                    United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 99-3962
                                   ___________

Jon B. Roeder,                        *
                                      *
     Plaintiff - Appellant,           *
                                      * Appeal from the United States
     v.                               * District Court for the
                                      * District of Nebraska.
Metropolitan Insurance and Annuity    *
Company,                              *
                                      *
     Defendant - Appellee.            *
                                 ___________

                             Submitted: October 18, 2000

                                  Filed: January 8, 2001
                                   ___________

Before BOWMAN, LOKEN, and HANSEN, Circuit Judges.
                           ___________

LOKEN, Circuit Judge.

       This is an action to recover the proceeds of a life insurance policy issued to
Norman E. Roeder, a Nebraska resident. Although the policy lapsed for nonpayment
of premiums before Roeder died, his son, the policy beneficiary, asserts a right to
recover the proceeds because the insurer, Metropolitan Insurance & Annuity Company,
failed to provide a lapse notice required by the policy and the Nebraska insurance
regulations. Metropolitan moved for summary judgment, conceding for purposes of its
motion that it failed to give the required notice. The district court granted summary
judgment, concluding that Roeder’s failure to pay any premium for 245 days after the
policy lapsed was unreasonable as a matter of law. The beneficiary appeals.
Concluding that the district court erred in failing to analyze this issue under the
Nebraska law of equitable estoppel, we reverse and remand.

       Roeder purchased the flexible premium policy in February 1984, when he was
57-years old. The policy provided $300,000 of term life insurance for an annual
planned premium of $6,575, scheduled to be paid in semi-annual installments of
$3,287.50 on February 7 and August 7 of each year. Metropolitan deposited each
premium payment in an accumulation fund and withdrew the cost of insurance from that
fund on a monthly basis. In the policy’s early years, the planned premiums exceeded
the cost of insurance. That excess, together with earned interest and the continuing
semi-annual payments, were projected (but not guaranteed) to cover the rising cost of
the term insurance until the policy expired when Roeder reached age 95. However, the
policy was flexible -- Roeder could skip scheduled premium payments, change their
frequency and amount, or withdraw from the accumulation fund, so long as the amount
in that fund remained sufficient to keep the policy in force.

       Because the accumulation fund’s earnings were affected by interest rate changes,
the policy warned Roeder that “the planned premium . . . may need to be increased to
keep this policy and coverage in force.” In addition, the policy provided that, if the
accumulation fund became insufficient to pay the monthly cost of insurance --

      there will be a grace period of 61 days . . . to pay an amount that will
      cover the monthly deduction. We will send you a notice at the start of the
      grace period. . . . If we do not receive a sufficient amount by the end of
      the grace period, your policy will then end without value.

      Roeder made the scheduled semi-annual premium payments from 1984 until
1993, when he withdrew $27,115 from the accumulation fund. This withdrawal


                                          -2-
decreased both the face amount of the policy and the excess previously built up in the
fund. Metropolitan’s annual statement for the 1993-1994 policy year reported the
precipitous drop in the accumulation fund and advised Roeder that continued payment
of the scheduled premiums would only keep the policy in force until January 1997.

       Roeder continued making the scheduled semi-annual payments in 1994, 1995,
and 1996. In December 1996, Metropolitan sent him a regular billing statement
advising that the next semi-annual payment was due on February 7, 1997. On January
7, 1997, Metropolitan sent a lapse notice advising Roeder that the accumulation fund
was insufficient to pay that month’s insurance charge, and he must pay $1,630.97 by
March 16, 1997, to keep the policy in force. On January 21, Roeder made a regular
semi-annual payment of $3,287.50. Shortly thereafter, Metropolitan sent him an annual
statement for the 1996-1997 policy year. That statement reflected his January premium
payment and advised:

      If you continue to pay premiums as scheduled, on the basis of current
      interest rates and cost of insurance charges, your coverage will remain in
      effect until December 1997.

                                 *    *   *     *   *

      If you make no further premium payments, on the basis of current interest
      rates and cost of insurance charges, your coverage will remain in effect
      until May 1997.

Because Roeder had already made the February 1997 scheduled payment, no further
premium payments were “scheduled” until August 1997. Thus, the above-quoted
reference to “further premium payments” is less than self-explanatory. A person
familiar with this type of insurance could figure out the underlying problem from these
annual statements -- Roeder was now 70 years old, the cost of the term insurance
exceeded the scheduled premium payments, and his accumulation fund was too


                                          -3-
depleted to make up the difference during the entire period covered by a semi-annual
payment. But it would have been difficult if not impossible to discern from the annual
statements alone just when the accumulation fund would become insufficient to pay the
next monthly insurance deduction. Thus, the policy sensibly obligated Metropolitan
to provide Roeder a 61-day grace period to pay any premium shortfall and a notice of
when that period would begin.1

       Roeder made no further premium payments. He died of lung cancer in January
1998. Following his death, the beneficiary filed a claim for the policy proceeds,
$272,115. Metropolitan denied the claim on the ground that the policy had lapsed on
July14, 1997. Metropolitan’s policy records include reproductions of a May 7, 1997,
“lapse pending” letter advising Roeder that, to keep the policy in force, he must pay
$1,742.16 by July 14, 1997, the end of a 61-day grace period; and a July 14, 1997,
lapse notice advising Roeder that his coverage terminated that day for nonpayment of
premium. The beneficiary asserts that Roeder never received these notices.
Metropolitan did not send Roeder a regular billing statement for the August 1997
scheduled semi-annual payment because the policy lapsed on July 14.

      In claiming a right to the policy proceeds, the beneficiary pleaded an estoppel
theory. Metropolitan may not argue the policy lapsed or was cancelled, the beneficiary
alleged, because Roeder’s failure to pay any premiums due before his death was caused
by Metropolitan’s failure to send him (i) the May 1997 notice that additional premiums
must be paid or the policy would terminate on July 14, and (ii) a regular billing
statement for the August 1997 scheduled semi-annual payment. Metropolitan moved
for summary judgment. Conceding for purposes of its motion that it failed to send
Roeder a contractually required notice in May 1997, Metropolitan argued that the



      1
      This policy provision complied with notice and grace-period requirements in the
Nebraska insurance regulations. See NEB. ADMIN. CODE tit. 210, ch. 40, § 007.06.

                                         -4-
policy was not thereby extended indefinitely; rather, it terminated as a matter of law
prior to Roeder’s death in January 1998.

       Applying Nebraska law, the district court granted summary judgment in favor
of Metropolitan, concluding that its failure to provide the required lapse notice
extended the policy’s coverage only for a reasonable time, and that the policy lapsed
before Roeder’s death because his failure to pay any premiums for 245 days following
the lapse was unreasonable as a matter of law. We review the grant of summary
judgment de novo, viewing the facts in the light most favorable to the nonmoving party.
Summary judgment is appropriate if there is no material fact in dispute and the evidence
would not allow a reasonable jury to return a verdict for the nonmoving party. See
Derickson v. Fidelity Life Ins. Ass’n, 77 F.3d 263, 264 (8th Cir. 1996). We review the
district court’s interpretation and application of state law de novo. See Salve Regina
Coll. v. Russell, 499 U.S. 225, 231 (1991).

       Although Nebraska law does not favor the forfeiture of an insurance policy, “[a]
condition in a policy of life insurance, that if the stipulated premium shall not be paid
on or before a certain day the policy shall cease and determine, is of the very essence
and substance of the contract. Against a forfeiture caused by failure so to pay, a court
of equity cannot relieve.” Howie v. Cosmopolitan Old Line Life Ins. Co., 272 N.W.
207, 209 (Neb. 1937), citing Klein v. Insurance Co., 104 U.S. 88, 90-91 (1881); accord
St. Paul Mercury Ins. Co. v. Hurst, 301 N.W.2d 352, 355 (Neb. 1981). However,
“[t]he burden of establishing an effective cancellation before a loss is on the insurer,
and notice of cancellation must be in accord, and in substantial compliance, with the
provisions of the policy relating thereto.” Baker v. St. Paul Fire & Marine Ins. Co.,
480 N.W.2d 192, 197 (Neb. 1992). “[A] provision for forfeiture for nonpayment of
premiums is self-executing [unless] a notice of forfeiture [is required] by statute, by the
terms of the contract, or by course of dealing.” Tighe v. Security Nat. Life Ins. Co.,
214 N.W.2d 622, 625 (Neb. 1974). The issue, then, is whether Metropolitan’s failure


                                           -5-
to provide the required May 1997 lapse notice relieved Roeder of his obligation to keep
the policy in force by making additional premium payments prior to his death.

       The Supreme Court of Nebraska addressed a very similar issue in Pester v.
American Family Mutual Insurance Co., 186 N.W.2d 711 (Neb. 1971). In Pester, an
auto insurer failed to send its regular notice that a six-month premium was due. The
insured failed to pay the premium, suffered an accident eight days later, and the insurer
denied coverage because the policy had lapsed. In affirming judgment for the insured
after a court trial, the Supreme Court of Nebraska first stated precisely what the trial
court had decided:

             The court found that defendant was estopped to assert that the
      policy had lapsed and, in so doing, necessarily found that plaintiffs had
      not received the usual notice of premium due with reference to the one
      accruing on January 30, 1966; that plaintiffs relied and depended upon
      receipt of such notice; and that they could and would have paid the
      premium without defaulting had the notice been received.

186 N.W.2d at 713. After reviewing the facts as found by the trial court, the Supreme
Court stated the six elements of equitable estoppel2 and concluded the insured had
established each of those elements. See 186 N.W.2d at 714-15.

      In this case, without citing Pester, the district court relied primarily on a First
Circuit case in concluding that Metropolitan’s failure to give the required lapse notice
extended the policy only for a reasonable period of time. See Bezanson v.

      2
        As to the party estopped, (1) making a false representation, concealing material
facts, or conveying the impression the facts are other than those the party subsequently
asserts, (2) intending or expecting this conduct will influence the other party, and (3)
knowledge of the true facts. As to the other party, (4) lack of knowledge and the
means of knowledge of the true facts, (5) good faith reliance on the conduct or
statements of the estopped party, and (6) a detrimental change of position.

                                          -6-
Metropolitan Ins. & Annuity Co., 952 F.2d 1 (1st Cir. 1991), cert. denied, 505 U.S.
1205 (1992). But the court in Bezanson, a bankruptcy case, looked to Maine law and
did not analyze the issue under the doctrine of equitable estoppel. Although Pester
involved a liability insurance policy, rather than a life insurance policy, equitable
estoppel is a doctrine of general application under Nebraska law. Therefore, we
conclude the Supreme Court of Nebraska would apply the elements of equitable
estoppel as identified in Pester in deciding this case.

       Without question, the length of time between Metropolitan’s failure to give the
required lapse notice, the lapse of the policy, and Roeder’s death are relevant in
applying estoppel factors (4) and (5) summarized in footnote 2 -- whether Roeder knew
or had the means of knowing the policy was about to lapse, and his good faith reliance
on the lack of notice. But equitable estoppel turns on all the facts and circumstances
of a particular case, not just a single factor such as whether 245 days is an
unreasonably long period to extend the coverage of a life insurance policy. See, e.g.,
Franksen v. Crossroads Joint Venture, 515 N.W.2d 794, 803 (Neb. 1994). We agree
with the district court that the Supreme Court of Nebraska would not extend a life
insurance policy indefinitely because the insurer failed to give a required lapse notice.
Cf. Nederland Life Ins. Co. v. Meinert, 199 U.S. 171, 181 (1905) (a statutory notice
requirement should not be construed so as to make it a “trap” for either the insurer or
the insured). But the doctrine of equitable estoppel avoids this harsh and unreasonable
result by focusing on the insured’s lack of knowledge, good faith reliance, and
detrimental change of position. Cf. Norwest Bank, N.A. v. Federal Kemper Life Ins.
Co., 110 F. Supp. 2d 774, 783-84 (N.D. Ind. 2000) (discussing this issue in terms of
promissory estoppel under Indiana law).

       Under Nebraska law, the party asserting an estoppel, here the beneficiary, must
prove each element by clear and convincing evidence. See Double K, Inc. v.
Scottsdale Ins. Co., 515 N.W.2d 416, 422 (Neb. 1994). Though it is an equitable
doctrine, estoppel is an issue of fact under Nebraska law, see Woodard v. City of

                                          -7-
Lincoln, 588 N.W.2d 831, 836-37 (Neb. 1999), and where the underlying action is one
traditionally at law, such as an action to recover insurance proceeds, estoppel issues
may be submitted to a jury. See Chadron Energy Corp. v. First Nat’l Bank of Omaha,
459 N.W.2d 718, 730, 736 (Neb. 1990); Lydick v. Gill, 77 N.W. 340 (Neb. 1898). In
this case, assuming Metropolitan did not send the May 1997 lapse notice, whether the
beneficiary can establish an estoppel turns on issues such as what Roeder should have
learned from the January 1997 lapse notice and the various annual statements, and
whether Roeder could have reasonably relied on the absence of an August 1997 semi-
annual billing statement in making no further premium payments or inquiries before he
died in January 1998. Although there are many Nebraska cases rejecting claims of
equitable estoppel as a matter of law, in these circumstances we conclude the district
court erred in granting summary judgment without expressly analyzing the disputed
elements of equitable estoppel.

       The judgment of the district court is reversed, and the case is remanded for
further proceedings not inconsistent with this opinion.

      A true copy.

             Attest:

                CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.




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