In re Mutual Life Ins. of New York Premium Litig.
| Citation | 295 F.Supp.2d 140 |
| Decision Date | 17 November 2003 |
| Docket Number | No. CIV.A. 96-10411-EFH.,CIV.A. 96-10411-EFH. |
| Parties | In re MUTUAL LIFE INSURANCE COMPANY OF NEW YORK PREMIUM LITIGATION. William J. McLean, Naomi Driscoll and Roger K. Brown and Thomas C. Brown, Trustees of the Richard L. Brown Irrevocable Trust No. 2, DTD 3/17/90, individually and on behalf of all others similarly situated, Plaintiffs, v. Mutual Life Insurance Co. of New York f/k/a Mutual Life Insurance Company of New York, Defendant. |
| Court | U.S. District Court — District of Massachusetts |
Barry A. Weprin, Milberg, Weiss, Bershad Specthrie & Lerach, New York City, Kenneth G. Gilman, Peter A. Lagorio, Gilman and Pastor, LLP, Saugus, MA, Richard T. Phillips, Smith, Phillips, Mitchell, Scott & Rutherford, Batesville, MS, for William J. McLean, Individually and on behalf of all others Similarly Situated, Plaintiff.
Daniel J. Gleason, John A. Sten, Boston, MA, Nutter, McClennen & Fish, LLP, Glenn E. Deegan, Holland & Knight, LLP for Mutual Life Insurance CO of New York, Defendant.
The plaintiffs in this case are two Massachusetts residents, William McLean ("McLean") and Naomi Driscoll ("Driscoll"), and two Illinois residents, Roger Brown and Thomas Brown, who are acting in their capacity as trustees for the Richard L. Brown Irrevocable Trust Number 2 ("the Browns"). The plaintiffs' complaint alleges that the defendant, MONY Life Insurance Company ("MONY"), used false and misleading sales presentations to sell the plaintiffs "vanishing premium" life insurance policies in violation of Massachusetts and Illinois state consumer protection statutes. The defendant moved for summary judgment as to both sets of plaintiffs. For reasons stated below, the Court grants the motion as to McLean and Driscoll, but denies the motion as to the Browns.
In 1995, Paul Goshen ("Goshen") filed a class action lawsuit against MONY in New York state court alleging deceptive sales practices in connection with the sale of "vanishing premium" life insurance policies. McLean and Driscoll purchased MONY life insurance policies in Massachusetts and joined Goshen's class action lawsuit. Goshen's complaint alleged a number of common law and statutory violations, but only his claim under New York's Consumer Protection Act, Gen. Bus. § 349, is relevant to the current case.
MONY moved for summary judgment on all of Goshen's claims. The New York trial court granted the motion. Regarding the Section 349 claim, the trial court held as an initial matter that the statute applied "only to those claims which arose out of transactions occurring in New York State, and so may not be raised in favor of any plaintiff who claims to have been injured by the purchase of insurance in any other jurisdiction." Goshen v. The Mutual Life Ins. Co. of N.Y., 1997 WL 710669 at *13 (N.Y.Sup.1997). As for those plaintiffs who purchased their policies in New York, the trial court ruled that the plaintiffs had failed to allege conduct by the defendant that was materially deceptive, as required by the statute. Id. Accordingly, judgment was entered dismissing the complaint "in its entirety with prejudice on the merits." (emphasis supplied).
On appeal, the New York Appellate Division affirmed the trial court without opinion. See Gaidon v. Guardian Life Ins. Co. of Am., 94 N.Y.2d 330, 704 N.Y.S.2d 177, 725 N.E.2d 598, 602 (1999). The case was then appealed to New York's highest court, the Court of Appeals, which affirmed in part and reversed in part. See id. The court held that the plaintiffs did in fact allege conduct that was materially deceptive under Section 349 and remanded that particular cause of action to the trial court "for further proceedings consistent with this opinion." Id., 704 N.Y.S.2d 177, 725 N.E.2d at 608. In all other respects the trial court's decision was affirmed. On remand, the trial court repeated its earlier ruling that only plaintiffs who purchased their policies in the State of New York may raise claims under Section 349. The trial court concluded that "[s]ince there is no doubt that Goshen purchased his policy in Florida, his claim must be dismissed."
The trial court's decision dismissing Goshen's Section 349 claim was again appealed to, and affirmed by, the Appellate Division. Appeal was taken to the Court of Appeals, which held that a prima facie case under Section 349 requires "that the transaction in which the consumer is deceived must occur in New York." Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 746 N.Y.S.2d 858, 774 N.E.2d 1190, 1195 (2002). Applying this rule to the case before it, the Court of Appeals concluded that Goshen's purchase of insurance in Florida meant that he did "not state any cognizable cause of action." Id., 746 N.Y.S.2d 858, 774 N.E.2d at 1196. The trial court's ruling was affirmed.
Shortly after Goshen filed his complaint in New York state court, other individuals in different jurisdictions brought similar actions against MONY. These cases were eventually coordinated and transferred to this Court as part of a Multi-District Litigation Panel Order. One of these cases was originally filed by McLean in this Court on March 7, 1996. McLean's case, like all the other Multi-District Litigation cases, was stayed pending the outcome of Goshen. Shortly after the final decision by the New York Court of Appeals in Goshen, the stay was lifted and McLean moved to amend his complaint. McLean sought to drop all of the claims contained in his original complaint and add a claim under the Massachusetts Consumer Protection Act, Mass. Gen. Laws ch. 93A, and a second Massachusetts plaintiff, Driscoll. McLean also sought to add the Illinois plaintiffs, the Browns, and their claim under the Illinois Consumer Fraud and Deceptive Business Practice Act, 815 Ill. Comp. Stat. 505/1 ("ICFA"). This Court granted McLean's motion to amend his complaint.
In 1990, the Browns purchased a $2 million "vanishing premium" life insurance policy from MONY in Illinois. The Browns allege that the MONY sales agent made representations and used illustrations during the sales presentation that showed that the insurance policy could be purchased for five annual premiums of $44,000 each. The insurance policy purchased by the Browns yielded investment income in the form of dividends. The dividends were to be used to pay for the policy's premiums, thus allowing the Browns' out-of-pocket payments to "vanish" over time. In 1992, the Browns' were informed by a MONY sales agent that "things hadn't gone as well as expected," and an additional three years of premiums were required. Richard Brown testified at his deposition that these three additional annual payments were $16,000 each. In March, 1995, the Browns received a letter from MONY indicating that annual premiums of $18,477 were required for at least sixteen more years.
The Browns decided to bring suit. Unlike McLean and Driscoll, however, the Browns decided to opt out of the Goshen class action that was filed in New York. Instead, in January, 1996, the Browns joined a class action lawsuit against MONY that was filed in federal district court in Mississippi. That case was ultimately transferred to this Court as part of the Multi-District Litigation Panel Order. The Browns then dropped out of the Mississippi class action and joined McLean's action, raising only one claim under the ICFA.
Currently pending before this Court is MONY's motion for summary judgment on McLean's amended complaint. Summary judgment should be granted when the evidence, taken in the light most favorable to the nonmoving party, shows that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. See Rocafort v. IBM Corp., 334 F.3d 115, 119 (1st Cir.2003).
MONY argues that summary judgment should be granted as to McLean and Driscoll because the doctrine of res judicata precludes their 93A claim. "In cases involving preclusion, federal statutory law requires federal courts to give preclusive effect to state-court judgments whenever the courts of the State from which the judgments emerged would do so." Patterson v. Patterson, 306 F.3d 1156, 1158 (1st Cir.2002) (quotation marks and citation omitted). In this case, MONY argues that Goshen bars the claims brought by McLean and Driscoll. The Court rules that New York's res judicata law controls. See N.H. Motor Transp. Ass'n. v. Town of Plaistow, 67 F.3d 326, 328 (1st Cir.1995).
Under New York law, the doctrine of res judicata precludes future litigation between the same parties on the same claims once a final judgment is entered. See Ferris v. Cuevas, 118 F.3d 122, 126 (2d Cir.1997). Two claims are considered the same if they arise from "the same transaction or series of transactions ... even if based upon different theories or if seeking a different remedy." O'Brien v. City of Syracuse, 54 N.Y.2d 353, 445 N.Y.S.2d 687, 429 N.E.2d 1158, 1159 (1981). This means that parties are precluded from raising not only issues actually litigated before a court but also those issues which could have been litigated. See In re Hofmann, 287 A.D.2d 119, 733 N.Y.S.2d 168, 172 (App.Div.2001).
McLean and Driscoll concede that they were parties to Goshen because they elected to join the class. See Siegel v. Competition Imports, Inc., 296 A.D.2d 540, 745 N.Y.S.2d 701, 702 (App.Div.2002). McLean and Driscoll also concede that their claims in Goshen are based on the same factual transactions as their current claim, namely their purchase of "vanishing premium" life insurance policies from MONY. The primary challenge they make to the applicability of res judicata is that the decisions of the various courts in Goshen did not amount to a final judgment. McLean and Driscoll argue that the Goshen decisions did not adjudicate the substance of the Section 349 claims brought by plaintiffs who purchased...
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In re Mut. Life Ins. Co. of New York Premium Lit., No. CIV.A.96-10411-EFH.
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