Mayo v. Hartford Life Insurance Company
United States Court of Appeals for the Fifth Circuit
354 F.3d 400 (2004)
Walmart established a company-owned life insurance (COLI) program in 1993, insuring the lives of its employees, with Walmart as beneficiary; employees were covered unless they opted out of a related special-death-benefits program. Walmart discontinued the COLI program in 1998. Douglas Sims, a Walmart employee from 1987 until his death in 1998, was insured under a COLI policy. Sims's estate sued Walmart, claiming the policy violated the Texas insurable-interest doctrine, and sought a declaratory judgment, a constructive trust, and disgorgement of the COLI proceeds. The district court granted the estate partial summary judgment, holding Walmart lacked an insurable interest in the lives of its regular employees, and Walmart appealed. (Scott Mayo was the original named plaintiff in the broader multi-plaintiff litigation from which this appeal arose, which is why the case is captioned Mayo v. Hartford Life Insurance Co. even though Sims's claim against Walmart is the one at issue in this particular appeal.)
Whether a company has an insurable interest in the life of an employee when (1) the employer-employee relationship is the only relationship between them, and (2) the company's success or failure does not depend on that particular employee.