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American General Life Insurance Co. v. Shenkman

July 27, 2010

AMERICAN GENERAL LIFE INSURANCE COMPANY, PLAINTIFF,
v.
LAVI SHENKMAN, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Robert F. Kelly, Sr. J.

MEMORANDUM

Presently before this Court is a Motion for Summary Judgment filed by Plaintiff American General Life Insurance Company ("American General"). For the reasons set forth below, American General's Motion will be granted.

I. FACTS

In 2006, American General issued life insurance policy number U1E000289L (the "Policy"), insuring the life of Zeev Shenkman ("Shenkman"), to Irrevocable Agreement of Trust dated June 23, 2003, with Shenkman as the Settlor (the "Irrevocable Trust"). On November 13, 2008, Shenkman committed suicide.

The "General Provisions" section of the Policy contains the following language: "Suicide Exclusion. If the Insured takes his or her own life, while sane or insane, within 2 years from the Date of Issue, We will limit the Death Benefit Proceeds to the premiums paid less any policy loans and less any partial cash surrenders paid" (the "Suicide Exclusion"). (Pl.'s Mot. Summ. J., Ex. A at AGL0022.) The "Policy Schedule" section of the Policy states:

"DATE OF ISSUE: DECEMBER 19, 2006." (Id. at AGL0003.) The "Date of Issue" is also defined in the Policy as "the date on which the first premium is due. The Date of Issue is also the date from which all policy years, anniversaries, and Monthly Deductions dates are determined." (Id. at AGL0007.) American General asserts that December 19, 2006 is the date from which it determined all policy years, anniversaries and Monthly Deductions dates; Defendants do not dispute this assertion.

The face of the Policy provides: "The first premium must be paid on or before delivery of this policy." (Id. at AGL0001.) The Policy also states that "[y]ou have paid the first premium and have submitted an application, a copy of which is attached." (Id. at AGL0007.) Finally, attached to the Policy is a "Policyowner Acknowledgment of Policy Delivery or Producer's Certification of Mailing of Policy to the Policyowner," signed and dated December 12, 2006 by Ruth Shenkman, one of the Trustees of the Irrevocable Trust (the "Acknowledgment of Policy Delivery"). (Id. at AGL0041.)

On July 17, 2009, American General filed a Complaint for Declaratory Relief in this Court seeking, inter alia, a judgment that the Suicide Exclusion limits Death Benefit Proceeds to the premiums paid less any policy loans and less any partial cash surrenders paid. (Pl.'s Compl. at 6.) On March 18, 2010, American General filed its Motion for Summary Judgment. On April 1, 2010, Defendants filed their Response in Opposition to the Motion for Summary Judgment. On May 26, 2010, American General filed a Reply to the Response to the Motion for Summary Judgment. On June 9, 2010, Defendants filed a Sur-Reply in Opposition to the Motion for Summary Judgment. On July 2, 2010, American General filed a Sur-Reply in Support of the Motion for Summary Judgment.

American General argues that the Policy contains an express and unambiguous Date of Issue of December 19, 2006 in the Policy Schedule. Because the date of Shenkman's suicide, November 13, 2008, was less than two years from this alleged Date of Issue, American General asserts that pursuant to the Suicide Exclusion, Death Benefit Proceeds are limited to the premiums paid less any policy loans and less any partial cash surrenders paid.

Defendants, however, argue that the Date of Issue is ambiguous because the date of December 19, 2006, as set forth in the Policy Schedule, directly conflicts with the definition of the Date of Issue in the Policy as the date on which the first premium is due. Defendants claim that because any ambiguity must be construed in favor of the insured, the Date of Issue must be the date when the first premium is due. Defendants further assert that because a § 1035 exchange*fn1 occurred, the first premium was due when American General made the request for surrender. Defendants allege that this date was November 10, 2006, more than two years before Shenkman's suicide, and therefore, beyond the Policy's two-year Suicide Exclusion. Finally, Defendants maintain that Shenkman reasonably expected that the Suicide Exclusion would not apply because: (1) American General specifically represented that it would not surrender Shenkman's existing coverage until after the Policy was issued; and (2) Shenkman had a reasonable expectation of coverage from the date which the § 1035 Absolute Assignments were given on October 20, 2006.

II. STANDARD OF REVIEW

Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper if "there is no genuine issue as to any material fact and . . . the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). Essentially, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). The moving party has the initial burden of informing the Court of the basis for the motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). An issue is genuine only if there is a sufficient evidentiary basis on which a reasonable jury could find for the non-moving party. Anderson, 477 U.S. at 249. A factual dispute is material only if it might affect the outcome of the suit under governing law. Id. at 248.

To defeat summary judgment, the non-moving party cannot rest on the pleadings, but rather, that party must go beyond the pleadings and present "specific facts showing a genuine issue for trial." Fed. R. Civ. P. 56(e)(2). Similarly, the non-moving party cannot rely on unsupported assertions, conclusory allegations, or mere suspicions in attempting to survive a summary judgment motion. Williams v. Borough of W. Chester, 891 F.2d 458, 460 (3d Cir. 1989) (citing Celotex, 477 U.S. at 325). Further, the non-moving party has the burden of producing evidence to establish prima facie each element of its claim. Celotex, 477 U.S. at 322-23. If the Court, in viewing all reasonable inferences in favor of the ...


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