Kioutas v. Life Ins. Co. of Virginia, 97 C 6594.

Decision Date12 November 1998
Docket NumberNo. 97 C 6594.,97 C 6594.
Citation35 F.Supp.2d 616
PartiesBeatrice KIOUTAS, Plaintiff, v. LIFE INSURANCE COMPANY OF VIRGINIA, Defendant.
CourtU.S. District Court — Northern District of Illinois

Steven H. Mora, Mora & Baugh, Ltd., Chcaigo, IL, for Plaintiff.

William A. Chittenden, III, Janice L. Cleary, Francis Losurdo, Peterson & Ross, Chicao, IL, for Defendant.

MEMORANDUM OPINION AND ORDER

LEVIN, United States Magistrate Judge.

INTRODUCTION

Pending before this court is Plaintiff Beatrice Kioutas' (hereinafter "Plaintiff") complaint which was originally filed in the Circuit Court of Cook County, Illinois and subsequently removed to this court.1 In her complaint, Plaintiff seeks to recover the $200,000 death benefit due on an insurance policy issued by The Life Insurance Company of Virginia (hereinafter "Life of Virginia") on the life of her deceased husband, Steven Kioutas (hereinafter "Mr. Kioutas"). Life of Virginia had denied Plaintiff's claim for the death benefit and has filed this motion for summary judgment herein. This court grants Life of Virginia's motion for summary judgment for the reasons set forth below.

ISSUES

Life of Virginia avers that the insurance policy issued on the life of Mr. Kioutas never took effect because he: (1) failed to satisfy the condition precedent to coverage that he was in good health and insurable at the time the policy was delivered; (2) made material misrepresentations in his application for insurance which materially affected Life of Virginia's acceptance of the risk or hazard assumed in insuring his life; and (3) breached his good faith duty to disclose changes in his health and insurability prior to delivery of the policy.

BACKGROUND FACTS

The life insurance application in question herein consisted of an Application Part I form, entitled "Application for Life Insurance," and an Application Part II form, entitled "Medical of Application to the Life Insurance Company of Virginia," (hereinafter collectively referred to as the "Application"). (See Def.'s Am. Mot. for Summ. J. at 2.) Mr. Kioutas agreed to the following pertinent conditions in executing and signing Part I of the Application on November 30, 1995.

All answers to the questions in this application, which includes Part 1, 2 and 3 and any medical questionnaires and special questionnaires required, are complete and true to the best of my knowledge and belief, and I agree that: 1. The answers to those questions, together with this agreement, are the basis for issuing any policy. ... 4. Except as otherwise provided in the Conditional Receipt, no insurance will take effect unless the full first premium is paid and the policy is delivered to me while all persons proposed for insurance are in good health and insurable. (Emphasis added.) (See Def.'s Am. Mot. for Summ. J. at 2-3.)

On December 4, 1995 when Mr. Kioutas completed and signed Part II of the Application, he was asked questions concerning his health and medical history. (See Def.'s Am. Mot. for Summ. J. at 3.) Mr. Kioutas' Application Part II responses to the relevant medical questions in this case are as follows:

1. a. Name and address of your personal physician.

Answer: L.D. Anagnostopoulos, Arlington Heights, IL.

2. Have you ever been treated for or had any indication of:

c. Shortness of breath, persistent hoarseness, or cough, bronchitis, pleurisy, asthma, emphysema, tuberculosis, or any lung disorder?

Answer: Yes — "Bronchitis — 7/95 (over counter med)."

j. Disorder of skin, lymph glands, cyst, tumor or cancer?

Answer: No.

3. Are you now under observation or treatment for any medical or mental condition? Explain.

Answer: No.

7. Other than the above, have you within the past five years:

a. Had any mental or physical disorder?

Answer: No.

b. Had a checkup, consultation, illness, injury, surgery?

Answer: No.

d. Been a patient in a hospital, clinic, or other medical facility?

Answer: No.

e. Had an electrocardiogram, x-ray, or other diagnostic test? Answer: No.

f. Been advised to have any diagnostic test, hospitalization, or surgery which was not completed?

Answer: No.

(See Def.'s Am. Mot. for Summ. J. at 3.)

After completing the medical questions, Mr. Kioutas reviewed and signed Part II of the Application and made the following certification:

The above statement and answers are complete to the best of my knowledge and belief. I agree that such statements and answers shall be part of the Application and are made to induce The Life Insurance Company of Virginia to issue the policy or contract applied for.

(See Def.'s Am. Mot. for Summ. J. at 4.)

Jesse Tayloe (hereinafter "Tayloe"), an underwriter for Life of Virginia, reviewed Mr. Kioutas' completed Application and the medical records of Dr. Anagnostopoulos. (See Def.'s Am. Mot. for Summ. J. at 4.) Based on Mr. Kioutas' responses and in reliance on the information contained in the Application, Life of Virginia issued its Graded Premium Life Insurance Policy No. 002668205, with Application attached, in the amount of $200,000 designating Mr. Kioutas as the owner and insured of the policy. (See Def.'s Am. Mot. for Summ. J. at 4.) The life insurance policy was delivered to Mr. Kioutas on January 19, 1996. (See Def.'s Am. Mot. for Summ. J. at 4.)

On June 10, 1996, six months after delivery of the life insurance policy, Mr. Kioutas died of lung cancer. (See Def.'s Am. Mot. for Summ. J. at 4.) Plaintiff then filed a claim for the $200,000 death benefit due under the policy. (See Def.'s Am. Mot. for Summ. J. at 4.) Because Mr. Kioutas died within the two-year period of contestability, Life of Virginia investigated Mr. Kioutas' medical history. (See Def.'s Am. Mot. for Summ. J. at 4.) This investigation revealed that the application information Mr. Kioutas provided to Life of Virginia concerning his health and medical history was false. (See Def.'s Am. Mot. for Summ. J. at 4.) Before Mr. Kioutas applied for the subject life insurance, he had been diagnosed with a lung disorder and during the underwriting process, he was conclusively diagnosed with lung cancer. (See Def.'s Am. Mot. for Summ. J. at 4.) Specifically, Life of Virginia's investigation revealed the following facts and factual chronology.

1. On his Application, Mr. Kioutas listed Dr. L.D. Anagnostopoulos, his cardiologist, as his personal physician. Dr. Donald Cyborski, not Dr. L.D. Anagnostopoulos, was Mr. Kioutas' personal physician. (See Def.'s Am. Mot. for Summ. J. at 4.)

2. In November of 1995, Mr. Kioutas contacted Dr. Cyborski complaining of "wheezing for six weeks." (See Def.'s Am. Mot. for Summ. J. at 5.)

3. Dr. Cyborski advised Mr. Kioutas to have a chest x-ray. On November 27, 1995, Mr. Kioutas underwent a chest x-ray which revealed a mass on his lung. (See Def.'s Am. Mot. for Summ. J. at 5.)

4. On November 28, 1995, Dr. Cyborski informed Mr. Kioutas that the chest x-ray revealed that he had a mass on his lung. Dr. Cyborski advised Mr. Kioutas that he should have a C.T. scan of his lung. (See Def.'s Am. Mot. for Summ. J. at 5.)

5. Two days later, on November 30, 1995, Mr. Kioutas applied for life insurance with Life of Virginia. (See Def.'s Am. Mot. for Summ. J. at 5.)

6. Mr. Kioutas had a C.T. scan of his lung on December 8, 1995 and a biopsy of his lung on December 12, 1995. (See Def.'s Am. Mot. for Summ. J. at 5.)

7. Mr. Kioutas was conclusively diagnosed with lung cancer on or about December 14, 1995. He began a concurrent course of radiation and chemotherapy for his cancer on December 20, 1995. (See Def.'s Am. Mot. for Summ. J. at 5.)

8. On January 19, 1996, as stated, the subject life insurance policy was delivered to Mr. Kioutas. (See Def.'s Am. Mot. for Summ. J. at 4.)

Because Life of Virginia's position was that it would not have issued or delivered the life insurance policy to Mr. Kioutas if he had truthfully disclosed his health and medical history, Life of Virginia denied Plaintiff's claim for the $200,000 death benefit and refunded all premiums paid to Plaintiff. (See Def.'s Am. Mot. for Summ. J. at 5.)

LEGAL STANDARD

Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgement as a matter of law." Fed.R.Civ.P. 56(c). See also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has produced evidence to show that it is entitled to summary judgment, the party seeking to avoid such judgment must affirmatively demonstrate that a genuine issue of material fact remains for trial. LINC Fin. Corp. v. Onwuteaka, 129 F.3d 917, 920 (7th Cir.1997).

In deciding a motion for summary judgment, a court must "review the record in the light most favorable to the nonmoving party and to draw all reasonable inferences in that party's favor." Vanasco v. National-Louis Univ., 137 F.3d 962, 963 (7th Cir.1998). See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Nevertheless, the nonmovant may not rest upon mere allegations, but "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). See also LINC, 129 F.3d at 920. A genuine issue of material fact is not shown by the mere existence of "some alleged factual dispute between the parties," Anderson, 477 U.S. at 247, 106 S.Ct. 2505, or by "some metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Rather, a genuine issue of material fact exists only if "a fair-minded jury could return a verdict for the [nonmoving party] on the evidence presented." Anderson, 477 U.S. at 252, 106 S.Ct. 2505.

DISCUSSION
I. Lowy's Alleged Knowledge of Insured's Cancer Cannot Be Imputed to Life of Virginia.

Plaintiff contends, in it's...

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