Claire Kay v. United of Omaha Life Ins. Co.

709 F. App'x 320
CourtCourt of Appeals for the Sixth Circuit
DecidedSeptember 8, 2017
Docket16-1576
StatusUnpublished
Cited by7 cases

This text of 709 F. App'x 320 (Claire Kay v. United of Omaha Life Ins. Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Claire Kay v. United of Omaha Life Ins. Co., 709 F. App'x 320 (6th Cir. 2017).

Opinion

HELENE N. WHITE, Circuit Judge.

Claire Kay (“Mrs. Kay”) and Claymore Construction Company (Claymore, collectively, Plaintiffs) were the beneficiaries of a $2 million life-insurance policy that Claire’s husband Dr. Sherman Kay purchased from United of Omaha Life Insurance Company (United) in 2001. After Dr. Kay died in January 2009, United denied coverage, asserting ’ that the policy had lapsed because the December 2008 and January 2009 premiums had not been paid before Dr. Kay’s death. Plaintiffs sued, alleging breach of contract. A jury found in Plaintiffs’ favor, but this court reversed due to flawed jury instructions. After remand, a second jury again found in Plaintiffs’ favor. United now argues that the district court erred by denying its post-remand request to submit a second summary judgment motion, by incorrectly instructing the jury, and by denying United’s motions for post-trial relief. We AFFIRM.

I. BACKGROUND 1

A. Facts

As this court previously explained:

In 2001, Sherman Kay bought a $2 million life-insurance policy from United. At the time of his death, the plaintiffs ... were the policy’s joint owners and beneficiaries.
The policy’s premium was due by the 12th day of each month. If Kay failed to pay by that date, the policy remained in force during a 31-day grace period. If Kay did not pay by the end of the grace period, the policy would terminate. In that event, the policy’s terms required Kay to do three things to reinstate it: first, submit a written application signed *322 by the owner and the insured; second, submit evidence of insurability satisfactory to United; and third, pay any past-due premiums with interest.
In practice, however, United also allowed Kay to reinstate the policy another way — through a so-called “special offer” that was not part of the policy’s terms. Specifically, once the grace period expired, United would send Kay a notice in which it offered to reinstate the policy if Kay simply paid the outstanding premium by the date stated in the notice, so long as the payment was made “during the lifetime of all persons insured under the policy.” Kay — who routinely paid premiums late — reinstated the policy in this manner at least seven times.

Kay v. United of Omaha Life Ins. Co. (Kay I), 562 Fed.Appx. 380, 383 (6th Cir. 2014). Further, United did not send out premium notices on a regular schedule; rather, it only sent the notice that a given month’s premium was due after it received the premium for the prior month. See id.

Dr. Kay apparently suffered a serious stroke in early 2008. In February, Mrs. Kay began paying the monthly life-insurance premiums. In May, she telephoned United, told a representative that she did not want the policy to terminate, requested a payment history, and asked United to contact her if any payments were late. Up to that point, United had been sending premium notices to Claymore at its corporate office. Claymore ceased operations in the summer of 2008. This caused some confusion, but eventually Mrs. Kay directed United to send premium notices to Dr. Kay at the family home, and it is undisputed that all premium payments through October 2008 were made. It is also undisputed that the November 2008 premium (due November 12) was not paid until December 11, almost a month late, but two days before the expiration of the policy’s 31-day grace period.

The December 2008 premium was due on December 12. United’s files contain three notices regarding the December premium, dated December 19, 2008, December 26, 2008, and January 13, 2009. E.ach is addressed to Dr. Kay at the Kay family home. On the back side of the December 19 notice is the following text: “Unless each premium billed on this Notice is paid on or before the due date or within the grace period, each policy on which the premium is not paid will lapse and all payments thereon will become forfeit [sic] except as otherwise stated in the contract.” (Appellant’s App. at 175.) The parties dispute whether these notices were actually sent, and whether Mrs. Kay received them.

Dr. Kay passed away on January 23, 2009. The parties agree that the December 2008 and January 2009 premiums were both unpaid and past-due at that point, and that United advised the Kays’ independent insurance agent on January 26 that it would reject any claim for benefits. The parties disagree, though, on whether the policy was still in effect at that point. Believing it was, Mrs. Kay attempted to make the outstanding payments on January 30, but United returned her check. She filed a claim for benefits in February, but United denied it.

B. Procedural History

Plaintiffs brought this action in state court in May 2009, and United removed it to federal court. As relevant here, Plaintiffs pleaded two distinct claims. First, Plaintiffs alleged that United committed a breach of contract by, among other things, refusing to accept late payments when it had done so in the past (an equitable es-toppel theory), failing to act in good faith, and failing to pay benefits upon Dr. Kay’s *323 death when the policy was still in effect because United had not terminated it in accordance with Michigan law. 2 Second, Plaintiffs sought a declaratory judgment that because United had not complied with the same Michigan law, the policy remained in effect when Dr. Kay died. Prior to the first trial, Plaintiffs agreed, in their pleadings and the joint pretrial order, that United had sent the notices regarding the December 2008 premium to Dr. Kay at the family home.

The case eventually proceeded to trial, and a jury found in Plaintiffs’ favor on the breach-of-contract claim. Because the jury was not instructed on any of the specific theories of liability, and returned a general verdict for Plaintiffs on their breach-of-contract claim, we do not know which theory or theories of liability the jury accepted. The district court did not rule on Plaintiffs’ declaratory judgment claim, and Plaintiffs did not ask the court to do so.

United appealed, arguing, as relevant here, that the district court should have granted its summary judgment motion or its Rule 50(a) motion, and had erred by not instructing the jury that Michigan law provides a rebuttable presumption that a mailed letter (e.g., the premium notice dated December 19, 2008) has been delivered and received. Kay 1, 562 Fed.Appx. at 384-86; see Goodyear Tire & Rubber Co. v. City of Roseville, 468 Mich. 947, 664 N.W.2d 751 (2003), Plaintiffs cross-appealed, arguing that they were entitled to summary judgment on their breach-of-contract claim because United had not sent the termination notice required by Michigan law, and that the district court should have decided their declaratory-judgment claim in their favor for the same reason.

In April 2014, this court held that it was without jurisdiction to consider either side’s request for judgment as a matter of law, because neither party renewed its request after trial. Kay I, 562 Fed.Appx. at 384, 387 (citing Ortiz v. Jordan, 562 U.S.

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709 F. App'x 320, Counsel Stack Legal Research, https://law.counselstack.com/opinion/claire-kay-v-united-of-omaha-life-ins-co-ca6-2017.