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Shapley v. Centurion Life Ins. Co.

Supreme Court of Idaho

June 25, 2013

WILLIAM S. SHAPLEY, an individual, Plaintiff-Appellant,
v.
CENTURION LIFE INSURANCE COMPANY, a foreign corporation, and WELLS FARGO FINANCIAL IDAHO, INC., an Idaho corporation, Defendants-Respondents, and JOHN DOES, individually, does 1 through X, and JOHN DOE BUSINESS ENTITIES, does 1 through X, Defendants.

2013 Opinion No. 80

Appeal from the District Court of the Third Judicial District, State of Idaho, Canyon County. Hon. Thomas Joseph Ryan, District Judge.

District court order granting summary judgment, affirmed.

Pedersen & Whitehead, Twin Falls and Richard S. Owen, Nampa, for appellant. Brian J. Hilverda argued.

Hawley, Troxell, Ennis & Hawley, Boise, for respondents. Kenneth C. Howell argued.

BURDICK, Chief Justice.

William Shapley appeals the Canyon County district court's dismissal of his breach of contract and negligence claims against Centurion Life Insurance Company ("Centurion") and Wells Fargo Financial ("Wells Fargo"). William Shapley and his wife Barbara Shapley applied for credit life insurance with Centurion on the same day they closed on a loan with Wells Fargo. Before Centurion approved their application, Mrs. Shapley passed away. After Centurion denied Mr. Shapley's claim for benefits, he brought several actions against both Centurion and Wells Fargo, which the district court dismissed on summary judgment. Mr. Shapley argues that this dismissal was in error, as was the district court's refusal to allow him to amend his complaint to add an estoppel claim. We affirm the district court's decisions.

I. FACTUAL AND PROCEDURAL BACKGROUND

On June 20, 2008, the Shapleys applied for a real estate loan with Wells Fargo. The Shapleys closed on the loan and submitted an application to Wells Fargo for a joint credit life insurance policy through Centurion on July 10, 2008. Upon submitting their application, the Shapleys were provided with a notice of insurance underwriting practices. The Shapleys did not pay a premium at that time, nor did the application papers require an upfront premium payment.

The application papers stated that the Shapleys would receive insurance coverage only if Centurion approved their application. Specifically, the application the Shapleys signed stated, "I understand that if my application for insurance is not approved by the insurance company, one or both of the coverages for which I have applied will not become effective and no charge will be made for that type of insurance." Additionally, the notice of insurance that the Shapleys received and signed on the same day explained the underwriting process. This document states:

Your insurance application will be forwarded to our underwriting department to decide if we will approve the insurance coverage(s) you requested. However, the underwriter may first need additional information from you regarding your answers on the Health Statement. If so, we (or our representative) will contact you by telephone to obtain the information we need to make our decision. If we require a telephone interview and the interview is not completed for any reason we will not approve the insurance coverage(s) you requested.

Nancy Lunn, Centurion's Claims Manager and Underwriting Manager, explained in her deposition that Centurion had an underwriting procedures guideline that outlined when an interview with an applicant was required. She explained that "requirements for an interview are any yes answers on the health questions, age 55 or older, loan amount 75, 000 or more, insurance added after loan date more than three months, answers changed from yes to no on the health statement."

Centurion never had a chance to have a phone interview with Mrs. Shapley. The day after the Shapleys closed on their loan, Mrs. Shapley suffered a brain hemorrhage from which she died four days later. Mr. Shapley contacted Centurion the same day to claim benefits in connection with Mrs. Shapley's passing. Centurion denied the claim because it never issued insurance on Mrs. Shapley's life. Centurion claims that Mrs. Shapley's application was tagged for a phone interview because she was over 55. Because this interview never took place Centurion issued insurance solely to Mr. Shapley.

Mr. Shapley filed a complaint alleging breach of contract, bad faith, intentional infliction of emotional distress, negligence, misrepresentation, and fraud. He later sought leave from the court to amend his complaint to include a punitive damages claim, and defendants filed a motion for summary judgment. The district court took both of these motions under advisement following a hearing on July 28, 2011. In its November 4, 2011 Memorandum Decision, the district court granted summary judgment to Centurion and Wells Fargo finding that all of Mr. Shapley's claims depended on the existence of a contract to insure Mrs. Shapley's life and no such contract was made.

Later that month, Mr. Shapley filed a motion to amend his complaint to add an estoppel claim. On November 29, 2011, while that motion was pending, the district court entered a final judgment in favor of Centurion and Wells Fargo. Mr. Shapley then sought a reconsideration of the district court's summary judgment ruling. In doing so, Mr. Shapley argued that his negligence claim does not depend on the existence of a contract to insure Mrs. Shapley's life. In opposing reconsideration, Centurion and Wells Fargo contended that ...


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