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Metlife Investors USA Insurance Co. v. Estate of Lindsey

United States District Court, N.D. Indiana, Hammond Division

December 4, 2017

METLIFE INVESTORS USA INSURANCE COMPANY, Plaintiff,
v.
ESTATE OF MELINDA LINDSEY, STEVEN L. LINDSEY and JULIE KIRBY, in her capacity as Personal Representative of the Probate Estate of Melinda Lindsey, Defendants, ESTATE OF MELINDA LINDSEY and JULIE KIRBY, in her capacity as Personal Representative of the Probate Estate of Melinda Lindsey, Defendants/Counter-Plaintiffs,
v.
METLIFE INVESTORS USA INSURANCE COMPANY, Plaintiff/Counter-Defendant.

          OPINION AND ORDER

          RUDY LOZANO, JUDGE

         This matter is before the Court on: Defendants/Counter-Plaintiffs Estate of Melinda Lindsey and Julie Kirby in Her Capacity as Personal Representative of the Probate Estate of Melinda Lindsey's Motion to Summary Judgment, filed on June 12, 2017 (DE #41); Plaintiff's Rule 56(d) Motion to Deny or Defer Defendants' Motion for Summary Judgment, filed by MetLife Investors USA Insurance Company on June 16, 2017 (DE #44); and Defendants/Counter-Plaintiffs Estate of Melinda Lindsey and Julie Kirby in Her Capacity as Personal Representative of the Probate Estate of Melinda Lindsey's Request for Oral Argument on Motion for Summary Judgment, filed on July 24, 2017 (DE #58). For the reasons set forth below, Defendants/Counter-Plaintiffs' motion for summary judgment (DE #41) is DENIED. Plaintiff's motion to deny or defer Defendants' motion for summary judgment (DE #44) is DENIED. Defendants/Counter-Plaintiffs' request for oral argument (DE #58) is DENIED.

         BACKGROUND

         Plaintiff MetLife Investors USA Insurance Company (“MetLife”) seeks rescission of a term life insurance policy (“Policy”) issued to decedent Melinda Lindsey (“Lindsey”) based on allegedly material misrepresentations and/or omissions she made in the Policy application. Defendants/Counter-Plaintiffs Estate of Lindsay and Julie Kirby in her capacity as personal representative of the probate estate of Lindsey (together, “Estate”) move for summary judgment on the grounds that MetLife failed to properly rescind the Policy by retaining the insurance premiums when it initiated the suit, and by not depositing the premiums with the Court. MetLife filed a motion to deny or defer the Estate's motion for summary judgment based on Federal Rule of Civil Procedure 56(d). These motions are fully briefed and are ripe for adjudication. The Estate also filed a request for oral argument on its motion for summary judgment.

         DISCUSSION

         Request for Oral Argument

         At the outset, the Court will address the Estate's request for oral argument on its motion for summary judgment. (DE #58.) Pursuant to Local Rule 7-5, the Court may “grant or deny a request for oral argument or an evidentiary hearing in its discretion.” N.D. Ind. L.R. 7-5(c)(1). Here, the parties' memoranda have sufficiently apprised the Court of the issues at hand, and the Court does not believe that oral argument is necessary. Therefore, the Court DENIES the Estate's request for oral argument (DE #58), and turns to the merits of the motions.

         Undisputed Facts

         On January 2, 2014, Lindsey completed and signed an application for a term life insurance policy with an accidental death benefit rider by MetLife (“Policy”). As part of her application, Lindsey responded to a series of questions regarding her medical history and her spouse's life insurance coverage. MetLife issued the Policy to Lindsey on March 26, 2014.[1]

         On January 16, 2015, Lindsey was shot and killed. Her death occurred during the contestable period of the Policy. Lindsey's spouse, Steven Lindsey, made a claim for the Policy benefits as the named beneficiary. Steven Lindsey was eventually convicted of Lindsey's death and is currently incarcerated. The Estate made a claim for the Policy benefits on the basis that it obtained a wrongful death judgment against Steven Lindsey for the Lindsey's death. As part of its review of the claims for the Policy benefits, MetLife found what it believes to be material misrepresentations and omissions in Lindsey's application.

         In a letter dated June 25, 2015, MetLife denied Steven Lindsey's claim for death benefits, and notified him that MetLife was exercising its right to void the Policy, and that all premiums paid as of that date, with interest, would be forwarded to him under separate cover. MetLife sent a similar letter to the Estate, indicating that the premium refund was being sent to Steven Lindsey. The Estate responded on June 29, 2015, requesting that premium refunds be forwarded to the Estate, rather than Steven, who at that time was awaiting trial for Lindsey's murder. On July 6, 2015, MetLife sent a check to Steven Lindsey in the amount of $907.05, representing a premium refund plus interest. On July 20, 2015, MetLife sent a check to the Estate for the same amount. On January 19, 2016, the Estate returned the premium refund check to MetLife, and notified MetLife that it intended to contest the denial of the Policy. MetLife acknowledged the Estate's return of the check in correspondence dated January 25, 2016. On February 24, 2016, MetLife stopped payment on the checks that it had sent to Steven Lindsey and the Estate.

         On March 16, 2016, MetLife filed the instant lawsuit seeking rescission of the Policy. The First Amended Complaint for Rescission (“Complaint”) alleges that Lindsey made material misrepresentations and/or omissions in her application for the Policy, that MetLife relied to its detriment on her representations, and that MetLife would not have issued the Policy if Lindsey had accurately and fully disclosed all necessary information and made correct and complete representations in the application. (DE #14.) The Complaint alleges that the misrepresentations were fraudulent and/or material, entitling it to rescind the Policy. The Complaint also alleges that “[o]n June 25, 2015, MetLife provided timely written notice to the Defendants that the Policy is considered void and MetLife refunded all premiums paid as of that date, with interest.” (Id., ¶24.)

         The Estate answered the Complaint and filed counterclaims against MetLife. On June 30, 2016, MetLife filed its answer to the Estate's counterclaims, asserting as a defense that “MetLife properly and timely determined the Policy initially issued to the Decedent was void and/or voidable and should be rescinded based on misrepresentations and/or omissions in the Decedent's insurance application.” (DE #21, at 13.) In September 2016, Magistrate Judge Martin held the Rule 16 preliminary pretrial conference, and set discovery and mediation deadlines. In May 2017, Magistrate Judge Martin granted the parties' motion to extend discovery deadlines; the close of fact discovery was set for August 15, 2017, and the close of all discovery was set for February 15, 2018. No deadline was set for the filing of dispositive motions.

         On June 12, 2017, the Estate filed the instant motion for summary judgment. (DE #41.) At that time, the parties were still engaged in discovery, and the Estate had yet to take the depositions of certain MetLife employees. On June 16, 2017, MetLife filed the instant motion to deny or defer the Estate's motion for summary judgment (DE #44), as well as a motion for leave to deposit funds with the Clerk (DE #43). On July 27, 2016, Magistrate Judge Martin granted MetLife's motion for leave to deposit funds with the Clerk, noting that “[a]ccepting deposit of the funds is therefore appropriate but in no way addresses the timeliness and effectiveness of MetLife's attempted rescission.” (DE #60 at 2.) ...


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