The opinion of the court was delivered by: Whelan, District Judge.
ORDER GRANTING PHILADELPHIA LIFE'S MOTION FOR SUMMARY JUDGMENT;
DENYING MOTION TO BIFURCATE AS MOOT; DENYING MOTION TO ISSUE
RULE 54(B) CERTIFICATION
Defendant, counterclaimant and third party plaintiff
Philadelphia Life Insurance Company ("Philadelphia Life") moves
for summary judgment, or alternatively partial summary judgment,
pursuant to Rule 56 of the Federal Rules of Civil Procedure.
Plaintiffs Robert Maddux, Dennis Maddux and Donald Maddux,
(successors-in-interest to decedent Mary Manley Caine)
("Plaintiffs") oppose. All parties are represented by counsel.
This Court has jurisdiction pursuant to 28 U.S.C. § 1335, 1367.
For the reasons expressed below, the Court GRANTS Philadelphia
Life's motion for summary judgment.
On March 6, 1998 Plaintiffs commenced this action alleging
claims sounding in breach of contract, breach of the implied
covenant of good faith and fair dealing and fraud based on
Philadelphia Life's refusal to pay Plaintiff Mary Manley Caine
("Caine") the proceeds of a $25,000 life insurance policy. The
policy was issued by Philadelphia Life to Omer L. Manley
("Manley"), Policy No. 0080421510. Manley, Caine's former
husband, was born in Oklahoma on January 27, 1925.
Philadelphia Life subsequently interpled the policy benefits
pursuant to 28 U.S.C. § 1335. Notwithstanding the interpleader,
however, the Court retained pendent and supplemental jurisdiction
over Plaintiffs' contract and tort claims. Philadelphia Life now
seeks summary judgment against those claims.
B. THE MANLEY MARRIAGE, LIFE INSURANCE, DIVORCE
On January 16, 1989 Manley married Plaintiff Mary Caine
("Caine") in Sacramento, California. On July 25, 1990, while
residing in Kansas, Manley applied for and received a $25,000
life insurance policy. Philadelphia Life's agent, Ken Thomas,
also signed the application on the same date and at the same
location. According to the application, "[a]ny policy issued on
this application will be deemed to be delivered in and governed
by the laws of the jurisdiction in which this application was
signed." (See Pls.' Ex. 1). The application identified Caine as
the primary beneficiary and Union National Bank as the contingent
beneficiary. Philadelphia Life subsequently issued the policy on
September 12, 1990.
Manley and Caine continued to reside in Kansas as husband and
wife until mid-1993 when they separated. Caine moved back to
California and Manley relocated to Oklahoma. In December 1993
Manley filed for divorce in Oklahoma. Caine did not contest the
divorce, and signed a waiver of summons and entry of general
appearance while she remained in California. On February 14, 1994
a divorce decree was entered in the District Court of Creek
County in Oklahoma. According to the decree, Manley had resided
in Oklahoma for more than six months preceding the initiation of
his divorce petition. The decree also awarded Manley and Caine,
as their separate property, all items in their respective
possession. As to the policy, Oklahoma law provides "that in the
event of divorce, the decedent's former spouse shall be treated
for all purposes under the [insurance] contract as having
predeceased the decedent." See 15 Okla. Stat. Ann. § 178.
After the divorce was final, Manley moved to Oregon and then to
California where he died on March 29, 1997. Manley's death
certificate listed his final residence as Sacramento, California.
Manley's former wife Caine and his four daughters from a former
marriage ("the Manley sisters") later asserted conflicting claims
to the policy benefits.
On February 5, 1998 Mary Caine filed this action in California
Superior Court. On March 6, 1998 Philadelphia Life timely removed
the action to federal court on the basis of diversity of
On April 24, 1999 Plaintiff Mary Caine passed away. On July 20,
1999 Plaintiffs Robert Maddux, Dennis Maddux and Donald Maddux
substituted into this action as Caine's successors-in-interest by
filing a Second Amended Complaint alleging six claims against
Philadelphia Life. The first claim alleges that Philadelphia Life
breached the terms of the policy by failing to pay Caine the
insurance proceeds. The second claim asserts that Philadelphia
Life breached the implied covenant of good faith and fair dealing
by withholding the insurance proceeds for an improper purpose.
Plaintiffs' third claim alleges fraud based on Philadelphia
Life's issuance of a policy it allegedly never intended to pay.
Plaintiffs' fourth claim alleges a conspiracy between
Philadelphia Life and the Manley
sisters. Plaintiffs' remaining claims seek declaratory relief,
punitive damages and damages for emotional distress.
To resolve the competing claims to the insurance proceeds,
Philadelphia Life deposited the policy benefits of $25,000 with
the Court pursuant to 28 U.S.C. § 1335 naming Mary Caine and the
Manley Sisters as parties to the interpleader action. By order
dated January 22, 1999 the Court granted Philadelphia Life's
motion for judgment in interpleader, finding that Philadelphia
Life could properly interplead the insurance proceeds.
Philadelphia Life now moves for summary judgment as to the
remaining claims brought against it.
Summary judgment is appropriate when there is no genuine issue
as to any material fact, and the moving party is entitled to
judgment as a matter of law. See FED. R. CIV. P. 56(c);
Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548,
2552, 91 L.Ed.2d 265 (1986). A fact is "material" when, under the
governing substantive law, it could affect the outcome of the
case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106
S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); Freeman v. Arpaio,
125 F.3d 732, 735 (9th Cir. 1997). A dispute about a material fact is
"genuine" if "the evidence is such that a reasonable jury could
return a verdict for the nonmoving party." Anderson, 477 U.S.
at 248, 106 S.Ct. at 2510.
A party seeking summary judgment always bears the initial
burden of establishing the absence of a genuine issue of material
fact. Celotex, 477 U.S. at 323, 106 S.Ct. at 2553. The moving
party can satisfy this burden in two ways: (1) by presenting
evidence that negates an essential element of the non-moving
party's case or (2) by demonstrating that the nonmoving party
failed to make a showing sufficient to establish an element
essential to that party's case on which that party will bear the
burden of proof at trial. Id. at 322-23, 106 S.Ct. at 2552-53.
If the moving party fails to discharge this initial burden,
summary judgment must be denied and the court need not consider
the non-moving party's evidence. Adickes v. S.H. Kress & Co.,
398 U.S. 144, 159-60, 90 S.Ct. 1598, 1609-10, 26 L.Ed.2d 142
However, once the moving party meets this initial burden, the
non-moving party cannot defeat summary judgment by merely
demonstrating "that there is some metaphysical doubt as to the
material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d
538 (1986); Triton Energy Corp. v. Square D Co., 68 F.3d 1216,
1221 (9th Cir. 1995) (citing Anderson, 477 U.S. at 252, 106
S.Ct. at 2512) ("The mere existence of a scintilla of evidence in
support of the non-moving party's position is not sufficient.").
Rather, the non-moving party must "go beyond the pleadings and by
her own affidavits, or by `the depositions, answers to
interrogatories, and admissions on file,' designate `specific
facts showing that there is a genuine issue for trial.'"
Celotex, 477 U.S. at 324, 106 S.Ct. at 2553 (quoting Fed.
When making this determination, all inferences drawn from the
underlying facts must be viewed in the light most favorable to
the party opposing the motion. Matsushita Elec. Indus. Co., 475
U.S. at 587, 106 S.Ct. at 1356. "Credibility determinations, the
weighing of the evidence, and the drawing of legitimate
inferences from the facts are jury functions, not those of a
judge, [when] he [or she] is ruling on a motion for summary
judgment." Anderson, 477 U.S. at 255, 106 S.Ct. at 2513.
Philadelphia Life seeks summary judgment against Plaintiffs'
claims for breach of contract, breach of the implied ...