93 F.4th 1315
11th Cir.2024Background
- Plaintiff Worth Johnson purchased a universal life insurance policy from Protective Life Insurance Company in 1988, which included a death benefit and an investment/savings component that accrues interest.
- Johnson brought a class action, ultimately as the sole plaintiff, alleging breach of contract concerning how Protective set and adjusted the 'cost of insurance' (COI) rates under the policy.
- The policy describes guaranteed maximum COI rates but also permits Protective to determine internal, non-guaranteed COI rates, subject to specific terms.
- Johnson claimed Protective was contractually obligated to reassess and reduce internal COI rates to reflect improving nationwide mortality rates but failed to do so.
- The district court granted judgment to Protective, holding that there was no breach, leading to this appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the policy require Protective to reassess and redetermine COI rates due to improved mortality rates? | Contract language ("will be determined") imposes a mandatory, periodic reassessment duty. | The phrase means only that Protective may determine COI rates in the future, not must. | No contractual duty was imposed by the policy to reassess or redetermine COI rates. |
| Did "based on ... mortality experience" mean rates must be set solely on mortality factors? | “Based on” in the policy required COI rates to be set exclusively on mortality expectations. | “Based on” does not mean exclusively; other factors may be considered. | "Based on" does not require exclusivity; Protective could consider other factors. |
| If Protective elected to redetermine COI rates, could it ignore mortality expectations? | If COI rates are redetermined, must include expectations as to future mortality. | (Raising but contesting that this theory was properly before the court.) | If Protective voluntarily redetermined rates, it could not ignore mortality experience. |
| Did the district court err by rejecting Johnson’s proposed third amended complaint? | District court failed to consider new factual allegations in the proposed amendment. | Plaintiff did not properly file a motion for leave to amend. | No error—leave to amend was not properly before the district court. |
Key Cases Cited
- Bell v. Progressive Direct Ins. Co., 757 S.E.2d 399 (S.C. 2014) (insurance contracts subject to general rules of contract construction in South Carolina)
- Williams v. Gov’t Emps. Ins. Co., 762 S.E.2d 705 (S.C. 2014) (plain and ordinary meaning controls clear contract language)
- Sloan Constr. Co. v. Cent. Nat’l Ins. Co. of Omaha, 236 S.E.2d 818 (S.C. 1977) (meaning of insurance policy read in context)
- Gambrell v. Travelers Ins. Cos., 310 S.E.2d 814 (S.C. 1983) (insurance policy interpretation)
- Schulmeyer v. State Farm Fire and Cas. Co., 579 S.E.2d 132 (S.C. 2003) (ambiguity not created by focusing on a single clause of contract)
- McGill v. Moore, 672 S.E.2d 571 (S.C. 2009) (question of law whether contract is ambiguous; ambiguities construed for the insured)
- Diamond State Ins. Co. v. Homestead Indus., Inc., 456 S.E.2d 912 (S.C. 1995) (interpret ambiguous policy provisions against insurer)
- Hawkins v. Greenwood Dev. Corp., 493 S.E.2d 875 (S.C. Ct. App. 1997) (contract ambiguity defined by reasonable person standard)