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8:11-cv-03167-TMC Date Filed 07/10/13 Entry Number 49 Page 1 of 11

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA

ANDERSON DIVISION

C/A No. 8:11-3167-TMC

OPINION & ORDER

Plaintiff,

v.

Nancy K. Wactor,

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_________________________________

Jackson National Life
Insurance Company,

Defendant.

This matter is before the Court on a motion for summary judgment filed by

Defendant Jackson National Life Insurance Company (“Jackson National”). (ECF No.

30). Plaintiff Nancy K. Wactor (“Wactor”) filed a response opposing the motion and

Jackson National filed a reply. (ECF Nos. 36 and 40). A hearing was held on the

matter on April 19, 2013, and the court took the motion under advisement. For the

reasons set forth below, Jackson National’s Summary Judgment Motion is granted.

Background/Procedural History

Wactor’s husband, William R. Wactor, (“Decedent”) died on June 12, 2010. For

many years prior to his death, he had a life insurance policy issued by Jackson

National. Wactor was the sole beneficiary of the life insurance policy and the Personal

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Representative of Decedent’s estate. Pursuant to the terms of this policy, the premium

payments were to be paid quarterly. The Decedent made his last quarterly premium

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Originally the policy provided for benefits in the amount of $400,000, but this

was later reduced to $200,000.

8:11-cv-03167-TMC Date Filed 07/10/13 Entry Number 49 Page 2 of 11

payment on October 25, 2009. After the quarterly payment due January 25, 2010, was

not paid, Jackson National mailed a grace period notice to Decedent dated February 4,

2010, in which Jackson National informed Decedent that the premium had not been

paid, and the policy would end on February 25, 2010, unless the premium was paid.

Jackson National sent a lapse notice dated February 25, 2010, in which it informed

Decedent that the premium still had not been paid, but if the premium was paid by

March 26, 2010, the policy would automatically be reinstated without any additional

requirements. Further, the letter stated that if the premium was not received by March

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26 , the Decedent would have to pay additional unpaid premiums plus interest, and

complete the enclosed reinstatement application and obtain approval from Jackson

National for reinstatement.

In early 2010, the Decedent was diagnosed with mild dementia and subsequently

he developed other health issues which ultimately resulted in his hospitalization and

death. On June 11, 2010, the day before Decedent died, Wactor called Jackson

National and told the operator that Decedent had developed Parkinson’s disease and

inquired if Decedent had made the appropriate payments on the life insurance policy.

Jackson National informed her that the life insurance policy was no longer in force and

the last payment had been received on October 25, 2009. Wactor inquired as to

whether she could pay any missed premium payments. Jackson National told Wactor

the owner of the policy, the Decedent, would have to contact them for instructions on

how to reinstate the policy and what amount would be required to do so. Wactor told

Jackson National that Decedent was in the hospital with a broken foot and she did not

know that he would be able to contact Jackson National. After determining that Wactor

did not have a financial power of attorney, Jackson National suggested that the owner

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8:11-cv-03167-TMC Date Filed 07/10/13 Entry Number 49 Page 3 of 11

of the policy could authorize Wactor to receive the information needed to reinstate the

policy. Wactor stated that Decedent maybe could do that at some point soon, but not

currently, and the phone call ended. At her deposition, Wactor testified that when she

called Jackson National she “pretty much knew [Decedent] wasn’t going to make it.”

Decedent died the following day and on June 15, 2010, Decedent’s daughter, Lisa

Gunter, contacted Jackson National to make a claim on the life insurance policy. She

was informed the policy had lapsed. Gunter then sent a letter to Jackson National

explaining that her father had suffered from dementia prior to his death and this resulted

in his missing the premium payments. Gunter included three letters from Decedent’s

health care providers.

On June 16 , Jackson National sent Wactor a letter informing her that the policy

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had lapsed on February 25, 2010, and that no benefits were payable to her as the

beneficiary. Thereafter, Wactor brought this action alleging a breach of contract,

equitable estoppel, unjust enrichment, bad faith, and breach of duty of good faith and

fair dealing. (Compl. ¶¶ 19-41).

Discussion

In her memorandum opposing Jackson National’s Summary Judgment Motion,

Wactor contends that there are questions of fact regarding: 1) whether there was

adequate notice of cancellation; 2) whether Jackson National acted in bad faith; 3)

whether Jackson National should be estopped from cancelling the policy; and 4)

whether Jackson National acted in good faith. The court addresses each of these

below.

A. Notice

The parties to an insurance contract may include in the policy a provision

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8:11-cv-03167-TMC Date Filed 07/10/13 Entry Number 49 Page 4 of 11

regarding the cancellation of the policy, and notice of cancellation must be in

accordance with such a policy provision, or an applicable statute. Here, it is undisputed

that there is no notice provision in the life insurance policy and Wactor has not set forth

an applicable statute requiring notice.

Nonetheless, Wactor contends a question of fact exists as to the cancellation

notice Jackson National provided and whether Decedent ever received the notice. (Pl.’s

Mem. Opp. Summ. J. Mot. at 14). Specifically, she argues that while there is some

evidence that indicates that Jackson National sent notices by regular mail, there is no

evidence that Decedent or Wactor ever received either the grace period notice or

cancellation notice. Id. at 16. Wactor notes that ambiguities must be resolved in favor

of the insured. Id. at 15. She then quotes Edens v. South Carolina Farm Bureau Mut.

Ins, 208 S.E.2d 670 (S.C. 1983), and argues that Edens restricts the insurer’s ability to

cancel by requiring actual receipt of the written cancellation as a condition precedent to

cancellation. Id. 2

However, Edens is clearly distinguishable from this case. First, in Edens, the

court found the policy provision regarding cancellation to be ambiguous. Specifically, the

2

Wactor requests that the court give significant consideration to the opinion of

Gerald M. Finkel as an expert in insurance coverage and bad faith practices. (Pl.’s
Mem. Opp. Summ. J. Mot. at 12). Finkel offers his opinion as to the applicability of
Edens and whether Jackson National acted in bad faith. As a general proposition,
expert witnesses are “precluded from opining on the law governing the case.” Long v.
Blair, No. 2:09–349, 2010 WL 1930219, at *2 (S.D.W.Va. May 12, 2010) (citing
Adalman v. Baker, Watts & Co., 807 F.2d 359, 366 (4th Cir. 1986) (affirming the
exclusion of testimony by an expert witness which included legal conclusions)). In fact,
expert evidence as to legal conclusions is not only inadmissible, it is not “‘evidence’ at
all.” Nutrition 21 v. United States, 930 F.2d 867, 871 n. 2 (Fed.Cir. 1991). The court
concludes expert testimony on the applicability of Edens and whether Jackson National
acted in bad faith are legal conclusions. Accordingly, the court will disregard this expert
opinion evidence to the extent it merely constitutes legal conclusions.

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8:11-cv-03167-TMC Date Filed 07/10/13 Entry Number 49 Page 5 of 11

court held that the homeowner’s insurance policy provision that the insurance company

could cancel “by giving to the insured a five days’ written notice of cancellation” was

ambiguous as to the method of giving notice. Id. at 671. The insurance company sent

the notice of cancellation by regular mail and the insured denied receiving the notice. Id.

The court noted that “[w]here a cancellation clause provides that the insurer may cancel

by mailing the notice to the insured's address or where it contains substantially similar

language, the mere mailing is sufficient to effect cancellation. Id. (citation omitted).

However, the court held that the term “giving written notice” was distinguishable from a

provision that the notice be mailed and meant that the insured must have personally

received the notice. Id. Here, the policy does not contain any cancellation provision

which could be construed as ambiguous. Edens, which dealt solely with the sufficiency

of the notice required by an ambiguous notice provision, is simply inapplicable.

The court also notes that Wactor contends that Jackson National misstated the

facts when it asserted that the presumption of mailing is unrebutted and undisputed.

(Pl.’s Mem. Opp. Summ. J. Mot. at 15). She contends that Jackson National waived or

forfeited its right to cancel by providing grace periods and lapse notices in the past on

approximately 22 occasions. Id. at 15-16. Further, she argues that such conduct in the

past strongly indicates that the Decedent did not know this time that the policy was in

danger of cancellation and she also notes that neither she nor her daughter could find

the notices among the Decedent’s effects. Id. Finally, Wactor contends that the only

evidence that any notices were sent was Jackson National’s copies of the notices and a

history log entry. Id. at 16.

First, Jackson National’s grant of a grace period to Decedent in the past does not

mean it forfeited its right to cancel the life insurance policy for non-payment of future

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8:11-cv-03167-TMC Date Filed 07/10/13 Entry Number 49 Page 6 of 11

premiums. Wactor contends that in the past Jackson National accepted late payments

22 times from the Decedent over the 19-year period of the policy. However, it is

undisputed that on those occasions, the Decedent paid the late premiums during the

grace period. Jackson National has never allowed Decedent to pay premiums after the

grace period has lapsed. Jackson National did nothing that would have created a

reasonable expectation of insurance coverage past the expiration of the grace periods.3

Jackson National’s prior conduct of accepting late premiums during a grace period

cannot in any way be construed as a waiver or forfeiture by Jackson National from

cancelling the policy for non-payment of premiums after a subsequent grace period has

lapsed.

The remaining arguments go to the issue of whether the Decedent received the

notices and do not dispute that Jackson National mailed the notices. Wactor has not

specifically challenged Jackson National’s proof of mailing. The undisputed evidence is

that Jackson National mailed the notices. Furthermore, as there was no provision in the

policy requiring any notice, there is no provision to find ambiguous and construe as the

court did in Edens. As discussed above, Edens is factually distinguishable from the

present case and simply inapplicable. Finally, there are no statutory requirements in

South Carolina regarding notice prior to the cancellation of a life insurance policy.4

Based on the foregoing, the court finds that here is not a genuine issue of material fact

as to the grace and cancellations notice sent by Jackson National.

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One payment was made during an extended grace period which Jackson

National had granted to Decedent, but it is undisputed it was paid within a grace period.

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For example, S.C. Code Ann. § 38-75-710 requires notice of cancellation for a

homeowner’s insurance policy. However, there is no statutory requirement for
cancellation of a life insurance policy.

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8:11-cv-03167-TMC Date Filed 07/10/13 Entry Number 49 Page 7 of 11

B. Bad Faith

Under South Carolina law, the elements of an action for bad faith under an

insurance contract include:

(1) the existence of a mutually binding contract of insurance between the
plaintiff and the defendant; (2) refusal by the insurer to pay benefits due
under
faith or
unreasonable action in breach of an implied covenant of good faith and
fair dealing arising on the contract; (4) causing damage to the insured.

the contract; (3) resulting

insurer's bad

from

the

Crossley v. State Farm Mut. Auto. Ins. Co., 415 S.E.2d 393, 396–97 (S.C. 1992). “An

insured may recover damages for a bad faith denial of coverage if he or she proves

there was no reasonable basis to support the insurer's decision to deny benefits under a

mutually binding insurance contract.” Dowling v. Home Buyers Warranty Corp., 400

S.E.2d 143, 144 (S.C.1991). “[A]n insurer acts in bad faith when there is no reasonable

basis to support the insurer's decision [for contesting a claim].” Helena Chem. Co. v.

Allianz Underwriters Ins. Co., 594 S.E.2d 455, 462 (S.C. 2004). However, “[g]enerally, if

there is a reasonable ground for contesting a claim, the denial of the claim does not

constitute bad faith.” Hansen ex. rel. Hansen v. United Services Auto. Ass’n, 565

S.E.2d 114, 119 (S.C. Ct. App. 2002) (citing Cock-N-Bull Steak House v. Generali Ins.

Co., 466 S.E.2d 727, 730 (S.C. 1996).

Wactor contends there are questions of fact regarding whether the policy was

effectively cancelled. (Pl.’s Mem. Opp. Summ. J. Mot. at 17). Wactor contends Jackson

National knew when it denied the claim that there was a question as to the Decedent’s

knowledge of the policy lapse. Id. Specifically, Wactor contends that Jackson National’s

initial response to Lisa Gunter’s letter and the family’s inquiries was a computer

generated letter from Jackson National Vice-President Charles F. Field dated June 16,

2010, denying coverage without conducting any investigation into the Decedent’s

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cognitive abilities. Id. at 18-19. Subsequently, Customer Service Representative Kevin

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J. Schweda of Jackson National merely confirmed a lapse for non-payment occurred

before Decedent’s death and determined that notices were mailed. Wactor contends

he did not consider that Wactor had telephoned Jackson National on June 11, 2010, the

information about Decedent’s dementia and cognitive loss, or the acceptance of late

payments 22 times by Jackson National during the life of the policy. Further, she

contends that no supervisory Jackson National employee performed any further review.

There is nothing in the record to suggest that Jackson National acted in an

unreasonable manner in denying coverage. Wactor does not dispute that the premiums

were not paid. Based upon the non-payment of the premiums and the lapse of the

policy, Jackson National had reasonable grounds for denying this claim. The Court

finds, based upon the facts in the record, there is no genuine issue of material fact

regarding whether Jackson National had a reasonable ground for denying the claim.

C. Estoppel

Wactor argues that Jackson National should be estopped from cancelling the

Decedent’s life insurance policy because Jackson National refused to provide Wactor

“all the meaningful information regarding the status of the Policy other than their position

that the Policy had lapsed due to non-payment.” (Pl.’s Mem. Opp. Summ. J. Mot. at

20). Jackson National contends its privacy policy is required by law and it did nothing

that would estop it from cancelling the policy.

The essence of equitable estoppel is that the party entitled to invoke the
principle was misled to his injury. The essential elements are (1) lack of
knowledge and of the means of knowledge of the truth as to the facts in

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Wactor notes that Field never actually reviewed the file or saw the letter until

right before his deposition. (Pl.’s Mem. Opp. Summ. J. Mot. at 7-8).

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question; (2) reliance upon the conduct of the party estopped, and (3)
action based thereon of such a character as to change his position
prejudicially.

Koren v. Nat’l Home Life Assurance Co., 288 S.E.2d 392, 394 (S.C. 1982) (internal

citation omitted).

In particular, Wactor contends that Jackson National cited its privacy policy as a

reason to deny providing Wactor with the information she needed to resolve the lapse

and Jackson National would not have provided that information, even if Wactor had

called prior to the grace period lapsing. (Id. at 21). Jackson National’s privacy policy

includes the following provision:

To the extent permitted by law, we may disclose to either affiliated or
nonaffiliated
financial
information that we collect about our customers, as described above.

the non-public personal

third parties all of

Wactor contends that the privacy policy is relevant here because she contacted

Jackson National on June 11, 2010, asking to be informed of the amount of the late

payments, so that she could pay immediately, but was refused such information, on the

basis of the privacy policy. (Pl.’s Mem. Opp. Summ. J. Mot. at 20-21). Further she

contends that Jackson National admits that had she inquired about the policy during the

grace period, she would have been given no information. Id.

Wactor argues Jackson National arbitrarily can choose “to deny information to an

insured’s wife who is also the beneficiary, but still arbitrarily give ‘all of the non-public

personal information that we collect about our customers’ to ‘non-affiliated third parties,’

for whom there are no guidelines or definitions.” Id. at 10. She contends that when the

insured suffers from dementia, Jackson National’s privacy policy eliminates the ability of

the policyholder or beneficiary to make effective use of the grace period or

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reinstatement provision. Id. at 9.

There is no evidence that Wactor was harmed by her reliance upon any alleged

misrepresentations made by Jackson National. Wactor’s argument that Jackson

National’s privacy policy eliminates the insured’s ability to reinstate a lapsed policy does

not create a question of fact as to the estoppel claim. During Wactor’s phone call to

Jackson National, Jackson National offered two ways by which Wactor could act on

behalf of the Decedent: Wactor could obtain a power of attorney in order to manage

Decedent’s affairs or Decedent could contact Jackson National and authorize Wactor to

receive information regarding the policy. Wactor interposes several hypothetical or

theoretical questions which appear to be an attempt to create questions of fact to defeat

summary

judgment. However,

there

is simply no evidence of any material

misrepresentations by Jackson National or detrimental reliance by Wactor. Accordingly,

the court finds that there is no genuine issue of material fact as to the estoppel claim.

D. Good Faith and Fair Dealing

Wactor contends Jackson National breached its implied covenant of good faith

and fair dealing under South Carolina insurance law by failing to provide proper notice

of cancellation, properly investigate the claim, fairly administer its own procedures, and

adopt and implement reasonable standards for the prompt investigation and settlement

of claims. (Pl.’s Mem. Opp. Summ. J. Mot. at 21).

South Carolina courts have held that “the covenant of good faith and fair dealing

extends not just to the payment of a legitimate claim, but also to the manner in which it

is processed.” Mixson, Inc. v. Am. Loyalty Ins. Co., 562 S.E.2d 659, 662 (S.C. Ct. App.

2002) (citing Tadlock Painting Co. v. Md. Cas. Co., 473 S.E.2d 52, 53 (S.C. 1996)). The

South Carolina Supreme Court has further explained that “if an insured can

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demonstrate bad faith or unreasonable action by the insurer in processing a claim under

their mutually binding insurance contract, he can recover consequential damages in a

tort action.” Tadlock, 473 S.E.2d at 53 (quoting Nichols v. State Farm Mut. Auto. Ins.

Co., 306 S.E.2d 616, 619 (S.C. 1983)).

However, the crux of a bad faith claim is still whether there is a reasonable

ground for the insurer’s actions. See Crossley, 415 S.E.2d at 397; see also Helena

Chem. Co. v. Allianz Underwriters Ins. Co., 594 S.E.2d 455, 462 (2004) (“Under South

Carolina law, an insurer acts in bad faith when there is no reasonable basis to support

the insurer's decision.”). There is nothing in the record to suggest that Jackson National

acted in an unreasonable manner in denying coverage or its handling of this claim. It is

undisputed the premiums were not paid and the policy had lapsed for nonpayment of

the premiums. Jackson National had a reasonable ground for its actions. Accordingly,

no rational trier of fact could find that Jackson National acted unreasonably in its

handling of this claim. See Monahan v. Cnty. of Chesterfield, 95 F.3d 1263, 1265 (4th

Cir.1996).

Conclusion

For the foregoing reasons, Defendant Jackson National’s Motion for Summary

Judgment (ECF No. 30) is GRANTED and this action is dismissed with prejudice.

IT IS SO ORDERED.

s/Timothy M. Cain
United States District Judge

Greenville, South Carolina
July 10, 2013

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