Smith v. Prudential Insurance Co. of America

Citations: 864 F. Supp. 2d 654; 2012 WL 405504Docket: Case No. 3:10-cv-00845

Court: District Court, M.D. Tennessee; February 7, 2012; Federal District Court

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The defendant, Prudential Insurance Company, has filed a Motion for Summary Judgment regarding claims made by the plaintiffs, Tyler Smith and Sherri Smith, related to a life insurance policy taken out by Gary Smith. This policy, effective February 1, 2007, provided for $1 million in natural death benefits and $1 million in accidental death benefits, with an additional $1 million for each category acquired through a later application approved on July 1, 2008. The policy included a two-year contestability period, with specific exclusions for suicide.

Gary Smith was found dead on August 12, 2008, shortly after the policy limit increase, under circumstances that led Prudential to believe he committed suicide, prompting them to deny payment. The plaintiffs allege breach of contract and initially claimed bad faith under Tennessee law, but have since abandoned the bad faith claim, focusing instead on whether the jury should decide the cause of Smith's death.

The court must evaluate if genuine issues of material fact exist regarding the cause of death, with both parties submitting extensive evidence, including witness depositions, expert reports, and other documentation. Prudential contests the admissibility of some evidence presented by the plaintiffs. The court will address these evidentiary concerns before establishing the relevant facts for consideration in the summary judgment decision.

Prudential challenges the validity of several facts alleged by Plaintiffs in their opposition, arguing that these claims are unsupported by the evidence and rely on characterizations, generalizations, or unreasonable inferences. The court agrees with Prudential's concerns regarding the alleged facts. For instance, Plaintiffs assert that Gary Smith's use of coyote calls indicates a plan to hunt rather than commit suicide; however, this claim is based on hearsay from Sherri, lacking personal knowledge and being speculative. Additionally, while Plaintiffs claim Smith was in good health with no suicidal thoughts, the testimony cited does not substantiate those assertions, as it merely reflects his discussions about suicide without confirming his mental state. Furthermore, Sherri's affidavit includes several unverified assertions about Smith's actions and state of mind, but lacks the necessary personal knowledge to support them, violating procedural rules that require a clear statement of material facts with specific citations. Consequently, the court must evaluate each claimed fact to determine its admissibility and whether a genuine dispute exists for trial.

The court will only consider admissible facts established by the evidence cited by the Plaintiffs, favoring reasonable inferences for the Plaintiffs. Prudential has raised objections regarding three unsworn expert reports submitted by the Plaintiffs, arguing that such reports cannot be considered at the summary judgment stage as they are hearsay and do not fulfill the requirements of Fed. R. Civ. P. 56(c)(4). Even if the reports were authenticated, Prudential contends that they should be excluded based on evidentiary standards for expert testimony. The court does not need to rule on these objections since it finds a genuine dispute of material fact that warrants jury consideration without the reports. However, Prudential's concerns about the admissibility of the experts' opinions are acknowledged, prompting the court to plan a separate order regarding pretrial motions to exclude expert testimony. For the motion's resolution, the court disregards the Plaintiffs’ expert reports and any unsupported or inadmissible facts contained within them.

Additionally, the factual background reveals details about Smith, an accountant and non-practicing lawyer who provided financial advisory services, including to music industry clients. Residing in Brentwood, Tennessee, with a strong family relationship, Smith was planning a vacation to Italy with his wife to celebrate their 20th wedding anniversary at the time of his death.

Smith had two sons, Tyler, who was nearing 17, and Tanner, who was about 13 at the time of Smith’s death. Smith frequently played golf with Tyler, who is competitive, and they had shared a memorable experience just days before his death at a tournament in Memphis. Sherri, presumably Smith's spouse, testified that Smith only had minor medical issues like acid reflux and sinus problems, with no evidence of debilitating or terminal conditions. She described Smith as a habitual person with no noticeable changes in his routine leading up to his death. An avid hunter with multiple firearms, Smith often hunted on property owned by a friend, where his body was later found. He was knowledgeable about gun safety and promoted safe hunting practices.

Professionally, Smith had established several successful businesses, including an accounting firm with Douglas Wiles, and engaged in real estate ventures with developer Ronnie Gilley during the real estate boom. These ventures involved forming companies and obtaining multi-million dollar loans, for which Smith personally guaranteed portions of the debt. Most of these ventures failed, leading to defaults on loans around the time of Smith’s death, which Prudential claims indicated a dire financial situation. They argue that Smith’s financial troubles were significant enough to contribute to his suicide, with implications that his family might have faced severe financial consequences as well.

Conversely, the Plaintiffs argue that Smith’s financial state was not as critical as Prudential claims, and Sherri had little knowledge of the financial issues. Prudential posits that Smith concealed his business failures from his family and suggests he had motives for suicide due to his financial distress. Evidence cited includes Smith’s transfer of property interests to Sherri through quitclaim deeds in 2007 and a handwritten note left for her labeled 'For Your Eyes Only,' which may indicate his intention to arrange his affairs before his death.

A note addressed to Sherri, labeled 'Sherri-Read Only In Case of My Untimely Death,' serves as a financial guide outlining Smith's life insurance policies, their limits, beneficiaries, and an overview of his financial situation. Smith mentions having $7-$8 million in cash, a paid-off house, minimal debt, retirement accounts, and business equity. The note also describes his real estate investments and provides posthumous handling instructions. Smith emphasizes his intention to live long but acknowledges the possibility of death, urging Sherri to avoid debt and warning her against potential financial exploitation. 

On August 12, 2008, the day of Smith’s death, Sherri noted his unusually cheerful demeanor. He planned to go hunting, packed his gear, and left dressed for work. He returned home to gather more equipment before heading to his office in Nashville, where coworkers prepared a birthday celebration for him. Smith communicated with Sherri multiple times before 1 P.M., indicating he would be home for dinner. After failing to return or answer further calls, Sherri contacted Brett Fincher for help, leading to the discovery of Smith's body by Charles Fincher on the family property before 9 P.M.

Authorities discovered Smith's body in hunting gear, positioned face up with legs protruding from a hunting stand. He had multiple bullet wounds—one in the back and others in the chest. A rifle, found below the stand, had a clogged muzzle, suggesting it fell into mud. Near the scene, Smith's zipped duffle bag contained various hunting items, including binoculars and a hunting knife. Sergeant Melinda Brewer of the Lawrence County Sheriff's Department (LCSD) was part of the initial response and investigation, theorizing Smith was shot from behind. Smith's body was taken to a hospital, where his rifle and duffle bag were returned to his wife, Sherri, without any forensic examination or fingerprinting. Additionally, Smith's hands were not bagged, allowing potential residue to wash away during cleaning. Brewer reported that Chief Deputy Terry Beecham prohibited further investigation, including witness interviews.

Dr. Adele Lewis, an Assistant State Medical Examiner, performed an autopsy and concluded Smith died from a close-contact gunshot wound, contradicting initial LCSD theories. She noted the bullet entered through the chest and exited the back, passing through vital organs. Although Lewis identified abrasions on Smith's body, she did not believe they impacted her suicide conclusion. Initially, she marked the death as "pending investigation" on the death certificate due to ongoing inquiries by the LCSD.

Later, the Tennessee Bureau of Investigation tested Smith's shirt and found evidence of a close-contact discharge from the front. The Browning .308 rifle found at the scene was confirmed as the firearm that discharged the fatal bullet. During this time, Brett Fincher, a relative of Smith, contacted Lewis repeatedly about her report's status, falsely claiming collaboration with the LCSD, but these interactions did not influence her findings.

On February 11, 2009, following the TBI test results on Smith's shirt, a 'Delayed Report of Diagnosis-Death' was filed, indicating Smith's death as a suicide, which was registered by the registrar on February 17, 2009. After this report, Smith’s rifle was submitted to the TBI for testing. The TBI agent could not cause the rifle to discharge unintentionally, despite attempts to force it, although the rifle did malfunction multiple times, with the agent eventually able to fire it. The source of the malfunctions was undetermined. The LCSD speculated that the rifle may have accidentally discharged when Smith swatted at a wasp’s nest or if the cabin door slammed into it. On May 21, 2009, Brewer closed the case as an accidental death, despite her belief that Smith did not die accidentally. Prudential later conducted its own investigation and concluded that Smith had committed suicide.

In terms of legal standards, the court must grant summary judgment if there is no genuine dispute over material facts. The burden shifts to the plaintiff if the defendant shows no genuine issue for at least one essential claim element. The court must view evidence favorably for the plaintiff, without weighing the evidence itself, ensuring that a reasonable jury could find for the plaintiff. 

Regarding life insurance contracts governed by Tennessee law, there is a presumption against suicide, reflecting the inherent value of life. The burden of proof regarding accidental death lies with the plaintiff throughout the trial, requiring evidence of death by external and violent means. If such circumstances exist without clear causation, the law presumes an accidental death, shifting the burden to the defendant to prove by a preponderance of evidence that the death was by suicide.

The presumption against suicide remains intact unless evidence sufficiently strong enough to overturn it is presented, leaving the decision to the jury if the evidence suggests suicide. In cases of death by external violence without clear evidence of accident or suicide, or when the evidence is evenly balanced, this presumption supports the plaintiff's case. Conversely, if the evidence indicates circumstances inconsistent with accident, the presumption is displaced. The court must recognize that individuals can commit suicide without apparent reasons. In the case involving Smith’s death, which is based solely on circumstantial evidence, the court must determine if summary judgment for Prudential is justified, acknowledging the necessity of a fact-specific inquiry. 

The Tennessee Court of Appeals case Maddux highlights that multiple circumstantial factors suggested accidental death rather than suicide, such as the presence of an exploded gun shell, the insured's positive life circumstances, lack of suicidal indications, and plausible scenarios for an accidental discharge. The court asserted that without direct evidence of suicide, the case warranted jury consideration. In contrast, the Littleton case involved definitive evidence of suicide, where the decedent’s actions—loading a gun and shooting herself in a specific manner—contradicted the husband's theory of accidental discharge, leading the court to rule in favor of the insurance company.

The court found it highly improbable for an individual to hold a gun perpendicular to her chest while inspecting the barrel, leading to a determination that a directed verdict was appropriate. Under the Tennessee Vital Records Act (VRA) of 1977, death certificates filed within six months of the event serve as prima facie evidence of the facts contained within them. Certificates filed after this period are designated as "delayed." Several cases have established that timely filed death certificates provide admissible evidence but with limited weight. For instance, in Continental Casualty Co. v. Nashville, the court upheld a lower court's refusal to amend a public record of death based on a subsequent coroner’s inquest, emphasizing the trial court's role in determining admissibility. Milstead v. Kaylor indicated that a death certificate creates a rebuttable presumption, which can be countered by evidence. Prudential argues that since the medical examiner's final death certificate classified the death as suicide, the burden shifts to the plaintiffs to prove otherwise. However, the delayed death certificate in question was not registered within the six-month timeframe required by the VRA, as it was filed after the deadline, thus failing to qualify as prima facie evidence. Consequently, the presumption against suicide and the associated burden-shifting framework remain in effect. Even if the certificate had met the timeliness criteria, it would not alone displace the presumption against suicide, as substantial evidence is needed to show that the death occurred in a manner inconsistent with suicide.

Registered death certificates hold minimal evidentiary weight, with their prima facie inference diminishing in light of contrary evidence. In this case, evidence suggests that Smith may not have committed suicide, allowing the jury to hear testimony that challenges the medical examiner's conclusions. The court determines that the death certificate alone does not negate the application of the Prieto framework or fulfill Prudential’s burden within that framework.

Prudential argues that circumstantial evidence strongly indicates Smith's suicide, supporting their case with several key points: Smith increased his insurance policy limits shortly before his death, the medical examiner classified the death as a suicide, and the Tennessee Bureau of Investigation (TBI) concluded that the bullet's trajectory was indicative of a self-inflicted wound. The investigation found no accidental misfire during ballistics testing. Smith's history as an experienced hunter suggests he would not mishandle a loaded rifle. His unusual behavior on the day of the shooting, including returning home multiple times and not attending an office celebration, raises questions.

Furthermore, Smith left behind a note for his wife detailing his insurance policies and indicating financial planning for his potential “untimely” death, which may have stemmed from significant debts related to failed business dealings. Prudential also posits that law enforcement, under Chief Beecham's direction, may have sought to label Smith's death as accidental to suppress a more thorough investigation. This theory is supported by actions taken by the investigating detective, including returning evidence prematurely and ending the investigation against her recommendations. Prudential suggests that Smith may have staged the scene to resemble a hunting accident, with the detective acknowledging the scene's potential for staging if it were indeed a suicide.

Plaintiffs argue that circumstantial evidence raises a genuine dispute regarding whether Smith’s death was a suicide. They highlight Smith's stable family life, a loving marriage, recent enjoyment with his son, and plans for a 20th wedding anniversary trip, suggesting he had no suicidal intent. Witnesses testified that Smith exhibited no signs of depression or erratic behavior prior to his death. On the day he died, Smith's hunting activity was typical, and his intention to return for dinner implies he did not plan to commit suicide. Details surrounding his death, such as the necessity of driving to the hunting property, changing clothes, and bringing hunting gear, contradict the notion of suicide. Additionally, evidence indicated potential accidental circumstances, including a wasp’s nest at the hunting stand and the spring-loaded door of the stand. The presence of an ammunition clip in Smith's bag suggests he may not have known the gun was loaded. The investigation by the LCSD concluded Smith's death was accidental, and there are claims that his financial situation was not as desperate as Prudential claims, reducing motives for suicide. Important forensic evidence may have been lost due to the LCSD's handling of the rifle and Smith's hands, and the investigation was deemed incomplete. Mistakes in the autopsy report further weaken the determination of suicide. Ultimately, the court concludes that the determination of Smith's true manner of death is a matter for the jury.

Key issues for the jury include Smith's motivation for suicide, the accuracy of medical examiner Lewis's determination of death, Beecham's alleged obstruction of Brewer's investigation, and the possibility that Smith staged his death as a hunting accident. The court indicates that evidence suggests Smith's death could be consistent with an accident, allowing the jury to find that the plaintiffs have met their prima facie burden. Despite indications of suicide, the question of whether the evidence sufficiently displaces the presumption against suicide remains for the jury to decide.

The case parallels previous rulings where circumstantial evidence suggested alternative explanations for death, thus leaving factual determinations to the jury. In contrast, other cited cases where plaintiffs' theories were inconsistent with undisputed evidence are not applicable here. The court concludes that a genuine dispute exists regarding whether Smith's death falls within the Policy’s suicide exception.

The court grants Prudential’s motion in part and denies it in part: it dismisses the plaintiffs' bad faith claims but reserves the breach of contract claim for trial. Additionally, the Policy is associated with a group contract for life insurance coverage by Prudential for AICPA members. Sherri, as Tyler's guardian, has filed the suit on his behalf. The identified fact witnesses include Sherri, Tyler, Dr. Adele Lewis, Steve Scott, Melinda Brewer, Dwight Wiles, and Kris Wiatr, with various depositions referenced. The plaintiffs previously filed and refiled their statement of additional facts in opposition to Prudential's motion for summary judgment, to which Prudential responded. An amendment in the memorandum involved a citation correction and subsequent footnote renumbering, without affecting the court's prior order on the motion.

The court will reference Docket No. 72 as "Plaintiffs’ Additional Facts," which includes the full statement of Plaintiffs' additional facts, exhibit descriptions, and Prudential's responses. Prudential supports its Statement of Undisputed Material Facts (Docket No. 39) with 45 exhibits, organized sequentially in a "Table of SOF Exhibits" found in Docket No. 39, Attachment 1, and filed across Docket Entries 39-42. The court will cite these exhibits as "Prudential SOF Ex. No. P" according to their designated numbers in the table. Prudential objects to Paragraph 2 of the affidavit regarding Sherri's estimate of the distance from Smith’s office to the Fincher property, arguing it is speculative and unsupported by the best evidence, as the Tennessee Department of Transportation states they are 92 miles apart; however, the exact distance is deemed immaterial for this motion. In Paragraph 6, Sherri claims no ammunition clip was found in the rifle Smith possessed on August 12, 2008, which aligns with established facts in the record. Testimony from Kris Wiatr indicates that Gilley, involved in Smith's real estate ventures, was operating a Ponzi scheme and later pled guilty to federal corruption charges. A note references policy limits of $1 million to "Tyler, Tanner Equally," possibly written before the limits were raised in July 2008, and mentions a double payout for accidental death. Sherri describes Smith as someone who avoided attention, particularly on significant birthdays. The case cites *Bryan*, where the court ruled against submitting accidental death to a jury due to direct evidence contradicting the murder theory. Unlike *Bryan*, this case lacks direct evidence that eliminates alternative theories, but the certificate of vital statistics is admissible under evidentiary rules. The Plaintiffs did not address Smith’s "For Your Eyes Only" letter in their opposition.