The opinion of the court was delivered by: Sarah Evans Barker, Judge United States District Court Southern District of Indiana
The facts of this case are, to say the least, prolix and convoluted. Fortunately, for purposes of this entry, we need not engage in an attempt to sort out all of the potentially relevant facts in order to resolve the pending motions. At this juncture, we shall provide only so much of the factual background as is required for us to resolve the pending motions and give direction to the parties for the next stages of this litigation.
Carlson Media Group, Inc. ("CMG") was organized as a Delaware corporation with its business operations located in Noblesville, Indiana. Its authorization to conduct business in Indiana dates back to 2001, but it was administratively dissolved in March 2008. Jason C. Bolf, who later changed his name to J.B. Carlson, was at all relevant times CMG's majority shareholder, President, CEO and Chairman of the Board of Directors. To avoid confusion, we refer to him throughout this entry as "Carlson," regardless of his name change.
In 2006, Germaine "Suzy" Tomlinson was a shareholder and member of the Board of Directors of CMG. Whether she was actively engaged as a director of CMG at any given point in time is a matter in dispute. Not in dispute is the fact that Tomlinson had relatively little income and lived in a house that was owned by her daughter, TomiSue Hilbert. Germaine Tomlinson died in September 2008 from what the county coroner determined to be an accidental drowning in her home, compounded by alcohol-based intoxication. Whether she was sixty-nine or seventy-four at the time of her death is unclear but immaterial.
Geoffrey Vanderpal was an independent insurance agent and financial planner whose home and business office were in Nevada during the relevant time period; he now resides in Texas. In January 2006, Vanderpal submitted an application for life insurance to American General Life Insurance Company ("AGL"), which resulted in that company's issuance of a life insurance policy for the face amount of fifteen million dollars ($15,000,000) on the life of Germaine Tomlinson. The named beneficiary of the policy was the Germaine Tomlinson Insurance Trust dated January 23, 2006 ("GT Trust"). The application submitted to AGL, which was also dated January 23, 2006, stated that the Wilmington Trust Company ("Wilmington") was the current trustee of the GT Trust. Further, the application bore the signatures of Germaine Tomlinson, Geoffrey Vanderpal and Michele Harra, as a representative of Wilmington.
An unauthenticated trust agreement submitted to the Court by AGL purports to have created the GT Trust, and is dated January 23, 2005 (not 2006 as referenced in the insurance application). That document states that the "Settlor" of the GT Trust is Germaine Tomlinson, the Beneficial Owner is CMG and the Trustee and Co-Trustee are Wilmington and Carlson, respectively. Provisions of the trust document allow the Settlor to direct the Trustee to dissolve the trust or amend its terms without restriction, other than that the requirement that the Settlor's instructions to the Trustee be in writing. The trust document purports to bear the signatures of Tomlinson, Carlson and Harra, with Carlson signing as both Co-Trustee and as the CEO of CMG.
AGL filed suit in this court on December 31, 2008, naming as Defendants CMG, Vanderpal, the Germaine Tomlinson Trust Dated January 23, 2006, and its Trustees, J.B. Carlson, Michele Harra and Wilmington. The lawsuit alleges that Vanderpal, Carlson and others (whom AGL claims helped finance the purchase of the insurance) engaged in a scheme to dupe Tomlinson and obtain a sizeable life insurance policy on her life without their possessing an insurable interest so that they could later profit from selling the policy on the secondary market. AGL alleges that the sale on the secondary market could not be completed prior to Tomlinson's death and that CMG now seeks to collect on the life insurance despite never having held an insurable interest in the life of Tomlinson. According to AGL's Complaint For Declaratory Relief and Disgorgement, it is entitled to keep the premiums paid for the insurance, to withhold payment of the policy proceeds, and to be reimbursed by Vanderpal for the commissions AGL paid to him.
CMG, Carlson and the GT Trust (the "Trust Defendants") have responded by claiming that the insurance policy was originally purchased as a "key man" policy to protect CMG against the loss of Tomlinson's contributions to the success of the business as a director. They claim her skills and importance to the business were demonstrated by the fact that she had introduced Carlson and the company to numerous potential clients. Therefore, they contend that CMG, as Beneficial Owner of the GT Trust, had an insurable interest in Tomlinson's life, but that, even if no such insurable interest existed, the policy's two-year incontestability clause acts as a bar to AGL's denial of CMG's claim to the policy proceeds. Vanderpal asserts that there is no evidence that he did anything wrong with regard to the issuance of the policy and that he therefore can not be made to reimburse AGL for his commissions unless AGL is in turn required to repay the premiums paid to purchase the policy. Each of the Trust Defendants has counterclaimed that ALG has acted in bad faith by refusing to pay the policy proceeds to CMG.
Tomlinson's Estate and Tomisue Hilbert, who is Tomlinson's daughter (collectively the "Tomlinson Defendants"), were allowed to intervene in this lawsuit based on their potential interest in its outcome. They apparently knew very little about any of the relevant circumstances in June of 2009 when they sought to intervene and filed their answer and affirmative defenses, and later a cross-claim in September 2009. More recently, they claim that discovery has produced evidence not only to support an intention on the part of Tomlinson to obtain a life insurance policy for the benefit of her children and grandchildren, but also to support the inclusion of AGL and certain other entities who apparently financed the purchase of the life insurance policy as passive participants in the scheme initiated by Carlson and Vanderpal to dupe Tomlinson and to sell the policy on the secondary market. The Tomlinson Defendants argue that the proceeds of the policy should be paid into court and held in escrow until a decision can be made regarding the distribution of the money. These Defendants have also sought leave to file an Amended Answer, Affirmative Defenses, Counterclaim, Crossclaims and Third-Party Claim.
Summary judgment motions have been filed by AGL, Vanderpal, the Trust Defendants and the Tomlinson Defendants, respectively. There are also pending motions seeking leave to file additional briefs. We address all of these motions below.
Summary Judgment Standard
Summary judgment is appropriate when the record establishes that there is "no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Disputes concerning material facts are genuine where the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In deciding whether genuine issues of material fact exist, the court construes all facts in a light most favorable to the non-moving party and draws all reasonable inferences in favor of the non-moving party. See id. at 255. However, neither the "mere existence of some alleged factual dispute between the parties," id. at 247, nor the existence of "some metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), will defeat a motion for summary judgment. Michas v. Health Cost Controls of Illinois, Inc., 209 F.3d 687, 692 (7th Cir.2000).
The moving party "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323. The party seeking summary judgment on a claim on which the non-moving party bears the burden of proof at trial may discharge its burden by showing an absence of evidence to support the non-moving party's case. Id. at 325.
Summary judgment is not a substitute for a trial on the merits, nor is it a vehicle for resolving factual disputes. Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 920 (7th Cir.1994). Thus, after drawing all reasonable inferences from the facts in favor of the non-movant, if genuine doubts remain and a reasonable fact-finder could find for the party opposing the motion, summary judgment is inappropriate. See Shields Enter., Inc. v. First Chicago Corp., 975 F.2d 1290, 1294 (7th Cir.1992); Wolf v. City of Fitchburg, 870 F.2d 1327, 1330 (7th Cir.1989). But if it is clear that a plaintiff will be unable to satisfy the legal requirements necessary to establish her case, summary judgment is not only appropriate, but mandated. See Celotex, 477 U.S. at 322; Ziliak v. AstraZeneca LP, 324 F.3d 518, 520 (7th Cir.2003). Further, a failure to prove one essential element "necessarily renders all other facts immaterial." Celotex, 477 U.S. at 323.
Courts are often confronted with cross-motions for summary judgment because Rules 56(a) and (b) of the Federal Rules of Civil Procedure allow both plaintiffs and defendants to move for such relief. "In such situations, courts must consider each party's motion individually to determine if that party has satisfied the summary judgment standard." Kohl v. Ass'n. of Trial Lawyers of Am., 183 F.R.D. 475 (D.Md.1998). Thus, in determining whether genuine and material factual disputes exist in this case, the Court has considered the parties' respective memoranda and the exhibits attached thereto, and has construed all facts and drawn all reasonable inferences therefrom in the light most favorable to the respective non-movant. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
AGL's Motion for Leave to File Sur-Reply Brief (Doc. # 104)
AGL seeks to supplement its briefing with respect to the two summary judgment motions filed by the Trust Defendants and the Tomlinson Defendants on the grounds that an additional brief will allow it to clear up any confusion that may exist with regard to Ind. Code § 27-1-12-44, which was enacted in 2008 for the purpose of barring an insurer from denying payment of life insurance benefits after the two-year contestability period if the policy was issued in connection with "stranger originated life insurance," as that phrase is defined in Indiana's insurance statutes. However, the sur-reply brief which AGL seeks to file barely addresses the statute, focusing instead on already briefed issues. Only the Tomlinson Defendants have made any mention of the statute in their briefing and then only to assert that it provides an indication of the applicable public policy dealing with the denial of benefits following the expiration of the two-year contestability period. We note that by its own terms the statute's prohibitions are limited to policies issued after June 30, 2008, which defeats its usefulness here.
In short, there is no confusion regarding the meaning or application of the referenced statute and, therefore, no reason to permit the additional briefing ...