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Chacon v. Ohio State Life Insurance Co.

United States District Court, D. Arizona

August 24, 2017

RAMON CHACON, an Arizona resident, Plaintiff,
v.
OHIO STATE LIFE INSURANCE COMPANY, a Texas corporation authorized to do and doing business within the State of Arizona, Defendant.

          ORDER

          H. Russel Holland United States District Judge.

         Motion for Partial Summary Judgment

         Defendant moves for partial summary judgment.[1] This motion is opposed.[2] Oral argument was requested and has been heard.

         Facts

         Plaintiff Ramon Chacon's father, Matthew Chacon ("Mr. Chacon"), applied for a life insurance policy with defendant Ohio State Life Insurance Company on January 3, 2001. Defendant issued a $400, 000 policy to Mr. Chacon which became effective on February 1, 2001.

         Mr. Chacon's policy defined a "beneficiary" as follows:

The beneficiary receives the death benefit of this policy upon the death of the insured. The beneficiary of this policy is named in the application unless a new beneficiary is later named, subject to the terms of the Change of Beneficiary provision.
If no named beneficiary survives the insured, then you or - in the event of your death - your estate will be named as the beneficiary. [3]

         On his application, which was considered part of the insurance contract, [4] Mr. Chacon designated his "primary" beneficiaries as: 1) "Aurora Chacon - spouse 50%[, ]" 2) "Israel Chacon[5] - son 25% Aurora Chacon to be trustee until son becomes of legal age[, ]" and 3) "Estate - of Mathew [sic] Chacon 25%[.]"[6] Although the application gave Mr. Chacon the option of naming contingent beneficiaries, Mr. Chacon did not name any contingent beneficiaries.[7] The beneficiary section of the application provides that "[s]ubject to applicable law, surviving beneficiaries of a stated class will share equally unless otherwise noted."[8]

         Mr. Chacon died on February 28, 2002, within the two-year contestability period. His wife, Aurora, was appointed the personal representative of his estate. In March 2002, defendant notified Mrs. Chacon that it would be conducting a contestability review before it paid any benefits under Mr. Chacon's policy. In April 2002, Mrs. Chacon submitted claim forms on behalf of all the beneficiaries. Defendant determined that Mr. Chacon had made material misrepresentations on his application and thus defendant rescinded the policy and denied the claims that Mrs. Chacon had submitted. After the claims were denied, Mrs. Chacon took no further action on behalf of any of the beneficiaries.

         In November 2013, after he reached legal age, plaintiff commenced this action in which he asserts a breach of contract claim and a claim for bad faith.

         Defendant now moves for summary judgment limiting plaintiff's damages for his breach of contract claim to $100, 000.

         Discussion

         Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The initial burden is on the moving party to show that there is an absence of genuine issues of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). If the moving party meets its initial burden, then the non-moving party must set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). In deciding a motion for summary judgment, the court views the evidence of the non-movant in the light most favorable to that party, and all justifiable inferences are also to be drawn in its favor. Id. at 255. "[T]he court's ultimate inquiry is to determine whether the 'specific facts' set forth by the nonmoving party, coupled with undisputed background ...


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