Vasily v. Mony Life Ins. Co. of Am.

• Decision Date: 08 May 2015
• Docket Number: No. 3:11–CV–530 GWC.,3:11–CV–530 GWC.
• Citation: 104 F.Supp.3d 207
• Court: U.S. District Court — District of Connecticut
• Parties: Medina VASILY (Independent Trustee of the Lambros E. Siderides Insurance Trust Indenture); Elliot J. Siderides and Elizabeth Siderides Theofanides (Co–Executors of the Estate of Lambros Siderides); and Cleo Siderides, Plaintiffs, v. MONY LIFE INSURANCE COMPANY OF AMERICA, Defendant.

104 F.Supp.3d 207

Medina VASILY (Independent Trustee of the Lambros E. Siderides Insurance Trust Indenture); Elliot J. Siderides and Elizabeth Siderides Theofanides (Co–Executors of the Estate of Lambros Siderides); and Cleo Siderides, Plaintiffs,

v.MONY LIFE INSURANCE COMPANY OF AMERICA, Defendant.

No. 3:11–CV–530 GWC.

United States District Court, D. Connecticut.

Signed May 8, 2015.

David G. Jordan, Jeffrey J. Vita, Saxe, Doernberger & Vita, PC, Hamden, CT, for Plaintiffs.

Theodore J. Tucci, Robinson & Cole, LLP, Hartford, CT, for Defendant.

OPINION AND ORDER RE: DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (Doc. 42)

GEOFFREY W. CRAWFORD, District Judge.

Plaintiffs Medina Vasily, independent trustee of the Lambros E. Siderides Insurance Trust Indenture; Elliot J. Siderides and Elizabeth Siderides Theofanides, co-executors of the estate of Lambros Siderides; and Cleo Siderides, widow of the late Lambros Siderides (collectively “plaintiffs”) bring this action against defendant MONY Life Insurance Company of America (“MONY”) seeking payment of death proceeds on two insurance policies issued on the life of Lambros Siderides. Plaintiffs assert four claims against MONY: breach of contract; equitable estoppel; “disproportionate forfeiture/unfair penalty”; and breach of the duty of good faith and fair dealing. (Doc. 1.) MONY has moved for summary judgment on all claims, contending there was no breach of any duty to its insured. For the reasons stated below, the court GRANTS IN PART and DENIES IN PART MONY's motion.

I. Undisputed Facts

In May of 2001, Dr. Lambros Siderides obtained three life insurance policies from MONY. A policy with a face amount of $600,000 was made payable to the Lambros E. Siderides Trust Indenture (“Trust Policy”); a policy with a face amount of $200,000 was made payable to Cleo Siderides (“Spouse Policy”); and a policy with a face amount of $400,000 (later reduced to $200,000) was made payable to the Siderides Estate (“Estate Policy”). (Docs. 43 at 3; 47 at 2.)

Dr. Siderides died on June 7, 2010 due to complications from idiopathic pulmonary fibrosis, which affects the lungs. (Doc. 47–4.) The beneficiaries to the three policies made claims for the death proceeds. MONY paid the proceeds on the Estate Policy, but it denied the claims for death proceeds on the Spouse and Trust Policies “on the ground that the Policies had lapsed and that the Insured was not living when payment [of the latest premiums] was received on June 14, 2010.” (Doc. 44 at 7.)

The relevant provisions of the three policies are identical. (SeeDocs. 43 at 3–4; 44–1; 44–2; 47–4 at 20–69.) The policies required that premiums be paid on a quarterly basis. (Doc. 44–1 at 4.) Payments were due on the second day of the months of February, May, August, and November. (Doc. 44 at 3.) The contracts provide:

If the Insured dies while this policy is in force and while premiums are being paid, we will pay the Death Proceeds of this Policy to the Beneficiary. Payment will be made subject to all the provisions of this Policy....

The Death Proceeds payable to the Beneficiary will be the sum of:

—the amount of insurance then in force ...;

—any portion of premium paid that applies to a period beyond the policy month in which the Insured dies ...;

LESS:

—an amount equal to one month's premium if the Insured dies during the grace period of an unpaid premium.

(Id.at 7.) Under the “Premiums and Policy Exchange” provision, each policy provides: “No premium due is payable on or after the date of the Insured's death.” (Id.at 8.)

Each policy contains a “Grace Period” provision to supply an additional period after the premium due dates to “allow [the insured] to pay any amount needed to keep this Policy in force.” (Id.at 9.) The grace period “runs for 31 days from the premium due date.” (Id.) “[D]uring the grace period this Policy will continue in force. If any premium is not paid by the end of the grace period, the Policy will end at once. The policy will have no further value.” (Id.)

Each policy also contains a “Reinstatement” provision:

If any premium is not paid by the end of the grace period you may reinstate the policy within 5 years of the due date of the first premium in default.

What does the Company require for reinstatement of my policy?

We will need:

(a) evidence satisfactory to us of the Insured's insurability; plus

(b) payment of all overdue premiums plus compound interest at 8% a year.

(Id.at 11.) The requisite evidence of insurability is not defined or expanded upon in the policies.

In November 2001, Dr. Siderides failed to make the Spouse Policy's third premium payment by the end of the thirty-one-day grace period. On December 3, 2001, he received a letter from MONY. (Doc. 44–6 at 26.) The letter informed him:

While the grace period ... expired, ... we would be happy to restore this policy (subject to its provisions on lapse and reinstatement) if, within the next twenty days, we receive your payment.... We encourage you to remember the importance of the protection you secured when you purchased the policy, and remit your payment promptly.... [R]einstatement of your policy in the future requires the inconvenience of completing additional forms and may be subject to additional underwriting.

(Id.) Dr. Siderides paid the premium within the twenty-day restoration period.¹(Doc. 44–5 at 3.) MONY did not require him to pay any interest on the premium or to provide any evidence of insurability. He received no documentation related to lapse or reinstatement of the policy. The policy continued and his premium due dates remained as scheduled. (Doc. 47 at 4, 8.)

Dr. Siderides subsequently failed to pay his premium by the end of the grace period on thirty-four occasions between 2001 and 2010. Each occasion proceeded as the first described above: Dr. Siderides would receive a “restoration letter,” he would pay the overdue premium within twenty days, and his policies would continue in force. (Id.at 8.)

The second quarterly premiums for the Trust and Spouse Policies were due on May 2, 2010. Because Dr. Siderides's pulmonary fibrosisimpaired his cognitive and memory functions, his son, Elliot Siderides, was granted power of attorney over Dr. Siderides's affair's on May 11, 2010. (Id.at 5.) During the next month, Elliot Siderides paid many of his father's bills, including the second quarterly premium on the Estate Policy. He did not pay the premiums on the other two policies, and was unaware until afterhis father's death that they remained unpaid. (Id.) The thirty-one-day grace period for the premium payments on the Trust and Spouse Policies expired on June 2, 2010. (Id.) On June 2, MONY issued restoration letters for these policies. (Id.) Elliot Siderides discovered that the two premiums remained unpaid shortly after his father's death on June 7, 2010, and he wired the payments to MONY on June 14. (Doc. 47–4 at 101.)

MONY returned the wired payments on July 6, 2010. (Doc. 43 at 6.) It denied plaintiffs' claim for death proceeds under the Trust and Spouse Policies. MONY sent a letter to plaintiffs on July 26, 2010 explaining its decision. (Doc. 47–4 at 104.) The letter states:

[S]ince the policy was not in force when the insured became deceased, no claim can be considered under it....

If any premium is not paid by the end of the grace period the policy will end at once.

In those instances, when the premium payment was not received within the grace period, a letter was sent indicating the grace period had expired. It also included an offer to restore the policy, subject to its provisions on lapse and reinstatement, if premium payment was received within the following 20 days....

On June 2, 2010, the policy lapsed and the letter referred to above was mailed. Unfortunately, Mr. Siderides became deceased before the required premium was paid and before the policy could be restored.

Id.

Plaintiffs filed this action in the Superior Court of Connecticut on March 4, 2011, requesting the death proceeds under the Trust and Spouse Policies plus interest. (Doc. 1 at 17.) The action was removed to federal court on diversity grounds,

II. Legal Standards

A. Summary Judgment Standard

Rule 56 of the Federal Rules of Civil Procedureprovides that the court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” “[A]t the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.”Redd v. N.Y. State Div. of Parole,678 F.3d 166, 173–74 (2d Cir.2012). The burden is on the moving party to show that it is entitled to summary judgment. Huminski v. Corsones,396 F.3d 53, 69 (2d Cir.2005). The nonmoving party receives the benefit of favorable inferences drawn from the underlying facts. Hayes v. New York City Dep't of Corr.,84 F.3d 614, 619 (2d Cir.1996). “If the party moving for summary judgment demonstrates the absence of any genuine issue as to all material facts, the nonmoving party must, to defeat summary judgment, come forward with evidence that would be sufficient to support a jury verdict in its favor.” Burt Rigid Box, Inc. v. Travelers Prop. Cas. Corp.,302 F.3d 83, 91 (2d Cir.2002).

B. Construction of Insurance Policies

A life insurance policy is construed “by the local law of the state where the insured was domiciled at the time the policy was applied for....” Bush v. MONY Life Ins. Co. of Am.,No. 3:07–cv–451 (WWE), 2008 WL 4874137, at *4 (D.Conn. Nov. 10, 2008)(internal quotation omitted). Since Dr. Siderides as well as his trustee, Medina Vasily, resided in Connecticut at the time he applied for the policies at issue, the court applies Connecticut law.

III. Analysis

MONY has moved for summary judgment with respect to each count. The court considers the counts in order.

A. Breach of Contract

MONY argues that it is entitled to summary judgment on plaintiffs' breach-of-contract claim because it...