Kuehl v. First Colony Life Ins. Co.

T erence K uehl , appellanT, v . F irsT colony
liFe insurance company , appellee .
749 N.W.2d 491
Filed May 13, 2008. 	No. A-06-1170.
1. Insurance: Contracts: Appeal and Error. The interpretation of an insurance
policy is a question of law, in connection with which an appellate court has
an obligation to reach its own conclusions independently of the determination
reached by the trial court.
2. Summary Judgment. Summary judgment is proper when the pleadings and
evidence admitted at the hearing disclose that there is no genuine issue as to any
material fact or as to the ultimate inferences that may be drawn from those facts
and that the moving party is entitled to judgment as a matter of law.
3. Summary Judgment: Appeal and Error. In reviewing a summary judgment, an
appellate court views the evidence in a light most favorable to the party against
whom the judgment is granted and gives such party the benefit of all reasonable
inferences deducible from the evidence.
4. Insurance: Contracts. Insurance contracts, like other contracts, are to be con-
strued according to the sense and meaning of the terms which the parties have
used. If the terms of the contract are clear and unambiguous, they are to be taken
and understood in their plain, ordinary, and popular sense.
5. ____: ____. An ambiguity exists in an insurance contract only when the policy can
be interpreted to have two or more reasonable meanings.
6. ____: ____. The language of an insurance policy should be read to avoid ambi-
guities, if possible, and the language should not be tortured to create them.
7. Appeal and Error. An appellate court is not obligated to engage in an analysis
that is not needed to adjudicate the controversy before it.
8. Insurance: Fraud: Contracts. In the absence of fraud or misrepresentation, a
health defect existing but undetected on the date of the medical examination can-
not later be advanced as a breach of a continued insurability clause.
9. ____: ____: ____. An applicant for life insurance has no duty to voluntarily
inform the insurer of new information about his health which arises after a medical
examination by the insurer.
Appeal from the District Court for Douglas County: J ohn D.
harTigan , J r ., Judge. Affirmed.
Richard J. Rensch, of Raynor, Rensch & Pfeiffer, P.C., for
appellant.
Kyle Wallor and John M. Walker, of Lamson, Dugan &
Murray, L.L.P., for appellee.
sievers , carlson, and moore, Judges.
KuehL v. FIRST CoLoNy LIFe INS. Co. 	661
Cite as 16 Neb. App. 661
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:16 AM CST

moore, Judge.
INTRoDuCTIoN
In this declaratory judgment action, Terence Kuehl sought
to establish his entitlement to the proceeds of a life insur-
ance policy issued by First Colony Life Insurance Company
to Terence’s deceased wife, Deborah Kuehl. The district court
for Douglas County entered an order sustaining the company’s
motion for summary judgment and dismissing the action, find-
ing that Deborah failed to satisfy a condition precedent required
by the company and that the policy therefore never went into
effect. We affirm the decision of the district court.
BACKGRouND
In November 2003, Deborah obtained a life insurance policy
from the company. Deborah died on March 23, 2004. on April
12, Terence, as primary beneficiary under the policy, submit-
ted a “Proof of Loss” to the company. Following an investiga-
tion, the company denied the claim for death benefits. on July
30, Terence filed a petition for declaratory judgment, seeking
a declaration that the company wrongfully denied Terence’s
claim for death benefits and that the company is obligated to
pay the $600,000 death benefits together with costs pursuant
to Neb. Rev. Stat. § 44-359 (Reissue 2004). In its answer, the
company admitted that it issued a life insurance policy. Also in
its answer, the company, after admitting and denying various
allegations, affirmatively alleged that Deborah made material
misrepresentations during the course of the application and
delivery process which rendered the policy void ab initio and,
further, that Deborah failed to meet all conditions precedent to
the policy by failing to advise the company of the change in
her health status.
on May 10, 2006, the company filed a motion for summary
judgment, and a hearing was held on the motion on July 17.
Various depositions, affidavits, and discovery responses were
admitted in evidence, which we now summarize.
The facts of this case are largely undisputed. In August
2003, Steven Violett, an independent insurance agent who had
obtained life insurance policies for the Kuehls in the past, sug-
gested that Deborah could obtain a better rate if she purchased
662 	16 NeBRASKA APPeLLATe RePoRTS

a $600,000 life insurance policy from the company as a substi-
tute for two existing $300,000 policies issued by other compa-
nies. on September 5, Deborah completed an application to the
company. In this application, Deborah checked the box which
indicated that she currently uses tobacco or other nicotine prod-
ucts. At the bottom of the application form, immediately above
Deborah’s signature, is the following language:
I represent: (1) the statements and answers given in the
application are true, complete, and correctly recorded to
the best of my knowledge and belief . . . .
I agree that: (1) I will notify the Insurer if any statement
or answer given in the application changes prior to policy
delivery; and (2) except as provided in the Temporary
Insurance Application and Agreement, if any, insurance
will not begin unless all persons proposed for insurance
are living and insurable as set forth in the application at
the time a policy is delivered to the owner and the first
modal premium is paid.
(emphasis omitted.)
“Part I” of the application was completed by Deborah on
September 5, 2003. “Part II” of the application, the “Medical
history,” was completed on September 12 in conjunction with
the insurance medical examination conducted on that day by
Jo Myers, a medical examiner retained by the company. Myers
testified in her deposition that she completed the information
on the medical history by recording the answers given to her by
Deborah. In addition to completing the written medical history,
Myers obtained Deborah’s height, weight, blood pressure, and
pulse, along with an eKG reading. The medical questions asked
by Myers of Deborah were preceded with this language: “In
the past 10 years, have you had, been treated for, or been medi-
cally advised to be treated for, any of the following?” Deborah
answered “No” to the questions concerning bronchitis, cancer,
coughing up blood, chronic lung disorder, and tumor, mass, or
lump. In the “Details” section of the medical history, Myers
recorded that Deborah was last seen 5 years ago for a sinus
infection and put on an antibiotic and that she was seen by her
gynecologist in January 2003 for a “Pap and a mammogram.”
Also noted in this section was that Deborah’s mother died of
KuehL v. FIRST CoLoNy LIFe INS. Co. 	663
Cite as 16 Neb. App. 661

lung cancer at age 58 and that her father had alcoholism and
died of pneumonia at age 62. Immediately above Deborah’s
signature on the medical history form is the identical language
noted above from part I of the application.
Due to a problem with the eKG machine, Myers was
required to obtain another eKG reading from Deborah, which
she did at Deborah’s home on october 8, 2003. Myers testified
that Deborah did not advise her of any changes in her health
since completing the medical history on September 12.
The company issued a life insurance policy on November 7,
2003, which was delivered to Deborah by Violett on November
14. The “Policy Delivery Acknowledgment” form was signed
by Deborah on November 14, and it stated:
By signing below, I confirm that on the Date of this
Acknowledgment: (1) the Policy identified by the number
above was delivered to me; (2) the first modal premium
for this Policy was paid; and (3) all persons proposed for
insurance under this Policy were living and insurable as
described in each part of the application for this Policy.
Coverage under this Policy will begin on the date this
Acknowledgment is signed and given to a Company rep-
resentative along with the first modal premium payment
provided all persons proposed for insurance under this
Policy are living and insurable as described in each part
of the application for this Policy.
The first premium payment was made by Deborah. Violett
indicated that Deborah did not advise him that she was spit-
ting up blood, nor that she had a chronic lung disorder or lung
cancer, between the time of the application and the delivery of
the policy.
According to Terence, Deborah began having trouble with
spitting up blood around the middle of october 2003. Dr. Martin
Mancuso, who practices internal medicine, was Deborah’s pri-
mary care physician since 1986. Mancuso testified that he treated
Deborah several times for chronic bronchitis and other respira-
tory infections prior to 2003. on october 9, 2003, Deborah had
an office visit with Mancuso in which she indicated that she had
been coughing up blood for 2 to 3 weeks. An x ray performed on
october 9 in Mancuso’s office revealed a “suspicious” shadow
664 	16 NeBRASKA APPeLLATe RePoRTS

or mass which Mancuso discussed with Deborah, at which time
he “probably” said it could be cancer. Mancuso’s impressions
at the time of the october 9 visit included chronic lung disease.
Following a CT scan on october 14, a positron emission tomog-
raphy scan on october 16, and a biopsy on october 30, Deborah
was diagnosed with “[m]etastatic non-small cell carcinoma.” on
November 3, Deborah had a consultation for potential treatment
of the carcinoma of her lung. Deborah passed away on March
28, 2004, as a result of the lung cancer.
Terence testified that between September 5 and November 14,
2004, he did not discuss with Violett the change in Deborah’s
health. Violett came to the Kuehls’ place of business on october
23 to pick up the premium check. Neither Terence or Deborah
told Violett at that time about Deborah’s spitting up blood or
that x rays revealed a tumor in her lung. Nor did the Kuehls
advise Violett of Deborah’s medical condition at the time Violett
delivered the policy on November 14. Terence admitted that as
of November 14, both he and Deborah knew that she had been
diagnosed with, and was actively treating for, lung cancer.
The vice president and chief underwriter for the company
stated in his affidavit that Deborah’s failure to disclose coughing
up blood and the diagnostic testing she underwent were material
to the underwriting of the policy and that had the company been
informed of these events, it would not have allowed the policy
to be delivered and would have made no offer of insurance until
the cause of the coughing up of blood was determined, the test-
ing was completed, and a diagnosis was made. he stated that
had the company been advised of the diagnosis of lung cancer,
it would have declined any insurance coverage on Deborah’s
life. he further opined that Deborah was not insurable under the
company on November 14, 2003, the date of policy delivery.
on october 10, 2006, the district court entered a detailed,
eight-page order, granting the company’s summary judgment
motion 	and 	dismissing 	Terence’s 	petition 	with 	prejudice.
Terence timely appeals.
ASSIGNMeNTS oF eRRoR
Terence asserts, combined and restated, that the district
court erred in finding that the insurance policy was plain and
KuehL v. FIRST CoLoNy LIFe INS. Co. 	665
Cite as 16 Neb. App. 661

unambiguous and in granting the company’s motion for sum-
mary judgment.
STANDARD oF ReVIeW
[1] The interpretation of an insurance policy is a question of
law, in connection with which an appellate court has an obliga-
tion to reach its own conclusions independently of the determi-
nation reached by the trial court. Jones v. Shelter Mut. Ins. Cos.,
274 Neb. 186, 738 N.W.2d 840 (2007).
[2,3] Summary judgment is proper when the pleadings and
evidence admitted at the hearing disclose that there is no gen-
uine issue as to any material fact or as to the ultimate inferences
that may be drawn from those facts and that the moving party is
entitled to judgment as a matter of law. Peterson v. Ohio Casualty
Group, 272 Neb. 700, 724 N.W.2d 765 (2006). In reviewing a
summary judgment, an appellate court views the evidence in a
light most favorable to the party against whom the judgment is
granted and gives such party the benefit of all reasonable infer-
ences deducible from the evidence. Id.
ANALySIS
Is Insurance Policy Plain and Unambiguous?
[4-6] Insurance contracts, like other contracts, are to be
construed according to the sense and meaning of the terms
which the parties have used. If the terms of the contract are
clear and unambiguous, they are to be taken and understood
in their plain, ordinary, and popular sense. Fokken v. Steichen,
274 Neb. 743, 744 N.W.2d 34 (2008). An ambiguity exists in
an insurance contract only when the policy can be interpreted
to have two or more reasonable meanings. Id. The language of
an insurance policy should be read to avoid ambiguities, if pos-
sible, and the language should not be tortured to create them.
Hillabrand v. American Fam. Mut. Ins. Co., 271 Neb. 585, 713
N.W.2d 494 (2006).
The district court in this case found that the condition prec-
edent requiring the insurance applicant to “‘notify the Insurer if
any statement or answer given in the application changes prior
to policy delivery’” is clear and unambiguous. The court stated
that a literal and plain reading of the clause demonstrates that
666 	16 NeBRASKA APPeLLATe RePoRTS

it required the insurance applicant to inform the company of
any change in the statements made in the application, includ-
ing whether the applicant had been treated for “coughing up of
blood” or “cancer.” The court found that there is no other mean-
ing which can be given to these policy provisions and that no
ambiguity exists which requires construction.
[7] In his brief, Kuehl does not argue that the language
regarding notification of changes to answers given in the appli-
cation is ambiguous. Rather, he concentrates on the language
regarding being “insurable” at the time the policy is delivered.
however, the district court did not address this language in
its decision. The focus of the district court was upon the con-
tractual obligation of the applicant to “‘notify the Insurer if
any statement given in the application changes prior to policy
delivery.’” We agree with the district court that this provision
is clear and unambiguous and, as discussed below, is disposi-
tive of the case. Therefore, we need not address the issue of
whether the language regarding being “insurable” is ambiguous.
An appellate court is not obligated to engage in an analysis that
is not needed to adjudicate the controversy before it. Fokken v.
Steichen, supra.
Did Deborah Fail to Meet Condition Precedent?
The district court found that it is undisputed that between
the time Deborah signed the application indicating she had
never coughed up blood or had cancer and the effective date of
her policy, her answers to those questions changed. The court
concluded that Deborah had an obligation to update the answers
given in her application for those changes in health and that
because she failed to meet that condition precedent, the insur-
ance contract never became effective.
Nebraska case law has recognized in the insurance context
that a condition precedent must be performed before the agree-
ment becomes a binding contract, and a condition precedent
must be fulfilled before a duty to perform the contract arises.
See Coppi v. West Am. Ins. Co., 247 Neb. 1, 524 N.W.2d 804
(1994). This proposition was applied relative to a health insur-
ance contract in Donaldson v. Farm Bureau Life Ins. Co., 232
Neb. 140, 440 N.W.2d 187 (1989). In that case, the Nebraska
KuehL v. FIRST CoLoNy LIFe INS. Co. 	667
Cite as 16 Neb. App. 661

Supreme Court held that a condition precedent to the formation
of the insurance contract was a requirement that the insured not
have existing health coverage with another insurer and that the
insured’s failure to cancel other coverage precluded the forma-
tion of a new policy of insurance with the defendant. See, also,
Adolf v. Union Nat. Life Ins. Co., 170 Neb. 38, 101 N.W.2d 504
(1960) (failure of applicant to meet condition to submit to medi-
cal examination resulted in no contract of insurance).
Kuehl argues that the district court’s decision is directly
contrary to the holding of Ortega v. North American Co. for
L. & H. Ins., 187 Neb. 569, 193 N.W.2d 254 (1971). The facts
of Ortega are very similar to the case at hand, in that between
the time of the application for life insurance and the receipt
of the policy, the insured experienced an episode of cough-
ing up blood, consulted with a doctor, and had x rays taken
which showed a shadow on his lung, indicating a possible
malignancy. he died from complications resulting from surgery
for removal of his lung, which occurred shortly after deliv-
ery of the policy. The insurer rejected his widow’s claim, and
she brought a declaratory judgment action. The district court
entered judgment for the insurer following a jury verdict. The
Supreme Court reversed the judgment, finding that the insured
did not breach any duty to disclose material information about
his health which he learned after the application and medical
examination by the insurer.
[8] The focus of the Supreme Court’s decision in Ortega was
on the following policy language contained in the application:
“The insurance policy hereby applied for shall not be con-
sidered in force until a policy shall have been issued by the
Company . . . and said policy received and accepted by the
owner and the first premium paid thereon, all during the
continued insurability of the person to be insured . . . .”
187 Neb. at 571, 193 N.W.2d at 255-56 (emphasis omitted).
The Supreme Court analyzed the continued insurability clause,
noting that its function is to protect the insurer against sudden
changes in health arising in the interval between a medical
examination and the consummation of the policy. The court
found that the approval by the insurer of the application, the
subsequent delivery of the policy, and the acceptance of the
668 	16 NeBRASKA APPeLLATe RePoRTS

premium raised a presumption that all conditions precedent
such as continued insurability had been met and that this pre-
sumption was sufficient to sustain the plaintiff’s burden of proof
unless the insurer introduced evidence to rebut it. The court
noted that the insurer set up the conditions and requirements by
which it would determine the insurability of the insured, namely
a medical examination and the insurer’s doctor’s approval of the
insured as insurable. The court found that the insured complied
in every respect with the requirements and conditions that the
insurer required. The court held that, in the absence of fraud or
misrepresentation, a health defect existing but undetected on the
date of the medical examination cannot later be advanced as a
breach of a continued insurability clause.
[9] There are two distinctions between Ortega, supra, and the
case at hand which render its holding inapplicable to this case:
the first difference being a factual distinction and the second,
more important, difference being the policy language. First, in
Ortega, neither the insured nor his doctors, including the thoracic
surgeon, had any confirmed information as to the status of the
malignancy until the surgery which resulted in his death, which
was at least 2 days after delivery of the policy. In the present
case, Deborah had a confirmed diagnosis of lung cancer 2 weeks
before delivery of the policy. More important, however, is the
difference in the policy language. In Ortega v. North American
Co. for L. & H. Ins., 187 Neb. 569, 193 N.W.2d 254 (1971), the
insurer’s position that the insured breached a condition precedent
to coverage related solely to the continued insurability language
of the policy. In Ortega, there was no contractual obligation of
the insured to notify the insurer of any change in health status
before delivery of the policy. The court in Ortega referred to
the general rule that an applicant for life insurance has no duty
to voluntarily inform the insurer of new information about his
health which arises after a medical examination by the insurer.
See Merriman v. Grand Lodge Degree of Honor, 77 Neb. 544,
110 N.W. 302 (1906) (insured not required to inform insurer
of evidence of pregnancy discovered subsequently to physical
examination and application for life insurance).
The difference between this case and Ortega, supra, is that in
this case the insured had a contractual duty to inform the insurer
KuehL v. FIRST CoLoNy LIFe INS. Co. 	669
Cite as 16 Neb. App. 661

of new information concerning statements in the application
prior to policy delivery. Nebraska case law has not addressed
this specific language in the context of a life insurance contract.
At least one other jurisdiction has addressed a policy provision
very similar to the one at issue here in the context of conditions
precedent to formation of the contract. The Sixth Circuit dis-
cussed the effect of the following policy provision contained in
an application for life insurance: “‘I understand that if my health
or any of my answers or statements change prior to delivery of
the policy, I must so inform the [insurer] in writing.’” Abella v.
Jackson National Life Ins. Co., No. 97-3498, 1998 WL 708706
at *1 (6th Cir. oct. 1, 1998) (unpublished disposition listed in
table of “Decisions Without Published opinions” at 165 F.3d
26 (6th Cir. 1998)). In the application, the insured stated that
he had never had any indication of chest pain, discomfort, or
palpitations, that he had not had an electrocardiogram or x ray,
and that he had not been advised to have any such diagnostic
tests. After completion of the application, but before delivery
of the policy, the insured experienced chest pains for which he
underwent testing. The insured did not inform the insurer of
these changes prior to delivery of the policy. The Sixth Circuit
held that the provision requiring the insured to inform the
insurer of changes in his answers was a condition precedent to
coverage and, accordingly, affirmed the district court’s grant of
summary judgment in favor of the insurer. See, also, Willard v.
Valley Forge Life Ins. Co., 218 F. Supp. 2d 1197, 1201 (C.D.
Cal. 2002) (application provided insurance would “not take
effect until the application is approved and accepted . . . and
the policy is delivered while the health of each person proposed
for insurance and other conditions remain as described in the
application” (emphasis omitted)).
We find the rationale in Abella, supra, to be persuasive. We
conclude that the requirement in the company’s policy that
the insured notify the insurer of any changes in statements
given in the application for insurance prior to policy delivery
was a condition precedent to the formation of the insurance
contract. This notification requirement was a condition of the
contract which Deborah acknowledged and signed, and which
she failed to satisfy. Deborah’s answers to several questions in
670 	16 NeBRASKA APPeLLATe RePoRTS

the application changed between September 12, 2003, the date
of the medical history and examination, and November 14, the
date of the policy delivery. Specifically, the questions relating
to having been treated for coughing up blood, cancer, chronic
lung disorder, and tumor, mass, or lump required a change in
answer from “No” to “yes” during this time period. Deborah’s
failure to notify the company of the changes precluded the for-
mation of the insurance contract.
We conclude that the district court did not err in finding that
the life insurance policy never went into effect and in granting
summary judgment in favor of the company.
CoNCLuSIoN
Because a condition precedent to the formation of the con-
tract of life insurance was not fulfilled, the life insurance policy
never went into effect. We affirm the district court’s grant of
summary judgment in favor of the company.
aFFirmeD.
sTaTe oF nebrasKa , appellanT, v .
emily m. hansen , appellee .
749 N.W.2d 499
Filed May 13, 2008. 	No. A-07-1014.
1. Judgments: Appeal and Error. With respect to questions of law, an appellate
court has an obligation to reach an independent conclusion, irrespective of the
decision of the court below.
2. Statutes. When the words of a statute are plain, direct, and unambiguous, no
interpretation is necessary or will be indulged to ascertain meaning.
3. Sentences: Prior Convictions. Neb. Rev. Stat. § 60-6,197.03 (Supp. 2005) pro-
vides enhanced penalties by enhancing the conviction presently before the court
for which sentencing is occurring in the event there are prior convictions.
4. Sentences: Prior Convictions: Drunk Driving: Blood, Breath, and Urine Tests.
Neb. Rev. Stat. § 60-6,197.02 (Supp. 2005) is structured by first articulating the
two different crimes for which there can be enhancement because of a prior con-
viction. The first category of crime is for a violation of Neb. Rev. Stat. § 60-6,196
(Reissue 2004), driving under the influence, and the second category of crime is
for a violation of Neb. Rev. Stat. § 60-6,197 (Reissue 2004), refusal to submit to a
chemical test.
STATe v. hANSeN 	671
Cite as 16 Neb. App. 671