     Case: 18-10347         Document: 00514851081            Page: 1      Date Filed: 02/26/2019




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                              United States Court of Appeals
                                                                                       Fifth Circuit

                                          No. 18-10347                               FILED
                                                                              February 26, 2019
                                                                                Lyle W. Cayce
JACKSON NATIONAL LIFE INSURANCE COMPANY,                                             Clerk

                Plaintiff - Appellee

v.

LANCE DOBBINS; L & R CATTLE L.L.C.,

                Defendants - Appellees

v.

FEDERAL DEPOSIT INSURANCE CORPORATION,

                Defendant - Appellant




                     Appeal from the United States District Court
                          for the Northern District of Texas
                                USDC No. 3:16-CV-854


Before STEWART, Chief Judge, and SOUTHWICK and ENGELHARDT,
Circuit Judges.

PER CURIAM:*
       In 2015, Larry Dobbins (“Dobbins”) died. Now, the correct recipient of his
$1 million life insurance policy (the “Policy”) is in dispute. Dobbins used the


       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
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                                         No. 18-10347
Policy as collateral for a loan, assigning the proceeds to the Bank of Union
(“Union”). When Dobbins died, he was in default on this loan. Jackson National
Insurance Company (the “Insurer” or “Jackson National”) brought an
interpleader action and sought a judgment from the district court as to which
party was entitled to the Policy proceeds. At issue is whether Dobbins made a
valid assignment to Union, and whether the Insurer was entitled to reduce the
Policy proceeds pursuant to a misstatement-of-age provision within the Policy.
For the reasons stated below, we REVERSE the district court’s grant of
summary judgment for L & R Cattle, LLC (“L & R”) and Lance Dobbins
(“Lance”). Additionally, we AFFIRM the district court’s grant of summary
judgment for Jackson National as to the reduced amount of proceeds payable.
 I.    RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
       In 1999, Dobbins applied for a life insurance policy from Valley Forge
Life Insurance Company (“Valley Forge”) and received a $1 million term life
insurance policy. Linda Dobbins was initially designated as the Policy’s
primary beneficiary, but in 2001, the primary beneficiary was changed to
Dobbins Enterprises, which in turn transferred its rights to L & R in 2015. In
2001, Lance was named as a contingent beneficiary. 1 Both Dobbins Enterprises
and Lance were revocable beneficiaries. In 2007, Dobbins Ranch, LLC—owned
by Dobbins—obtained a loan from Union and used the Policy as collateral. As
collateral, Dobbins assigned the Policy to Union conveying “the sole right to
collect from the Insurer the net proceeds of the Policy when it becomes a claim
by death or maturity[.]” Dobbins and Union executed a form reflecting the
assignment and sent it to Valley Forge. But, Valley Forge stated that it needed




       1In 2014, Dobbins transferred ownership of the Policy to Lance, a transfer that was confirmed
by Jackson National, the successor to Valley Forge, in 2015.
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                                   No. 18-10347
more information to process the assignment because a few portions of the
assignment form were incomplete.
      The Policy states that the insurance company is only bound by the
assignment if certain requirements are met (the “paperwork provision”). The
paperwork provision states that the Insurer is “bound by an Assignment only
if [it] receive[s] a duplicate of the original Assignment at [its] Executive Office.”
There is also a formal assignment as collateral form that must be completed.
The assignment form was never completed and the parties did not comply with
the paperwork provision. In 2014, Jackson National ultimately communicated
to Dobbins that the assignment was never accepted, therefore, the Policy “was
never assigned to the Bank of Union.”
      Union was closed on January 24, 2014 and the Federal Deposit
Insurance Corporation (“FDIC”) was appointed as receiver, succeeding to all of
Union’s rights and assets under 12 U.S.C. § 1821(d)(2). Dobbins died on
November 12, 2015, with Dobbins Ranch in default on the Union loan. Dobbins
Ranch owed more than $7.6 million on the defaulted loan. After Dobbins’s
death, L & R, Lance, and the FDIC all submitted claims for the full proceeds
of the Policy.
      In March 2016, Jackson National filed an interpleader action against
L & R, Lance, the FDIC, and Newtek Small Business Lending, LLC
(“Newtek”), Union’s loan servicer. Jackson National moved the district court
for (1) permission to deposit the insurance proceeds with the court and (2) a
ruling to decide as a matter of law who was entitled to the Policy proceeds.
Jackson National took no position as to who was entitled to the Policy proceeds
and moved to be immediately dismissed from the case. The district court
granted Jackson National’s motion, contingent on its deposit of the full $1
million Policy proceeds with the court. Jackson National, however, only


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                                         No. 18-10347
deposited $910,888.82 with the court. 2 It did not interplead the full amount
because Valley Forge misstated Dobbins’s age in the Policy, and pursuant to
the Policy’s misstatement-of-age provision, Jackson National could at any time
adjust the Policy proceeds amount so that it represented Dobbins’s true age.
Jackson National asked the district court to accept the reduced amount due to
its invocation of the misstatement-of-age provision. 3 The district court denied
Jackson National’s motion. Accordingly, Jackson National filed an amended
complaint seeking a declaratory judgment that the reduced proceeds complied
with the Policy’s terms.
       After discovery, all parties moved for summary judgment. Jackson
National moved for summary judgment on its declaratory judgment claim in
which it sought a declaration that the reduced amount of proceeds was correct.
L & R and Lance and the FDIC cross-moved for summary judgment on the
issue of who was entitled to the Policy proceeds. In January 2018, the district
court granted summary judgment pursuant to City Nat’l Bank of Lawton v.
Lewis, 176 P. 237 (Okla. 1918) for L & R and Lance. The district court also
granted Jackson National summary judgment, declaring that the reduced
amount of the Policy proceeds was consistent with the Policy’s terms. The
FDIC timely appealed both judgments.
II.    ANALYSIS
       a. Jurisdiction
       We have jurisdiction pursuant to 28 U.S.C. §§ 1331, 1335, and 12 U.S.C.
§ 1819(b)(2)(A) because the FDIC is a party. When our jurisdiction is based on



       2  This amount encompasses the Policy amount minus attorney’s fees, interest, and includes a
partial refund of the monthly premium.

       3 The misstatement-of-age provision states that “[i]f the age or sex of the insured has been
misstated, [the insurance company] will adjust the policy proceeds to the amount which the premiums
paid would have purchased at the correct age or sex.”
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                                  No. 18-10347
a federal question, we apply federal common law choice-of-law principles.
Singletary v. United Parcel Serv., Inc., 828 F.3d 342, 351 (5th Cir. 2016) (citing
Jimenez v. Sun Life Assurance Co. of Can., 486 F. App’x 398, 406 (5th Cir. 2012)
(unpublished opinion)). The Policy does not include a choice-of-law provision;
thus, the court must determine which state has the “most significant
relationship to the transaction and the parties.” Restatement (Second) of
Conflicts of Laws § 188 (Am. Law Inst. 1971); see also Albany Ins. Co. v. Anh
Thi Kieu, 927 F.2d 882, 891 (5th Cir. 1991) (“In contract cases, courts must
consider such factors as the place of formation of the contract and the place of
negotiation of the contract to determine which states have sufficient contact
with the transaction and the parties to support the application of their law.”
(citing Section 188)).
      The parties agree that Oklahoma contract law applies. Oklahoma has
the most significant contacts because among other things, Dobbins is a citizen
of Oklahoma and the Policy was entered into in Oklahoma. Therefore,
Oklahoma contract law governs this case. See Minton v. Minton, 39 P.2d 538,
542 (Okla. 1934) (“[T]he insured being a resident of Oklahoma when the policy
was signed, delivered, and the premiums paid, the policy is an Oklahoma
contract and governed by the laws of Oklahoma[.]” (citation omitted)).
      b. Standard of Review
      We review a district court’s grant of summary judgment de novo,
applying the same standard as the district court. Dillon v. Rogers, 596 F.3d
260, 266 (5th Cir. 2010) (citation omitted). Summary judgment is appropriate
where the “pleadings, depositions, answers to interrogatories and admissions
on file, together with any affidavits, if any, show that there is no genuine issue
as to any material fact and that the moving party is entitled to judgment as a
matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citation
omitted); see also Fed. R. Civ. P. 56(a). “The evidence of the non[]movant is to
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                                  No. 18-10347
be believed, and all justifiable inferences are to be drawn in [his] favor.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) (citing Adickes v. S.
H. Kress & Co., 398 U.S. 144, 158-59 (1970)). Not every factual dispute between
the parties will prevent summary judgment; rather, the disputed facts must be
material. See Anderson, 477 U.S. at 247-48. In other words, they must have
the potential under the substantive law governing the issue to affect the
outcome of the suit. Id. A nonmovant’s mere beliefs, conclusory allegations,
speculation, or unsubstantiated assertions are insufficient to survive summary
judgment. Clark v. Am.’s Favorite Chicken Co., 110 F.3d 295, 297 (5th Cir.
1997) (citation omitted). “When parties file cross-motions for summary
judgment, we review ‘each party’s motion independently, viewing the evidence
and inferences in the light most favorable to the non[-]moving party.’” Cooley
v. Hous. Auth. of City of Slidell, 747 F.3d 295, 298 (5th Cir. 2014) (quoting Ford
Motor Co. v. Tex. Dep’t. of Transp., 264 F.3d 493, 498 (5th Cir. 2001)).
      c. Validity of Assignment
      The FDIC asserts that the assignment between Dobbins and Union was
valid because both parties clearly intended to effect the assignment.
Additionally, it asserts that Alkire v. King, 80 P.2d 309 (Okla. 1938) governs
this case. It, therefore, argues that the insurer’s acceptance of the assignment
via the paperwork provision is not relevant to the assignment’s validity. We
agree with both assertions.
      “Under Oklahoma law, no particular words are necessary to effect a
contractual assignment; rather, the intent of the parties governs whether an
assignment has been made.” Coosewoon v. Meridian Oil Co., 25 F.3d 920, 930
(10th Cir. 1994) (citing Cobb v. Baxter, 292 P.2d 389, 391-92 (Okla. 1956)).
“[A]ny writing indicating the intention to pass the interest in the proceeds of
the policy to the assignee is sufficient as an assignment.” Alkire, 80 P.2d at 311


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(citation omitted). Dobbins and Union executed a written assignment form
establishing their intent to enter into an assignment.
      Oklahoma law provides that “a policy may be assignable or not
assignable, as provided by its terms.” Okla. Stat. Ann. tit. 36 § 3624 (1957). To
the extent that a policy includes a provision requiring acceptance by the
insurance company, “the provision in the policy requiring approval or
acceptance of the assignment is for the sole benefit of the company.” Alkire, 80
P.2d at 309; see also 3 Couch on Ins. § 36:2 (2018) (“Provisions with respect to
formalities of assignment are for the benefit of the insurer, and the insurer
alone can complain of noncompliance.”). Accordingly, “[t]here is no merit to the
contention that the assignment is not valid because [it was] not accepted by
the insurance companies.” Alkire, 80 P.2d at 309.
      Under Oklahoma case law, assignment provisions within insurance
policies generally do not have a bearing on the validity of an assignment
between competing beneficiaries or assignees but are only for the benefit of the
insurance company, specifically when it is sued for failure to pay a policy’s
proceeds. See Lewis, 176 P. at 239 (lawsuit against insurance company for
failure to pay policy proceeds to a bank pursuant to an oral assignment);
Bankers Healthcare Grp., Inc. v. Reassure Am. Life Ins. Co., No. CIV-10-1044-
D, 2011 WL 4592493, at *5 (W.D. Okla. Sept. 30, 2011) (“Where, as in this case,
[a breach-of-contract case against the insurer], the insurer’s consent to an
assignment is required, the assignee acquires no right as against the insurer
in the absence of that consent.”) (emphasis in original) (internal citations and
quotation marks omitted).
      L & R asserts that Lewis, not Alkire, governs this case, and the district
court agreed. However, Lewis and Alkire do not stand for opposite propositions
regarding the effect of the insurance company’s acceptance of an assignment.
The distinguishing factor between them is that in Lewis the insurance
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                                  No. 18-10347
company was a defendant and had not interpleaded any of the policy proceeds
into the court. See Lewis, 176 P. 238 (“The [bank] instituted this suit against
the defendants for the purpose of [transferring] the proceeds of a settlement of
certain life insurance policies made by the defendant Martha A. Lewis with
her codefendant, the Federal Life Insurance Company, with what is designated
an equitable assignment.”); Alkire, 80 P.2d at 310 (“The [insurance] companies
are not involved here; the suit is between rival claimants to the funds which
have already been received from the companies.”). In this case, the insurance
company is not a defendant, similar to Alkire, and has taken no position as to
who is entitled to the Policy’s proceeds. As a result, the paperwork provision
does not apply to the assignment between Dobbins and Union.
      The language of the assignment provision in this case states that the
Policy is freely assignable, but that the insurance company is only bound by
the assignment if the parties fully comply with the paperwork provision. The
Policy does not contain any provision regarding the assignment’s validity as
between rival claimants for failure to comply with the paperwork provision. In
fact, the Policy states that the insurer “takes no responsibility for the validity
of the assignment.” The paperwork provision only serves to establish that the
insurance company will not be liable for failure to pay proceeds to an assignee
if suit is brought against the company and the parties failed to comply with the
paperwork provision.
      We also note that Dobbins assigned the Policy as collateral for a loan,
which the Policy and Oklahoma law allow. See Prudential Ins. Co. of Am. v.
Glass, 959 P.2d 586, 591 (Okla. 1998) (“[T]he owner of a life insurance policy,
assignable at his will, may assign all his/her interest in the policy for monetary
consideration.” (citing Alkire, 80 P.2d at 309)). Oklahoma law also treats the
rights of a collateral assignee as “superior to [those] of the revocable beneficiary
to the extent of the underlying debt.” Id. at 592 (citing McAllen State Bank v.
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Tex. Bank & Tr. Co., 433 S.W.2d 167, 169-71 (Tex. 1968)). Further, the Policy
states that “[i]f an assignment is collateral, the collateral Assignee has priority
[over] the interest of any revocable [b]eneficiary or revocable payee[.]”
Therefore, the FDIC as receiver for Union has an interest in the Policy
proceeds superior to that of L & R and Lance. Consequently, because the FDIC
has a superior interest and the amount that Dobbins owes on its loan is more
than the value of the Policy proceeds, the FDIC is entitled to the entire amount
of proceeds.
       d. Reduction of Policy Proceeds
       The FDIC asserts that Jackson National was not entitled to reduce the
amount of the Policy proceeds because Valley Forge (and subsequently Jackson
National) had knowledge of Dobbins’s misstated age. Additionally, the FDIC
asserts that Dobbins’s age was misstated by Valley Forge, and thus, Jackson
National cannot reduce the amount of the Policy proceeds based on Valley
Forge’s mistake. 4 Jackson National counters these assertions, arguing that the
Policy’s misstatement-of-age provision “simply operates to match the policy
amount and the premiums to the true risk undertaken by the insurance
company based on the correct age of the insured.” Moreover, Jackson National
argues that it only seeks to enforce the terms of the Policy, not to reform it.
       Under Oklahoma law, misstatement-of-age provisions are required in
each life insurance policy. Okla. Stat. Ann. tit. 36 § 4006 (1957). Additionally,
Oklahoma law states that incontestability clauses cannot “be construed to
preclude adjustment at any time of the amount payable or benefits accruing
under the policy for misstatement of age, whether or not such age adjustment
provision is excepted in such clause.” Id. at § 4015 (emphasis added).


       4  Valley Forge misstated Dobbins’s age when the Policy was initially secured, but it placed a
note in the Policy documents noting his correct birthdate.

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                                          No. 18-10347
       Thus, Oklahoma statutory law recognizes the ability of an insurance
company to adjust the policy proceeds pursuant to a misstatement-of-age
provision at any time absent contractual language to the contrary. 5 The plain
text of the Policy does not place a time limit on adjusting the Policy based on a
misstatement of Dobbins’s age.
       The FDIC cites several cases in which an insurance company was not
allowed to adjust a policy because the company erred, but these cases are
inapposite. In these cases, the insurance company was trying to invalidate a
policy or to reduce its liability to only the premiums paid by the insured, which
is distinguishable from Jackson National’s desire to enforce the misstatement-
of-age provision. See Union Life Ins. Co. v. Evans, 101 S.W.2d 778 (Ark. 1937);
N.C. Mut. Life Ins. Co. v. Banks, 148 S.W.2d 54 (Tenn. 1940); see also
Lowenstein v. Old Colony Life Ins. Co., 166 S.W. 889 (Mo. 1914) (holding that
because the insurance company had knowledge that the insured’s age was
incorrect and still chose to honor the policy, it could not reduce the amount of
the proceeds based on the insured’s misstatement of his age). Moreover, none
of these cases are governed by Oklahoma law.
       Jackson National only seeks to enforce the provisions of the Policy, and
neither the plain language of the Policy nor Oklahoma law places a time limit
on when the insurance company can adjust the policy based on the
misstatement-of-age provision. Therefore, it was proper for Jackson National
to reduce the amount of Policy proceeds based on Dobbins’s true age. To the
extent that the FDIC argues that Jackson National’s declaratory judgment
action was untimely, we again reiterate that there is no time limit on when an



       5  Under Oklahoma law each policy must have an incontestability clause stating that the policy
“shall be incontestable, except for nonpayment of premiums, after it has been in force during the
lifetime of the insured for a period of two (2) years from its date of issue.” Okla. Stat. Ann. § 4004
(1957).
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                                  No. 18-10347
insurance company can enforce the misstatement-of-age provision. See Okla.
Stat. Ann. § 4015.
III.     CONCLUSION
         For the reasons stated above, we REVERSE the district court’s grant of
summary judgment in favor of L & R and Lance and RENDER summary
judgment in favor of the FDIC. Additionally, we AFFIRM the district court’s
grant of summary judgment in favor of Jackson National as to the reduction of
the Policy proceeds.




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