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EVALUATION SYSTEMS, INC. v. AETNA LIFE INS. CO.

December 23, 1982

EVALUATION SYSTEMS, INC., PLAINTIFF,
v.
AETNA LIFE INSURANCE COMPANY, DEFENDANT. AETNA LIFE INSURANCE COMPANY, COUNTERPLAINTIFF, V. EVALUATION SYSTEMS, INC. AND VRENI NAESS, COUNTERDEFENDANTS.



The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

Evaluation Systems, Inc. ("Evaluation Systems") sues Aetna Life Insurance Company ("Aetna"), seeking recovery of (1) $75,000 in insurance proceeds (Count I) and (2) statutory damages under Illinois Insurance Code § 155 (Ill.Rev.Stat. ch. 73, § 767) for Aetna's "vexatious and unreasonable" refusal to pay (Count II). Two motions have been submitted and briefed by the parties:

    1. Aetna's under Fed.R.Civ.P. ("Rule") 12(b)(6) to dismiss
  Complaint Count II; and
    2. Evaluation Systems' under Rule 9(c) to strike Aetna's
  Answer to Complaint ¶¶ 10 and 12.

For the reasons stated in this memorandum opinion and order, Aetna's motion is denied and Evaluation Systems' is granted.

Facts*fn1

Aetna received and cashed the $563.25 check. It then sent Evaluation Systems a December 1, 1981 form letter:

  Thank you for your payment of $563.25. To pay the current
  premium due, an additional payment of $50.25 is needed.
  Enclosed is a self-addressed envelope for your convenience.
  Once we receive your additional payment, we will apply your
  checks to pay your November premium due of $613.50.

If we can be of any further assistance, please contact us.

Unfortunately the letter was mailed to Evaluation Systems' old address (the one listed in the Policy application).*fn3 Consequently the letter never reached Evaluation Systems, but was returned to Aetna with the statement "Moved 3 yrs. ago" written on the envelope.

At that point Aetna made no further effort to locate Evaluation Systems, which (from the incomplete information now before the Court) had apparently relocated from Chicago to a Chicago suburb. Instead Aetna mailed the original letter to Naess, whose home address had also been listed in the Policy application. In response Naess' wife Vreni wrote Aetna December 15, 1981 that one of the three Evaluation Systems partners had previously ousted the other two (including Naess) from the company. She asked whether "any regulation on your books" prevented continuation of insurance under those circumstances.

Aetna's next move (two months later) was to send a "Notice of Lapse" to the same former Evaluation Systems address it had already been told was wrong by the postal authorities. Its February 19, 1982 letter read in part:

  The annual premium of $613.50 due November 20, 1981 was not
  received by us within the time allowed for payment.
  Consequently, protection has ceased in accordance with the
  terms of the policy.

Not surprisingly, this letter too never reached Evaluation Systems.*fn4

On the same date Aetna sent the second letter, it mailed a $563.25 refund check to a different (but also incorrect) address that had been provided Aetna by its Chicago office. Nothing about any claimed lapse accompanied the ...


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