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McClendon v. North Carolina Mutual Life Insurance Co.

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

January 9, 2020

MARIETTA MCCLENDON, Plaintiff,
v.
NORTH CAROLINA MUTUAL LIFE INSURANCE COMPANY, Defendants.

          BROWN MAGISTRATE JUDGE.

          MEMORANDUM

          WILLIAM L. CAMPBELL, JR. UNITED STATES DISTRICT JUDGE.

         Pending before the Court is Plaintiff's Motion to Certify Class. (Doc. No. 134; corrected copy filed at Doc. No. 143). Defendant filed a response (Doc. No. 173), Plaintiff filed a reply (Doc. No. 183). Almost three months after filing the initial motion to certify class, Plaintiff requested leave to file a supplemental memorandum in support of the motion for class certification. (Doc. No. 156).[1] Defendant filed an opposition to Plaintiff's motion to supplement the motion for class certification (Doc. No. 159), Plaintiff filed a reply (Doc. No. 164), and Defendant filed a sur-reply (Doc. No. 167). Following the Court's ruling on the motions for summary judgment, the parties each filed supplemental briefs on the motion for class certification. (Docs. Nos. 192 and 194).

         For the reasons below, Plaintiff's Motion to Certify Class (Doc. No. 134) is GRANTED / DENIED. Plaintiff's Motion to File a Supplemental Memorandum in Support of the Motion for Class Certification (Doc. No. 156) is MOOT.

         I. BACKGROUND

         Plaintiff Marietta McClendon was the beneficiary of a life insurance policy purchased in 1984 by her mother to insure the life of Plaintiff's brother. The policy face value was $10, 000 and included two policy riders that had 27-year terms. In 1995, Plaintiff's mother took out loan against the policy in the amount of $1, 533.90 at an interest rate of 5%. When Plaintiff's brother passed away on March 16, 2016, Defendant calculated that the benefit due on the policy was $4, 896.46 and issued a check for this amount. In so doing, Defendant incorrectly applied a 6% interest rate. When notified by Plaintiff of this mistake, Defendant corrected the interest calculation and issued Plaintiff a check in the amount of $299.36, representing the 1% difference in interest. Plaintiff was not satisfied with the interest calculation and did not cash the check.

         In addition to the incorrect interest rate, Plaintiff claims Defendant did not properly apply payments made by her mother toward the loan amount and continued charging rider premiums beyond the 27-year term. The rider premiums collected from 2011 (the expiry of the original 27-year term) to 2016 totaled $92.80. Defendant's records show that two payments were made toward the original loan balance - $160 in 2004 and $400 in 2006. Plaintiff claims that her mother had paid of the loan entirely and that Defendant failed to properly credit the account.

         Alleging similar problems affected thousands of policy holders, Plaintiff filed a class action complaint against Defendants on behalf of herself and all others similarly situated. The Court dismissed Plaintiff's claims for unjust enrichment, and violation of the Alabama Deceptive Trade Practices Act, Ala. Code §8-19-1 et seq. and the North Carolina Unfair or Deceptive Trade Practices Act, N.C. Gen Stat. § 75-1.1 et seq. (See July 26, 2019 Order, Doc. No. 188). Plaintiffs sole remaining claim is for breach of contract.

         The breach of contract claim is based on: (1) application of the incorrect interest rate to the policy loan; (2) failure to properly credit payments toward the policy loan; and (3) collection of rider premiums beyond the rider term. The Court's July 26, 2019 Order and Memorandum (Doc. No. 188, 189) addressed these breach of contract claims - granting summary judgment to Plaintiff on the issue of the interest rate and denying summary judgment to Plaintiff as to the application of loan payments and collection of premiums for policy riders.

         Although the Court denied Plaintiff's motion for summary judgment as to the rider payments, the denial was not because there were disputed issues of material fact that should be resolved at trial. Rather, the Court held as a matter of law that the alleged conduct - continued billing and acceptance of payments for the policy riders - did not constitute a breach of contract under Alabama law. (See Memorandum, Doc. No. 189 at 14-15). Because Defendant did not move for summary judgment on this issue, the claim is left in a peculiar procedural position where the Court has held that Plaintiff does not state a claim as a matter of law, yet the claim is technically still live.

         With the claims at this point of resolution, Plaintiff seeks to certify the following two plaintiff classes:

(1) Loan Class - All policy holders and beneficiaries of Assumed Policies against which the policyholder took out a policy loan; and
(2) Rider Class - All policyholders and beneficiaries of Assumed Policies whose policies included additional rider benefits for terms less than life.

         Plaintiff seeks certification under Federal Rule of Civil Procedure 23(b)(3) that allows certification of a class when “questions of law or fact common to the class predominate over any questions affecting only individual members” and “a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” Fed.R.Civ.P. 23(b)(3). After filing the motion for class certification, Plaintiff moved to file a supplemental memorandum in support of the motion for class certification to add as an additional ground for class certification that the class should be certified as a limited fund under Fed.R.Civ.P. 23(b)(1)(B). (Doc. No. 156). Defendant opposes the motion to assert a new basis for class certification as untimely. (Doc. No. 159).

         II. ...


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