Stewart v. Nw. Mut. Life Ins. Co.

• Decision Date: 18 April 2016
• Docket Number: Case No. 15 C 11600
• Citation: 180 F.Supp.3d 566
• Parties: Laura L. Stewart, Plaintiff, v. The Northwestern Mutual Life Insurance Company and Michael Bartenhagen, Defendants.
• Court: U.S. District Court — Northern District of Illinois

180 F.Supp.3d 566

Laura L. Stewart, Plaintiff,

v.The Northwestern Mutual Life Insurance Company and Michael Bartenhagen, Defendants.

Case No. 15 C 11600

United States District Court, N.D. Illinois, Eastern Division.

Signed April 18, 2016

Michael J. Malatesta, Malatesta Law Offices, LLC, Chicago, IL, for Plaintiff.

Paul F. Heaton, Richard A. Bartolomei, II, Godfrey & Kahn, S.C., Milwaukee, WI, Edna Sybil Kersting, Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, Brian James Riordan, James Michael Weck, Clausen Miller PC, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

Laura L. Stewart, a Florida citizen, has sued The Northwestern Mutual Life Insurance Company, a Wisconsin company with its principal place of business in that state, and one of its sales agents, Illinois citizen Michael Bartenhagen.Stewart seeks to recover the death benefit on her late husband's life insurance policy, of which she is the beneficiary.

Stewart alleges that on September 10, 2012—five days after her husband's death—she paid her husband's unpaid premiums in order to reinstate his lapsed policy, but that Northwestern Mutual refused to reinstate the policy.She asserts state law claims for breach of contract, promissory estoppel, and breach of fiduciary duty.Stewart also seeks a declaratory judgment that pursuant to 215 ILCS 5/357.5, Northwestern Mutual reinstated her husband's life insurance policy by accepting the check she gave it to cover delinquent premiums.Defendants have moved to dismiss under Federal Rule of Civil Procedure 12(b)(6).For the reasons stated below, the Court grants defendants' motion.

Background

The following facts are taken from Stewart's complaint, which the Court must accept as true for the purposes of the present motion, and “documents that are central to the complaint and are referred to in it.”Williamson v. Curran , 714 F.3d 432, 435–36(7th Cir.2013).

In June 2004, Northwestern Mutual issued Stewart's husband, David, a life insurance policy worth $500,000.The insurance contract listed Stewart's husband as the sole owner of the life insurance policy and listed Stewart as the policy's sole beneficiary.Under the terms of the contract, Stewart's husband was required to pay a first premium of $1,558 on June 11, 2004, and pay annual premiums of $1,420 every year by June 11 through 2024.Neither the complaint nor the documents referred to in it mention a payment plan for the premiums, but it appears that Stewart's husband arranged a payment plan through which he made monthly payments to cover his annual premiums.He made payments on a monthly basis through May 2012 but failed to pay his monthly installment of $123.55 due June 11, 2012.Northwestern Mutual sent an urgent letter to Stewart's husband informing him that he had missed a payment, he was entering a 31-day grace period, and his policy would lapse if he did not submit his missed premium payment with the next month's payment by July 11, 2012.When he again failed to make a payment, Northwestern Mutual terminated his life insurance policy.

Stewart's husband apparently never opened these letters.He also did not open another letter notifying him that his policy had been terminated and that, pursuant to the terms of his insurance contract, he could take action to reinstate his lapsed life insurance policy.The letter, addressed to Stewart's husband and dated August 16, 2012, stated in relevant part:

Dear Policyowner:

We have not yet received the past due premium for this policy and it no longer provides the protection you originally intended.

The policy coverage has ended.

However, you can apply to restore full protection and policy values, provided the insured is living.To do so, you must take this easy step:

• Enclose the reinstatement payment coupon with your payment of $1,436.81 to reinstate this policy with premiums paid to June 11, 2013.Your payment must be received by September 9, 2012....

If the payment is received by the due date, you will continue to enjoy all the valuable benefits the policy was designed to provide.After reinstatement, your next payment will be due on June 11, 2013.

If your payment is not received by September 9, 2012, the insured will be required to submit additional information, which may include a medical examination and records from a physician.This information may result in additional premiums being charged or coverage being declined.

Defs.' Ex., dkt. no. 1-3, at 36.Stewart also did not see these letters when they were sent, because sometime prior to the first letter's delivery, she and her husband stopped living together.

From January 2012 through September 2012, Stewart's husband suffered from depression.He visited a hospital in late May and was admitted for psychiatric care on May 26, 2012.He was released from the hospital on or around June 1, 2012, still receiving medication and being treated by a doctor.On September 5, 2012, he died.

Four days after her husband's death, Stewart found and read the unopened letters from Northwestern Mutual, including the letter telling her husband he had until September 9, 2012 to reinstate his life insurance policy.According to Stewart's complaint, she then received a telephone call from Northwestern Mutual on September 10, 2012 in which she was instructed to issue a check for her husband's past-due premium so that a Northwestern Mutual representative could come pick it up from her home.Specifically, Stewart alleges that “Michael Bartenhagen individually and as an agent of [Northwestern Mutual] promised that the insurance policy would be reinstated if Laura Stewart had a check ready for him to pick up at her home.”Compl., dkt. no. 1-1, ¶ 47.Bartenhagen came to Stewart's home and retrieved the check that day, and sometime between September 10 and September 27, 2012, Northwestern Mutual negotiated the check.

On September 26, 2012, Northwestern Mutual telephoned Stewart to tell her that her claim for the benefit payable under her husband's insurance policy would not be honored.The next day, Northwestern Mutual issued a letter denying reinstatement of the policy and denying Stewart's claim.It also sent her a check worth $1,436.81, in an effort to refund the payment she made seventeen days prior.

Stewart filed suit in the Circuit Court of Cook County in November 2015, asserting four claims against defendants.First, she alleged that Northwestern Mutual breached her husband's insurance contract.(She brought this claim as an intended third-party beneficiary.)Second, she sought a declaratory judgment to the effect that under 215 ILCS 5/357.5, Northwestern Mutual reinstated her husband's life insurance policy by receiving her check, negotiating it, and holding onto the funds for seventeen days.Third, Stewart alleged that Bartenhagen and Northwestern Mutual should be liable for the total amount of the benefit payable under the insurance policy on a theory of promissory estoppel.Fourth, she alleged that Bartenhagen breached a fiduciary duty he allegedly owed her as her husband's insurance agent.

Defendants removed the case to this Court on December 23, 2015 and then moved to dismiss the case.The existence of complete diversity was unclear at the time, so the Court requested further submissions on that point.The issue was resolved when Stewart confirmed that she is a Florida domiciliary and citizen, thereby establishing complete diversity.

Discussion

When considering a motion to dismiss for failure to state a claim, the Court accepts the facts stated in the complaint as true and draws reasonable inferences in favor of the plaintiff.Parish v. City of Elkhart , 614 F.3d 677, 679(7th Cir.2010).The Court may properly consider documents submitted by a defendant seeking dismissal where those documents are referenced in the complaint, their authenticity is undisputed, and they are central to the plaintiff's claim.SeeHecker v. Deere & Co. , 556 F.3d 575, 582(7th Cir.2009).To state a viable claim, a plaintiff must provide “enough facts to state a claim to relief that is plausible on its face.”Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929(2007).A claim is plausible on its face if “the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868(2009).

Defendants seek dismissal of all four of Stewart's claims.They contend that by the express terms of the insurance policy, Stewart was not permitted to reinstate her husband's insurance policy after his death.They further argue that 215 ILCS 5/357.5 does not dictate that Northwestern Mutual's receipt, holding, and eventual refund of Stewart's September 10, 2012, payment constitutes reinstatement of the insurance policy.Because the insurance policy was reinstated neither before nor after Stewart's husband's death, say defendants, denying Stewart's claim for the policy benefit did not constitute a breach of contract.Next, defendants contend that Stewart cannot bring a promissory estoppel claim to enforce her husband's written insurance contract, and that she has failed to state a promissory estoppel claim because she has not plausibly alleged reasonable and detrimental reliance on Bartenhagen's alleged promises.Finally, defendants argue that Bartenhagen neither owed Stewart a fiduciary duty nor caused damages by his conduct.

A.Breach of contract

It goes without saying that an insurer does not breach an insurance contract when it refuses to fulfill a claim on a lapsed policy.The parties do not dispute that on the day Stewart's husband passed away, his life insurance policy had lapsed.Thus, Northwestern Mutual did not breach the insurance contract by refusing to pay the benefit to Stewart when she made a claim after that date, unless the life insurance policy was reinstated.

Stewart claims that this is precisely what...