BRIGHTHOUSE LIFE INSURANCE COMPANY v. WALKER WALTON

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

BRIGHTHOUSE LIFE INSURANCE : CIVIL ACTION

COMPANY :

:

v. : NO. 22-485

:

ANTOINETTE WALKER WALTON, :

PRESTON HARPER, KADEENA :

FULTON :

MEMORANDUM

MURPHY, J. February 13, 2024

Brighthouse Life Insurance Company asks us to declare that Antoinette Walker-Walton is

the sole beneficiary of I-Dean Fulton’s life insurance policy. Because there is no genuine dispute

of material fact, we will.

Mr. Fulton applied for and was issued a Brighthouse life insurance policy. Ms. Walker-

Walton, his then-fiancée, was the policy’s sole beneficiary. A few weeks after Mr. Fulton

applied for the policy, he submitted a second application. The second one named Preston Harper

(his brother) and KaDeena Fulton (his daughter) as co-beneficiaries. Brighthouse eventually

denied Mr. Fulton’s second application.

But an administrative error caused the second application to be incorrectly submitted

under the same case number as the first. When Mr. Fulton died, Brighthouse’s internal system

showed Ms. Fulton and Mr. Harper as the policy’s co-beneficiaries. Ms. Walker-Walton, Ms.

Fulton, and Mr. Harper lodged competing claims for the policy’s death benefit.

After some investigation — and still unaware of its own systems error — Brighthouse

filed an interpleader action against Ms. Walker-Walton, Ms. Fulton, and Mr. Harper to sort

things out. Interpleader would allow the potential claimants figure out who gets the death

benefit. But fact discovery uncovered the aforementioned administrative error, which

confirmed — in Brighthouse’s view — that Ms. Walker-Walton is the correct beneficiary.

Unsurprisingly, Ms. Walker-Walton agrees. As a result, Brighthouse requested leave to amend

its complaint and now asks that we declare Ms. Walker-Walton the sole beneficiary.

Based on the undisputed material facts, we agree with Brighthouse and grant its request.

We also grant Brighthouse summary judgment with respect to the defendants’ counterclaims.

I. Facts1

Brighthouse issues life insurance policies. See DI 55-2 ¶ 2. On November 4, 2009, Mr.

Fulton applied for one. See id. ¶ 1. He “designated his ‘fiancée,’ [Ms.] Walker-Walton, as sole

primary beneficiary.” Id.; see also DI 55-3 Ex. A.2 Brighthouse approved Mr. Fulton’s

application, set a policy date of January 26, 2010, and issued the policy on January 27, 2010.

1 We rely on the undisputed facts submitted by Brighthouse, the undisputed evidence in

the record, and — to the extent there is a disputed, material fact — the non-movant’s version of

the facts. See DI 55-2, 55-3, 57-14. Ms. Walker-Walton responded directly to Brighthouse’s

statement of undisputed facts, see DI 57-14, but Ms. Fulton and Mr. Harper did not. Ms. Fulton

and Mr. Harper argue only that Brighthouse’s statement of undisputed material facts “is replete

with inaccuracies.” DI 56 at 4 n.1. However, they do not state the specific inaccuracies, much

less abide by Rule 56’s requirement that such assertions be supported by record citations.

2 References to lettered exhibits in Brighthouse’s appendix are the exhibits to Matthew

Duncan’s certification in support of summary judgment. See DI 55-3. Mr. Duncan is an

associate chief underwriter for Brighthouse. DI 55-3, Certification of Matthew Duncan, ¶ 1. For

all other materials included in Brighthouse’s appendix, our citations use the pagination supplied

by the CM/ECF docketing system.

At her deposition, Ms. Walker-Walton testified that she and Mr. Fulton would have

submitted and “filled . . . out” his life insurance application “together.” DI 56-4 at 26 (ECF); see

DI 55-2 ¶ 45. Ms. Walker-Walton testified that she and Mr. Fulton would have received the

application from Lamont Brown — her claims agent. See DI 56-4 at 26-27 (ECF). Yet Mr.

Brown, the purported claims agent for Mr. Fulton’s policy, testified that he did not know Mr.

Fulton. See DI 55-3 at 103 (ECF) (“Q. We’re here about this policy that was owned by an

insured [named] I-Dean Fulton did you know him? A. No.” (emphasis added)).

2

See DI 55-2 ¶ 2; DI 55-3 Ex. B.3 The policy had a $1,000,000 death benefit. See DI 55-3 Ex. B.

Shortly after submitting his first application, Mr. Fulton applied for another one. See DI

55-2 ¶¶ 23-25. The second application — dated November 30, 2009 — designated his daughter,

Ms. Fulton, and brother, Mr. Harper (together, Fulton/Harper), “as co-primary beneficiaries.” Id.

¶ 24; see DI 55-3 Ex. K. Brighthouse denied Mr. Fulton’s second application on February 26,

2010. See DI 55-2 ¶¶ 29-30; see also DI 55-3 Ex. M (citing “information received from [a]

medical care provider” as reason for denial).

Several errors created confusion between the two applications. See DI 55-2 ¶¶ 22-35.

Claims agent Lamont Brown incorrectly submitted the second application (dated November 30,

2009) under the same “case number” as his first application (dated November 4, 2009). See id.

¶¶ 23, 37. Mr. Brown flagged the error shortly after it happened. See id. ¶ 25.4 “[F]or reasons

unknown,” Brighthouse never formally cancelled the second application in its system. Id. ¶ 27.

So, the second application appeared as “a successive, superseding application” in Mr. Fulton’s

file. Id. ¶ 32.

Brighthouse did not uncover the error until discovery in this case. See id. ¶¶ 36-42.5 Mr.

3 MetLife Investors USA Insurance Company, which later became Brighthouse, issued

Mr. Fulton’s policy. See DI 55-3 Ex. A.

4 Mr. Duncan swore that Brighthouse’s “systems notes” show Mr. Brown communicated

the submission error. DI 55-3, Certification of Matthew Duncan, ¶ 23. And Brighthouse’s

systems’ notes reflect that Mr. Brown sent the following message to Brighthouse on January 26,

2010: “I just scanned a new app, ignore it please do not change the bene to reflect it. Sorry for

confusion.” Id. Ex. L (emphasis added).

5 Mr. Duncan swore that he searched through Brighthouse’s “electronic records using

[Mr. Fulton’s] name and date of birth” to determine who the correct beneficiary is before

Brighthouse filed its complaint. DI 55-3, Certification of Matthew Duncan, ¶ 31. The

“separateness” of the two applications did not become clear until Mr. Brown was deposed and

3

Brown testified that “the first application was specifically designed with Antoinette Walker

being the beneficiary,” and “a separate policy and application” was intended for Fulton/Harper.

See DI 55-3 at 104 (ECF) (Mr. Brown’s deposition testimony). Mr. Brown referred to a

February 26, 2010 letter sent by Brighthouse declining Mr. Fulton’s second life insurance policy

application. See DI 55-2 ¶ 39.6 The deposition led Brighthouse to re-search its internal systems

and “locate a separate file pertaining to the second, later-submitted application, which was

denied.” Id. ¶ 40.

While the mix-up was still undiscovered, in February 2020, Mr. Fulton died “as the result

of gunshot wounds.” Id. ¶ 12. “[H]is death was ruled a homicide.” Id. His policy’s death

benefit became due. See id. ¶ 13.

But because Brighthouse never cancelled Mr. Fulton’s second application, its system

reflected that Fulton/Harper were the policy’s co-beneficiaries. Id. ¶¶ 14, 31. As such,

Brighthouse sent Fulton/Harper forms to claim Mr. Fulton’s death benefit on June 15, 2020, and

Fulton/Harper made their claims. See id. ¶¶ 15-16; DI 56-6 (forms sent by Brighthouse to

Fulton/Harper); DI 55-3 Ex. G, I (Fulton/Harper’s claims).7 Ms. Walker-Walton also claimed

proffered the February 26, 2010 declination-of-coverage letter, which allowed Mr. Duncan to

“reconcile the discrepancies in Brighthouse’s systems.” Id. ¶¶ 32-33.

6 See also DI 55-3 at 104 (ECF); id. at 111-12 (ECF) (letter from Mr. Brown to Mr.

Fulton stating that Brighthouse was “unable to offer [him] any life insurance coverage due to

information received from [a] medical provider”); DI 56-4 at 28-29 (ECF) (Ms. Walker-Walton

testifying that the second life insurance policy application intended for Fulton/Harper was

denied).

7 Ms. Fulton submitted her claim form on June 19, 2020, see DI 55-3 Ex. G, and Mr.

Harper submitted his on July 26, 2020, see id. Ex. F. And Fulton/Harper received their claim

forms only a few days after Mr. Brown called Brighthouse regarding the policy’s death benefit.

See DI 56 Ex. A (June 11, 2020 call from Mr. Brown to Brighthouse representative).

4

the death benefit. See DI 55-2 ¶ 17.8

The adversarial claims prompted Brighthouse to figure out whether it should pay

Fulton/Harper. See DI 55-3 Ex. J. As part of its investigation, Brighthouse “attempted to

confirm with law enforcement whether” it ruled out Fulton/Harper as suspects in Mr. Fulton’s

homicide. DI 55-2 ¶ 18. A Philadelphia Police Department detective told a Brighthouse

employee that it did not rule out Fulton/Harper. See DI 55-3 Ex. J (July 17, 2020 email

referencing Philadelphia Police Department detective). Therefore, Brighthouse was of the view

that it could not pay out the death benefit to Fulton/Harper. See id.9 And Fulton/Harper testified

that they did not know whether the police department was still investigating Mr. Fulton’s death.

See DI 55-2 ¶ 46. The investigation has effectively “gone cold.” See id. ¶¶ 46-51.

Further, Brighthouse’s “good faith searches of company records” at the time did not

reveal another case file for Mr. Fulton’s second policy application. See id. ¶¶ 33-35. And Ms.

Walker-Walton continued to maintain that she is the sole beneficiary under Mr. Fulton’s policy.

See DI 55-3 Ex. I. So, absent further investigatory developments — and ready to pay the death

benefit — Brighthouse filed an interpleader action against Ms. Walker-Walton and

Fulton/Harper. See generally DI 1.

II. Brighthouse’s Motion for Summary Judgment

Brighthouse’s original complaint requested only that we require the defendants settle —

8 See also DI 57-6 at 52-54 (ECF) (copy of July 22, 2020 claim to death benefit filed by

Ms. Walker-Walton); DI 55-3 Ex. H (same).

9 See 20 Pa. C.S. § 8802 (“No slayer shall in any way acquire any property or receive any

benefit as the result of the death of the decedent, but such property shall pass as provided in the

sections following.”).

5

among themselves — who gets Mr. Fulton’s death benefit. See id. But Brighthouse moved for

leave to amend its complaint after discovery revealed the administrative error that it believes is

dispositive of who is the proper beneficiary. See DI 37. We granted Brighthouse’s motion, and

it added a declaratory judgment cause of action. See DI 42.

Now, Brighthouse claims that Ms. Walker-Walton “is the sole beneficiary.” See id. at 9.

Ms. Walker-Walton and Fulton/Harper each answered Brighthouse’s amended complaint and

counterclaimed. See DI 45, 51.10 Their counterclaims assert the same causes of action: breach

of contract, and statutory bad faith11 under Pennsylvania law. See generally DI 45, 51.12 They

claim that Brighthouse’s failure to pay the death benefit to either Ms. Walker-Walton or

10 Ms. Walker-Walton did not file her counterclaim against Brighthouse until one month

after she answered Brighthouse’s amended complaint. See DI 51; see also Fed. R. Civ. P.

13(a)(1) (emphasis added) (“A pleading must state as a counterclaim any claim that — at the

time of its service — the pleader has against an opposing party if the claim arises out of the same

transaction or occurrence that is the subject matter of the opposing party’s claim . . . .”); Bristol

Farmers Mkt. & Auction Co. v. Arlen Realty & Dev. Corp., 589 F.2d 1214, 1220 (3d Cir. 1978)

(“A compulsory counterclaim not raised in the first action is barred in subsequent litigation.”).

Also, Ms. Walker-Walton crossclaimed against Fulton/Harper for tortious interference

with the Brighthouse contract. See DI 44 at 11-13. Fulton/Harper have not responded to Ms.

Walker-Walton’s crossclaim, despite us ordering a response. See DI 53 ¶ 1.

11 Brighthouse argued in its summary judgment motion that Ms. Walker-Walton failed to

refer to the proper statute to assert a statutory bad faith claim. See DI 55-1 at 14. To cover all

bases, Brighthouse explained that its arguments against Fulton/Harper’s statutory bad faith

counterclaim apply to Ms. Walker-Walton’s counterclaim, to the extent she intended on bringing

a statutory bad faith claim and not a common law bad faith claim. See id. at 14 n.4.

Brighthouse is correct that Ms. Walker-Walton did not specify the type of bad faith

counterclaim, see DI 51 at 5-6, but Ms. Walker-Walton clarified in her opposition that she

intended to assert a “statutory [c]laim for [b]ad [f]aith under 42 Pa. C.S. § 8371.” DI 57 at 12.

For our purposes, we will treat Ms. Walker-Walton’s cause of action as a statutory bad faith

counterclaim.

12 Fulton/Harper also brought a cause of action under Pennsylvania’s Unfair Trade

Practices and Consumer Protection Law. But they said that they want to voluntarily dismiss the

claim. See DI 56 at 12.

6

Fulton/Harper is a breach of its contractual responsibilities. See DI 45 at 14; DI 51 at 5. And

both allege that Brighthouse’s “unfounded refusal to pay” evidences bad faith. DI 45 ¶ 36; DI 51

¶ 36.

Brighthouse has moved for summary judgment on its own claims and defendants’

counterclaims. See DI 55. It argues “[t]here is simply no evidence” that “anyone other than”

Ms. Walker-Walton is entitled the death benefit. DI 55-1 at 21-22. Brighthouse submits that,

even if a fact issue remains as to who gets the death benefit, we should allow — as an

alternative — for it to deposit the death benefit and obtain interpleader relief. See id. at 22-27.

In response, Ms. Walker-Walton agrees with Brighthouse that she is the sole beneficiary.

See DI 57 at 10. But she disagrees with Brighthouse on her counterclaims, arguing that

Brighthouse should have paid her the death benefit years ago. See id. at 11-15. According to

Ms. Walker-Walton, “[a] reasonable review of [Brighthouse’s] own records would have shown

that [she] was the beneficiary and entitled to the death benefit in early 2020.” Id. at 14.

Fulton/Harper disagree with Brighthouse and Ms. Walker-Walton. See DI 56 at 7-9.

Fulton/Harper argue that two genuine disputes of material facts preclude summary judgment:

first, whether they or Ms. Walker-Walton are the correct beneficiaries, see id. at 7-8; second,

whether Mr. Brown — Ms. Walker-Walton’s claims agent — had biased deposition testimony

that calls into question the correct beneficiary, see id. at 8-9. Fulton/Harper also argue that the

evidence precludes summary judgment on their counterclaims.

7

We have subject-matter jurisdiction over Brighthouse’s claims and defendants’

counterclaims. See 28 U.S.C. §§ 1332, 1367; DI 42 ¶¶ 1-6.13 We heard oral argument on

Brighthouse’s motion. See DI 60. The motion is ripe for disposition.

For the reasons explained below, we grant summary judgment on Brighthouse’s claim for

declaratory relief. We also grant Brighthouse summary judgment on defendants’ counterclaims.

III. Standard of Review

Federal Rule of Civil Procedure 56 requires courts to grant summary judgment when a

“movant shows that there is no genuine dispute as to any material fact and the movant is entitled

to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “A dispute is ‘“genuine” . . . if the

evidence is such that a reasonable jury could return a verdict for the nonmoving party.’” PIM

Brands Inc. v. Haribo of Am. Inc., 81 F.4th 317, 320 (3d Cir. 2023) (quoting Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986)). Parties “asserting that a fact cannot be or is genuinely

disputed must support the assertion by” citing to evidence in the record. Fed. R. Civ. P. 56(c)(1).

13 In addition to diversity jurisdiction, Brighthouse alleges that we have subject-matter

jurisdiction over its request (in the alternative) for interpleader relief under 28 U.S.C. § 1335. DI

42 ¶ 6. Brighthouse says that it did not “originally plead jurisdiction under the Interpleader

Statute” because it did not think diversity of citizenship existed between adverse claimants. See

DI 55-1 at 23 n.7; see also § 1335(a)(1).

Regardless, Brighthouse’s amended complaint alleges that we have subject-matter

jurisdiction proceeding under Federal Rule of Civil Procedure 22 — not just statutory

interpleader. An independent basis for subject-matter jurisdiction means we can adjudicate

Brighthouse’s request for declaratory relief. See Auto-Owners Ins. Co. v. Stevens & Ricci Inc.,

835 F.3d 388, 394 (3d Cir. 2016) (“T[he] [Declaratory Judgment] Act does not itself create an

independent basis for federal jurisdiction but instead provides a remedy for controversies

otherwise properly within the court’s subject matter jurisdiction.”).

8

And “for a factual dispute to be material, its resolution must have the potential to affect the

outcome of the suit.” SodexoMAGIC, LLC v. Drexel Univ., 24 F.4th 183, 203 (3d Cir. 2022).

IV. Analysis

The judgment that Brighthouse seeks (and Ms. Walker Walton supports) is declaring Ms.

Walker-Walton the sole beneficiary of Mr. Fulton’s life insurance policy. Fulton/Harper fail to

cite to evidence in the record showing a genuine dispute of material fact regarding Brighthouse’s

administrative error, or, who Mr. Fulton designated as the beneficiary of his life insurance

policy. Thus, we grant Brighthouse declaratory relief. We also grant Brighthouse summary

judgment on the defendants’ counterclaims.

A. The undisputed material facts show Ms. Walker-Walton is the sole beneficiary of

the life insurance policy.14

Fulton/Harper make two attempts to forestall summary judgment. Both are unavailing.

First, Fulton/Harper focus heavily on Mr. Fulton’s purported “last written expression of

intent.” DI 56 at 8. They argue that naming them co-beneficiaries “give[s] effect” to Mr.

Fulton’s intentions. Id. The argument fails to rebut the undisputed material facts that explain,

among other things, (1) Brighthouse’s administrative error, (2) how Fulton/Harper came to be

incorrectly listed as co-beneficiaries of Mr. Fulton’s policy, and (3) how Brighthouse denied Mr.

Fulton’s second application, where they were listed as co-beneficiaries. Claiming — without

meaningful factual and legal support15 — that we must abide by Mr. Fulton’s intentions is not

14 Because we grant Brighthouse summary judgment on its declaratory judgment cause of

action, we express no opinion on its request in the alternative for interpleader relief.

15 Fulton/Harper’s only legal support for their argument is a Third Circuit decision

summarizing Pennsylvania law’s “fundamental rule in interpreting the meaning of a contract.”

See Great Am. Ins. Co. v. Norwin Sch. Dist., 544 F.3d 229, 243 (3d Cir. 2008) (quoting Murphy

9

enough to generate a genuine dispute of material fact.

Second, Fulton/Harper question the truthfulness of Mr. Brown’s deposition testimony

that led to Brighthouse doubling back and discovering the administrative error. See DI 56 at 8-9.

Fulton/Harper argue that a factfinder must assess Mr. Brown’s credibility before granting

declaratory judgment. Not so. Even disregarding Mr. Brown’s deposition testimony, the

evidence provides an ample basis to conclude that Ms. Walker-Walton is the policy’s sole

beneficiary.

We agree with Brighthouse (and Ms. Walker-Walton) that Ms. Walker-Walton is the

correct beneficiary. We grant Brighthouse’s declaratory relief claim.

B. Fulton/Harper’s breach-of-contract counterclaim fails because they neither

contracted with Brighthouse nor were beneficiaries of the life insurance policy.16

“Pennsylvania law requires that a plaintiff seeking to proceed with a breach of contract

action must establish ‘(1) the existence of a contract, including its essential terms, (2) a breach of

a duty imposed by the contract, and (3) resultant damages.’” Ware v. Rodale Press, Inc., 322

F.3d 218, 225 (3d Cir. 2003) (quoting CoreStates Bank, N.A. v. Cutillo, 723 A.2d 1053, 1058

v. Duquesne Univ., 777 A.2d 418, 428-30 (Pa. 2001)). Norwin does not cure Fulton/Harper’s

biggest problem: the record shows that they are not parties to or beneficiaries of Mr. Fulton’s life

insurance policy.

16 Granting summary judgment on Brighthouse’s declaratory judgment claim means that

Ms. Walker-Walton’s breach-of-contract counterclaim fails. At oral argument, her counsel

agreed. If Ms. Walker Walton is the correct beneficiary, it follows that Brighthouse did not

breach a legal duty owed to her, and Ms. Walker-Walton did not suffer resultant damages. Not

to mention that she alleges Brighthouse owes her $1,000,000 (the death benefit) in contract

damages. See DI 51 ¶¶ 32-35.

Therefore, we grant Brighthouse’s summary judgment motion with respect to Ms.

Walker-Walton’s breach-of-contract counterclaim.

10

(Pa. Super. Ct. 1999)).17 And “[p]rivity of contract must exist for a defendant to be liable for a

breach. In other words, both parties must be parties to the contract.” Three Rivers Hydroponics,

LLC v. Florists’ Mut. Ins. Co., 2023 WL 5554644, at *3 (3d Cir. Aug. 29, 2023) (footnote

omitted).

“[T]he exceptional circumstance” where a party not in privity can state a breach-of-

contract claim is when that party “is a third-party beneficiary.” Id. “[U]nder Pennsylvania law,

a party becomes a third party beneficiary ‘only where both parties to the contract express an

intent to benefit the third party in the contract itself.’” Tredennick v. Bone, 323 F. App’x 103,

104 (3d Cir. 2008) (quoting Scarpitti v. Weborg, 609 A.2d 147, 150 (Pa. 1992)).

Here, nothing in the record indicates that Fulton/Harper are either parties to or third-party

beneficiaries of Mr. Fulton’s life insurance policy. Fulton/Harper’s counsel essentially admitted

at oral argument that an adverse decision for them on Brighthouse’s declaratory judgment claim

negatively affects their breach-of-contract counterclaim. Thus, their counterclaim fails.

C. Fulton/Harper’s and Ms. Walker-Walton’s statutory bad faith counterclaims

fail.

Pennsylvania allows for the award of punitive damages against insurers if a court “finds

that the insurer has acted in bad faith toward the insured.” 42 Pa. C.S.A. § 8371 (emphasis

added). “Although the term ‘bad faith’ is not defined by the Pennsylvania bad faith statute,

Pennsylvania courts have interpreted it as ‘any frivolous or unfounded refusal to pay proceeds of

a policy.’” J.C. Penney Life Ins. Co. v. Pilosi, 393 F.3d 356, 367 (3d Cir. 2004) (quoting

Terletsky v. Prudential Prop. & Cas. Ins. Co., 649 A.2d 680, 688 (Pa. Super. Ct. 1994)); see

17 No party disputes that Pennsylvania law applies for defendants’ counterclaims.

11

Frog, Switch & Mfg. Co., Inc. v. Travelers Ins. Co., 193 F.3d 742, 751 n.9 (3d Cir. 1999) (“Bad

faith is a frivolous or unfounded refusal to pay, lack of investigation into the facts, or a failure to

communicate with the insured.”). “While successful bad faith claims do not need to show

fraudulent behavior, negligence or bad judgment will not support a bad faith claim.” Rau v.

Allstate Fire & Cas. Ins. Co., 793 F. App’x 84, 87 (3d Cir. 2019).

The Third Circuit uses the Pennsylvania Superior Court’s two-part framework in

Terletsky to determine whether an insured can prove a statutory bad faith claim. See Wolfe v.

Allstate Prop. & Cas. Ins. Co., 790 F.3d 487, 498 (3d Cir. 2015) (citing Terletsky, 649 A.2d

680). “To recover under section 8371, a [claimant] must show by clear and convincing evidence

that [1] the insurer did not have a reasonable basis for denying benefits under the policy[,] and

that [2] the insurer knew or recklessly disregarded its lack of reasonable basis in denying the

claim.” Id.

“[B]ad faith must be proven by clear and convincing evidence and not merely

insinuated.” Terletsky, 649 A.2d at 688. As such, “[t]he evidentiary burden on a [party]

opposing a summary judgment motion” for a statutory bad faith claim “is ‘commensurately

high.’” Gibson v. State Farm Mut. Auto. Ins. Co., 994 F.3d 182, 191 (3d Cir. 2021) (emphasis

added) (quoting Pilosi, 393 F.3d at 367); see Pilosi, 393 F.3d at 367 (“[T]he plaintiff’s

burden . . . is commensurately high in light of the substantive evidentiary burden at trial.”). “By

contrast, all that is needed to defeat a claim of bad faith under § 8371 is evidence of a reasonable

basis for the insurer’s actions or inaction.” Gibson, 994 F.3d at 191.

Starting with Fulton/Harper, Brighthouse argues that they have no standing because they

are neither the “insured” nor the beneficiaries under Mr. Fulton’s policy. See DI 55-1 at 15-17;

12

DI 58 at 5. Fulton/Harper do not confront Brighthouse’s standing argument in their response.

Because the undisputed facts demonstrate that Fulton/Harper are not beneficiaries, see supra

Section IV.A, they lack standing. See Davin v. Davin, 842 A.2d 469, 473 (Pa. Super. Ct. 2004)

(holding party has no standing for statutory bad faith claim because she was “not the insured” or

“a beneficiary” of an insurance policy); Elican v. Allstate Ins. Co., 2017 WL 6525781, at *5

(E.D. Pa. Dec. 21, 2017) (“To have standing to pursue a bad faith claim, the party must be an

insured or a third-party beneficiary.”).18

Next, Ms. Walker-Walton. Brighthouse argues19 that Ms. Walker-Walton’s claim fails

under either prong of the Terletsky framework. See DI 55-1 at 17-19; DI 58 at 5-9. In response,

Ms. Walker-Walton says that — now, with the benefit of hindsight — the evidence demonstrably

shows she was always the sole beneficiary. See DI 57 at 14. She argues that Brighthouse never

had a basis for denying her the death benefit because the police never named her as a suspect for

Mr. Fulton’s homicide. See id. And she says that fact discovery has revealed Brighthouse’s

“fail[ure] to perform any level of investigation once it discovered competing claims to the

policy.” Id.

Even assuming, arguendo, that Brighthouse did not have a reasonable basis for delaying

18 It is unnecessary for us to hold — and we do not hold — that a party misled to believe

it is a beneficiary could never maintain a bad faith claim. That is simply the outcome this record

warrants.

And because Fulton/Harper do not have standing to pursue their bad faith counterclaim,

we need not address their argument regarding Brighthouse’s purported breach of the

Pennsylvania Insurance Code. See DI 56 at 11-12 (citing 40 P.S. §§ 467, 621).

19 As mentioned, Brighthouse argued that Ms. Walker-Walton’s common law bad faith

claim fails. See DI 55-1 at 14. But Ms. Walker-Walton clarified in her opposition that she is

bringing a statutory bad faith claim, see supra n.11, so Brighthouse replied that its statutory bad

faith arguments apply to Ms. Walker-Walton with equal force, see DI 58 at 5.

13

or denying20 the payment of the death benefit, Ms. Walker-Walton’s claim fails under prong two

of Terletsky. There is no evidence that Brighthouse — during its “investigation and other

conduct in handling the claim” — engaged in “conduct that certainly . . . ‘import[s] a dishonest

purpose.’” Post v. St. Paul Travelers Ins. Co., 691 F.3d 500, 524 (3d Cir. 2012) (quoting Brown

v. Progressive Ins. Co., 860 A.2d 493, 501 (Pa. Super. Ct. 2004)). The Third Circuit has said

that “mere negligence or aggressive protection of an insurer’s interest is not bad faith” when an

insured predicates a bad faith claim on the failure to properly investigate or handle a claim. Id.

Post’s analysis of statutory bad faith claims is instructive. In Post, the Third Circuit

granted an insurer’s summary judgment motion on a lawyer’s statutory bad faith claim. See id.

at 525. The lawyer argued, in relevant part, that his insurer acted in bad faith by “ignoring

20 Brighthouse argues that it is not denying Mr. Walker-Walton of a benefit under

Terletsky — in fact, the contrary. See, e.g., DI 58 at 6. Ms. Walker-Walton appears to

characterize the “denial” as the delay between her attempt to claim the death benefit and her

ability to actually obtain it. See DI 57 at 14. What constitutes the “denial” may not matter as

much because the gist of Ms. Walker-Walton’s argument is Brighthouse’s lack of effort towards

investigating the correct beneficiary. The Third Circuit has said that parties may bring statutory

bad faith claims “based largely on behavior beyond . . . denial of the claim.” Gallatin Fuels, Inc.

v. Westchester Fire Ins. Co., 244 F. App’x 424, 435 (3d Cir. 2007); see Post v. St. Paul Travelers

Ins. Co., 691 F.3d 500, 524 (3d Cir. 2012) (stating it “is no doubt true” that an insurer’s actions

can be unreasonable despite a finding that the insurer had no duty to cover); see also Ferguson v.

USAA Gen. Indem. Co., 334 F.R.D. 407, 410 (M.D. Pa. 2019) (quoting Frog, Switch & Mfg. Co.,

193 F.3d at 751 n.9) (“For example, an insurer ‘refusing to pay without a reasonable

investigation of all available information’ would be held liable under Section 8371, even if they

were ultimately correct in denying coverage.”); UPMC Health Sys. v. Metro. Life Ins. Co., 391

F.3d 497, 506 (3d Cir. 2004) (citation omitted) (stating “the alleged bad faith need not be limited

to the literal act of denying a claim”).

True, “‘cases in which an insurer can be liable for bad faith’ even though there was no

duty to provide coverage” are “exceedingly rare.” Post, 691 F.3d at 524 (quoting Gallatin Fuels,

244 F. App’x at 435); see also T.H.E. Ins. Co. v. Davis, 54 F.4th 805, 825 (4th Cir. 2022)

(applying Pennsylvania law and stating that “in ‘exceedingly rare’ circumstances, an insurer may

act in bad faith by failing to conduct a reasonable investigation”). But for our purposes, Ms.

Walker-Walton’s claim rises and falls with the lack of clear and convincing evidence

demonstrating a dishonest purpose in its investigation of the correct beneficiary.

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communications from the insured, violating its own policies and procedures . . . and keeping

crucial information from [the person who] made his coverage determination.” Id. at 524. The

Third Circuit distinguished between an insurer making misrepresentations and acting dishonestly

when investigating a claim, versus protecting its own interests. See id. And the Third Circuit

further separated the lawyer’s claim challenging “largely benign claims-handling conduct,” from

an insurer “reflexively den[ying] coverage” without a proper investigation. See id. at 525

(contrasting Giangreco v. U.S. Life Ins. Co., 168 F. Supp. 417 (E.D. Pa. 2001)). The record

reflected that the insurer “did not automatically deny coverage” and had a “reasonable basis” for

denying its coverage throughout its investigation. Id.

Here, nothing suggests that Brighthouse made intentional misrepresentations or acted

dishonestly toward Ms. Walker-Walton when handling the claims to Mr. Fulton’s death benefit.

Nor do the facts show that Brighthouse immediately denied Ms. Walker-Walton the death

benefit21 without investigation. Rather, Brighthouse has provided evidence of the reasons for its

actions and inaction. See Gibson, 994 F.3d at 191. The undisputed facts show how Mr. Brown

submitted the second life insurance policy application under Mr. Fulton’s first case number, how

Mr. Brown tried communicating the mistake to Brighthouse, how Fulton/Harper incorrectly

remained as successive, co-beneficiaries of Mr. Fulton’s policy, and how Brighthouse filed an

interpleader action to avoid the risk of multiple liability. See DI 58 at 6-7. Brighthouse’s own

“record-keeping issue[s]” may have caused the dispute, but on this record, Brighthouse was, at

worst, negligent in investigating the competing claims. See id. at 8. That is not enough to prove

21 The opposite happened; Ms. Walker-Walton will receive the death benefit.

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a statutory bad faith claim based on a failure to adequately investigate or handle competing

claims.

Moreover, Ms. Walker-Walton lacks evidence showing that Brighthouse’s concern over

the suspects of Mr. Fulton’s homicide were pretextual. Rather, the record reflects that

Brighthouse did not want to risk paying Fulton/Harper before they were ruled out as homicide

suspects. See DI 55-3 Ex. J; DI 58 at 9.22 Further, nothing shows that Brighthouse disregarded

Ms. Walker-Walton’s claim to Mr. Fulton’s death benefit. The record instead indicates that the

police investigation had not closed, and the investigation went “cold.”

Therefore, “[e]ven if [Brighthouse’s] claims-handling processes were not ideal, there is

no evidence in the record — let alone clear and convincing evidence — to show that

[Brighthouse’s] purported mishandling of [Ms. Walker-Walton’s] claim was motivated by a

dishonest purpose or ill will.” Post, 691 F.3d at 525.23

V. Conclusion

Without a genuine dispute of material fact regarding the beneficiary of Mr. Fulton’s life

insurance policy, we grant Brighthouse summary judgment on its declaratory relief claim. Ms.

22 And Brighthouse’s investigation after Mr. Fulton’s death did not uncover the

application submission error that was discovered during fact discovery. Thus, Brighthouse had

no reason to think — at the time it communicated with the Philadelphia Police Department on

July 17, 2020 — that Ms. Walker-Walton was the correct beneficiary. See DI 55-3 Ex. J (July

17, 2020 email referencing conversation with Philadelphia Police Department); id. Ex. H (Ms.

Walker-Walton’s claim form).

23 Like Fulton/Harper, Ms. Walker-Walton makes passing reference to Brighthouse’s

purported failure to “maintain a copy of [Mr. Fulton’s] [p]olicy” in violation of the Pennsylvania

Insurance Code. DI 57 at 15; see id. at 9. The argument is meritless.

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Walker-Walton is the policy’s sole beneficiary. And we grant Brighthouse’s summary judgment

motion with respect to the defendants’ counterclaims.24

24 We also dismiss Ms. Walker-Walton’s crossclaim against Fulton/Harper with prejudice

for failure to prosecute. See DI 44 at 11-13.

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