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Goot v. Metropolitan Government of Nashville and Davidson County11/9/2005
(Tenn. 2004).
The Metropolitan Government is obligated to provide all eligible employees with group life insurance coverage that contains a waiver of premium benefit. A life insurance policy is a mixture of contract and donative transfer, and when the policy is payable to someone other than the insured, it is a classic example of a third-party beneficiary contract. Milbourne v. Conseco Servs., LLC, 181 F. Supp. 2d 466, 468 (D. Md. 2002); In re Estate of DeWitt, 54 P.3d 849, 859 (Colo. 2002); In re Estate of England, No. WILLS FOLIO 114375, 2000 WL 128854, at *4 (Del. Ch. Jan. 4, 2000); Chicago White Metal Casting, Inc. v. Treiber, 517 N.E.2d 7, 11 (Ill. Ct. App. 1987). Once the insured names a beneficiary, there is no question that the employee, the employer, and the insurance company intend to benefit the named beneficiary.
When group insurance policies are involved, the courts generally view the employee as the intended third-party beneficiary of the contract for insurance between the employer and the insurance company. Nidiffer v. Clinchfield R.R. Co., 600 S.W.2d at 246; see also Roworth v. Minnesota Mut. Life Ins. Co., 674 F.2d 756, 758 (8th Cir. 1982); Aetna Life Ins. Co. v. Messier, 173 F. Supp. 90, 91 (D. Pa. 1959). Thus, the employees themselves have legally enforceable rights under the group insurance contracts. The courts have also extended the same rights to any beneficiary named by the employee as long as all the conditions of the policy have been fulfilled. Bass v. John Hancock Mut. Life Ins. Co., 518 P.2d 1147, 1150 n.4 (Cal. 1974); Keane v. Aetna Life Ins. Co., 91 A.2d 875, 883 (N.J. Super. Ct. 1952); 13 Williston on Contracts § 37:29, at 186.
One of the principle reasons for purchasing life insurance is to confer a benefit on a third party following the death of the named insured. Accordingly, when the Metropolitan Government included life insurance among the group benefits available to its employees, it knew and intended that these death benefits would be paid upon the employee's death to the employee's beneficiary. It follows, therefore, that both the employee and the Metropolitan Government knew and intended that upon the death of the employee, the surviving spouse or other named beneficiary would be entitled to receive the death benefits as long as all the requirements for receiving these benefits had been fulfilled.
In light of the relationship between the employees and their beneficiaries, we conclude that surviving spouses of employees, as intended beneficiaries of the group life insurance benefit, could step into the shoes of their former spouse to pursue their claim that the Metropolitan Government breached the employment contract by failing to provide "full information" regarding the waiver of premium benefit as required by Metro. Code § 3.08.040(A)(3). Therefore, the trial court did not err when it declined to grant the Metropolitan Government's motion for directed verdict predicated upon its claim that the surviving spouses were not intended third-party beneficiaries of their former spouses' group life insurance benefit.
B. The Surviving Spouses' Evidence Supporting Their Breach of Contract Claim
The final issue involves the trial court's decision to direct a verdict for the Metropolitan Government because Mmes. Goot, Taylor, and Duke did not introduce a copy of the group life insurance contract containing the waiver of premium benefit. Mmes. Goot, Taylor, and Duke assert that the trial court erred because the Metropolitan Government had never denied the existence of the group life insurance contract containing a waiver of premium provision or what the terms of the waiver of premium provision were. We agree, in lig
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