Court Opinion

ID: 815747
Source: CourtListenerOpinion
Date Created: 2013-01-22 20:34:14+00
Date Added: 2024-06-11T11:12:32.842764
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 12-1329

BANNER LIFE INSURANCE COMPANY,

                Plaintiff - Appellee,

           v.

JACQUELINE L. NOEL,

                Defendant - Appellant.

                             No. 12-1498

BANNER LIFE INSURANCE COMPANY,

                Plaintiff - Appellee,

           v.

JACQUELINE L. NOEL,

                Defendant - Appellant.

Appeals from the United States District Court for the Eastern
District of Virginia, at Richmond.  James R. Spencer, District
Judge. (3:11-cv-00434-JRS)

Argued:   December 5, 2012                 Decided:   January 22, 2013

Before WILKINSON, NIEMEYER and GREGORY, Circuit Judges.
Affirmed by unpublished per curiam opinion.

ARGUED:   John  Tracy   Walker,   MCGUIREWOODS, LLP,  Richmond,
Virginia, for Appellant.     Robert Barnes Delano, Jr., SANDS
ANDERSON, PC, Richmond, Virginia, for Appellee.      ON BRIEF:
Joseph E. Blackburn, Jr., BLACKBURN, CONTE, SCHILLING & CLICK,
PC, Richmond, Virginia, for Appellant.

Unpublished opinions are not binding precedent in this circuit.

                                  2
PER CURIAM:

              Banner    Life   Insurance     Company       (Banner)       filed    for    a

declaratory judgment in the United States District Court for the

Eastern District of Virginia seeking to limit its obligations

under a binder of temporary insurance entered into with Gary

Noel.     Jacqueline Noel, the beneficiary of the policy, opposed

the action and filed a counter-claim for breach of contract.

Following cross-motions for summary judgment, the district court

granted      Banner    declaratory    judgment       limiting       its    obligations

under the binder to remitting the premium paid by Gary.                           For the

following reasons, we affirm.

                                        I.

                                        A.

              On November 30, 2010, Gary and Jacqueline met with

Banner Life Insurance agent Christopher Roberts to purchase a $1

million      life    insurance   policy      on    Gary’s     life.         During     the

meeting,      Gary     completed     three    documents        as     part        of   the

application         packet.    The   first        document,       labeled     Part       1,

contained biographical questions; the second document, labeled

Part    2,    examined    medical    history;        and    the     third    document,

entitled “Temporary Insurance Application and Agreement” (TIAA),

allowed for temporary insurance coverage pending approval of the

full policy.

                                             3
              When   filling     out     Part     2,     Gary   was    required         to

truthfully      provide     information         about     his   medical     history.

Despite this, Gary failed to disclose his history of elevated

liver function tests, an abnormal abdominal liver ultrasound,

and    that    his   primary      care     physician       referred       him     to     a

gastroenterologist.         Gary also denied having sleep apnea and did

not disclose that his doctor recommended he consult with a sleep

disorder      specialist.       Jacqueline       acknowledges      that     Gary       was

required to disclose this information.

              After filling out Part 1 and Part 2, Gary had the

option   of    filling    out   the    TIAA.       The    approval     of   the      life

insurance policy was not contingent upon completion of the TIAA.

The TIAA contained four yes or no questions, all of which had to

be answered no to be eligible for temporary coverage.                           At the

bottom of the TIAA was a provision entitled “Other Limitations,”

which read in pertinent part:             “The Insurer’s liability will be

limited to a return of the Amount Remitted if . . . any part of

the    life    insurance     application         or     this    TIAA    contains        a

misrepresentation material to the Insurer.”                     Gary answered all

four   questions     “no,”      presumably       read    the    provision       at     the

bottom, and signed the TIAA.             Gary remitted payment for the TIAA

in the amount of $913.90.             Banner acknowledges that Gary filled

out the TIAA truthfully.

                                             4
              After Gary completed and signed all three documents,

Roberts        submitted            the      application              packet        to        Banner’s

underwriting department.                  A Banner underwriting consultant, Sean

Lucas,    reviewed            Gary’s       application        packet.               Because         Gary

admitted to a history of hypertension when completing Part 2,

Lucas ordered and obtained a copy of Gary’s medical records from

his primary care physician.                      Upon review of the records, Lucas

learned of Gary’s undisclosed medical problems, and as a result,

was    unable      to    make       a    recommendation          of    approval          for   Gary’s

application.         Before         he     could     approve          Gary’s    policy,          Lucas

requested       that      Roberts         follow     up     with        Gary    regarding            the

gastroenterologist              referral.           Roberts       obliged,          and       informed

Lucas on January 31, 2011, that Gary did not follow up on the

referral.

              On     Thursday,           February    3,    2011,       Lucas        completed        his

review    of       Gary’s       application         and    forwarded           it    to       Banner’s

medical    director.           He       recommended       postponing         approval          of    the

policy pending additional follow-up and definitive diagnosis for

the cause of Gary’s elevated liver tests.                                Gary died sometime

between    Sunday,            February      6,     and    Monday,       February          7,    before

Banner was able to notify Gary that it was postponing issuing

the    life     insurance        policy.            On    July    5,     2011,       Banner         sent

Jacqueline a letter denying her claim for benefits under the

TIAA    due     to      the    misrepresentations            made       in     Part       2    of    the

                                                      5
application.         Enclosed with the letter was a check refunding

Gary’s premium payment.

                                           B.

              On July 6, 2011, Banner filed a declaratory judgment

action in the district court seeking to either rescind the TIAA

or have the court declare that its obligations were limited to a

return   of    the     premium      paid   by       Gary.         Jacqueline      answered,

denying that Banner was entitled to rescission, claiming that

Banner   was       estopped    from    rescission,          and    counterclaiming        for

breach   of    contract       and     attorneys’       fees.         At   the     close    of

discovery both parties moved for summary judgment.

              On    February     15,    2012,       the     district      court    granted

Banner’s motion for summary judgment, asserting that Part 1,

Part   2,     and    the   TIAA     formed      a    single       contract;       that    the

misrepresentations made in Part 2 were material to Banner; and

as a result, Banner’s obligations were limited to returning the

premium paid by Gary per the terms of the TIAA.                             Banner Life

Ins. Co. v. Noel, 861 F. Supp. 2d 701 (E.D. Va. 2012).                                   In a

corollary matter, on April 5, 2012, the district court awarded

Banner attorneys’ fees for having to defend a motion to compel

discovery.

              Jacqueline timely appealed, challenging the district

court’s grant of summary judgment and award of attorneys’ fees.

                                                6
                                        II.

            Jacqueline first argues that the district court erred

in   granting     Banner’s     motion    for       summary      judgment,     limiting

Banner’s obligations to returning the premium paid by Gary.                          We

review a grant of summary judgment de novo.                      Henry v. Purnell,

652 F.3d 524, 531 (4th Cir. 2011) (en banc).

            The   TIAA   entered     into         by   Banner    and   Gary    was   an

independent binder of insurance. 1 The clause in the TIAA, “Other

Limitations,”      instructs     that    any       material      misrepresentations

contained in the life insurance application packet as a whole

limits    Banner’s   obligations        under      the   agreement.         Jacqueline

does not argue that there were no misrepresentations in Part 2

of the application.            Therefore, the pertinent question before

the Court is whether the misrepresentations were material to

Banner,    limiting      its     obligations           under    the    agreement     to

returning the premium paid by Gary.

     1
       A “binder” is defined as: “An insurer’s memorandum giving
the insured temporary coverage while the application for an
insurance policy is being processed or while the formal policy
is being prepared.” Black’s Law Dictionary 190 (9th ed. 2009).

     Despite the district court’s finding to the contrary, the
TIAA was intended to be an independent contract consistent with
Virginia law.   See Va. Code. Ann. § 38.2-304; First Protection
Life Ins. Co. v. Compton, 335 S.E.2d 262 (Va. 1985). This error
is inconsequential given that the TIAA incorporates by reference
the entire application packet.

                                              7
               “A fact is material to the risk to be assumed by an

insurance company if the fact would reasonably influence the

company’s decision whether or not to issue a policy.”                                 Mut. of

Omaha Life Ins. Co. v. Echols, 154 S.E.2d 169, 172 (Va. 1967).

Materiality is assessed from the vantage point of the insurance

company and the effect of a misrepresentation on the company’s

“investigation and decision.”                    Jefferson Standard Life Ins. Co.

v.    Clemmer,          79     F.2d           724,       733       (4th      Cir.      1935).

Misrepresentations           have        been     considered        material        when    the

insurer        would        have     issued            the     policy        on     different

terms, see Minn. Lawyers Mut. Ins. Co. v. Hancock, 600 F. Supp.

2d   702,      709     (E.D.       Va.     2009);        or    postponed      issuing       the

policy, see Parkerson v. Fed. Home Life Ins. Co., 797 F. Supp.

1308, 1312, 1314-15 (E.D. Va. 1992).

               The     evidence          on      the      record      shows        that      the

misrepresentations made by Gary in Part 2 of the life insurance

application packet caused Banner to postpone issuing Gary’s life

insurance policy.             Both Lucas and Banner’s Chief Underwriter

testified      that    an    essential          element       to   issuing    an    insurance

policy    is    risk    assessment,           which      necessarily      depends     on    the

truthful disclosure of an applicant’s medical history.                                     Lucas

testified that because of Gary’s undisclosed medical history, he

recommended “postpon[ing] [the] case pending additional work up

and definitive diagnosis for cause of elevated liver function

                                                     8
tests.”    As     a    result         of   Gary’s       omissions,       Banner’s       Medical

Director agreed with Lucas’s assessment and officially decided

to postpone issuing a policy. 2

            It is evident that Gary’s undisclosed medical history

prompted     Banner         to    postpone       issuing        the     insurance       policy.

Therefore,      Gary’s       misrepresentations             are       considered    material

under Virginia Law.               See Parkerson, 797 F. Supp. at 1312, 1314-

15    (finding          that          postponement         of       a    decision        shows

materiality);         Mut.       of   Omaha     Ins.    Co.,     154    S.E.2d     at    171-73

(same).

            Jacqueline            tries    to    limit     the      terms    of    the    TIAA,

asserting that any misrepresentation must be material to the

issuance     of       the    TIAA       itself.          The    TIAA     does     not     limit

materiality in the manner Jacqueline suggests.                              The TIAA “Other

Limitations” provision only requires that a misrepresentation be

material to Banner – a material misrepresentation can be found

in   any   part       of    the       application       packet. 3        Accordingly,       the

      2
       Jacqueline implicitly concedes that the misrepresentations
were material to Banner issuing the life insurance policy. See
Appellant’s Br. 19 (“This clearly shows that Banner is relying
on statements made in Part 2 to issue an insurance policy, not
[to] temporarily bind coverage under the TIAA.”).
      3
       Jacqueline also argues that since Banner found out the
information independent of Gary’s misrepresentations, that they
cannot be considered “material.”    This argument is baseless.
What was omitted, no matter how it was discovered, caused Banner
to delay issuing Gary a policy.

                                                    9
misrepresentations made by Gary in Part 2 of the application

packet were material to Banner issuing Gary’s policy given that

they led to a postponement of Banner’s decision.                         Under the

plain terms of the TIAA, Banner’s obligations were limited to

remitting the premium. 4

                                           III.

             Jacqueline also argues that the district court erred

in   granting    Banner     attorneys’     fees   for    having    to    contest   a

motion to compel discovery.           Jacqueline does not challenge the

court’s ruling on the motion.             We review an award of attorneys’

fees for abuse of discretion.             Robinson v. Equifax Info. Serv.,

LLC, 560 F.3d 235, 243 (4th Cir. 2009) (citation omitted).

           On     November    23,   2011,      Jacqueline      moved    to   compel

discovery as to the meaning of a term used in Banner’s notation

system.      This     was    in   spite   of     the    fact    that    Banner   had

previously answered the same question in an interrogatory and

Jacqueline      had   the    opportunity    to     depose      Banner    employees.

      4
       The parties seek to embroil the Court in a debate on the
principles of equity, asserting a number of equitable remedies
and defenses.   Because this dispute is easily resolved per the
unambiguous terms of the contract, we will not be baited into an
unnecessary debate.    See Catholic Soc. of Religious Literary
Educ. v. Madison Cnty., 74 F.2d 848, 850 (4th Cir. 1935) (a
“fundamental rule in equity in the federal courts is that a suit
will not lie when there is an adequate remedy at law”).

                                            10
Banner opposed the motion, arguing that its initial answer was

sufficient and requesting costs for having to defend the motion.

In an order dated December 15, 2011, the district court denied

Jacqueline’s      motion,    finding      that      Banner’s     answer     to   the

interrogatory     was     sufficient.         The     district     court     further

awarded Banner attorneys’ fees in the amount of $1,311 - the

cost of responding to the motion.

          The district court essentially awarded attorneys’ fees

because it found that Jacqueline’s motion to compel discovery

was cumulative.         Furthermore, the court only awarded attorneys’

fees for the single motion.               Because the award of attorneys’

fees was not “clearly wrong,” see Plyer v. Evatt, 902 F.2d 273,

277-78 (4th Cir. 1990), the district court did not abuse its

sound discretion.

                                       IV.

     Because      the    clear    terms    of     the    TIAA     limit    Banner’s

obligations to remitting the premium paid by Gary, and the award

of   attorneys’     fees    was    well      within     the     district    court’s

discretion, the district court’s judgment is affirmed.

                                                                           AFFIRMED.

                                             11