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John Hancock Life Insurance Co. v. William R. Ufer, Sr., Irrevocable Trust

United States District Court, Sixth Circuit

May 24, 2013

John Hancock Life Insurance Company, Plaintiff,
The William R. Ufer, Sr., Irrevocable Trust, Defendant.


JEFFREY L. HELMICK, District Judge.


Before me is the motion of Plaintiff John Hancock Life Insurance Company for reconsideration of my denial of its motion for summary judgment. (Doc. No. 24). Defendant The William R. Ufer, Sr., Irrevocable Trust has filed a response. (Doc. No. 27). John Hancock filed a reply. (Doc. No. 28). For the reasons stated below, John Hancock's motion is denied.


Rule 54(b) provides that any order or decision, other than a "final judgment" entered as described in the text of the Rule, "that adjudicates fewer than all the claims... of fewer than all the parties does not end the action as to any of the claims or parties... [and] may be revisited at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities." Fed. R. Civ. Pro. 54(b). "The major grounds justifying reconsideration of interlocutory orders are an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice." Reich v. Hall Holding Co., 990 F.Supp. 955, 965 (N.D. Ohio 1998) ( citing Petition of U.S. Steel Corp., 479 F.2d 489 (6th Cir. 1973), cert. denied, Fuhrman v. U.S. Steel Corp., 414 U.S. 859 (1973)).


John Hancock commenced this litigation on October 31, 2011 with the filing of a complaint seeking a declaratory judgment concerning the parties' rights and obligations under a life insurance policy John Hancock issued to Ufer. (Doc. No. 1). On January 17, 2013, I denied John Hancock's motion for summary judgment after concluding the language that John Hancock used when drafting the contract did not constitute a condition precedent under Ohio law. (Doc. No. 23). John Hancock argues I erred by implying "the language in question[1] was a warranty'..." because the plain language of the Policy precludes this construction. (Doc. No. 24 at 1). John Hancock concludes "[t]he conditions at issue in this Policy cannot be deemed warranties without doing violence to the plain language of the Policy, as well as to prevailing Ohio precedent." (Id. at 4). In the alternative, John Hancock requests leave to file a renewed summary judgment motion arguing the contested provisions "are some form of warranty...." (Id. at 6).


John Hancock asserts the "warranty analysis" in Ohio Nat'l Life Assurance Corp. v. Satterfield, 956 N.E.2d 866 (Ohio Ct. App. 2011), and Mumaw v. W. & S. Life Ins. Co., 119 N.E. 132 (Ohio 1917), "has no bearing in this case because the Policy specifies the [provisions] at issue are not warranties." (Doc. No. 24 at 2). John Hancock is correct in its description of the policy language and in its assertion that I improperly left open the possible inference that I concluded the language at issue is a warranty. The Policy states "[a]ll statements made in any application shall, in the absence of fraud, be deemed representations and not warranties." (Doc. No. 17-4 at 34). I did not intend to imply the language at issue is a warranty, and agree, consistent with the policy language, that it instead is a representation.

It is John Hancock's position that "[o]ther than using the phrase condition precedent' (which a layperson would not likely understand when applying for a policy), it is difficult to conceive of plainer language to convey the point that this is a condition precedent - the policy will not be formed if those conditions change." (Doc. No. 24 at 2). This argument, however, attempts to rewrite the contract John Hancock drafted. John Hancock quite clearly expects laypersons seeking life insurance policies to understand the difference between representations and warranties, as well as numerous other legal terms and concepts throughout its lengthy policy. ( See Doc. No. 17-4). It offers no explanation as to why its decision not to include the term "condition precedent" should be treated any differently.

Further, as I noted previously, the Policy is governed by Ohio law, which provides "an insurance policy is a contract whose interpretation is a matter of law." Sharonville v. Am. Emp'rs Ins. Co., 846 N.E.2d 833, 836 (Ohio 2006). The terms of an insurance policy "are to be given their plain and ordinary meaning." Id. The plain and ordinary meaning of the Policy is that the statements Ufer made in obtaining the Policy are representations, not warranties - and plainly not conditions precedent. "The provisions in question do not require that some event shall happen, ' or some act shall be performed' afterwards, in order that the contract shall be in force." Mumaw, 119 N.E. at 136. Additionally, under Ohio law, "[w]hen possible, courts should construe promises in a bilateral contract as mutually dependent and concurrent, rather than one promise as a condition precedent to the other." Kaufman v. Byers, 823 N.E.2d 530, 537 (Ohio Ct. App. 2004); see also Evans, Mechwart, Hambleton & Tilton, Inc. v. Triad Architects, Ltd., 965 N.E.2d 1007, 1014 (Ohio Ct. App. 2011) ("[A]bsent an explicit intent to establish a condition precedent, courts will not interpret a contractual provision in that manner, particularly when a forfeiture will result.").

John Hancock argues the court's decision in Langley v. Federal Kemper Life Assurance Co., No. 01AP-129, 2001 WL 1143019 (Ohio Ct. App. Sept. 28, 2001), affirms that the language John Hancock used here is in fact a condition precedent. It is true that in Langley the decedent agreed the insurance policy for which he applied would not take "effect unless... the health and habits of the Proposed Insured remain as stated in this application." Langley, 2001 WL 1143019, at *3. In the same policy, there also was a provision under which "the decedent promise[d] to tell the Company of any change in the health or habits of the Proposed Insured that occurs after completing this application, but before the Policy is delivered to me... and the first premium is paid." Id. The Langley court concluded that by failing to fulfill this latter provision, "the decedent failed to comply with the conditions for obtaining insurance under the policy." Id. John Hancock did not include similar language in the Policy. Conversely, and contrary to John Hancock's protestations, the Langley court did not conclude the former provision - often referred to as a "good health" provision - constituted a condition precedent. Instead, the court identified the disputed issue as "whether [the insurance company] could refuse payment on the policy because the decedent failed to comply with the policy terms" and concluded "[b]ecause the decedent's health had changed, [the] plaintiff [was] not entitled to recover[ ]" on the policy. Id. at 4.

John Hancock also points to Abella v. Jackson Nat'l Life Ins. Co., 1998 U.S.App. LEXIS 24687 (6th Cir. 1998), an unpublished table decision, in which the court affirmed a district court conclusion that the insurer was not obliged to pay benefits to the decedent's estate under Ohio Revised Code § 3911.06. Abella, 1998 U.S.App. LEXIS 24687 at *1. The court adopted, for the purpose of its opinion, the plaintiffs' contention "the proper legal standard in this case is the common law of Ohio governing analysis of conditions precedent to the enforceability of an insurance contract." Id. at *11 n.3. The court, however, proceeded to discuss the plaintiff's "obligation to update his answers in the insurance application" in the context of the requirements set forth in O.R.C. § 3911.06, which provides "[n]o answer to any interrogatory made by an applicant in his application for a policy shall bar the right to recover upon any policy issued thereon, " unless the insurer carries the burden of proof on five listed elements. Id. at *13-17. While the court uses the term "condition precedent" to describe the plaintiff's obligation to update his responses, the court did not cite to or discuss any Ohio case law concerning conditions precedent. Rather, the court applied § 3911.06, which by its terms applies to false answers to interrogatories in the application, [2] and which Ohio courts have held does not apply when "[t]he stipulation upon which the [insurer] relies is in the policy." Lumpkin v. Metro. Life Ins. Co., 62 N.E.2d 189, 191 (Ohio Ct. App. 1945) ( citing Metro. Life Ins. Co. v. Howle, 56 N.E. 908 (1900)).

As I previously stated, "[t]he language in the Policy which John Hancock used, and to which Ufer agreed, does not mandate the taking of any action or the occurrence of any event; it contemplates only the continued validity of the ...

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