Tropp v. Western-Southern Life Ins. Co.

• Decision Date: 20 August 2004
• Docket Number: No. 03-3569.,03-3569.
• Citation: 381 F.3d 591
• Parties: Geraldine TROPP, as Administrator of the Estate of Mary E. Mikos, individually and on behalf of all other persons and entities similarly situated, Plaintiff-Appellant, v. WESTERN-SOUTHERN LIFE INSURANCE CO., d/b/a Western-Southern Financial Group, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

381 F.3d 591

Geraldine TROPP, as Administrator of the Estate of Mary E. Mikos, individually and on behalf of all other persons and entities similarly situated, Plaintiff-Appellant, v. WESTERN-SOUTHERN LIFE INSURANCE CO., d/b/a Western-Southern Financial Group, Defendant-Appellee.

No. 03-3569.

United States Court of Appeals, Seventh Circuit.

ARGUED May 21, 2004.

DECIDED August 20, 2004.

Appeal from the United States District Court for the Northern District of Illinois, Rebecca R. Pallmeyer, J.

Robert A. Holstein (argued), Holstein Law Offices, Chicago, IL, for Plaintiff-Appellant.

Phillip E. Stano (argued) and Shaunda Patterson-Strachan, Jorden Burt LLP, Washington, DC, F. James Foley, Vorys, Sater, Seymour and Pease LLP, Columbus, OH, for Defendant-Appellee.

Before BAUER, KANNE, and DIANE P. WOOD, Circuit Judges.

KANNE, Circuit Judge.

On September 27, 2002, Geraldine Tropp, administrator of her mother's estate, filed a class-action complaint against Western-Southern Life Insurance Co. in the Circuit Court of Cook County, Illinois. After Western-Southern removed the case to federal court, Tropp filed an amended class-action complaint. The amended complaint included her original claim that Western-Southern violated the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 Ill. Comp. Stat. 505/1, et seq. The district court, finding that the interests of the estate were governed by a prior class-action settlement approved by an Ohio state court, granted summary judgment to Western-Southern on that count. Tropp also alleged (as claims in the alternative) that Western-Southern improperly administered the class-action settlement. The district court, after ensuring that the estate was paid an undisputed amount under the settlement, dismissed the remaining counts. We affirm in all respects.

I. History

Tropp is a resident of Frankfort, Illinois, and is the administrator of the estate of her mother, Mary Mikos, formerly a resident of Blue Island, Illinois. Mikos held a life insurance policy issued by Western-Southern, a national insurance company incorporated and with its principal place of business in Ohio. Western-Southern specializes in selling relatively low-limit life insurance policies, with moderate premiums, to older individuals.

Mikos purchased the policy on May 1, 1983. She was seventy-four years old at the time. Complying with the terms of the policy, Mikos made monthly payments for the first three years. Thereafter, she had the choice of paying monthly, quarterly, semiannually, or annually; the premium rates were higher if she chose to continue paying through an installment plan rather than a single yearly payment. Mikos chose to pay the premium annually after the three-year period. But she was inappropriately charged (and in fact paid) the higher monthly premium rate, multiplied by twelve, rather than the lower annual premium rate. As a result, by the time Mikos had fully paid the policy on October 1, 1995, she had paid $5,544.99 in total premiums, whereas had she paid the proper amounts, she would have paid only $4,962.28.

On January 16, 2002, Mikos died. Tropp contacted Western-Southern by telephone the week of January 21 regarding her mother's death. Tropp and her brother met with two of Western-Southern's agents later that week. Tropp asserts that she provided the agents with a copy of Mikos's death certificate at that time. The agents explained that the death benefit on the policy was $1,756 (including accumulated dividends of $129), and on January 28, Western-Southern issued a check in that amount to its local office. Neither the agents nor anyone else at Western-Southern informed Tropp that Mikos had the right to enhanced benefits under a class-action settlement, approved by an Ohio state court the previous October. Tropp, despite her ignorance of the settlement, was suspicious of the amount her mother had paid in premiums, so she refused to cash the check in order to preserve her legal rights.¹

The Ohio class-action lawsuit, Kriedler v. Western-Southern Life Assurance Co., was a nationwide class action brought by policyholders. The Kriedler plaintiffs sought damages in connection with Western-Southern's marketing practices and administration of class members' insurance policies. The second amended complaint in Kriedler alleges expansively that "[t]he case is brought ... on behalf of all persons or entities who have or had an interest in individual permanent life insurance policies... issued by [Western-Southern] ... and taken from January 1, 1981 through and including December 31, 1998." The Kriedler complaint goes on to allege a broad range of deceptive practices by Western-Southern in connection with these policies. The same day the second amended complaint was filed, June 14, 2001, the parties entered into a settlement agreement.

On approximately August 20, 2001, Rust Consulting, a firm hired by Western-Southern to notify potential class members of the litigation and settlement, mailed a Class Notice package to Mikos at her address of record in Blue Island. The package contained a detailed description of the litigation, the settlement, a definition of the class, instructions on how to opt out of the settlement, and a complete copy of the release and waiver of rights that would be effective against settlement participants. The release is very broad, stating that the releasing parties shall not bring any cause of action against Western-Southern for any of the "Released Transactions." The "Released Transactions" are defined as the "marketing, solicitation, application, underwriting, acceptance, sale, purchase, face amount charge, operation, retention, administration, interest crediting, servicing, or replacement ... of the Policies, or any insurance policy ... sold in connection with, or relating in any way directly or indirectly to the sale or solicitation of, the Policies...." Mikos did not opt out of the class.

On October 23, 2001, the Ohio trial court approved the settlement and expressly retained "exclusive jurisdiction over the administration, consummation, enforcement, and interpretation of the Settlement." (R. 8, Ex. A at 25-26.) The court certified a class of "all persons who are or were owners of a Policy or Policies, except ... any owner of a Policy or Policies who timely excludes himself or herself from the Class...." By virtue of the settlement agreement, class members were eligible for either "General Relief" or "Claim Evaluation Process (CEP) Relief."

Under the General Relief option, class members would "receive coverage under a Settlement Death Benefit simply by remaining in the Class and not electing to participate in CEP." The Settlement Death Benefit increases the beneficiary's policy payment by six percent, following Western-Southern's receipt of proof that the insured died within a year of the date that the settlement agreement was entered.

Under the alternative CEP relief, any class member who believed he or she was harmed by wrongdoing in connection with a policy was invited, in the notices sent by Rust Consulting, to complete and submit a CEP election form by September 23, 2001. Following the approval of the settlement by the Ohio court, class members who elected the CEP remedy could submit claim forms to be reviewed by a third party. Mikos did not elect to participate in the CEP.

Tropp's suit claimed that Western-Southern violated the Illinois Consumer Fraud Act by overcharging her mother for her policy premiums. In her original complaint, filed in Illinois state court, she requested both monetary and injunctive relief for the alleged Illinois Consumer Fraud Act violations. Once the case had been removed to federal court, Tropp also asserted in her amended complaint that if the class action foreclosed her Illinois Consumer Fraud Act claim, then Western-Southern's failure to pay the Mikos estate (and other similarly situated parties) according to the Ohio settlement entitled the Mikos estate to payment under breach of contract, breach of fiduciary duty, unjust enrichment, and an accounting. Western-Southern moved for summary judgment, insisting that Mikos was covered by the Kriedler settlement and could only recover pursuant to that agreement, not in a separate lawsuit. Western-Southern acknowledged its obligations under the Kriedler settlement and asserted that it stood ready to pay as soon as it received a death certificate from Tropp.

The district court granted summary judgment to Western-Southern on Tropp's Illinois Consumer Fraud Act claim, holding that Mikos indeed was a party to the Kriedler settlement. The district judge also denied Tropp's class certification motion, holding that the Ohio trial court had retained jurisdiction over all issues pertaining to the administration of the settlement and that the additional counts should be dismissed for that reason. In addition, the district court ordered Western-Southern to obtain Mikos's death certificate and to tender any undisputed payments owed under the policy. Western-Southern promptly complied with this order, obtaining the death certificate and paying the Settlement Death Benefit to the Mikos estate.

II. Analysis

A litigant may invoke diversity jurisdiction in federal court when all parties are citizens of different states and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332. Western-Southern, the removing party, must offer evidence that proves to a reasonable probability that jurisdiction, including the requisite amount in controversy, exists. Se...