Mitchell v. AARP Life Insurance Program

HOLLANDER, Judge. In this case, we must determine whether Curtiss B. Mitchell, appellant, is the beneficiary of a valid contract of life insurance issued by the “AARP Life Insurance Program, New York Life Insurance Company” (“New York Life”), 1 appellee. On September 17, 1999, after New York Life refused to pay appellant the death benefit of $15,000 allegedly due under the life insurance policy that he procured for his late father, George Mitchell, 2 appellant filed suit in the Circuit Court for ¹⁰⁷ Montgomery County. Appellee subsequently moved for summary judgment on January '31, 2000, claiming that no life insurance coverage existed when George died, and therefore appellant was not entitled to the insurance proceeds.

The trial court granted summary judgment to New York Life on March 28, 2000. On April 10, 2000, appellant filed a motion to alter or amend, which was denied on May 22, 2000. Appellant, who is pro se here, as he was below, presents two questions for our consideration. We have combined and rephrased them as follows: Did the trial court err- in granting appellee’s motion for summary judgment?

For the reasons that follow, we shall affirm. FACTUAL BACKGROUND 3 George, appellant’s father, was bom on June 5, 1926. On February 12, 1999, appellant obtained a Durable Power of Attorney over the affairs of his seventy-three year old ailing father, who was then hospitalized due to his failing health. Over the next several days, appellant contacted several life insurance companies in an unsuccessful attempt to obtain life insurance for his father. ¹⁰⁸ According to appellant, the “AARP New York Life Insurance Program had come to [his] attention during one of his visits with his father through a piece of their promotional literature, which advertised prompt insurance coverage after the applicant had met a simple three step process----” Mitchell noted that the program was targeted for seniors, and was “very alluring.” Mitchell asserts in his brief that “[e]nrollment and coverage was advertised as almost instantaneous after completion of [the] three step process.” Because appellee’s life insurance plan seemed “very practical and commonsensical” and was “designed for the benefit of seniors, [with] a very low rejection rate ...,” appellant and his father “desired immediate coverage.... ” On behalf of his father, appellant contacted New York Life by telephone on February 28, 1999, to obtain assistance with the application form, titled “Request for Group Insurance.” Appellant alleged that he spoke with an agent of appellee about “expeditiously processing a policy of life insurance on his ailing father.” He informed appellee’s customer service representative that he was ready to complete the application “right then,” but needed assistance with the form.

According to Mitchell, the insurer’s agent helped him with the application, but appellant was unable to identify the particular person with whom he spoke. The insurance application form contains a section labeled “Coverage Amount Requested.” Appellant initially sought $25,000 in coverage, the maximum amount offered. The “insurer’s agent” advised him, however, that the age of his father precluded George from obtaining life insurance in that amount. As a result, appellant selected coverage of $15,000, the highest coverage available to George, based on George’s age.

Appellant named himself as the sole beneficiary of the requested policy. Section B of the Application is titled “Payment Options,” and contains two options for payment. “Option 1,” titled “Automatic Premium Payment,” authorizes monthly or quarterly withdrawals from a bank account. “Option 2,” titled ¹⁰⁹ “Periodic Premium Billing,” contains two more choices. In one, the applicant seeks to be billed, while the other indicates that payment is enclosed. Appellant selected Option 2 and checked the box that reads: “So coverage can take effect as soon as possible, I enclose a check for my first payment in the amount of__” In the blank, the application contains the handwritten amount of $151.80.

Section D is titled “Statement of Health.” It asks the applicant if he or she has had “treatment for or consulted a physician about ... emphysema....” On the form, the word “emphysema” is circled. Appellant also checked “yes” to a question asking if the applicant had been admitted to a hospital in the past two years, adding that George suffered from “Chronic Obstructive Lung Disease & Tracheobronchitis,” for which he had “nebulizer treatments, intravenous fluids & antibiotics.” Section E of the Application contains the following preprinted statement: I understand that insurance will be effective on the date of the certificate, provided my premium is received during my lifetime and within 31 days of such Insurance Date. I understand that premium payment for insurance does not mean there is any coverage in force before the effective date as specified by New York Life, and that benefits may be denied during the first two years if material facts have been misstated here. I represent that I am an AARP member, and that, to the best of my knowledge and belief, the information on this request is true and complete.

(Emphasis added). Appellant signed the application as follows: “George C. Mitchell/Curtiss Mitchell P.O.A.,” and dated it “2/20/99.” At his deposition on January 17, 2000, appellant said he believed the application constituted the “Certificate” referred to in Section E of the application. He explained that he “filled it out, sent [his] money ... and no one told [him] that this was not a certificate.” He “point[ed]” to a number on the application, “5189624,” to support his assertion. Appellant also indi ¹¹⁰ cated at his deposition that the text of the application provided that the insurance would be effective “[o]n the date of the certificate.” At the summary judgment hearing, however, Mitchell acknowledged that he never received a certificate from appellee.

Appellant claimed that, after completing the application, he asked appellee’s customer service representative what he should do to assure immediate life insurance coverage for George. Mitchell contends that appellee’s agent advised him to mail the completed application, along with a power of attorney and the premium payment, to appellee’s corporate office. Accordingly, Mitchell mailed the application, a copy of the power of attorney, and a check dated March 4,1999, in the amount of $151.80, in payment of the first premium. It is undisputed that New York Life received the documents on March 9, 1999; the application is stamped “Mar 09 1999.” Moreover, appellee deposited appellant’s check on that date.

George died the next day, March 10, 1999, at approximately 6:30 a.m. At about 8:00 a.m., appellant contacted New York Life to advise of his father’s death. At his deposition, appellant said that he “never asked for the $150,000 death benefit.” On March 11, 1999, appellant again contacted New York Life. He was informed that the application had not been processed or reviewed prior to George’s death, and therefore the policy was not in effect at the time of George’s demise.

Several days later, appellee returned the premium payment of $151.80 to appellant, with a letter advising that appellee had not approved the insurance application prior to George’s death, and thus appellant was not entitled to the death benefit under the policy. In support of its motion for summary judgment, appellee submitted several documents, including: an affidavit from Daniel J. Rice, the Director of Underwriting for New York Life’s AARP Operations, located in Tampa, Florida; a copy of the power of attorney submitted by Mitchell; excerpts from appellant’s deposition; a copy of the insurance application completed by Mitchell; and an excerpt from New York Life’s ¹¹¹ Underwriting Guidelines. Rice averred in his affidavit that the Underwriting Department had not reviewed George’s application by the time he died, nor had New York Life issued a conditional receipt or a premium receipt to George. Rice stated that, as a result, appellee did not approve coverage for George, and no insurance certificate had been issued.

Appellant asserted in his opposition to the summary judgment motion that New York Life’s brochure advertised an easy application process that would permit coverage at the “earliest possible date.” Moreover, he argued that, in his conversation with New York Life’s agent, “the terms and conditions for a policy of Life Insurance on the beneficiary’s ailing father’s life were set out and mutually agreed upon, and those representations merged with the brochure’s representations to form a binding temporary contract.” Appellant also claimed that appellee’s agent advised him that if he completed “the Enrollment Form, executed a Durable Power of Attorney, and made out a check for the first premium payment in the sum of $151.80, and mailed the documents to New York Life, he would have a contract for preliminary and temporary insurance coverage for his father.” Accordingly, appellant followed the instructions, and the first premium payment of $151.80 was deposited by New York Life on March 9, 1999, one day prior to George’s death. Although appellant did not include an affidavit with his opposition, he signed it under oath. In further support of appellant’s opposition, he submitted the New York Life brochure, his check for the first premium payment, and the first page of his letter of June 8,1999, to A. J. Goergen, a corporate vice president of New York Life, in which appellant described the events that took place. See Md. Rule 2-501(b).

On March 28, 2000, the court held a motion hearing. In granting summary judgment to appellee, the court stated: It is [appellee’s] position in this case that summary judgment is appropriate to be granted by the Court for really three reasons, the first being that no insurance coverage existed at the time of George Mitchell’s death. ¹¹² It is the position of [appellee] that the application was merely an offer and that coverage would not take effect until the [appellee] accepted the offer and that the [appellee] did not have the opportunity to accept the offer because of the unfortunate timing of [appellant’s father’s] death being within a day of the materials being received by New York Life. [Appellee] also argues that there is no situation of temporary insurance coverage because [appellant’s father] did not meet any objective standard for insurability, and third, that even if he had met any objective standard for insurability, his application would have been rejected because he failed to meet three subjective requirements of [appellee]. This is all spelled out really in the paperwork that has been very well prepared by both sides in the case and is very complete. It is [appellant’s] position that the coverage really took effect when the [appellee] received the application based on the language of the brochure, which he felt was an offer to provide immediate life insurance, and that acceptance of the offer was completed by the mere receipt of the application and the check, and he bases his position on statements that he alleges were made by an agent of [appellee] during a series of phone conversations.

I have had an opportunity to review all of the citations which have been submitted by both sides in the case, and I cannot really distinguish this case from the case of Heideman [v .] Northwestern National Life Insurance Company, [ 546 N.W.2d 760 (Minn.Ct.App.1996)], which clearly indicates that the brochure is viewed as a solicitation for offers. This particular brochure said, “Your coverage will take effect on the date shown on your certificate of insurance.” Therefore, I think it is clear that a certificate had to be issued by New York Life for them to have formally accepted the risk of this insurance. The case of Heideman’s language in the brochure is nearly identical to what is in this case, which has been ¹¹³ interpreted by many Maryland court decisions of the Court of Appeals and the Court of Special Appeals to support the position of [appellee]. So I am satisfied that it is appropriate to grant summary judgment in this case in favor of [appellee].

We shall include additional facts in our discussion. STANDARD OF REVIEW Maryland Rule 2-501 establishes a two-part test for summary judgment. “In deciding a motion for summary judgment ... the trial court must decide whether there is any genuine dispute as to material facts and, if not, whether either party is entitled to judgment as a matter of law.” Bagwell v. Peninsula Reg’l Med. Ctr., 106 Md.App. 470, 488 , 665 A.2d 297 (1995), cert. denied, 341 Md. 172 , 669 A.2d 1360 (1996); see Okwa v. Harper, 360 Md. 161, 178 , 757 A.2d 118 (2000); Beatty v. Trailmaster Prods., Inc., 330 Md. 726, 737-38 , 625 A.2d 1005 (1993). Similarly, in reviewing a grant of summary judgment, we must determine “whether a genuine dispute of material fact exists and then whether the movant is entitled to summary judgment as a matter of law.” Williams v. Mayor of Baltimore, 359 Md. 101, 113 , 753 A.2d 41 (2000); see Hartford Ins.

Co. v. Manor Inn of Bethesda, Inc., 335 Md. 135, 144 , 642 A.2d 219 (1994). When the movant has provided a sufficient basis for summary judgment, the party opposing the motion must “produce sufficient evidence” to show that there is a genuine dispute of fact, “which is sufficiently material to be tried.” Williams, 359 Md. at 115 , 753 A.2d 41 ; see Scroggins v. Dahne, 335 Md. 688, 691 , 645 A.2d 1160 (1994); Berringer v. Steele, 133 Md.App. 442, 470 , 758 A.2d 574 (2000). A material fact is one that will “affect the outcome of the case,” depending upon how the factfinder resolves the dispute. King v. Bankerd, 303 Md. 98, 111 , 492 A.2d 608 (1985); see Faith v. Keefer, 127 Md.App. 706, 734 , 736 A.2d 422 , cert. denied, 357 Md. 191 , 742 A.2d 521 (1999).

All genuine factual disputes, and inferences reasonably drawn from the facts, are resolved in favor of the non- ¹¹⁴ moving party. Frederick Rd. Ltd. P’ship v. Brown & Sturm, 360 Md. 76, 94 , 756 A.2d 963 (2000); Dobbins v. Washington Suburban Sanitary Comm’n, 338 Md. 341, 345 , 658 A.2d 675 (1995) ; Green v. Brooks, 125 Md.App. 349, 365 , 725 A.2d 596 (1999). Moreover, in resolving the motion, the trial court may not determine the credibility of witnesses.

Thacker v. City of Hyattsville, 135 Md.App. 268, 286 , 762 A.2d 172 (2000). But, mere general allegations or conclusory assertions of disputed fact will not suffice. Beatty, 330 Md. at 738 , 625 A.2d 1005 . Appellee included an affidavit with its motion for summary judgment.

Appellant filed his opposition with an oath, but he did not include a countervailing affidavit. Maryland Rule 2-501(b) provides that the response to a summary judgment motion must “identify with particularity the material facts that are disputed.” Further, the rule requires that when a motion is supported by an affidavit, the opposing party “shall support the response by an affidavit or other written statement under oath.” Id.; see Imbraguglio v. Great Atlantic & Pacific Tea Co., Inc., 358 Md. 194, 203-04 , 747 A.2d 662 (2000) (recognizing that attachment of documents in a summary judgment proceeding, without affidavit, is not proper); Hartford Accident & Indem. Co. v. Scarlett Harbor Assoc. Ltd. P’ship, 109 Md.App. 217, 263-64 , 674 A.2d 106 (1996) (recognizing that a party opposing summary judgment must present admissible evidence of a factual dispute), aff'd, 343 Md. 334 , 681 A.2d 70 (1996) .

Appellee did not challenge the sufficiency of appellant’s oath or appellant’s failure to submit an affidavit. As we observed, if there are no genuine disputes of material fact, then the reviewing court must determine if the trial court “reached the correct legal result.” Crews v. Hollenbach, 126 Md.App. 609, 625 , 730 A.2d 742 (1999), aff'd, 358 Md. 627 , 751 A.2d 481 (2000); see Goodwich v. Sinai Hosp. of Baltimore, Inc., 343 Md. 185, 204 , 680 A.2d 1067 (1996); Baltimore Gas & Elec. Co. v. Lane, 338 Md. 34, 42-43 , 656 A.2d 307 (1995); Beatty, 330 Md. at 737 , 625 A.2d 1005 . In our review, we evaluate “the same material from the record and decide[] the same legal issues as the circuit court.” ¹¹⁵ Lopata v. Miller, 122 Md.App. 76, 83 , 712 A.2d 24 , cert. denied, 351 Md. 286 , 718 A.2d 234 (1998).

Appellate courts will generally uphold a grant of summary judgment “only on the grounds relied upon by the trial court.” Blades v. Woods, 338 Md. 475, 478 , 659 A.2d 872 (1995); see also Gross v. Sussex, Inc., 332 Md. 247 , 254 n. 3, 630 A.2d 1156 (1993); Hoffman v. United Iron and Metal Co., Inc., 108 Md.App. 117, 132-33 , 671 A.2d 55 (1996). DISCUSSION Appellant contends that the trier of fact should have decided whether a binding contract of life insurance was formed based on appellee’s promotional literature, “coupled” with the “telephone colloquy of February 20, 1999,” between appellant and an agent of New York Life. According to appellant, his telephone conversation with an unidentified representative of New York Life, who assisted him with completion of the application, “had the [ejffect of modifying and reforming the promotional literature and making a binding bilateral contract between the parties.” Moreover, he observes that the promotional literature “said nothing about [appellee’s] policy ... of not accepting applications by phone, and was silent about the condition precedent of the enrollment application approved by their underwriter for the insurance coverage to take effect.” Thus, appellant maintains that, “as the bargained exchange” for returning the completed enrollment form, executing the power of attorney, and mailing the first premium payment to New York Life, appellee was obligated to provide immediate insurance coverage for his father, as the “promised consideration.” Appellant states: “The alleged contract between the parties was a ... contract, its [sic] the fulcrum of this case, and should have been the primary focus of the trial court, steering its inquiry.” Mitchell also claims the trier of fact should have determined whether appellee provided interim life insurance while George’s application for insurance was pending. Appellee counters that no insurance coverage existed, because New York Life “had neither processed nor reviewed ¹¹⁶ George Mitchell’s enrollment application----” Indeed, appellee observes that its policies and procedures do not permit applications to be processed and accepted by telephone.

Therefore, appellee asserts that New York Life never accepted the risk of coverage. In addition, appellee contends that appellant “failed to meet his burden of proof to show that his father met New York Life’s objective standard of insurability.” Because the interpretation of an insurance policy is governed by the same principles generally applicable to the construction of other contracts, we begin our analysis with a review of basic principles of contract law. See Philadelphia Indem. Ins.

Co. v. Maryland Yacht Club, Inc., 129 Md.App. 455, 467 , 742 A.2d 79 (1999). A contract has been defined as “ ‘a promise or set of promises for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.’ ” Kiley v. First Nat’l Bank of Md., 102 Md.App. 317, 333 , 649 A.2d 1145 (1994) (quoting Richard A. Lord, 1 Williston on Contracts, § 1:1, at 2-3 (4th ed.1990)), cert. denied, 338 Md. 116 , 656 A.2d 772 , cert. denied, 516 U.S. 866 , 116 S.Ct. 181 , 133 L.Ed.2d 120 (1995). The interpretation of a written contract is generally a question of law for the court, subject to de novo review. Wells v. Chevy Chase Bank, F.S.B., 363 Md. 232, 250 , 768 A.2d 620 (2001); Auction & Estate Representatives, Inc. v. Ashton, 354 Md. 333, 341 , 731 A.2d 441 (1999). “‘In Maryland, insurance policies, like other contracts, are construed as a whole to determine the parties’ intentions.’ ” Bushey v. Northern Assurance Co. of America, 362 Md. 626, 631 , 766 A.2d 598 (2001) (quoting Sullins v. Allstate Ins.

Co., 340 Md. 503, 508-09 , 667 A.2d 617 (1995)). We utilize the law of objective interpretation to ascertain the intent of the contracting parties, provided that intention does not violate an established principle of law. B & P Enter. v. Overland Equip. Co., 133 Md.App. 583, 604 , 758 A.2d 1026 (2000); Ragin v. Porter Hayden Co., 133 Md.App. 116, 135 , 754 A.2d 503 (2000).

When the language of a contract “is unambiguous, a court ¹¹⁷ shall give effect to its plain meaning and there is no need for further construction by the court.” Wells, 363 Md. at 251 , 768 A.2d 620 ; see Painewebber Inc. v. East, 363 Md. 408, 414 , 768 A.2d 1029 (2001). Moreover, “ ‘[i]f only one reasonable meaning can be ascribed to the [contract] when viewed in context, that meaning necessarily reflects the parties’ intent.’ ” Labor Ready, Inc. v. Abis, 137 Md.App. 116, 128 , 767 A.2d 936 (2001) (citation omitted). The question of formation of a contract is central to this case. “A contract is formed when an unrevoked offer made by one person is accepted by another.” Prince George’s County v. Silverman, 58 Md.App. 41, 57 , 472 A.2d 104 (1984). An essential element with respect to the formation of a contract is “ ‘a manifestation of agreement or mutual assent by the parties to the terms thereof; in other words, to establish a contract the minds of the parties must be in agreement as to its terms.’” Safeway Stores, Inc. v. Altman, 296 Md. 486, 489 , 463 A.2d 829 (1983) (citation omitted); see Kiley, 102 Md.App. at 333 , 649 A.2d 1145 .

Thus, as with other contracts, the validity of an insurance contract depends upon the “two prerequisites of mutual assent ... namely, an offer and an acceptance.” 3 Eric M. Holmes, Holmes’s Appleman on Insurance 2D, § 11.1, at 93 (1998) (“Appleman”). An “application for insurance standing alone does not constitute a contract upon which judgment can be recovered. It is merely an offer or request for insurance which may be either accepted or rejected by the insurer.... The offer must be unconditionally accepted for the contract of insurance to come into force.” Appleman, § 11.1, at 93-94.

As a “general rule,” then, there is “no binding contract of insurance,” even if the applicant makes a “contemporaneous payment” of the initial premium when submitting an insurance application, unless “the insurer manifests its acceptance.” Appleman, § 11.1, at 95; see also Appleman, § 10.1, at 1 (acknowledging that a life insurance application is merely an offer to contract for life insurance, and that in order to create a binding contract of insurance, an insurer must accept the ¹¹⁸ offer); 1 Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3D (“Couch”) (1997) § 11:1, at 11-2 to 11-3; § 11:3, at 11-9 to 11-10; 43 Am.Jur. 2D Insurance § 201, at 283 (1982) (“Until the application is accepted, no contractual relationship exists between an applicant for insurance and the insurance company”). “[A]cceptance occurs when the insurer agrees to accept the application and to issue the policy,” provided there are no condition precedents “to the completion of the contract agreed upon.” Appleman, § 11.2, at 106. To be sure, “[a]cts and conduct of an insurance company may be sufficient to establish the acceptance....” Id., § 11.2, at 106. It is also salient that, in the absence of an applicable statute, an insurer ordinarily has “no duty to write insurance for any particular applicant.” Id., § 11.1, at 91-92. To the contrary, an insurance company generally is entitled to determine the risks it considers profitable to insure.

Insurance Comm’r of Md. v. Allstate Ins. Co., 268 Md. 428, 440 , 302 A.2d 200 (1973); American Casualty Co. v. Ricas, 179 Md. 627, 634 , 22 A.2d 484 (1941). Put another way, “ ‘it is purely voluntary on the part of the company as to whom it will insure.... The insurer is. at liberty to choose its own risks and may accept or reject applicants as it sees fit.’ ” Edelstein v. Nationwide Mut.

Ins. Co., 252 Md. 455, 462 , 250 A.2d 241 (1969) (citation omitted). As we noted, “[t]here must be an actual acceptance by the insurer before it will be liable upon the risk.” Appleman, § 11.2, at 106. The question here is whether appellant made a valid offer on behalf of his father that was accepted by appellee.

Appellant argues, inter alia, that a valid life insurance contract was created based on all of the circumstances, including appellee’s brochure, its deposit of the premium payment prior to George’s death, and the representations of an unnamed New York life representative on February 20, 1999. Appleman recognizes that, when an insurer “engages in ¹¹⁹ the mass solicitation of business by mail,” it is not uncommon for the “average person [to] believe that his or her response by sending the application and premium would be sufficient to consummate the contract.” Appleman, § 11.1, at 94-95. Yet, Appleman also asserts that “the insurer’s physical acceptance of the submitted application] does not create the binding contract of insurance where the application and accompanying literature specifies that acceptance can only be made upon an investigation and determination of the applicant’s insurability.” Id. at 95. As the Court of Appeals recognized in Simpson v. Prudential Ins.

Co., 227 Md. 393, 400 , 177 A.2d 417 (1962), “a life insurance company obviously has a sound business reason for wishing to be cautious before it fully commits itself by actually issuing a policy which is not readily cancellable.” To protect against what might be perceived as an automatic acceptance, however, “the insurer must use clear and unequivocal language to demonstrate its intent to only provide