Prudential Ins. Co. of America v. Stewart
| Docket Number: | 2006-CA-01105-SCT Linked Case(s): 2006-CA-01105-SCT ; 2006-CA-01105-SCT ; 2006-CA-01105-SCT |
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| Supreme Court: | Opinion Link Opinion Date: 09-27-2007 Opinion Author: EASLEY, J. Holding: REVERSED AND RENDERED |
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| Additional Case Information: |
Topic: Insurance - Enforceable contract - Meeting of the minds Judge(s) Concurring: SMITH, C.J., WALLER, P.J., CARLSON, DICKINSON AND LAMAR, JJ.; RANDOLPH, J. CONCURS IN PART WITHOUT SEPARATE WRITTEN OPINION. Dissenting Author : GRAVES, J. Dissent Joined By : DIAZ, P.J. Concurs in Result Only: RANDOLPH, J. Procedural History: Jury Trial Nature of the Case: CIVIL - INSURANCE |
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| Trial Court: |
Date of Trial Judgment: 02-28-2006 Appealed from: Hinds County Circuit Court Judge: Winston Kidd Disposition: Jury Verdict in favor of Appellee Case Number: 251-02-1269-CIV |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA AND PRUCO LIFE INSURANCE
COMPANY |
ROY H. LIDDELL
WALTER D. WILLSON
RICHARD GERALD NORRIS, II |
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| Appellee: | PATTY STEWART, SALLY STEWART HESTER, GILES STEWART, LARRY STEWART, INDIVIDUALLY, AS CO-EXECUTORS OF THE ESTATE OF EDSEL STEWART; AND LARRY STEWART AND GILES STEWART AS COTRUSTEES OF THE STEWART FAMILY LIFE INSURANCE TRUST | ALEX A. ALSTON, JR. SHELDON G. ALSTON SHARON F. BRIDGES ELIZABETH LEE DECOUX | ||
Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Insurance - Enforceable contract - Meeting of the minds |
| Summary of the Facts: | Dr. Edsel Stewart retained James Bateman, an independent broker, to handle estate planning and to procure a life insurance policy in the amount of $1,000,000 to cover the expected tax liabilities of approximately $1,000,000. Dr. Larry Stewart, was the trustee of Dr. Stewart’s trust and was involved with his father’s procurement of life insurance. Only Dr. Stewart and Bateman were present when a $20,000 check, dated August 31, 1999, from the bank account of Dr. or Mrs. Edsel Stewart, indicating for a “fee,” was tendered to JMB Financial Group. On September 1, 1999, Dr. Stewart had a stroke and fell into a coma. On September 9, 1999, Larry received a faxed document from Bateman that needed his signature. Larry signed and approved the “Supplement to the Application” form. Larry did not inform Bateman that Dr. Stewart had had a stroke and was now in a coma. On September 17, 1999, Pruco issued a policy that differed from the policy face amount of $1,000,000 applied for by Dr. Stewart. The policy required an annual premium of $105,000, not $100,000 as requested in the Trust’s application. The policy was delivered to Bateman with delivery instructions and a requirement that he see the proposed insured personally and to not deliver the policy if any person covered under the contract is ill, disabled, has died, or has been put in an institution or prison. On September 21, 1999, Bateman attempted to contact Dr. Stewart. When Bateman could not locate Dr. Stewart, he contacted Larry and asked him to arrange a meeting with Dr. Stewart. On September 22, 1999, Larry contacted Bateman and inquired again about the delivery of the policy, informing him for the first time that Dr. Stewart was in a coma. Bateman informed Larry that there would be no insurance. Following Dr. Stewart’s death, Patty Stewart, Sally Stewart Hester, Giles Stewart, and Larry Stewart, individually and as co-executors of the Estate of Edsel Stewart, and Larry Stewart and Giles Stewart, as co-trustees of the Stewart Life Insurance Trust, filed suit against Prudential Insurance Company of America, Pruco Life Insurance, James Bateman, and JMB Financial Group to recover proceeds from the life insurance policy. The jury awarded compensatory and punitive damages to the plaintiffs. The plaintiffs filed a motion for attorneys’ fees and costs, which the trial court granted. The trial court entered a judgment against the defendants, Prudential and Pruco, in the amount of $1,400,000 in compensatory damages, $35,000,000 in punitive damages, and $501,638.02 in attorneys’ fees, for a final judgment of $36,901,638.02, at an 8% annual interest rate. The defendants appeal. |
| Summary of Opinion Analysis: | The issue in this case is whether a contract was ever formed between the trust and Prudential Life Insurance for life insurance on Dr. Stewart. In order to have an enforceable insurance contract, the essential elements are an offer and an acceptance, supported by consideration. The parties dispute whether there was an offer and an acceptance, and if so, which documents constituted the offer and the acceptance. The plaintiffs argue that the application was an acceptance of Prudential's offer to insure. Prudential argues that the policy was the offer and that there can be no meeting of the minds because the policy was never delivered to Larry or Dr. Stewart. Generally, through bargaining transactions conducted between the insurer’s agent and the potential insured, the agent invites the potential insured to make an offer by submitting an application. In the alternative, the insurer may make the offer through the agent’s express assent to the specific and definite terms of coverage. Such terms include all of the essential terms as delineated in the application – the subject matter of insurance, the period of coverage, the premium, and the amount of insurance. There must be a complete understanding between the parties as to these terms in order for such assertions by the insurer or the agent to constitute an offer. The terms of the application in this case included a face amount of $1,000,000 and a premium set at $100,000. Pruco contends that it issued a policy which would have constituted a counteroffer since it contained a premium $5,000 higher than that quoted in the application. The treatment of the policy as a counteroffer in this case is consistent with precedent. The terms of acceptance of Prudential’s counteroffer required Dr. Stewart’s signature on the COD endorsement, receipt of the initial premium, and delivery of the policy. Clearly, Dr. Stewart was unable to accept Prudential’s counteroffer since he was in a coma. Without an offer and acceptance, no contract was formed. As Prudential never presented the policy to the applicant for acceptance, there was no possibility of the occurrence of both an offer and acceptance. The evidence is insufficient to show a meeting of the minds as to whether an offer was made and what the terms of insurance coverage were. Thus, a contract was never formed between Larry, as representative of the Trust, and Prudential. |
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