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Smith v. Union National Life Insurance Co.

United States District Court, S.D. Mississippi, Southern Division

February 22, 2018




         This matter is before the Court on Union National's Motion for Summary Judgment [357], Plaintiff's Motion to Strike Union National's Motion in Support of Summary Judgment [378], and Plaintiff's Motion for Partial Summary Judgment [364]. After reviewing the applicable law and submissions of the parties, the court finds as follows:

• Plaintiff's Motion to Strike [378] is granted in part and denied in part:
• Hecker's references to there being a paper/hard copy waiver of premium file in Paragraphs 10, 11, and 15 of her Declaration are struck, as they are blatantly contradicted by Union National's previous discovery responses. o Randall's attempts to offer evidence of correspondence between Mr. Brabec and Mr. Vancleave and the reason for the delay in issuing the second check are struck for lack of personal knowledge. Randall's statements as to what the proper interest rate under the Policy and Mississippi law is are also struck.
• Plaintiff's motion as to Exhibit E of Union National's Motion for Summary Judgment is moot in light of the Court's previous Order [413]. o The remainder of Plaintiff's motion is denied.
• Union National's Motion for Summary Judgement [357] is granted in part and denied in part.
• Smith's Motion for Partial Summary Judgment [364] is granted in part and denied in part.

         I. Background

         This is a life insurance dispute over a $10, 000 policy (“the Policy”). In 1994, Daisy Carter took out a life insurance policy with Union National. She initially named her daughter, Sandra Carter as the beneficiary. In 1996, she submitted a Change of Beneficiary Form naming Plaintiff, her neighbor, as the beneficiary. In 2004, Union National switched its policy administration system, where all documents were stored on microfilm and indexed in the C.A.R. Indexing System.

         Daisy Carter died on May 31, 2014. The next day, C&J Financial submitted a request for Union National to verify benefits under Carter's life insurance policy to pay for her funeral at Marshall Funeral Home. Union National checked its C.A.R. Indexing System, which only showed the original application, and advised that Sandra Carter was the beneficiary. Shortly after, Gina Marshall, an employee of Marshall Funeral Home, sent Dawn Key, a Union National employee in the benefits verification department, a scanned copy of the Change of Beneficiary form showing that Plaintiff was the beneficiary. Key informed Marshall that the documents needed to be sent to the Claims Department, as she did not have the authority to resolve beneficiary disputes. Marshall then called Union National's call center and explained that she had copies of the Change of Beneficiary form. None of those employees told her to send the form to them. The Claims Department never received the documents. The Policy benefits were paid to Sandra Carter, who then assigned them to the funeral home. Daisy Carter's funeral was held without delay.

         On July 19, 2014, Plaintiff wrote Ed Konar, president of Union National, a letter asserting that she was the beneficiary of the Policy. She asked what she needed to do to receive the proceeds. She included Carter's death certificate, but not the Change of Beneficiary Form. Michelle Randall, an employee in the Claims Department, did a second investigation into the documents listed on the C.A.R. Indexing System, and advised Mr. Konar's assistant that Sandra Carter was the beneficiary. Konar responded as such and stated that if Plaintiff had any questions to please contact him.

         On January 13, 2015, Plaintiff filed suit alleging that Union National breached its contract with its insured, Daisy Carter. She has further alleged that Union National wrongfully denied her the proceeds of this Policy in bad faith. Two weeks later, the attorneys for Union National and Plaintiff exchanged emails where Plaintiff's counsel acknowledged that he had proof that Plaintiff was the correct beneficiary, but that he would not send the document to defense counsel unless either (1) Union National sent him certified copies of all of its paper files or (2) defense counsel personally affirmed that he had reviewed all of Union National's hard copy policy files and found no proof that Plaintiff was the beneficiary. Plaintiff's counsel cited Union National's duty to investigate its own files and asserted that Union National could not delegate that duty to the insured in support of his offer to exchange documents. Union National's attorney declined, stating they would wait for Plaintiff's initial disclosures.

         On February 4, 2015, a paralegal found the Change of Beneficiary form in Daisy Carter's waiver of premium file. On April 30, 2015, Plaintiff attached the Change of Beneficiary form in response to Kemper Corporation's Motion for Summary Judgment. Plaintiff produced the document in her initial disclosures on December 4, 2015. On January 13, 2016, Union National found the Change of Beneficiary form in its microfilm. On February 4, 2016, it sent Plaintiff a check for $10, 398.96, representing the policy limits, plus 8% interest, minus a loan Daisy Carter had taken out against the Policy. Plaintiff's counsel rejected the tender as it was not unconditional, did not include attorney's fees, and did not show how interest was calculated. On June 29, 2016, Union National delivered another check that was then accepted.

         Both parties have filed motions for summary judgment. Plaintiff has also filed a Motion to Strike (1) the three affidavits of Union National employees that it attached to its Motion for Summary Judgment because they are “sham affidavits, ” (2) evidence she argues should be excluded for untimely disclosure under Federal Rule of Civil Procedure 26, and (3) parole evidence.

         II. Motion to Strike [378]

         The Sham Affidavit Rule holds that “a plaintiff[1] may not manufacture a genuine issue of material fact [in defending a motion for summary judgment] by submitting an affidavit that impeaches prior testimony without explanation.” Doe ex rel. Doe v. Dallas Indep. Sch. Dist., 220 F.3d 380, 386 (5th Cir. 2000); S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 495 (5th Cir. 1996); Albertson v. T.J. Stevenson & Co., 749 F.2d 223, 228 (5th Cir. 1984). Nevertheless, “[w]hen an affidavit merely supplements rather than contradicts prior deposition testimony, the court may consider the affidavit when evaluating genuine issues in a motion for summary judgment.” S.W.S. Erectors, Inc., 72 F.3d at 496. Furthermore, the Court “cannot disregard a party's affidavit merely because it conflicts to some degree with an earlier deposition.” Kennett-Murray Corp. v. Bone, 622 F.2d 887, 893 (5th Cir. 1980). In such cases, there is merely an issue of credibility, which must be resolved by the jury. Id. at 893, 894. In contrast, when an affidavit attempts to create a sham issue, to the point that the court may brand it as “bogus, ” the Court may disregard such sham affidavit. Id. at 894.

         A. Declaration of Judy Hecker

         i. Paragraph 7

         Plaintiff first takes issue with Paragraph 7 of Hecker's Declaration. The Declaration states:

As to the Policy here, Union National stored on its microfilm rolls the original Application for Insurance and the Request for Policy Change, evidencing the change of beneficiary from Sandra Carter to Plaintiff. (See Application for Insurance and Request for Policy Change, attached hereto as Exhibits ‘1' and ‘2, ' respectively.).

         Declaration of Judy Hecker ¶ 7, ECF No. 375-1. Exhibit 2 to Hecker's Declaration, the Request for Policy Change, is a document Bates stamped UNLIC 1364. Plaintiff points out that that in one of its interrogatory responses, Union National identified UNLIC 45 as the Change of Beneficiary form found on the microfilm. Union National Life Ins. Co.'s Third Supp. Resp. Pl.'s First Set of Interrog. 23-13, 5, 30-31, ECF No. 378-4.[2]

         It is worth noting that these documents are copies of the same form, meaning the substance of each of these documents is the same. Plaintiff argues that the distinction between these two documents matters because UNLIC 45 was produced with Defendant's December 9, 2015 Disclosures [378-5] with a paper flag on it. Plaintiff further points out that the disclosure happened before Union National says that it found the document on microfilm, on January 13, 2016. Hecker Decl. ¶ 19, ECF No. 375-1. In response, Union National submits that UNLIC 45 is a copy of the form found in a waiver of premium file, [3] while UNLIC 1364 is the copy of the document on microfilm. Union National's interrogatory response that Plaintiff claims Hecker's Declaration contradicts even says UNLIC000044 and UNLIC 45 “were stored in hard copy in Plaintiff's waiver-of-premium file.” Union National Life Ins. Co.'s Third Supp. Resp. Pl.'s First Set of Interrog. 3, ECF No. 378-4.

         The Court finds there is not sufficient contradiction between Union National's interrogatory response and Hecker's Declaration to warrant calling it a “sham.” It appears that in the interrogatory response, Union National is using UNLIC 45 to refer to the Change of Beneficiary Form in general. While the response could have been clearer as to the exact document it was referring to, this is not enough to strike to this portion of the affidavit.

         ii. Paragraph 8

         Paragraph 8 reads: “So, without having the Request for Policy Change properly indexed, Union National was unable to locate this document in the archives.” Hecker Decl. ¶ 8, ECF No. 375-1. Plaintiff argues that this is “totally contrary” to Defendant's deposition testimony by Hecker as a Rule 30(b)(6) designee. Pl.'s Mem. Supp. Mot. Strike 4, ECF No. 379.

         In the deposition, Hecker first testified that in order to find an unindexed document on Union National's microfilm, “you would have to go through every single roll of Union National's microfilm, one by one-there's hundreds of thousands of those.” Hecker Dep. 43:7-12, ECF No. 378-2. Hecker then testified that rolls are stored “by week and year” and that they are not stored by policy number range. Id. at 44:1. Plaintiff's counsel then showed Hecker the outer cover of a box that contained a roll of microfilm that had a range of policy numbers listed on it.

Q: So your testimony a moment ago that life policy changes were not stored by policy number and year is incorrect; isn't that true?
A: Based on this, that is true.

Id. at 45:25-46:3. After this, Hecker again stated that without the index, one would need “the date, the year, and the week” that the change was made to find the document on the microfilm. Id. at 46:10-13. After Plaintiff's counsel pointed out that one would only need to search the rolls for the years 1994 (the year the policy was issued) through 2014 (the year Daisy Carter died), Plaintiff's counsel asked:

Q: However many [rolls of film] it is, whether it's hundreds of thousands, like you testified, or tens of thousands, Union National wouldn't have to go through every single roll to find the beneficiary change on a specific policy, would it?
A: No.
Q: All it would have to do was go through the rolls that are indexed for policy changes that have the range of policies that include Ms. Smith's policy; isn't that true?
A: That could be done, yes.

Id. at 51:7-17.

         Finally, Plaintiff's counsel informed Ms. Hecker that another employee, Stacy Huch was able to find the document on a microfilm viewer in less than ten (10) minutes. Id. 51:18-25. Plaintiff's counsel then stated that the roll was organized in sequential order by policy number.

Q: Well, the policies-the information on the roll, as she reviewed it, was in policy number order. So the only thing she had to do to find Ms. Smith's policy number was advance the roll, look at the policy number, until she got to the policy number, right? It would be just like finding a number between 1 and 1, 000. If you knew the number was 662, all you would have to do is find 500 and 700, and then close it in until you got to the right number, right?
A: Correct.
Q: That's an easy thing to do, right?
A: Yes.

Id. at 52:6-18.

         Hecker's testimony contains some inconsistencies. Nevertheless, it appears that she was confused by Plaintiff's counsel's questions and the cover of the microfilm roll. Further, she does state several times that one would need to know the week and year of a policy change in order to find a document that was not indexed on microfilm. Thus, any inconsistencies in Hecker's testimony existed from the date of the deposition, which suggests that the affidavit is not a sham.

         Despite Plaintiff's assertions, Hecker does not clearly state that the document could be found “easily.” She merely states that it would be “easy” to find a document with a number, if those documents were organized sequentially. Her statement in the affidavit that Union National would not be able to find a document that was not indexed is not flatly contradicted by her deposition testimony. It is not a sham.

         Plaintiff then cites to several long excepts from Hecker's deposition, which may be summarized as follows: (1) Hecker conceded that Gina Marshall, an employee of Marshall Funeral Homes, sent Dawn Key, an employee of Union National, documents proving that Plaintiff was the beneficiary and that included the date of the beneficiary change on June 3, 2015; those documents and the email were never scanned into the Union National's system; and (2) a screenshot on the old policy administration system also listed Plaintiff as the correct beneficiary, but it did not include the date of the change; and logging into the old system and pulling up this document took Hecker about a minute. None of this directly contradicts Hecker's affidavit, which simply states: “So, without having the Request for Policy Change properly indexed, Union National was unable to locate this document in the archives.” Hecker Decl.¶ 8, ECF No. 375-1. The Court agrees with Defendant that Plaintiff's arguments are overlapping with her substantive arguments in the motions for summary judgment. None of this is so contradictory as to require calling Hecker's affidavit a sham. These arguments are without merit.

         iii. Statements Regarding the Waiver of Premium File (Paragraphs 10, 11, 15)

         In her affidavit, Hecker states, “A hard copy of the Request for Policy Change . . . was found in the course of this litigation in a Waiver of Premium claim file . . ., which is a separate paper file.” Hecker Decl. ¶ 7, ECF No. 375-1. Paragraphs 11 and 15 also make references to there being a paper copy of the Request for Policy Change. Plaintiff points out that in several interrogatory responses, Defendant has testified that the paper copy of Daisy Carter's Waiver of Premium file was imaged to microfilm and then destroyed in the regular course of business in March 2014. Union Nat'l Life Ins. Co.'s Second Supp. Resps. Pl.'s First Set Interrog. 4, ECF No. 378-13. In another response to an interrogatory, Union National stated, “On or about February 4, 2015, [S. Joyce] Scales, a paralegal within Union National's legal department, was able to locate UNLIC 44 and 45 within Plaintiff's imaged waiver of premium file.” Union Nat'l Life Ins. Co.'s Third Supp. Resp. Pl.'s First Set of Interrog. 14, ECF No. 378-4. In response to a request for production asking for all original/hard copies of documents comprising or relating to each claim file(s), Union National stated that it had produced such documents. It further stated: “Union National does not have the original documents. Union National imaged all such paper documents in the normal course of business.” Union Nat's Life Ins. Co.'s Third Supp. Resps. Pl.'s First Set Req. Produc. Docs. 5-6, ECF No. 378-15.

         In response Union National argues: “[T]here is no real inconsistency between the discovery responses and Hecker's declaration, and any perceived inconsistency is immaterial.” Brief Opp. Pl.'s Mot. Strike 8, ECF No. 404. While Union National apparently does contest Plaintiff's argument that Hecker's statements are inconsistent with Union National's discovery responses, it failed to give any explanation so as to resolve these inconsistencies. Rather both of the parties' briefs focus on whether such facts are material to this case. As that is not an issue in this motion, the Court will not determine whether the document was in a paper copy or imaged. For now, the Court will strike any references to the document being found in paper form. Plaintiff's motion is granted to the extent that the affidavit states that UNLIC 44 and 45 were found in a hard copy or paper copy.

         Plaintiff also takes issue with Paragraph 11, which reads as follows:

Accordingly, at the time of Daisy Carter's death, there were two documents in Union National's possession reflecting that Daisy Carter had changed the beneficiary under her Policy to Plaintiff: (1) the Request for Policy Change stored on the microfilm roll that was not located because it was not indexed in the C.A.R. Indexing System, and (2) a paper copy of the Request for Policy Change that was located in an old claim file in the Claims Department (i.e., the Waiver of Premium paper file in the Claims Department) where it would not be expected to be found.

Hecker Decl. ¶ 11, ECF No. 375-1. Plaintiff argues that this statement is “patently false” as the following were in Union National's possession:

• UNLIC 1362 [378-12]: This is a screen shot from the “old policy administration system” that listed Jeanetta Smith as a beneficiary. Union National argues that this is not a “document.”
• UNLIC 44 [378-10]: This is also a screen shot from the “old system.” This shows the date of change and that Jeanetta Smith is a beneficiary. Union National also argues that this is not a document.
• UNLIC 62, 545, 542 [378-17]: Each of these documents say “see endorsement for beneficiary, ” but none of them contain the actual endorsement, nor do any specifically state that Plaintiff is the correct beneficiary.
• Documents provided by Gina Marshall [378-9]: These documents clearly show that Smith was the correct beneficiary. Plaintiff states that these were provided to Defendant on June 2-3, 2014. It is uncontested that this was after Daisy Carter's death.
• The waiver of premium file that was imaged into Union National's electronic files. Union National argues that “this file is one of the two files Hecker acknowledges existed at the time of Carter's death in her declaration.” Brief Opp. Pl.'s Mot. Strike 11, ECF No. 404.

         The Court finds that this is not so contradictory to warrant striking this portion of Hecker's affidavit. Plaintiff's motion is denied as to this issue.

         iv. Paragraph 14 and Paragraph 9

         Paragraph 14 of Hecker's declaration states: “The only source document that could be located regarding the policy was the application, reflecting that Sandra Carter was the beneficiary.” Hecker Decl. ¶ 14, ECF No. 375-1. Hecker then states that “source documents” are the documents that are imaged on microfilm and indexed on the C.A.R. Indexing System. Id. ¶ 15. Plaintiff argues that Hecker testified that the documents listed above “could have easily been located with minimal investigation.” The fact that other documents-that are not source documents-could have been found does not contradict the affidavit.

         Plaintiff next takes issue with Hecker's statement that the Application for Insurance is a “source document.” As just noted, the declaration refers to documents on the microfilm that were indexed on the C.A.R. Indexing System as “source documents.” Plaintiff cites the following deposition testimony, during which Hecker is reviewing a print out of the C.A.R. Microfilm Index, [357-4], which shows relevant documents after a person inputs a policy number.

Q: So this tells us that at Roll 5180 of Union National's microfilm, at Frame 1659, there is some information related to Policy 7020526342, correct?
A: Yes. And we know it's return mail.
Q: And we also know that at Roll 999, at Frame 99999, the entire file related to that policy is found, correct
A: That's incorrect
Q: Why?
A: Because . . . there's no such roll and frame. [The date listed] was when records were requested a couple years ago, when we requested records.
They started adding them to the C.A.R. index to let the clerical staff know that these records are in imaging. . . . The same thing for the original app[lication]. They're telling us that the original app[lication] was imaged in imaging on [September] 12, 2016. . . . The only thing that we had, physical, on a roll and frame that was indexed was returned mail.
Q: It's Union National's testimony that the only documents pertaining to Daisy Carter's life insurance policies that were indexed on-that were recorded on Union National's microfilm system was some returned mail dated April 30th, 2003?
A: That's the only thing that was indexed.
Q: Well, what do you mean by that?
A: The application, the original application is also on rolled film. Those were housed by policy number and issue year. They are not indexed on the C.A.R. retrieval system.

Hecker Dep. 34:5-35:17, ECF No. 378-2. In response, Union National submits that these statements are not contradictory. It is uncontested that policy applications were stored by year and policy number; therefore, those documents would not need to be indexed. Policy applications do, however, show up in the C.A.R. Indexing System when a person inputs the policy number. See CAR Indexing System [357-4].

         Plaintiff argues that Hecker's statement that she has never known of another instance where a document stored on microfilm was not indexed in the C.A.R. Indexing System. Plaintiff submits that since policies were not indexed this statement is a sham. It is clear from the above deposition testimony that Hecker is referring to documents that change the policies, not policy applications. This argument is without merit.

         v. Paragraph 18

         Defendant argues that Hecker's testimony that Dawn Key “followed company procedures by referring Marshall to the claims Department and instructing her to submit the change for their consideration” contradicts her previous testimony “that Key's failure to image Marshall's email and policy documents into the system was a violation of Defendant's Claims Guiding Principles and Defendant's Policy Administration Guiding Principles.” Plaintiff concedes that these principles are dated October 2015, which is after Key received the emails. Further, Hecker testified that those policies were not in place when Marshall emailed Key. Hecker Dep. 157:15-158:3, 162:22-25, 163:1-9, ECF No. 378-2. Nevertheless, Plaintiff argues that Defendant was unable to demonstrate that the oral policies in place at that time were different from the written policies. As the movant, Plaintiff has the burden to show inconsistencies so blatant to warrant calling this affidavit a sham. It is not Union National's burden to prove otherwise. Plaintiff has not met her burden here.

         vi. Paragraph 19

         Finally, Plaintiff takes issue with Hecker's statement that she and Stacy Huch were not able to locate the Change of Beneficiary Form on microfilm until January 13, 2016. Hecker Decl. ¶ 19, ECF No. 375-1. In an interrogatory response and several supplemental responses, Defendant stated that it first found the document on microfilm on January 13, ...

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