UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
________________________ FILED
January 7, 2009
No. 07-60482
Charles R. Fulbruge III
_______________________
Clerk
FIRST COLONY LIFE INSURANCE COMPANY,
Plaintiff-Appellee,
v.
BOBBY L. SANFORD,
Defendant-Appellant.
____________________________
Appeal from the United States District Court
for the Southern District of Mississippi
__________________________
Before SMITH, and PRADO, Circuit Judges, and YEAKEL, District Judge.*
LEE YEAKEL, District Judge:
At issue in this diversity action is the validity of First Colony Life
Insurance Company’s (“First Colony”) policy on the life of Emmanuel Morris.1
Bobby Sanford purchased the Policy and was the primary beneficiary under the
*
District Judge of the Western District of Texas, sitting by designation.
1
The First Colony policy at issue is life insurance Policy No. 8,288,530 (“Policy”).
No. 07-60482
Policy. For about a year before his death, Morris lived with Sanford and his
family. Upon Morris’s death, Sanford filed a claim seeking to collect the Policy’s
$100,000 death benefit. First Colony declined to pay Sanford and commenced
the underlying declaratory-judgment action seeking, inter alia, a declaration
from the district court that under Mississippi law, because Sanford lacked an
insurable interest in Morris, the Policy is void. Sanford answered and asserted
several counterclaims against First Colony, including breach-of-contract and tort
claims. Both parties moved for summary judgment. The district court granted
summary judgment in favor of First Colony and denied Sanford’s motion. The
district court found as a matter of law that Sanford lacked an insurable interest
in Morris’s life, the Policy was void, and Sanford was unable to establish a legal
and factual basis for recovery on any of his counterclaims. The court ordered
First Colony to refund to Sanford the premiums Sanford paid on the Policy. We
reverse the summary judgment and remand for further proceedings.
Background
In January 2004, Morris was seventeen years old and homeless; his father
was dead, his mother was incarcerated serving a life sentence, and no family
member was willing or able to care for him. Morris’s grandmother asked
Sanford, a released convicted felon who ministers to troubled teenagers, if
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No. 07-60482
Sanford would care for Morris. Sanford agreed, took Morris into his home, and
cared for him along with Sanford’s three children.
In February 2004, Sanford hired an attorney to commence legal
proceedings for Sanford to become Morris’s guardian. A Final Judgment
Appointing Guardian was rendered in the Chancery Court of Rankin County,
Mississippi, appointing Sanford as General Guardian over Morris, a minor, upon
Sanford’s taking the oath prescribed by Mississippi law. See Miss. Code Ann.
§ 93-13-17 (2008). Sanford, however, never took the oath. No Letters of
Guardianship were issued to Sanford.
Sanford hired another attorney, who assisted Sanford in having Morris’s
federal social-security payments redirected from Morris’s aunt to Sanford.
Although Morris had use of the social-security funds while in Sanford’s care,
Sanford asserts that he provided additional financial support to Morris.
Before Morris came to live with Sanford, Sanford purchased First Colony
life insurance policies insuring each of Sanford’s three children that, like the
Policy insuring Morris, each provided a $100,000 death benefit and named
Sanford the primary beneficiary. In August 2004, upon Morris’s consent,
Sanford applied for, was approved, and purchased the Policy on Morris’s life
through the same insurance agent Sanford used when purchasing the First
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No. 07-60482
Colony life policies on his children. On the Policy application, Sanford
represented that he was Morris’s guardian.
In January 2005, Morris was reported missing. A few weeks later, Morris
was found dead; the coroner determined Morris’s death was caused by drowning.
In March 2005, Sanford filed a claim for the $100,000 death benefit under the
Policy, which First Colony denied. Initially, First Colony informed Sanford that
payment was denied because Sanford was a suspect in Morris’s death, although
later First Colony told Sanford the denial was due to the fact that Sanford lacked
an insurable interest in Morris’s life. First Colony then commenced this action.
By affidavit, Sanford explained his relationship with Morris over the year
that Morris lived with Sanford and his family. When Sanford met Morris during
the first week of January 2004, Morris explained to Sanford that he was
homeless and sleeping in abandoned houses in Batesville, Mississippi. Morris
told Sanford that no one in his family could help him, but that Morris really
wanted to work and to go to school. Sanford believed that he could help Morris,
and asked Morris if he would like to come to Sanford’s home in Florence,
Mississippi. Morris said yes, and asked Sanford to take him in. Sanford offered
him a room in his house, but Morris preferred to live in a small apartment on
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No. 07-60482
Sanford’s property. Sanford agreed, and Morris lived in the apartment under
Sanford’s control and supervision.
Sanford states that he treated Morris the same as he treated his own
children, in that he provided Morris a place to live, financially supported him
over and above what Morris received in social-security benefits, provided Morris
with a car and insurance, paid for trips for Morris, including flying him to
Houston for an Astros baseball game, took Morris out to eat, provided Morris
food at Sanford’s home, bought Morris clothes and other things he needed or
wanted, gave him money for entertainment, helped Morris find a job at the
grocery store where Sanford shops, took him to church, and introduced him to
people with the church that he thought could help Morris then and in the future.
Accompanying Sanford’s affidavit is a photograph of Sanford and Morris
together with Morris wearing a suit Sanford purchased for him. Sanford
assisted Morris with opening a checking account and co-signed for him on the
account.
Sanford also took Morris to visit Mississippi College and Hinds County
Community College, where they met with admissions staff. Additionally,
Sanford assisted Morris in applying for a scholarship at Mississippi College,
which Morris received. Morris instead chose to enroll in Hinds Community
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No. 07-60482
College, and Sanford paid Morris’s tuition in cash and with funds from Sanford’s
ministry, the “Young People in Action Ministry.” Included as summary-
judgment proof are the scholarship award letter, a receipt for tuition to Hinds
Community College, and copies of documents refunding to Sanford Morris’s
tuition due to the fact Morris was reported missing and never attended classes.
Sanford worked with Morris and assisted him in developing life goals and
often discussed with him the importance of making good decisions and making
something of himself and his life. In April 2004, Morris was in a car accident
and needed medical treatment. At the hospital, Sanford signed as the party
responsible for Morris and Sanford paid medical bills incurred by Morris related
to the accident.
Sanford hoped that Morris would receive a college education and Morris
would assist Sanford in the future with his youth ministry. Sanford stated that
he treated Morris just like his own children when Sanford brought Morris into
his home. As to Morris, Sanford stated that he intended to and did undertake
all obligations and duties that a parent would owe to a child.
In rendering summary judgment in favor of First Colony, the district court
found: (1) Sanford never became Morris’s legal guardian; (2) Sanford’s argument
that Mississippi law allows his substantial relationship with Morris, which was
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No. 07-60482
engendered by love and affection, to establish an insurable interest in Morris’s
life was unavailing; and (3) Sanford failed to show that an issue of material fact
existed regarding whether he had a legal or economic interest in the continued
life of Morris; rather Sanford showed only the mere possibility or expectation of
a future economic relationship, which under Mississippi law is insufficient to
establish an insurable interest. Thus, the district court dismissed Sanford’s
claims for breach of contract and fiduciary duty. The district court declared the
Policy void and ordered First Colony to return to Sanford the premiums Sanford
had paid for the Policy. Sanford appeals.
Standard of review
“We review a district court judgment rendered on cross-motions for
summary judgment de novo.” Cedyco Corp. v. PetroQuest Energy, LLC, 497 F.3d
485, 488 (5th Cir. 2007). As both parties moved the district court for summary
judgment, we independently review each motion with its supporting proof. See
White Buffalo Ventures, LLC v. Univ. of Tex. at Austin, 420 F.3d 366, 370 (5th
Cir. 2005). Summary judgment is appropriate when “the pleadings, the
discovery and disclosure materials on file, and any affidavits show that there is
no genuine issue as to any material fact and that the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(c); See Anderson v. Liberty
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No. 07-60482
Lobby, Inc., 477 U.S. 242, 251 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322-
23 (1986). When reviewing a summary judgment, although we construe all facts
and draw all justifiable inferences in the light most favorable to the nonmoving
party, the nonmoving party must set forth specific facts to establish that there
is a genuine issue for trial. See Anderson, 477 U.S. at 250; Murray v. Earle, 405
F.3d 278, 284 (5th Cir. 2005). If, however, the nonmovant’s proof lacks probative
value as to the genuine issue, summary judgment is appropriate. Anderson, 477
U.S. at 249. “An issue is ‘genuine’ if the evidence is sufficient for a reasonable
jury to return a verdict for the nonmoving party.” Hamilton v. Seque Software
Inc., 232 F.3d 473, 477 (5th Cir. 2000). “A fact is ‘material’ if its resolution in
favor of one party might affect the outcome of the lawsuit under governing law.”
Id. Finally, a summary assertion made in an affidavit is simply not enough
proof to raise a genuine issue of material fact. Hibernia Nat’l Bank v. Carner,
997 F.2d 94, 98 (5th Cir. 1993). With these standards in mind, we review the
applicable law and the record before the district court.
Applicable law
In reviewing the district court’s rulings in this diversity case, we apply the
substantive law of Mississippi. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78-
79 (1938). Mississippi follows the general rule that for a purchaser of an
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No. 07-60482
insurance policy to be entitled to proceeds from such policy, the purchaser must
have an insurable interest in the property or life insured. See Se. Fid. Ins. Co.
v. Gann, 340 So. 2d 429, 434 (Miss. 1976), Nat’l Life & Accident Ins. Co. v. Ball,
Ball, 127 So. 268, 268 (Miss. 1930). For there to be an insurable interest in the
life of another,
“there must be a reasonable ground, founded upon the
relations of the parties to each other, either pecuniary
or of blood or affinity, to expect some benefit or
advantage from the continuance of the life of the
assured. Otherwise the contract is a mere wager, by
which the party taking the policy is directly interested
in the early death of the assured. Such policies have a
tendency to create a desire for the event. They are,
therefore, independently of any statute on the subject,
condemned, as being against public policy.”
Ball, 127 So. at 268 (quoting Warnock v. Davis, 104 U.S. 775, 779 (1881)).
Mississippi law provides that a person has an insurable interest in the life, body,
and health of another individual if one of the following exists:
(a) The individual and the insured are related closely by
blood or by law, a substantial interest engendered by
love and affection [sic];
(b) The person has a lawful and substantial economic
interest in having the life, health or bodily safety of the
insured continue, as distinguished from an interest
which would arise only by, or would be enhanced in
value by, the death, disablement or injury of the
insured;
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No. 07-60482
***
(d) A person has a lawful interest in having the funeral
expenses of the insured paid through insurance,
provided the insured has knowledge of such insurance.
Miss. Code Ann. § 83-5-251(3)(a), (b), (d) (2008) (“Section 83-5-251”).2
Regarding insuring minors, Mississippi law provides:
No life or health insurance contract upon an individual,
except a contract of group life insurance or annuity or
of group health insurance, or replacement contracts,
shall be made or effectuated, unless at the time of the
making of the contract the insured, applies therefor or
has consented thereto in writing or has had the
application acknowledged in writing by the insurance
company, except that any person having an insurable
interest in the life of a minor or any person upon whom
a minor is dependent for support and maintenance may
effectuate insurance upon the life of or pertaining to
such minor.
Miss. Code Ann. § 83-5-253 (2008) (“Section 83-5-253”) (emphasis added.)
Analysis
Here, as before the district court, Sanford argues that independently of
whether a formal legal guardianship existed, the summary-judgment proof
establishes that he was related closely by law to Morris by virtue of the final
2
Section 83-5-251 provides five means for establishing an insurable interest in the
continued life of another individual, however only the three mentioned here are arguably
applicable in this case. Omitted provisions (c) and (e) relate to stocks, businesses, and
charitable institutions.
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No. 07-60482
judgment appointing him guardian of Morris and his relationship with Morris.
Sanford contends that he was in loco parentis to Morris, thereby establishing
that a close legal relationship existed between Sanford and Morris, engendered
by love and affection, which gives rise to Sanford’s insurable interest in Morris.
Sanford contends, alternatively, that under Section 83-5-253, Sanford has shown
that Morris, a minor, was dependent upon Sanford for support and maintenance.
Thus, Sanford argues, the summary judgment should be reversed.
First Colony takes issue with Sanford’s contention that he stood in loco
parentis to Morris.3 First Colony casts the summary-judgment proof in a light
unfavorable to Sanford. However, as we are reviewing First Colony’s motion and
the trial-court judgment rendered against Sanford, we view all facts and draw
all reasonable inferences in Sanford’s favor.
First Colony notes that relationship by affinity is not always alone
sufficient to confer an insurable interest. See Ball, 127 So. at 268 (son-in-law
lacked insurable interest in mother-in-law because he failed to show reasonable
3
First Colony contends that Sanford failed to disclose to the court that rather than
taking Morris into his home as his own child, Sanford rented Morris a room behind his house
and required Morris to pay his own utility bills. Additionally, First Colony contends that after
Sanford had Morris’s social-security payments redirected to Sanford, he did not use the entire
payment for Morris’s benefit; rather Sanford kept the money and only paid Morris an
allowance. First Colony further argues that Sanford never sought to terminate Morris’s
mother’s parental rights or to adopt Morris.
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No. 07-60482
expectation of any benefit in continuance of her life necessary to form basis of
insurable interest). First Colony argues that even assuming Sanford was
standing in loco parentis to Morris, lacking is any authority for the proposition
that in Mississippi an individual standing in loco parentis to a minor gives rise
to the individual’s having an insurable interest in the life of that minor.
The district court determined neither whether Sanford stood in loco
parentis to Morris, nor if he was, whether that fact, along with any additional
facts and circumstances, would give rise to Sanford and Morris being related by
law to a degree that would give rise to Sanford’s having an insurable interest in
Morris’s life. Miss. Code Ann. § 83-5-251(3)(a).
We have found no Mississippi authority, and the parties have directed us
to none, holding that the relationship of an individual standing in loco parentis
to a minor establishes that the individual has an insurable interest in the minor,
nor have we found any authority to the contrary.
Mississippi recognizes the doctrine of in loco parentis and defines a person
acting in loco parentis as
one who has assumed the status and obligations of a
parent without a formal adoption. Thus, any person
who takes a child of another into his home and treats
[the child] as a member of his family, providing
parental supervision, support and education, as if [the
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No. 07-60482
child] were his own child is said to stand (in loco
parentis.)
Logan v. Logan, 730 So. 2d 1124, 1126 (Miss. 1998) (internal citations and
quotations omitted). This legal relationship has been recognized by Mississippi
courts to award child custody, visitation, and workers’ compensation benefits
and to impose parental obligations on persons standing in loco parentis to a
minor. See J.P.M. v. T.D.M., 932 So. 2d 760, 767-69 (Miss. 2006) (child custody,
visitation, and support); Logan, 730 So. 2d at 1126-27 (child custody); In re
M.D.B., 914 So. 2d 316, 319-21 (Miss. Ct. App. 2005) (child custody and
visitation); W.R. Fairchild Constr. Co. v. Owens, 224 So. 2d 571, 575 (Miss. 1969)
(workers’ compensation death benefits). Additionally, the Supreme Court of
Mississippi has stated:
A person in loco parentis may be defined as one who
has assumed the status and obligations of a parent
without a formal adoption. The rights, duties and
liabilities of one standing in loco parentis are the same
as those of a natural parent. Whether the relationship
exists is a matter of intention and of fact to be deduced
from the circumstances of the particular case.
Farve v. Medders, 128 So. 2d 877, 879 (Miss. 1961). “A person stands in loco
parentis to a child only when the person intends to assume toward the child the
status of a parent.” Worley v. Jackson, 595 So. 2d 853, 855 (Miss. 1992) (citing
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No. 07-60482
59 Am. Jur. 2d, Parent and Child § 88). The Worley court determined that
particular facts presented precluded its holding that grandparents stood in loco
parentis to their grandchildren. Id. Specifically, the Worley court noted that the
grandparents only sought from the court an order of temporary custody of their
grandchildren, that it was apparent that the grandparents intended to restore
custody of the children to their mother when she was no longer incarcerated, and
that it was doubtful that the children regarded the grandparents as their
parents, as they continued to visit their mother in jail. Id.4
In light of the fact that Mississippi recognizes the legal relationship of in
loco parentis, finding an in loco parentis relationship between Sanford and
Morris and considering that relationship along with other factors could lead to
Sanford’s having an insurable interest in Morris’s life. As the district court did
not consider whether Sanford was standing in loco parentis to Morris, and as the
record reflects factual disputes about whether Sanford stood in loco parentis to
Morris, summary judgment was not appropriate in this case. We therefore
remand this cause to the district court for additional consideration. On remand
4
In other jurisdictions, the relationship of in loco parentis alone has been held to
establish an individual’s insurable interest in the life of a minor. See Volunteer State Life Ins.
Co. v. Pioneer Bank, Tr., 327 S.W.2d 59, 62 (Tenn. Ct. App. 1959); see also 3 Couch on
Insurance § 43:5 (3d ed. 2008) (citing Peoples First Nat’l Bank & Trust Co. v. Christ, 65 A.2d
393, 395 (Pa. 1949)) (“[W]here a person stands toward another in loco parentis they each have
an insurable interest in the other’s life[.]”).
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No. 07-60482
the district court should determine whether Sanford stood in loco parentis to
Morris’s life and if so, whether that relationship alone or along with other factors
vested Sanford with an insurable interest in Morris.
The summary judgment is REVERSED and the cause is REMANDED for
further proceedings consistent with this opinion.
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