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
C/A No. 8:11-3167-TMC
OPINION & ORDER
Nancy K. Wactor,
Jackson National Life
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.
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
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
Originally the policy provided for benefits in the amount of $400,000, but this
was later reduced to $200,000.
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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
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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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
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).
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
The parties to an insurance contract may include in the policy a provision
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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
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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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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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
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.
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.
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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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
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
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
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.
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
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
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).
8:11-cv-03167-TMC Date Filed 07/10/13 Entry Number 49 Page 9 of 11
question; (2) reliance upon the conduct of the party estopped, and (3)
action based thereon of such a character as to change his position
Koren v. Nat’l Home Life Assurance Co., 288 S.E.2d 392, 394 (S.C. 1982) (internal
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
includes the following provision:
To the extent permitted by law, we may disclose to either affiliated or
information that we collect about our customers, as described above.
the non-public personal
third parties all of
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
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
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
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
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
8:11-cv-03167-TMC Date Filed 07/10/13 Entry Number 49 Page 11 of 11
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
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