Professional Documents
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Filed: Patrick Fisher
Filed: Patrick Fisher
PUBLISH
AUG 14 2001
PATRICK FISHER
TENTH CIRCUIT
Clerk
CINDY RICE,
Plaintiff-Appellant,
v.
THE OFFICE OF
SERVICEMEMBERS GROUP LIFE
INSURANCE, a subsidiary of The
Prudential Insurance Company of
America, a corporation,
No. 99-6354
Defendant-Appellee.
Appeal from the United States District Court
for the Western District of Oklahoma
(D.C. No. 98-CV-1566-M)
Glen Mullins, Oklahoma City, Oklahoma, for Plaintiff-Appellant.
David L. Kearney (Amy M. Cox with him on the brief), of Gable & Gotwals,
Oklahoma City, Oklahoma, for Defendant-Appellee.
Before EBEL and HENRY, Circuit Judges, and ROGERS, * District Judge.
EBEL, Circuit Judge.
BACKGROUND
Decedent committed suicide on May 8, 1998. As a member of the Army
Reserves, he carried a $200,000 life insurance policy from the Office of
Servicemembers Group Life Insurance (OSGLI), which is a subsidiary of the
Prudential Insurance Company of America. On April 16, 1998, twenty-three days
before his death, Decedent changed the beneficiary of this policy from his wife,
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Plaintiff, to his ailing mother, Wilma Evans. At the same time, he filed a Record
of Emergency Data in which he instructed the Army to inform only his mother if
he died. It did not list Plaintiff, their daughter, Erika, or his four sons from a
previous marriage. Earlier, on January 25, 1998, Decedent had signed a military
benefits form that listed his former wife, Kathy Rice, as his spouse and ended his
childrens eligibility for benefits. The misinformation on this form may have
been due to glitches in the militarys computer system.
Decedent had a history of clinical depression, for which he had received
some treatment, and had attempted suicide before. Friends and family testified
that Decedent was acting somewhat strangely in the weeks leading up to his
suicide. The Rices marriage was under strain, and at times Decedent was
considering divorcing Plaintiff and moving back to West Virginia with his
mother, Evans.
Evans testified that during the last few months of his life, Decedent was
calling her at least daily, as opposed to two to three times a month before then.
Phone records show that the two spoke for 33 minutes on April 15, the day before
he designated her the beneficiary of his life insurance policy. Evans testified that
they did not discuss the life insurance policy until several days after he had
changed it.
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Plaintiff sought payment from the OSGLI after Decedents death. The
OSGLI provided Plaintiff an opportunity to document Decedents lack of mental
capacity when he changed the beneficiary of his insurance policy. Because
Plaintiff provided only lay affidavits rather than a medical opinion, the OSGLI
paid Evans.
Plaintiff brought this suit, arguing both that Decedent did not have the
mental capacity to change beneficiaries on April 16 and that Evans exercised
undue influence on him. The district court granted summary judgment on the
undue influence question. After a trial on the issue of mental capacity, the jury
found for the OSGLI.
DISCUSSION
I. Jurisdiction
Both parties concede, and the district court accepted, that federal
jurisdiction over this case is conferred by 38 U.S.C. 1975. Nonetheless, we
have an independent duty to examine our jurisdiction. Maier v. EPA, 114 F.3d
1032, 1036 (10th Cir. 1997). We ultimately conclude that we have jurisdiction,
but on different grounds than that advanced by the parties.
The jurisdictional provision relied on by the parties provides, The district
courts of the United States shall have original jurisdiction of any civil action or
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claim against the United States founded upon [the SGLI subchapter]. 38 U.S.C.
1975. Plaintiffs lawsuit, however, is not against the United States. Rather, it
is against the OSGLI, a division of the Prudential Insurance Company and
therefore a private entity. This is in accordance with the governing regulations,
which state that [a]ctions at law or in equity to recover on the policy, in which
there is not alleged any breach of any obligation undertaken by the United States,
should be brought against the insurer. 38 C.F.R. 9.13.
Several district courts have assumed without analysis that 1975 or its
predecessor, former 38 U.S.C. 775, confer federal jurisdiction over suits against
the OSGLI or Prudential. E.g., Kilburn v. SGLI Co., 587 F. Supp. 54, 54 (S.D.
Ohio 1984); cf. Stratton v. SGLI Co., 422 F. Supp. 1119, 1120 (S.D. Iowa 1976)
(noting that no objection has been made to the Courts taking of jurisdiction
under former 775). 1 None of these cases provide analysis of the jurisdictional
question, and thus they do not constitute strong precedent on the issue. Cf.
United States v. L.A. Tucker Truck Lines, 344 U.S. 33, 38 (1952) ([T]his Court
is not bound by a prior exercise of jurisdiction in a case where it was not
questioned and it was passed sub silentio.).
At oral argument, counsel for the OSGLI also cited Prudential Insurance
Co. v. Mehlbrech, 878 F. Supp. 1382 (D. Or. 1995), to support jurisdiction under
1975. Mehlbrech, however, was an interpleader action, id. at 1383, and
jurisdiction was therefore apparently proper under 28 U.S.C. 1335. Mehlbrech
does not cite or discuss 1975.
1
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In any event, we reject this position as inconsistent with the plain language
of 1975. We therefore follow the majority of courts that look to some other
statutory basis for federal jurisdiction. See, e.g., Shannon v. United States, 417
F.2d 256, 263 (5th Cir. 1969) (discretionary pendant party jurisdiction); Melton v.
White, 848 F. Supp. 1511, 1512 (W.D. Okla. 1994) (federal question); Prudential
Ins. Co. of Am. v. Moorhead, 730 F. Supp. 727, 728 (M.D. La. 1989) (diversity
and federal question).
We see two other provisions that might support Plaintiffs allegation of
federal jurisdiction. The first is 28 U.S.C. 1332, the diversity jurisdiction
statute. We examine the face of the complaint to determine whether a party has
adequately presented facts sufficient to establish diversity jurisdiction. The party
asserting jurisdiction must allege facts essential to show jurisdiction. Gaines v.
Ski Apache, 8 F.3d 726, 729 (10th Cir. 1993). Thus, the complaint must allege
that the plaintiff and defendant are citizens of different states and that the amount
in controversy is greater than $75,000. 28 U.S.C. 1332(a). A corporation is
treated as a citizen of the state where it is incorporated and the state where it has
its principal place of business. Id. 1332(c).
Here, the complaint alleges that Plaintiff is a citizen of Oklahoma, but does
not set forth the citizenship of the OSGLI or the amount in controversy.
[W]here the pleadings are inadequate, we may review the record to find evidence
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that diversity exists. Gaines, 8 F.3d at 729. We have reviewed the record and
do not find that it establishes diversity jurisdiction.
The other potential basis for federal jurisdiction is 28 U.S.C. 1331, the
federal question statute. This section confers jurisdiction over cases arising
under federal law. For a case to arise under federal law, the federal question
must be apparent on the face of a well-pleaded complaint, and Plaintiffs cause of
action must be created by federal law or, if it is a state-law cause of action, its
resolution must necessarily turn on a substantial question of federal law, and that
federal law in turn must create a private cause of action. Merrell Dow Pharms. v.
Thompson, 478 U.S. 804, 808, 811-12 (1986); Erwin Chemerinsky, Federal
Jurisdiction 285 (3d ed. 1999).
For the purposes of this appeal, we need not determine whether Plaintiff
has asserted a cause of action under state or federal law. It is sufficient for us to
find that (1) the issues of mental capacity and undue influence are governed by
federal law; (2) these issues raise substantial questions of federal law that must be
resolved; and (3) the federal SGLI statute gives rise to an implied private cause of
action.
First, federal law governs the issues of mental capacity and undue influence
in this case. As the Seventh Circuit explained in a different context,
SGLI is a federal program; in fact, technically the government rather
than the serviceman is the policyholder. . . . As we have both a
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Roecker v. United States, 379 F.2d 400, 405, 408 (5th Cir. 1967) (finding that
state law governs the propriety of a guardians discharge of his duties leading to a
redesignation of a National Service Life Insurance policys beneficiary, but
emphasizing that the question was not the insureds competence).
Second, to recover on the insurance policy, Plaintiff must prove she is the
beneficiary and to do so she must show that Decedents purported change was
ineffective, either because he lacked the capacity to do so or because he was
under undue influence at the time. These are substantial questions indeed, the
only disputed issues in the case on which the outcome of this lawsuit turn.
Third, there is an implied cause of action under the SGLI statute for
beneficiaries against the OSGLI. Parker v. OSGLI, 91 F. Supp. 2d 820, 824-25
(E.D. Pa. 2000). Whether a federal statute contains an implied cause of action is
ultimately a question of determining what Congress intended. Karahalios v. Natl
Fedn of Fed. Employees, 489 U.S. 527, 532 (1989). Such congressional intent
can be implied by the text or structure of the statute. Alexander v. Sandoval, 121
S. Ct. 1511, 1520 (2001). Although the text of the SGLI statute is silent, we
believe its structure shows that Congress intended to allow private causes of
action to enforce the provisions of SGLI policies. The statute requires
beneficiaries to make claim[s] for payment under some circumstances, but
contains no mechanism (administrative or otherwise) to enforce the insurance
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mental capacity by the greater weight of the evidence. Plaintiff raises two
objections to the presumption instruction: first, that there is no general
presumption of mental capacity to change ones beneficiary; and second, that the
presumption was rebutted and should not have been included in the jury
instructions. Only the first of these objections was raised below.
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insured was of sound mind at the time the contract was entered into, and clear
proof is required to establish that he or she lacked sufficient capacity. (footnotes
omitted)). We also draw support from the Department of Veterans Affairs, which
in administrative proceedings involving the validity of a change in beneficiary
applies a general but rebuttable presumption that every testator possesses
testamentary capacity. 38 C.F.R. 3.355(c).
State law also supports the district courts instruction. See, e.g.,
Commercial Union Ins. Co. v. Schmidt, 967 F.2d 270, 272 (8th Cir. 1992)
(applying Minnesota law); Lynn v. Magness, 62 A.2d 604, 607 (Md. 1949)
(stating that the law presumes every man to be sane and to possess the requisite
mental capacity to change his beneficiary); Matthews v. Acacia Mut. Life Ins.
Co., 392 P.2d 369, 373 (Okla. 1964) (The law presumes every person sane, and
casts the burden of establishing insanity on the one asserting its existence.);
Estate of Galland v. Rosenberg, 630 S.W.2d 294, 297 (Tex. App. 1981) (A
presumption . . . exists that the decedent possessed the requisite mental capacity
to make his designation.). Finally, the instruction is consistent with our
jurisprudence in other areas of the law. For example, under federal law, the
capacity of a person offered as a witness is presumed, and in order to exclude a
witness on the ground of mental incapacity, the existence of the incapacity must
be made to appear. United States v. Haro, 573 F.2d 661, 667 (10th Cir. 1978).
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In sum, the district court correctly found that federal law generally
presumes a persons mental capacity in this context.
There is sufficient authority that a presumption instruction that tracks the burden
of proof as in this case is not reversible error. See, e.g., Lewis v. Owen, 395 F.2d
537, 542 (10th Cir. 1968); Dostal v. Balt. & Ohio R.R. Co., 189 F.2d 352, 355-56
(3d Cir. 1951); cf. Brown v. Henderson, 189 N.E. 41, 43 (Mass. 1934) (Lummus,
J., concurring in the result) (The statutory presumption . . . is wholly
overshadowed by that burden of proof, and can have no practical effect. . . . [It]
is like a handkerchief thrown over something also covered by a blanket. For this
reason, if the burden of proof is correctly stated to the jury, there can be no
reversible error in dealing with the presumption . . . .). Whether or not the
district court was correct to instruct the jury on the presumption of mental
capacity in this case, the instructions as a whole were not patently plainly
erroneous and prejudicial. Zimmerman, 848 F.2d at 1054.
wanted to move back to West Virginia. This comment does not create a genuine
issue as to her role in inducing the change of beneficiary.
On this record, no reasonable jury could have concluded that Evans exerted
undue influence over Decedent to cause him to make her the beneficiary of his
SGLI policy. The district court correctly granted summary judgment to the
OSGLI.
period, Decedent was performing his work in the Army Reserves adequately. He
was also writing some checks. Decedents physician concluded that in April
1998, he had no direct evidence from [his] conversations with Mr. Rice to
suggest that he was mentally incompetent to handle his own affairs.
Plaintiff bore the burden of proving Decedents mental incapacity. In the
light of the above facts, a reasonable jury could have ruled against her. We
therefore affirm the district courts denial of judgment as a matter of law.
CONCLUSION
We AFFIRM the district court on all issues.
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