United States District Court, N.D. Alabama, Southern Division
ADVANCE TRUST & LIFE ESCROW SERVICES, LTA, as securities intermediary for LIFE PARTNERS POSITION HOLDER TRUST, on behalf of itself and others similarly situated, Plaintiff,
PROTECTIVE LIFE INSURANCE COMPANY, Defendant.
OWEN BOWDRE CHIEF UNITED STATES DISTRICT JUDGE.
matter comes before the court on “Defendant’s
Motion for Judgment on the Pleadings, ” in which
Defendant Protective Life Insurance Company moves to dismiss
Plaintiff Advance Trust & Life Escrow Services’
entire complaint-which involves life insurance policies
issued in 1986, 1998, 1999, and 2005-as time barred, either
by Alabama’s applicable statute of limitations or its
common-law rule of repose. (Docs. 25 & 26). This
Memorandum Opinion also addresses “Plaintiff’s
Motion for Leave to File an Amended Complaint Pursuant to
Fed.R.Civ.P. 15, ” in which Plaintiff Advance Trust
seeks to “clarify and reinforce what [Defendant]
apparently disputes.” (Doc. 32).
receiving Defendant Protective Life’s motion for
judgment on the pleadings, the court ordered Advance Trust to
show cause why the court should not dismiss its complaint as
untimely, (doc. 29); Advance Trust responded on November 19,
2018, (doc. 31), and simultaneously filed a motion for leave
to amend its complaint, (doc. 32). With leave of the court,
Defendant Protective Life filed briefs opposing Advance
Trust’s response to the motion for judgment on the
pleadings and Advance Trust’s motion to file an amended
complaint. (Docs. 42 & 44). And Advance Trust filed a
reply in support of its motion to amend. (Doc. 45).
the two motions fully briefed, the court considers the issues
ripe for review. For the reasons stated below, the court will
DENY Defendant’s motion for judgment on the pleadings
and will GRANT Plaintiff’s motion for leave to amend
its complaint, if Plaintiff still wishes to amend in view of
this Memorandum Opinion.
Protective Life Insurance Company offers standardized
“universal life” policies with “flexible
premiums, ” which serve as both life insurance and
investment vehicles. Through a chain of assignments, Advance
Trust ultimately came to own Protective Life flexible premium
policies issued in the years 1986, 1998, 1999, and 2005.
purposes of Advance Trust’s complaint, these policies
contain identical operative language as to how Protective
Life should calculate premiums. The policies require the
insured to pay minimum premiums designed to cover “cost
of insurance” charges and certain other specified
expenses. COI charges represent the insurer’s mortality
risk, also known as the “mortality charge” or the
“pure cost of protection.” (Doc. 1 at ¶ 2).
As flexible premium policies, the policies allow the insured
to pay in excess of the required minimum premiums, with the
surplus payment added to the investment portion of the
product, or to the “policy value.” Protective
Life deducts the COI charges directly from the
insured’s policy value every month, so each COI
deduction constitutes a transfer of funds from the insured to
amount of the COI deduction “is determined at the end
of each policy month.” (Doc. 1-1 at 15). Determining
the monthly cost of insurance involves determining the
“COI rate, ” which “is based on the sex,
attained age, and rate class of the Insured and on the policy
year.” (Doc. 1-1 at 16). The policies include COI Rate
Tables that forecast increased COI rates as the insured ages.
(Doc. 1-1 at 24). But the policies also provide that
“[m]onthly cost of insurance rates will be
determined by [Protective Life], based on [its]
expectations as to future mortality
experience” and that “[a]ny change in
the monthly cost of insurance rates will be on a uniform
basis for insureds of the same class.” (Doc. 1-1 at 16)
monthly COI rates invariably increase as the insured ages and
the pure cost of protection commensurately rises, Advance
Trust alleges the policies obligate Protective Life to adjust
the Rate Table, which determines how much the COI
rate should increase, as expectations of future mortality
experience change. Advance Trust claims Protective Life has
failed to “periodically review the COI rates to confirm
that they correctly capture the insurer’s projected
mortality costs” and to reduce the COI Rate Tables when
expectations as to future mortality experience decline. (Doc.
1 at ¶ 3).
Life appears to have based the COI Rate Tables in the
policies at issue on the “1980 CSO Mortality Table,
” an industry-standard mortality table insurers
commonly used at the time of policy issuance to calculate
appropriate COI rates. The American Academy of Actuaries has
released at least two updated mortality tables since 1980-one
in 2001 and one in 2015- each one showing improved life
expectancy rates compared to the preceding table. (Doc. 1 at
¶ 6). But since issuing these policies, Protective Life
has never altered the Rate Tables, meaning the premiums
increase according to the same schedule as initially set out
Trust filed this lawsuit individually and on behalf of other
policyholders on August 13, 2018, alleging one count of
breach of contract. The complaint alleges that Protective
Life breached the contract “by deducting COI charges
calculated from COI rates not based on its expectations as to
future mortality experience.” (Doc. 1 at ¶ 37).
Advance Trust specifically identifies the alleged overcharges
as stemming from Protective Life failing to reduce COI rates
based on improved mortality, in breach of its contractual
duty. (Id.). Advance Trust also alleges that
Protective Life breached the policies by using factors other
than expectations as to future mortality to calculate COI
rates. (Doc. 1 at ¶ 38).
Life filed an answer and then filed the motion for judgment
on the pleadings now before this court. (Docs. 16 and 25).
Advance Trust filed a response, as well as a motion to amend
its complaint. (Doc. 31–32). The parties have fully
briefed the motions, and the issue is now ripe for this
Standards of Review
filed a motion for judgment on the pleadings pursuant to
Federal Rule of Civil Procedure 12(c), and Plaintiff filed a
motion for leave to amend its complaint pursuant to Federal
Rule of Civil Procedure 15(a). The court articulates the
proper standard for each in turn.
Motion for Judgment on the Pleadings Standard
12(c) of the Federal Rules of Civil Procedure allows a party
to move for judgment on the pleadings after the pleadings are
closed, but early enough not to delay trial. SeeFed.
R. Civ. P. 12(c). A judgment on the pleadings is appropriate
“when there are no material facts in dispute, and
judgment may be rendered by considering the substance of the
pleadings and any judicially noticed facts.”
Horsley v. Rivera, 292 F.3d 695, 700 (11th Cir.
2002). To determine whether the movant is entitled to a
judgment on the pleadings, the court should “accept as
true all material facts alleged in the non-moving
party’s pleading, and . . . view those facts in
the light most favorable to the non-moving party.”
Perez v. Wells Fargo N.A., 774 F.3d 1329, 1335 (11th
Cir. 2014) (emphasis added).
court analyzes a Rule 12(c) motion for judgment on the
pleadings the same way as a Rule 12(b)(6) motion to dismiss
for failure to state a claim upon which relief can be
granted. See Dial v. City of Bessemer, No.
2:14-cv-01297-RDP, 2016 WL 3054728, at *3 (N.D. Ala. May 31,
2016) (“A Rule 12(c) motion for judgment on the
pleadings is analyzed the same as a Rule 12(b)(6) motion to
dismiss.”). So, “to survive a motion for judgment
on the pleadings, ‘a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief
that is plausible on its face.’” Losey v.
Warden, 521 F.App'x 717, 719 (11th Cir. 2013)
(quoting Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009)). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Iqbal, 556 U.S.
Motion for Leave to Amend Complaint Standard
plaintiff's motion to amend is ‘committed to the
sound discretion of the district court, ’ but that
discretion ‘is strictly circumscribed’ by
Rule15(a)(2) of the Federal Rules of Civil Procedure, which
instructs that leave to amend should be ‘freely give[n]
when justice so requires.’” City of Miami v.
Wells Fargo & Co., 801 F.3d 1258, 1267 (11th Cir.
2015), cert. granted sub nom. Wells Fargo & Co. v.
City of Miami, Fla., 136 S.Ct. 2545 (2016) (quoting
Gramegna v. Johnson, 846 F.2d 675, 678 (11th Cir.
1988)). “Despite the rule that leave to amend should be
given freely, the court may deny leave to amend on numerous
grounds, including the futility of the amendment.”
Patel v. Georgia Dep't BHDD, 485 Fed.Appx. 982,
982 (11th Cir. 2012) (citing Maynard v. Bd. of Regents of
Div. of Univs. of Florida Dept. of Educ. ex rel. Univ. of S.
Florida, 342 F.3d 1281, 1287 (11th Cir. 2003)).
“Futility justifies the denial of leave to amend where
the complaint, as amended, would still be subject to
dismissal.” Patel, 485 Fed.Appx. at 982
(citing Burger King Corp. v. Weaver, 169 F.3d 1310,
1320 (11th Cir. 1999)).