McKown was the beneficiary of a universal life insurance policy issued by Symetra on the life of his father, providing a death benefit of $100,000. The policy had an anniversary date of September 18.
The policy included a grace period for the payment of premiums: "A grace period of 61 days will be granted if the cash value is not sufficient to cover the Cost of Insurance for the next following month." However, this provision warned that "[i]f such premium is not paid within the grace period, all coverage under the policy will terminate without value at the end of the 61 day period."
McKown paid a premium of $2,787.62 on September 15, 2009. On September 18, 2009, Symetra sent a Universal Life Insurance Statement, informing McKown that the cost of insurance from September 18 to the next anniversary date was $9,233.76, and the policy would remain in force only until October 18, 2009, if no additional premium was paid. Symetra later explained that the $2,787.62 payment had been insufficient to fund the policy for a full year beginning September 18, 2009.
On October 18, 2009, Symetra sent McKown a notice, informing him that all coverage would cease on December 19, 2009, the end of the 61-day grace period, if the required premium was not received. The past due premium was not paid by December 19, 2009.
On December 21, 2009, Symetra sent McKown a Lapse/Reinstatement Notice, informing him that the 61-grace period had expired, and that the policy had lapsed effective December 19, 2009. The notice stated that in order to reinstate the policy, McKown must submit a reinstatement application, a medical release, and the past due premium, which was then $3,986.57. McKown sent a check for $3,986.57, which Symetra deposited on February 1, 2010.
The insured died on February 9, 2010. The parties disputed when Symetra received notice of the death. McKown claimed that he called Symetra and reported the death "on or about" February 19, 2010. Symetra provided a copy of a letter to McKown dated March 17, 2010, which stated that McKown had reported the death by telephone on February 23, 2010.
Symetra also provided a copy of a letter dated February 22, 2010, stating that it was refunding the premium of $3,986.57 under separate cover. The letter requested that the insured "answer all of the questions on the enclosed health statement/HIPAA form, sign, date, and return the forms along with your premium payment of $3,986.57." The letter said nothing about the insured being deceased.
Symetra refunded the premium by check dated February 23, 2010, which was mailed on February 24, 2010. McKown contended that he "rejected" this refund and did not negotiate the check.
Under South Carolina law, "[a]n implied contract, like an express contract, rests on an actual agreement of the parties to be bound to a particular undertaking." Stanley Smith & Sons v. Limestone Coll., 283 S.C. 430, 322 S.E.2d 474, 477 (Ct.App. 1984). For an implied contract to be created, "[t]he parties must manifest their mutual assent to all essential terms of the contract in order for an enforceable obligation to exist." Id.
Thus, a plaintiff must prove the defendant's "assent by conduct to all those terms essential to create a binding contract." Id. However, "[i]t is for the jury to determine whether there was a contract and whether it was performed according to its terms." Johnston v. Brown, 292 S.C. 478, 357 S.E.2d 450, 452 (1987) (citing Quality Concrete Products, Inc. v. Thomason, 253 S.C. 579, 172 S.E.2d 297 (1970)).
In opposition to Symetra's motion for summary judgment, McKown argued that because Symetra had retained the reinstatement premium for 21 days, an implied contract of insurance was created, even though neither a reinstatement application nor a medical release had been submitted. The court denied the motion for summary judgment, holding: "A reasonable jury could find that, by retaining the premium for approximately three weeks without any indication of any deficiencies or problems with the reinstatement, an implied contract of insurance was created."
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