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Kovach v. Hancock Bank of Louisiana

Court of Appeals of Louisiana, Fourth Circuit

May 6, 2015

ELLEN SHIRER KOVACH WIFE OF AND BRENT A. KOVACH
v.
HANCOCK BANK OF LOUISIANA AND NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY

Page 437

APPEAL FROM 24TH JUDICIAL DISTRICT COURT. NO. 701-424, Honorable Michael E. Kirby, Judge Ad Hoc.

E. John Litchfield, BERRIGAN LITCHFIELD SCHONEKAS MANN TRAINA & BOLNER, LLC, New Orleans, LA, COUNSEL FOR PLAINTIFFS/APPELLANTS, ELLEN SHIRER KOVACH AND BRENT A. KOVACH.

Virginia N. Roddy, Jennifer M. Lawrence, ELKINS, P.L.C., New Orleans, LA, COUNSEL FOR DEFENDANT/APPELLEE, NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY.

Court composed of Judge Terri F. Love, Judge Edwin A. Lombard, Judge Joy Cossich Lobrano. LOBRANO, J., CONCURS IN THE RESULT.

OPINION

Page 438

Terri F. Love, Judge.

[2014-0981 La.App. 4 Cir. 1] This appeal arises from the cash surrender of plaintiff's one million dollar life insurance policy assigned as collateral to a bank holding the promissory notes for loans in default on two French Quarter hotels. In conjunction with the cash surrender, the life insurance policy was cancelled. The plaintiffs filed a lawsuit alleging that the insurance company wrongfully surrendered the husband's life insurance policy to a third-party. The insurance company filed a motion for summary judgment asserting that it owed no duty to the plaintiff to ensure that the assignment was being properly exercised. The trial court granted the motion for summary judgment finding that the language of the policy and assignment waived any duty the insurer may have had to provide notice of a third-party's cancellation of the life insurance policy. Plaintiffs appealed contending that the insurance company breached a basic duty to keep the policy holder informed about the status of the policy. We find genuine issues of material fact exist as to whether the insurance company breached a duty to the plaintiffs by failing to notify them that the insurance policy was about to be cancelled. Accordingly, we reverse and remand for further proceedings.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

In 1995, Brent Kovach and Ellen Kovach procured a one million dollar life [2014-0981 La.App. 4 Cir. 2] insurance policy (" Policy" ) for Mr. Kovach from New England Mutual Life Insurance Company (" New England" ). Mr. Kovach was subsequently diagnosed with cancer, but the cancer is now in remission.

Mr. Kovach was a shareholder of St. Peter, Inc.'s hotel and a member of A Creole House, LLC, which also ran a small hotel (collectively " Hotels" ) in the French Quarter. Following Hurricane Katrina, the Hotels required refinancing. Whitney Bank f/k/a Hancock Bank of Louisiana (" Hancock" ) agreed to provide the loans if Mr. Kovach personally guaranteed the loans and executed a collateral assignment (" Assignment" ) of the Policy. Mr. Kovach complied. The Hotels failed to pay the loan payments, so in May 2010, Hancock sent a default letter to New England seeking the cash surrender value of the Policy. Based on the terms of the Assignment, New England tendered the cash surrender value, $52,316.33, to Hancock. In February 2011, Mr. Kovach learned that his Policy was cancelled by New England when Hancock ordered the cash surrender. He then sought to have the Policy reinstated, but soon discovered that he was unable to procure life insurance after being diagnosed with cancer.

Thereafter, the Kovaches filed a Petition for Damages and Breach of Contract against Hancock and New England alleging that Hancock and New England failed to follow proper procedure for surrendering the Policy. Hancock and New England filed Motions for Summary Judgment.

Page 439

The trial court found " [b]y his own signature Mr. Kovach twice relieved New England of any duty that it may have had to protect him from a defective exercise of an assignee's rights." The trial court further noted that the " plaintiff cannot prove an essential element of his case, the violation of a duty owed him either in tort or in contract by New England Life." Thus, the trial court granted New England's Motion for Summary [2014-0981 La.App. 4 Cir. 3] Judgment and dismissed the Kovaches' claims.[1] The trial court denied Hancock's Motion for Summary Judgment.[2] The Kovaches' devolutive appeal followed.

The Kovaches contend that the trial court erred in granting New England's Motion for Summary Judgment because the Assignment did not waive New England's obligations, the Assignment was not legally enforceable, the surrender of the Policy was against public policy, and a reasonable jury could have found that ...


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