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Widow Seeking Benefits Can’t Sue State Farm

PITTSBURGH (CN) - A federal judge declined to revive a widow's lawsuit that claims State Farm paid $100 to buy her late husband's $10,000 insurance policy just days before he died of suspicious circumstances.

Lorraine Johnson sued State Farm in federal court when she realized insurance agent Robert Confer had purchased her late husband Terry Johnson's life insurance policy right before his sudden death from peritonitis while in jail for violating the terms of her restraining order.

Both Confer and State Farm knew Terry was actively abusing illegal drugs, had just been released from a psychiatric ward and "had engaged in extremely erratic behaviors days prior to the transaction," according to the complaint.

State Farm allegedly told Lorraine that Confer had bought Terry's policy for $100, that the company stood by its agent's purchase and that "there is a difference between what is moral and what is legal."

Lorraine said Confer later told her that he would pay for part of the funeral expenses, but that he was keeping the balance of the insurance benefit, amounting to $10,000.

U.S. District Judge Terrence McVerry in July dismissed the remaining claims from Lorraine's original lawsuit, which alleged state-law violations, breach of fiduciary duty, fraud, bad faith and conversion.

Last week, the judge declined to reconsider that decision for errors of law.

Lorraine had argued that the court improperly required her to show a master-servant relationship between State Farm and Confer, though State Farm could be held liable under the doctrine of ratification.

McVerry found, however, the record is "devoid of evidence that State Farm controlled the manner in which Confer conducts insurance policy business and that its ratification of Confer's actions did not alter that conclusion."

She also had "not pointed to any evidence to support a finding that Confer was acting on behalf of State Farm," according to the six-page decision. "To the contrary, Johnson has taken the position that Confer took advantage of Mr. Johnson to convert the policy proceeds for his own benefit having named himself as the beneficiary. The doctrine of ratification therefore does not serve to hold State Farm liable. Thus, even if the court previously misconstrued the import of Johnson's argument regarding ratification, it would have reached the same result and no injustice has occurred."

The court also stood by its analysis of the parties' testimony.

Confer had claimed that he tried "to talk Mr. Johnson out of cancelling the policy because it was a valuable asset; that he was concerned Mr. Johnson would regret cancelling it if he and his wife reconciled; and that by purchasing the policy Mr. Johnson would be able to buy it back from him for the same $100.00."

"Although Johnson dismisses Mr. Confer's testimony in this regard as self-serving and requiring a credibility determination, she has not pointed to any evidence that would cast doubt on Mr. Confer's testimony or demonstrate that his motives were improper," McVerry wrote.

While Lorraine pointed to an April 27, 2007, letter from State Farm that says it was Confer's idea to purchase the policy, the evidence "does not speak to Confer's motives for purchasing the policy which is the subject of the Court's remark," the court found.

"More importantly, however, even if the Confer was 'caught in a blatant contradiction' regarding whose idea it was for him to purchase the policy, and even if that somehow rendered his stated reasons for purchasing the policy suspect, those facts have no bearing on whether State Farm is liable for Confer's actions."

Without any proof of master-servant relationship between State Farm and Confer, "Confer's credibility and motives for purchasing the Policy were immaterial and played no part in the court's decision," McVerry wrote.

"The fact that Mr. Johnson was mentally ill and had a problem with drugs does not by itself demonstrate that Confer took advantage of him or even that Mr. Johnson was incompetent or otherwise incapable of selling the policy at the time," the decision concludes.

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