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Banner Life Insurance Co. v. Holland

United States District Court, W.D. North Carolina, Asheville Division

July 20, 2018




         THIS MATTER is before the Court on the Plaintiff's Motion for Default Judgment [Doc. 13].


         This case arises out of a life insurance policy issued by the Plaintiff Banner Life Insurance Company (“Banner Life”). By the present action, Banner Life seeks a declaratory judgment that the policy is void due to misstatements and omissions made by the insured on a reinstatement application. [Doc. 1]. Alternatively, Banner Life seeks a declaration that the acceptance by the designated beneficiary, William Holland (“Holland”), of a check in the amount of the paid premiums constituted an accord and satisfaction of any claim that the beneficiary might have had against Banner Life. [Id.].

         Banner Life served Holland with a Summons and a copy of the Complaint on September 11, 2017. [Doc. 5]. On September 26, 2017, Holland's lawyer filed an unopposed Motion for Extension of Time to File Defensive Pleadings to Plaintiff's Complaint. [Doc. 4]. The Court granted the motion three days later, extending Holland's time to respond to the Complaint to and including October 23, 2017. [Doc. 6].

         Holland, however, never filed a response to the Complaint. On February 15, 2018, Banner Life moved for the entry of default against Holland. [Doc. 10]. On March 2, 2018, the Clerk of Court entered a default against Holland. [Doc. 12].[1] Banner Life now seeks a default judgment against Holland. [Doc. 13].


         Rule 55 of the Federal Rules of Civil Procedure provides for the entry of a default when “a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend.” Fed.R.Civ.P. 55(a). Once a defendant has been defaulted, the plaintiff may then seek a default judgment. If the plaintiff's claim is for a sum certain or can be made certain by computation, the Clerk of Court may enter the default judgment. Fed.R.Civ.P. 55(b)(1). In all other cases, the plaintiff must apply to the Court for a default judgment. Fed.R.Civ.P. 55(b)(2).

         “The defendant, by his default, admits the plaintiff's well-pleaded allegations of fact . . . .” Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (quoting Nishimatsu Constr. Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). A defendant, however, “is not held . . . to admit conclusions of law.” Ryan, 253 F.3d at 780 (quoting Nishimatsu, 515 F.2d at 1206). The Court therefore must determine whether the facts as alleged state a claim. Global Santa Fe Corp. v. Global, 250 F.Supp.2d 610, 612 n.3 (E.D. Va. 2003).


         The well-pleaded factual allegations of the Plaintiff's Complaint having been deemed admitted by virtue of the Defendant's default, the following is a summary of the relevant facts.

         On or about November 18, 2008, Banner Life issued a $500, 000, 30-year, term life insurance policy to the Insured, [2] insuring the Insured's life (the “Policy”). [Doc. 1 at ¶ 10]. The Policy was issued at Banner Life's “preferred plus non-tobacco” rate. [Id. at ¶ 11]. The Policy later lapsed and was terminated as a result of the Insured's failure to pay the premium due by April 30, 2016, in a timely manner. [Id. at ¶ 14].

         Desiring to reinstate the Policy, the Insured submitted an Application for Reinstatement to Banner Life (the “Reinstatement Application”). [Id. at ¶ 15]. The Reinstatement Application asked the Insured to provide certain information and answer a series of questions about his health during the time period between the submission of the original application for insurance and the submission of the Reinstatement Application. [Id. at ¶ 17]. The Insured completed the Reinstatement Application and submitted it to Banner Life. [Id. at ¶ 22]. After receiving the Reinstatement Application, Banner Life conducted a standard prescription search to see if any medicines had been prescribed for the Insured. [Id. at ¶ 23]. The investigation revealed that the Insured had been prescribed a medication that he had not disclosed on the Reinstatement Application, so Banner Life requested that the Insured update the application by providing certain additional information. [Id. at ¶ 25]. The Insured revised the Reinstatement Application and re-submitted it to Banner Life. [Id. at ¶¶ 26-30].

         On the basis of the Insured's representations in the Reinstatement Application and in reliance on the Insured being completely candid, honest, and open in disclosing information in response to the questions on the application, Banner Life reinstated the Policy, with its “preferred plus non-tobacco” rate. [Id. at ΒΆ 31]. Banner Life sent the ...

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