Susan DeCoursey v. American General Life Ins. , 822 F.3d 469 ( 2016 )

United States Court of Appeals
For the Eighth Circuit
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No. 15-1927
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Susan DeCoursey
lllllllllllllllllllll Plaintiff - Appellant
v.
American General Life Insurance Company
lllllllllllllllllllll Defendant - Appellee
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No. 15-1929
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Susan DeCoursey
lllllllllllllllllllll Plaintiff - Appellee
v.
American General Life Insurance Company
lllllllllllllllllllll Defendant - Appellant
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Appeals from United States District Court
for the Western District of Missouri - Kansas City
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Submitted: March 17, 2016
Filed: May 17, 2016
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Before WOLLMAN, ARNOLD, and SHEPHERD, Circuit Judges.
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ARNOLD, Circuit Judge.
This case arises out of a dispute over a life insurance policy. When Susan
DeCoursey sued American General Life Insurance Company (the company) for
interest she claimed it owed her on a payout it made on a policy, the company
counterclaimed, asking for its money back because it had paid DeCoursey by mistake
and so DeCoursey was not entitled to the payout in the first place, let alone interest.
After the district court granted the company summary judgment on DeCoursey's
claims and granted her summary judgment on the company's counterclaim, both
parties appealed.
In 1985, DeCoursey's husband purchased a $250,000 life insurance policy from
the company's predecessor in interest. In August 1986, DeCoursey's husband and son
died in a car accident. She submitted a claim on the policy, but her claim was denied
because the policy had lapsed. DeCoursey took no further action. In June 2011, the
company began an effort to determine if any life insurance beneficiaries had failed to
notify it of an insured's death and were thus owed life insurance benefits. The
company did so by reviewing Social Security Administration death records. The
company may have undertaken this effort because of media and regulatory scrutiny
of the life-insurance industry as well as pressure from states seeking to catalyze
review of dormant policies in the hope that unclaimed payouts might eventually
escheat to them.
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As a result of the review, the company notified DeCoursey that she was entitled
to benefits under the policy because the policy did not lapse until three months after
her husband died, and so it paid her the policy's face value, $250,000, in January 2013.
Unsatisfied, DeCoursey demanded that the company pay her 9% interest from the time
it denied her claim in 1986. The company refused, maintaining that it owed her no
interest because it had paid her the face value of the policy within 30 days after her
renewed request for payment. See Mo. Code Regs. Ann. tit. 20, § 100-1.050(1)(H).
The company's refusal prompted DeCoursey to file a complaint with the Missouri
Department of Insurance (MODI). After it received a copy of the complaint, the
company began investigating the policy more closely. Much of the information
relating to the policy had been discarded, but the company discovered, after an
exhaustive search of its records, that the policy had indeed lapsed nine days before
DeCoursey's husband died.
The company then notified DeCoursey that it had erroneously paid her
$250,000 because the policy had lapsed before her husband died, but it nonetheless
offered to settle her claim by allowing her to keep the $250,000 along with an
additional $25,000. DeCoursey declined the offer and instead filed an action in a
Missouri state court that made numerous claims, including, as relevant here, ones for
vexatious refusal to pay, unpaid statutory interest, breach of contract, and unjust
enrichment. The company removed the case to federal court and counterclaimed for
unjust enrichment.
The company then moved for summary judgment on DeCoursey's claims,
asserting that DeCoursey had failed to bring suit within the limitations period. The
district court agreed, holding that DeCoursey did not bring suit until after the ten-year
limitations period had expired. The district court granted DeCoursey's motion for
summary judgment on the company's counterclaim, holding that the company had
voluntarily paid DeCoursey $250,000 because it "put forth no evidence to suggest that
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it did not have the opportunity to diligently investigate the Policy before it was paid
out."
We address DeCoursey's appeal first. She contends that her claims did not
accrue until 2013 when she learned that the company's records indicated that the
policy did not lapse until November 1986. The parties agree that Missouri law
controls in this diversity case, see Midwestern Indem. Co. v. Brooks, 779 F.3d 540,
544–45 (8th Cir. 2015), and that a ten-year limitations period applies. See Mo. Rev.
Stat. § 516.110(1). Under Missouri law, a limitations period begins to run when a
cause of action accrues, which is "when the damage resulting [from a wrong or the
breach of contract or duty] is sustained and is capable of ascertainment." Mo. Rev.
Stat. § 516.100. In other words, claims accrue "when the evidence was such to place
a reasonably prudent person on notice of a potentially actionable injury," and at this
point the plaintiff is obliged to discover potential damages and to seek redress.
Huffman v. Credit Union of Tex., 758 F.3d 963, 967–68 (8th Cir. 2014). Importantly,
"[d]amage is ascertainable when the fact of damage can be discovered or made known,
not when the plaintiff actually discovers injury or wrongful conduct." Id. at 967. We
have recognized that Missouri courts applying these principles have routinely held
that insurance-dispute claims accrue when the plaintiff receives notice that a claim
was denied. See Brown v. CRST Malone, Inc., 739 F.3d 384, 388 (8th Cir. 2014).
DeCoursey fails to demonstrate how her claims can escape the general rule and
accrue when she received notice of her claim's denial. Her argument that she did not
learn of the allegedly wrongful basis for her claim's denial until 2013 makes no
difference under Missouri law because accrual does not turn on when the plaintiff
"discovers injury or wrongful conduct." Huffman, 758 F.3d at 967. In fact, the
Missouri Supreme Court recently overturned the very decision of the Missouri Court
of Appeals upon which DeCoursey relies for the proposition that the limitations
statute begins to run when the wrongful conduct is discovered. See Boland v. Saint
Luke's Health Sys., Inc., 471 S.W.3d 703 (Mo. 2015) (en banc). Since DeCoursey's
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claims accrued in 1986, the ten-year limitations period bars the claims she brought in
2013.
DeCoursey also maintains that, even if her claims accrued in 1986, the
limitations period was tolled when the company paid her the policy's face value.
Partial payment of a debt will generally toll a limitations period because it
acknowledges the debt and carries an implied promise to pay the remaining balance.
Heidbreder v. Tambke, 284 S.W.3d 740, 746–47 (Mo. Ct. App. 2009). "Where
nothing appears to show a contrary intention, the payment alone prevents the statute
from barring the claim." Id. at 747. Tolling also prevents a debtor from lulling a
creditor into a limitations bar. Id. at 748.
Even if partial payment could restart, rather than merely toll, a limitations
period, a proposition by no means obvious, see Corrales v. Murwood, Inc., 232
S.W.3d 609, 612 (Mo. Ct. App. 2007), the company's repeated refusal to pay interest
is completely inconsistent with an implied promise to pay the remainder of the alleged
debt. DeCoursey admitted that the company explicitly refused to pay her interest even
before it paid her the face value of the policy and continued to do so thereafter. And
payment of the policy's face value did not lull DeCoursey into a limitations bar
because the bar was in place years before the payment. The company's payment
therefore did not toll or restart the limitations period.
DeCoursey further contends that a written acknowledgment of a promise to pay
interest that a company employee executed tolled the limitations period. The
acknowledgment at issue stemmed from a telephone conversation between
representatives from the company and MODI: The company representative wrote in
her notes from the call that she confirmed that the company would pay interest and
that DeCoursey was entitled to the policy's face value.
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But Missouri law provides that no acknowledgment of a debt or promise to pay
a debt "shall be evidence of a new or continuing contract, whereby to take any case
out of the [statute of limitations] or deprive any party of the benefit thereof, unless
such acknowledgment or promise be made or contained by or in some writing
subscribed by the party chargeable thereby." Mo. Rev. Stat. § 516.320. Whether an
acknowledgment removes a contract from the statute of limitations is a question of
law. Millington v. Masters, 96 S.W.3d 822, 831 (Mo. Ct. App. 2002).
We reject DeCoursey's argument for two reasons. In the first place, the note was
never delivered to her and Missouri courts have found a delivery requirement implicit
in § 516.320. See, e.g., id. at 831. Where the acknowledgment is not delivered to the
creditor or prepared for her, it cannot toll the limitations period. Id. We disagree with
DeCoursey's contention that the matter of delivery is merely a consideration in
determining whether the acknowledgment contains a vague or uncertain promise.
Missouri courts have regarded the question of delivery as distinct from the question
of vagueness, see id., and anyway we cannot see how delivery of an acknowledgment
can shed any light on its meaning. Here, the note was not given to DeCoursey or even
to MODI, and it was not prepared for DeCoursey's benefit; therefore, under Missouri
law, it cannot toll or restart the limitations period.
Missouri courts, moreover, have strictly construed § 516.320's requirement that
the acknowledgment be "subscribed by the party chargeable thereby." To be
"subscribed," "the person must write his or her name underneath the writing in
question," and "[t]he text of the writing must be followed by the handwritten signature
of the person." Flowers v. McDonald Cnty., 195 S.W.3d 434, 439 (Mo. Ct. App.
2006). The acknowledgment here contains no signature: It contains only the author's
typewritten name at the top of the page. There is no error here.
We likewise reject DeCoursey's derivative argument that the limitations period
did not bar a second vexatious-refusal claim that accrued in 2013 when the company
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refused her demand for interest. We agree with the district court that DeCoursey
pleaded only one vexatious-refusal claim, which was based on the events surrounding
her claim's denial in 1986.
DeCoursey's last argument is that the company's fraudulent concealment tolled
the limitations period. For fraudulent concealment to toll a limitations period, "there
must be something of an affirmative nature designed to prevent, and which does
prevent, discovery of the cause of action." Owen v. Gen. Motors Corp., 533 F.3d 913,
920 (8th Cir. 2008). Silence does not suffice unless accompanied by a duty to speak.
Id.
DeCoursey does not identify any affirmative fraudulent acts on the company's
part or tell us why it had a duty to speak. She appears to assume that any error in
paying her claim necessarily stems from fraudulent, wrongful conduct rather than
from mistake. But the record contains nothing tending to show that the company
concealed a fact that prevented DeCoursey from asserting her claims after learning of
coverage denial in 1986. We therefore reject DeCoursey's argument that fraudulent
concealment tolled the limitations period and hold that the district court correctly
found that DeCoursey's claims were untimely.
On cross-appeal, the company maintains that the district court erred in
concluding that its voluntary payment of the policy amount defeats its counterclaim
for unjust enrichment. Such a claim is appropriate "when one party has been unjustly
enriched through the mistaken payment of money by the other party." Inv'rs Title Co.,
Inc. v. Hammonds, 217 S.W.3d 288, 293 (Mo. 2007) (en banc). This restitutionary
claim arises when a defendant possesses money that in equity and good conscience
belongs to the plaintiff. Id. at 293–94.
The company contends that, at the time it paid DeCoursey the face value of the
policy, it mistakenly believed that she had never submitted a claim on her husband's
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policy and that the policy was in effect at his death. The district court apparently
assumed for summary judgment purposes that the company's claimed mistakes were
genuine, but it concluded that the company "put forth no evidence to suggest that it
did not have the opportunity to diligently investigate the Policy before it was paid out"
and so paid it voluntarily. In reaching this conclusion, the district court relied on a
decision from the Missouri Court of Appeals that determined that when an insurer has
paid with full knowledge of the facts or "an unlimited opportunity to become informed
of the facts," the insurer may have waived any defense it had to a claim. See Sentry
Ins. v. Knox, 360 S.W.3d 846, 849 (Mo. Ct. App. 2011).
Sentry, though it relied on a restitution case, might well be inapposite here, but
it is in any case an outlier at best. There are numerous Missouri cases that undermine
the district court's reliance on Sentry. The Missouri Court of Appeals has held that "a
payor's lack of care will not diminish his right to recover, or somehow justify retention
of the windfall by an unintended beneficiary." W. Cas. & Sur. Co. v. Kohm, 638
S.W.2d 798, 801 (Mo. Ct. App. 1982). Even where the mistake "is due solely to lack
of care by the payor," restitution will lie because the payee is not entitled to a windfall.
Pitman v. City of Columbia, 309 S.W.3d 395, 404 (Mo. Ct. App. 2010). This is true,
for instance, when the payor's mistake of fact could have been discovered had it
reviewed records available to it. Hertz Corp. v. RAKS Hosp., Inc., 196 S.W.3d 536,
544 (Mo. Ct. App. 2006). In Kohm, an insurer's mistaken payment to an insured did
not justify allowing the insured to keep the payment, apparently despite the insurer's
constructive knowledge of the terms of its insurance policy. Kohm, 638 S.W.2d at
801. The court explained that "if a consumer, despite having adequate financial
records, carelessly overpaid his insurance premium, he would certainly be entitled to
reclaim the money despite the fact that he had been negligent in sending it." Id.
The tendency of the cases in the Missouri Court of Appeals is therefore quite
plain. When interpreting state law, however, we are bound only by decisions of the
highest state court, and when the highest state court has not decided an issue we must
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attempt to predict how it would. Allstate Indem. Co. v. Rice, 755 F.3d 621, 623–24
(8th Cir. 2014). While decisions of the Missouri Court of Appeals are persuasive
evidence of Missouri law, see id. at 624, they are not controlling and here they may
even be conflicting.
We are confident that the Missouri Supreme Court would decide that "a payor's
lack of care will not diminish his right to recover, or somehow justify retention of the
windfall by an unintended beneficiary." See Kohm, 638 S.W.2d at 801. This result
comports with the relevant Restatement, which explains that the so-called voluntary-
payment rule does not "impute knowledge of relevant circumstances of which the
payor is not in fact aware, describing as 'voluntary' a payment that was actually the
consequence of negligence or inadvertence." Restatement (Third) of Restitution &
Unjust Enrichment § 6 cmt. e. Instead, a "voluntary" payment that will defeat a
restitutionary claim "normally occur[s] in the context of a payment made to settle a
claim. Where the terms of settlement involve an explicit compromise of an uncertain
liability, the contractual mechanism by which a risk of uncertainty is allocated to the
payor is transparent." Id. Here, on the other hand, the company's payment of the face
value of the policy did not involve an explicit compromise allocating the risk to the
company that DeCoursey might not in fact be entitled to the face value of the policy.
Instead, if we accept the company's version of the facts, as we must on summary
judgment, see Mahanna v. U.S. Bank Nat'l Ass'n, 747 F.3d 998, 1001 (8th Cir. 2014),
the parties did not explicitly contemplate this risk until after the company's deeper
investigation into its liability on the policy following DeCoursey's demand for
interest.
The Restatement explains that "where the parties have not recognized that
coverage is doubtful, an insurer's mistake as to the fact or extent of insurance coverage
yields a straightforward claim in restitution." Restatement (Third) of Restitution &
Unjust Enrichment § 6 cmt. f(1). A Restatement illustration drives home the point:
"A's life is insured with B Company under a term policy. C is the named beneficiary.
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Receiving proof of A's death, B pays C. Unknown to B or C, A's policy had lapsed
prior to death for nonpayment of premiums. B has a claim in restitution against C."
Id. at cmt. f(1), illus. 23. We think that the Missouri Supreme Court would find the
Restatement's guidance persuasive, especially since that court frequently regards
Restatements as authoritative in general, see, e.g., Humphrey v. Glenn, 167 S.W.3d
680, 684 (Mo. 2005) (en banc), and has relied on an earlier version of the Restatement
on Restitution in particular. See Strype v. Lewis, 180 S.W.2d 688, 691–92 (Mo. 1944).
Our conclusion is consistent with the settled principles of restitution law. A
claim for restitution lies "when one party has been unjustly enriched through the
mistaken payment of money by the other party." Hammonds, 217 S.W.3d at 293. We
cannot see why a payor's negligence should estop it from asserting that its mistakes
of fact resulted in a payment of money that was not due. There is no connection
between the payor's negligence and the voluntary-payment rule. Mistakes are often the
result of negligence, and if a restitution claim were barred because the plaintiff was
negligent, the voluntary-payment exception would bid fair to swallow a large part of
the general restitutionary rule. We find altogether persuasive the observation in Kohm
that if the shoe were on the other foot, a court would have no trouble whatsoever in
concluding that a negligent insured would be entitled to restitution for mistaken
premium payments. In short, the company has a perfectly straightforward claim for
restitution here. The district court therefore erred in holding that the company's
counterclaim failed because it neglected to discover all of the relevant facts.
We affirm the district court's grant of summary judgment to the company on
DeCoursey's claims but reverse the district court's grant of summary judgment to
DeCoursey on the company's counterclaim and remand for further proceedings.
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