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Jones v. Unum Life Insurance Company of America

May 8, 2007


The opinion of the court was delivered by: J. Leon Holmes United States District Judge


Cassandra Jones commenced this action in the Circuit Court of Pulaski County, Arkansas, seeking damages against Unum Life Insurance Company of America for breach of the covenant of good faith and fair dealing and breach of contract. Unum removed the case to this Court pursuant to 28 U.S.C. § 1332 as Jones is a citizen of Arkansas, Unum is incorporated in Maine and has its principal place of business in a state other than Arkansas, and the amount in controversy exceeds $75,000. Previously, this Court granted summary judgment as to all of Jones's claims in the original complaint, but also granted Jones's motion to amend her complaint to add a count for breach of settlement agreement. Before the Court is Unum's motion for summary judgment as to that count. For the following reasons, the Court denies that motion.


A court should enter summary judgment if the evidence, viewed in the light most favorable to the nonmoving party, demonstrates that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed. 2d 202 (1986); Cheshewalla v. Rand & Son Constr. Co., 415 F.3d 847, 850 (8th Cir. 2005). The party moving for summary judgment bears the initial responsibility of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed. 2d 265 (1986).

If the moving party carries its burden, "the nonmoving party must come forward with 'specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed. 2d 538 (1986) (quoting Fed. R. Civ. P. 56(e)). A genuine issue for trial exists only if there is sufficient evidence to allow a jury to return a verdict for the nonmoving party. Anderson, 477 U.S. at 249, 106 S.Ct. at 2511. When a nonmoving party cannot make an adequate showing on a necessary element of the case on which that party bears the burden of proof, the moving party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 323, 106 S.Ct. at 2552.


In November of 2004, Unum Life Insurance Company of America, along with its affiliates, entered into a Regulatory Settlement Agreement with the Superintendent of the State of Maine Bureau Insurance, the Commissioner of the Tennessee Department of Commerce and Insurance, the Commissioner of the Massachusetts Division of Insurance, the insurance regulators of each of the remaining States, the District of Columbia and American Somoa that adopted the Agreement, and the United States Department of Labor. Among other things, the Agreement provided that certain former policyholders would be entitled a right to reassessment of claims that had previously been denied. Jones asserts that she is one of these policyholders, and that Unum never notified her of this right in violation of the Agreement. Jones now sues Unum to enforce the Agreement as a third party beneficiary.


As a preliminary question, the parties dispute whether Jones's claim for breach of settlement agreement should be settled by the law of Arkansas or Maine. Under Arkansas law, the Court must "first look to see if there has been an effective choice of law" by the parties. Crisler v. Unum Ins. Co. of Am., 366 Ark. 130, __ S.W.3d __, 2006 WL 1118936, at *2 (2006). Section C(1) of the regulatory settlement agreement at issue clearly states: "This Agreement shall be governed by and interpreted according to laws of the State of Maine . . . ." In choosing whether to enforce a choice of law provision, courts have considered whether: (1) the chosen law bears a relationship to the contract, (2) the chosen law has a reasonable relationship to the transaction or the parties, (3) there are sufficient contacts between the selected jurisdiction and the transaction, (4) the choice of law was made in good faith, and (5) the choice of law was made without fraud. 17A AM. JUR. 2d Contracts § 262 (2004). The Maine Bureau of Insurance is a party to the contract at issue here, and Unum maintains its home office in Portland, Maine. There are sufficient contacts and relationships between and among the transaction, the parties, and the chosen law, and there is no evidence of lack of good faith or fraud. The choice of Maine law to govern the contract is effective.

Jones argues that Unum should be judicially estopped from arguing Maine law in this Court, as it argued Arkansas law in its previous motion for summary judgment. Unum, however, correctly notes that, in the prior motion, the settlement agreement was not at issue. Rather, a contract between Jones and Unum was under dispute, a contract that was agreed upon and executed in Arkansas, without a choice of law provision, and was therefore appropriately governed by Arkansas law. Unum did not therefore "waive reliance on Maine law," as Jones argues, nor should it be judicially estopped from relying on Maine law at the first appropriate time. Maine law governs the settlement agreement.

Unum contends that Jones has no enforceable right under the contract and therefore has no standing to bring suit. Jones counters that she is a third party beneficiary to the contract. Under Maine law, "[i]n order for [the plaintiff] to survive a summary judgment motion and proceed as a third party beneficiary on a contract theory, he must generate a genuine issue of material fact on the issue of [the defendant's] intent that he receive an enforceable benefit under the contract." Devine v. Roche Biomedical Labs., 659 A.2d 868, 870 (Me. 1995). The Supreme Court of Maine has "relied on RESTATEMENT (SECOND) OF CONTRACTS § 302 in deciding whether a third party was an intended beneficiary who could enforce a contract." Perkins v. Blake, 853 A.2d 752, 754 (Me. 2004); Fleet Bank of Me. v. Harriman, 721 A.2d 658, 660 (1998); F.O. Bailey Co. v. Ledgewood, Inc., 603 A.2d 466, 468 (Me. 1992). Section 302 reads:

(1) Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either

(a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or

(b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of ...

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