Bajwa v. Metro. Life Ins. Co., 95051.

• Citation: 804 N.E.2d 519,208 Ill.2d 414,281 Ill.Dec. 554
• Decision Date: 23 January 2004
• Docket Number: No. 95051.,95051.
• Parties: Khalid J. BAJWA, Adm'r of the Estate of Muhammad Cheema, a/k/a Manwar Ahmad Bajwa, Deceased, Appellee and Cross-Appellant, v. METROPOLITAN LIFE INSURANCE COMPANY, Appellant and Cross-Appellee.
• Court: Illinois Supreme Court

804 N.E.2d 519

208 Ill.2d 414

281 Ill.Dec. 554

Khalid J. BAJWA, Adm'r of the Estate of Muhammad Cheema, a/k/a Manwar Ahmad Bajwa, Deceased, Appellee and Cross-Appellant, v. METROPOLITAN LIFE INSURANCE COMPANY, Appellant and Cross-Appellee.

No. 95051.

Supreme Court of Illinois.

January 23, 2004.

Chittenden, Murday & Novotny, L.L.C. (Joseph J. Hasman and David F. Schmidt, of counsel), Lawrence X. Pusateri, and Peterson & Ross, L.L.C. (Anna M. Loftus, of counsel), Chicago, for appellant and cross-appellee.

Corboy & Demetrio, P.C., Chicago (Philip H. Corboy, Thomas A. Demetrio, Philip H. Corboy, Jr., and Francis Patrick Murphy, of counsel), for appellee and cross-appellant

Justice THOMAS delivered the opinion of the court:

Plaintiff, Khalid J. Bajwa, as administrator of the estate of Muhammad Cheema, filed an action under the Wrongful Death Act (740 ILCS 180/1 et seq. (West 1998)), alleging that the negligent issuance of a life insurance policy by defendant, Metropolitan Life Insurance Company (Met Life), proximately caused the murder of Muhammad Cheema (decedent or A. Cheema) by the beneficiary of the policy. Met Life filed a motion to dismiss pursuant to section 2-615 of the Code of Civil Procedure (the Code) (735 ILCS 5/2-615 (West 2000)). The circuit court of Cook County granted the motion. The appellate court reversed and remanded the cause for further proceedings. 333 Ill.App.3d 558, 267 Ill.Dec. 237, 776 N.E.2d 609. We granted Met Life's petition for leave to appeal pusuant to Supreme Court Rule 315 (177 Ill.2d R. 315), to consider an issue of first impression in Illinois: whether a cause of action for negligent issuance of a life insurance policy should be recognized, where there are a number of anomalies in the application process and plaintiff alleges that the insurer should have known that the supposed insured did not know of the policy and did not give his consent to it, thereby proximately causing the death of the insured.

BACKGROUND

The plaintiff's fourth amended complaint and the attached exhibits reveal that in December 1992, Muhammad U. Cheema (U. Cheema) met with Met Life account representative Imtiaz Sheik to fill out an insurance policy on the life of A. Cheema. U. Cheema falsely represented himself as the son of A. Cheema and provided some personal information necessary to fill out part A of the application. U. Cheema designated himself as the beneficiary and arranged for the policy premiums to be deducted from his own bank account. U. Cheema then told the agent that he would take the application to his "father" to obtain his signature. This was a violation of Met Life's standard procedural rules, requiring that the agent meet personally with the proposed insured to witness the signature on the application and to propound certain questions to the proposed insured. Nevertheless, Sheik agreed to this deviation from procedure, and U. Cheema returned the application with it signed "A. Cheema." Agent Sheik then signed part A of the application, under the heading "Witness," indicating that he had personally witnessed the proposed insured sign the application. When the policy was contested following the decedent's death, Sheik admitted that he had not witnessed the proposed insured's signature. For part B of Met Life's application process, the proposed insured was required to submit to a medical examination conducted by a paramedical examiner hired by Met Life. The medical exam resulted in a number of discrepancies between part A and part B of the application: the proposed insured's mailing address was listed as 6400 N. Ridge, # 305, Chicago, IL in part A, but the address of his residence was listed as 5101 N. Slunden, Chicago, IL in part B; the social security numbers listed for the proposed insured in part A and part B were not the same; and the spaces provided for disclosing previous treatment for high blood pressure and previous surgery were checked "no" in part A, but were checked "yes" in part B.

The paramedical examiner certified in part C of the application that he had personally examined A. Cheema. However, the person examined by the paramedical examiner was 5 feet 11 inches tall and 195 pounds, while decedent was actually 5 feet 8 inches tall and 213 pounds.

Prior to the issuance of the policy, a Met Life underwriter noticed a number of additional irregularities in the application that required further investigation. In that regard, he questioned why U. Cheema, rather than A. Cheema's wife, was the policy beneficiary, and why the beneficiary was paying the premiums rather than the insured, and finally, he questioned why the policy was for $200,000 when A. Cheema's income, according to Met Life's guidelines, did not qualify him for that large of a policy amount. Despite these discrepancies, the underwriter decided the application was acceptable and issued the policy on January 18,1993.

After the policy was issued, someone identifying himself as "Muhammad Cheema" called Met Life on five different occasions, purporting to be the insured and asking questions about possible coverage in the event of the insured's death. Met Life found these calls "strange enough" to send the case to the Consulting Services area, where the file was "noted." Nine days after the last of those calls was made to Met Life, the real A. Cheema was stabbed and beaten to death in his apartment. According to plaintiff, U. Cheema murdered the decedent in order to collect the life insurance benefits from the policy provided by Met Life.

Plaintiff filed a fourth amended complaint on February 19, 1999, alleging that Met Life negligently issued an insurance policy on the life of the decedent. Count IV of that complaint alleged that Met Life was negligent in the following ways: (1) issued a life insurance policy on the life of the decedent without investigating the veracity of the information on the insurance application and personally meeting with the insured; (2) issued a policy in favor of a beneficiary who did not possess an insurable interest on the life of the insured; (3) relied upon misrepresentations of its agent in underwriting the policy; (4) failed to warn decedent of the suspicious phone calls; and (5) provided motivation for the murder. Count V alleged gross negligence for the same acts. Count VI alleged negligent supervision of agent Sheik. The trial court granted Met Life's 2-615 motion to dismiss these counts of the complaint.¹ The appellate court reversed, finding that plaintiff could maintain a cause of action for negligent issuance of an insurance policy. In so doing, it looked to cases from other jurisdictions that have considered the matter and found that courts in those states have recognized the validity of such claims on three different grounds: (1) where the insurer should have known that the person who procured and owned the policy, and who was named as beneficiary, had no insurable interest in the life of the insured; (2) where the insurer had knowledge that the insured was unaware of and did not consent to the policy; and (3) where the insurer had actual knowledge of the beneficiary's intent to murder the insured and failed to take action. 333 Ill. App.3d at 565, 267 Ill.Dec. 237, 776 N.E.2d 609.

As to the insurable interest ground, the appellate court noted that "while it has long been the established law of Illinois that the purchaser of an insurance policy must have an insurable interest in the insured's life [citation], it has also long been held that `one may insure his own life for the benefit of another having no insurable interest therein [citation].'" 333 Ill. App.3d at 568, 267 Ill.Dec. 237, 776 N.E.2d 609. The court then found that plaintiffs pleadings were insufficient because they failed to make this distinction—plaintiff did not allege that Met Life issued an insurance policy on the life of the decedent to an individual who did not possess an insurable interest, but, rather, that Met Life allowed the policy owner to designate a beneficiary who did not possess an insurable interest. Accordingly, the court concluded that plaintiff's allegations as they relate to an insurable interest were insufficient to state a cause of action. 333 Ill. App.3d at 569, 267 Ill.Dec. 237, 776 N.E.2d 609.

With respect to the second ground of possible recovery, however, the appellate court found that Met Life had a duty to ascertain, prior to the issuance of a policy on the life of another, whether the individual named as the insured is aware of and has consented to the procurement of the policy. The court found that the various irregularities in the application process, combined with the suspicious phone calls, were sufficient to put the insurer on notice that an investigation was warranted. 333 Ill.App.3d at 580, 267 Ill.Dec. 237, 776 N.E.2d 609. The court then rejected the notion that actual knowledge was necessary to establish liability on the part of the insured. 333 Ill.App.3d at 578-79, 267 Ill. Dec. 237, 776 N.E.2d 609.

ANALYSIS

As noted above, the circuit court dismissed plaintiff's complaint after Met Life brought a section 2-615 motion to dismiss. A section 2-615 motion to dismiss challenges the legal sufficiency of the complaint. Chandler v. Illinois Central R.R. Co., 207 Ill.2d 331, 348, 278 Ill.Dec. 340, 798 N.E.2d 724 (2003). In reviewing a section 2-615 dismissal, a reviewing court must decide whether the allegations, when construed in the light most favorable to the plaintiff, are sufficient to establish a cause of action upon which relief may be granted. People ex rel. Ryan v. Telemarketing Associates, Inc., 198 Ill.2d 345, 351, 261 Ill.Dec. 319, 763 N.E.2d 289 (2001). A cause of action should be dismissed only if it is clearly apparent from the pleadings that no set of facts can be proven which will entitle the plaintiff to recovery. Chandler, 207 Ill.2d at 349,278 Ill.Dec. 340,798 N.E.2d 724. Review of a section 2-615 dismissal is conducted de novo. Telemarketing...