Niccole A. Naifeh, et al. v. Valley Forge Life Insurance Company, et al.

We granted this appeal to determine (1) whether a life insurance policy purchased by the insured as part of a divorce decree had been terminated before the insured’s death; and (2) whether the insurer or the insurance agent was negligent in failing to prevent the policy from lapsing after the insured issued an oral stop payment order and failed to pay a monthly premium. The Chancery Court concluded that the policy had not been terminated, that the insurer and insurance agent were negligent, and that the proceeds of the policy were to be paid to the beneficiary. The Court of Appeals, reversing the Chancellor’s judgment, concluded that the policy had been backdated by agreement of the parties and had been terminated by the insured before his death. The Court of Appeals also concluded that the insurer and the insurance agent were not negligent because their actions were not a proximate cause of the damages. After reviewing the record and applicable authority, we conclude that the life insurance policy remained valid at the time of the insured’s death and that the beneficiary was entitled to the proceeds under the policy. However, we agree with the Court of Appeals’ conclusion that the insurer and the insurance agent were not negligent because there was no evidence that their acts were a proximate cause of the damages. Accordingly, the Court of Appeals’ judgment is affirmed in part and reversed in part for the reasons stated herein.