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FOSTER v. METROPOLITAN LIFE INSURANCE COMPANY

December 7, 2005.

Edward B. Foster, Plaintiff,
v.
Metropolitan Life Insurance Company, Defendant.



The opinion of the court was delivered by: JAMES WARE, District Judge

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

I. INTRODUCTION

Edward B. Foster ("Foster" or "Plaintiff") initiated this suit against Metropolitan Life Insurance Company ("MetLife") after Plaintiff's life insurance policy "lapsed" due to non-payment of premiums. Plaintiff contends that MetLife breached his life insurance policy by failing to provide the requisite pre-cancellation notices.

  Presently before this Court is MetLife's Motion for Summary Judgment. MetLife contends that Foster's claim fails as a matter of law because (1) Foster's claim is barred by the doctrine of laches; (2) MetLife sent the requisite notices; (3) Foster's policy lapsed due to non-payment of premiums; and (4) MetLife did not waive its right to lapse and terminate Foster's policy. The motion was heard of October 17, 2005. Based upon all papers filed to date and the comments of counsel, the Court GRANTS MetLife's Motion for Summary Judgment. II. BACKGROUND

  In 1978, Foster was employed by Stanford Research Institute ("SRI"), and as part of the SRI employment benefits, Foster acquired a Group Life Insurance Policy ("GUL"). The coverage initially issued on November 11, 1989. At the time, Foster was insured by Travelers. In 1995 or 1996, MetLife became Foster's insurer. Marsh@Work Solutions ("Marsh") served as the third-party administrator on Foster's policy.*fn1 Marsh administered and processed claims according to MetLife's guidelines and all records maintained by Marsh on behalf of MetLife are the property of MetLife.

  On August 16, 1998, Foster retired from SRI and accordingly, his GUL coverage transitioned from payroll deductions to direct-bill status. At the time, Foster began making quarterly premium payments towards his insurance policy. On August 23, 1999, Foster made an advance payment of $1,144.86, to cover the months of August, September and October, 1999. Thereafter, Foster made no payments in November or December 1999. MetLife's insurance certificate contains a "Grace Period" provision, which provides that:
If you are not paying under the Payroll Deduction Plan and if the Cash Value on any monthly anniversary is less than the Monthly Deduction for that month, there will be a Grace Period of 60 days after the anniversary to pay an amount that will cover the Monthly deduction. We will send you a notice of the Grace period. If we do not receive a sufficient amount by the end of the Grace period, this certificate will then end without value.
Plaintiff's Opp'n. at 2. According to this provision, Foster's 60-day grace period expired on December 31, 1999. However, MetLife did not cancel Foster's policy at the time. On January 26, 2000, Foster called Marsh, requesting that MetLife refrain from declaring his policy as "lapsed," and accept a late payment for the period November, December, 1999, and January 2000. On February 1, 2000, Marsh received a payment for $1,021.91, which was applied towards Foster's premium payments for November and December 1999, and January 2000. Marsh failed to generate a premium notice or billing notice for the months of January, February and March 2000. On April 2, 2000, another 60-day grace period lapsed. Again, MetLife took no action and failed to cancel Foster's policy. MetLife claims that on April 7, 2000, it mailed to Foster, a Notice of Payment Due for the February, March, April, 2000 premium period and the May, June, July, 2000 premium period. On April 27, 2000, Marsh received a check from Foster in the amount of $1,068.42, which was applied to the February, March, and April 2000 premium period. No other payments were received after April 27, 2000.

  On May 5, 2000, Marsh allegedly sent a billing notice to Foster. MetLife claims that it also sent Foster a Notice of Payment Due on May 5, 2000. This notice allegedly informed Foster that his policy would lapse if payment was not received by July 1, 2000. MetLife also claims that it sent another Notice of Payment Due to Foster on June 5, 2000, reminding him that his policy would lapse if no payment was received by July 1, 2000. Foster claims that he never received any of these notices. The Notices of Payments Due were never returned to Marsh or to MetLife. In the absence of any further payments, Marsh sent a letter to Foster on July 9, 2000, stating that Foster's policy had lapsed effective May 1, 2000.

  On July 17, 2000, Foster contacted Marsh to inquire as to the status of his policy. During this conversation, Marsh informed him that his policy had lapsed due to non-payment of the premium. Foster claimed that he had mailed a check for the required amount and that he would contact his bank to ascertain if the check was cashed. At this time, Marsh informed Foster that he could either send a copy of the cancelled check to Marsh, or he could reapply for reinstatement of his policy.

  For the next two years and eight months, Foster made no contact with Marsh or MetLife. Finally, on March 21, 2003, Foster called Marsh requesting information on reinstatement of his policy. Marsh informed Foster that he had six weeks remaining to complete the necessary forms for reinstatement. Foster, however, chose not to reapply for reinstatement and proceeded to file a complaint against MetLife on April 23, 2003. MetLife removed the action to this Court.

  Foster claims that MetLife breached its contractual agreement by terminating his life insurance policy. Presently before this Court is MetLife's motion for summary judgment. MetLife essentially contends that Foster's policy lapsed due to non-payment of premiums, and alternatively, that Foster's action is barred by laches.

  III. STANDARDS

  Summary judgment is proper when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). The purpose of summary judgment "is to isolate and dispose of factually unsupported claims or defenses." Celotex v. Catrett, 477 U.S. 317, 323-24 (1986).

  A movant for summary judgment always "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the `the pleadings, depositions, answer to interrogatories, and admissions on file, together with the affidavits, if any' which it believes demonstrate the absence of a genuine issue of material fact." Id. at 323. If the movant does not satisfy this initial burden, the non-movant has no obligation to produce anything and summary judgment must be denied. If, however, the movant meets this initial burden, then the burden shifts to the non-movant to "designate `specific facts showing that there is a genuine issue for trial.'" Id. at 324. In other words, to preclude entry of summary judgment, the non-movant must bring forth genuine issues of material fact. An issue of fact is "genuine" if it can reasonably be resolved in favor of either party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue of fact is "material" if it "might affect the outcome of the suit under the governing law. . . . Factual disputes that are irrelevant or unnecessary will not be counted." Id. In short, the non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586 (1986).

  It is this court's responsibility "to determine whether the `specific facts' set forth by the non-movant, coupled with undisputed background or contextual facts, are such that a rational or reasonable jury might return a verdict in its favor based on that evidence." T.W. Elec. Service v. Pac. Elec. Contractors, 809 F.2d 626, 631 (9th Cir. 1997). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no `genuine issue for trial.'" Matsushita, 475 U.S. at 587. In conducting its analysis, this court must draw all reasonable ...


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