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Protective Life Insurance Co. v. Phillips

August 26, 2008

PROTECTIVE LIFE INSURANCE COMPANY, AS SUCCESSOR-IN-INTEREST TO CHASE INSURANCE LIFE AND ANNUITY COMPANY, PLAINTIFF,
v.
RACHEL PHILLIPS, DEFENDANT.



FINDINGS & RECOMMENDATIONS

This case was referred to the undersigned pursuant to Local Rule 72-302(c)(19). See 28 U.S.C. § 636(b)(1). Plaintiff's motion for entry of default judgment against defendant Rachel Phillips came on for hearing on May 21, 2008. Jessica Perry appeared as plaintiff's counsel, and defendant made no appearance. Upon review of the motion and the supporting documents, the court issues the following findings and recommends that the motion be granted.

I. JURISDICTION

Jurisdiction is appropriate under 28 U.S.C. § 1332. Plaintiff is a corporation organized under the laws of the State of Tennessee and maintains its principal place of business in Birmingham, Alabama. Complaint ("Compl."), ¶ 1. Defendant Rachel Phillips is a resident of California. Id., ¶ 2. The matter in controversy exceeds $75,000. Id., ¶ 3.

II. BACKGROUND

This case is proceeding on the complaint filed on January 4, 2008. Plaintiff seeks a judgment rescinding the life insurance policy applied for by defendant's husband, Rodney Phillips ("decedent"), on grounds of misrepresentation and concealment of material facts. Plaintiff is the successor-in-interest to Chase Insurance Life and Annuity Company, which processed decedent's application for term life insurance. See Compl., ¶¶ 1, 6; Declaration of Jessica M. Perry in Support of Request to Enter Default of Defendant Rachel Phillips ("Perry Decl."), ¶ 1. Defendant, Rachel Phillips is the named beneficiary under the policy. Compl, ¶ 6.

The complaint alleges claims for rescission based on the decedent's misrepresentations and concealment of facts in his application for term life insurance. On or around December 13, 2006, Rodney Phillips spoke with a Chase account executive regarding an application for term life insurance, with a death benefit of $100,000. Compl., ¶ 6. The executive read questions from the application over the telephone, and decedent responded. Id. Decedent named his wife, defendant Rachel Phillips, as the primary and sole beneficiary under the policy. Id. Around October 14, 2006, Chase sent the typed application packet to decedent for his signature, which was to be made in the presence of a medical examiner. Id., ¶¶ 6, 19, 20. The packet included a Receipt and Temporary Insurance Agreement ("TIA"), which included a provision that any material misrepresentations or fraud in the application invalidated the TIA. Id., ¶ 7.

Decedent was scheduled for a medical examination on October 19, 2006, but the examination did not occur. Id., ¶ 19. Decedent claimed he lost the application packet, and when he notified Chase on November 7, 2006, it sent him a duplicate application packet on or around November 9, 2006. Id. The medical examination was rescheduled, and occurred on November 9, 2006. Id., ¶ 20. However, decedent was not able to sign the agreement in the examiner's presence because he had not yet received the new packet. Id.

On November 10, 2006, Rodney Phillips died. Id., ¶ 22. Chase received notice of decedent's death on or around November 15, 2006, when decedent's brother called Chase upon receiving the duplicate application packet in the mail. Id.

On November 22, 2006, following decedent's death, defendant Rachel Phillips faxed to Chase a copy of the agreement bearing decedent's purported signature, dated October 19, 2006 -- the date of the originally scheduled medical examination. Id., ¶ 23.

Because no policy had ever been delivered and decedent had never paid the first premium due, and in light of the discrepancy between decedent's previous representation regarding the lost packet and the date of his purported signature, plaintiff began a contestable claim investigation. Id., ¶¶ 7, 24. During that investigation, plaintiff discovered numerous misrepresentations on decedent's application. Specifically, plaintiff discovered that decedent had failed to disclose his history of hypertension, asthma, chronic obstructive pulmonary disease, congestive heart failure, seizures, hepatitis C, severe depression, schizophrenia, alcoholism, abuse of Soma, and, among other things, his conviction and driver's license suspension for driving under the influence within the five years preceding the application. See id., ¶¶ 9-18, 24-26. These newly discovered facts contradicted many of decedent's representations on the application. Id., ¶¶ 9-18. Plaintiff had no knowledge of the falsity of decedent's representations prior to the investigation. Id., ¶ 28.

Based on these misrepresentations, plaintiff rescinded any applicable coverage under the TIA or application, and filed this action. Id., ¶ 29. Defendant was served with the summons and complaint on February 15, 2008, but failed to file an answer or otherwise respond to the complaint. The Clerk entered default against defendant on March 17, 2008, and plaintiff now moves for entry of default judgment pursuant to Fed. R. Civ. P. 55(b)(2). Specifically, plaintiff seeks a declaratory judgment that defendant is owed no sums under Chase life insurance policy number FK3627499 on the life of Rodney I. Phillips.

III. DISCUSSION

Pursuant to Federal Rule of Civil Procedure 55(a), the Clerk is required to enter default when the fact of default is established by affidavit or otherwise. Fed. R. Civ. P. 55(a). In this case, default was established by plaintiff and entered by the Clerk on March 17, 2008. Now before the court is plaintiff's application ...


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