The opinion of the court was delivered by: INFANTE
For the reasons set forth below, Old Line's Motion for Summary Judgment as to all causes of action in Plaintiffs' complaint is GRANTED.
The following facts are undisputed, except where otherwise noted.
On August 4, 1992, decedent John Casey completed Part A of a written application for $ 500,000 in life insurance coverage with Defendant Old Line Life Insurance Company ("Old Line"). Defendant's Undisputed Fact ("UF") 1. This Application consisted of Part A and one or more Parts B. UF 2. Previously, on May 21, 1992, John Casey had undergone a paramedical examination which was required by Old Line in connection with the insurance application. UF 6. During the paramedical examination, the medical examiner asked John Casey specific questions about his health. The medical examiner filled out the examination, entitled Answers to Medical Examiner (forming Part B of the Application), and John Casey signed the application, signifying that all information given in the application was correctly recorded, complete, and true. UF 7. In his answers to the medical examiner, Mr. Casey responded "No" to the following questions:
3.a. Have you received treatment or joined an organization for alcoholism or drug dependency or abuse; been advised to discontinue the use of alcohol or drugs?
b. Have you used cocaine, barbiturates, amphetamines or any other drug which might cause a dependency, other than as prescribed by a licensed physician?
On August 4, 1992, John Casey completed and signed an application for life insurance, Part A, which contained the following statement:
This application consists of Part A and one or more Parts B. This application is not a contract of insurance. A contract of insurance shall take effect only if a policy is issued on this application and the first premium is paid in full (a) during the lifetime of all proposed insureds and (b) while there is no change in the insurability and health of all such persons from that stated in this application. ... It is represented that all statements in this application are true, full and complete, and bind all parties in interest under any policy applied for.
Charles Weidner, an underwriter employed by Line Life, reviewed the Application materials on or about August 14, 1992. UF 9. Mr. Weidner observed that Mr. Casey's blood test of May 21, 1992 revealed moderately elevated Serum Glutamic-Oxalacetic Transaminase ("SGOG") and Serum Glutamic-Pyruvic Transaminase ("SGPT") levels. UF 10. Mr. Weidner asserts that these levels raised the possibility of several medical anomalies, ranging from temporary illness to excessive alcohol consumption. Weidner Decl. P 10.
Based upon these test results, Old Line requested that Mr. Casey undergo a second blood chemistry test and urinalysis, which he did on August 31, 1992. UF 12, 13. Old Line also sought and obtained medical records from Mr. Casey's primary treating physician, Dr. Hudson. UF 14.
On August 31, 1992, Mr. Weidner reviewed an inspection report, on which Mr. Casey revealed that he was a total abstainer of alcohol. UF 15.
Mr. Weidner reviewed the Application, the medical records from Dr. Hudson, the second blood chemistry results and urinalysis, and all of the documentation in the underwriting file on or about September 9, 1992, and found no information relating to Mr. Casey's medical history that was significant for underwriting purposes. UF 16, 17. Mr. Weidner found that there was no evidence of any drug or alcohol use or abuse by Mr. Casey on his second blood test, nor was there any such evidence in the medical records from Mr. Hudson or on the Application. UF 18, 19. However, the prior moderate elevation of the SGOG and the SGPT levels on the first blood test caused Old Line to make a policy counteroffer of a "standard" rating, rather than the preferred rating for which Mr. Casey applied. UF 20.
On October 6, 1992, John Casey executed an Amendment of Application for Insurance, changing the policy from a PT-1 preferred non-tobacco rate, to a PT-1 standard non-tobacco rate. UF 21. Based upon the information provided by Mr. Casey, Old Line issued to John Casey its Policy No. 1870980, effective September 24, 1992. UF 22.
At the time the policy was issued, John Casey named as equal beneficiaries to the policy his daughter and son, Patrick Carson Casey and Allison Casey. UF 23. On January 27, 1994, John Casey executed a Request for Change of Beneficiary, changing the beneficiary designation of the Policy to "1/2 Norry Beth Carrel (intended spouse), 1/4 Patrick Carson Casey, and 1/4 Allison Dana Casey." UF 24. John Casey died on June 27, 1994, and Old Line thereafter received claims for benefits under the Policy from all of the beneficiaries. UF 25.
Old Line conducted a contestable investigation, pursuant to the two year contestable provision. UF 26, 27. In the course of its investigation, Old Line obtained the following records which indicated that John Casey had a long history of alcohol abuse. Defendant obtained medical records from Stanford University Hospital, dated June 22, 1994, which stated "PT has a long hx of ETOH abuse beginning at age 15 yrs. He has been in ETOH rehab three times, the most recent was 1/94 at Ross in Marin." UF 29; Publicover Decl., Exh. A. Old Line also obtained John Casey's medical records from Ross Hospital, dated July 13, 1988, which stated, "The patient describes himself as an alcoholic but stopped drinking years ago." UF 30; Publicover Decl., Exh. B. Finally, Defendant sought medical records from Ross Hospital, to which decedent's family objected. Old Line did obtain a copy of a Discharge Summary from Ross Hospital, dated August 12, 1992, which stated that John Casey was admitted to Ross Hospital on June 4, 1992 and discharged on June 30, 1992, that his admitting diagnosis was alcohol dependency, reactive depression, benzodiazepine abuse, and insomnia secondary to alcohol dependency, and that his discharge diagnosis was alcohol dependency. The discharge summary also stated that John Casey was to attend 90 AA meetings in 90 days and participate in Ross Aftercare meetings and Alumni meetings once a week. Publicover Decl., exh. C.
Based upon these medical records and its conclusion that John Casey made material misrepresentations and concealments in his insurance application, Old Line rescinded the policy.
III. SUMMARY JUDGMENT STANDARDS
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). If the moving party will bear the burden of proof on an issue at trial, either because it is the plaintiff or, as a defendant, is asserting an affirmative defense, it must establish beyond controversy all of the essential elements of the claim or defense. See Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). However, the moving party has no burden to negate or disprove matters on which the ...