United States District Court, District of Columbia
JEREMY D. ORCHIN, Trustee of the Eugene C. Gadaire Insurance Trust, Plaintiff,
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY, Defendant, ELIZABETH GADAIRE, Plaintiff,
JEREMY D. ORCHIN, et al., Defendants.
RANDOLPH D. MOSS, District Judge.
These consolidated cases arise out of a dispute over the life insurance coverage of Dr. Eugene C. Gadaire, which was assigned to a trust maintained for the benefit of Dr. Gadaire's spouse, Elizabeth Gadaire. The trustee-Jeremy D. Orchin-missed two semi-annual payments beginning in July 2009, leading to the termination of Dr. Gadaire's coverage. After the insurance lapsed, Dr. Gadaire died. Upon learning of Dr. Gadaire's death and realizing that he had failed to make the required payments, Orchin contacted the insurance company, Great-West Life & Annuity Insurance Co. ("Great-West"), and successfully convinced them to reinstate the insurance-without mentioning that Dr. Gadaire was already deceased. After learning that Dr. Gadaire had died before the insurance was reinstated, Great-West asserted that the reinstatement was invalid and refused to pay the $750, 000 value of the insurance benefits to the trust.
Orchin brought suit against Great-West on behalf of the trust, alleging that Great-West breached contractual obligations and failed to comply with relevant laws in terminating the insurance and that it should have honored the reinstatement. Orchin v. Great-West Life & Annuity Insurance Co., No. 12-cv-01743 (D.D.C. Oct. 26, 2012). In a separate action, Mrs. Gadaire brought similar claims against Great-West and additionally sued Orchin for missing the payments and causing the insurance to lapse. Gadaire v. Orchin, No. 13-cv-00055 (D.D.C. Jan. 14, 2013). The two cases were subsequently consolidated. See Minute Order, Feb. 1, 2013.
Three motions for summary judgment are now before the Court. In the first, Orchin seeks summary judgment against Great-West. Dkt. 29. In the second, Mrs. Gadaire seeks summary judgment on two of her three claims against Orchin. Dkt. 30. And in the third, Great-West seeks summary judgment against both Orchin and Mrs. Gadaire. Dkt. 31. For the reasons set forth below, the Court GRANTS Great-West's motion for summary judgment, Dkt. 31, and DENIES the motions for summary judgment filed by Orchin and Mrs. Gadaire, Dkts. 29 and 30.
Except as noted, the following facts are undisputed. In April 1975, Dr. Gadaire, a recent graduate of dental school, obtained insurance through an American Dental Association ("ADA") group term life insurance policy administered by Great-West. See Dkt. 29-1 (application for insurance), Dkt. 31-6 (certificate of insurance). His spouse, Elizabeth Gadaire, was designated as one of the insurance's beneficiaries. Dkt. 31-6 at 35. Payments were due twice a year, on July 1 and January 1. Id. at 11; Dkt. 31-7 ¶ 4. The certificate of insurance provided that "31 days are allowed to pay a premium in default.... If the premium is not paid by the end of the days of grace, the insured Member's insurance will terminate, " Dkt. 31-6 at 11, and, in another provision, explained that "[t]he insurance of an insured Member will end on the earliest of the following:... the 32nd day after the due date of any unpaid premium." Id. at 18.
In 1993, Dr. Gadaire transferred ownership of his life insurance to a trust he created, the Eugene C. Gadaire Insurance Trust ("Trust"). See Dkt. 29-4 at 7-17 (Trust Agreement). The Trust's sole beneficiary is Mrs. Gadaire. Dkt. 21 ¶ 15; see also Dkt. 29-4 at 9. Orchin-who is also a dentist and was Dr. Gadaire's close friend, Dkt. 31-4 at 3, 10-11-was named as the trustee. Dkt. 29-4 at 7. To transfer the life insurance to the Trust, Dr. Gadaire submitted to Great-West an assignment of ownership form, Dkt. 29-4 at 3, and an "Absolute Assignment of All Incidents of Ownership" form, Dkt. 29-4 at 5. Plaintiffs claim that they also submitted a copy of the Trust Agreement between Orchin and Dr. Gadaire, Dkt. 29-4 at 7-17; Dkt. 29-20 (declaration from Mrs. Gadaire asserting that "[t]o the best of [her] knowledge and recollection, [she] enclosed a copy of the Trust Agreement" along with her Designation of Beneficiary and Designation of Ownership forms to Great-West); but Great-West disputes this, see Dkt. 31-7 ¶ 16 (noting that there is no evidence that the Trust Agreement was sent to Great-West at this time). The "Absolute Assignment of All Incidents of Ownership" form provided, in relevant part, that Dr. Gadaire was assigning
the insurance on [his] life... together with all incidents of ownership therein and all [his] right, title, claim, interest, and benefit in and to all moneys which are or may at any time become payable thereunder or in connection therewith, with full power to the assignee to receive same and grant receipts therefor..., and with full power of the assignee at any time to exercise all rights, options and privileges given to or at any time exercisable by the insured under the said policy in respect to the insured's interest under the above certificate.
Dkt. 29-4 at 5. Under the new arrangement, Dr. Gadaire remained the insured, but ownership of the insurance was transferred to the Trust.
The Trust Agreement provided that Orchin, as trustee, would make payments on the insurance. Dkt. 29-4 at 7. To fulfill that responsibility, whenever Orchin received a statement, he would call Mrs. Gadaire and tell her that a payment was due. Mrs. Gadaire would then deposit money in the Trust's checking account, and Orchin would write a check to Great-West. Dkt. 29-5 at 8.
From 1993 through the payment due January 1, 2009, Orchin made every semi-annual payment as required on behalf of the Trust. Dkt. 31-7 ¶ 4. Before payments were due, Great-West would mail a notice of payment due to Orchin's address of record, which was his home on 44th Street, NW, Washington, D.C. Id.; Dkt. 31-10 at 3. In April 2009, Orchin moved to a new home on Westover Place, NW, Washington, D.C. See Dkt. 26 ¶ 26; Dkt. 31-4 at 6. Before that, as a "temporary measure, " he moved into an apartment in Bethesda, Maryland, while renovating the new home. Dkt. 31-4 at 6. He allegedly submitted change of address forms to the U.S. Postal Service after each move, but he did not notify Great-West of his moves. Id. In June 2009, Great-West mailed a notice for the premium due on July 1, 2009, to Orchin's address of record, which was still the 44th Street address. Dkt. 31-7 ¶¶ 4-6. When Orchin did not pay the premium within the 31-day grace period that expired on July 31, Great-West mailed a notice of termination, which offered an additional 31-day period during which insurance could have been reinstated without re-application or re-qualification. Id. ¶ 25. Dr. Orchin testified that he never received a premium notice in July 2009 and also asserts that he did not receive a lapse notice in August 2009. Dkt. 31-4 at 6; Dkt. 29-10 at 3; see also Dkt. 31-7 ¶ 22.
It is undisputed that no payment was made for the premium due on July 1, 2009. The coverage accordingly terminated on August 1, 2009. See Dkt. 31-10 at 3-5. The deadline for the next payment that would have been due-January 1, 2010-also passed without Orchin or the Gadaires making a payment or contacting Great-West. See Dkt. 30-10 at 2-5; Dkt. 26 ¶ 33; Dkt. 31-7 ¶ 18.
Dr. Gadaire died suddenly on January 15, 2010. Dkt. 21 ¶ 25, Dkt. 26 ¶ 36; Dkt. 29-16; Dkt. 29-10 at 13. Three days later, Orchin-who was aware of Dr. Gadaire's death and realized that he had not made the most recent payment on the insurance-called Great-West. Dkt. 31-4 at 9-11. In that phone call, which was recorded,  Orchin stated:
I'm the trustee of a life insurance trust for a friend of mine and I think I need to clear up a discrepancy in billing. I haven't gotten a statement for the balance that was due in December. I think I've moved several times and I've put in a change of address but I'm not sure it's gotten through so I need some help to clarify this.
Dkt. 31-4 at 2. Great-West representative Jan Guthrie explained that the insurance had been terminated, and she noted that the address in the system was 2831 44th Street, NW-Orchin's old address. Id. at 3. Orchin repeated that he was the trustee and stated that he needed "to reinstate the policy because there was a miscommunication on addresses, " and he asked whether any notices "would have been sent out... [b]ecause [he] didn't get anything." Id. Guthrie explained that "a bill would have been sent out in June for the July 1 renewal, and then since [Great-West] did not receive payment within that 31 day grace period, by the end of July, a lapse notice would have been sent out." Id. She asked whether Orchin had put in a change of address form, and he explained that he "neglected to do that because of... two moves in six months." Id. Orchin further explained that it was "his fault" and that he was under "a lot of pressure because [he was] the trustee." Id.
Guthrie explained that Dr. Gadaire's insurance could not be reinstated and that Dr. Gadaire would have to re-apply for life insurance. Id. In response, Orchin asked if he could talk to someone higher up and explained the situation. The parties debate what exactly Orchin said, as follows:
Is there someone else I can talk to that might have more influence because I'm feeling so guilty, I've been a trustee for 15 years and I've never let it slip and I don't want [him or them- parties disagree ] to know that I did this. There must be a way that I can pay the past monies or something.
Dkt. 31-10 at 4. Guthrie agreed to ask a supervisor, Nancy Fix, to speak to Orchin. Id. at ...