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Power v. Erie Family Life Insurance Co.

United States District Court, E.D. Pennsylvania

August 1, 2019

STACY POWER and AL B. HILL, as Receiver for Credit Nation Capital, LLC, Plaintiffs,
v.
ERIE FAMILY LIFE INSURANCE COMPANY, Defendant.

          MEMORANDUM

          EDUARDO C. ROBRENO, J.

         Plaintiff Stacy Power (“Power”) is the owner of a life insurance policy (“the policy”) that Erie Family Life Insurance Company (“Erie”) issued to Stephen Creighton (“Creighton” or “the insured”). At some point in the past, Creighton sold his interest in the policy to Credit Nation Capital, LLC (“Credit Nation”). Power bought the policy as an investment from Credit Nation, and named the Power Living Trust as the beneficiary.

         The policy terminated when Power did not make timely premium payments. Power claims that the termination was in breach of the terms of the policy. He also claims that the termination was improper based on principles of promissory estoppel and equity. He seeks reinstatement of the policy.

         Plaintiff Al Hill (“Hill”) is the court-appointed receiver of Credit Nation. Hill also seeks reinstatement of the policy.

         For its part, Erie seeks declaratory judgment that the policy was properly terminated, and that Erie is not required to reinstate the policy.

         Present before the Court are Plaintiffs' Motion for Partial Summary Judgment, and Erie's Motion for Summary Judgment. For the reasons set forth below, the Court will grant Erie's Motion for Summary Judgment as to Power's claims, dismiss Hill's claims for lack of standing, and deny Erie's counterclaim for declaratory judgment as moot.

         I. BACKGROUND

         In 2005, Erie issued to Creighton a life insurance policy on his life. ECF No. 48 Ex. A. In 2015, the policy was bought by James Torchia and Marc Celello, with both owners listed as beneficiaries. See ECF No. 47 Ex. A-2; ECF No. 48 Ex. C. Torchia and Celello listed the same address in Woodstock, Georgia (the “Georgia address”). ECF No. 47 Ex. A-2. Erie mailed a confirmation of the change of ownership to Torchia at the Georgia address, stating that “[t]he payor has been changed to James Torchia.” Id. Ex. C. The payor address is where the owner wants to receive non-payment notices.

         In January 2016, Power bought the policy from Torchia and Celello via their company Credit Nation Capital, LLC. ECF No. 47 Exs. A-4, C, D; ECF No. 48 Ex. D. The change of ownership form identified Power's address as the same Georgia address as Torchia and Celello, and the form listed Power Living Trust as the sole beneficiary, with an address in Yonges Island, South Carolina (the “South Carolina address”). ECF No. 47 Ex. A-4. Erie mailed a confirmation of the change of ownership and beneficiary to Power at the Georgia address. ECF No. 48 Ex. D.

         The purchase agreement between Power and Credit Nation made Power responsible for all future premium payments, while Credit Nation would retain the file for management purposes. ECF No. 47 Ex. B-1. However, pursuant to an oral agreement (not otherwise described by the parties), Credit Nation agreed to pay the premiums on the policy for the first four years. Id. Ex. C at 21, 29, 31-32. Credit Nation made payment that kept the policy in force until March 2017.

         In April 2016, Credit Nation was placed into receivership under a receivership order issued by the United States District Court for the Northern District of Georgia for alleged fraudulent investment schemes. See SEC v. Torchia, 922 F.3d 1307, 1312 (11 Cir. 2019). Hill was appointed as the receiver ECF No. 47 Ex. B-4.

         Power became concerned about his investment after hearing rumors of problems with Credit Nation. In May 2016, Power placed a call to Erie and “requested that the payor address remain the same [Georgia address] but that the owner address be updated” to Power's address the South Carolina address. ECF No. 47 Ex. A-8, C at 51-52. According to Power, but disputed by Erie, Power also asked Erie's agent to contact him “in case anything was to happen” to the policy, and the agent told Power that “nothing would happen to the policy without [Power] being notified.” ECF No. 48-2 ¶ 14. After Power's phone call, Erie sent a letter to Power at the South Carolina address confirming “a change of address was processed on [the] policy.” ECF No. 48 Ex. J.

         After Credit Nation had been placed in receivership, Hill became the administrator of the policy, and was tasked with disposing of the assets in which Credit Nation had an interest. Id. Hill offered to Power the same terms provided in the receivership order for retaining ownership of the policy. ECF No. 47 Ex. B-5, C. If Power accepted the terms, Power would be responsible for all future premium payments.

         On June 21, 2016, Power accepted the terms and mailed the acceptance form to Hill. ECF No. 48 Ex. I. On June 26, 2016, Credit Nation emailed Power stating that it had received the acceptance letter and payment required by the receivership order. ECF No. 47 Exs. B-6, E (Power's admission that he received the email). The email told Power to “be sure to update [Erie] with your name and address as the premium payor on record. You will want to make sure you receive any and all correspondence from [Erie] regarding your policy. The current paid-to-date on your policy is: 03/24/2017.” Id.

         Despite the email's express instruction, Power did not request Erie to change the address of the payor from the Georgia address to the South Carolina address. ECF No. 47 Ex. C.

         In February and April of 2017, Erie sent notices to Power at the payor address on file--the Georgia address--stating that a premium payment was due under the policy. ECF No. 47 Exs. A-10, A-11, A-12. Power apparently did not receive these notices and did not pay the premium on time. Consequently, at the end of the grace period, the policy terminated according to its terms. ECF No. 47 Exs. D, F.

         At the end of June 2017, Power called Erie to make a payment but was informed that the policy had terminated. ECF No. 48 Ex. R. Furthermore, because an additional, non-policy “easy reinstatement” period had run, Erie required a reinstatement application. Id.; ECF No. 48 Ex. Q. ...


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