Court Opinion

ID: 2804934
Source: CourtListenerOpinion
Date Created: 2015-06-02 15:05:18.082569+00
Date Added: 2024-06-11T11:27:42.600706
License: Public Domain

ATTORNEYS FOR APPELLANT                                          ATTORNEYS FOR APPELLEE
Elizabeth L. Deeley                                              Patrick J. Stueve
Kirkland & Ellis LLP                                             Bradley T. Wilders
San Francisco, California                                        Stueve Siegel Hanson LLP
                                                                 Kansas City, Missouri
Patrick F. Philbin
Kirkland & Ellis LLP                                             John J. Schirger             Jun 02 2015, 10:06 am
Washington, District of Columbia                                 Matthew W. Lytle
                                                                 Miller Schirger LLC
D. Randall Brown
                                                                 Kansas City, Missouri
Jason T. Clagg
Barnes & Thornburg LLP                                           Matthew J. Connelly
Fort Wayne, Indiana                                              Blume Connelly Jordan Stucky & Lauer LLP
                                                                 Fort Wayne, Indiana

                                                  IN THE
          COURT OF APPEALS OF INDIANA

Lincoln National Life Insurance                                  June 2, 2015
Company,                                                         Court of Appeals Cause No.
                                                                 02A04-1407-PL-319
Appellant-Defendant,

        v.                                                       Interlocutory Appeal from the Allen
                                                                 Circuit Court
                                                                 Honorable Thomas J. Felts, Judge
Peter S. Bezich, individually and on                             Case No. 02C01-0906-PL-73
behalf of a class of others similarly
situated,
Appellee-Plaintiff,

Robb, Judge.

Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015                     Page 1 of 26
                                  Case Summary and Issues
[1]   Peter Bezich filed a complaint against Lincoln National Life Insurance

      Company (“Lincoln”), alleging three separate counts of breach of contract

      regarding his variable life insurance policy. Bezich then moved to certify a class

      of policyholders on all three breach of contract claims. The trial court issued an

      order denying class certification as to Count 1 and Count 2 of Bezich’s

      complaint. However, the trial court concluded that a single-issue class may be

      certified as to Count 3 for the purpose of determining liability. Lincoln appeals,

      arguing that the trial court erred by certifying a single-issue class for Count 3.

      Bezich cross-appeals, arguing that the trial court erred by declining to certify a

      class for Count 1 and Count 2. We conclude the trial court acted within its

      discretion by certifying a single-issue class for Count 3. However, we conclude

      that Count 1 and Count 2 should have similarly been certified for class

      treatment. Therefore, we affirm in part, reverse in part, and remand.

                               Facts and Procedural History                                 1

[2]   Between 1986 and 2008, Lincoln sold a standardized variable life insurance

      policy known as an Ensemble II. Bezich purchased an Ensemble II in 1996.

      The Ensemble II works as both a life insurance policy and an investment tool.

      Amounts paid by the policyholder as premiums are credited to the policy and

      1
          We held oral argument in this case at the Indiana Statehouse in Indianapolis on April 13, 2015.

      Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015                             Page 2 of 26
      are included in the “Accumulation Value” of the policy, which is comprised of

      premiums, investment earnings, and interest. The actual insurance existing

      under the policy is called the “Net Amount at Risk,” which is the difference

      between the Accumulation Value and the policy’s assigned death benefit.

[3]   Lincoln is authorized under the contract to make monthly deductions from the

      Accumulation Value to keep the policy in force. Those monthly deductions are

      comprised of two charges: (1) a “cost of insurance” (“COI”) charge and (2) an

      administrative charge.2 The COI charge is calculated by multiplying the Net

      Amount at Risk by a COI rate. With respect to that COI rate, the Ensemble II

      states: “The monthly cost of insurance rate is based on the sex, issue age,

      policy year, and rating class of the Insured. Monthly cost of insurance rates will

      be determined by the Company based upon expectations as to future mortality

      experience.” Appellee’s Appendix at 19 (“COI rate provision”). Regarding

      administrative charges, the Ensemble II states the monthly deduction includes

      “a monthly administrative charge. This charge is equal to $6.00 per month in

      each policy year.” Id. (“administrative charge provision”).

[4]   In 2009, Bezich surrendered his Ensemble II policy and forfeited the $200,000

      death benefit the policy provided. On July 25, 2012, Bezich filed his amended

      2
        Specifically, the Ensemble II states: “Monthly Deduction – The monthly deduction for a policy month
      shall be equal to (1) plus (2), where: (1) is the cost of insurance . . . [and] (2) is a monthly administrative
      charge. This charge is equal to $6.00 per month in each policy year.” Appellee’s App. at 19.

      Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015                                 Page 3 of 26
      complaint alleging that Lincoln breached three separate provisions of the

      Ensemble II.

[5]   In Count 1, Bezich claims Lincoln breached the terms of the Ensemble II by

      including non-mortality factors in determining the COI rate charged under the

      policy. He argues that the terms “based on” and “based upon” in the COI rate

      provision limit the calculation of the COI rate to consideration of mortality

      factors only, and because Lincoln imposed COI charges that included expenses

      undisclosed in the Ensemble II, Lincoln breached the agreement.

[6]   In Count 2, Bezich claims Lincoln breached the policy by loading

      administrative fees and expenses into the COI rate. Bezich argues that the

      administrative charge provision acts as a cap on administrative expenses, and

      that the recovery of administrative expenses in excess of $6.00 per month is a

      breach of the Ensemble II.

[7]   In Count 3, Bezich claims Lincoln breached the agreement by failing to reduce

      the COI rate in response to improving mortality rates. Count 3 relies on

      contract language saying that “[m]onthly cost of insurance rates will be

      determined by the Company based upon expectations as to future mortality

      experience.” Id.

[8]   On August 27, 2012, Lincoln filed a motion to dismiss Bezich’s claims, arguing

      that unambiguous language in the Ensemble II required that Bezich’s claims be

      dismissed as a matter of law. However, the trial court denied Lincoln’s motion

      Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015      Page 4 of 26
      as to all three Counts, and in doing so, the court interpreted the relevant

      provisions corresponding to each Count of Bezich’s complaint:

           As to Count 1, the trial court found that the COI rate provision was

              ambiguous insofar as the terms “based on” / “based upon” could lead a

              reasonable person to believe the COI rate was restricted to mortality

              factors only, but that the provision could also be read to say that

              mortality factors were the primary—but not exclusive—factors to be

              considered in setting rates.

           As to Count 2, the trial court concluded that the administrative charge

              provision was an unambiguous cap on administrative expenses and that

              “an ordinary policyholder of average intelligence would not interpret this

              provision to mean that administrative fees can exceed $6.00/month or

              that these administrative fees can be tacked on to the COI rate.”

              Appellant’s Appendix at 43-44.

           As to Count 3, the trial court concluded dismissal was inappropriate

              because “[g]iving [the COI rate provision] its plain and ordinary

              meaning, an ordinary policyholder of average intelligence could

              reasonably interpret this provision to mean that the COI rate would be

              adjusted based on future mortality expectations, whether those mortality

              experiences are improving or declining.” Id. at 44.

[9]   On September 16, 2013, pursuant to Indiana Trial Rule 23, Bezich sought to

      certify a class of Ensemble II policyholders from thirty states on all three

      Counts. Following an evidentiary hearing, the trial court issued its Findings of
      Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015         Page 5 of 26
       Fact, Conclusions, and Order, denying class certification on Count 1 and

       Count 2 but granting class certification on Count 3 solely on the issue of

       liability.

[10]   As to Count 1 and Count 2, the trial court concluded that issues concerning

       extrinsic evidence and choice of law prohibited a finding that common

       questions of law and fact predominated over questions affecting individual class

       members. Specifically, the trial court reiterated its finding that the COI rate

       provision is ambiguous as it applies to Count 1 and thus extrinsic evidence may

       be necessary to aid the court in interpreting that provision. This would involve

       an individualized inquiry for each class member to determine whether the

       policyholders were given information from a salesperson regarding how the

       COI rate was calculated.3 After concluding that extrinsic evidence would be

       important in resolving Count 1 claims, the trial court stated that resolution of

       Count 2 was “inevitably . . . intertwined” with Count 1 and “[b]ecause Count II

       will be influenced by extrinsic evidence bearing on the ambiguity in the COI

       rate provision, there is no way to avoid inquiries into extrinsic evidence for

       Count I but not Count II.” Id. at 31.

[11]   As to Count 3, the trial court found that because the COI rate provision is

       unambiguous as it pertains to Count 3, the concern of extrinsic evidence that

       3
         Lincoln put particular emphasis on an Illustration Questionnaire available to prospective policyholders that
       explained that the COI rate accounted for expenses and other factors in addition to mortality. Believing the
       COI rate provision to be ambiguous, the trial court agreed that the Illustration Questionnaire could be used
       to interpret the Ensemble II in Lincoln’s favor.

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015                            Page 6 of 26
       applied to Count 1 and Count 2 did not apply to Count 3. However,

       individualized statute of limitations issues prevented the court from finding

       Count 3 met the predominance and commonality requirements of Trial Rule

       23. Nevertheless, the trial court utilized Trial Rule 23(C)(4) to certify a class on

       Count 3 solely on the issue of liability.

[12]   Lincoln now brings this interlocutory appeal, challenging the trial court’s

       certification of a single-issue class on Count 3. Bezich cross-appeals the trial

       court’s denial of class certification on Count 1 and Count 2. Additional facts

       will be provided as necessary.

                                   Discussion and Decision
                                 I. Class Action Requirements
[13]   Indiana Trial Rule 23 governs class actions. Subsection (A) sets out four

       prerequisites that must be met for a party to pursue a class action:

               (1) the class is so numerous that joinder of all members is
               impracticable;
               (2) there are questions of law or fact common to the class;
               (3) the claims or defenses of the representative parties are typical of the
               claims or defenses of the class; and
               (4) the representative parties will fairly and adequately protect the
               interests of the class.
       Ind. Trial Rule 23(A). In addition to those prerequisites under subsection (A),

       the claimant must meet at least one element set out in subsection (B). See Ind.

       Trial Rule 23. Only the third element of subsection (B) is relevant in this case;

       that element is: “(3) the court finds that the questions of law or fact common to

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015             Page 7 of 26
       the members of the class predominate over any questions affecting only

       individual members . . . .” Ind. Trial Rule 23(B)(3).4 The requirements of

       typicality, predominance, and adequacy of representation are of particular

       importance in this case.

[14]   “Typicality may be satisfied through the existence of the same legal theory of

       the plaintiffs’ claims and defenses; typicality may be satisfied even if there are

       factual distinctions between the claims of the named plaintiffs and those of the

       class members.” Rose v. Denman, 676 N.E.2d 777, 783 (Ind. Ct. App. 1997).

[15]   As to the predominance requirement under Trial Rule 23(B)(3), there is no

       precise test for determining whether common questions of law or fact

       predominate over issues affecting individual members; rather, the court makes a

       pragmatic assessment of the entire action and all the issues involved. 7-Eleven,

       Inc. v. Bowens, 857 N.E.2d 382, 393 (Ind. Ct. App. 2006). Factors that favor a

       finding of predominance include:

                       The substantive elements of class members’ claims require the
                        same proof for each class member[.]
                       The proposed class is bound together by a mutual interest in
                        resolving common questions more than it is divided by
                        individual interests.
                       The resolution of an issue common to the class would
                        significantly advance the litigation.

       4
         In addition to a requirement that common questions of law and fact predominate, Trial Rule 23(B)(3) also
       contains a requirement that a class action is “superior” to other methods of adjudication, but Lincoln does
       not focus on that requirement in this appeal.

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015                           Page 8 of 26
                       One or more common issues constitute significant parts of each
                        class members’ individual cases.
                       The common questions are central to all the members’ claims.
                       The same theory of liability is asserted by or against all class
                        members, and all defendants raise the same basic defenses.

       Associated Med. Networks, Ltd. v. Lewis, 824 N.E.2d 679, 686 (Ind. 2005) (citation

       omitted).

                                     II. Standard of Review
[16]   Whether an action is maintainable as a class action is a question committed to

       the sound discretion of the trial court. Associated Med. Networks, Ltd., 824
N.E.2d at 682. Thus, we review the trial court’s ruling on a motion for class

       certification by employing an abuse of discretion standard. Id. The trial court’s

       determination concerning class certification will be affirmed if it is supported by

       substantial evidence; however, a misinterpretation of law will not justify an

       affirmance. Id.

[17]   This case also involves the interpretation of insurance contract provisions. The

       interpretation of an insurance contract is a question of law, which we approach

       using a de novo standard of review. Justice v. Am. Family Mut. Ins. Co., 4 N.E.3d
1171, 1175 (Ind. 2014). An insurance contract is interpreted “from the

       perspective of an ordinary policyholder of average intelligence.” Bradshaw v.

       Chandler, 916 N.E.2d 163, 166 (Ind. 2009) (citation omitted). A contract is

       ambiguous if “reasonably intelligent people may interpret the policy’s language

       differently . . . .” Id.

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015           Page 9 of 26
                                                   III. Count 1             5

             A. The COI Rate Provision is Unambiguously Limited to
                               Mortality Factors
[18]   Bezich argues that the trial court abused its discretion by denying class

       certification on Count 1 after finding Bezich failed to establish that common

       questions of law and fact predominate over individualized issues. The grant or

       denial of class certification hinges on whether the COI rate provision is

       ambiguous. Whether the contract language is ambiguous is important because

       Indiana follows the majority “four corners rule,” which provides that “extrinsic

       evidence is not admissible to add to, vary or explain the terms of a written

       instrument if the terms of the instrument are susceptible of a clear and

       unambiguous construction.” Univ. of S. Ind. Found. v. Baker, 843 N.E.2d 528,

       532 (Ind. 2006) (citation omitted).

[19]   Bezich contends that the COI rate provision is unambiguous as it relates to

       Count 1. In its entirety, the COI rate provision says: “The monthly cost of

       insurance rate is based on the sex, issue age, policy year, and rating class of the

       Insured. Monthly cost of insurance rates will be determined by the Company

       5
         As an initial matter, Bezich argues that this court does not have jurisdiction to decide whether the COI rate
       provision is ambiguous. The trial court first found that the provision was unambiguous in its order denying
       Lincoln’s motion to dismiss. Bezich argues that because this interlocutory appeal concerns only the order on
       Bezich’s motion for class certification—and not the trial court’s order denying Lincoln’s motion to dismiss—
       interpretation of the COI rate provision is not properly before this court. Lincoln counters that interpretation
       of the Ensemble II was clearly at issue in the trial court’s order on class certification and that Lincoln was not
       required to file a separate interlocutory appeal of the trial court’s order denying dismissal. In our view,
       interpretation of the Ensemble II was an integral part of the trial court’s order concerning class certification
       and is a question properly before this court on appeal.

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015                               Page 10 of 26
       based upon expectations as to future mortality experience.” Appellee’s App. at

       19. Bezich maintains that in the context of a contract like the Ensemble II, the

       terms “based on” / “based upon” connote exclusivity—i.e. only mortality

       factors may be considered—and that the contract does not leave room for

       Lincoln to pad the COI rate with other undisclosed factors or expenses.

       Lincoln counters that the COI rate provision unambiguously does not mean

       exclusivity, or is, at the very least, ambiguous.

[20]   In support of his position, Bezich cites several court decisions concluding COI

       provisions that stated a rate was “based on” certain factors unambiguously

       meant that calculation of the rate was limited to the use of those factors. For

       instance, in Jeanes v. Allied Life Ins. Co., 168 F. Supp. 2d 958 (S.D. Iowa 2001),

       rev’d on other grounds 300 F.3d 938 (8th Cir. 2002), the court dealt with an

       insurance contract which provided in relevant part: “The Cost of Insurance

       Rate is based on the sex, attained age and rate class of the Insured. . . . Monthly

       cost of insurance rates will be determined by us based on our expectations as to

       future mortality experience.” Id. at 973 (emphasis omitted). The court found

       that the language was unambiguous and held “the plain language of the

       contract only allows [the insurance company] to change the cost of insurance

       for increases in the companies [sic] expectations as to future mortality.” Id. at

       974; see also Alleman v. State Farm Life Ins. Co., 334 F. App’x 470, 472 (3d Cir.

       2009) (holding that contract language stating “[t]he guaranteed values are based

       on the Insured’s age[,] last birthday[,] and sex” unambiguously meant that “age

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015     Page 11 of 26
       and sex are the only mortality factors relevant to the rate that the insureds

       received under the policies.”) (emphasis added).

[21]   In contrast, Lincoln relies most heavily on Norem v. Lincoln Benefit Life Co., 737
F.3d 1145 (7th Cir. 2013), which dealt with a COI provision similar to the one

       in this case. The COI rate provision in Norem said: “The cost of insurance rate

       is based on the insured’s sex, issue age, policy year, and payment class. The

       rates will be determined by us, but they will never be more than the guaranteed

       rates shown on Page 5.” Id. at 1147. The court held that the provision

       unambiguously allowed for consideration of non-enumerated factors. Id. at

       1155. In reaching its holding, the court emphasized dictionary definitions of

       the term “based on” that suggest a “main ingredient,” and the court noted that

       no dictionary definition of the term meant exclusivity. Id. at 1149-50.

[22]   Both parties attempt to distinguish the cases cited by their opposition. Lincoln

       claims that Jeanes is inapposite because it held “solely that rate increases that had

       no basis at all in increased mortality were not ‘based on’ mortality.”

       Appellant’s Reply and Cross-Appellee Brief at 37 (emphasis in original). This

       proposed distinction is unconvincing. Even if that could be viewed as a factual

       discrepancy between the claim in Jeanes and Bezich’s Count 1, the court’s

       interpretation of the contract and that interpretation’s direct application to this

       case remains intact.

[23]   Bezich argues that Norem should be disregarded because there was no contract

       provision in that case that alluded to “future mortality experience.” Indeed, the

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015      Page 12 of 26
       court in Norem distinguished its decision from divergent federal decisions

       interpreting COI rate provisions with the term “based on” by pointing out that

       the COI rate provisions in other cases included references to “mortality

       experience” while the provision in Norem did not. 737 F.3d at 1154

       (distinguishing Yue v. Conseco Life Ins. Co., No. CV 08-1506 AHM, 2011 WL
210943 (C.D. Cal. Jan. 19, 2011) and Jeanes, 168 F. Supp. 2d at 974, both of

       which held that COI rate provisions unambiguously limited calculation of rates

       to factors stated in the contract).

[24]   Of course, the Ensemble II contains the exact phrase that the court in Norem

       noted was missing from the contract in that case. See Appellee’s App. at 19

       (“Monthly cost of insurance rates will be determined by the Company based

       upon expectations as to future mortality experience.”). We agree with

       Bezich—and the court in Norem—that the presence of that phrase properly

       distinguishes the Ensemble II from the contract at issue in Norem.

[25]   Even if Norem could not be distinguished on that basis, we would still hold that

       the Ensemble II unambiguously limits the calculation of the COI rate to

       mortality factors. Referring to the divergent holdings of cases cited by the

       parties, the trial court here concluded “it follows that reasonable persons could

       differ as to the meaning of this phrase.” Appellant’s App. at 42. However, it is

       not true in Indiana that a split in court decisions on the meaning of contract

       terms automatically means that those terms are ambiguous. Allgood v. Meridian

       Sec. Ins. Co., 836 N.E.2d 243, 248 (Ind. 2005). “A disagreement among courts

       as to the meaning of a particular contractual provision is evidence that an

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015   Page 13 of 26
       ambiguity may exist. But a division of authority is only evidence of ambiguity.

       It does not establish conclusively that a particular clause is ambiguous . . . .” Id.

       (citation omitted) (holding a contractual provision was unambiguous despite a

       split of authority). Like our supreme court in Allgood, we are not inclined to

       deem an unambiguous contract provision to be an ambiguous one simply

       because of an inconsistent court decision.

[26]   In Fleisher v. Phoenix Life Ins. Co., 18 F. Supp. 3d 456, 473-74 (S.D.N.Y. 2014),

       the court held that a COI rate provision virtually identical to the Ensemble II’s

       was ambiguous solely because of a split in court decisions. We pay particular

       attention to the decision in Fleisher because of Lincoln’s reliance on it, which we

       find puzzling. The court in Fleisher was resolute in its belief that “‘based on’

       unambiguously precludes [the insurance company] from considering factors

       beyond those six factors enumerated in [the contract.]” Id. at 473. The court

       persuasively reasoned that the COI rate provision was unambiguous and that

       the court in Norem had “unnecessarily complicated a simple issue.” Id. at 470-

       73. Although the court ultimately held that the existence of competing court

       decisions rendered the rate provision ambiguous, its analysis only reinforces our

       belief that the Ensemble II’s COI rate provision is unambiguous.

[27]   Lincoln compares the Ensemble II to “a cake recipe ‘based on’ flour, sugar, and

       eggs” and claims that a person of average intelligence would understand that

       the recipe was not limited to those three ingredients. Appellant’s Reply and

       Cross-Appellee Brief at 35 (citing Norem, 737 F.3d at 1150). But the Ensemble

       II is not an off-the-cuff cake recipe; it is an insurance contract. Context matters.

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015     Page 14 of 26
       The COI rate provision explains how Lincoln calculates the COI rate and thus

       how the policyholders are charged for holding an Ensemble II policy. An

       ordinary policyholder of average intelligence would read the COI rate provision

       to say that the COI rate is calculated using the factors enumerated and only

       those factors. No reasonable policyholder would read the COI rate provision,

       which states that the COI rate is “based on the sex, issue age, policy year, and

       rating class of the Insured . . . [and] based upon expectations as to future

       mortality experience,” and believe that Lincoln implicitly retains the right to

       charge policyholders a potentially infinite amount of undisclosed fees or costs.

[28]   In sum, we hold that the plain language of the COI rate provision

       unambiguously precludes Lincoln from considering factors other than mortality

       factors when determining COI rates. Accordingly, there is no need for the trial

       court to resort to extrinsic evidence, and questions of law or fact common to the

       members of the class predominate over questions affecting individual members.

       Therefore, class certification for Count 1 is appropriate.

                    B. Need for Extrinsic Evidence Despite a Lack of
                                        Ambiguity
[29]   Lincoln also contends that even if the COI rate provision is not ambiguous,

       individualized inquiries involving extrinsic evidence will still be necessary

       because contract law in a few of the class states requires examination of

       extrinsic evidence even when reading an unambiguous contract. Lincoln

       asserts that five of the thirty class states—California, Colorado, Washington,

       Arizona, and Utah—either permit or require the use of extrinsic evidence even

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015    Page 15 of 26
       where a contract is unambiguous on its face. See Appellant’s Br. at 26;

       Appellant’s Reply Brief at 6. Lincoln claims this variation in law among the

       class states would require a choice-of-law inquiry for each individual class

       member and that those inquiries combined with the following need for extrinsic

       evidence precludes a finding that common issues predominate. Lincoln relies

       on Bowers v. Jefferson Pilot Fin. Ins. Co., 219 F.R.D. 578, 583-84 (E.D. Mich.

       2004), which held that variations in state law regarding the use of extrinsic

       evidence in interpreting contracts precluded class certification.

[30]   The extrinsic evidence that Lincoln contends is relevant to Count 1 (and Count

       2) are Illustration Questionnaires and statements potentially made by insurance

       agents to customers. We note that the Ensemble II provides that “[t]he entire

       contract consists of this policy and the application (and any supplemental

       applications for additional Specified Amounts).” Appellee’s App. at 11. The

       contract also states that “[t]he agent has no authority to make, modify, alter or

       discharge any policy.” Id. at 25 (emphasis added). Thus, the contract clearly

       embodies the full and final expression of the agreement, and statements made

       by an agent or written materials outside the Ensemble II, including the

       Illustration Questionnaire, cannot alter the terms of the policy.

[31]   Moreover, the minority-rule states upon which Lincoln relies do not allow

       consideration of extrinsic evidence if that evidence would vary or alter the

       language of a contract or if the contract is meant to be the full and final

       expression of the terms of the agreement. See, e.g., Taylor v. State Farm Mut.

       Auto Ins. Co., 854 P.2d 1134, 1138 (Ariz. 1993) (citation omitted) (“When two

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015     Page 16 of 26
parties have made a contract and have expressed it in a writing to which they

have both assented as the complete and accurate integration of that contract,

evidence, whether parol or otherwise, of antecedent understandings and

negotiations will not be admitted for the purpose of varying or contradicting the

writing.”); Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Ass’n,

291 P.3d 316, 318 (Cal. 2013) (citing Cal. Civ. Proc. Code § 1856 and Cal. Civ.

Code § 1625) (stating “when parties enter an integrated written agreement,

extrinsic evidence may not be relied upon to alter or add to the terms of the

writing); Denver Found. v. Wells Fargo Bank, NA, 163 P.3d 1116, 1126 (Colo.

2007) (en banc) (stating “intent must be determined from contract language

itself, and an unambiguous document cannot be explained by extrinsic evidence

so as to dispute its plain meaning”); Daines v. Vincent, 190 P.3d 1269, 1277-78

(Utah 2008) (stating “there can be no ambiguity where evidence is offered in an

attempt to obscure otherwise plain contractual terms”); Brogan & Anensen LLC v.

Lamphiear, 202 P.3d 960, 961 (Wash. 2009) (en banc) (per curiam) (“The parol

evidence rule precludes the use of extrinsic evidence to add to, subtract from,

modify, or contradict the terms of a fully integrated written contract; that is, a

contract intended as a final expression of the terms of the agreement.”).

Therefore, the extrinsic evidence that Lincoln relies upon—as it pertains to

interpretations of the Ensemble II under Count 1 and Count 2—would not be

admissible even under the law of those few minority-rule states. Accordingly,

Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015       Page 17 of 26
       we conclude that any differences in the use of extrinsic evidence in those states

       does not prevent class certification on Count 1 or Count 2. 6

                                                  IV. Count 2
[32]   Bezich argues the trial court erred by ruling that individualized issues of

       extrinsic evidence and choice-of-law preclude class certification on Count 2.

       He maintains that the administrative charge provision is unambiguous and that

       the trial court was wrong to conclude that any ambiguity in the COI rate

       provision affects the meaning of the administrative charge provision.

[33]   In relevant part, the Ensemble II lays out the policyholder’s monthly charges as

       follows: “Monthly Deduction – The monthly deduction for a policy month

       shall be equal to (1) plus (2), where: (1) is the cost of insurance . . . [and] (2) is a

       monthly administrative charge. This charge is equal to $6.00 per month in each

       policy year.” Appellee’s App. at 19. The trial court originally concluded that

       this provision was an unambiguous cap on administrative fees and that

       administrative fees in excess of $6.00 could not be tacked onto the COI charge.

       However, in its order denying class certification on Count 2, the trial court

       concluded that the resolution of Count 2 was “inevitably intertwined” with

       6
         Even if the Ensemble II was not an integrated contract and extrinsic evidence would not modify or alter its
       unambiguous terms, and if extrinsic evidence must be considered by the trial court based on the law followed
       by a few outlier states, the answer would be to exclude those states from the putative class, not outright denial
       of class certification.

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015                              Page 18 of 26
       Count 1 and could be affected by extrinsic evidence that alters the interpretation

       of the COI rate provision as it pertains to Count 1.

[34]   On appeal, Lincoln stands by the trial court’s diagnosis that Count 1 and Count

       2 are “inevitably intertwined” and that their interrelation prohibits class

       certification of Count 2. But because we have found that the COI rate

       provision is unambiguous as it pertains to Count 1, any interrelation with

       Count 2—if such a connection does exist—does not preclude certification of

       Count 2. Therefore, we conclude that a class may be certified for Count 2.

                                                  V.Count 3
[35]   Finally, we address Lincoln’s challenge to the trial court’s decision to certify a

       single-issue class on Count 3. Lincoln challenges the decision based on three of

       the Trial Rule 23 requirements: (1) adequacy (Rule 23(A)(4)); (2) typicality

       (Rule 23(A)(3)); and (3) predominance (Rule 23(B)(3)). Because Lincoln’s

       arguments against a finding of predominance and typicality are essentially the

       same, they are addressed together below.

                                    C. Typicality & Predominance
                  1. The COI Rate Provision is Unambiguous as it Relates to Count 3

[36]   Lincoln presents two arguments that the trial court’s findings of predominance

       and typicality were erroneous with respect to Count 3. Both arguments rely on

       the proposition that the necessity for extrinsic evidence creates individualized

       issues that preclude a finding of predominance and typicality. First, Lincoln

       contends that the COI rate provision is ambiguous as it pertains to Count 3, and
       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015    Page 19 of 26
       extrinsic evidence is therefore necessary to interpret the provision on a

       policyholder-by-policyholder basis. Second, Lincoln maintains that even if the

       COI rate provision is unambiguous as it relates to Count 3, a handful of states

       included in the proposed class still allow the use of extrinsic evidence to

       interpret a contract.

[37]   Once again, the COI rate provision states: “The monthly cost of insurance rate

       is based on the sex, issue age, policy year, and rating class of the Insured.

       Monthly cost of insurance rates will be determined by the Company based upon

       expectations as to future mortality experience.” Appellee’s App. at 19. The

       trial court ruled that the COI rate provision unambiguously provided that “the

       COI rate would be adjusted based on future mortality expectations, whether

       those mortality experiences are improving or declining.” Appellant’s App. at

       23. Lincoln contends that the trial court erred by finding the provision

       unambiguous.

[38]   Lincoln chiefly argues that the trial court’s decision “cannot be reconciled with

       [its] holding that the same language in the same provision of the policy was

       ambiguous in connection with Count I.” Appellant’s Brief at 29 (emphasis in

       original). This argument references the trial court’s conclusion that the terms

       “based on” / “based upon” render the provision ambiguous as to whether the

       COI rate must be calculated exclusively using mortality factors. According to

       Lincoln, it follows that the terms “based on” / “based upon” must also create

       an ambiguity as to whether Lincoln had a contractual obligation to adjust the

       COI rate to correlate with changes in future mortality expectations.

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015       Page 20 of 26
[39]   We disagree that an ambiguity affecting Count 1 would automatically render

       the provision ambiguous as it relates to Count 3.7 However, that is not a

       question we must delve into. As explained above, the COI rate provision is

       unambiguous as it pertains to Count 1. Therefore, Lincoln’s argument that an

       ambiguity transfers from Count 1 to Count 3 has no force because no such

       ambiguity exists.

[40]   As a second effort, Lincoln asserts that the provision is ambiguous for failing to

       set out precisely how and when the COI rate would be adjusted to account for

       changes in future mortality. Lincoln claims there is no way to determine a

       “threshold level of change in mortality required to trigger an obligation to

       change COI rates.” Id. at 33. Lincoln further complains that the Ensemble II

       does not specify how often it must reevaluate mortality for the purpose of

       updating COI rates.

[41]   Lincoln’s questions concerning the method of updating rates do not pose a

       problem that prevents class certification, which is the only issue on appeal. The

       COI rate provision says that “rates will be determined by the Company based

       upon expectations as to future mortality experience.” Appellee’s App. at 19.

       This is an unambiguous statement that rates will reflect changes in mortality.

       7
         The COI rate provision unambiguously obligates Lincoln to adjust rates to reflect improving mortality
       expectations. We are persuaded by Yue v. Conseco Life Ins. Co., 282 F.R.D. 469, 481 (C.D. Cal. 2012), which
       involved a life insurance rate provision nearly identical to the one in this case. In Yue, the court stated “when
       a number is said to be ‘based on’ a variable, the phrase ‘based on’ indicates that the number will change in
       accordance with changes in that variable.” Id.

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015                              Page 21 of 26
       Even if Lincoln is correct that the question of precisely how and when rates must

       be changed is up for grabs, it is a question that can certainly be answered on a

       class-wide basis.

[42]   Finally, we cannot help but comment upon the absurdity of Lincoln’s own

       interpretation of the COI rate provision, which is that the Ensemble II allows

       Lincoln to unilaterally increase rates on customers to reflect a change in mortality

       factors but offers no parallel commitment to decrease rates despite an

       overwhelming improvement in mortality. We have grave doubts that any

       policyholder of average intelligence would read the COI rate provision to confer

       on Lincoln that sort of “heads we win, tails you lose” power.

                        2. Need for Extrinsic Evidence Despite a Lack of Ambiguity

[43]   Lincoln also contends that even if the COI rate provision unambiguously

       imposes an obligation to change rates as mortality expectations change,

       individualized inquiries involving extrinsic evidence will still be necessary

       because contract law in a few of the class states requires examination of

       extrinsic evidence even when interpreting an unambiguous contract. As

       discussed above, Lincoln claims this variation in law among the class states

       would require a choice-of-law inquiry for each individual class member and that

       those inquiries combined with the following need for extrinsic evidence

       precludes a finding that common issues predominate.

[44]   Bezich counters that the extrinsic evidence issue is irrelevant as to Count 3

       because Lincoln has failed to establish that any extrinsic evidence exists that

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015      Page 22 of 26
       could potentially alter the interpretation of the COI rate provision as it applies

       to Count 3. We agree. The Illustration Questionnaire—the extrinsic evidence

       Lincoln hangs its hat on—is relevant only to the parties’ competing

       interpretations as they relate to Count 1 or Count 2. Although the Illustration

       Questionnaire could explain that COI rates may include a loading of expenses,

       nothing in the questionnaire implies that COI rates would not be adjusted to

       correspond with changes in mortality expectations. Because the use of extrinsic

       evidence would not change the outcome under Count 3, class certification

       should not be denied on that basis.8 See Simon v. United States, 805 N.E.2d 798,

       805 (Ind. 2004) (stating that Indiana’s choice-of-law analysis first asks “whether

       the differences between the laws of the states are important enough to affect the

       outcome of the litigation.”) (citation and internal quotation marks omitted).

                                                D.             Adequacy
[45]   Lincoln also contends that the trial court abused its discretion by finding that

       Bezich is an adequate representative of the proposed class. The Trial Rule

       23(A)(4) adequacy requirement has three components: “1) the chosen class

       representative cannot have antagonistic or conflicting claims with other

       members of the class; 2) the named representative must have a sufficient interest

       in the outcome to ensure vigorous advocacy; and 3) counsel for the named

       8
         Even if material extrinsic evidence did exist that must be dealt with based on the law followed by minority-
       rule states, the answer would be to exclude those states from the putative class, not outright denial of class
       certification.

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015                            Page 23 of 26
       plaintiff must be competent, experienced, qualified, and generally able to

       conduct the proposed litigation vigorously.” N. Ind. Pub. Serv. Co. v. Bolka, 693
N.E.2d 613, 618 (Ind. Ct. App. 1998), trans. denied.

[46]   We note initially that there seems to be general agreement among the parties

       that Bezich has a sufficient interest in the outcome to ensure vigorous advocacy,

       and that Bezich’s counsel is qualified to litigate this case. Lincoln’s challenges

       to Bezich’s adequacy as a class representative are claims that he poses a risk of

       conflict with certain members of the proposed class.

[47]   First, Lincoln states that uncontradicted evidence presented to the trial court

       showed that updating COI rates in the manner Bezich advocates would actually

       result in higher COI rates for some of the putative class members. 9 Therefore,

       Bezich’s claim under Count 3 is antagonistic to certain members of the

       proposed class. Bezich responds that this supposed conflict is entirely

       speculative, pointing out that he only seeks past damages on behalf of the class

       and that there would be no order forcing Lincoln to raise rates on policyholders

       in the future. See Allen v. Holiday Universal, 249 F.R.D. 166, 181 (E.D. Pa. 2008)

       (“[P]otential conflicts relating to relief issues which would arise only if the

       plaintiffs succeed on common claims of liability on behalf of the class will not

       9
         It is unclear what portion of the putative class are allegedly benefitting from Lincoln’s refusal to adjust COI
       rates in response to changes in mortality expectations. The trial court’s factual findings (at Paragraph 6)
       make reference to some “Band 4 policyholders” for whom “Lincoln alleges that at a certain point under the
       re-pricing, COI rates . . . become lower than expected mortality.” Appellant’s App. at 22. Those
       policyholders make up 4.5% of the putative class, and it is possible they are the group Lincoln is using to
       challenge Bezich’s adequacy as a class representative.

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015                              Page 24 of 26
       bar a finding of adequacy.”) (citation omitted). Additionally, Bezich argues

       that the possibility of higher COI rates in the future should not be a bar to

       certification because Lincoln’s own interpretation of the Ensemble II would

       allow it to increase COI rates whenever it pleases.

[48]   The trial court was unconvinced that the sort of speculative harm suggested by

       Lincoln should preclude a finding that Bezich is an adequate representative.

       We are not persuaded that the trial court abused its discretion. At its essence,

       Count 3 attempts to establish an interpretation of the Ensemble II that requires

       Lincoln to adjust COI rates where changes in mortality would benefit the

       policyholder. Such an interpretation is beneficial to all policyholders, especially

       when juxtaposed with Lincoln’s current interpretation allowing it to increase

       rates unilaterally to reflect worsening mortality expectations in some

       policyholders while ignoring improving mortality expectations for other

       policyholders.

[49]   Second, Lincoln asserts that class members have conflicting interests in

       selecting the benchmark to be used for updating COI rates. According to

       Lincoln, there are several mortality studies from which it could have extracted

       mortality expectations to adjust COI rates, and some class members would

       have a lower COI rate under an alternate benchmark than under the benchmark

       proposed by Bezich. This, Lincoln argues, presents an intra-class conflict that

       renders Bezich an inadequate class representative.

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015    Page 25 of 26
[50]   Bezich’s primary response is that the question of what is the proper benchmark

       is one that affects damages and should not defeat class certification on the issue

       of liability. “Courts generally reject the argument that an intra-class conflict

       exists when divergent theories of liability would benefit different groups within

       the class. Courts have thus rejected challenges to the class representatives’

       adequacy that were based . . . on different class members desiring different

       methods of calculating damages . . . .” Williams B. Rubenstein et al., Newberg

       on Class Actions § 3:62 (5th ed.). We agree that competing options for

       establishing damages should not preclude class certification. Any conflict as to

       the method of establishing damages is outweighed by the class members’

       overall interest in establishing Lincoln’s liability class-wide.

[51]   In sum, we conclude that the trial court’s determination that Bezich is an

       adequate class representative was not an abuse of discretion.

                                                Conclusion
[52]   Concluding that class certification for the purpose of determining liability is

       proper for each of Bezich’s three breach of contract claims, we affirm the trial

       court’s judgment as to Count 3, reverse as to Count 1 and Count 2, and remand

       for further proceedings consistent with this opinion.

[53]   Affirmed in part, reversed in part, and remanded.

       Bailey, J., and Brown, J., concur.

       Court of Appeals of Indiana | Opinion 02A04-1407-PL-319| June 2, 2015    Page 26 of 26