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Laschkewitsch v. Legal & General America, Inc.

United States District Court, E.D. North Carolina, Western Division

March 23, 2017



          JAMES C. DEVER, Chief United States District Judge

         On June 24, 2016, Banner Life Insurance Company ("Banner" or "defendant") moved for summaryjudgment [D.E. 60] and filed a supporting memorandum [D.E. 61], a statement of material facts [D.E. 62], and an appendix [D.E. 63]. On June 27, 2016, the Clerk of Court notified plaintiff John Laschkewitsch ("Laschkewitsch" or "plaintiff') of Banner's motion for summaryjudgment, informed him that any response in opposition was due by July 18, 2016, and stated that failure to respond could result in the court granting Banner's motion. See [D.E. 66]. Notwithstanding this deadline and his knowledge of it, Laschkewitsch did not file his response in opposition to Banner's motion until July 26, 2016, at which time he also responded in opposition to Banner's statement of material facts. See [D.E. 82, 83].[1] On August 8, 2016, Banner replied [D.E. 87]. As explained below, the court grants Banner's motion for summary judgment.


         Plaintiff John B. Laschkewitsch is a former insurance agent who fraudulently attempted to profit, via numerous life-insurance policies, from the illness and death of his brother, Ben, from amyotrophic lateral sclerosis ("ALS"). See, e.g.. Laschkewitsch v. Am. Nat'l Life Ins. Co., No. 5:15-CV-21-D, 2016 WL 4184422, at *1 (E.D. N.C. Aug. 5, 2016) (unpublished); appeal dismissed. No. 16-2003, 2016 WL 7378888 (4th Cir. Dec. 20, 2016) (per curiam) (unpublished); Laschkewitsch v. Lincoln Life and Annuity Distribs, Inc., 47 F.Supp.3d 327, 333-39 (E.D. N.C. 2014), appeal dismissed, 616 F.App'x 102 (4th Cir. 2015) (per curiam) (unpublished); Reliastar Life Ins. Co. v. Laschkewitsch, No. 5:13-CV-210-BO, 2014 WL 2211033, at *4-12 (E.D. N.C. May 28, 2014) (unpublished), affd, 597 F.App'x 159 (4th Cir.) (per curiam) (unpublished), cert, denied. 136 S.Ct. 593 (2015). This case also involves Laschkewitsch's attempts to recover under one of those policies.

         In August 2009, Laschkewitsch's brother Ben was diagnosed with ALS. Banner's Stmt. Material Facts [D.E. 62] ¶ 1; Banner App. Ex. 4 [D.E. 63-13]. Following this diagnosis, Laschkewitsch, an independent insurance agent, applied for or assisted his brother in applying for numerous life-insurance policies. Banner's Stmt. Material Facts ¶ 13. On September 22, 2009, Laschkewitsch submitted one such application to Banner. Id. ¶ 14; Banner App. Exs. 1-A [D.E. 63-1] 6-11 & 1-B [D.E. 63-1] 12-14. That application omitted Ben's diagnosis for ALS and the fact that Ben had applied for or was covered by other insurance policies. See Banner's Stmt. Material Facts ¶¶ 15-20. Although the application did not initially list Laschkewitsch as the beneficiary, Laschkewitsch later submitted a Beneficiary Change Form listing himself as the policy's beneficiary. Banner App. Ex. 1-L [D.E. 63-1] 113-14. Laschkewitsch submitted an Agent's Report as part of the application. Banner's Stmt. Material Facts ¶ 22; Banner App. Ex. 1-C [D.E. 63-1] 16-17. One of the questions asked whether Laschkewitsch was "aware of any information that would adversely affect any Proposed Insured's eligibility, acceptability, or insurability, " to which Laschkewitsch responded "No." Banner's Stmt. Material Facts ¶ 24; Banner App. Ex. 1-C.

         On January 14, 2010, Banner sent Ben the policy. Banner's Stmt. Material Facts ¶ 29; Banner App Ex. 1-E [D.E. 63-1] 20-62. Although the policy's issue date was January 14, 2010, it had a backdated effective date of September 22, 2009. Banner's Stmt. Material Facts ¶ 30; Banner App. Ex. 1-E. Due to the backdated effective date, Banner required Ben to pay premiums from the policy's effective date through its issue date. Banner's Stmt. Material Facts ¶ 31; Banner App. Exs. 1-E& 14 [D.E. 63-14] ¶3 (Cheryl Milor declaration). Rather than pay the premiums and accept the policy, Ben requested on January 25, 2010, that Banner reissue the policy "current dated." Banner's Stmt. Material Facts ¶ 33; Banner App. Ex. 14 ¶ 4. Banner issued Ben a new policy with policy and issue dates of January 26, 2010. Banner's Stmt. Material Facts ¶ 35; Banner App. Ex. ¶ 4. Ben executed a written acknowledgment of the policy's delivery. Banner's Stmt. Material Facts ¶ 36; Banner App. Exs. 1-G [D.E. 63-1] 71-72 & 14 ¶ 5.

         On January 15, 2012, Ben died. Id. ¶ 43. Over three months later, and after trying to get Banner to change the policy's issue date, Laschkewitsch submitted a claim under the policy. Id. ¶ 46; Banner App. Ex. 1-M [D.E. 63-1] 116. After months of requesting that Laschkewitsch provide the necessary documents, Banner denied the claim. Banner's Stmt. Material Facts ¶¶ 47, 64. It did so after an investigation revealed the application's misrepresentations regarding Ben's health and existing policies or applications for life insurance policies. Id. ¶ 47. In a letter denying Laschkewitsch's claim, Banner stated that "had [Ben] health been truthful on his application for insurance and disclosed his medical history, financial information, work history and other insurance, [Banner] would not have approved the issuance of this policy." Id.; Banner App. Ex. 1-N [D.E. 63-1] 118-129.

         Laschkewitsch alleges that Banner committed various torts and statutory violations in refusing the pay the proceeds to him and seeks declaratory judgment awarding him the full policy proceeds and declaring the policy incontestable. See Am. Compl. [D.E. 27] ¶¶ 1-172. In response, Banner counterclaims for fraud, breach of contract, breach of the duty of good faith and fair dealing, unjust enrichment, and violations of North Carolina's Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1 et seq.. and seeks declaratory judgment declaring the policy null, void, and rescinded due to Laschkewitsch's fraud. See Ans. to Pl.'s Am. Compl. [D.E. 30] ¶¶ 1-62.


         This court has subject-matter jurisdiction based on diversity jurisdiction. Thus, the court applies state substantive principles and federal procedural rules. See Erie R.R. v. Tompkins, 304 U.S. 64, 78-80 (1938); Dixon v. Edwards. 290 F.3d 699, 710 (4th Cir. 2002). Summary judgment is appropriate if the moving party demonstrates "that there is no genuine dispute as to any material fact" and the moving party "is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The party seeking summary judgment must initially show an absence of a genuine dispute of material fact or the absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett. 477 U.S. 317, 325 (1986). If a moving party meets its burden, the nonmoving party must "come forward with specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quotation and emphasis omitted). A genuine issue for trial exists if there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242.249 (1986V "The mere existence of a scintilla of evidence in support of the plaintiffs position [is] insufficient" Id. at 252; see Beale v. Hardy. 769 F.2d 213, 214 (4th Cir. 1985) ("The nonmoving party, however, cannot create a genuine issue of material fact through mere speculation or the building of one inference upon another."). Only factual disputes that might affect the outcome under substantive law preclude summary judgment. Anderson. 477 U.S. at 248. In reviewing the factual record, the court views the facts in the light most favorable to the nonmoving party and draws reasonable inferences in that party's favor. Matsushita. 475 U.S. at 587-88.

         The court first considers whether Banner is entitled to summary judgment on Laschkewitsch's claims. The court then considers whether Banner is entitled to summary judgment on its counterclaims.



         Laschkewitsch seeks a declaration that his brother Ben died outside the policy's constestability period. See Am. Compl. ¶¶ 73-80. The policy's contestability clause states: "We will not contest this policy after it has been in force during the Insured's lifetime for two years from the Issue Date, except for failure to pay premiums." Banner App. Ex. 1-1 [D.E. 63-1] 83. Laschkewitsch claims that the January 14, 2010 policy is the original policy, meaning Ben died one day after the contestability period for the January 14, 2016, policy ended. The evidence shows, however, that Ben rejected that policy and that Banner issued the operative policy on January 26, 2010. See Banner App. Ex. 14 (Cheryl Milor declaration). Ben died on January 15, 2012, within the two-year contestability period. Contrary to Laschkewitsch's contention, nothing required Banner to file suit within the two-year contestability period. See Reliastar Life Ins. Co.. 2014 WL 2211033, at*7. Thus, Banner can contest the policy. See Laschkewitsch. 47 F.Supp.3d at 338; Reliastar Life Ins. Co.. 2014 WL 2211033, at *7.


         Laschkewitsch alleges that Banner breached the life-insurance contract by failing to pay him the policy proceeds upon Ben's death. See Am. Compl. ¶ 85. He also alleges that Banner breached a duty of good faith and fair dealing by insisting on a January 26, 2010 issue date. See Id. ¶¶ 81-96.

         Laschkewitsch's fraudulent misrepresentations foreclose these claims. "[M]aterial misrepresentations in an application for an insurance policy may prevent recovery on the policy." Luther v. Seawell, 191 N.C.App. 139, 144, 662 S.E.2d 1, 4 (2008). "[I]n an application for a life insurance policy, written questions and answers relating to health are deemed material as a matter of law." Ward v. Durham Life Ins. Co., 325 N.C. 202, 210, 381 S.E.2d 698, 702 (1989). As for misrepresentations unrelated to the applicant's health, "a representation in an application for an insurance policy is deemed material if the knowledge or ignorance of it would naturally influence the judgment of the insurer in making the contract." Goodwin v. Invests. Life Ins. Co. of N. Am., 332 N.C. 326, 331, 419 S.E.2d 766, 769 (1992) (quotation omitted). Regardless of the type of misrepresentation, material misrepresentations will void an insurance policy even if made unintentionally. See Tharrington v. Sturdivant Life Ins. Co., 115 N.C.App. 123, 128, 443 S.E.2d 797, 801 (1994) (citation omitted).

         The application submitted to Banner contained numerous misrepresentations and omissions concerning Ben's health. See Banner App. Ex. 1-B [D.E. 63-1] (responses to questions 19, 23(a), and 29); Banner's Stmt. Material Facts ¶ 16. These representations are material as a matter of law, entitling Banner to void the policy. See Laschkewitsch, 47 F.Supp.3d at 336. The application also failed to disclose that Ben had applied for other insurance policies. See Banner App. Ex. 1 -A [D.E. 63-1] (responses to questions 30(a), 30(c), and 31); Id. Ex. 7-A [D.E. 63-7] 27-59, Ex. 7-B [D.E. 63-7] 60-90, Ex. 9 [D.E. 64-16], Ex. 10 [D.E. 64-17] (policies Laschkewitsch helped bis brother obtain before applying for an insurance policy from Banner); Banner's Stmt. Material Facts ¶¶ 13, 17-20. These misrepresentations are material because Banner would not have issued the policy had the application truthfully disclosed this information. Banner's Stmt. Material Facts ¶ 21; Banner App. Ex. 12 [D.E. 63-12] ¶ 8 (Sharon Jenkins Decl.). Because these misrepresentations prevent Laschkewitsch from recovering under the policy, the court grants summary judgment to Banner on Laschkewitsch's breach of contract claims. See Laschkewitsch, 47 F.Supp.3d at 336.


         Laschkewitsch claims constructive fraud. See Am. Compl. ¶¶ 97-113. A claim for constructive fraud requires "(1) a relationship of trust and confidence, (2) that the defendant took advantage of that position of trust in order to benefit himself, and (3) that plaintiff was, as a result, injured." White v. Consol-Planning Tnc.166 N.C.App. 283, 294, 603 ...

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