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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT ________________________
No. 19-11178 ________________________
D.C. Docket No. 4:00-cv-217-CDL
TVPX ARS, INC.,
Plaintiff-Appellant/Cross-Appellee,
versus
GENWORTH LIFE AND ANNUITY INSURANCE COMPANY,
Defendant-Appellee/Cross-Appellant.
________________________
Appeals from the United States District Court for the Middle District of Georgia ________________________
(May 26, 2020)
Before MARTIN, NEWSOM, and O’SCANNLAIN,* Circuit Judges.
MARTIN, Circuit Judge:
* Honorable Diarmuid F. O’Scannlain, United States Circuit Judge for the Ninth Circuit, sitting by designation. Case: 19-11178 Date Filed: 05/26/2020 Page: 2 of 21
In 2018, TVPX ARS, Inc. (“TVPX”) filed an amended class action
complaint in the Eastern District of Virginia against Genworth Life and Annuity
Insurance Company (“Genworth”). The amended complaint alleged that Genworth
had violated the terms of one of its life insurance policies by imposing inflated
“cost of insurance” charges on its insureds. Genworth brought this action in the
Middle District of Georgia (the “District Court”), seeking to enjoin TVPX’s
Virginia lawsuit and arguing that TVPX’s claims were barred by a 2004 agreement
settling a prior class action about the same life insurance policies. The District
Court granted Genworth’s motion to enjoin TVPX’s Virginia action. It found that
TVPX’s complaint was barred by the doctrine of res judicata because its claims
were premised on a continuation of the same conduct at issue the 2004 settlement.
After careful consideration, and with the benefit of oral argument, we vacate the
order enjoining TVPX’s Virginia lawsuit and remand for factfinding consistent
with this opinion.
I.
At issue in this appeal are Genworth’s flexible premium, universal life
insurance policies. A universal policy is a type of life insurance that, in addition to
paying out a death benefit, includes an interest-bearing account that builds cash
value during the insured’s life. Policyholders can pay premiums into their account
to add to the cash value, and Genworth draws monthly deductions from the
2 Case: 19-11178 Date Filed: 05/26/2020 Page: 3 of 21
account’s cash value. So long as the cash value is high enough to cover the
following month’s deductions, the policy remains in force. If the cash value is
insufficient to cover the next month’s deductions, the policy lapses unless the
policyholder pays a premium that covers the deficit. Relevant here, one of
Genworth’s monthly deductions is a “cost of insurance” charge (“COI”), which,
according to Genworth’s policy terms, is determined “according to expectations of
future mortality.” Often referred to as a “mortality charge,” COI is intended to
compensate life insurers for the risk that the insured will die in a given policy year.
COI rates are recalculated by Genworth on a monthly basis.
A. The McBride Class Action
In 2000, Robert McBride filed a putative class action against Genworth, then
known as Life Insurance Company of Virginia, over the administration and
marketing of its universal life insurance policies. Complaint, McBride v. Life
Insurance Co. of Virginia, No. 4:00-cv-217 (M.D. Ga.) (“McBride”), ECF No. 1-
2. 1 The second amended complaint in McBride (the “McBride complaint”), which
was the operative complaint when that case settled, alleged that Genworth
deceived customers purchasing universal life policies by representing that their
premiums would remain level, vanish, or not be required in the future. It also
alleged that Genworth “wrongfully and improperly” assessed premiums in amounts
1 For the sake of clarity, we refer to Life Insurance Company of Virginia as “Genworth.” 3 Case: 19-11178 Date Filed: 05/26/2020 Page: 4 of 21
higher than the premiums contracted for by the parties by “applying an increased
cost of insurance to cash value as policy holders grew older over time.” The
McBride complaint further alleged that Genworth engaged in deceptive marketing
practices by failing to disclose it charged cost of insurance rates, “or that cost of
insurance is determined at the whim or discretion of [Genworth’s] management on
a monthly basis.”
In 2004, the parties entered into a settlement agreement that contained a
broad release. Among other things, class members agreed to release all “past,
present and future” causes of action that were “based upon, related to, or connected
with, directly or indirectly, in whole or in part (a) the allegations, facts, subjects or
issues set forth or raised in the [McBride action] or (b) the Released Conduct.”
The release also provided that class members were precluded and estopped from
bringing any future causes of action “related to in any way, directly or indirectly,
in whole or in part (a) the allegations, facts, subjects or issues set forth or raised in
the [McBride action] or (b) the Released Conduct, regardless of whether such
Causes of Action accrue after the [settlement agreement] is approved.” “Released
Conduct” was defined broadly to encompass essentially every aspect of
Genworth’s universal life policies, including “the design, development, marketing,
sale, suitability, administration, servicing, modification, underwriting, lapse,
termination, performance, payments, cash values, premiums, cost of insurance
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rates and charges, death benefits, coverage, maturity date, policy loans,
replacements, commissions, taxes, surrender charges, credited interest, expense
charges, or other costs of any Class Policy” (emphasis added).
A court-approved settlement notice was sent to the McBride class members.
It described the issues in the lawsuit, including the allegation that Genworth
breached the insurance policy by “increasing policy charges, including cost of
insurance rates.” The notice also said that if class members did not opt out of the
McBride settlement agreement, they might surrender claims relating to “cost of
insurance charges” and “cost of insurance rates.”
No class members objected to the settlement, and only 652 of over 350,000
total class members opted out. The final judgment, which adopted the McBride
settlement, said the terms of the settlement would be “forever binding on the
Plaintiffs, all other Class Members and all Releasors, and shall have res judicata
and other preclusive effect in all pending and future claims, lawsuits or other
proceedings . . . to the extent those claims, lawsuits or other proceedings involve
matters that were or could have been raised in this Action or are otherwise
encompassed by the Release.”
Also relevant to this appeal, the McBride settlement provided that “Nothing
in this Agreement shall prevent [Genworth] from increasing any Class Member’s
monthly policy deductions (i.e., the monthly cost of insurance charges and
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expenses of the Class Policy) in accordance with Pre-Settlement Policy
Administration.” The definition of Pre-Settlement Policy Administration
(“PSPA”) states that Genworth will
administer a Class Member’s Class Policy in the same manner that [Genworth] administered flexible premium adjustable life insurance policies prior to the Settlement. In particular, [Genworth] will administer a Class Member’s Class Policy in accordance with the terms of such policy and in accordance with [Genworth]’s interpretation of that policy’s provisions, such that the policy will stay in force only so long as the Class Policy’s cash value or cash value less surrender charges (whichever is applicable in the particular Class Policy) is sufficient to cover the monthly deductions (i.e. the monthly cost of insurance charges and expenses of the Class Policy), and that a Class Member may have to pay premiums in an amount or at a frequency greater than the Planned Premium or any other premium that the Class Member was paying or expected to pay in order to keep his/her Class Policy from lapsing.
B. The TVPX Class Action
TVPX purchased a Genworth life insurance policy for Lucius Whitaker in
2017. The policy was originally issued in 1984, with Arlene Whitaker as the
policy owner and Lucius Whitaker as the insured. In 2018, TVPX filed a putative
class action against Genworth in the Eastern District of Virginia, alleging that
Genworth had breached its insurance policies by failing to calculate COI rates in
accordance with mortality expectations. In TVPX’s original complaint, it alleged
that Genworth had “left its COI rates unchanged for decades,” notwithstanding the
fact that mortality expectations had improved significantly. The complaint cited
“mortality tables” published by the Society of Actuaries and the American 6 Case: 19-11178 Date Filed: 05/26/2020 Page: 7 of 21
Academy of Actuaries which showed that mortality rates that improved at a rate of
roughly 1% each year over the past three decades. TVPX asserted that, “[d]espite
these continuously improved mortality expectations . . . Genworth has never once
lowered the COI rates it charges its customers.
TVPX amended its complaint, and the new complaint largely mirrored its
original complaint, with two key differences. First, the amended complaint
narrowed the class period to the five years leading up to the amended complaint,
i.e. from 2013 through 2018. Second, TVPX deleted its allegation that Genworth
had “left its COI rates unchanged for decades,” and instead charged that Genworth
actually increased its COI rates from 2013 through 2018, even though mortality
expectations improved during that same time period.
C. District Court Proceedings
After TVPX filed its original complaint, Genworth filed a motion to dismiss
and a motion to stay in the Eastern District of Virginia. At the same time,
Genworth filed a motion in the Middle District of Georgia seeking to enjoin
TVPX’s Virginia action under the All Writs Act, 28 U.S.C. § 1651(a). 2 In its
motion to enjoin, Genworth argued that TVPX’s complaint was precluded by the
2 The All Writs Act grants district courts jurisdiction to “issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.” 28 U.S.C. § 1651(a). Under this statute, a district court may “issue such commands . . . as may be necessary or appropriate to effectuate and prevent the frustration of orders it has previously issued in its exercise of jurisdiction otherwise obtained.” United States v. N.Y. Tel. Co., 434 U.S. 159, 172, 98 S. Ct. 364, 372 (1977). 7 Case: 19-11178 Date Filed: 05/26/2020 Page: 8 of 21
2004 settlement and release because the two cases arose from the same factual
predicate. That is, Genworth asserted that whatever violations TVPX alleged
about its COI rates was merely a continuation of conduct Genworth was engaging
in at the time of the McBride settlement. Such conduct, according to Genworth,
was therefore necessarily covered by the McBride release. Separately, Genworth
filed a motion for leave to file a counterclaim against TVPX for breaching the
McBride settlement’s covenant not to sue.
TVPX made two arguments in response to Genworth’s motion to enforce.
First, it said the PSPA “carves out” a class member’s right to bring the claims
raised in TVPX’s complaint by requiring Genworth to “administer a Class
Member’s Class Policy in accordance with the terms of such policy.” And second,
TVPX argued that the McBride complaint could not preclude TVPX’s complaint
because the McBride action “target[ed] disparate rights, duties, and time frames
creating different facts and legal conclusions.”
The District Court granted Genworth’s motion to enjoin on res judicata
grounds. It found that TVPX’s Virginia complaint was premised on a continuation
of the same conduct that was at issue in McBride. If Genworth was engaging in
the same conduct in 2004, the District Court reasoned, then TVPX’s complaint was
necessarily precluded by the McBride settlement and judgment. The District Court
rejected TVPX’s argument that its claims were preserved by the PSPA. It found to
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the contrary that the PSPA allowed Genworth to “continue what it had been doing”
with regard to monthly deductions such as cost of insurance. Finally, the District
Court denied Genworth’s motion for leave to file a counterclaim on futility
grounds. This appeal followed.
II.
“In reviewing the district court’s decision to grant an injunction, including
an injunction under the All Writs Act, we apply an abuse-of-discretion standard.”
Adams v. S. Farm Bureau Life Ins. Co., 493 F.3d 1276, 1285 (11th Cir. 2007)
(quotation marks omitted). “A district court abuses its discretion if it applies an
incorrect legal standard, follows improper procedures in making the determination,
or makes findings of fact that are clearly erroneous.” Klay v. United Healthgroup,
Inc., 376 F.3d 1092, 1096 (11th Cir. 2004) (quotation marks omitted). A finding
of fact is clearly erroneous “when although there is evidence to support it, the
reviewing court on the entire evidence is left with the definite and firm conviction
that a mistake has been committed.” Anderson v. City of Bessemer City, 470 U.S.
564, 573, 105 S. Ct. 1504, 1511 (1985) (quotation marks omitted). And while we
review the grant of an injunction for an abuse of discretion, underlying questions
of law are nevertheless reviewed de novo. Adams, 493 F.3d at 1285.
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III.
On appeal, TVPX says its claims arise from a different factual predicate than
the claims in McBride, and thus are not barred by res judicata. Alternatively,
TVPX says the District Court order turned on the impermissible factual finding
that Genworth was engaged in the same conduct during the McBride action.
TVPX argues that because there was no evidence supporting such a finding, our
Court must, at a minimum, remand for discovery on that issue. Second, TVPX
says the PSPA expressly reserved TVPX’s right to bring claims raised in its
complaint. Genworth responds that TVPX’s complaint is not only barred under res
judicata, but also by a straightforward application of the McBride release.
A. Res Judicata
To invoke res judicata—also called claim preclusion—a party must establish
four elements: that the prior decision (1) was rendered by a court of competent
jurisdiction; (2) was final; (3) involved the same parties or their privies; and
(4) involved the same causes of action. Trustmark Ins. Co. v. ESLU, Inc., 299
F.3d 1265, 1269 (11th Cir. 2002). Here, the dispute is about the fourth element,
which asks whether a case “arises out of the same nucleus of operative facts, or is
based upon the same factual predicate, as a former action.” Griswold v. County of
Hillsborough, 598 F.3d 1289, 1293 (11th Cir. 2010) (quotation marks omitted).
This Court has recognized that res judicata applies not only to the precise legal
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theory presented in the previous litigation, but to all legal theories and claims
arising out of the same operative nucleus of fact. Trustmark, 299 F.3d at 1270 n.3.
When determining whether two cases arise out of a common nucleus of fact, “the
analysis centers on whether the primary right and duty are the same.” Adams, 493
F.3d at 1289 (quotation marks omitted). Beyond that, “[t]he most basic principles
of res judicata require that full relief must have been available in the first action in
order for the second action to be barred.” In re Atlanta Retail, Inc., 456 F.3d 1277,
1287 (11th Cir. 2006); see also Manning v. City of Auburn, 953 F.2d 1355, 1360
(11th Cir. 1992) (explaining that res judicata bars only those claims that “could
have been brought” in the original proceeding). These principles apply with equal
force when considering the preclusive effect of a prior class action settlement
agreement. Adams, 493 F.3d at 1290–91.
1. The primary right and duty at issue in TVPX’s complaint were also at issue in McBride.
We reject TVPX’s argument that the rights and duties at issue in its
complaint were not at issue in McBride. TVPX says the two actions are
qualitatively distinct because McBride “was about sales practices, marketing, and
misrepresentations made to induce people to buy the policies,” whereas TVPX’s
claims address only Genworth’s COI practices. Br. of Appellant/Cross-Appellee at
27. But the McBride action was not so circumscribed. While it is true that the
McBride complaint focused on Genworth’s misleading marketing practices, it also 11 Case: 19-11178 Date Filed: 05/26/2020 Page: 12 of 21
alleged that Genworth breached its insurance policies by assessing premiums in
amounts higher than the premiums contracted for by the parties. And one of the
mechanisms by which Genworth overcharged its policyholders, according to the
McBride complaint, was by “applying an increased cost of insurance to cash value
as policy holders grew older over time.”
When assessing the res judicata effect of a prior action, we are not limited to
the allegations raised in a prior complaint. See Adams, 493 F.3d at 1290–91
(determining res judicata effect of prior settlement by examining complaint, class
notice, and settlement). We may also consider the parties’ settlement documents to
determine the claims at issue in a prior action. See id. The McBride settlement
agreement said class members released Genworth from any causes of action
“related to or connected in any way with” various aspects of Genworth’s universal
life policies, including “cost of insurance rates and charges.” The class notice also
indicated that one of the issues in McBride was the allegation that Genworth
breached the insurance policy by “increasing policy charges, including cost of
insurance rates.”
This Court confronted a similar scenario in Adams, which was a lawsuit
over deceptive marketing related to “‘increasing premium’ insurance policies—
that is, claims based on [an insurer’s] failure to disclose that their policy premiums
might increase in the event interest rates turned out to be lower than those
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projected.” 493 F.3d at 1289. The defendant insurer argued these claims were
precluded by a prior class action in which the plaintiffs alleged fraud with respect
to “‘vanishing premium’ policies, that is, where the policy holder expected the
premium to disappear once the cash value was large enough to cover the required
premiums.” Id. Notwithstanding the plaintiffs’ attempt to distinguish “increasing
premium” policies from “vanishing premium” policies, a panel of this Court found
the two actions concerned the same “primary right and duty” because the original
class action alleged an “overarching scheme of fraud and deception by [the insurer]
in connection with the sale of these flexible premium types of policies.” Id. at
1290. Similarly, the McBride complaint, settlement, and class notice, when taken
together, establish that McBride was not limited only to Genworth’s marketing
practices. Rather, it encompassed an “overarching scheme of fraud and deception”
that extended to the manner in which Genworth administered various aspects of its
universal life policies, including COI. Id. Precisely the same primary right and
duty are at issue in TVPX’s action.
2. The record does not support the District Court’s finding that Genworth’s COI practices remain unchanged since McBride.
For res judicata to apply, however, it is not enough that the prior action
encompassed the same primary rights and duties as the subsequent complaint. The
plaintiff must have also been capable of bringing the same claims in the first
action. See In re Atlanta Retail, 456 F.3d at 1287. For this reason, a class release 13 Case: 19-11178 Date Filed: 05/26/2020 Page: 14 of 21
may not preclude a subsequent action unless “the released conduct arises out of the
‘identical factual predicate’ as the claims at issue in the case.” 6 Newberg on Class
Actions § 18:19 (5th ed. updated Dec. 2019). And an “identical factual predicate”
cannot exist unless the defendant was engaged in the same offending conduct
during the prior action. See Kilgoar v. Colbert Cty. Bd. of Educ., 578 F.2d 1033,
1035 (5th Cir. 1978) (“Subsequent conduct, even if it is of the same nature as the
conduct complained of in a prior lawsuit, may give rise to an entirely separate
cause of action.”)3; Manning, 953 F.2d at 1359 (holding that a common nucleus of
fact cannot exist where there has been a “modification of significant facts creating
new legal conditions” between the first and second suit).
TVPX’s amended complaint alleges that from 2013 through 2018, Genworth
calculated COI in a way not consistent with mortality expectations. The operative
complaint says nothing about whether Genworth’s COI charges were similarly
untethered to mortality expectations prior to the class period. Nevertheless, the
District Court found that TVPX’s lawsuit was premised on “a continuation of the
same conduct” occurring during the McBride action. This finding was based
solely on the McBride complaint’s allegation that Genworth engaged in deceptive
marketing practices by failing to “disclose” or “illustrate” that “cost of insurance is
3 In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed down before October 1, 1981. 14 Case: 19-11178 Date Filed: 05/26/2020 Page: 15 of 21
determined at the whim or discretion of [Genworth’s] management on a monthly
basis.” According to the District Court, this allegation established that Genworth
was calculating COI “on something other than the insured’s . . . expectations of
future mortality” at the time of the McBride action.
This record does not support this finding. The allegation relied on by the
District Court expressly referred to Genworth’s marketing practices. It says
nothing about how Genworth actually calculated COI at the time of the
McBride settlement. Indeed, Genworth itself has disclaimed the suggestion that it
has imposed or can impose “any [COI] rates it wants on a whim.” Br. of
Appellee/Cross-Appellant at 26. Therefore, the District Court’s reliance on this
allegation in the McBride complaint was misplaced.
Genworth argues that the District Court’s finding is supported by TVPX’s
allegation, in its initial complaint (since amended), that Genworth “left its COI
rates unchanged for decades.” Genworth characterizes this as an “admission” by
TVPX that its claims are based on a continuation of the same COI-related practices
that existed at the time of the McBride complaint. Id. at 30. However, TVPX
amended its complaint and deleted this allegation. The operative complaint alleges
that Genworth’s COI rates increased each year from 2013 through 2018. And of
course, an amended complaint “supersede[s] the former pleadings.” Hoefling v.
City of Miami, 811 F.3d 1271, 1277 (11th Cir. 2016). Once an amended complaint
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is filed, the original pleadings are considered “abandoned” and are “no longer a
part of [the plaintiff’s] averments.” Id. Genworth is therefore incorrect that TVPX
admitted that Genworth had the same COI rate for “decades.”4 And as Genworth
conceded during oral argument, there is nothing else in the record to indicate that
the way Genworth calculates and charges COI has remained unchanged since the
McBride action. Oral Argument at 20:25–21:06 (Apr. 21, 2020).
Because there is nothing in the record to suggest that Genworth’s COI-
related practices have remained the same since McBride, Genworth gets no help
from Freeman v. MML Bay State Life Insurance Company, 445 F. App’x 577 (3d
Cir. 2011) (unpublished). The plaintiff in that case brought a class action against a
life insurance company, alleging that it was “breaching the terms of [its policy] on
a monthly basis by deducting as mortality charges, amounts unrelated to
mortality.” Id. at 579. The defendant moved for summary judgment, arguing that
plaintiff’s claims were barred by a prior class settlement that released claims
“related to . . . cost of insurance.” Id. at 578. The district court granted the motion,
and the Third Circuit affirmed after concluding that the two cases had the “same
factual predicate.” Id. at 580. While Freeman bears similarities to this case, it
differs in one material respect. The complaint in Freeman “allege[d] that the
4 During oral argument on Genworth’s motion to enjoin, TVPX acknowledged that it amended this allegation after realizing it was “factually incorrect.”
16 Case: 19-11178 Date Filed: 05/26/2020 Page: 17 of 21
actions presently complained of (i.e. monthly breaches of contract with respect to
mortality charges) were occurring as early as 1999, which was during the
[previous] class period.” Id. Here, by contrast, there is nothing in the record to
indicate that Genworth engaged in the same offending conduct during the McBride
class period. Freeman is therefore inapposite.
Because the record is not sufficient to support a finding that Genworth’s
COI-related practices have remained unchanged since the McBride action, the
District Court abused its discretion in so finding.5 Where the record at the
pleading stage was insufficient to determine whether a prior action bars a current
complaint under res judicata, we have remanded to the district court for further
factual development. See Concordia v. Bendekovic, 693 F.2d 1073, 1074, 1076
(11th Cir. 1982) (vacating and remanding “[i]n view of the insufficiency of the
record” on whether, in the previous action, an issue was “actually litigated” and
whether final judgment was rendered); Baloco ex rel. Tapia v. Drummond Co., 640
F.3d 1338, 1351 (11th Cir. 2011) (reversing and remanding for “further
factual development as to the scope, if any, of the [plaintiffs’] involvement in” the
5 Genworth says that even if the District Court abused its discretion in concluding that TVPX’s claims were barred under the doctrine of res judicata, we may nevertheless affirm under the doctrine of release. Br. of Appellee/Cross-Appellant at 16. Even assuming a class settlement can independently foreclose a subsequent action under the doctrine of release, Genworth recognizes that the key question is whether the prior release and the new complaint arise from an “identical factual predicate.” Id. at 18. The existing record does not allow us to make that determination.
17 Case: 19-11178 Date Filed: 05/26/2020 Page: 18 of 21
prior litigation). Consistent with our past practice, we remand to the District Court
for limited discovery on whether Genworth has in any way changed how it
calculates and charges COI since the McBride settlement. 6
B. Pre-Settlement Policy Administration
Finally, we address TVPX’s argument that the PSPA expressly reserved its
claims by requiring Genworth to “administer a Class Member’s Class Policy in
accordance with the terms of such policy.” TVPX’s reading of this clause—as
preserving a class member’s right to sue Genworth for any alleged breach of its
universal life policy—is a strained one. We conclude instead that the PSPA
merely preserves Genworth’s right to administer its policies in the same manner as
it had before the McBride settlement.
As part of a settlement agreement, a party may expressly reserve the right to
sue on a particular claim in the future. Cf. Norfolk S. Corp. v. Chevron, U.S.A.,
Inc., 371 F.3d 1285, 1290 (11th Cir. 2004). In determining whether such a
6 Genworth claims TVPX failed to preserve its argument that discovery was needed before the District Court could find that Genworth’s COI-related conduct had remained unchanged. This argument fails for at least a couple of reasons. During oral argument before the District Court on Genworth’s motion to enforce, TVPX said that any finding on whether Genworth was handling COI charges in the same manner now as they did before was “at worst . . . a factual dispute . . . that cannot be decided on the pleadings.” Nor are we persuaded by Genworth’s argument that remand is unwarranted because TVPX did not formally move for discovery in the District Court. Res judicata is an affirmative defense under Federal Rule of Civil Procedure 8. Concordia, 693 F.2d at 1075. The burden to seek discovery on this topic therefore would have been on Genworth, as the moving party, rather than TVPX. See In re Piper Aircraft Corp., 244 F.3d 1289, 1296 (11th Cir. 2001) (“At all times the burden is on the party asserting res judicata . . . .”).
18 Case: 19-11178 Date Filed: 05/26/2020 Page: 19 of 21
reservation has been made, we interpret the settlement agreement according to
traditional principles of contract law. Id. at 1289–90. Here, the McBride parties
agreed that their settlement would be interpreted under Virginia law. Under
Virginia rules of contract interpretation, contract terms are read in context, see
Babcock & Wilcox Co. v. Areva NP, Inc., 788 S.E.2d 237, 244 (Va. 2016), and
courts must attempt to give effect to the entire contract, see Condo. Servs., Inc. v.
First Owners’ Ass’n of Forty Six Hundred Condo., Inc., 709 S.E.2d 163, 170 (Va.
2011).
TVPX’s proposed construction of the PSPA violates these basic principles
of contract interpretation. If, as TVPX claims, the PSPA reserves a class
member’s right to sue Genworth for any alleged policy violation, the PSPA would
render much of the McBride release inoperable. Under TVPX’s interpretation,
class members could sue Genworth for the precise policy violations at issue in
McBride, so long as those alleged violations continued beyond the date of the
McBride settlement agreement. This is directly at odds with the settlement’s
release of all “past, present and future” causes of action related to Genworth’s
administration of its policies.
Beyond that, TVPX reads the phrase, “in accordance with the terms of such
policy,” out of context. The PSPA provides that Genworth will “administer a
Class Member’s Class Policy in the same manner that [it] administered flexible
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premium adjustable life insurance policies prior to the settlement.” This means,
“[i]n particular,” that Genworth will “administer a Class Member’s Class Policy in
accordance with the terms of such policy and in accordance with [Genworth]’s
interpretation of that policy’s provisions, such that the policy will stay in force
only so long as the Class Policy’s cash value . . . is sufficient to cover the monthly
deductions . . . , and that a Class Member may have to pay [higher or more
frequent] premiums” than “the Class Member was paying or expected to pay in
order to keep his/her Class Policy from lapsing.”
To the extent the PSPA says Genworth will administer policies “in
accordance with the terms of such policy,” the rest of the PSPA makes clear that
those “terms” refer to Genworth’s right to continue charging monthly deductions
and to lapse a policy if the policyholder does not cover the monthly deductions.
Whether Genworth was permitted to impose monthly deductions on its
policyholders (and whether the failure to pay those deductions would result in the
cancellation of a policy) was a central dispute in McBride, and the PSPA appears
to resolve it in Genworth’s favor. When read in its entirety, therefore, the PSPA
does not constitute a preservation of rights, but instead clarifies that Genworth may
continue administering its policies in the same manner that it did before the
settlement.
20 Case: 19-11178 Date Filed: 05/26/2020 Page: 21 of 21
IV.
For these reasons, we VACATE the District Court’s order enjoining
TVPX’s complaint. We REMAND for further factual development of whether
Genworth has in any way altered how it calculates or charges COI since the
McBride settlement. 7
7 We do not reach Genworth’s argument on cross-appeal that the District Court erred in denying its motion for leave to file a counterclaim. Genworth’s proposed counterclaim alleges that TVPX breached the McBride settlement’s covenant not to sue for released conduct. As damages, Genworth seeks attorney’s fees and costs incurred in defending against TVPX’s claims. The District Court held that Genworth’s claim would be futile under Virginia law, which does not allow the recovery of attorney fees absent express statutory or contractual grant, neither of which exists here. But it matters not whether Genworth would be entitled to damages if it cannot first demonstrate that TVPX violated the covenant not to sue for released conduct. Because we cannot determine, on this record, whether TVPX’s claims are premised on released conduct, we need not now decide whether Genworth’s counterclaim is futile under Virginia law. 21