Jackson National Life Insurance Company v. Sterling Crum
20-11280
| 11th Cir. | Feb 4, 2022Background
- In Jan 1999 Kelly Couch (HIV-positive) procured a $500,000 term life policy from Jackson National after making material misrepresentations (including about HIV status, SSN, and bankruptcies); the policy named his estate as beneficiary and contained a two‑year contestability period.
- Couch intended to sell the policy to viatical investors; within months Associates Trust (a viatical broker) marketed the policy and Sterling Crump agreed to acquire it; Couch executed a beneficiary/ownership change in Sept 1999 naming Crump.
- Premiums were paid via a broker "premium reserve account" during the two‑year contestability period; after January 2001 Crump paid premiums directly through 2009. Couch died in 2005; Crump only learned of the death in 2016 and submitted a claim in 2017.
- Jackson National refused payment and sued for a declaratory judgment that the policy was void ab initio as an illegal human life wagering contract and for lack of insurable interest; the district court (bench trial) found Couch procured the policy with intent to sell and held it void as a wagering contract.
- Crump appealed, arguing Couch’s unilateral intent to sell (without a known or complicit third‑party at procurement) is insufficient to render the policy void; Jackson argued unilateral intent is enough when the insured’s sole purpose is to sell to a third party lacking an insurable interest.
- The Eleventh Circuit found Georgia precedent inconclusive on whether a third‑party or intermediary must be complicit at procurement and certified the controlling legal question(s) to the Georgia Supreme Court rather than resolving the issue itself.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a life policy procured by an insured with the intent to sell to a purchaser lacking an insurable interest is void ab initio when no third‑party or intermediary was complicit at procurement | Policy is void when insured takes out a policy intending to sell it for profit to someone with no insurable interest; insurer’s public‑policy bar on wagering contracts applies regardless of third‑party involvement at inception | Policy was lawfully taken by Couch (he had an unlimited insurable interest in his own life); absent an identified third‑party purchaser or their complicity at procurement, unilateral intent to sell does not make the policy a wagering contract | Eleventh Circuit did not decide the merits; it certified to the Georgia Supreme Court whether third‑party or intermediary complicity is required and, if not absolute, what circumstances render a policy void ab initio as an unlawful wager. |
Key Cases Cited
- Clements v. Terrell, 145 S.E. 78 (Ga. 1928) (dictum discussing insured’s intent and beneficiary designation limits)
- Wood v. New York Life Ins. Co., 336 S.E.2d 806 (Ga. 1985) (beneficiary without insurable interest may create temptation to hasten insured’s death)
- Union Fraternal League v. Walton, 34 S.E. 317 (Ga. 1899) (insured may name any beneficiary but not where contract is a cover for a wagering agreement)
- Rylander v. Allen, 53 S.E. 1032 (Ga. 1906) (early discussion of wagering‑policy exception to beneficiary freedom)
- Wilson v. Progressive Life Ins. Co., 7 S.E.2d 44 (Ga. Ct. App. 1940) (wagering contracts unenforceable and void ab initio)
- Whiteside v. GEICO Indem. Co., 977 F.3d 1014 (11th Cir. 2020) (federal precedent endorsing certification when state law is unclear)
- Pruco Life Ins. Co. v. Wells Fargo Bank, N.A., 780 F.3d 1327 (11th Cir. 2015) (procedural guidance on transmitting record when certifying questions)