                      IN THE COURT OF APPEALS OF TENNESSEE
                                   AT JACKSON

                                                                      FILED
ERNEST L. ATKINS,                    )
                                     )                                December 28, 1998
       Plaintiff/Appellant,          )      Shelby Circuit No. 79423-4 T.D.
                                     )                                  Cecil Crowson, Jr.
                                                                      Appe llate Court C lerk
v.                                   )
                                     )
SECURITY CONNECTICUT                 )      Appeal No. 02A01-9710-CV-00257
LIFE INSURANCE CO.,                  )
                                     )
       Defendant/Appellee.           )


              APPEAL FROM THE CIRCUIT COURT OF SHELBY COUNTY
                           AT MEMPHIS, TENNESSEE


                   THE HONORABLE JAMES E. SWEARENGEN , JUDGE



For the Plaintiff/Appellant:         For the Defendant/Appellee:

Edwin C. Lenow                       S. Russell Headrick
Memphis, Tennessee                   Jennifer Ziegenhorn
                                     Memphis, Tennessee




                                     AFFIRMED


                                     HOLLY KIRBY LILLARD, J.



CONCURS:

DAVID R. FARMER, J.


HEWITT P. TOMLIN, JR., SR.J.
                                             OPINION

       This case involves a claim for breach of a life insurance contract. The proceeds of the life

insurance policy were distributed while the beneficiary was in prison, and in the lawsuit the

beneficiary claimed he did not receive them. The trial court granted summary judgment to the

defendant insurance company. We affirm.

       On approximately November 11, 1985, Ernest L. Atkins (Father) purchased a $15,000 term

life insurance policy from Security-Connecticut Life Insurance Co. (Security). Father named his

son, Ernest L. Atkins, (“Atkins”) as a contingent beneficiary under the policy. The policy indicated

that Father lived at 1569 Shadowlawn, Memphis, Tennessee 38106.

       On October 11, 1991, Father died. Security received two claim documents after Father’s

death. One document was a notice of social security number (Notice), dated December 20, 1991 and

executed by “Ernest L. Atkins, 1569 Shadowlawn Boulevard.” A Claimant’s affidavit was also

submitted. This document was likewise executed by “Ernest L. Atkins, 1569 Shadowlawn

Boulevard,” and notarized and dated January 24, 1992. Security’s claims department noticed

nothing unusual about these two documents.

       After receiving the claim documents, Security notified the claimant, “Ernest L. Atkins, 1569

Shadowlawn Boulevard,” by letter that his claim for life insurance benefits had been approved.

Security then placed the policy proceeds and interest, $13,627.59, in a personal security account at

State Street Bank and Trust Company in Boston, Massachusetts. Two checks were executed on the

account in the following amounts:

       1.      $9,000.00 to Debra Atkins dated February 19, 1992, and

       2.      $4,627.59 to Debra Atkins dated February 20, 1992.

       At the time of his Father’s death in 1991, Atkins was incarcerated in the Shelby County

Correctional Center. After his release in 1994, Atkins applied for food stamps and was rejected

because the office records reflected that he had received $13,627.59 in income in 1992. The food

stamp office gave Atkins the name of the insurance company and the policy number from the IRS

form filed by Security.

       Atkins then contacted Security in November 1994, asserting that he did not receive the

insurance policy proceeds. Atkins also told Security that he was incarcerated at the time of his

father’s death. In his affidavit Atkins stated he had no contact with Security during this time. Atkins


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maintained that he did not authorize anyone to receive the proceeds, and that he did not execute the

claim documents used to recover the policy proceeds. Security refused to pay the policy proceeds

to Atkins. Atkins then filed this lawsuit.

       Security filed a motion for summary judgment, submitting in support of the motion an

affidavit from the supervisor of the claims department at Security-Connecticut, Lois Mountzoures.

Mountzoures’ affidavit recounts the steps taken by Security in delivering the proceeds to the

beneficiary. Mountzoures avers that, at the time benefits were paid, the claim documents received

appeared to have been properly executed. She asserts that Security was not put on notice of the

alleged fraud until after Atkins contacted Security in November 1994 and April 1995. In response,

Atkins maintained that there were genuine issues of material fact, since he as the proper beneficiary

did not receive the proceeds of the policy.

       The trial court granted Security’s motion for summary judgment, without elaborating on its

reasoning. From this order, Atkins now appeals.

       On appeal, Atkins claimed that summary judgment was not appropriate in this case, because

there were disputed factual issues in this case, and Security’s payment to an imposter did not

extinguish the debt owed to him.

       Summary judgment is appropriate where there is no genuine issue of material fact and the

moving party is entitled to judgment as a matter of law. Tenn. R. Civ. P. Rule 56.03; Byrd v. Hall,

847 S.W.2d 208, 214 (Tenn. 1993). “[T]he issues that lie at the heart of evaluating a summary

judgment motion are: (1) whether a factual dispute exists; (2) whether the disputed fact is material

to the outcome of the case; and (3) whether the disputed fact creates a genuine issue for trial.” Byrd,

847 S.W.2d at 214. Even where disputed facts exist, summary judgment is appropriate so long as

those facts do not materially bear on the legal elements of the claim or defenses. Walker v. First

State Bank, 849 S.W.2d 337, 340 (Tenn. App. 1992).

       In this case, Atkins asserts that he was the proper beneficiary of the life insurance policy, and

that he did not receive the proceeds. Security responds by asserting that there was nothing in the

claim documents that would have indicated to Security that the documents were forged or were




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otherwise improper. The record contains no evidence from Atkins of anything in the claim

documents that might have put Security on notice that the documents were forged or irregular.

Atkins’ response to Security’s summary judgment motion is to reassert that the proceeds must have

been paid to an imposter because he did not execute the claim documents and did not receive the

proceeds. Thus, the issue in this case is whether an insurance company’s payment of proceeds to

someone other than the named beneficiary, without evidence of impropriety in the claim documents

that would have placed the insurer on notice, is sufficient to support the beneficiary’s claim against

the insurer for breach of contract.

        We found no published Tennessee decisions on this issue. However, courts in other states

that have considered this issue have adopted the principle that “an insurer is discharged from all

subsequent liability when it makes good faith payments to a purported beneficiary without notice

of any competing claims.” Crosby v. Crosby, 986 F.2d 79, 83 (4th Cir. 1993); see also Rogers v.

Unionmutual Stock Life Ins. Co., 782 F.2d 1214 (4th Cir. 1986); Weed v. Equitable Life

Assurance Soc., 288 F.2d 463 (5th Cir. 1961); Harper v. Prudential Ins. Co. of America, 662 P.2d

1264, 1273 (Kan. 1983). A payment of proceeds to a beneficiary in good faith “without knowledge

of facts vitiating the claim will prevent a second recovery by another claimant.” Weed, 288 F.2d at

464. An insurer is required to investigate a claim when the company is aware of suspicious

circumstances. See In re Estate of Thompson, 426 N.E.2d 1 (Ill. App. 1981).

        In Estate of Thompson, the insurance company paid life insurance proceeds to the named

beneficiary who later confessed that she had been involved in the insured’s murder, thus precluding

her from receiving any of the proceeds. In re Estate of Thompson, 426 N.E.2d at 2. The insured’s

estate argued that the insurance company acted in bad faith because the insurance company allegedly

acted with notice of facts that would defeat the beneficiary’s claim and acted without sufficient

investigation. Id. In affirming the trial court’s granting summary judgment in favor of the insurance

company, the court described the standard for a good faith and sufficient investigation:

        We agree that the obligation of good faith might require reasonably prudent pre-
        payment investigation when an insurer is aware of suspicious circumstances
        concerning a beneficiary and the death of an insured. However, we conclude that this
        component of the obligation of good faith is not violated unless [a] reasonably
        prudent investigation would have uncovered facts which would have defeated the
        beneficiary’s claim.

Id. at 3.



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       In this case, the record contains no evidence suggesting that Security had reason to suspect

that the claim documents were forgeries. The documents were properly signed and notarized, and

the social security numbers and addresses were correct on the forms. Therefore, there is no evidence

of suspicious circumstances that would have triggered a duty by Security to investigate further.

Thus, the good faith payment to “Ernest L. Atkins” discharged Security’s liability to Atkins, and the

trial court’s grant of summary judgment to Security was appropriate.

       The decision of the trial court is affirmed. Costs are assessed against the Appellant, for

which execution may issue, if necessary.




                                      HOLLY KIRBY LILLARD, J.

CONCUR:



DAVID R. FARMER, J.



HEWITT P. TOMLIN, JR., SR.J.




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