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McClendon v. North Carolina Mutual Life Insurance Co.

United States District Court, M.D. Tennessee, Nashville Division

July 26, 2019

MARIETTA MCCLENDON, on behalf of herself and all others similarly situated, Plaintiff,




         Pending before the Court are three motions by Defendant seeking dismissal of the claims in Plaintiff's Second Amended Complaint and Plaintiff's Motion for Partial Summary Judgment. Prior to Plaintiff filing the Second Amended Complaint, Defendant moved for summary judgment on Plaintiff's claims of breach of contract, violation of the North Carolina Unfair and Deceptive Trade Practices Act (“NCUDTPA”), and unjust enrichment. (Doc. No. 79.)[1] Plaintiff's Second Amended Complaint (Doc. No. 108) added a claim for violation of the Alabama Deceptive Trade Practices Act (“ADTPA”). Defendant moved to dismiss the new ADPTA claim and the NCUDTPA claim. (Doc. No. 124.) Defendant then filed a Supplemental Motion for Summary Judgment (Doc. No. 130). Plaintiff filed her own Motion for Partial Summary Judgment seeking summary judgment on her claims for breach of contract and violations of the ADTPA. (Doc. No. 144.)

         For the reasons stated below, Defendant's motions for summary judgment are GRANTED in part and DENIED in part, Defendant's motion to dismiss the ADPTA and NCUDTPA claims is GRANTED, and Plaintiff's motion for partial summary judgment is GRANTED in part and DENIED in part.

         I. BACKGROUND

         In 1984, Plaintiff's mother purchased a $10, 000 whole life insurance policy from Protective Industrial Insurance Company of Alabama (the “Policy”) to insure the life of Plaintiff's brother. (Am. Compl. at ¶ 36, Doc. No. 108.) The monthly premium for the policy was $17.06, which consisted of $15.46 for the preferred whole life premium that was to be paid for the duration of the policy, $0.50 per month for a waiver of premium rider benefit, and $1.10 per month for an accidental death benefit rider. (Doc. No. 82-1.) The policy riders had 27-year terms.

         In 1995, Plaintiff's mother took out a loan against the policy in the amount of $1, 533.90 at an interest rate of 5% (“Policy Loan”). (Am. Compl., Doc. No. 108 at ¶ 39; Policy Loan Disc. Stmt., Doc. No. 139-19.) The parties dispute the amount and frequency of payments made toward the loan. Defendant claims only two payments were made - $160 in 2004 and $400 in 2006. (Doc. No. 169-26.) Plaintiff claims additional payments were made and that the policy loan was entirely paid off. (McClendon Dep., Doc. No. 169-3 at 185-86.)

         In 2009, Defendant acquired the Policy following the insolvency of the issuing company.[2] (Am. Compl. ¶ 17-20, Doc. No. 108.) Defendant continued to charge premiums for the policy riders after the rider term expired in 2011. From June 2011 to March 2016, Defendant charged an additional $1.60 per month for policy riders covering Waiver of Premium and Accidental Death. (Am. Compl., Doc. No. 108 at ¶ 38.) Payments related to the policy riders during that period totaled $92.80. (Id.)

         On March 16, 2016, Plaintiff's brother passed away. (Doc. No. 139-21.) At the time of his death, Plaintiff was the sole beneficiary on the life insurance policy. (Doc. No. 82-2.) Following the death of her brother, Plaintiff assigned the proceeds of the Policy to Roberts Funeral Services. (Assignment of Proceeds and Power of Attorney, Doc. No. 82-3.) The assignment of proceeds stated: “I hereby assign, set over and transfer to the said ROBERTS FUNERAL SERVICES, the sum of ten thousand dollars ($10, 000) of the proceeds and or refund of premiums of the policy(ies) … which is or may be due me from the said Company as beneficiary of the said policy(ies).” (Id.) The document included a power of attorney appointing Roberts Funeral Services attorney in fact to endorse her name on the check representing the assigned proceeds. (Id.)

         Defendant calculated that the benefit due on the policy was $4, 896.46, representing the value of the Policy, minus the principal and 6% interest, and sent that amount to the funeral home on May 4, 2016. (Am. Compl., Doc. No. 108 at ¶ 41; Doc. No. 82-5.) Defendant corrected the interest calculation when it received loan documents specifying the correct interest amount was 5% and issued a check to Plaintiff in the amount of $299.36, representing the 1% difference in interest. (Am. Compl., Doc. No. 108 at ¶ 42.) Plaintiff was not satisfied with the explanation of the calculation and did not cash the check. (Id.)

         Alleging that similar problems affected thousands of policy holders, Plaintiff filed a class action complaint against Defendant on behalf of herself and all others similarly situated. Plaintiff's Second Amended Complaint alleges breach of contract, unjust enrichment, violation of the Alabama Deceptive Trade Practices Act, Ala. Code §8-19-1 et seq., and violation of the North Carolina Unfair or Deceptive Trade Practices Act, N.C. Gen Stat. § 75-1.1 et seq.[3]


         A. Motion to Dismiss

         Federal Rule of Civil Procedure 12(b)(6) permits dismissal of a complaint for failure to state a claim upon which relief can be granted. For purposes of a motion to dismiss, a court must take all the factual allegations in the complaint as true. Ashcroft v. Iqbal, 556 U.S. 662 (2009). To survive a motion to dismiss, a complaint must contain sufficient factual allegations, accepted as true, to state a claim for relief that is plausible on its face. Id. A claim has facial plausibility when the plaintiff pleads facts that allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. In reviewing a motion to dismiss, the Court construes the complaint in the light most favorable to the plaintiff, accepts its allegations as true, and draws all reasonable inferences in favor of the plaintiff. Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007).

         In considering a Rule 12(b)(6) motion, the Court may consider the Complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to Defendant's motion to dismiss so long as they are referred to in the Complaint and are central to the claims. Bassett v. National Collegiate Athletic Assn., 528 F.3d 426, 430 (6th Cir. 2008).

         B. Summary Judgment

         Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The party bringing the summary judgment motion has the initial burden of informing the Court of the basis for its motion and identifying portions of the record that demonstrate the absence of a genuine dispute over material facts. Rodgers v. Banks, 344 F.3d 587, 595 (6th Cir. 2003). The moving party may satisfy this burden by presenting affirmative evidence that negates an element of the non-moving party's claim or by demonstrating an absence of evidence to support the nonmoving party's claims. Id.

         In evaluating a motion for summary judgment, the court views the facts in the light most favorable for the nonmoving party and draws all reasonable inferences in favor of the nonmoving party. Bible Believers v. Wayne Cty., Mich., 805 F.3d 228, 242 (6th Cir. 2015); Wexler v. White's Fine Furniture, Inc., 317 F.3d 564, 570 (6th Cir. 2003). The Court does not weigh the evidence, judge the credibility of witnesses, or determine the truth of the matter. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). Rather, the Court determines whether sufficient evidence has been presented to make the issue of material fact a proper jury question. Id. The mere scintilla of evidence in support of the nonmoving party's position is insufficient to survive summary judgment; instead, there must be evidence of which the jury could reasonably find for the nonmoving party. Rodgers 344 F.3d at 595.

         III. ANALYSIS

         A. Deceptive and Unfair Trade Practices

         In the Second Amended Complaint, Defendant alleges claims of deceptive and unfair trade practices under the NCUDTPA and the ADTPA.

         In a diversity action, state law governs the parties' claims. (Order on Choice of Law, Doc. No. 46 (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938).) “Choice-of-law analysis in a diversity action is governed by the law of the state where the federal court sits.” In re Air Crash Disaster, 86 F.3d 498, 540-41 (6th Cir. 1996) (citing Klaxton Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). Tennessee's choice-of-law rules will determine which state's unfair trade practices law applies to the claims in this case.[4]See Premium Freight Mgmt., LLC v. PM Engineered ...

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