UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
August 16, 2006
MOZELLA D. JONES, PLAINTIFF,
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY, ET AL. DEFENDANTS.
The opinion of the court was delivered by: Henry H. Kennedy, Jr. United States District Judge
MEMORANDUM OPINION AND ORDER
Mozella Jones brings this action against Provident Life and Accident Insurance Company ("Provident Life"), PAS Financial Group, Inc. ("PAS"), Hartford Life and Accident Insurance Company ("Hartford Life"), Association Group Insurance Administrators, and A.G.I.A., Inc. ("A.G.I.A."), alleging that she was improperly denied the proceeds of a life insurance policy. Asserting that defendants, both negligently and in breach of contract, mishandled the insurance documents and failed to pay her the proceeds of the policy, Jones seeks a declaratory judgment that she is the proper beneficiary of the policy and monetary damages. Before the court is Hartford Life's motion to dismiss Jones's negligence claim. Upon consideration of the motion, the opposition thereto, and the record of this case, the court concludes that Hartford Life's motion must be denied.
Jones alleges that on or about December 2000, an insurance policy was taken out on Henry Clay Thompson, Jr. in the amount of $100,000. Jones was assertedly the named beneficiary of that policy. She asserts that she timely paid the premiums on the policy from the date of purchase, in December 2000, until Thompson passed away, on August 3, 2005. At the time of Thompson's death, none of the defendants were able to locate any information regarding the proper beneficiary of the policy and, as a result, did not pay Jones any proceeds.
The policy was originally purchased through Provident Life, with PAS acting as program administrator. Jones asserts that, at the time the policy was purchased, PAS was responsible for "keep[ing], record[ing], transfer[ing] and hold[ing] for safe keeping, the insurance policy, enrollment forms, the names of the beneficiary, and other papers for that policy." Am. Compl. ¶ 13. Prior to the death of Thompson, the policy was sold to Hartford Life and administered by Association Group Insurance Administrators and A.G.I.A, who were thereafter allegedly responsible for the proper handling of the insurance papers.
In Count II of her amended complaint, Jones alleges that Hartford Life, and the other defendants, negligently failed to record and maintain the insurance documents naming her as the proper beneficiary of Thompson's life insurance policy. Hartford Life moves to dismiss Jones's negligence claim, arguing that Jones's amended complaint fails to state a claim against it for negligence.*fn1 The elements of a cause of action for negligence are: a duty of care owed by the defendant to the plaintiff, a breach of that duty by the defendant, and damage to the interests of the plaintiff, proximately caused by the breach. See Dist. of Columbia v. Harris, 770 A.2d 82, 87 (D.C. 2001); McLane v. Russell, 546 N.E.2d 499, 501--02 (Ill. 1989).*fn2 Hartford Life argues that Jones's negligence claim must fail because the first element is lacking; namely, that, as a matter of law, Hartford Life did not owe Jones a duty of care.
The failure to perform a contractual obligation typically does not give rise to a cause of action in tort. Towers Tenant Ass'n v. Towers Ltd. P'ship, 563 F. Supp. 566, 570 (D.D.C. 1983); Blake Constr. Co. v. C. J. Coakley Co., 431 A.2d 569, 577 n.5 (D.C. 1981). Rather, an action for breach of contract is often "the appropriate avenue of relief." Towers Tenant Ass'n, 563 F. Supp. at 570. However, if a plaintiff can establish the existence of "an independent legal duty, he may maintain an action in tort even though the acts complained of also constitute a breach of contract." Id. Accordingly, the sustainability of Jones's negligence claim against Hartford Life turns on whether an insurer owes an independent duty of care to an intended beneficiary of a life insurance policy.
It is well established that an insurer owes an independent duty of care to an insured. See, e.g., Saylab v. Don Juan Rest., Inc., 332 F. Supp. 2d 134, 144 (D.D.C. 2004) ("An insurance agent must exercise reasonable care and skill in performing his duties and that agent may become liable in tort to the principal who suffers a loss by [the agent's failure] to use standard care.") (internal quotations omitted); Cooper v. Berkshire Life Ins. Co., 810 A.2d 1045, 1069 (Md. Ct. Spec. App. 2002) ("An agent, employed to effect insurance, must exercise such reasonable skill and ordinary diligence as may fairly be expected from a person in his profession or situation . . . . The failure to meet that duty allows a recovery in tort."). Such a duty is thought to require an insurer to do "'what is necessary to effect a policy, in seeing that it effectively covers the property [or person] to be insured,'" Saylab, 332 F. Supp. 2d at 146 (quoting Cooper, 810 A.2d at 1069), and is considered independent of any contractual duty between the parties. Towers Tenant Ass'n, 563 F. Supp. at 570.
It is less clear, however, whether an insurer owes an independent duty of care to an intended beneficiary of an insurance policy. None of the cases cited by either party in their briefs are particularly instructive, for they mostly stand for the unremarkable proposition that "if the contract creates a special relationship imposing a duty, breach of that duty may give rise to an independent tort action," Def.'s Opp'n at 3 (emphasis added) (citing Fidelity & Deposit Co. v. Commercial Casualty Consultants, Inc., 976 F.2d 272, 276 (5th Cir. 1992)), and that, absent an independent duty, a tort action is not a proper avenue for relief in cases involving contract disputes. Pl.'s Mot. at 4 (citing Towers Tenant Ass'n, 563 F. Supp. at 570). These cases do not answer the central question raised in this case-whether a special relationship exists between an insured and an intended beneficiary of a life insurance policy, thereby giving rise to an independent duty of care.
While it does not appear that any court in the District of Columbia has addressed the issue, courts elsewhere have recognized that an insurer may owe a duty of care, separate from any contractual duty, to an intended beneficiary of an insurance policy. See, e.g., Parlette v. Parlette, 596 A.2d 665, 670 (Md. 1991); United Olympic Life Ins. Co. v. Gunther, 1994 U.S. App. LEXIS 6264, at *5 (9th Cir. March 24, 1994); see also 12 ERIC MILLS HOLMES, HOLMES' APPLEMAN ON INSURANCE 2D § 85.1, at 335 (1999) (recognizing that some courts have held that "an intended beneficiary of a life insurance policy has the right to bring either a negligence cause of action or a breach of contract claim against the agent who fails to obtain the desired life insurance coverage."). In Parlette, for example, the plaintiff brought a negligence claim against a life insurance agent who sold a policy to her late son, claiming she was the intended beneficiary of the policy. In resolving an issue similar to the one before this court, the court concluded that "an intended beneficiary can recover from another's insurance agent if the intended beneficiary can prove that intent to benefit him, or her, was a direct purpose of the transaction between insured and agent and [can show] the other elements of negligence." Id. (emphasis in original).
Analogous case law also supports the proposition that an independent duty of care is owed by an insurer to an intended beneficiary of an insurance policy. For example, many jurisdictions allow a cause of action in negligence against an attorney by a non-client, where an intent to benefit the non-client was "the primary or direct purpose of the transaction or relationship" between the attorney and her client. Pelham v. Griesheimer, 440 N.E.2d 96, 99 (Ill. 1982) ("[T]o establish a duty owed by the defendant attorney to the non-client the non-client must allege and prove that the intent of the client to benefit the non-client third party was the primary or direct purpose of the transaction or relationship."). Particularly relevant are those cases supporting the right of an intended beneficiary of a will to bring a negligence claim against the attorney who fails to draft or execute a will properly. See, e.g., Hopkins v. Akins, 637 A.2d 424, 428 (D.C. 1993) (explaining that an intended beneficiary of a will may maintain a cause of action in negligence against another's attorney, where the primary intent of the parties in privity was to benefit the third party); Needham v. Hamilton, 459 A.2d 1060, 1061 (D.C. 1983) (finding in favor of an intended beneficiary of a will who brought a negligence claim against the attorneys for the decedent, whose negligent drafting of a will resulted in the beneficiary's inability to receive the portion of the deceased's estate to which he was entitled); United Olympic, 1994 LEXIS 6264, at *4 ("[A] lawyer who negligently fails to include a beneficiary in a will may be sued by the beneficiary for the lost bequest.") (citing Hale v. Groce, 744 P.2d 1289, 1290 (Or. 1987)).
Given the cogent reasoning of this body of law, this court concludes that an insurer owes an independent duty of care to an intended beneficiary of a life insurance policy, given that the primary purpose of such a policy is necessarily to benefit the intended beneficiary. Accordingly, Jones has adequately pleaded that Hartford Life owed a duty to Jones, for, like the plaintiff in Parlette, Jones alleges that she was the named beneficiary of the policy. Because the court concludes that Jones's amended complaint sufficiently sets forth the elements of a negligence claim-duty, breach, injury, and causation*fn3 -Hartford Life's motion to dismiss must be denied.*fn4
Accordingly, it is this 16th day of August, 2006, hereby ORDERED that defendant Hartford Life's motion to dismiss [#21] is DENIED.