ANN D. MONTGOMERY, U.S. DISTRICT JUDGE.
On January 18, 2017, the undersigned United States District Judge heard oral argument on Plaintiff Mary G. Yang's ("Yang") and Defendant Farmers New World Life Insurance Company's ("Farmers") Motions for Summary Judgment [Docket Nos. 26, 36]. For the reasons set forth below, Yang's Motion is granted and Farmers' Motion is denied.
On May 9, 2003, Yang's grandmother, May Yang (the "Insured"), signed a $150,000 20 Year Guarantee Level Term 2000 FNWL Life Insurance Policy (the "Policy") issued by Farmers. At issue in this case is the birthdate of the Insured. Yang contends that the Insured's birthdate is July 11, 1943, meaning that she was 59 years old when she purchased the Policy. Farmers, on the other hand, argues that the Insured's birthdate is May 27, 1933, meaning that the Insured was 69 years old at the time the Policy was purchased. If Farmers is correct, then the Insured was ineligible to purchase the Policy because her age exceeded the Policy's maximum age at the time of issue.
On May 9, 2003, Farmers' independent agent, Daniel Stocker ("Stocker") met the
Nao Yang ("Nao"), the Insured's son-in-law, testified that Stocker was directly asked which birthdate should be placed on the application and Stocker responded that the July 11, 1943 date of birth should be used.
Stocker does not recall being told that the Insured had two different birthdates. Stocker Dep. at 26:20-25. Stocker also testified that in his fifteen years as a Farmers agent, he could not recall a situation where an insured had two different dates of birth.
The Policy has a maximum issue age limit of 60 years old, meaning only individuals under age 60 are eligible to purchase the Policy. Consistent with Minnesota law, the Policy includes a misstatement of age or sex provision and an incontestability provision. The Policy's misstatement of age or sex provision provides, "[i]f the insured's age or sex was misstated, the amount payable will be that which the premiums paid would have purchased at the correct age or sex." Second Whitley Aff. [Docket No. 54] at 7. The incontestability provision states that Farmers "will not contest this policy after it has been in force for two years from the date of issue during the insured's lifetime except for nonpayment of premiums. This provision does not apply to any additional benefits for disability or accidental death."
In 2007, the Insured applied for a whole life insurance policy with Unity Financial Life Insurance Company ("Unity"). Klosowski Decl. [Docket No. 40] Ex. H. The Unity application reflects the Insured's birthdate as May 27, 1933, the date that Yang claims was arbitrarily assigned by United States immigration officials.
The Insured died in Laos on February 11, 2014. Yang then made a claim to Farmers for death benefits under the Policy that had been purchased in 2003. On July 16, 2014, Farmers, in denying Yang's request, wrote:
Yang later provided Farmers a Laotian death certificate that showed the Insured was born on July 11, 1943. Tischer Aff. [Docket No. 48] Ex. A. In investigating Yang's claim, Farmers learned of the Unity policy purchased in 2007. Farmers also learned that when the Insured's beneficiary made a claim under the Unity policy, Unity was provided with a Laotian death certificate that showed the Insured's birthdate was May 27, 1933. Klosowski Decl. Ex. I. This birthdate was consistent with the birthdate provided on the Unity policy application, but inconsistent with the birthdate provided to Farmers.
Farmers also discovered that the Insured's passport, Certificate of Naturalization, and Minnesota Identification card each list the Insured's birthdate as May 27, 1933.
As an explanation for the two different birthdates, Yang claims that it was common practice for the United States to assign birthdates to immigrants arriving in the country without official identification papers. To support this claim, Nao, the Insured's son-in-law, testified that he was assigned an arbitrary birthdate when he arrived in the United States. Nao Yang Aff. ¶¶ 3, 4. While Nao stated that he eventually corrected his United States records to reflect his true birthdate and that he encouraged the Insured to do the same, she never followed through and continued to use her identifying documents with inaccurate information.
Yang contends that the Insured's birthdate is July 11, 1943, and seeks full payment of the Policy's $150,000 benefit. Farmers asserts that, consistent with the Policy's misstatement of age or sex provision, Yang is only eligible for an amount which the premiums paid would have purchased if her correct birthdate of May 27, 1933 was provided. On February 20, 2015, after Farmers refused to pay the $150,000 benefit, Yang filed this breach of contract case in Minnesota state court. Compl. [Docket No. 1-1]. Farmers removed the case to federal court under diversity jurisdiction, and both parties move for summary judgment.
Rule 56(a) of the Federal Rules of Civil Procedure provides that summary judgment shall be rendered if there exists no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. On a motion for summary judgment, the court views the evidence in the light most favorable to the nonmoving party.
If evidence sufficient to permit a reasonable jury to return a verdict in favor of the nonmoving party has been presented, summary judgment is inappropriate.
There seem to be three possible scenarios here: 1) the Insured's actual birthdate is July 11, 1943, 2) the Insured misstated her birthdate when securing the Policy and her birthdate is not July 11, 1943, or 3) the Insured purposefully misrepresented her birthdate to be eligible to purchase the Policy and her birthdate is not July 11, 1943. As explained below, under any scenario, Yang is entitled to the full $150,000 benefit.
Yang first argues that the evidence establishes that the Insured's true birthdate is July 11, 1943, the date submitted on the Policy application. If Yang is correct, then the Insured is below the Policy's 60 year old issue age limit and Farmers must pay Yang the full $150,000 benefit. Farmers argues in response that the record includes credible evidence showing the Insured's birthdate is not July 11, 1943, and that this conflicting evidence presents a dispute of material fact that makes summary judgment inappropriate.
To support her argument, Yang relies upon three different categories of evidence: 1) the Insured's Laotian birth certificate and affidavit testimony swearing to its authenticity; 2) anecdotal testimony that it was common practice to assign arbitrary birthdates to immigrants arriving in the United States without documentation, and; 3) testimony that Stocker knew about the two birthdate confusion, and that it was his decision to use the July 11, 1943 date.
The value of the first category of evidence is critically impaired by the information and documents the Insured provided to Unity. Most concerning is that the two Laotian death certificates in the record conflict was to when the Insured was born. While both death certificates appear to be official Laotian documents, at least one must be incorrect. This demonstrates that the Laotian documents in this case are not free from error, mistake, or something intentional, such as alteration. Therefore, Yang's reliance upon the Laotian birth certificate, even with two affiants swearing to its authenticity, is not dispositive.
The second category of evidence also does not demonstrate conclusive proof of the Insured's birthdate. Assuming Yang is correct and the Insured was assigned an arbitrary birthdate upon entry to the United States, it is troubling that no effort was made to correct the inaccuracy. It is even more concerning that the arbitrary date was used to secure three pieces of official documentation—the Insured's passport, Certificate of Naturalization, and Minnesota Identification card. All three were either obtained or used after the Policy was purchased. Even if there is no explicit requirement to correct an inaccurate date of birth on a passport or naturalization documents, granting summary judgment on the basis of this anecdotal evidence requires the Court to credit Yang's explanation over the birthdate reflected in the official documents, an assessment which is prohibited on summary judgment.
In sum, the conflicting evidence in this case prohibits summary judgment as to the Insured's true date of birth. This same prohibition applies to Yang's Motion as well as for Farmers', who argues that the record unequivocally shows the Insured's birthdate is May 27, 1933. Concluding that Farmers is correct requires crediting its evidence over the evidence submitted by Yang. Again, that is not permitted in analyzing a summary judgment motion.
Farmers argues that the Policy's misstatement of age provision permits it to pay Yang $10,354.00, the benefit payable for a policy with similar premiums available to a 69 year old individual—the Insured's age when the Policy was issued if she was born on May 27, 1933. Farmers' argument is flawed for two reasons. First, the misstatement of age provision only applies if there is conclusive proof that the Insured's date of birth is not July 11, 1943. As explained above, there is a genuine issue of material fact as to the Insured's true date of birth.
More importantly, even if Farmers is correct and the Insured's birthdate is truly May 27, 1933, the Policy's incontestability provision prevents Farmers from applying the misstatement of age provision to award Yang reduced benefits under a different policy. This is true regardless of whether the Insured inadvertently misstated her birthdate or whether her date of birth was deliberately misrepresented. While neither Yang nor Farmers focused their argument on the incontestability provision, it is dispositve to this case.
The Policy's incontestability provision states that Farmers "will not contest this policy after it has been in force for two years from the date of issue during the insured's lifetime except for nonpayment of premiums. This provision does not apply to any additional benefits for disability or accidental death." Second Whitley Aff. at 7. Such a provision, which is required under Minn. Stat. § 61A.03, subd. 1(c), is designed to force an insurance company to investigate any potential errors or misrepresentations on insurance applications with reasonable diligence to prevent "an insurer from lulling the insured, by inaction, into fancied security during the time when the facts could best be ascertained and proved, only to litigate them belatedly, possibly after the death of the insured."
It matters not whether any misstatement of age was inadvertent or willful, as Minnesota does not bar enforcement of an incontestability provision on the grounds of fraudulent procurement once the two-year contestability period has lapsed. Put simply, an incontestability provision "limit[s] the time within which the policy may be contested for fraudulent answers in its procurement."
Having concluded that the Policy is incontestable, the next issue is whether the Policy's incontestability and misstatement of age provisions can be read in harmony, or if the incontestability provision precludes the misstatement of age provision from taking effect. In
76 Ill.App.2d 187, 222 N.E.2d 363, 371 (1966).
In some cases, a misstatement of age provision that is invoked after the running of the contestability period will have the
237 P.2d at 515. A similar outcome was reached in the cases cited by Farmers.
Farmers argues that it has conclusively demonstrated that the Insured's birthdate is May 27, 1933. Thus, it contends that the Policy's misstatement of age provision authorizes a reduction in benefits to an amount the premiums that were paid would have purchased had the Insured's age been correctly stated. If Farmers could have established that the Insured's birthdate was May 27, 1933, "adjusting her age would take her outside the scope of the insurance policy altogether" because the Policy was only eligible to individuals under 70 years old.
There is no material distinction between this case and
Based on the foregoing, and all the files, records and proceedings herein,