Hicks v. North Am. Co. for Life & Health Ins.
| Docket Number: | 2008-CA-01364-COA Linked Case(s): 2008-CA-01364-COA2008-CT-01364-SCT |
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| Court of Appeals: |
Opinion Link Opinion Date: 01-05-2010 Opinion Author: Carlton, J. Holding: Affirmed in part, reversed and remanded in part. |
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| Additional Case Information: |
Topic: Insurance - Fraud - Intentional misrepresentation - Breach of fiduciary duty - Statute of limitations - Section 15-1-49 - Fraudulent concealment Judge(s) Concurring: King, C.J., Lee and Myers, P.JJ., Irving, Griffis, Ishee, Roberts and Maxwell, JJ. Non Participating Judge(s): Barnes, J. Procedural History: Summary Judgment Nature of the Case: CIVIL - INSURANCE |
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| Trial Court: |
Date of Trial Judgment: 07-03-2008 Appealed from: Benton County Circuit Court Judge: Robert P. Chamberlin Disposition: SUMMARY JUDGMENT ENTERED FOR INSURANCE DEFENDANTS Case Number: B2004-066 |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | SARAH B. HICKS, L.T. HICKS, MARTHA JO HALE, WILLIAM M. EVANS, ROBERT D.
CHILDERS AND RAY D. SPENCER |
WILLIAM C. SPENCER, MICHAEL D. GREER, WILLIAM DANIEL PRESTAGE |
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| Appellee: | NORTH AMERICAN COMPANY FOR LIFE AND HEALTH INSURANCE AND CLIFF N. HANCOCK D/B/A HANCOCK INSURANCE AGENCY | BO RUSSELL, BRIAN CARTER SMITH, ROBERT W. BRADFORD, WILLIAM F. RAY, WILTON V. BYARS | ||
| Appellee #2: | ||||
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 - Fraud - Intentional misrepresentation - Breach of fiduciary duty - Statute of limitations - Section 15-1-49 - Fraudulent concealment |
| Summary of the Facts: | Six people purchased universal life insurance policies from North American Company for Life and Health Insurance through Cliff Hancock d/b/a Hancock Insurance Agency. They contend that Hancock sold them universal life insurance policies with terms that differed from the coverage Hancock verbally assured them they were buying. Universal life insurance constitutes a flexible insurance product that differs from whole life and term life. Universal life provides a flexible death benefit. It also can build a cash value at a lower cost than whole life, and over time that cash value grows tax deferred in accordance with applicable interest rates. Additionally, the insured maintains the ability to borrow from the cash value or withdraw from the cash value. However, such loans or withdrawals reduce the death benefit. The plaintiffs filed a complaint against North American and Hancock alleging fraud, intentional misrepresentation, fraudulent concealment, fraudulent inducement, civil conspiracy, breach of obligations of good faith and fair dealing, negligent misrepresentation, breach of fiduciary and quasi-fiduciary obligations, negligence and/or gross negligence, and tortious breach of contract. North American and Hancock filed separate motions for summary judgment. The circuit court granted summary judgment in favor of North American and Hancock and dismissed the plaintiffs’ complaint with prejudice. The plaintiffs appeal. |
| Summary of Opinion Analysis: | Issue 1: Statute of limitations Section 15-1-49(1) provides for a three-year statute of limitations for all actions for which no other period of limitation has been prescribed. This limitations period begins within three years after the cause of action accrued. However, under section 15-1-49(2), the statute of limitations commences upon discovery of an injury, and discovery is an issue of fact to be decided by a jury when there is a genuine dispute. In this case, the plaintiffs bought their policies in the early and late 1990s. However, they assert that their cause of action accrued in 2004, when they discovered that their policies would terminate unless they increased their premium payments, contradicting Hancock’s prior alleged representations. If the plain language of the policy does not clearly contradict the agent’s representations such that the insured is put on notice, a fraud claim accrues when the insured becomes aware of the misrepresentation. The plaintiffs argue that North American, through ambiguous terms and policy language, purposely concealed that the policy the plaintiffs actually bought differed from Hancock’s oral assurances about the policy premiums and life of the policy. In order to prove fraudulent concealment and to toll the statute of limitations, the plaintiffs must show that some affirmative act or conduct was done and prevented discovery of a claim, and due diligence was performed on their part to discover it. The five policies issued in 1992 and 1993 were ambiguous. The definition of maturity date in the policies fails to explain that the payment of the planned premium will not be sufficient to keep the policy in effect to the maturity date. Rather, the definition simply explains that the insurance may terminate prior to the maturity date if “sufficient” premiums are not paid, without defining sufficient premium. Moreover, the 1992 and 1993 policies contain no definition for base premium, and the definition of periodic premium also contains no definition or reference to sufficiency of premium or planned premium. The periodic premium terms fail to explain that the planned premium is insufficient to keep the policy effective. The 1992 and 1993 policies define the grace period in reference to the base premium expiry date, but not in relation to the planned premium. Likewise, the projection of policy values fails to rectify any ambiguity regarding the insufficiency of the planned premium. In contrast to the five policies issued in 1992 and 1993, Hale’s policy, purchased in 1998, contains a projection of benefit and policy values, as well as a new index that defines sufficiency of premium and annual report. While the language of Hale’s policy is unambiguous, the language of the five policies issued in 1992 and 1993 is ambiguous. When reviewing the terms of the policy in the light most favorable to the plaintiffs, except Hale, a genuine issue of material fact exists as to when the cause of action accrued, specifically when a reasonable policyholder should have realized that the terms of the policy conflicted with the alleged oral representations by Hancock. Thus, the grant of summary judgment as to these five claims is reversed. Issue 2: Breach of fiduciary duty The plaintiffs argue that the trial court erred in granting summary judgment when material issues of genuine fact existed regarding whether they possessed a fiduciary relationship with Hancock. It is well established under Mississippi law that no fiduciary duty exists between an insurer and an insured, or between the agent of the insurer and insured, in the context of first-party insurance contracts. Here, the record is void of evidence of any special circumstances which would warrant departure from the general rule that no fiduciary relationship exists between an insurer and insured. |
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