In re Jackson Nat. Life Ins. Co. Premium Litigat.
| Decision Date | 05 July 2000 |
| Docket Number | No. MDL 1122.,MDL 1122. |
| Citation | 107 F.Supp.2d 841 |
| Parties | In re JACKSON NATIONAL LIFE INSURANCE COMPANY PREMIUM LITIGATION |
| Court | U.S. District Court — Western District of Michigan |
Stephen L. Hubbard, Hubbard & Biederman, LLP, Dallas, TX, for plaintiff.
Joel Feldman, Sachnoff & Weaver, Ltd., Chicago, IL, for defendant.
In this multi-district litigation, plaintiffs are purchasers of, or persons beneficially interested in, life insurance policies underwritten and sold by defendant Jackson National Life Insurance Company ("Jackson National"). Plaintiffs allege they suffered loss due to Jackson National's misrepresentations. The consolidated amended complaint expressly asserts the claims of individual plaintiffs from Texas, Ohio, Arizona, Oklahoma, California and Illinois. Named defendants are Jackson National; its wholly owned subsidiary, Jackson National Life Insurance Company of Michigan; and their holding company, Brooke Life Insurance Company. Michigan is the principal place of business for all three defendants, collectively referred to herein as "Jackson National." Plaintiffs seek compensatory and injunctive relief, asserting claims for fraud, breach of fiduciary duty, negligent misrepresentation, negligent supervision of sales agents, breach of contract, unjust enrichment, violation of Michigan's Consumer Protection Act, and violation of Michigan's Pricing and Advertising Act.
On September 30, 1997, the Court dismissed plaintiffs' claims under the Michigan Consumer Protection Act. On October 22, 1998, the Court denied plaintiffs' motion for certification of a nationwide class. Now before the Court is Jackson National's motion for summary judgment on all remaining claims. For the following reasons, the Court concludes the motion must be granted in part and denied in part.
Plaintiffs allege they were induced to purchase interest sensitive whole-life insurance policies by false, incomplete and misleading sales representations and information disseminated by Jackson National. More specifically, they allege they paid large lump sum premiums or large fixed premiums for a number of years in reliance upon representations that future premiums would "vanish" as interest and other values accumulated in the policy and became sufficient to pay remaining premiums. In the 1990s, when interest rates declined and the amounts paid into the policies failed to produce sufficient income to pay remaining premiums, plaintiffs were advised that additional out-of-pocket premium payments were required to maintain the policies. Consequently, plaintiffs allege they have been faced with the choice of either incurring the unexpected expense of continuing premium payments or surrendering the policies at substantial loss. They pray for compensatory and punitive or exemplary damages, injunctive relief enjoining Jackson National's deceptive practices and requiring Jackson National to pay for the costs of obtaining life insurance conforming to the sales representations, and an order imposing a constructive trust upon monies wrongfully acquired by Jackson National.
Plaintiff Paul Christiansen is a resident of California.1 In 1984, he converted a Jackson National term policy insuring the life of his brother to a $100,000 Ultimate II life insurance policy. Christiansen purportedly relied on Jackson National brochures, a vanishing premium illustration, and oral representations of the sales broker, Robert Greenup, in deciding to purchase the Ultimate II policy. Based on these communications, plaintiff Christiansen allegedly understood that, irrespective of the interest crediting rate approved by Jackson National, his obligation to make continuing annual premium payments of $838 — either out-of-pocket or out of the policy's accumulated cash value — would vanish after four to nine years. It appears Christiansen paid premiums out-of-pocket until 1992. Thereafter, and continuing to the present, he has elected to have the annual premium withdrawn from the policy's accumulated cash value. It has been more than nine years since he purchased the policy and the premiums have still not "vanished" in the way Christiansen understood they would.
Plaintiffs Patricia Everett and Charles J. Everett, M.D., individually, and Ralph P. Higgins, Trustee of the Everett Family Irrevocable Trust, are residents of Ohio.2 In March 1990, the Everett Trust purchased a $1,000,000 Jackson National Last Survivor Ultimate policy insuring the lives of Dr. and Mrs. Everett. Relying on illustrations and representations of sales agent Jack Stitt, the Everetts believed that after six annual premium payments of $8,870, the premium would vanish. After having made seven annual premium payments out-of-pocket, they have since elected to have premiums paid from the policy's accumulated cash value. They allege the continuing obligation to pay premiums beyond six years is contrary to the agent's explanation of the policy; who, although he made no guarantee, led them to believe the likelihood of the need for a seventh payment was remote.
Jerome Fleischer and his wife Harriet Fleischer, as well as Stuart Morse and George Williams, Trustees of the Fleischer Liquidity Trust II, are residents of Texas.3 The Fleischers purchased a $500,000 Last Survivor Ultimate policy in 1990, in reliance upon representations made by sales broker Gary Gray, who showed them several illustrations. They understood that if they made premium payments (in the quarterly amount of $2,423.30) for seven or eight years, the premium would vanish. The Fleischers made the quarterly payments until 1995, when they surrendered the policy for its cash value. The decision to surrender the policy appears to have been precipitated by two circumstances: first, miscommunication concerning premium payments; and second, the Fleischers' concern that the premium would not actually vanish after seven or eight years as expected.
Plaintiff Roy E. Bliss and his wife Nellie A. Bliss are residents of Arizona.4 Their son Roy Lee Bliss is Trustee of the Bliss Irrevocable Trust, which holds the beneficial interest in a Jackson National Last Survivor Ultimate policy purchased by the Blisses in 1990. In reliance upon policy illustrations and other documents, as well as representations of sales agent John Fattig, the Blisses allegedly understood that a single premium payment of $94,887 would buy them a death benefit of $500,000 and that no further premium payment would ever be required. In 1995, the Blisses were shocked to receive notice that additional premium payments were required to maintain their policy. Since 1997, premiums have been paid from the policy's accumulated cash value. The Blisses allege they did not receive the policy they were promised.
Plaintiff Gerald Zaidman is the Trustee of the Harry A. Young, Jr. Irrevocable Trust and a resident of Illinois.5 The Young Trust is the owner of two $150,000 Ultimate II whole life policies purchased by Harry A. Young, Jr. in 1990 and 1993. Young purchased the policies in reliance upon representations contained in Jackson National illustrations which were explained by sales broker Robert Szarvas. Young understood that he would make annual premium payments (of $5,968 on the first policy and $5,669 on the second) for seven years before the premiums would vanish. Young made seven annual premium payments out-of-pocket on the 1990 policy before electing in 1997 to have the premium paid from the policy's accumulated cash value. On the 1993 policy, he has made six annual premium payments out-of-pocket. The obligation to pay continuing premiums beyond seven years, Zaidman maintains, is contrary to Jackson National's representations.
Jackson National has moved for summary judgment on all of plaintiffs' claims. The motion requires the Court to look beyond the pleadings and evaluate the facts to determine whether there is a genuine issue of material fact that warrants a trial. Fed.R.Civ.P. 56(c). See generally Barnhart v. Pickrel, Schaeffer & Ebeling Co., 12 F.3d 1382, 1388-89 (6th Cir.1993). That is, the Court must determine "whether the evidence presents sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The Court must consider all pleadings, depositions, affidavits, and admissions on file, and draw all justifiable inferences in favor of the party opposing the motion. Matsushita Elec. Ind. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
An issue of fact is "genuine" if the evidence is such that a reasonable jury could return a verdict for the nonmovant. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. Once the moving party identifies elements of a claim or defense which it believes are not supported by evidence, the nonmovant must present affirmative evidence tending to show a genuine dispute of fact. Celotex Corp. v. Catrett, 477 U.S. 317, 324-25, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Production of a "mere scintilla of evidence" in support of an essential element will not forestall summary judgment. Anderson, 477 U.S. at 252, 106 S.Ct. 2505. The nonmovant must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586, 106 S.Ct. 1348.
The substantive law identifies which facts are "material." Facts are "material" only if establishment thereof might affect the outcome of the lawsuit under governing substantive law. Anderso...
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