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JOHNSON v. PRUDENTIAL INS. CO. OF AMERICA

December 30, 1983

JOHNSON, PLAINTIFF
v.
PRUDENTIAL INSURANCE COMPANY OF AMERICA, DEFENDANT


John Garrett Penn, J.


The opinion of the court was delivered by: PENN

JOHN GARRETT PENN J.:

 The plaintiff brought this action to recover the face value of a life insurance policy, in the amount of $56,000, issued by the defendant insurer on the life of Douglas Johnson (decedent) on September 16, 1977. The case is now before the Court on the defendant's motion for summary judgment. After giving careful consideration to the motion, and the opposition thereto, together with the record and the arguments of counsel, the Court concludes that the motion should be granted.

 I

 On or about September 16, 1977, the decedent entered into an agreement with the insurer under which the insurer agreed to insure the life of the decedent in the amount of $56,000 in return for the payment of premiums by the decedent. In his application for insurance, the decedent was asked whether he "regularly used, or is . . . currently using, barbiturates or amphetamines, marijuana, or other hallucinatory drugs, or heroin, opiates or other narcotics except as prescribed by a doctor" (emphasis the Court's). He answered, "No". See Application dated September 16, 1977. In signing that application, the decedent agreed to be bound by all "[his] answers and statements . . . in any part of [the] application." Id. Based upon his responses, a standard policy was issued. The policy thereafter lapsed for nonpayment of premiums in March 1978.

 On June 3, 1978, the decedent signed and submitted a reinstatement application. That application asked whether the insured "regularly used, or is currently using, barbiturates or amphetamines, marijuana or other hallucinatory drugs, or heroin, opiates or other narcotics except as prescribed by a doctor" (emphasis this Court's). Once again the decedent responded, "No". The decedent declared the above statement to be true to the best of his knowledge and belief.

 Three days after signing the reinstatement application, the decedent entered the Greater Southeast Community Hospital where he was diagnosed as suffering from a pulmonary abscess. He remained in the hospital until his death on June 19, 1978. The reinstatement application had not been approved by the home office of the insurer as of June 6, 1978, or as of the date of decedent's death.

 When the decedent was admitted to the hospital on June 6, he was seen by Dr. Robert S. Castrence who examined him and took a history. On that day, the decedent advised Dr. Castrence that "he smokes pot, up to six joints a day -- heavy on weekends." See Castrence's Dep. at 10; Defendant's Opposition to Motion to Compel, Exhibit C. Dr. Castrence asked Dr. Louis V. Kaufman to consult with him in the case. Dr. Kaufman examined the decedent on June 10, 1978. He found the decedent to be "awake", "conscious", and "articulate", and he also took a patient history from him. Kaufman Dep. at 8. The decedent advised him that he smoked "approximately three to five joints of marijuana a day for the past two to three years." Kaufman Dep. at 9-10. Defendant's Opposition to Motion to Compel, Exhibit D.

 The decedent's widow testified that the decedent smoked marijuana "if we went to a party, or to a social gathering, something of that nature." Johnson Dep. at 17. She noted that they went to parties "maybe once a month", and that there was "generally" marijuana at the parties. Id. The plaintiff also testified that the decedent also went to parties and social gatherings without her, "maybe once or twice, the same month." Id. at 18. The decedent also "went out to play ball after coming home from work, most nights, in the evening". Id. at 21. When he got off at 6:00 o'clock in the evening, he would come home and eat and then go out between 7:00 and 7:30 p.m. and return between 10:00 and 11:00 p.m. Id. at 22. He would say that he was going to play ball "with the boys", but "where they went, what they did" the plaintiff does not know. Id. at 22. In response to defendant's interrogatories, the plaintiff stated that the only time decedent used marijuana "was on occasion when we were socializing." Plaintiff's Answer to Interrogatory No. 33.

 The plaintiff filed a related action in the Circuit Court for Montgomery County, Maryland in the summer of 1979. The case was removed to the federal court on August 17, 1979. See Johnson v. Prudential Insurance Company of America, Civil No. 79-1532 (D Md.). In 1980 plaintiff sought discovery "concerning the processing of life insurance applications in which the applicant either did or did not admit to having a preexisting medical condition or to regular use of drugs." See defendant's objection to Magistrate's Order, Exhibit B (Judge Blair's letter dated March 26, 1980 filed in Civil No. 79-1532 (D. Md.)). Judge Blair denied discovery of the above matters in his letter order filed on March 26, 1980. This Court was later to deny a similar request in this case. See Memorandum Order filed July of 1983. The Maryland case was thereafter dismissed by the plaintiff pursuant to Fed. R. Civ. P. 41(a)(2).

 II

 The first issue raised by the motion is whether, at the time of the decedent's death, the policy had lapsed, or whether it had been reinstated.

 The decedent applied for the policy on September 16, 1977. In his application submitted to the insurer, he stated that he had not "regularly used" and was not "currently using" marijuana. In March 1978 the policy lapsed for nonpayment of premiums. On June 3, 1978, the decedent submitted an application to reinstate the policy. In that reinstatement application he again stated that he did not "regularly" use and was not "currently" using marijuana. The application for insurance and the application for reinstatement were accepted by the same insurance agent, Paul L. Washington. The application for insurance signed by the decedent in September 1977 provided that the applicant agreed that "no agent has the authority to make or modify any contract, to pass on insurability or to waive any of Prudential's rights or requirements." The application for reinstatement provided that the applicant agrees that "the policy shall not be reinstated until Prudential has received payment of all arrears and has approved this application" (emphasis the Court's). At the time he applied for reinstatement, the decedent gave Mr. Washington $62.60 representing premiums for March, April, May and June 1978. Washington Dep. at 15-16.

 The plaintiff contends that Mr. Washington represented to the decedent that the policy would be immediately reinstated once the premium payments were made and the application for reinstatement was signed. She presents no evidence to support that contention. Moreover, the form signed by the decedent clearly provides that the policy shall not be reinstated until the insurer has approved the application. Accordingly, the Court concludes that the policy was not reinstated on June 3, 1978. Decedent entered the hospital on June 6, three days later, and since the application was pending and the policy had not been accepted, he had a duty to inform the insurer of his hospitalization since it represented a change which could "materially affect [] the risk" undertaken by the insurer. Kaplan v. Manhattan Life Insurance Company of New York, 71 App. D.C. 250, 252, 109 F.2d 463, 465 (1939). ...


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