United States Life Insurance v. Wilson
18 A.3d 110
Md. Ct. Spec. App.2011Background
- Policy purchased November 15, 1998; 10-year term; Dr. Griffith owner and insured; Wilson as primary beneficiary.
- Premiums billed and collected via AMA Insurance Agency, Inc. (AMAIA), the third-party administrator; AMAIA responsible for premium collection.
- Grace period: 31 days, extendable by written notice; Reminder Notice allegedly extended grace period to 60 days.
- May 15, 2007 premium not paid; grace period extended to July 14, 2007; lapse occurred after end of grace period if unpaid.
- Dr. Griffith attempted reinstatement by paying overdue premium in late July 2007; AMAIA rejected payment as received after grace period; Dr. Griffith died July 28, 2007; suit filed for breach of policy benefits; circuit court granted summary judgment for Wilson on policy in force but against AMAIA; on appeal, court held policy reinstated as of July 25, 2007, and AMAIA not liable, remanding for entry of judgment in AMAIA’s favor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the Policy in force at Dr. Griffith’s death? | Wilson argues REMINDER extended grace period to 60 days; reinstatement timely within cap. | US Life argues grace period extended or not; reinstatement required evidence of insurability; payment after death; no reinstatement. | Policy reinstated and in force at death. |
| Is AMAIA contractually liable on the Policy as a party to pay benefits? | AMAIA denied claim and acted as agent of US Life, liable as party. | AMAIA was merely an agent for a disclosed principal; not personally liable on policy. | AMAIA not liable; judgment reversed in favor of AMAIA; US Life liable; remand for entry of judgment in AMAIA’s favor. |
Key Cases Cited
- Konover Prop. Trust, Inc. v. WHE Assocs., 142 Md.App. 476 (2002) (lex locus contractus applies to choice of law in contract matters)
- Continental Casualty Co. v. Kemper Ins. Co., 173 Md.App. 542 (2007) (locus contractu and contract interpretation principles for insurance)
- Outboard Marine Corp. v. Liberty Mutual, 154 Ill. 2d 90 (1992) (contract interpretation; insurance policy construction guidance)
- Mattingly Constr. v. Hartford Underwriters, 415 Md. 313 (2010) (contract interpretation; ambiguity and de novo review)
- Premier Title Co. v. Donahue, 328 Ill.App.3d 161 (2002) (contract interpretation; contra proferentem as last resort)
- Ocean Petroleum v. Yanek, 416 Md. 74 (2010) (contract interpretation; standard for ambiguity and application to policy)