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Malone v. Reliastar Life Insurance Co.

March 12, 2009


Appeals from the United States District Court for the Northern District of Indiana, South Bend Division. No. 05 C 660-William C. Lee, Judge.*fn1

The opinion of the court was delivered by: Kanne, Circuit Judge.


Before KANNE, WILLIAMS, and SYKES, Circuit Judges.

This is a case about death. To be entitled to the death benefit payable under a life insur- ance policy, a beneficiary must prove that the insured is actually, or, in the alternative, perhaps only legally, dead. There is a difference between the two. As is often the case in the law, words and concepts so familiar in everyday life assume esoteric identities when cloaked in legal rhetoric. It should come as no surprise, then, that not even death, perhaps the most sobering and forthright fact in life, is immune from legal definition.

A life insurance beneficiary may prove an insured's death in two ways. One avenue is for the beneficiary to utilize direct or circumstantial evidence to prove, by a preponderance of the evidence, that an insured is, in fact, dead. In lieu of proving actual death, however, a beneficiary may seek to prove death by means of a legal presumption. In other words, although the insured may, as a matter of fact, be alive, in certain circumstances the law permits one to presume he is dead. The mechanics of this presumption are at the center of this case. For the reasons that follow, we conclude that the district court incorrectly instructed the jury and employed a flawed special verdict form. Taken together, these errors were prejudicial. We remand for a new trial.


Gordon Beeler, a husband, father, and businessman, disappeared on January 31, 1998. At the time of his disappearance, Beeler left behind a wife of almost thirty years, Kathy; four living children, ranging in ages from twelve to twenty-two; and a business partner, John Martin. None of these individuals has seen or heard from Beeler since that day in 1998. Beeler was fifty-one years old at the time he disappeared.

Beeler had obtained no fewer than six different life insurance policies, three of which are at issue in this case. AXA Equitable Life Insurance Company issued the*fn2 first policy to Gordon Beeler on September 20, 1991. The policy carries a death benefit of $500,000. ReliaStar Life Insurance Company issued the other two disputed*fn3 policies. Beeler obtained the first, which carries a death benefit of $600,000, on December 9, 1991. He took out the second shortly thereafter, on January 29, 1992. The death benefit of the second policy is $1.5 million. Added together, these three policies are to pay a total of $2.6 million to the named beneficiary upon the death of Gordon Beeler. In November 1999, Kathy Beeler transferred ownership of these policies to the Gordon L. Beeler Irrevocable Trust, dated May 26, 1999 ("Beeler Trust").

Each of the three policies originally named Kathy Beeler as the sole beneficiary. At the same time that she transferred policy ownership, however, Kathy Beeler also amended the policies to name the Beeler Trust as beneficiary. John Malone, Beeler's former business partner, serves as trustee for the Beeler Trust; it is in the role of trustee that Malone brought this action. Kathy Beeler and the Beeler children are the Beeler Trust's beneficiaries.

The Beeler Trust first sought payment of death benefits under the AXA policy in a claim filed in November 2003,*fn4 which AXA denied the following February. In January 2004, the Beeler Trust filed similar claims for payment on the two ReliaStar policies; ReliaStar denied these claims in correspondence dated March 30, 2004. Both companies noted that seven years had not yet passed, which was the time required for the common law presumption of death to take effect in Indiana.

In February 2005, the Beeler Trust submitted renewed death claims to both AXA and ReliaStar. In separate correspondence mailed in April, both companies declined to pay the benefits under their respective policies. The insurance companies cited evidence they had obtained suggesting that Beeler was either still alive or had not died at the time of his disappearance.

Eight months later, in October, the Beeler Trust filed a complaint in Indiana's St. Joseph Superior Court, alleging that AXA and ReliaStar had breached their respective contracts and seeking payment of the death benefits payable thereunder. The defendants promptly removed the case to the South Bend Division of the Northern District of Indiana. In June 2006, the Beeler Trust filed an amended complaint in the federal court, in which it added a claim for punitive damages, alleging that the companies had made unfounded refusals to pay death benefits and had deceived the Beeler Trust, thereby violating the insurance companies' duties of good faith and fair dealing. In an order dated March 21, 2007, the district court granted summary judgment in favor of the insurance companies on the plaintiff's punitive damages claims, leaving only the breach of contract claims for trial.

At a jury trial held from May 21 to May 29, 2007, the Beeler Trust presented evidence to demonstrate Beeler's death. The plaintiff showed that Beeler had been missing since the day of his disappearance nine years earlier in 1998. The family, the authorities, and the life insurance companies had conducted numerous fruitless investigations in an effort to locate Beeler. Beeler's last known communication was a letter to Kathy dated January 31, 1998, and postmarked in Key West, Florida. In the letter, Beeler informed his wife of many arrangements he had made to provide financial security for both Kathy and their children long into the future. Finally, none of Beeler's family or friends had any communication with Beeler since his disappearance.

The insurance companies argued that Beeler could not be presumed dead; they claimed that he had left simply to extricate himself from an increasingly troublesome family situation. They presented evidence that Beeler's last years with his family were far from idyllic. He engaged in an extramarital affair. He grew distant from his family and was often absent from family gatherings. His marriage with Kathy became strained. He spent long periods of time living away from the family's primary home in Granger, Indiana, often staying in hotels or escaping by himself to their vacation house in Marco Island, Florida. Near the conclusion of 1997, Beeler leased an apartment in nearby South Bend, Indiana. In early 1998, Kathy Beeler filed an action in state court seeking a formal separation from her husband and a temporary restraining order to keep him away from the family's home. Following a hearing on January 28, the court granted both requests. Kathy spoke with her hus-band on the telephone three days later, on the morning of January 31. She never spoke with him again.

The insurance companies also presented witnesses who testified that they had seen Beeler since 1998. Several witnesses testified that they had encountered Beeler in the months following his disappearance. A friend of the Beeler family stated that she had seen Beeler in the Indianapolis airport as late as May 2004.

As the trial neared conclusion, the plaintiff entered objections to both Jury Instruction 22 and the court's proposed special verdict form. We will discuss the contents of both the jury instruction and the verdict form in the analysis that follows. These two objections, both denied by the district court, form the primary basis for the claims raised by the appellant, the Beeler Trust, on appeal. Following deliberations, the jury returned a verdict in favor of the defendants. Pursuant to the questions posed in the special verdict form, the jury found, specifically, that the plaintiff had not established the elements necessary to raise the presumption of death.

On February 26, 2008, the district court denied the Beeler Trust's Renewed Motion for Judgment as a Matter of Law, or, In the Alternative, For New Trial. The court subsequently denied the Beeler Trust's motion to reconsider its February 26 order, as well as its request to certify to the Indiana Supreme Court the question of whether Jury Instruction 22 and the special verdict form accurately stated Indiana's common law presumption of death.*fn5


The Beeler Trust appeals the district court's summary judgment order on the punitive damages claims, the court's formulation of Jury Instruction 22 and the special verdict form, and the court's denial of its motion for a new trial. We turn first to its death benefits claims, which encompass appellant's arguments regarding Instruction 22 and the special verdict form, as well as the motion for a new trial. We then briefly discuss the punitive damages claims.

A. The Death Benefits Claims

On appeal, the Beeler Trust argues that errors in both the jury instructions and the special verdict form prejudiced the trial's outcome. We agree. As we discuss below, these errors, standing alone, would not merit a new trial. Taken together, however, they prevented the jury from considering one of the two ways in which the ...

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