Samson v. Unum Life Ins. Co. of Am.

300 So.3d 930

Roland F. SAMSON, III, as Guardian Ad Litem of Jeffrey Jake Werneth and Shelby Lee Werneth, Minors

v.UNUM LIFE INSURANCE COMPANY OF AMERICA

NO. 2019-CA-00247-SCT

Supreme Court of Mississippi.

May 7, 2020

Rehearing Denied September 3, 2020

ATTORNEY FOR APPELLANT: ROBERT P. MYERS, JR.

ATTORNEY FOR APPELLEE: CLIFFORD KAVANAUGH BAILEY, III, Ridgeland

BEFORE KING, P.J., MAXWELL AND BEAM, JJ.

BEAM, JUSTICE, FOR THE COURT:

¶1. This case involves liability for misappropriation of funds in a guardianship matter. After a mother requested life-insurance proceeds for the benefit of her two minor children after the death of the children's father, the insurance company requested that she provide the appropriate guardianship documentation. The insurance company received the order appointing the mother guardian and providing directions for the issuance of funds. But the insurance company did not issue the funds as instructed by the order, and the mother misappropriated the funds. A guardian ad litem was then appointed by the chancery court for the minor children and eventually sued the insurance company in the Harrison County Circuit Court for negligence and breach of contract.

¶2. The circuit court granted the insurance company's motion for summary judgment, holding that because the insurance company was not a party to the guardianship proceeding in chancery court, the insurance company was not subject to liability for an alleged violation of the guardianship order. We find, however, that a genuine issue of material fact exists as to the insurance company's liability and that summary judgment should not have been granted. Therefore, we reverse and remand the case for a trial on the merits.

FACTS AND PROCEDURAL HISTORY

¶3. Jeffrey Werneth purchased a life-insurance policy from Unum Life Insurance Company of America (Unum) in the amount of $336,000 for the benefit of his three children, including two minor children, Jeffrey and Shelby Werneth.¹ The minor children resided with their mother, Shannon, who had previously divorced their father.

¶4. On August 31, 2013, Jeffrey died and Shannon attempted to collect the policy proceeds. Unum, in receiving the request, advised her that she needed a court order establishing guardianships for the children in order for Unum to tender the policy proceeds.

¶5. Shannon obtained a guardianship order from the Jackson County Chancery Court naming her guardian for both minor children. On April 9, 2014, Unum received a copy of the guardianship order, which stated, in relevant part,

Petitioner, Shannon Werneth, is granted Letters of Guardianship over the estates of the minor children, Jeffrey Jake Werneth and Shelby Lee Werneth; and said Shannon Werneth, as guardian, is granted authority to take possession of all property of said minor children, real and personal, tangible and intangible, wherever situated, and specifically to apply for and collect on behalf of each of the wards, funds from insurance policies of which said minors are the respective beneficiaries; and to place the funds received in separate guardianship accounts with Keesler, Ocean Springs, Mississippi, a Federally insured institution, from which funds [s]hall not be withdrawn without specific authorization of this Court. A receipt shall be required and the insurance company shall make the check out to In the Matter of the Guardianship of Jeffrey Jake Werneth and Shelby Lee Werneth.

¶6. On April 16, 2014, Unum issued separate drafts in the amounts of $116,973.15 each made payable to "Shannon Werneth Guardian for Jeffrey Jake Werneth Minor" and "Shannon Werneth Guardian for Shelby Lee Werneth Minor." The policy proceeds were mailed directly to Shannon's residence.

¶7. On April 25, 2014, Shannon presented and endorsed the checks in her individual capacity at Keesler Federal Credit Union (Keesler). The funds were deposited into Shannon's personal account, and Shannon later misappropriated the funds, depriving the minor children of the benefit of their father's life-insurance proceeds.

¶8. The chancery court discovered Shannon's misappropriation and appointed Robert Myers, Jr., as guardian ad litem for the minor children to investigate "the payment of life insurance policy proceeds by Unum" and to file "appropriate legal action, to recover the guardianship funds ...."

¶9. In May 2016, Myers filed a complaint against Unum and Keesler in the Harrison County Circuit Court, alleging negligence, breach of contract, and tortious breach of contract.

¶10. After answering the complaint, both Keesler and Unum filed motions for summary judgment. After hearing oral argument and receiving supplemental briefing, the trial court granted Unum's motion, dismissing all claims against Unum with prejudice. The trial court held that "Unum was not a party to the guardianship proceeding and, therefore, cannot be subjected to liability for an alleged violation of the Guardianship Order." The trial court concluded,

Simply put, because Unum was not a party to the guardianship proceedings, the Guardianship Order did not impose any additional duty or obligation on Unum over and above its contractual duties, which were not breached by Unum. It only granted rights to Shannon to receive the funds as guardian and imposed duties on her regarding the handling of the funds.

¶11. The claims against Keesler remained pending. And in September 2018, an agreed order was entered substituting Roland Samson as guardian ad litem and as the plaintiff in this action.² Keesler and Samson ultimately reached a settlement agreement in the case.

¶12. In January 2019, the trial court entered an agreed order and final judgment, both dismissing Keesler and making Unum's dismissal a final and appealable order. Samson timely appealed the trial court's grant of summary judgment to Unum.

¶13. Unum maintains that the trial court correctly concluded that Unum's obligations under the policy were contractual; that it fulfilled its contractual obligations under the policy; and that the guardianship order, entered in a proceeding in which Unum was not a party, imposed no additional legal obligation on Unum. Thus, Unum argues, it cannot be subjected to liability for not issuing the checks as stated in the guardianship order.³

DISCUSSION

¶14. We review a trial court's decision to grant or deny a motion for summary judgment de novo, "viewing the evidence in the light most favorable to the party against whom the motion has been made." Johnson v. Goodson , 267 So. 3d 774, 776 (Miss. 2019) (quoting Maness v. K & A Enters. of Miss., LLC , 250 So. 3d 402, 409 (Miss. 2018) ). Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to summary judgment as a matter of law." Miss. R. Civ. P. 56(c).

I. Liability

¶15. This Court has held that insurers owe a general duty of care to the insured, independent of contractual obligations, "to use that degree of diligence and care with reference thereto which a reasonably prudent man would exercise in the transaction of his own business." Security Ins. Agency, Inc. v. Cox , 299 So. 2d 192, 194 (Miss. 1974) ; see also United Am. Ins. Co. v. Merrill , 978 So. 2d 613, 628, 636-37 (Miss. 2007) (because "[a]n insurance company has exclusive control over evaluation, processing, and denial of claims[,]" Mississippi law imposes a duty on the company to exercise "that degree of care and diligence which a man of ordinary care and prudence would exercise in the management of his own business" (quoting Andrew Jackson Life Ins. Co. v. Williams , 566 So. 2d 1172, 1189 (Miss. 1990) )).⁴

¶16. This duty also extends, in certain cases, to the beneficiary named in an insurance policy. See, e.g. , Am. Life Ins. Co. v. Hauer , 218 Miss. 560, 67 So. 2d 523, 525-26 (1953). In Hauer , this Court held that an insurance company, which knew of the beneficiary named in a life-insurance policy, owed a duty to inform the beneficiary as to the status of the policy when the beneficiary timely inquired about the policy. Id.

The company knew that [Corrine Hauer] was the beneficiary. Hence the duty devolved upon it to inform her as to the status of the policy. Such information would have disclosed that the premium was not paid on [the due date], and that, at the expiration of the thirty-one day grace period, the benefits provided for in the policy would be forfeited. But the Company declined to give such information. It refused to speak thereon.

Id. at 526.

¶17. While we know of no Mississippi case directly analogous to the case before us, a Tennessee case with similar facts is cited by the plaintiffs In re Guardianship of Tatum , No. W2001-00859-COA-R3-CV, 2002 WL 1751247 (Tenn. Ct. App. Feb. 4, 2002). Although Tatum is an unpublished opinion pursuant to Rules 11 and 12 of the Rules of the Court of Appeals of Tennessee, we nonetheless find it both instructive and persuasive. Further, the Tennessee Supreme Court has since recognized Tatum approvingly in Hood v. Jenkins , 432 S.W.3d 814 (Tenn. 2013).⁵

¶18. In Tatum , a mother petitioned the probate court for guardianship of her minor daughter following the death of daughter's father. Tatum , 2002 WL 1751247, at *1. The daughter was named beneficiary of various insurance benefits available from her father's employer, BellSouth Telecommunications, Inc. Id. By order, the probate court appointed the mother as general guardian and directed the guardian's attorney to exercise joint control of the guardianship estate with the guardian. Id. That same day, a guardian bond was executed as surety for the guardian by a Maryland bonding company. Id.

¶19. The guardian's attorney notified BellSouth of the joint-control provision and requested that the funds be sent to him to be deposited in the guardianship accounts. Id. BellSouth ignored the request and sent a check payable to the...