Opinion
CIVIL ACTION NO. 4:01CV137-D-B
March 7, 2002
OPINION GRANTING LORD'S MOTION FOR SUMMARY JUDGMENT
Presently, before the court is the Defendant Wilburn Lord's motion for summary judgment and the Defendant Joseph P. Portera's cross-motion for summary judgment. Upon due consideration, the court finds that Wilburn Lord's motion is well taken and shall be granted. Joseph P. Portera's cross-motion is not well taken and shall be denied.
A. Factual and Procedural Background
The Plaintiff, Conseco Life Insurance Company (Conseco), filed this cause seeking a declaratory judgment to determine the ownership of a life insurance policy. Said policy insures the life of the Defendant Joseph P. Portera (Portera) and names the Defendant Wilburn Lord (Lord) as the owner and beneficiary.
Prior to 1996, Lord and Portera practiced Optometry together. They shared ownership of various businesses including 20/20 Eye World (20/20), 20/20 Eye World of Rolling Fork, and Great River Investments.
In 1993, Portera took out a life insurance policy with Lamar Life Insurance Company (now Conseco) in the face amount of One Million Dollars. He named himself as the owner and insured and his wife as the beneficiary. In May 1994, Portera instructed Lamar Life to split that policy into two separate policies, making Lord the owner and beneficiary of Five Hundred, Seventy-Five Thousand of the policy benefits. Lamar Life did so, issuing two policies totaling One Million Dollars, one of which was policy no. 000900980 in the face amount of Five Hundred, Seventy-Five Thousand. Lord was named as the owner and beneficiary of the policy effective June 15, 1994.
Lord and Portera both agree that the parties contemplated that upon Portera's death the proceeds of the policy would be used to purchase Portera's interest in 20/20. For the same reasons, 20/20 took out a policy on the life of Lord. However, it appears that Lord and Portera never executed such an agreement. Instead, a Stock Purchase Agreement between the parties was executed with the right of first refusal.
The relationship between Lord and Portera deteriorated and on December 31, 1996, the two entered into an agreement designed to substantially sever their business relationship and cancel the Stock Purchase Agreement between the parties. In December 1997, Portera requested that policy no. 000900980 be canceled. At that time, the premiums for the policy were still being paid by 20/20. In late 1997, Portera caused 20/20 to quit paying the premiums. Lord, the owner and beneficiary of the policy, began paying the premiums and has continued to do so. Both Lord and Portera signed a mutual release and settlement agreement on December 29, 2000, which failed to determine ownership of the policy. Afterwards, Portera demanded that Lamar cancel the life insurance policy in question, or reflect that Portera and/or 20/20 was the rightful owner of the policy. He argues that Lord had no insurable interest in his life and he received no valid consideration for the transfer of the ownership of the policy. According to Lord, the local banks which financed the 20/20 operation were requiring the policy as collateral for loans. Lord and Portera now move the court for summary judgment and cross-summary judgment each asking the court to declare him the rightful owner of the policy in question.
B. Summary Judgment Standard
On a motion for summary judgment, the movant has the initial burden of showing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265, 275 (1986) ("the burden on the moving party may be discharged by `showing' . . . that there is an absence of evidence to support the non-moving party's case"). Under Rule 56(e) of the Federal Rules of Civil Procedure, the burden then shifts to the non-movant to "go beyond the pleadings and by . . . affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex Corp., 477 U.S. at 324, 106 S.Ct. at 2553, 91 L.Ed.2d at 274. That burden is not discharged by "mere allegations or denials." Fed.R.Civ.P. 56(e). All legitimate factual inferences must be made in favor of the non-movant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202, 216 (1986). Rule 56(c) mandates the entry of summary judgment "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp., 477 U.S. at 322, 106 S.Ct. at 2552, 91 L.Ed.2d at 273. Before finding that no genuine issue for trial exists, the court must first be satisfied that no reasonable trier of fact could find for the non-movant. Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538, 552 (1986).
C. Discussion
It appears to the court that the only issues are: (1) whether Lord had an insurable interest in the life of Portera at the time the policy was transferred; and (2) whether there was valuable consideration paid by Lord for the transfer of the insurance policy. The court finds that Lord did have an insurable interest in Portera's life at the time the policy was transferred and the statute of limitations bars any consideration claim. There are no genuine issues of material facts in controversy and summary judgment is proper.
Mississippi Code § 83-5-251 provides in relevant part that:
(1) Any individual of competent legal capacity may procure or effect an insurance contract upon his own life or body for the benefit of any person, but no person shall procure or cause to be procured any insurance contract upon the life or body of another individual unless the benefits under such contract are payable to the insured or his personal representatives or to a person having, at the time when such contract was made, an insurable interest in the insured.
* * *
(3) For purposes of 83-5-251 through 83-5-257; "insurable interest" means that a person has an insurable interest in the life, body and health of another individual as follows:
(a) The individual and the insured are related closely by blood or by law, a substantial interest engendered by love and affection;
(b) The person has a lawful and substantial economic interest in having the life, health or bodily safety of the insured continue, as distinguished from an interest which would arise only by, or would be enhanced in value by, the death, disablement or injury of the insured;
(c) A party to a contract or option for the purchase or sale of an interest in a business proprietorship, partnership or firm, or of shares of stock of a closed corporation or of an interest in such shares, has an insurable interest in the life, body and health of each individual party to such contract and for the purposes of such contract only, in addition to any insurable interest which may exist as to such individual; . . .
MISS. CODE § 83-5-251 (2002).
Each person is presumed to have an incentive in preserving his or her own life. Therefore, the general rule, now codified by statute, is that every person has an insurable interest in his or her own life. Obviously, Portera had an insurable interest in his own life. He could name anyone he chose as a beneficiary under the policy. Davis v. Gulf States Insurance Co., 151 So. 167, 169 (Miss. 1933). There is no requirement that the named beneficiary have an insurable interest in the life of the insured, if the insured names the beneficiary. Notwithstanding, the court finds that Lord did have an insurable interest.
For life insurance, the existence of an insurable interest is determined at the time the insurance policy is issued. See First Columbus Nat'l Bank v. D.S. Pate Lumber Co., 141 So. 767 (Miss. 1932). At the time the policy in question was issued, Lord and Portera were business partners. Under § 83-5-251(3)(b), Lord had an insurable interest in that he was a stockholder in 20/20, a partner in Great River and a guarantor of the debts of these businesses. Even if Lord's insurable interest ceased after the policy was issued, it has no effect upon the validity of the policy or his rights to the proceeds. First Columbus, 141 So. at 768.
Further, according to § 83-5-251(3)(c), the court finds that Lord had an insurable interest in that there was a mutual agreement that the proceeds from each policy would be used to purchase the other's interest in 20/20. Although the parties failed to complete their buy-out agreement, they did finalize a first refusal agreement whereby each would be given the option of purchasing the other's interest in the event that one or the other died. In the court's opinion this satisfies § 83-5-251(3)(c) in that it gives each an option of purchasing the other's shares in the event of death.
Regarding the issue of consideration, the court finds that the statute of limitations bars any dispute of this issue. According to § 15-1-29, "actions . . . on any unwritten contract, express or implied, shall be commenced within three (3) years next after the cause of such action accrued, and not after . . ." MISS. CODE § 15-1-29 (2002). The court finds that both Lord and Portera agree that they had an oral agreement to execute a buy out agreement. The transfer of the insurance policy in question was carried out in reliance upon that agreement. Therefore, Portera's claim for lack of consideration would have begun to run in June, 1994, or no later than December, 1994. Accordingly, Portera has waited over four years too late to bring his claim. As such, it is barred.
A separate order in accordance with this opinion shall issue this day.
ORDER GRANTING LORD'S MOTION FOR SUMMARY JUDGMENT
Pursuant to an opinion issued this day, it is hereby ORDERED that:
1. the Defendant Wilburn Lord's motion for summary judgment (docket entry #9) is GRANTED;
2. the Defendant Joseph P. Portera's cross-motion for summary judgment (docket entry #18) is DENIED;
3. Wilburn Lord is the owner of Policy No. 000900980; and
4. this case is CLOSED.
SO ORDERED.