FSM SUPREME COURT TRIAL DIVISION
Cite as Ekiek v. Pohnpei, 24 FSM R. 251 (Pon. 2023)
MAYLEEN J. EKIEK and the ESTATE OF
ENERIKO EKIEK,
Plaintiffs,
vs.
POHNPEI STATE GOVERNMENT,
Defendant.
CIVIL ACTION NO. 2021-011
MEMORANDUM OF DECISION
Larry Wentworth
Associate Justice
Decided: August 30, 2023
APPEARANCES:
For the Plaintiff: Marstella E. Jack, Esq.
P.O. Box 2210
Kolonia, Pohnpei FM 96941
For the Defendant:
Monaliza Abello-Pangelinan, Esq.
Assistant Attorney General
Pohnpei Department of Justice
P.O. Box 1555
Kolonia, Pohnpei FM 96941
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By statute, a settling joint tortfeasor is immune from any claim for contribution by a co-defendant if the plaintiffs should obtain a judgment against the remaining co-defendant. This statute applies only to tort claims, not insurance contract claims or contract claims in general. Ekiek v. Pohnpei, 24 FSM R. 251, 254-55 (Pon. 2023).
Any amended pleading that would be futile must be denied. Ekiek v. Pohnpei, 24 FSM R. 251, 255 n.3 (Pon. 2023).
The failure to oppose a motion is deemed a consent to the motion, but even then, the court still needs good grounds before it can grant the motion. Ekiek v. Pohnpei, 24 FSM R. 251, 255 (Pon. 2023).
As a general rule, an employer functions as an agent of its employees when it negotiates insurance for the benefit of those employees. However, the employer serves as an agent of the insurance company when it enrolls employees in a previously-negotiated plan. The dividing line appears to be this: Once the group policy has been issued, the employer is the agent of the insurer in determining which persons are its employees and are thereby eligible to participate as a member of the group. Ekiek v. Pohnpei, 24 FSM R. 251, 255-56 (Pon. 2023).
The State of Pohnpei was the insurer's agent for the enrollment of insured employees and for the collection of premiums. Thus, if a state employee submitted a completed enrollment form to Pohnpei, the insurer would be liable to the deceased employee's beneficiary on the group life insurance contract. Ekiek v. Pohnpei, 24 FSM R. 251, 256 (Pon. 2023).
Generally, a principal is bound by, and liable for, the acts which his agent does with or within the actual or apparent authority from the principal, and within the scope of the agent's employment. Thus, the agent's knowledge that its employee was enrolled in the insurer's group life insurance plan would be imputed or attributed to the principal, the insurer. Ekiek v. Pohnpei, 24 FSM R. 251, 256 (Pon. 2023).
Since a conclusory argument is not evidence, summary judgment movants relying on conclusory arguments have not produced any admissible evidence to make out a prima facie case that their contention is true, and, since they have not, their summary judgment motion lacks a factual basis and cannot be granted. Ekiek v. Pohnpei, 24 FSM R. 251, 257 (Pon. 2023).
When a party's summary judgment motion is denied as a matter of law and when it appears the nonmoving party is entitled to judgment as a matter of law, the court may, in the absence of a cross-motion for summary judgment, grant summary judgment to the nonmoving party if the original movant had an adequate opportunity to show that there is a genuine issue and that the nonmoving opponent is not entitled to judgment as a matter of law. Ekiek v. Pohnpei, 24 FSM R. 251, 257 (Pon. 2023).
When the insurer received all of the insurance premium payments withheld from the state employee's pay and the state employer did not retain any, the state employer is, as a matter of law, entitled to summary judgment on the unjust enrichment claim. Ekiek v. Pohnpei, 24 FSM R. 251, 257 (Pon. 2023).
Signing up for a group life insurance program and paying the premiums are part of the insurance contract between the insured (the state employee) and the insurer, not the contract between the employer and employee. Ekiek v. Pohnpei, 24 FSM R. 251, 257 (Pon. 2023).
Because the state employer was an insurer's agent, not an insurer, and when, whether an insurer's agent may, in certain circumstances, be liable to an insured on the insurance policy was an issue that was not addressed, summary judgment on the breach of contract cause of action will be denied. Ekiek v. Pohnpei, 24 FSM R. 251, 257-58 (Pon. 2023).
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LARRY WENTWORTH, Associate Justice:
This comes before the court on the plaintiffs' Motion for Summary Judgment, filed March 10, 2023. The motion is denied as explained below. Summary judgment is granted for the defendant on the plaintiffs' unjust enrichment claim.
A. Eneriko Ekiek Insurance Eligibility
Eneriko Ekiek became an Associate Justice of the Pohnpei Supreme Court in September 2018. Every pay period after that, the premiums for group life insurance coverage (ostensibly for $75,000) were deducted from Justice Ekiek's bi-weekly pay. Participation in the group life insurance plan is optional for Pohnpei state employees. The State of Pohnpei remits all the group life insurance premiums it collects to Moylans Underwriters (FSM) Inc. ("Moylans FSM"), which acted as collection agent for the actual insurer, Netcare Life and Health Insurance Company ("Netcare").
Justice Ekiek died in April 2019. His widow, Mayleen J. Ekiek, claimed $75,000 as Justice Ekiek's beneficiary. Netcare denied the claim, asserting that Justice Ekiek was not enrolled as an insured because neither it nor Moylans FSM had a completed group life insurance enrollment application for him in their files. It is unclear whether Justice Ekiek completed an enrollment form that did not manage to make through channels from his employer (Pohnpei state) into the insurance companies' files, as alleged by the plaintiffs' first amended complaint; or whether the enrollment form was mislaid by an insurance company; or whether Justice Ekiek signed up for, and was added to the list of, Pohnpei employees with group life insurance coverage without actually completing an enrollment form. It is clear that Justice Ekiek had been paying the life insurance policy premiums through bi-weekly payroll deductions for eight months.
B. Widow and Estate of Eneriko Ekiek Sue
After the Estate of Eneriko Ekiek ("Estate") got the Pohnpei probate court's permission, the Estate and Mayleen J. Ekiek ("beneficiary"), on April 12, 2021, sued the Pohnpei state government and Moylans Insurance Underwriters Inc. ("Moylans") for breach of contract and unjust enrichment and Pohnpei for negligence. The plaintiffs sought as damages the $75,000 death benefit the beneficiary believed she was entitled to but for the Pohnpei state government's negligence and alleged that Moylans had breached the insurance contract by not paying the death benefits and that it was unjustly enriched by accepting Justice Ekiek's insurance premium payments.
On July 19, 2021, Moylans filed a Motion to Set Hearing for Approval of Settlement, in which it asked that it, and entities that it asserted were the real parties in interest (Moylans FSM and Netcare), be permitted to settle with the plaintiffs under the protection of 6 F.S.M.C. 1202(4).1 During the July 30, 2021 hearing, the court pointed out from the bench that the statutory protection that Moylans (and the other insurance companies) sought was available only to joint tortfeasors and the complaint alleged only contract and restitution claims against Moylans, not tort claims.
On August 5, 2021, the plaintiffs filed an amended complaint against Pohnpei, Moylans, Moylans FSM, and Netcare, alleging that Pohnpei had breached Justice Ekiek's employment contract and Pohnpei's promise that if Justice Ekiek signed up for life insurance coverage and paid the premiums, his beneficiaries would be paid the policy amount on his death; that the defendants had been unjustly enriched; that all defendants had been negligent in accepting the policy premiums without ensuring that the premium payer, Justice Ekiek, was properly enrolled in the group life insurance plan; and that Pohnpei had been negligent because Justice Ekiek must have completed an enrollment form, otherwise Pohnpei would not have started deducting life insurance premiums, but that Pohnpei must have lost the enrollment form.
C. Insurance Companies Settle
The plaintiffs and the defendant insurance companies quickly reached a settlement agreement, in which the insurance companies agreed to pay $37,500, supposedly half of Justice Ekiek's death benefits, in return for their dismissal from the case with prejudice. Defendant Pohnpei, on August 17, 2021, filed its answer denying negligence and liability because it had kept its part of the bargain by deducting the premiums from Justice Ekiek's paycheck and remitting them to Moylans FSM and because Pohnpei was not responsible for Moylans FSM's incomplete records. Pohnpei also cross-claimed against the defendant insurance companies, alleging that their acceptance of the premiums constituted an acceptance of coverage for Justice Ekiek. Pohnpei opposed the dismissal with prejudice of the defendant insurance companies, asking that the matter be held in abeyance until discovery was complete.
On September 22, 2021, the insurance companies moved to dismiss Pohnpei's cross-claim. Pohnpei did not file an opposition. The court therefore granted the motion and dismissed the cross-claim on October 21, 2021. On October 22, 2021, the insurance companies then moved for their own dismissal with prejudice, and the plaintiffs filed a non-opposition. Again, Pohnpei did not file an opposition to this motion.
On December 2, 2021, the court, noting that Pohnpei's cross-claim against its co-defendants had been dismissed, granted the dismissal of the insurance company defendants and further noted that "the settling co-defendants are, as 6 F.S.M.C. 1205(1) requires, immune from any claim for contribution by defendant Pohnpei state government if the plaintiffs should obtain a judgment [against] the Pohnpei state government." Section 1205 provides that
When a release or a covenant not to sue or not to enforce judgment is given in good faith to one of two or more persons liable in tort for the same injury or the same wrongful death:
(1) It does not discharge any of the other tort feasors from liability for the injury or wrongful death unless its terms so provide, but it reduces the claim against the other to the extent of any amount stipulated by the release or the covenant, or in the amount of the consideration paid for it, whichever is greater; and,
(2) It discharges the tort feasor to whom it is given from all liability for contribution to any other tort feasor.
6 F.S.M.C. 1205. Using this statute, the insurance companies settled the main cause of action against them in the First Amended Complaint § negligence. The insurance companies could not have sought the protection of this statute if they had been sued on the insurance policy itself because Section 1205 applies only to tort claims, not insurance contract claims or contract claims in general.
D. Plaintiffs' Summary Judgment Motion Filed Next
On March 10, 2023, the plaintiffs, noting that it was undisputed that Justice Ekiek paid group life insurance premiums the entire time he was employed by the Pohnpei Supreme Court and, noting that the defendant insurance companies had admitted liability for negligence and that Pohnpei's cross-claim had been dismissed, moved for summary judgment on its breach of contract, unjust enrichment, and negligence claims against Pohnpei. They seek $31,500 from Pohnpei, the unpaid amount of the death benefit.2
Pohnpei was, at its request, granted leave to move to amend its answer and was therefore allowed more time to respond to the plaintiffs' March 10, 2023 summary judgment motion. Pohnpei's May 9, 2023 proposed amended answer was, on May 22, 2023, denied because the proposed amendment was futile since it sought to assert a cross-claim against a non-party, that is, against Moylans,3 a co-defendant that was dismissed on December 2, 2021, when Pohnpei did not oppose the dismissal motion, and found immune to a contribution claim from defendant Pohnpei state government because it was a joint tortfeasor that had settled. The court further added that this denial did not prevent Pohnpei from arguing, if the facts and the law warranted, that it was not liable because the dismissed defendant was solely liable.
Pohnpei was then given until June 14, 2023, to file and serve a response to the plaintiffs' summary judgment motion. None was filed. The failure to oppose a motion is deemed a consent to the motion, FSM Civ. R. 6(d), but even then, the court still needs good grounds before it can grant the motion. Senda v. Mid-Pacific Constr. Co., 6 FSM R. 440, 442 (App. 1994).
The material facts upon which the plaintiffs base their summary judgment motion are undisputed § that Justice Ekiek worked at the Pohnpei Supreme Court from September 2018 until he died in April 2019; that Justice Ekiek paid life insurance premiums that entire time; that Pohnpei withheld those premiums from Justice Ekiek's salary and passed them on to Moylans FSM for group life insurance coverage by Netcare; that Moylans admitted joint liability with Pohnpei for negligence and then settled with the plaintiffs and sought protection under 6 F.S.M.C. 1205; that Pohnpei's cross-claim was dismissed October 21, 2021; and that the insurance companies were then dismissed from this suit based on the settlement agreement.
This is a peculiar case. The plaintiffs could have sued the insurer (Netcare) on the insurance policy, alleging that Pohnpei was the insurer's agent in accepting and processing enrollments from among its employees for the insurer's group life insurance policy. "As a general rule, an employer functions as an agent of its employees when it negotiates . . . insurance for the benefit of those employees. However, the employer serves as an agent of the insurance company when it enrolls employees in a previously-negotiated plan." In re Managed Care Litig., 185 F. Supp. 2d 1310, 1319 (S.D. Fla. 2002) (citations omitted). "The dividing line appears to be this: Once the group policy has been issued, the employer is the agent of the insurer in determining which persons are its employees and are thereby eligible to participate as a member of the group." Dawes Mining Co. v. Callahan, 272 S.E.2d 267, 269 (Ga. 1980). Pohnpei was Netcare's agent for the enrollment of insured employees and for the collection of premiums.4
Thus, if Justice Ekiek submitted a completed enrollment form to Pohnpei, Netcare would be liable to Justice Ekiek's beneficiary on the group life insurance contract. See, e.g., Baum v. Massachusetts Mut. Ins. Co., 357 P.2d 960, 964 (Okla. 1969) (in action by beneficiary to recover death benefits for group life insurance, the employer that procured group policy, accepted the applications for the group policy, determined whether applicant was eligible, and paid the premiums owing under the policy "acted as the agent of the insurer, and since it so acted, insurer is charged with knowledge possessed by employer while so acting"); See also Clauson v. Prudential Ins. Co. of Am., 195 F. Supp. 72, 80 (D. Mass.) (for purpose of handling group life insurance policy and contribution and payment of premiums, business association was agent of insurer and insurer was bound its determination of amount coverage deceased entitled to), aff'd, 296 F.2d 76 (1st Cir. 1961); Elfstrom v. New York Life Ins. Co., 432 P.2d 731, 738 (Cal. 1967) (employer is agent of insurer when administering policy and enrolling an employee in group insurance as an insured); Neider v. Continental Assurance Co., 35 So. 2d 237, 240-41, 2 A.L.R.2d 846, 850-51 (La. 1948) (employer with group life insurance for employees is insurer's agent, so insurer liable for death benefits when employer neglected to obtain premium contributions from insured); Norby v. Bankers Life Co. of Des Moines, 231 N.W.2d 665, 669-71 (Minn. 1975) (insurer liable on the policy to eligible employee of employer group health insurance policyholder for group health insurance benefits even though the enrollment function was negligently mishandled by the employer who was the insurer's agent for the purpose of enrolling employees in group insurance; insurer's third-party complaint against employer dismissed); Coker v. Aetna Life Ins. Co., 199 S.E. 694, 696 (S.C. 1938) (employer was agent of insurer for collecting and remitting premiums).
Generally, a principal is bound by, and liable for, the acts which his agent does with or within the actual or apparent authority from the principal, and within the scope of the agent's employment. Individual Assurance Co. v. Iriarte, 16 FSM R. 423, 437 (Pon. 2009); Phillip v. Marianas Ins. Co., 12 FSM R. 464, 469 (Pon. 2004). Thus, the agent's (Pohnpei's) knowledge that Justice Ekiek was enrolled in the group life insurance plan would be imputed or attributed to the principal, Netcare, the insurer. See, e.g., FSM v. Ishikawa, 23 FSM R. 459, 469 (Pon. 2021); FSM v. Katzutoku Maru, 15 FSM R. 400, 404 (Pon. 2007).
The plaintiffs, however, did not sue on the group life insurance contract. Instead, they chose to pursue a tort claim (negligence) with Pohnpei and the insurance companies as joint tortfeasors, no doubt because the insurance companies were willing to settle quickly for half the claimed death benefit amount, despite having received all of Justice Ekiek's premium payments (and Pohnpei having retained none).
The plaintiffs plead three causes of action against Pohnpei. They allege: 1) breach of Justice Ekiek's employment contract and Pohnpei's promise that if Justice Ekiek signed up for life insurance coverage and paid the premiums, his beneficiaries would be paid the policy amount on his death; 2) unjust enrichment; and 3) negligence by Pohnpei because Justice Ekiek had to have completed an enrollment form (otherwise it would not have started deducting Justice Ekiek's life insurance premiums), but that Pohnpei lost it. The court will address them in reverse order because the plaintiffs' motion focuses on the negligence cause of action.
A. Negligence by Pohnpei
The plaintiffs allege that Pohnpei was negligent in not forwarding Justice Ekiek's completed enrollment form to Moylans FSM or Netcare, but instead losing it. Pohnpei denies this allegation. The plaintiffs argue that Pohnpei would not have withheld the premium payments from Justice Ekiek's salary and paid them to Moylans FSM if Pohnpei had not received a completed insurance enrollment form from Justice Ekiek; so Pohnpei must have lost the form if Moylans FSM or Netcare did not have it. This is a conclusory argument. A conclusory argument is not evidence. FSM Dev. Bank v. Jonah, 17 FSM R. 318, 324 (Kos. 2011).
The plaintiffs have not produced any admissible evidence that Pohnpei had a completed enrollment from Justice Ekiek but failed to transmit it to Moylans FSM or Netcare. The plaintiffs therefore have not made out a prima facie case that this contention is true. Since they have not, their motion lacks a factual basis. The court therefore cannot grant them summary judgment on their negligence cause of action.
B. Unjust Enrichment
The plaintiffs allege that the defendants (which phrase presumably included Pohnpei as well as the insurance companies) were unjustly enriched in accepting Justice Ekiek's "biweekly premium payments through payroll deductions from the late justice's salary." First Am. Compl. para. 22. However, it was generally admitted that Pohnpei remitted all of the group insurance premium withholdings from its insured employees to Moylans FSM. No argument is made that Pohnpei was unjustly enriched by merely passing the withheld premiums on to Moylans FSM without retaining any. The plaintiffs thus lack a factual basis for an unjust enrichment claim against Pohnpei. The plaintiffs' motion for summary judgment on this claim is therefore denied.
When a party's summary judgment motion is denied as a matter of law and when it appears the nonmoving party is entitled to judgment as a matter of law, the court may, in the absence of a cross-motion for summary judgment, grant summary judgment to the nonmoving party if the original movant had an adequate opportunity to show that there is a genuine issue and that the nonmoving opponent is not entitled to judgment as a matter of law. Berman v. Pohnpei, 22 FSM R. 377, 382 (Pon. 2019).
The plaintiffs have had an adequate opportunity to show that there is a genuine issue and that Pohnpei is not entitled to judgment as a matter of law on their unjust enrichment claim. The material fact § that Netcare received all of the premium payments withheld from Justice Ekiek's pay § is undisputed. Therefore, as a matter of law, Pohnpei is entitled to judgment on the plaintiffs' unjust enrichment claim.
C. Breach of Justice Ekiek's Employment Contract
The plaintiffs allege that Pohnpei employed Justice Ekiek and promised him that if he signed up for the life insurance program and paid the premiums, his beneficiaries would be paid the policy amount on his death. First Am. Compl. para. 18 (Aug. 5, 2021). Justice Ekiek did sign up for the group life insurance program and paid the premiums. But the "signing up" and the premium payments are part of the insurance contract between the insured, Justice Ekiek, and the insurer, Netcare. The plaintiffs have not provided any authority that Pohnpei, Netcare's agent for the enrollment of insured employees and the collection of premiums, is liable on the insurance contract. Nor have the plaintiffs produced any evidence or authority that there was a separate contract, or contract provision in Justice Ekiek's employment contract with Pohnpei, under which Pohnpei would be liable.
The plaintiffs do seem to contend either that Justice Ekiek's group life insurance was part of Justice Ekiek's employment contract § an uncertain proposition since Justice Ekiek's terms of employment were fixed by Pohnpei state statute. Or that Pohnpei itself was an insurer, an even more uncertain proposition. As noted above, Pohnpei was an insurer's agent, not an insurer. Whether an insurer's agent may, in certain circumstances, be liable to an insured on the insurance policy is an issue that was not addressed. Summary judgment on this cause of action is therefore denied.
For the foregoing reasons, the plaintiffs' summary judgment motion is denied and Pohnpei is granted summary judgment on the plaintiffs' unjust enrichment cause of action.
_______________________________Footnotes:
1 Moylans probably meant 6 F.S.M.C. 1205 because 6 F.S.M.C. 1202(4) prevents a settling joint tortfeasor from seeking contribution from defendants who do not settle.
2 The plaintiffs' complaint asserted that the withheld premiums were for $75,000 of life insurance coverage. The plaintiffs' and first amended complaint, apparently based on later discovery or investigation, maintains that the premiums were for $69,000 of life insurance coverage. Since the insurance companies settled for $37,500, that leaves a $31,500 balance.
3 Moylans was not the actual insurer. Netcare was § another reason the proposed amendment would have been futile. Any amended pleading that would be futile must be denied. Primo v. Pohnpei Transp. Auth., 9 FSM R. 407, 413 (App. 2000); People of Eauripik ex rel. Sarongelfeg v. F/V Teraka No. 168, 19 FSM R. 88, 96 (Yap 2013) (futile amendments are not allowed).
4 Pohnpei also collected Justice Ekiek's premiums and remitted them to Netcare (through Moylans FSM). The court does not address whether Netcare's receipt of premiums alone would subject Netcare to liability for the death benefit.
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