Companies Should Know When Their Customers Die: Court Rendered Judgment For An Estate Who Was Sued By An Annuity Company For Overpayments

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In In re Estate of Scott, an annuity company sued a customer’s estate for not reporting the death of his wife, which resulted in him receiving larger monthly payments after her death than he was entitled to under the contract. No. 04-19-00592-CV, 2020 Tex. App. LEXIS 4059 (Tex. App.—San Antonio May 27, 2020, no pet. history). The customer died in 2013, and the annuity company discovered the overpayments in 2014. In 2016, the annuity company filed suit against the customer’s estate for the overpayments. Both parties filed summary judgment motions, and the trial court entered judgment for the annuity company. The estate appealed.

The court of appeals reversed and rendered for the estate. The court first addressed the annuity company’s breach of contract claim. The court held that the contract did not expressly or impliedly require the surviving spouse to report the death of the first spouse. The court held:

In sum, the annuity contract, taken as a whole, does not evidence an intent to impose an implied obligation on Harold to notify Principal of Emily’s death or an implied obligation to return money Harold received in excess of the stated contract amount. Moreover, it is undisputed that this was Principal’s contract. “In Texas, a writing is generally construed most strictly against its author and in such a manner as to reach a reasonable result consistent with the apparent intent of the parties.” Principal, a sophisticated commercial enterprise, did not include express provisions requiring Harold to notify Principal of Emily’s death or to return money received in excess of the stated contract amount. The annuity contract, as written, does not evidence an intent to imply these obligations. Because we conclude the annuity contract, taken as a whole, does not support imposition of an implied obligation on Harold to notify Principal of Emily’s death or an implied obligation to return money Harold received in excess of the stated contract amount, Principal cannot show Harold breached the annuity contract.

Id.

The court then reviewed the annuity company’s money-had-and-received claim. The court described the claim thusly: “Money had and received is an equitable doctrine designed to prevent unjust enrichment. To prevail on a claim for money had and received, the plaintiff need only prove that the defendant holds money which in equity and good conscience belongs to the plaintiff.” Id. The court held that the claim was barred by the two-year statute of limitations as the annuity company did not file its claim within two years of discovering the overpayments.

Finally, the court rejected the annuity company’s fraud by nondisclosure claim. To establish fraud by non-disclosure, “Principal must prove: (1) Harold deliberately failed to disclose material facts; (2) Harold had a duty to disclose such facts to Principal; (3) Principal was ignorant of the facts and did not have an equal opportunity to discover them; (4) by failing to disclose the facts, Harold intended to induce Principal to act or refrain from acting; and (5) Principal relied on the non-disclosure, which resulted in injury.” Id. The court held that the annuity company had an equal opportunity to discover its customer’s death:

Principal had an equal opportunity to discover Emily’s death. Principal had internal procedures in place to discover this very type of information. Angela Essick, Principal’s corporate representative, testified that between 2001 and the present, Principal utilized a third-party company and the Social Security Master Index to provide it with a list of names and social security numbers of the deceased on a quarterly basis. Principal would compare these names and social security numbers with those of its annuitants. Principal failed to discover Emily’s death through these channels because it never obtained Emily’s social security number. Principal cannot rely on its internal oversight to claim it did not have an equal opportunity to discover Emily’s death.

Id. Accordingly, the court dismissed all of the annuity company’s claims and rendered judgment for the estate of the customer.

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