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Sharp v. Valley Forge Life Insurance Co.

May 15, 2007

ELLIS A. SHARP, PLAINTIFF,
v.
VALLEY FORGE LIFE INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Thomas A. Varlan United States District Judge

(VARLAN/SHIRLEY)

MEMORANDUM OPINION

This civil action is before the Court on plaintiff Ellis Sharp's ("Plaintiff's") Motion for Summary Judgment [Doc. 11] and defendant Valley Forge Life Insurance Company ("Defendant's") Motion for Summary Judgment [Doc. 14]. Defendant has filed a response in opposition to Plaintiff's motion [Doc. 17]. Plaintiff has not responded to Defendant's motion and the time for doing so has passed. See L.R. 7.1(a), 7.2.

The Court has carefully considered the pending motions, along with the parties' briefs, affidavits, and other relevant pleadings. For the reasons set forth herein, Defendant's motion for summary judgment [Doc. 14] will be granted and Plaintiff's motion for summary judgment [Doc. 11] will be denied.

I. Relevant Facts

On or about December 27, 1999, Plaintiff signed an application for a life insurance policy with Defendant. [Doc. 14, Attachment 2 at pp. 5-7, Attachment 3.] The application was complete and accurate. [Doc. 14, Attachment 2 at pp. 5-7.] The application reflected Plaintiff's correct primary home address.*fn1 [Id. at p. 5.] Plaintiff successfully obtained a life insurance policy (the "Policy") from Defendant and made regular premium payments for several years. [Id. at p. 5.] Around July 4, 2004, Plaintiff temporarily moved out of his primary home address and instead lived at multiple secondary addresses. [Id. at p. 14-15.] Plaintiff did not resume living at his primary home address until late February or early March of 2005. [Id. at p. 14.] While Plaintiff was living at the secondary addresses, Plaintiff's ex-wife delivered Plaintiff's mail to him on a sporadic basis. [Id. at p. 13.] Plaintiff never notified Defendant of Plaintiff's secondary addresses. [Id. at p. 14.]

On December 3, 2004, Defendant mailed a Statement of Premium Due to Plaintiff's primary home address. [Doc. 16 at p. 4.] The Statement of Premium Due indicated that Plaintiff's Policy premium payment of $661.42 was due on or before December 28, 2004. [Doc. 16, Attachment 4]. Defendant has no record of the December 3, 2004, Statement of Premium Due being returned as undeliverable, nor of the post office notifying Defendant of a change of address by Plaintiff. [Doc. 16 at p. 4.] By the terms of the Policy, Plaintiff had a thirty-one day grace period, ending on January 28, 2005, to make the December 2004 premium payment. [Doc. 12, Attachment 2 at p. 27.] Defendant did not receive Plaintiff's December 2004 Policy premium payment during the grace period. [Doc. 16 at p. 5.] Under the Terms of the Policy, failure to pay the December 2004 Policy premium during the grace period resulted in the automatic expiration of the policy. [Doc. 12, Attachment 2 at p. 27; Doc. 16 at p. 5.]

Under the Policy, after the grace period, Plaintiff had a twenty day period, ending on February 17, 2005, during which he could reinstate the Policy without having to provide evidence of insurability. [Doc. 12, Attachment 2 at p. 27; Doc. 16 at p. 5.] In recognition of this twenty day reinstatement period, on January 28, 2005, Defendant mailed a Late Payment Offer to Plaintiff's primary home address. [Doc. 16 at p. 5.] Defendant has no record of the January 28, 2005, Late Payment Offer being returned as undeliverable, nor of the post office notifying Defendant of a change of address by Plaintiff. [Id. at p. 6.] Defendant did not receive Plaintiff's December 2004 premium payment during the twenty day reinstatement period. [Id.]

Under the terms of the Policy, after the twenty day reinstatement period, the Policy could only be reinstated if Plaintiff provided proof of insurability and paid all past due premiums with six percent interest compounded annually. [Doc. 12, Attachment 2 at p. 27.] On February 28, 2005, Defendant mailed a Notice of Policy Termination to Plaintiff's primary home address and to Plaintiff's local insurance agent. [Doc. 16 at p. 6]. Defendant has no record of either copy of the February 28, 2005, Notice of Policy Termination being returned as undeliverable, nor of the post office notifying Defendant of a change of address by Plaintiff or Plaintiff's local insurance agent. [Id.]

Plaintiff did not receive the February 28, 2005, Notice of Policy Termination until approximately March 10, 2005, when Plaintiff's ex-wife delivered a stack of Plaintiff's mail to Plaintiff. [Doc. 14, Attachment 2 at p. 9.] It appears that, because Plaintiff did not return to his primary home address until late February or early March of 2005, and because of his infrequent receipt of mail, Plaintiff either did not receive the December 3, 2004, and January 28, 2005, mailings, or received those two mailings at the same time he received the February 28, 2005, mailing. Upon receipt of the Notice of Policy Termination, Plaintiff mailed Defendant a check, dated March 10, 2005, in the amount of $661.42 for the December 2004 Policy premium and a letter explaining the delay in payment. [Id. at p. 10.]

On March 14, 2005, Defendant received Plaintiff's check of March 10, 2005. [Doc. 16 at p. 7.] Per Defendant's normal procedure, Plaintiff's check was deposited with all other checks received on March 14, 2005. [Id. at pp. 7-8.] On March 15, 2005, Defendant determined that Plaintiff's check of March 10, 2005, had been received after the Policy had lapsed and initiated the process for refunding Plaintiff's $661.42 payment. [Id. at p. 8.] On March 18, 2005, Defendant mailed Plaintiff a letter indicating that Plaintiff's check of March 10, 2005, had been received after the Policy had lapsed, that the Policy was no longer valid, and that a refund of Plaintiff's late payment would be sent under separate cover. [Doc. 16, Attachment 11.] On or about March 21, 2005, Defendant mailed Plaintiff a refund check in the amount of $661.42. [Doc. 16 at p. 9.] Plaintiff received the refund check, but returned the check to Defendant uncashed. [Doc. 14, Attachment 2 at p. 16.] Some time later Defendant mailed Plaintiff another refund check, which Plaintiff again returned to Defendant uncashed. [Id.]

During the refund process, Plaintiff also attempted to reinstate the Policy by providing proof of insurability. [Id. at p. 18.] On or around March 11, 2007, Plaintiff filled out an application for reinstatement of the Policy and mailed it to Defendants. [Doc. 16 at p. 8.] However, the application was incomplete, so on or around March 17, 2007, Plaintiff's local insurance agent returned the application for reinstatement to Plaintiff so that Plaintiff could complete the form and return it to Defendant. [Id.] Plaintiff also underwent a physical examination in conjunction with the reinstatement application. [Doc. 14, Attachment 2 at pp. 18-19.] Defendant denied Plaintiff's application for reinstatement because of Plaintiff's medical history. [Id. at pp. 19-20.]

Plaintiff subsequently filed suit in the Chancery Court of Knox County, Tennessee, seeking a declaratory judgment that, because Defendant had negotiated Plaintiff's check, it should be estopped from canceling Plaintiff's policy for non-payment. [Doc. 1, Attachment 2.] Defendant then removed the action to this Court. [Doc. 1.] The ...


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