly troublesome
family situation. They presented evidence that Beeler’s
last years with his family were far from idyllic. He
engaged in an extramarital affair. He grew distant from
his family and was often absent from family gatherings.
His marriage with Kathy became strained. He spent long
periods of time living away from the family’s primary
home in Granger, Indiana, often staying in hotels or
escaping by himself to their vacation house in Marco
Island, Florida. Near the conclusion of 1997, Beeler
leased an apartment in nearby South Bend, Indiana. In
early 1998, Kathy Beeler filed an action in state court
seeking a formal separation from her husband and a
temporary restraining order to keep him away from the
family’s home. Following a hearing on January 28, the
court granted both requests. Kathy spoke with her hus-
band on the telephone three days later, on the morning
of January 31. She never spoke with him again.
  The insurance companies also presented witnesses
who testified that they had seen Beeler since 1998. Several
witnesses testified that they had encountered Beeler in
the months following his disappearance. A friend of the
Beeler family stated that she had seen Beeler in the India-
napolis airport as late as May 2004.
  As the trial neared conclusion, the plaintiff entered
objections to both Jury Instruction 22 and the court’s
Nos. 08-1734 and 08-2377                                        7

proposed special verdict form. We will discuss the con-
tents of both the jury instruction and the verdict form in
the analysis that follows. These two objections, both
denied by the district court, form the primary basis for
the claims raised by the appellant, the Beeler Trust, on
appeal. Following deliberations, the jury returned a
verdict in favor of the defendants. Pursuant to the ques-
tions posed in the special verdict form, the jury found,
specifically, that the plaintiff had not established the
elements necessary to raise the presumption of death.
   On February 26, 2008, the district court denied the Beeler
Trust’s Renewed Motion for Judgment as a Matter of Law,
or, In the Alternative, For New Trial. The court subse-
quently denied the Beeler Trust’s motion to reconsider
its February 26 order, as well as its request to certify to the
Indiana Supreme Court the question of whether Jury
Instruction 22 and the special verdict form accurately
stated Indiana’s common law presumption of death.5

                         II. A NALYSIS
  The Beeler Trust appeals the district court’s summary
judgment order on the punitive damages claims, the
court’s formulation of Jury Instruction 22 and the special
verdict form, and the court’s denial of its motion for a

5
  Our decision on the merits of the Beeler Trust’s request for a
new trial makes it unnecessary to certify questions to the
Indiana Supreme Court. We therefore affirm the district
court’s order denying the Beeler Trust’s motion for certification.
8                                  Nos. 08-1734 and 08-2377

new trial. We turn first to its death benefits claims, which
encompass appellant’s arguments regarding Instruction
22 and the special verdict form, as well as the motion for
a new trial. We then briefly discuss the punitive damages
claims.

    A. The Death Benefits Claims
  On appeal, the Beeler Trust argues that errors in both
the jury instructions and the special verdict form preju-
diced the trial’s outcome. We agree. As we discuss
below, these errors, standing alone, would not merit a
new trial. Taken together, however, they prevented the
jury from considering one of the two ways in which the
plaintiff could prove Gordon Beeler’s death. For that
reason, a new trial is required.
  In the state of Indiana, a claimant seeking to prove an
insured’s death may pursue two separate avenues of
proof. Under the first, a claimant may use direct or cir-
cumstantial evidence to prove by a preponderance of the
evidence that the insured is, in fact, dead. Under the
second, a claimant may seek to prove death by means of
a common law presumption. Indiana law dictates that a
person is presumed dead if the following conditions are
met: first, that the individual has been “inexplicably
absent” for a continuous period of seven years; second,
that the individual has not communicated with those
persons who would be most likely to hear from him; and
third, that the missing individual cannot be found “despite
diligent inquiry and search.” Roberts v. Wabash Life Ins. Co.,
Nos. 08-1734 and 08-2377                                      9

410 N.E.2d 1377, 1382 (Ind. Ct. App. 1980). Once raised,
however, the presumption of death may be rebutted “ ‘by
proof of facts and circumstances inconsistent with, and
sufficient to overcome, such presumption.’ ” Id. (quoting
Equitable Life Assur. Soc. of the U.S. v. James, 127 N.E. 11, 12
(Ind. App. 1920)). It is for the jury to conclude whether
the presumption has been sufficiently rebutted. Equitable
Life, 127 N.E. at 12.
   The nature of the errors alleged in this case makes
critical the order of operations relative to the presumption.
We must determine whether facts tending to disprove
death prevent the presumption from ever arising in the
first instance, or whether they serve only to rebut the
presumption once it has arisen. In the vast majority of
cases, such a minute distinction would make no differ-
ence. The ultimate inquiry, after all, is simply whether,
after the evidence is in, the presumption of death survives.
And if the presumption does not survive, rarely does
one care about the cause of its demise—either because
it never arose or because it arose but was then rebutted.
We turn first to the source of the confusion: the use by
Indiana courts of the term “inexplicably absent” as a
prerequisite to raise, in the first instance, the common
law presumption of death.

  1.   Interpreting “Inexplicably Absent” and Jury Instruc-
       tion 22
  As stated above, under black-letter Indiana law, a
party seeking to raise the presumption of an individual’s
death must show that the individual has been “inexplica-
10                                 Nos. 08-1734 and 08-2377

bly absent” for a period of seven years. Roberts, 410
N.E.2d at 1382. The meaning of “inexplicably absent,”
however, is far from black-letter, and its proper inter-
pretation, which the district court attempted to define
in Jury Instruction 22, is at the center of this dispute.
   The distinction, as we alluded to earlier, is one of timing.
If a party contesting an individual’s death has evidence
that tends to show that the individual is still living, does
that evidence prevent the presumption from ever
arising because the individual’s absence is not “inexplica-
ble”? Or, alternatively, does the presumption arise from
the individual’s mere absence and lack of tidings, with
such explanatory evidence saved for purposes of rebuttal?
The district court, in Jury Instruction 22, embraced the
former procedure, which we now find to have been in
error.
  The purpose of Jury Instruction 22 was to explain to
the jury the ways in which the plaintiff could prove
Gordon Beeler’s death. It went into great detail about the
presumption process, including the prerequisites for
raising the presumption in the first instance. It stated,
correctly, that the person must be “inexplicably absent” for
a continuous period of seven years. The district court then
attempted to define “inexplicably absent.” At the request
of defense counsel, and over the objection of the plaintiff,
the court added the following definition: “As used in these
instructions, the phrase ‘inexplicably absent’ means that
his absence is unexplained by circumstances other
than those suggesting death.”
  We review de novo whether jury instructions contain
fair and accurate summaries of the law. Calhoun v. Ramsey,
Nos. 08-1734 and 08-2377                                   11

408 F.3d 375, 379 (7th Cir. 2005). Reversal is only appro-
priate, however, if the instructions failed to adequately
state the law and the error likely misled or confused the
jury, thereby prejudicing the appellant. Gile v. United
Airlines, Inc., 213 F.3d 365, 374-75 (7th Cir. 2000); see also
Schobert v. Ill. Dep’t of Transp., 304 F.3d 725, 730 (7th Cir.
2002). An erroneous jury instruction is not prejudicial
unless, “considering the instructions as a whole, along
with all of the evidence and arguments, the jury was
misinformed about the applicable law.” Susan Wakeen
Doll Co. v. Ashton-Drake Galleries, 272 F.3d 441, 452 (7th
Cir. 2001).
  Keeping these tenets in mind, we turn now to the first
question at hand: whether, under Indiana law, “inexplica-
bly absent” means an absence “unexplained by circum-
stances other than those suggesting death.” We con-
clude that it does not.
  Early Indiana cases provided no support for the use of
“inexplicably absent.” In Baugh v. Boles, 66 Ind. 376 (Ind.
1879), an Indiana Supreme Court decision that dealt
peripherally with this issue, the court said:
    It has long been an accepted rule of law . . . that where
    a person has left his usual place of abode, and no
    intelligence concerning him has been received by his
    relatives, or by those who would probably hear from
    him, if living, after the lapse of seven years . . . such
    person would be presumed to be dead.
Id. at 384. The court made no mention of an inexplicable
absence.
12                                 Nos. 08-1734 and 08-2377

  The phrase is also conspicuously absent from several
subsequent decisions by Indiana’s intermediate ap-
pellate court. In Metropolitan Life Insurance Co. v. Lyons, 98
N.E. 824 (Ind. App. 1912), the court stated that the pre-
sumption of death arose from an “unexplained absence” of
seven years. Id. at 825. But there is a marked difference
between an absence that is “inexplicable,” i.e., incapable of
explanation, and one that is merely “unexplained.” The
defendants quote repeatedly from Lyons the passage
that reads: “If the person alleged to be dead has been
absent from his home for seven years, a presumption
of death may arise; but proof of absence alone will not give
rise to this presumption.” Id. (emphasis added). Yet, in
so doing, the defendants fail to note the sentence that
follows:
     If, in addition to the absence of such person for the
     required time, it is shown that he left for a tempo-
     rary purpose of business or pleasure, and that he
     had not returned, and that those most likely to hear
     from him have received no word or tidings from
     him, the presumption of death arises, after an
     absence of seven years.
Id. at 825-26. In other words, the court simply enunciated
the remaining prerequisites for the presumption to arise,
see Roberts, 410 N.E.2d at 1382, which remain uncon-
tested by either party. It is clear that the “something
more” required by Lyons was not an inexplicable absence.
  The Indiana appellate court addressed this question
directly in Equitable Life Assurance Society of the United
States v. James, 127 N.E. 11 (Ind. App. 1920). In that case,
Nos. 08-1734 and 08-2377                                 13

in which a man was suspected of forgery and was sup-
posedly seen by two witnesses following the date of his
disappearance, the insurance company argued that “there
[was] no state of facts from which such a presumption
could have arisen; that such a presumption arises
only from an unexplained absence; and that where the
absence is explained, or the person has been seen during
the period of his absence, the presumption does not
arise.” Id. at 12. The court disagreed. It held that the
common law presumption arises “after a continuous
absence for a period of seven years, of one who left his
home for a temporary purpose, and from whom no
tidings have been received.” Id. Explanation for the
absence, said the court, was rebuttal evidence. Id. The
court found that the plaintiff’s evidence was sufficient
to raise the presumption, and that the explanatory evi-
dence of the individual’s absence was available only
for rebuttal. Id.
   Perhaps most persuasive are the facts from Roberts v.
Wabash Life Insurance Co., 410 N.E.2d 1377 (Ind. Ct. App.
1980), the case in which an Indiana court first used the
“inexplicably absent” language. Id. at 1382. In Roberts,
firefighters discovered a dead body while extinguishing
a fire in a barn owned by Clarence Roberts. Id. at 1379.
The charred remains were initially thought to be those
of Roberts himself. See id. Further investigation, however,
suggested that the body was not Roberts. See id. at 1380-81.
In fact, the evidence indicated that Roberts might have
killed a man and then burned the body in the barn in
an effort to fake his own death, with the intent of
avoiding creditors and potential charges of fraud. Id. at
14                                  Nos. 08-1734 and 08-2377

1383. His wife, claiming Roberts to be dead or presumed
dead, contested the insurance company’s refusal to pay
on Roberts’s life insurance policies. Id. at 1381-82.
  Using language notably similar to that found in Jury
Instruction 22, the trial court in Roberts concluded that
the presumption of death had never arisen because Rob-
erts’s disappearance was “explainable by a reasonable
hypothesis other than his death.” Id. at 1383. The Indi-
ana Court of Appeals disagreed. After stating that a
prerequisite to raising the presumption of death was an
“inexplicabl[e]” absence of seven years, id. at 1382, the
court found that requirement satisfied, stating that the
plaintiffs had “introduced evidence of the basic facts
which gave rise to the presumption of death,” id. at 1383.
It reached this conclusion despite evidence of murder,
arson, fraud, and financial ruin, all of which clearly
made Roberts’s disappearance anything but “inexpli-
cable,” at least in the literal sense of the word. But the
court looked to that evidence only to rebut the presump-
tion once it was raised, not to prevent it from ever aris-
ing. Thus, the Indiana appellate court’s application of the
“inexplicably absent” standard has differed from
the phrase’s common meaning since the first day of the
standard’s existence.
  Indeed, adopting the definition of “inexplicably absent”
found in Jury Instruction 22 would effectively eliminate
the presumption of death. The purpose of the presump-
tion is to provide relief to those who might not be able to
prove a person’s death with direct or circumstantial
evidence. See Green v. Shalala, 51 F.3d 96, 100 (7th Cir. 1995).
Nos. 08-1734 and 08-2377                                   15

If, to raise the presumption, a party were required to
prove that an individual’s absence was, as the district
court stated, “unexplained by circumstances other than
those suggesting death,” then the presumption would
no longer be necessary: armed with such evidence, the
party would likely be able to prove the individual’s death-
in-fact. The result would be that no party actually
needing the presumption would be able to raise it. See
Green, 51 F.3d at 100 (noting that such a high standard
“places an untenable burden on the claimant to disprove
every possible explanation for the missing person’s ab-
sence”). Although the Indiana Supreme Court has not
addressed this issue, the Wisconsin Supreme Court has
recognized this problem when discussing its own
state’s presumption of death:
    [T]he rule is satisfied by a lack of intelligence or
    tidings for seven years, even if a reason for the
    absence is shown. Were it otherwise the presump-
    tion would never attach where any reason for
    leaving is given, and, in such case, no recovery
    could ever be had except upon proof of actual
    death.
Ewing v. Metro. Life Ins. Co., 210 N.W. 819, 820 (Wis. 1926).
  We conclude, based on our analysis of Indiana law, that
the Roberts requirement of an inexplicable absence for
the common law presumption of death to arise is, at
worst, the result of inartful drafting or, at best, a term of
art with a far different interpretation than its common
meaning. Because the Roberts court cited the Equitable
Life decision as support for its test, see 410 N.E.2d at 1382,
we look to both of those decisions to reach what we feel
16                                 Nos. 08-1734 and 08-2377

is the appropriate interpretation of Indiana law on this
point. Under this interpretation, the common law pre-
sumption of death arises if the party seeking to prove a
person’s death presents evidence demonstrating (1) that
person’s continued absence for a period of seven years;
(2) that person’s failure to communicate with those indi-
viduals who would be most likely to hear from him; and
(3) the inability to find that person, despite diligent
inquiry and search. Cf. Roberts, 410 N.E. at 1382; Equitable
Life, 127 N.E. at 12. Evidence offered to explain an individ-
ual’s absence goes toward the rebuttal of the presump-
tion, not to prevent the presumption from first arising.
Equitable Life, 127 N.E. at 12.6
  Given such an interpretation, the definition contained
in Jury Instruction 22 was an incorrect statement of law. To
raise the presumption, a party need not show that an
individual’s absence “is unexplained by circumstances
other than those suggesting death.” As we mentioned
previously, however, such an error, by itself, does not
merit a new trial. A party must show prejudice as well.
Schobert, 304 F.3d at 730.
  In almost every situation, the timing issue that we
have just calibrated would make no difference in the
outcome of a trial. What matters, obviously, is whether
the presumption of death exists at the end of the in-

6
   Such an interpretation of the Roberts test brings Indiana in
line with the approach adopted by the Seventh Circuit in an
analogous situation. See Green, 51 F.3d at 100-01 (interpreting
the presumption of death in the context of Title II of the
Social Security Act).
Nos. 08-1734 and 08-2377                                17

quiry. Whether it was terminated because it never
first arose, or whether it arose but was eliminated by
rebuttal evidence should make no difference. Turning to
this case, it would generally be irrelevant why the jury
concluded that the presumption of death was inap-
plicable and did not entitle the Beeler Trust to relief.
What made it important here, however, and what ulti-
mately prejudiced the plaintiff, was the interplay of the
error in Jury Instruction 22 with a second error in the
jury’s special verdict form. We turn our discussion
now to this second error.

 2.   The Two Avenues of Proving Beeler’s Death and the
      Special Verdict Form
  Federal Rule of Civil Procedure 49 permits a court to
submit to the jury either a general or special verdict
form. A special verdict form requires the jury to return
specific findings on issues of disputed fact raised by the
parties during trial. Fed. R. Civ. P. 49(a). In the special
verdict form, the court must present to the jury “all
material issues raised by the pleadings and evidence.”
U.S. Fire Ins. Co. v. Pressed Steel Tank Co., 852 F.2d 313,
318 (7th Cir. 1988). We review a district court’s formula-
tion of questions on a special verdict form for an abuse
of discretion. Id. at 316.
  The special verdict form at issue here was significantly
flawed. It posed a series of three questions. A short para-
graph after each question instructed the jury how to
proceed based upon its answer to the preceding question.
18                               Nos. 08-1734 and 08-2377

  The first question listed the elements necessary to
raise the presumption of death and asked the jury to
determine whether the Beeler Trust had proven these
elements by a preponderance of the evidence. If the
jury answered no, meaning that the claimant had failed
to raise the presumption of death, the form instructed
the jury not to consider the remaining two questions.
According to the special verdict form, such a response
ended the jury’s inquiry: the defendants had prevailed.
   If the jury found that the Beeler Trust had successfully
raised the presumption of death under Question 1, the
form instructed the jury to proceed to Question 2. The
second question asked whether the defendants had
presented evidence sufficient to rebut the presumption.
If the jury found insufficient evidence to rebut the pre-
sumption, the special verdict form again instructed the
jury that its inquiry was over. The result, however, was
now different: an unrebutted presumption of death
meant that the plaintiff had won.
  Recall now the two evidentiary avenues available to
prove death. In addition to proving death by means of a
legal presumption, claimants may also prove death the
more traditional way: by direct or circumstantial evidence
of the ultimate fact of the insured’s death. According to
the verdict form’s instructions, if the jury determined,
under Question 2, that the defendants had rebutted the
presumption—meaning that the plaintiff had failed to
prove death using the presumption avenue—the jury
was to proceed to the final question. There, the court
asked the jury to decide whether the plaintiff, using
Nos. 08-1734 and 08-2377                                       19

direct or circumstantial evidence, had proven by a pre-
ponderance of the evidence that Gordon Beeler was in
fact dead.
  We find the problem with the special verdict form in
the instructions that follow Question 1. The jury answered
Question 1 in the negative, meaning that it concluded
that the Beeler Trust had failed to meet the elements
necessary to raise the presumption of death. The jury then
did as the form instructed and ended its deliberations. It
never considered Question 3, which asked the jury to
consider whether the plaintiff had proven death by the
alternative path, through direct and circumstantial evi-
dence of death-in-fact. Because the jury should have
considered whether the plaintiff had satisfied this alter-
native means of proof, the erroneous instruction
following Question 1 was a legal error that constituted
an abuse of the district court’s discretion.
  The district court’s confusion on this point is under-
standable. In Roberts, the court found that the plaintiff
had introduced the basic facts necessary to give rise to
the presumption of death, which the defendant had
subsequently rebutted. 410 N.E. at 1383-84. Once the
presumption was rebutted, the court said that the
plaintiffs “were then obligated to prove, by direct and
circumstantial evidence and the reasonable inferences to
be drawn therefrom, the ultimate fact of Clarence Rob-
erts’ death.” Id. at 1384. In the facts of Roberts, therefore, the
presumption was rebutted, which triggered consideration
of the alternative avenue of proof. But it would be illogical
to require those same facts in every case.
20                                 Nos. 08-1734 and 08-2377

  It would make no sense to conclude that the alternative
avenue of direct and circumstantial evidence can be
considered only when the presumption dies by rebuttal.
There is no reason to distinguish those cases where the
plaintiff fails to assert facts sufficient to give rise to the
presumption in the first instance from those where the
presumption arises but is later rebutted. What matters,
as we mentioned above, is the question of the presump-
tion’s ultimate survival. If the presumption does not
survive, the reason for its demise should make no dif-
ference to whether a jury must consider the alternative
question of direct and circumstantial proof of death.
Here, however, because of the special verdict form’s
construction, the trial’s outcome potentially hinged on
that improper distinction.
  Defendants advance arguments of waiver. They claim
that the Beeler Trust rested its entire case on the presump-
tion of death, that it never presented any evidence to
prove Beeler’s actual death, and that the lawyers never
made any arguments to the jury under this alternative
means of proof. See Fed. R. Civ. P. 49(a)(3). We need not
decide here whether waiver of one avenue of proof in
these situations is possible; for even if waiver were possi-
ble, the plaintiff did not do so here. Furthermore, the
court clearly intended to allow the jury to consider both
means of proof; having made that decision, the court was
then obligated to present to the jury an accurate state-
ment of the law in its instructions and verdict form.
  Indiana courts have recognized that the same facts that
one must prove to raise the presumption of death also
Nos. 08-1734 and 08-2377                                    21

serve as circumstantial evidence of death-in-fact. See
Roberts, 410 N.E.2d at 1383 (“[T]he lengthy disappearance
of Clarence Roberts, his failure to communicate with
friends and family, and the fruitless search for Roberts
amounted to circumstantial evidence of death . . . .”). The
intermediate appellate court gave a more thorough
review of this idea in Lyons:
    “Any facts or circumstances relating to the charac-
    ter, habits, conditions, affections, attachments,
    prosperity, and objects in life, which usually
    control the conduct of men, and are the motives of
    their actions, are competent evidence from which
    may be inferred the death of one absent and un-
    heard from, whatever has been the duration of
    such absence. A rule excluding such evidence
    would ignore the motives which prompt human
    actions, and forbid inquiry into them in order to
    explain the conduct of men.”
98 N.E. at 826 (quoting Tisdale v. Conn. Mut. Life Ins. Co., 26
Iowa 170, 176 (Iowa 1868)). Clearly, then, the plaintiff in
this case, by virtue of the evidence it advanced to demon-
strate the presumption of death, also presented circum-
stantial evidence that would allow the jury to infer that
Gordon Beeler was actually dead. Thus, we reject the
defendants’ arguments that the plaintiff presented no
circumstantial evidence of death-in-fact and was there-
fore barred from presenting that question to the jury.
  A review of the trial transcripts also demonstrates the
plaintiff’s cognizance of this alternative means of proof,
as well as the court’s willingness to permit the jury to
consider the death-in-fact question. In the instructions
22                                 Nos. 08-1734 and 08-2377

conference, plaintiff’s counsel requested a change to
Jury Instruction 22, noting that “if we don’t convince
the jury that the presumption applies, we can still prevail
in the case if the jury concludes that even without the
presumption the facts support their concluding that he
is dead as a matter of fact.” The court recognized this
and adjusted the instructions accordingly.

  3. Prejudicial Effect of the Combined Errors
  Taken in isolation, neither error was prejudicial. Given a
properly constructed special verdict form, a jury would
presumably have reached the death-in-fact question,
notwithstanding the erroneous definition of “inexplicably
absent” contained in Jury Instruction 22. As we have
discussed, Instruction 22 made the timing of the presump-
tion procedure important; but if both Question 1 and
Question 2 directed the jury to consider Question 3, this
issue would have become irrelevant. The jury would
have considered whether the plaintiff had proven actual
death by circumstantial evidence regardless of whether
the presumption never arose or whether it arose but
was later rebutted, thereby making the incorrect defini-
tion of “inexplicably absent” harmless.
  Similarly, if Jury Instruction 22 had not contained the
erroneous definition of “inexplicably absent,” it is likely
that the error in the special verdict form would not have
been prejudicial. By moving the timing question to the
forefront of its deliberations, the erroneous definition
served to logjam the jury’s decision. It raised an
impermissibly high hurdle to raise the presumption of
Nos. 08-1734 and 08-2377                                   23

death in the first instance. Without that instruction, it is
certainly possible that the jury would have proceeded
to Question 2, which, unlike Question 1, left open the
possibility of advancing to Question 3.
  Considered together, however, these errors were any-
thing but harmless. The inaccurate statement of law
contained in Jury Instruction 22, combined with the
procedure set forth in the special verdict form, made
the mechanics of the presumption procedure para-
mount and, as a result, prevented the jury from ever
considering the plaintiff’s alternative means of proving
Beeler’s death. A new trial is required.

  B. The Punitive Damages Claim
  The Beeler Trust also appeals the district court’s grant of
summary judgment in favor of the defendants on the
Beeler Trust’s punitive damages claims. We review de
novo the district court’s decision to grant summary judg-
ment. Alexander v. Wis. Dep’t of Health & Family Servs.,
263 F.3d 673, 680 (7th Cir. 2001). Summary judgment is
appropriate when, drawing all reasonable inferences
in favor of the appellant, there remains no genuine issue
as to any material fact, thereby making judgment as a
matter of law appropriate. See Fed. R. Civ. P. 56;
Alexander, 263 F.3d at 680.
  The Indiana Supreme Court has recognized that an
insurance company’s tortious breach of its duties of good
faith and fair dealing can serve as the basis for an insured’s
punitive damages claim. See Erie Ins. Co. v. Hickman ex rel.
24                                Nos. 08-1734 and 08-2377

Smith, 622 N.E.2d 515, 519 (Ind. 1993). The court also
noted, however, that such a claim “does not arise every
time an insurance claim is erroneously denied.” Id. at 520.
A “good faith dispute” regarding the existence of a valid
claim will not permit recovery of punitive damages, even
if the insurance company is ultimately determined to
have erroneously denied payment of benefits. Id.
  As the appellant correctly notes, however, an insur-
ance provider’s duty of good faith extends beyond deci-
sions to pay or deny benefits. See Monroe Guar. Ins. Co. v.
Magwerks Corp., 829 N.E.2d 968, 976 (Ind. 2005). Indiana
courts have declined to determine the full extent of this
duty, but they have noted that a provider may not make
an unfounded refusal to pay benefits nor cause an un-
founded delay in making payment. See Erie Ins. Co., 622
N.E.2d at 519. Evidence of bad faith in refusing to
pay benefits or causing unfounded delays must demon-
strate “a state of mind reflecting dishonest purpose, moral
obliquity, furtive design, or ill will.” Magwerks Corp., 829
N.E.2d at 977 (internal quotation marks omitted).
  After reviewing the record, we conclude that this is
nothing more than a good faith dispute over coverage.
The plaintiff has not demonstrated evidence of bad faith
on the part of the insurance providers sufficient to
survive summary judgment on a claim for punitive dam-
ages.

                    III. C ONCLUSION
  For the aforementioned reasons, we A FFIRM the district
court’s grant of summary judgment in favor of the defen-
Nos. 08-1734 and 08-2377                                25

dants on the Beeler Trust’s claim for punitive damages.
However, due to the errors in Jury Instruction 22 and the
jury’s special verdict form, we V ACATE the judgment
entered by the district court at the conclusion of the jury
trial and R EMAND for a new trial. Our decision makes
certification of questions to the Indiana Supreme Court
unnecessary; thus, we A FFIRM the district court’s order
denying the Beeler Trust’s motion for certification.

                           3-12-09