United States District Court, D. Nebraska
MELANIE F. DENNEY, Plaintiff,
THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, Defendant.
E. STROM, Senior Judge United States District Court
matter is before the Court on cross-motions for summary
judgment (Filing No. 20 and Filing No. 23).
On November 7, 2016, Melanie F. Denney
(“plaintiff”) filed a motion for summary judgment
(Filing No. 23). On the same day, The Guardian Life
Insurance Company of America (“Guardian”) also
filed a motion for summary judgment (Filing No. 20).
On February 7, 2017, the parties filed a joint motion to
vacate the final progression order under the belief that no
genuine dispute as to any material fact exists, and this case
may be disposed of as a matter of law. See Filing
No. 35. On the same date, Magistrate Judge Zwart
issued an order setting aside case progression deadlines and
cancelling trial and pretrial conference settings (Filing No.
36). Upon review of the record and relevant law, the Court
finds as follows.
in 2007, the Northwest High School, District 82
(“School District”) began self-administering a
group insurance policy provided by Guardian which included
life insurance (Filing No. 21 at 6-7). “[T]he
School District generated its own monthly billing statements
to Guardian and paid the premiums, submitted enrollment forms
to Guardian, and prepared and transmitted censuses to
Guardian listing the members of the plan.”
(Id. at 7-8).
August 1, 2003, plaintiff's husband, Doyle E. Denney
(“Decedent”), was hired by the School District as
an administrator (Filing No. 1-1 at 1). On August
20, 2003, Decedent requested coverage under a life insurance
policy (“Policy”) with Guardian as the insurer
(Filing No. 22-3 at 6). Decedent elected the maximum
amount of insurance valued at $150, 000. Id. On June
30, 2010, after nearly seven years, Decedent retired from the
District (Id. at 8). Decedent indicated that he
wished to continue his life insurance policy with Guardian
following retirement (Filing No. 25 at 5). The
School District “mistakenly told Mr. Denney that he was
a ‘qualified retiree' under the Plan.”
(Filing No. 21 at 8). After retirement, Decedent
continued to pay his insurance premium annually (Filing No.
25 at 5). The 2010/11 census submitted by the School
District to Guardian listed the Decedent as a retiree with a
life insurance amount of $150, 000 (Filing No. 22-3
at 12). On August 24, 2015, Decedent died and a claim on the
life insurance policy was submitted to Guardian (Id.
letter dated November 9, 2015, Guardian informed plaintiff
that the claimed benefit was not payable (Filing No.
22-5 at 1). Guardian asserted that the claim was
denied because Decedent's “coverage terminated June
30, 2010 when he no longer met the definition of a full time
employee and did not qualify as a retiree under the terms of
this plan.” (Id. at 2). In order to be covered
under the insurance plan, the individual must fall within one
of three classifications: (1) administrators; (2) all other
eligible employees; or (3) retirees who are at least age 55,
with at least 10 years of service (Filing No. 24-1
at 5). Guardian denied the claim because Decedent did not
meet the 10-year service requirement and did not
“convert his group life insurance policy to an
individual life insurance policy.” (Filing No.
22-5 at 2).
March 16, 2016, plaintiff filed a complaint in the District
Court of Lancaster County, Nebraska, asserting breach of
contract and bad faith (Filing No. 1-1 at 3). On
April 15, 2016, Guardian removed the case to this Court
pursuant to 28 U.S.C. § 1441 (Filing No. 1). On
November 7, 2016, both parties moved for summary judgment
(Filing No. 20; Filing No. 25).
judgment is proper if the movant shows that there is no
genuine dispute as to any material fact and that the movant
is entitled to a judgment as a matter of law. See
Fed. R. Civ. P. 56(a). Both parties assert that no genuine
dispute as to any material fact exists precluding the case
from being disposed of on summary judgment (Filing 35). After
review of the record, the Court agrees. Plaintiff's
claims hinge on the interpretation and application of an
insurance policy to the undisputed circumstances surrounding
Decedent's employment, enrollment in life insurance, and
retirement. “An insurance policy is a contract and its
terms provide the scope of the policy's coverage.”
Sweem v. American Fidelity Life Assur. Co., 739
N.W.2d 442, 447 (Neb. 2007). “The interpretation of a
contract and whether the contract is ambiguous are questions
of law.” Timberlake v. Douglas County, 865
N.W.2d 788, 793 (Neb. 2015). Accordingly, this case will be
disposed of as a matter of law.
brings two causes of action against Guardian: (1) breach of
contract and (2) bad faith (Filing No. 1-1 at 3;
see also Filing No. 8 at 3). The general
issue before the Court is whether or not Guardian is liable
under the terms of the Policy. More specifically, plaintiff
argues that the incontestability clauses in the Policy
preclude “Guardian from asserting . . . that Denney was
never entitled to receive life insurance.” (Filing No.
25 at 19).
Breach of Contract Claim
Nebraska law, a court interpreting an insurance policy must
first determine if the policy is ambiguous. Hillabrand v.
American Family Mut. Ins. Co., 713 N.W.2d 494, 498 (Neb.
2006). When interpreting the meaning of a contract,
“[a] court must consider a contract as a whole and, if
possible, give effect to every part of the contract.”
Brozek v. Brozek, 874 N.W.2d 17, 28 (Neb. 2016).
Provisions of an insurance policy that terminate the policy
at the termination of employment are enforceable. Palmer
v. Capitol Life Ins. Co. of Denver Colo., 61 N.W.2d 396,
400 (Neb. 1953).
review of the Policy and the terms contained within it, the
Court finds that no ambiguity exists and will construe the
Policy in accordance with its plain and ordinary meaning.
See Hillabrand, 713 N.W.2d at 494. Among others, the
Policy contains provisions regarding eligibility,
termination, and incontestability. See Filing No.
24-1. In order to be eligible for life
insurance, an employee must be a member of an “eligible
class” (Id. at 28). The “eligible
classes” are: ...