McClendon v. North Carolina Mutual Life Insurance Company, 406 F.Supp.3d 677

Background

Plaintiff Marietta McClendon sued North Carolina Mutual Life Insurance Company as a class action after her brother’s $10,000 whole‑life policy proceeded following his 2016 death; she had assigned the policy proceeds to a funeral home. The policy included two 27‑year riders and a 1995 policy loan.
Defendant acquired the policy in 2009 after the original issuer became insolvent and continued charging rider premiums after the riders’ 27‑year term ended in 2011; total contested rider charges after 2011 were $92.80.
Defendant initially calculated the death benefit net of loan principal and interest at 6%; after receiving loan documents showing 5% interest it issued an additional $299.36, which Plaintiff did not cash.
Plaintiff’s Second Amended Complaint pleaded breach of contract, unjust enrichment, violation of the Alabama Deceptive Trade Practices Act (ADTPA), and violation of the North Carolina Unfair or Deceptive Trade Practices Act (NCUDTPA).
The court applied Tennessee choice‑of‑law rules and held Alabama has the most significant relationship to the unfair‑trade‑practices claims; consequentially Alabama law governs those claims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Applicability of ADTPA	ADTPA applies to Defendant’s conduct (loan & billing practices) and Plaintiff is a consumer; summary judgment warranted on undisputed ADTPA violation	ADTPA exempts persons/activities subject to Alabama Insurance Code; loans are not ADTPA goods/services; ADTPA doesn’t allow class actions	ADTPA claim dismissed: life‑insurance loans/related activity fall within Alabama Insurance Code exemption; loans not goods/services under ADTPA
Choice of law for unfair‑trade claims	NCUDTPA may apply extraterritorially; North Carolina has interest in regulating its businesses	Alabama is site of most injuries and contracts; Alabama has strongest interest	Alabama law governs unfair‑trade‑practices claims (Alabama bears most significant relationship)
Unjust enrichment (alternative to contract)	Pleaded in the alternative; relief appropriate if contract remedy inadequate	Existence of valid insurance contract forecloses unjust enrichment	Unjust enrichment dismissed: valid contract exists and dispute sounds in contract
Breach of contract (interest calc; rider charges; loan‑payment crediting)	Breach for incorrect interest, improper rider charges after 2011, and failure to credit loan payments; seeks partial summary judgment on breach	Some claims time‑barred by 6‑year limitations; continued payments created implied extension of riders; disputes about whether loan payments were credited	Summary judgment granted to Plaintiff for breach as to interest calculations within 6‑year limitations period; Plaintiff’s summary judgment denied as to rider charges (court finds acceptance of payments impliedly extended riders) and denied as to application/crediting of loan payments (material facts disputed); portions of interest claims pre‑2011 likely time‑barred

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard for plausibility)
Anderson v. Liberty Lobby, 477 U.S. 242 (1986) (summary‑judgment standard; court does not weigh credibility)
DirecTV, Inc. v. Treesh, 487 F.3d 471 (6th Cir. 2007) (construing complaint in favor of plaintiff on dismissal)
Rodgers v. Banks, 344 F.3d 587 (6th Cir. 2003) (summary judgment movant’s burden and showing absence of genuine dispute)
Bassett v. National Collegiate Athletic Assn., 528 F.3d 426 (6th Cir. 2008) (materials courts may consider on Rule 12(b)(6) motion)
Premium Freight Mgmt., LLC v. PM Engineered Sols., Inc., 906 F.3d 403 (6th Cir. 2018) (state with strongest interest in unfair‑trade regulation is where harm occurred)
Glennon v. Dean Witter Reynolds, Inc., 83 F.3d 132 (6th Cir. 1996) (factors for most significant relationship in choice‑of‑law)
Hataway v. McKinley, 830 S.W.2d 53 (Tenn. 1992) (Tennessee adoption of Restatement’s most significant relationship test)