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Robbins v. Metropolitan Life Insurance Company of Connecticut

December 24, 2008


The opinion of the court was delivered by: Baylson, J.


Presently before the Court is Defendant's motion for judgment on the pleadings. In their suit, filed in federal court on diversity jurisdiction, Plaintiffs have alleged breach of contract, violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law, and bad faith insurance arising out of a life insurance policy issued by Defendants.For the reasons set forth below, the Defendant's motion for judgment on the pleadings is granted.

I. Background

A. Facts

Plaintiffs, Randi K. Robbins and Sherri K.Meyers, are owners and named beneficiaries of three life insurance policies issued by Defendant Metlife Life Insurance Company of Connecticut*fn1 (hereinafter "Defendant" or "MICC") for the life of Bernard Klazmer. (Compl. ¶s 14, 15, 16).On August 27, 2003, Defendant issued Policy No. 7415517, which provided $665,000 in coverage for the life of Bernard Klazmer. The value of that policy was increased to $1,350,000 on August 27, 2005. (Compl. ¶ 14.) On April 27, 2005, Defendant issued both Policy No. 7466326, worth $1,650,000, and Policy No. 7466327, worth $1,000,000, in additional insurance for the life of Bernard Klazmer. (Compl. ¶s 15, 16.) Both of the April 2005 Policies contained a Premium Based Scheduled Increase Rider (hereinafter referred to as the "PBSI Rider"), which provides for annual increases to the stated amount of the policy on each policy anniversary. (Compl. ¶ 18, Ex. A.) The PBSI Rider also states that the rider will terminate on the earliest of several possible dates, including the date of policy termination or maturity. (Id.)

Bernard Klazmer, the Insured, died on January 16, 2006. (Compl. ¶ 19.) On April 15, 2006, the Plaintiffs made claims to Defendant for payment of all amounts to which they were entitled under the three Policies. (Compl. ¶ 20.) Defendant elected to conduct a "contestability review" of those Policies, or the portions of the Policies, that had not been in effect for more than two years before the Insured's death, as provided for under those Policies. (Compl. ¶ 21, 22.) On June 28, 2006, Defendant paid Plaintiffs $665,000 representing the uncontestable portion of the initial 2003 Policy (No. 7415517). (Compl. ¶ 27.) After concluding its review on August 18, 2006, Defendant paid the remaining benefits under all three Policies, including $685,000 under Policy No. 7415517, $1,650,000 under Policy No. 7466326, and $1,000,000 under Policy No. 7466327. (Compl. ¶ 29.)

Plaintiffs then contacted Defendant regarding the PBSI Rider, and Plaintiffs allege Defendant initially suggested that they had no knowledge of the Rider. (Compl. ¶ 31.) Plaintiffs reasoned that the Rider entitled them to additional benefits in the amount of the annual increases for both April 2005 Policies. (Compl. ¶ 34.) Plaintiffs also suggested that, under applicable law, they were entitled to interest on all of the death benefits not paid within thirty days of the claim. (Compl. ¶35.) In response, Defendant explained that it initially did not recognize the reference to the PBSI Rider and was confused by the acronym, as it was previously known as the "Scheduled Increase of Premium Rider (SIOP)." (Def.'s Reply at 9.) However, Defendant noted that the PBSI Rider annual increase did not apply because the Insured died before the anniversary date, and thus the polices and riders terminated before the annual increases had occurred. (Id.) Defendant further counters that it already paid to Plaintiffs the required interest on the awarded death benefits andattached to its reply a letter sent to Plaintiffs explaining the breakdown of interest payments as well as the 1099 Interest Income Forms for each beneficiary.*fn2

(Def.'s Memo at 15 and Ex. C.)

As a result of Defendant's refusal to pay the additional amounts, Plaintiffs filed this suit alleging breach of contract (Count I), violation Pennsylvania's Unfair Trade Practices and Consumer Protection Law (Count II), and bad faith (Count III).(Doc. 1.) Defendant filed an Answer (Doc. 17) and then moved for judgment on the pleadings (Doc. 25.)

B. Parties Contentions

Defendant asserts that it is entitled to judgment as a matter of law because under the clear language of the insurance policy, the PBSI Rider terminates upon policy termination and the policy terminates when the Insured dies. (Def.'s Memo at 9.) Thus, the Rider terminated before the policy anniversary, as the Insured died before that date, and Plaintiffs are not entitled to the annual increase. Because Defendant otherwise paid Plaintiffs all benefits to which they are entitled under the Policies, including interest, Defendant did not breach any contract. (Def.'s Memo at 10-11.)

Furthermore, Defendant argues Plaintiffs have not pled justifiable reliance on any alleged misrepresentation or wrongful conduct of Defendant as required for a private right of action under Pennsylvania's Unfair Trade Practices and Consumer Protection Law ("UTPCPL"). (Def.'s Memo at 12-13.) Defendant further asserts it has not acted improperly and instead engaged in a timely contestable review before paying the death benefits in full. (Def.'s Memo at 14.) Finally, Defendant contends that Plaintiffshave made no allegations to support their bad faith claim, especially when Defendant ultimately provided the benefits. (Id.)

Plaintiffs respond that they are entitled to the increases because the April 2005 Policies were still in effect while Defendant engaged in the contestable review, which lasted beyond the Policy Anniversary dates, and thus the annual increases became due. (Pl.'s Memo at 10.) The Policies, and thus the Riders, only terminated when Defendant paid out the benefits, thereby fulfilling its obligations under the contract. (Pl.'s Memo at 10-11.) Plaintiffs point out that there is no clear language in the Policies indicating that the policies terminate with the death of the insured and any ambiguity must be construed against the insurer. (Id.)

With respect to the UTPCPL, Plaintiffs respond that the evidence that Defendant was "not aware" of the Riders indicates that Defendant engaged in some wrongful or deceptive conduct. Plaintiffs specifically suggest that Defendant's assertion that it did not know of the Riders indicates Defendant never had any intention of paying any increases that might be due under the Riders. Although Plaintiffs are unable to establish the extent of Defendant's improper behavior, they argue they have at least satisfied the pleading requirements and deserve to proceed to discovery to learn how Defendant handled, or mishandled, Plaintiff's claim. (Pl.'s Memo at 14-16.) Similarly, Plaintiffs argue they have sufficiently pled that Defendant acted in bad faith because they unreasonably deniedthe additional death benefits andwere initially unaware of the Rider.As such, Plaintiffs should be permitted to pursue this claim with further discovery. (Pl.'s Memo at 17.)

II. Legal ...

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