Metro. Life Ins. Co. v. Yitao Sun
| Decision Date | 04 September 2013 |
| Docket Number | 12 C 6036 |
| Parties | METROPOLITAN LIFE INSURANCE COMPANY, Plaintiff, v. YITAO SUN, YAQUN ZHANG, S.C. (a minor), AJIN ZHU, and JIADING ZHANG, Defendants, and YAQUN ZHANG, S.C. (a minor), AJIN ZHU, and JIADING ZHANG, Counter-Claimants/Cross-Claimants, v. METROPOLITAN LIFE INSURANCE COMPANY and YITAO SUN, Counter-Defendant and Cross-Claim Defendant, and YITAO SUN, Counter-Claimant/Cross-Claimant, v. METROPOLITAN LIFE INSURANCE COMPANY, YAQUN ZHANG, S.C. (a minor), AJIN ZHU, and JIADING ZHANG, Counter-Defendant and Cross-Claim Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Metropolitan Life Insurance Company ("MetLife") brought this interpleader suit pursuant to Federal Rule of Civil Procedure 22 and the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA"), against Yitao Sun, Yaqun Zhang, S.C. (a minor), Ajin Zhu, and Jiading Zhang, to resolve competing claims to benefits on a life insurance policy held by Yajiong Zhang ("Decedent") at the time of his death on February 21, 2011. Docs. 1, 14. Sun filed counterclaims against MetLife for recovery of life insurance benefits and equitable relief under 29 U.S.C. §§ 1132(a)(1)(B) and (a)(3), and for common law fraud and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS § 505/1 et seq. ("ICFA"). Doc. 19. Yaqun Zhang filed counterclaims against MetLife for breach of contract, breach of fiduciary duty, unjust enrichment, and a declaratory judgment. Doc. 25 at pp. 6-18. MetLife has moved to dismiss the counterclaims under Rule 12(b)(6). Doc. 42. The motion is granted in part and denied in part.
In considering MetLife's motion to dismiss, the court assumes the truth of the counterclaims' factual allegations, though not their legal conclusions. See Munson v. Gaetz, 673 F.3d 630, 632 (7th Cir. 2012). The court also must consider "documents attached to the [counterclaims], documents that are critical to the [counterclaims] and referred to in [them], and information that is subject to proper judicial notice," along with additional facts set forth in Sun's and Yaqun Zhang's briefs opposing dismissal, so long as those facts "are consistent with the pleadings." Geinosky v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012). The following facts are set forth as favorably to Sun and Yaqun Zhang as these materials allow. See Gomez v. Randle, 680 F.3d 859, 864 (7th Cir. 2012).
Sun is Decedent's widow. Doc. 19 at ¶ 5; Doc. 25 at p. 7, ¶ 5. Sun married Decedent in 2005. Doc. 19 at ¶ 10; Doc. 25 at p. 7, ¶ 12. Yaqun Zhang is Decedent's sister. Doc. 19 at ¶ 6; Doc. 25 at p.6, ¶ 1. S.C. is a minor and Decedent's niece. Doc. 19 at ¶ 7; Doc. 25 at p. 6, ¶ 3. Ajin Zhu and Jiading Zhang are Decedent's parents. Doc. 19 at ¶¶ 8-9; Doc. 25 at p. 6, ¶ 4.
From prior to his marriage to Sun through August 5, 2008, Decedent was employed by Cisco Systems, Inc. Doc. 19 at ¶ 11; Doc. 25 at pp. 7, 9, ¶¶ 6, 21. Decedent participated in Cisco's Life Insurance Plan, an ERISA-regulated employee welfare benefit plan sponsored by Cisco and funded by a group life insurance policy issued by MetLife, bearing the Group Policy Number 113189-G ("Policy 1"). Doc. 19 at ¶ 12; Doc. 25 at p. 7, ¶ 7. Policy 1 consisted of a Basic Life Insurance Policy and a Supplemental Life Insurance Policy. Doc. 14-1; Doc. 14-2; Doc. 25 at p. 7, ¶ 8. The Basic Policy provided a death benefit equal to Decedent's annual salary. Doc. 25 at p. 7, ¶ 8. The Supplemental Policy provided a death benefit equal to five times Decedent's salary. Ibid. Prior to his marriage to Sun, the beneficiary designation for Decedent's life insurance coverage under Policy 1 named Jiading Zhang, Yaqun Zhang, Ajin Zhu, and S.C. each as 25% beneficiaries. Id. at p. 7, ¶ 10; Doc. 19 at ¶ 14. As of January 2008, the total death benefit under Policy 1 was $693,000. Doc. 19 at ¶ 20; Doc. 25 at p. 7, ¶ 9.
In 2007, Decedent was diagnosed with cancer and became disabled. Doc. 19 at ¶ 15; Doc. 25 at p. 7, ¶ 11. Decedent's last day of work was January 21, 2007, and he was terminated on August 5, 2008. Doc. 19 at ¶¶ 15-16; Doc. 25 at pp. 8-9, ¶¶ 18, 21. After the termination, MetLife provided Decedent an Election of Portable Coverage Form, dated August 6, 2008 ("Portable Form"). Doc. 19 at ¶ 18; Doc. 14-5; Doc. 25 at p. 9, ¶ 22. The Portable Form identifies a different group insurance policy, bearing Policy Number 93211-G ("Policy 2"). Doc.14-5 at 2; Doc. 25 at p. 9, ¶ 23. Using the Portable Form, Decedent ported his Basic Life Insurance and Supplemental Life Insurance coverage from Policy 1 to Policy 2. Doc. 14-5; Doc. 19 at ¶ 18. Decedent completed a beneficiary designation form for Policy 2 naming Sun as a 33% beneficiary and Yaqun Zhang as a 67% beneficiary. Doc. 14-5 at 3.
Policy 1 provides that Decedent's insurance terminates upon the termination of his employment at Cisco. Doc. 19 at ¶ 17. Following Decedent's completion of the Portable Form, MetLife sent monthly invoices to Decedent and Sun for the premiums owed under Policy 2, and Decedent and Sun paid the amounts owed. Id. at ¶ 19. From the time Decedent's employment was terminated until he died on February 21, 2011, Sun and Decedent paid $7,556.33 in premiums on Policy 2. Ibid.
On or about March 23, 2011, approximately a month after Decedent died, MetLife informed Sun that after Decedent became disabled, Cisco continued to pay Decedent's premiums for Basic Insurance coverage under Policy 1. Id. at ¶ 21. Further, Sun was informed that MetLife supposedly had approved a waiver of premiums in December 2008, which continued Decedent's Supplemental Life Insurance coverage under Policy 1. Ibid. As a result, according to MetLife, Decedent was not eligible to port his Basic Life Insurance and Supplemental Life Insurance coverage from Policy 1 to Policy 2, Policy 1 remained in effect, and the ported coverage in Policy 2 was terminated and/or void. Ibid.
Prior to March 23, 2011, Cisco never informed Decedent or Sun that Cisco was continuing to pay the premiums for Decedent's Basic Life Insurance coverage under Policy 1 or that there had been a premium waiver for Decedent's Supplemental Life Insurance coverage under Policy 1. Id. at ¶ 22. Instead, MetLife sent Sun and Decedent monthly invoices forpremiums owed under Policy 2, and MetLife accepted their premium payments. Ibid. MetLife has refused to provide Sun benefits under Policy 1 because it claims that it cannot determine whether or not a court would find that Decedent changed his beneficiaries for Policy 1 when he completed the August 26, 2008 beneficiary designation on the Portable Form. Id. at ¶ 23. In naming Sun as a beneficiary in the Portable Form, Decedent clearly expressed his intention that Sun be a beneficiary of Decedent's life insurance benefits. Id. at ¶ 24.
In a January 14, 2008 letter from Cisco's benefits manager, Decedent was advised that his Basic Life Insurance and Supplemental Life Insurance coverage under Policy 1 would be continued at no cost to him while on medical leave. Doc. 25 at p. 8, ¶ 17; Doc. 25-1. Decedent was also advised that he should have received a separate letter from MetLife regarding "continued eligibility and early termination provisions under the Waiver of Premium Provision." Doc. 25 at p. 8, ¶ 19; Doc. 25-1. MetLife did not send and/or Decedent did not receive that separate letter. Doc. 25 at p. 9, ¶ 20. The total amount of the death benefits under Policy 2 was $761,000. Doc. 25 at p. 9, ¶ 29; Doc. 14-5 at 2.
Following Decedent's death in February 2011, MetLife issued claim forms for Policy 1 but not for Policy 2. Doc. 25 at p. 10, ¶ 32. On February 22, 2012, Yaqun Zhang filed an administrative appeal with MetLife regarding the enforceability of Policy 2. Id. at p. 10, ¶ 35. To date, MetLife has not paid any benefits under Policy 1 or Policy 2 and has not provided a decision or determination regarding Yaqun Zhang's administrative appeal. Id. at p. 10, ¶ 36.
On or about March 23, 2011, MetLife refunded Sun for all premiums paid on Policy 2. Id. at p. 10, ¶ 37. Sun unilaterally accepted the refund. Id. at p. 10, ¶ 38. Sun did not notify Yaqun Zhang of MetLife's offer to refund the premiums paid on Policy 2 or that she hadaccepted the refund until well after she had done so. Id. at p. 11, ¶ 39. MetLife did not notify Yaqun Zhang of the refund offer or that Sun's accepting a refund of the premiums would result in MetLife claiming that Policy 2 was terminated or rescinded. Id. at p. 11, ¶ 40.
Decedent intended to provide financially for his parents and his niece through the death benefit payable under Policy 1. Id. at p. 13, ¶ 55. Decedent intended and understood that Policy 2 would provide separate and additional life insurance coverage with death benefits payable to his sister and his wife. Id. at p. 13, ¶ 58. Decedent did not intend or understand that Policy 2 would be rescinded, leaving only Policy 1 to remain in force and effect. Id. at p. 13, ¶ 59. Yaqun Zhang claims that she, Jiading Zhang, Ajin Zhu, and S.C. are each entitled to 25% of the proceeds of Policy 1, and that she also is entitled to 67% of the proceeds of Policy 2. Id. at p. 12, ¶¶ 49-50.
Yaqun Zhang's counterclaims rest on the premise that both Policy 1 and Policy 2 remained in effect until Decedent's death, and thus that the beneficiaries of Policy 1 are entitled to payment of its $693,000 in benefits and the beneficiaries of Policy 2 are entitled to payment of its $761,000 in benefits, for a total recovery of $1,454,000. This theory fails. Under the plain language of the policies, so long as Policy 1 remained in effect—a fact admitted by Yaqun Zhang—Policy 2 did not permit additional...
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