Sue Kemberling v. Metlife Life & Annuity Co.

FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
MARCH 1, 2010
JOHN LEY
CLERK
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
_____________
No. 08-12331
_____________
D.C. Docket No. 06-01741-CV-T-23-MAP
SUSAN KEMBERLING,
JOHN CIAMBRONE,
EDWARD KAUPLA,
as Co-Trustees of the Kemco Charitable
Trust Dated February 2, 1998,
Plaintiffs-Counter-Defendants-Appellants,
versus
METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT,
Defendant-Counter-Claimant-Appellee.
____________
Appeal from the United States District Court
for the Middle District of Florida
____________
(March 1, 2010)
Before MARCUS and HILL, Circuit Judges, and VOORHEES, District Judge.*
Honorable Richard L. Voorhees, United States District Judge for the Western District of*
North Carolina, sitting by designation.

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HILL, Circuit Judge:
Sue Kemberling, John Ciambrone and Edward Kaupla, co-trustees of the
Kemco Charitable Trust dated February 2, 1998 (the “Trust”), brought this action
against MetLife Life and Annuity Company of Connecticut (“MetLife”) for breach
of contract by failure to pay the proceeds of a life insurance policy issued by
MetLife to Lee Kemberling, naming the Trust as beneficiary. MetLife1
counterclaimed against the Trust for rescission of Kemberling’s life insurance
policy. After a trial, the jury returned a verdict for MetLife. The Trust appealed.
For the following reasons, we affirm.
I.
In 2005, Lee Kemberling was a seventy-nine-year-old successful engineer
and businessman. He was chief executive officer of Kemco Systems, Inc.
(“Kemco”), a 100-employee company in Clearwater, Florida, which he had
founded thirty years earlier. Kemberling had, however, a variety of serious
medical issues, including hypertensive cardiovascular disease, high and abnormal
cholesterol, high and abnormal triglycerides, and, high and abnormal blood
pressure.
The policy was issued by Travelers Life and Annuity Company (Travelers) to1
Kemberling on April 13, 2005. MetLife acquired Travelers on July 1, 2005, and assumed all its
obligations under the policy.
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As the bulk of Kemberling’s wealth was held in illiquid Kemco stock, his
estate planning portfolio consisted of a large percentage of life insurance, as a
means to pay estate taxes and to provide financial security for his family after his
death. However, most of these policies were second-to-die policies, leaving his
wife vulnerable should he predecease her, without adequate liquidity to maintain
her lifestyle and pay the premiums on the second-to-die policies. In 2004,2
Kemberling’s advisors suggested additional term insurance to eliminate that
exposure.
Kemberling consulted Wayne Weaver, an independent insurance broker
doing business as First Financial Resources, a sole proprietorship, in Clearwater,
Florida, who had previously secured life insurance policies for him. In fact, since
1997, Weaver had obtained approximately $40 million in life insurance coverage
for Kemberling, from at least seven different insurance carriers. MetLife was not
one of those carriers.
Weaver approached at least five insurance carriers seeking to acquire $10
million in life insurance benefits on Kemberling’s life alone. Despite his multiple
health issues, he was pre-approved by MetLife for purchase of a life insurance
A second-to-die life insurance policy is a two-person life insurance policy which pays2
only after both insureds have died.
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policy.3
Upon his pre-approval, on March 10, 2005, Kemberling signed a blank
MetLife application form entitled “Part One Application for Life Insurance.” He
did not complete the form. Above Kemberling’s signature was a declaration
stating, in relevant part:
(c) No agent is authorized: (1) to make, alter or discharge any
contract; (2) to waive or change any condition or provision of any
contract, application, or receipt; or (3) to accept any risk or make any
decision concerning insurability.
On that same day, Weaver executed a Life Producer Contract (the
“Contract”) with MetLife. In the Contract, MetLife and Weaver agreed that,
subject to the limitations in the Contract, Weaver would “act as [its] agent for the
purpose of soliciting applications for . . . [MetLife] products,” and to “collect the
first or single premiums with an application and any other premiums [MetLife]
may ask you to collect.” The Contract authorized Weaver to act as MetLife’s
“agent under applicable state insurance laws to solicit, negotiate and effect the
contracts contemplated hereunder.” Weaver submitted Kemberling’s insurance
The record is clear that MetLife’s underwriters pre-approved Kemberling based upon3
their review and receipt of: a December 2004 medical questionnaire; a December 2004 EKG
stress test; a urinalysis; his blood test results; statements from Kemberling’s personal physician;
and, Kemberling’s medical records for the last ten years, which revealed his hypertension,
cardiovascular disease, cholesterol problems, and high blood pressure.
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application to MetLife.
Two days after submission of the application, on March 12, in response to a
newspaper ad, Kemberling drove to a church for a full body scan by Life Line
Screening, which included a screening of his carotid arteries. On March 23, 2005,
the Life Line Screening Report was delivered to Kemberling’s home by Federal
Express. The report described a “finding of possible significance” related to his
right carotid artery.
One month later, on April 13, MetLife issued the $10 million life insurance
policy to Kemberling. The policy required an annual premium payment of
$720,000, with an initial payment of $60,000, due on the date of issuance. The
policy contained the following “Coverage Effective Date Endorsement”:
No insurance will take effect prior to the later of the Issue Date or the
Policy Date shown on the Policy Summary. Insurance issued will
take effect on the later of the Issue Date or the Policy Date shown on
the Policy Summary if, on the later of the Issue Date or the Policy
Date, the health and other conditions relating to insurability remain
complete and true as described in the application for this policy
(emphasis added).
On April 20, Weaver delivered the policy to Kemberling. One week after
that, on April 27, Kemberling had an appointment with his personal physician and
questioned him about the screening report. The physician referred him to a
specialist.
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On May 11, Kemberling met with the specialist. Although the specialist
considered Kemberling asymptomatic of carotid disease, he recommended a
definitive ultrasound. On May 23, Kemberling had a definitive cerebrovascular
duplex scan. On July 14, the specialist informed Kemberling that he had carotid
stenosis of the right carotid artery, with a blockage ranging from 80% to 99%.
On August 23, Kemberling informed Weaver of the carotid artery screening
and subsequent diagnosis. Three months later, in November , Kemberling died4
from causes unrelated to his carotid artery. As Kemberling died prior to the
effective date of the policy’s two-year incontestability clause, MetLife conducted a
routine investigation into the circumstances surrounding Kemberling’s death and
the issuance of the policy. In July 2006, MetLife rescinded Kemberling’s policy,5
denying coverage on the ground that the policy never went into effect as
Kemberling failed to disclose the Life Line Screening test. Two months later the
Trust brought this action.
At the conclusion of the trial, the district court rejected the Trust’s request
As owner of the policy, the Trust paid MetLife a total of $675,000 in premiums from the4
date the policy was issued in April 2005, to Kemberling’s death in November 2005. Of that,
some $615,000, or 90%, of these premiums were accepted by MetLife after August 2005, the
date Kemberling informed Weaver of the carotid artery screening and subsequent diagnosis.
An incontestability clause in an insurance policy prevents an insurer from revoking5
coverage because of alleged misstatements by the insured after a specified period, in this case,
two years.
6

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that it instruct the jury they could find that Weaver was MetLife’s actual or
apparent agent after delivery of the Policy so that his knowledge of the Life Line
Screening Test result could be imputed to MetLife, thereby effectuating coverage
under the policy. In so ruling, the court stated:
Although an insurer has constructive knowledge of facts disclosed to
its agent while acting within the scope of his agency, a reasonable
jury could not have concluded from the evidence adduced at trial that
Kemberling disclosed the pertinent information to Weaver when
Weaver acted as MetLife’s authorized agent. Weaver’s actual
authority to act for MetLife is defined in the Life Producer Contract,
which authorizes Weaver to solicit applications, to submit completed
applications to MetLife, to collect first or single premiums along with
a policy application, and to collect such subsequent premiums as
MetLife asks Weaver to collect. After Weaver completed the only
acts he was authorized to perform, Weaver’s authority under the Life
Producer Contract to act for MetLife with respect to the Kemberling
policy ceased, and - absent some other source of actual or apparent
authority - he reverted to the role of a broker acting solely on behalf
of his long-time client Kemberling . . . Because the record includes no
other evidence of Weaver’s actual or apparent authority to act for
MetLife with respect to the Kemberling policy and no evidence that
Weaver learned about the Life Line screening during his service as a
soliciting agent, any information Weaver may have obtained from
Kemberling after the issuance of the policy could not be imputed to
MetLife.
The district court, therefore, removed the issue of Weaver’s agency status
with MetLife from the jury’s consideration. This is the primary issue on appeal.6
The jury may have been entitled to find for the Trust on its other theory of coverage,6
namely, that Kemberling had no duty to supplement the initial application. The jury found,
however, that Kemberling made a material misrepresentation to MetLife by failing to notify it of
7

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II.
We review the district court’s denial of a motion for judgment as a matter of
law de novo, viewing the evidence in the light most favorable to the non-moving
party. D’Angelo v. School Bd., 497 F.3d 1203, 1208 (11th Cir. 2007). We review
the district court’s refusal to give a proposed jury instruction for abuse of
discretion. Palmer v. Bd. of Regents, 208 F.3d 969, 973 (11th Cir. 2000). Under
this deferential standard, we will reverse “if we are left with a substantial and
ineradicable doubt as to whether the jury was properly guided in its deliberations.”
Carter v. DecisionOne Corp., 122 F.3d 997, 1005 (11th Cir. 1997). The jury
charge must be considered as a whole. United States v. Starke, 62 F.3d 1374,
1381 (11th Cir. 1995). There is no requirement to submit a question to the jury
unless the evidence is of such a character that it could warrant the jury in finding a
verdict [on that question] in favor of the requesting party. Anderson v. Liberty
Lobby Inc., , 477 U.S. 242, 250-51 (1986). A district court does not abuse its
discretion in refusing to instruct the jury on an issue not properly supported by the
record. Id.
the Life Line screening or its results, and entered a verdict for MetLife on its counterclaim for
recision of the contract. We find no merit to the Trust’s appeal of the district court’s refusal to
direct a verdict for it on the duty to supplement issue. Nor do we find any merit in the claim that
the district court abused its discretion if refusing several requested jury instructions on this issue.
Nor did the district court abuse its discretion in permitting the testimony of Eugene Zimmerlink
as to industry underwriting guidelines, a topic well within his personal knowledge.
8

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Our review of the record in this case supports the district court’s ruling that
there was insufficient evidence upon which to instruct the jury that they were
entitled to find that Weaver was MetLife’s agent at the time he learned of
Kemberling’s Life Line test results. First, the record evidence is clear that Weaver
was an independent insurance agent/broker, not the general agent of MetLife. See
Amstar Ins. Co. v. Cadet, 862 So.2d 736, 739 (Fla. 3d DCA 1997). Weaver was7
not bound by contract to work for or solicit insurance for MetLife only. Indeed,
Weaver had secured life insurance coverage from numerous other insurance
companies for Kemberling and his family over the prior seven years. Weaver
testified that he was a middleman acting in the best interests of Kemberling.
Furthermore, the Contract between MetLife and Weaver specifically
identified Weaver as an independent contractor and not an employee of MetLife.
Weaver was not even able to directly contact MetLife, instead having to go
through his brokerage general agent, Albert Banks and a brokerage general agency
called Advanced Planning Services (“APS”). Of the hundreds of insurance
policies sold by Weaver, this was the first and only MetLife policy he sold.
Therefore, Weaver was an independent agent/broker.
Although the issue of the applicable law was never decided by the court, the parties agree7
that the Florida and Wisconsin law of agency is “essentially the same” on agency and recession.
9

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During the process of applying for the MetLife policy, the parties agree that
Weaver acted as MetLife’s agent. The Contract between Weaver and MetLife,
however, strictly limited Weaver’s authority to three things: the solicitation of
applications; the taking of applications; and, the collection of initial premiums.
Once these things were accomplished, the Contract specifically prohibited Weaver
from making, altering or discharging any contract of insurance; waiving or
changing any condition of any contract, application, or receipt; or accepting any
risk or making any decision concerning insurability.” MetLife, therefore,
explicitly disavowed any intention to be bound by Weaver’s actions after issuance
of the policy. The Contract gave Weaver no authority to bind MetLife or to
undertake any acts after issuance of the policy in the absence of an explicit request
by MetLife.
In Amstar Ins. Co., the insurance application stated that the putative agent
had the “authority to solicit, receive, and transmit applications for insurance
contracts, but had “no right” to “make, alter, modify or discharge any contract or
policy issued on the basis of this application.” 862 So.2d at 740. This language
was found to put the insured on notice of the limitations on the putative agent’s
authority to act on behalf of the insurer. Id.
This same language is found in the MetLife policy application signed by
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Kemberling. It, too, put Kemberling on notice that Weaver had no authority to act
on behalf of MetLife after the policy was issued. There was no evidence,
therefore, from which a reasonable jury could have concluded that Weaver was
either MetLife’s agent – actual or apparent – after the issuance of the policy.8
In the absence of evidence that Weaver was some sort of agent for MetLife
after the policy issued, there is no basis for imputing Weaver’s knowledge of the
Life Line test results to MetLife. The Contract explicitly stated that Weaver could
not accept risks, make or alter policies, extend policy obligations, or incur
liabilities for MetLife. We have long ago recognized that “Florida case law
acknowledges the general principle of agency law that knowledge of, or notice to
an agent or employee is imputed to the principal [only] when it is received by the
employee within the scope of her employment, and when it is in reference to
matters over which the employee’s authority extends.” Computel, Inc. v. Emery
Air Freight Corp., 919 F.2d 678, 685 (11 Cir. 1990). As the district court held,th
“[a]fter Weaver completed the only acts he was authorized to perform, Weaver’s
authority under the Life Producer contract to act for MetLife with respect to the
The Trust argues that Weaver’s provision to Kemberling of certain illustrations about8
amendments to the policy after it was issued, on stationery bearing the MetLife letterhead, proves
their claim of apparent agency. The evidence is that Weaver ran these illustrations for his own
benefit and not at the request of MetLife. In fact, Weaver had to go through APS to even request
the illustrations. He could not go directly to MetLife. This evidence does not support apparent
agency.
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Kemberling policy ceased, and . . . he reverted to the role of a broker acting solely
on behalf of his long-time client Kemberling.”
Since, one cannot bind the insurer when the insurance application makes it
clear that there is no authority to do so, the district court correctly held that there
was no evidence in the record that Weaver had any sort of authority to act for
MetLife after the policy was issued, and, therefore, information Weaver may have
obtained from Kemberling after the issuance of the policy could not be imputed to
MetLife.
The jury found that Kemberling was obliged to tell MetLife about the
carotid artery screening and that his failure to do so entitled MetLife to rescind the
policy. We agree.
III.
We affirm the judgment of the district court in favor of MetLife and against
the Trust.
AFFIRMED.
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