UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 09-1788
DENISE REAGAN RUSSELL, individually and as Executor of the
Estate of Daniel Sean Reagan, deceased,
Plaintiff - Appellant,
v.
NATIONWIDE LIFE INSURANCE COMPANY,
Defendant – Appellee,
and
BRENT S. LUCAS; H.P. LUCAS & SONS, INCORPORATED,
Defendants.
Appeal from the United States District Court for the Eastern
District of Virginia, at Newport News. F. Bradford Stillman,
Magistrate Judge. (4:07-cv-00130-FBS)
Argued: September 22, 2010 Decided: November 12, 2010
Before NIEMEYER and DUNCAN, Circuit Judges, and Robert J.
CONRAD, Jr., Chief United States District Judge for the Western
District of North Carolina, sitting by designation.
Affirmed by unpublished opinion. Judge Duncan wrote the
opinion, in which Judge Niemeyer and Judge Conrad joined.
ARGUED: Leonard Claro Heath, Jr., HEATH LAW, PLC, Newport News,
Virginia, for Appellant. George J. Dancigers, MCKENRY,
DANCIGERS, DAWSON & LAKE, PC, Virginia Beach, Virginia, for
Appellee. ON BRIEF: Joseph F. Verser, JONES, BLECHMAN, WOLTZ &
KELLY, PC, Newport News, Virginia, for Appellant. Kira A.
Ligato, MCKENRY, DANCIGERS, DAWSON & LAKE, PC, Virginia Beach,
Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
DUNCAN, Circuit Judge:
Denise Reagan Russell (“Russell”) appeals from the opinion
of a United States magistrate judge holding that she was not
entitled to proceeds of a Nationwide Insurance Company
(“Nationwide”) life insurance policy carried by her deceased
husband, Daniel Sean Reagan (“Reagan”). The case was tried in a
bench trial before the magistrate judge by consent and agreement
of the parties pursuant to 28 U.S.C. § 636(c). 1 The court found
that Nationwide met its burden of proving that it provided to
Reagan the notice required by Virginia law before cancelling his
policy for non-payment, and thus concluded that Russell was not
entitled to proceeds from the policy. For the reasons set forth
below, we affirm. 2
I.
A.
Reagan obtained a life insurance policy with Nationwide on
September 20, 2002, through H.P. Lucas & Sons, Inc., an
insurance sales agent. Under the terms of the policy, premiums
in the amount of $219.95 were due quarterly. Each premium
1
In issuing an opinion following the bench trial, “the
magistrate judge was acting for the court, and we therefore
refer to the Opinion as that of the district court.” Scott v.
United States, 328 F.3d 132, 137 n.7 (4th Cir. 2003) (citing 28
U.S.C. § 636(c)(1)).
2
Appellant’s motion for supplemental briefing, filed
(Continued)
3
billing statement included the following language: “A grace
period of 31 days is allowed for the payment of premiums.” J.A.
452. Further, the policy provided:
GRACE PERIOD: If any premium after the first one is
not paid when due, a period of 31 days from the due
date of the unpaid premium will be allowed for
payment. The policy will continue in force during
this 31 day period. . . . This policy will lapse,
without value, if premiums are not paid.
J.A. 394. Reagan paid the premiums through March 2003, when his
employer, Seaford Baptist Church, agreed to take over the
payments, deducting the amount from his salary. To reflect this
arrangement, Reagan requested that Nationwide change his address
of record to that of the church. Nationwide keeps computerized
records of change of address requests, which reflect that
Reagan’s address was changed to “co David Phillips, PO Box 207,
Seaford” on June 4, 2003. J.A. 453. David Phillips
(“Phillips”) was the administrator and accountant of the church.
After June 2003, all billing statements were mailed to the
church’s PO Box, “c/o David Phillips.” J.A. 451, 456. However,
several letters regarding the policy, sent separately from the
billing statements, were mailed after this date directly to
Reagan at the church’s PO Box, without “c/o David Phillips”
included in the address.
September 29, 2010, is therefore denied as moot.
4
Reagan left his job with the church in December 2005. As a
result, Phillips told Reagan that the church would cease paying
premiums on the policy and that the December premium was the
last one it would pay. According to Phillips, Reagan indicated
that he would begin paying the billing statements after
December. Reagan failed, however, to notify Nationwide of any
change in address. Thus, his statements continued to be mailed
to the church’s PO Box.
Following Reagan’s departure, Phillips directed the
church’s secretaries to forward any mail addressed solely to
Reagan to Reagan’s home address, and to give any mail addressed
to Reagan “care of Phillips” to Phillips. Phillips thereafter
received one communication from Nationwide in February 2006.
Phillips did not open it. Instead, assuming it was a billing
statement, he passed it on to Reagan. Phillips also reminded
Reagan in February to change his address on file with
Nationwide.
Reagan did not pay the premium due on March 20, 2006.
Nationwide consequently prepared a notice stating that the
premium was past due (the “Past Due Notice”), which was included
within a billing statement dated April 10, 2006. This Past Due
Notice further explained:
THIS IS AN IMPORTANT REMINDER - Your premium is past
due and the grace period will expire APR 20, 2006. If
your payment is not received in the home office within
5
the grace period your policy will lapse effective MAR
20, 2006.
J.A. 417. Nationwide’s records reflect that this Past Due
Notice was sent to Reagan care of Phillips at the church’s PO
Box, which is where Reagan’s billing statements were customarily
sent. The parties dispute whether Reagan received this Past Due
Notice. However, he undisputedly never paid the premium due by
the end of the grace period, or any premium thereafter.
Nationwide’s records reflect that his policy lapsed on May 21,
2006, as a result of non-payment. Its system further shows that
a Notice of Lapse was sent to Reagan at the church’s PO Box on
this date, with a copy mailed to his insurance agent, Brent S.
Lucas (“Lucas”). Reagan passed away unexpectedly on November
14, 2006.
B.
Russell, individually and as executor of Reagan’s estate,
originally filed this action in the Circuit Court for the County
of York and the City of Poquoson, Virginia, on November 7, 2007.
Russell alleged breach of contract by Nationwide for failure to
pay benefits due under Reagan’s life insurance policy. She
argued that because Nationwide failed to provide Reagan the
notice required by Virginia law before cancelling his policy,
the policy remained in place as of his death. Nationwide
6
removed to the United States District Court for the Eastern
District of Virginia on December 11, 2007, on diversity grounds.
Prior to trial, the court narrowed the issues in the case
to one: whether Nationwide mailed, and Reagan actually received,
the Past Due Notice required by state law for the termination of
a policy. The matter proceeded to a bench trial.
The crux of Nationwide’s argument at trial involved
evidence that the required Past Due Notice was properly sent to
Reagan’s address of record. Nationwide employees testified that
the company’s billing is done through the computer system
Cyberlife. Cyberlife automatically generates billing
statements, including Past Due Notices, when it is time to bill
a customer. The program then interfaces with Nationwide’s
printing system, which prints the billing statements through an
automatic printer, then sends them to an automatic sorter,
mailer, and stamper. Accordingly, Nationwide’s system for
generating and mailing billing statements is entirely automated;
no hard copies are kept and no certificates of mailing exist for
these statements. To keep track of documents mailed, the
Cyberlife system interfaces with another system, MOBIUS, which
retains electronic copies of the billing statements sent out by
Cyberlife.
Nationwide employees testified that the MOBIUS system
retained a copy of the Past Due Notice allegedly sent to Reagan
7
on April 10, 2006, and reflected that Cyberlife had generated
and mailed the notice at that time. An employee further
testified that the system auto-generates a report if it
experiences a malfunction, but that there were no reports of any
malfunctions during the spring of 2006.
In response, Russell presented the testimony of Phillips,
who explained that he did not remember seeing any mail addressed
to Reagan--care of Phillips or otherwise--after February 2006.
However, Phillips conceded that the church secretaries could
have forwarded mail addressed to Reagan without Phillips’s
knowledge, despite his policy that the secretaries should give
to him any mail addressed to Reagan care of David Phillips.
Russell also presented, as evidence of the unreliability of
Nationwide’s automated system, the testimony of Reagan’s agent
Lucas. Lucas testified that he never received a copy of the May
21, 2006, Notice of Lapse for Reagan’s policy, although
Nationwide’s records reflected he had been copied on this
statement. Lucas also explained that each morning he received
from Nationwide a “beginning-of-day” report that listed all new
policies and all cancelled policies. However, his beginning-of-
day report for that day did not reflect the cancellation of
Reagan’s policy. 3 Finally, Russell presented the testimony of
3
Russell also presented evidence that Nationwide’s system
(Continued)
8
three individuals who heard Reagan say, after the lapse date of
the policy, that he had a policy presently in place.
The district court determined that Russell was not entitled
to relief. It noted that under the relevant Virginia law, “[i]t
is the insurer’s burden to prove that notice was provided to the
customer.” J.A. 570. It then found that Nationwide’s evidence
that its automated system showed the Past Due Notice was mailed
sufficed to prove proper mailing. In so finding, the court
rejected Russell’s argument that Nationwide did not send the
Past Due Notice to the proper address because it included “c/o
David Phillips.” It found that this address was correct, as
“Reagan’s address on record with Nationwide was ‘c/o David
Phillips, PO Box 207, Seaford, VA 23696-0207.’” J.A. 573.
Applying the Virginia rule that proof of proper mailing
establishes a presumption of actual receipt, the court found
that Nationwide’s evidence established a rebuttable presumption
that Reagan actually received the Past Due Notice.
inaccurately reflected the addresses to which a June 4, 2003,
letter confirming Reagan’s change of address was sent.
Nationwide’s records reflected only that the letter was sent to
Reagan’s former address. Russell put into evidence a hard copy
of the letter that had been sent to the church’s address,
arguing that this letter was further evidence of Nationwide’s
unreliable record-keeping. However, a Nationwide employee
testified that records of these letters, unlike billing
statements and Past Due Notices, were not housed on the MOBIUS
system.
9
Further, the district court found that Russell’s evidence
failed to adequately rebut the presumption that Reagan actually
received the Notice of Lapse. It credited Phillips’s testimony
that he did not receive the Past Due Notice, but noted his
concession that it was “‘certainly possible’ that one of the
church’s secretaries could have forwarded mail addressed to
Reagan without his knowledge and despite his policy.” J.A. 574.
The court accepted the testimony of Russell’s three witnesses
who explained that Reagan told them, between May and November
2006, that he had a life insurance policy in place. However, it
found that this evidence, while possibly tending to demonstrate
non-receipt of the Past Due Notice, was undercut by the fact
that Reagan knew he needed to begin paying the premiums after
December 2005 but never did so.
Having thus found that Reagan received the notice required
by Virginia law before his policy was cancelled, the court
denied Russell’s request to collect under the policy. This
appeal followed.
II.
The issue before us is whether Nationwide complied with
Virginia Code Section 38.2-232, which provides in relevant part:
“Every insurer . . . that issues a policy, contract, or plan of
insurance . . . shall provide the policy owner, contract owner,
10
or plan owner with a written notice prior to the date that the
policy, contract, or plan will lapse for failure to pay premiums
due.” Va. Code Ann. § 38.2-232.
On appeal, Russell argues that the trial court erred in
finding that Nationwide met its burden of proving that it
properly addressed, stamped, and mailed the Past Due Notice,
such that it was entitled, under Virginia law, to a presumption
of actual receipt by Reagan. She further argues that even if
this presumption was proper, her evidence that Reagan did not
actually receive the Past Due Notice sufficed to rebut it.
Finally, she challenges the court’s exclusion of certain
testimony.
We begin by laying out the burden-shifting framework that
governs proof of compliance with Virginia Code Section 38.2-232.
We then address each of Russell’s contentions in turn.
A.
Virginia law places the burden on insurers to prove
compliance with relevant statutory notice requirements. See
Villwock v. Ins. Co. of N. Am., 468 S.E.2d 130, 134 (Va. Ct.
App. 1996); see also Nat’l Union Fire Ins. Co. of Pittsburgh,
Pa. v. Dixon, 145 S.E.2d 187, 190 (Va. 1965) (explaining that
when an insurer asserts the defense of cancellation, it bears
the burden of proving effective cancellation of the policy).
11
When, as here, the applicable statute requires notice prior to
cancellation but “does not specify mailing as the method of
providing notice,” an insurance company must prove actual
receipt of notice, as opposed to proving merely that notice was
mailed in the manner required by statute. Villwock, 468 S.E.2d
at 133. However, actual receipt can be demonstrated through the
presentation of evidence that the notice was properly addressed,
stamped, and mailed, coupled with “application of the
presumption that correspondence properly mailed is received by
the addressee.” Id. at 134 n.4 (citing Washington v. Anderson,
373 S.E.2d 712, 715 (Va. 1988)). Denial of receipt by the
addressee does not, alone, overcome this presumption, but
instead creates an issue of fact for the fact finder. Hartford
Fire Ins. Co. v. Mutual Sav. & Loan Co., 68 S.E.2d 541, 544 (Va.
1952); see also Manassas Park Dev. Co. v. Offutt, 124 S.E.2d 29,
31 (Va. 1962); cf. Wright v. Grain Dealers Nat. Mut. Fire Ins.
Co., 186 F.2d 956, 960 (4th Cir. 1950) (“[T]he presumption of
the receipt of notice arising from the mailing thereof may be
rebutted by testimony of the policy holder that the notice was
not received; and when this occurs, the question is for the
jury.”).
B.
Russell first challenges the district court’s determination
that Nationwide proved that it properly addressed, stamped, and
12
mailed the Past Due Notice, such that it was entitled to a
presumption of actual receipt. She makes two main arguments on
this point: first, that the notice was not properly addressed;
and second, that Nationwide’s computerized evidence was
insufficient to establish a presumption of proper mailing. We
review Nationwide’s compliance with its burden of proof de novo,
as a matter of law, but review the court’s factual findings
underpinning this determination for clear error. See Belk v.
Charlotte-Mecklenburg Bd. of Educ., 269 F.3d 305, 379 (4th Cir.
2001); Stanley v. Hejirika, 134 F.3d 629, 633 (4th Cir. 1998).
1.
Russell first argues that the court improperly found that
the Past Due Notice was correctly addressed. As she explains
it, there were actually two different addresses on record for
Reagan beginning in June 2003: one address for the owner of the
policy and another for the payor of the policy. According to
Russell, the “owner address” on Reagan’s policy, as of June 4,
2003, became “David S. Reagan, P.O. Box 207, Seaford, VA 23696-
0207.” The “payor address” on file became “David S. Reagan, c/o
David Phillips, P.O. Box 207, Seaford, VA 23696-0207” (emphasis
added). Russell thus argues that because Nationwide mailed the
Past Due Notice to the payor address, rather than the owner
address, it cannot demonstrate that the Past Due Notice was
13
properly addressed. Cf. Va. Code Ann. § 38.2-232 (requiring
that notice be sent specifically to the policy owner).
We disagree. There is nothing clearly erroneous about the
trial court’s factual finding that “Reagan’s address on record
with Nationwide was ‘c/o David Phillips, PO Box 207 . . . .’”
J.A. 573. Although some letters--as opposed to billing
statements--sent by Nationwide to PO Box 207 were addressed
directly to Reagan, Russell points to nothing in the record to
compel the conclusion that Reagan established different “owner”
and “payor” addresses with Nationwide. To the contrary, the
policy’s billing statements list the “OWNER” address as “Daniel
S. Reagan, c/o David Phillips, PO Box 207.” J.A. 417, 452.
Moreover, Nationwide’s record of Reagan’s June 2003 change of
address reflects that this was the sole requested address of
record.
Furthermore, even if Russell were correct that the Past Due
Notice should have been sent directly to Reagan at PO Box 207,
as opposed to Reagan care of Phillips, the discrepancy is
insignificant where the physical address is identical. The
addition of the “c/o” element did not change the destination of
the Past Due Notice in any meaningful way. 4
4
Part of Russell’s argument is that any deviation from the
proper address--even a minor one--is impermissible because
Virginia law requires insurers to prove “strict” compliance with
(Continued)
14
Appellant points to a 1919 Virginia case, Wolonter v.
United States Casualty Co., 101 S.E. 58 (Va. 1919), to argue
that the addition of “c/o” here rendered the address incorrect.
Wolonter, however, does not extend this far. In Wolonter, the
Virginia Supreme Court found that mail sent to “John Wolonter,
Roanoke, VA” was not properly addressed when the address on file
with the insurance company was “John Wolonter, c/o Virginia
Bridge Company, Roanoke, VA.” See 101 S.E. at 59-61. Wolonter
thus stands only for the logical proposition that when the “c/o”
element is a vital part of the physical address, mail that
neglects the “c/o” element is not properly addressed. It does
not support appellant’s argument that mail routed to the proper
PO Box is nevertheless misaddressed when it specifies that it is
being received care of another individual.
section 38.2-232. This argument appears misplaced, as the cases
she cites for this proposition address statutes where all that
was required to prove compliance was proof that notice was
mailed in the statutorily required manner, rather than actually
received. In such a situation, “strict” compliance with the
mailing requirements is clearly mandated. See Harleysville Mut.
Ins. Co. v. Dollins, 109 S.E.2d 405, 409 (Va. 1959); see also
Riddick v. State Capital Ins. Co., 271 F.2d 641, 642-43 (4th
Cir. 1959). However, even accepting Russell’s proposition that
“strict” compliance is also required for section 38.2-232, we
find Nationwide strictly complied with the statutory
requirements because, as explained above, notice was sent to the
correct address.
15
2.
Russell also argues that, even assuming the address used
was correct, the court below erred by finding that Nationwide’s
evidence sufficed to establish a presumption of proper mailing.
Specifically, she contends that Nationwide’s computerized
evidence was simply insufficient to prove that the notice was
actually stamped and mailed. We are not unsympathetic to her
position. By deciding to rely on auto-generated records stored
in a computer system, as opposed to the generation and retention
of a hard copy of a notice, possibly sent by certified mail,
Nationwide has opened itself up to a challenge. However, we
find no legal requirement that it take such precautions.
Consequently, we find that computerized evidence can, as a
matter of law, establish proof of proper mailing if it is
sufficiently reliable. Cf. Villwock, 468 S.E.2d at 134 (finding
that a showing that an insurance company followed “its regular
procedure for mailing notices” supported an inference of proper
mailing).
Russell presents two arguments challenging the court’s
finding that Nationwide’s electronic proof of proper mailing was
sufficiently reliable. First, she contends that she was
improperly required to attack the efficacy of Nationwide’s
computer system, rather than Nationwide having to prove its
reliability. However, the record shows otherwise. At trial,
16
Nationwide presented evidence of how its computer system
functioned and offered testimony that there were no reports of
any mailing malfunctions during the spring of 2006.
Second, Russell asserts that evidence she presented at
trial undermined the conclusion that Nationwide’s electronic
records were reliable enough to support a presumption of proper
mailing. However, the trial court did not err in finding her
evidence inadequate to cast doubt on MOBIUS’s reliability as of
April 10, 2006. Russell presented evidence that Lucas, Reagan’s
insurance agent, did not receive a carbon copy of the May 2006
Notice of Lapse, even though he typically received such notices
and Nationwide’s records reflected that he was copied on
Reagan’s Notice of Lapse. The court determined that this
evidence was “of tenuous relevance” to the issue of whether
Reagan’s Past Due Notice--a different type of notice, sent to a
different address--had been properly mailed a month earlier.
J.A. 572. Moreover, it found no other evidence that
Nationwide’s MOBIUS system had a pattern that spring of
erroneously showing that documents had been mailed. 5 These
5
The court did not address Lucas’s testimony that he also
did not receive notice of the cancellation of Reagan’s policy
through a “beginning-of-day” report, as was typical. However,
without additional evidence explaining the link between this
beginning-of-day reporting system and Nationwide’s automated
record-keeping system, MOBIUS, such testimony also would have
been largely unhelpful in determining MOBIUS’s reliability.
17
findings were not clearly erroneous, as Russell’s evidence did
not speak directly to system lapses similar in type or timing to
the one Russell alleged.
Russell also presented evidence that Nationwide’s system
did not show that a second copy of a letter acknowledging
Reagan’s June 4, 2003, change of address had been sent, even
though a hard copy of the letter was in evidence. Although the
trial court did not explicitly consider this evidence in its
opinion, its choice not to do so was also not clearly erroneous.
Evidence of this possible system lapse in 2003 also would have
been of limited relevance, given that it related to a different
letter stored in a different computer program. Accordingly, we
conclude that the trial court did not err in holding that
Nationwide’s evidence of proper mailing established a
presumption of actual receipt.
C.
Russell next argues that the court erred in finding that
she had not rebutted the presumption of actual receipt with
adequate evidence that the Past Due Notice was not actually
received. Virginia law makes determination of this issue one
for the finder of fact, see Hartford Fire, 68 S.E.2d at 544, and
so we review the district court’s conclusion on this point for
clear error, Stanley, 134 F.3d at 633.
18
The court’s opinion reflects that it properly considered
Russell’s evidence of non-receipt, but on balance simply did not
find it compelling. It credited Phillips’s testimony that he
did not receive the Past Due Notice, but weighed this against
Phillips’s concession that “one of the church’s secretaries
could have forwarded mail addressed to Reagan without his
knowledge and despite his policy.” J.A. 574. The court also
acknowledged the testimony of the three witnesses whom Reagan
told between May and November 2006 that he had a $1,000,000 life
insurance policy in place. However, it weighed this evidence
against the fact that Phillips personally told Reagan in
December 2005 and February 2006 that Reagan needed to begin
making premium payments for his policy. It noted that
nevertheless, Reagan failed to make any quarterly payments in
2006, including the March payment and two further payments that
would have been due had the policy remained in place.
We see no clear error in the court’s finding that Russell’s
evidence did not sufficiently rebut the presumption that Reagan
actually received the Past Due Notice. Therefore, we agree with
its conclusion that Reagan’s policy was effectively cancelled in
May 2006.
D.
Finally, Russell argues that the court erred in disallowing
the testimony of Larry Kirk (“Kirk”). Kirk was another
19
Nationwide policy holder who would have testified that, in July
2006, he found out from his agent that his policy had lapsed
even though he had never received any prior notice. We review
evidentiary rulings for abuse of discretion. United States v.
Caro, 597 F.3d 608, 633 (4th Cir. 2010).
The district court excluded Kirk’s testimony because it
found this evidence about a different policy too remote in time
to have relevance to the issue of whether Nationwide’s system
malfunctioned with respect to notifying Reagan in April 2006.
Russell argues that the bar for relevancy is a low one, and
evidence that the computer system malfunctioned at any point
might have helped cast doubt on its efficacy during the spring
of 2006. However, even if Kirk’s testimony might have offered
proof of a system malfunction in July 2006 with respect to his
own policy, the trial court did not abuse its discretion in
determining that this would not help establish that the same
type of error occurred in April 2006 with respect to Reagan’s
policy. See United States v. Moore, 27 F.3d 969, 974 (4th Cir.
1994) (explaining that we will find a trial court’s evidentiary
rulings to be an abuse of discretion only when it acted
“arbitrarily or irrationally”).
20
III.
For the foregoing reasons, we affirm the opinion of the
district court.
AFFIRMED
21