United States District Court, D. Idaho
MEMORANDUM DECISION AND ORDER
W. DALE, UNITED STATES MAGISTRATE JUDGE
the Court is North American Company for Life and Health
Insurance's motion for summary judgment (Dkt. 48), and
Kristi Lynch's motion to strike the Affidavit of John
Robbins (Dkt. 64). Lynch was the owner and beneficiary of a
life insurance policy she claims was prematurely terminated
without proper notice. North American seeks summary judgment
on Lynch's claims, and its counterclaim for declaratory
relief on the grounds that the life insurance policy it had
issued was properly terminated. The Court conducted a hearing
on the motions on December 12, 2017. After hearing oral
argument, reviewing the parties' memoranda, and
researching relevant authorities, the Court will deny North
American's motion for summary judgment, and sustain, in
part, Lynch's evidentiary objection to the
Kelly Sharpe (the “Insured”) applied for a $750,
000 life insurance policy on or around September 13, 1989,
listing Kristi Lynch, the Insured's stepdaughter, as
owner and beneficiary. John Cookman, then a broker at MCN
Insurance Brokers, Inc., helped the Insured complete the
application. Cookman submitted the application to CPS
Insurance Services, that in turn submitted the application to
North American. A flexible premium adjustable life insurance
policy, policy number LW00006377, was issued to Lynch, on or
around November 7, 1989 (the “Policy”). The
Policy has a Specified Amount of $750, 000 and, per the
Application, names Lynch as owner and beneficiary. The
Policy's planned periodic premium was $9, 625 annually.
Policy's terms provide that, after November 7, 2004, the
Policy will lapse when the surrender value is insufficient to
cover the next monthly deduction. Upon a lapse, the Policy
will enter a 61-day grace period during which the owner may
make a premium payment to keep the Policy in force and avoid
termination. The Policy further provides:
Notice of the premium required to keep the policy in force is
mailed to your last known address at least 30 days prior to
termination. Such premium is due on such Monthly Anniversary
Day and if not paid within the grace period, all coverage
under this policy terminates without value at the end of the
61 day period.
mailing address has been the same post office box in Picabo,
Idaho, since late 2011. Lynch made regular premium payments
from November 1989 to November 2006, but did not make any
payments from December 2006 to December 2009. Lynch also
tendered a partial surrender of $14, 716 on or around
September 24, 2009, to receive a check in that amount. The
Policy then entered a grace period on December 7, 2009, and
North American sent Lynch a grace notice informing her she
had to remit either the planned periodic premium or at least
$626.88 to prevent the Policy from terminating. The grace
notice also informed Lynch that sending the $626.88
“minimum payment will provide coverage for this month
only and will not prevent your policy from entering the 61
day grace period again next month, perhaps for a different
amount. This minimum payment will not provide for the planned
long term performance of your policy.” The grace notice
further instructed Lynch to contact North American if she had
questions about her premiums or the Policy's performance.
Lynch did not contact North American but instead made the
minimum $626.88 payment on or around January 5, 2010.
did call North American on at least two occasions. On
September 2, 2010, she called North American inquiring about
a personal “note” she found that discussed
premium payments. Lynch also called North American on August
12, 2011, because she had misscheduled a payment and was
afraid the policy had lapsed. The North American
representative suggested that Lynch set up automatic
payments. Although North American sent Lynch paperwork to do
so, Lynch did not follow through on the suggestion. Lynch
instead continued to make either a minimum payment or a
payment in an amount not indicated in the Policy or any grace
notice, causing the Policy to enter a grace period on
American sent Lynch 36 grace notices between December of 2009
and May of 2015. Each grace notice contained the same or
similar information as the December 7, 2009 grace notice. The
Policy entered another grace period on June 7, 2015, because
the monthly deduction exceeded the Policy's surrender
value. North American asserts it mailed a grace notice to
Lynch on June 8, 2015, following its standard mail room
Robbins, Associate Vice President for Life and Variable
Services for North American's parent company, Sammons
Financial Group Member Companies, submitted an affidavit
describing North American's mail room procedures. As
Associate Vice President, Robbins oversees the Policy Billing
and Accounting Team. The Policy Billing and Accounting Team
is responsible for all billing procedures and matters,
including the generating, issuing, and mailing of grace
notices and termination of policies. Accordingly, Robbins
testified he has “firsthand knowledge of the policies,
procedures, and processes for generating, issuing, and
mailing grace notices North American had in effect before,
during, and after June of 2015.” Robbins Aff. ¶ 4.
(Dkt. 50 at 3.)
affidavit, Robbins explains that, “[p]er North
American's policies and procedures, June 7, 2015, was a
Sunday so North American's computer system
(“LifeComm”) reviewed the Policy on June 8, 2015,
and determined the Policy had entered a grace period.”
Robbins Aff. ¶ 19. Robbins explained that LifeComm then
printed three grace notices - the Owner Grace Notice to send
to Lynch (the “Lynch Grace Notice”), the Agent
Grace Notice to send to CPS Insurance Services, Inc. (the
“CPS Grace Notice”), and the File Copy Grace
Notice for North American to retain (collectively, the
“Grace Notices”) - in the computer room.
Id. ¶ 21.
addresses of record for Lynch and CPS Insurance Services at
the time were the post office box in Picabo, Idaho, and 4400
MacArthur Blvd 8th Floor, Newport Beach, CA 92660,
respectively. The computer room routed all grace notices
printed on June 8, 2015, including the Grace Notices, to
Policy Billing and Accounting, which sorted the grace notices
and delivered them to the Advanced Processing Support team
(“APS”). Id. ¶ 26.
indicated the grace notices would have then been placed in
the outgoing mail bin, which the mail room picked up and
delivered to North American's mailing vendor. North
American's mailing vendor next would have used a folding
machine to place the grace notices in envelopes, with the
addresses printed on the grace notices visible through the
envelope's window. The envelopes containing the Lynch and
CPS Grace Notices were then run through a postage reader for
postage and sent out as first class mail on June 9, 2015.
Id. at 31.
the Lynch nor CPS Grace Notices were returned as
undeliverable. Id. at 32. CPS Insurance Services
received the CPS Grace Notice. The June 8, 2015 Grace Notice
informed Lynch (and CPS) that a $2, 000 premium payment was
received on May 19, 2015, but that a $935.18 “minimum
additional premium” was required by August 7, 2015, to
avoid termination of coverage. The grace notice also stated
Payment of the minimum additional premium reflected above to
avoid termination of coverage will not prevent the Policy
from entering another grace period on its next monthly
deduction day. Also, please note that payment of any
regularly scheduled planned premiums for which you may
receive premium notices or which may be automatically paid
from your bank account may no longer be sufficient to prevent
your coverage from terminating. We strongly encourage you to
contact your agent or our office at (877) 872-0757 to obtain
additional information to assist you in determining a planned
premium payment amount and schedule that reflects your
current goals for the Policy.
their depositions, both Kristi Lynch and her husband, Philip
Lynch, testified they did not know whether the June 8, 2015
Grace Notice was delivered to their post office box. More
specifically, Kristi Lynch testified that:
Q. So going back to this big packet of grace notices.
Q. From May 7th, if you could turn the page to June 8, 2015.
So the second to last page A. Oh, ok. Thank you.
A. June 8th. Okay.
Q. Have you ever seen this grace notice before?
A. No, I have not.
Q. All right. Let's see. It's addressed to PO Box 
in Picabo, Idaho 83348. Is that correct?
A. That's correct.
Q. And it's dated June 8, 2015. Is that correct?
Q. And so, to the best of your knowledge, is that an accurate
address - mailing address, PO Box  - A. Yes.
Q. - for you on or around June 8, 2015?
Q. Do you know if this grace notice was received in the mail?
A. I have no idea.
Q. So maybe it was and maybe it ...