The Eleventh Circuit affirmed the district court’s order in the defendant insurer’s favor, dismissing the complaint and rejecting a claim that the plaintiff’s universal life policy was ambiguous and thus had to be construed against the insurer, in Anderson v. Wilco Life Insurance Co., 2021 U.S. App. LEXIS 33846 (11th Cir. Nov. 15, 2021).
Vanessa Anderson brought a putative class action against Wilco, alleging that the insurer had breached her policy by raising the monthly cost of insurance. The contract included several provisions relevant to the claim. The first was a “Policy Data Page” setting forth a “Table of Guaranteed Monthly Cost of Insurance Rates,” followed by a provision that “actual monthly cost of insurance rates will be determined by the company based on the policy cost factors described in your policy. However, the actual cost of insurance rates will not be greater than those shown above.” The second relevant provision was titled “Cost of Insurance” and provided that the monthly cost of insurance would depend on the “[m]onthly cost of insurance rate as described in the Cost of Insurance Rates section.” And the third, titled “Cost of Insurance Rates,” referred to both the “guaranteed”—or maximum—cost of insurance rates for the policy and the “current” cost of insurance rates:
COST [OF] INSURANCE RATES
- The guaranteed monthly cost of insurance rate[s] for the policy [is] based on the insured’s sex, attained age[, and] premium class on [the] date of issue. Attained age means age on the prior policy anniversary except when this policy is issued when it means age last birthday prior [to] policy date. These rates are shown on a Policy Data Page.
- Current monthly cost of insurance rates will be determined by the Company. The current monthly cost of insurance rates will not be greater than the guaranteed monthly cost of insurance rates which are listed on a Policy Data Page.
Anderson and Wilco agreed that the monthly rates charged under her policy did not exceed the policy’s guaranteed monthly cost of insurance rates. But Anderson claimed that Wilco raised her monthly rates for reasons other than her sex, attained age, and premium class, and that this breached the policy. After removing the action to federal court, Wilco moved to dismiss, arguing that the policy unambiguously gave Wilco discretion to raise monthly rates as long as the rates did not exceed the guaranteed rate. The district court granted the motion, and Anderson appealed.
The Eleventh Circuit, in an opinion written by Judge Branch, affirmed. Anderson argued that the statement on the “Policy Data Page” to the effect that her monthly cost of insurance would be determined “based on the policy cost factors described in [her] policy” rendered the policy at least ambiguous as to whether the current monthly cost of insurance had to be based only on her sex, age, and premium class. “The problem,” the court observed, “is that the policy never mentions policy cost factors in conjunction with the current monthly rate. The only factors mentioned—the insured’s sex, attained age, and premium class—relate to the calculation of the guaranteed monthly rate.” To the extent that conflicted with the Policy Data Page’s reference to “cost factors,” the court continued, the provision specific to Anderson’s policy “surely controls.”
Applying Georgia law, the court invoked several rules of contract construction in rejecting Anderson’s claim. The court agreed that under Georgia law an ambiguous policy is construed against the insurer, but noted that Georgia law also provides that a policy is not ambiguous, even if susceptible to two reasonable meanings, if the court can resolve the conflicting interpretations by applying the rules of contract construction. And the court could do that here by applying the rule that a specific provision controls over a conflicting general provision. Anderson’s proposed interpretation would also “destroy the guaranteed/current monthly rate distinction,” and “would render much of the Cost of Insurance Rates provision superfluous[,]” the court added. Anderson’s interpretation also “undermines the plain meaning of the Policy Data Page caption,” which made clear that there are two distinct rates, a guaranteed monthly rate and a current monthly rate. “Under the policy’s plain meaning,” the court concluded, “Wilco had discretion to set Anderson’s current monthly rate, so long as that rate did not exceed the guaranteed monthly rate.”
Posted by Valerie Sanders.