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Mehta v. John Hancock Mut. Life Ins. Co.





Appeal from the Circuit Court of Cook County; the Hon. Alan E. Morrill, Judge, presiding.


Plaintiff brought this action against defendant, John Hancock Insurance Company (John Hancock), and its agent, Jagdish Patel (Patel), to recover the proceeds of a life insurance policy insuring plaintiff's deceased husband, Chinulal Mehta, in the face amount of $50,000. Plaintiff also sought damages for the alleged fraudulent and bad-faith rejection of the claim by John Hancock, resulting in emotional distress to her. Plaintiff appeals from orders granting summary judgment for both defendants based on a release she executed in exchange for return of the premiums paid. She contends she averred sufficient facts to state a cause of action and that a genuine issue of material fact exists concerning the validity of the release.

In her original complaint, plaintiff alleged that Patel was an agent of John Hancock and had approached deceased prior to November 8, 1981, and offered him a "non-medical" $50,000 life insurance policy and demanded an insurance premium, which deceased paid. John Hancock issued its policy on November 8, 1981, with plaintiff named as beneficiary. On August 30, 1982, the insured died, but John Hancock refused to pay the claim. In count II plaintiff further alleged that John Hancock, through its chief claims representative, George Hall, had fraudulently and in bad faith rejected her claim in violation of John Hancock's duty of good faith and fair dealing, resulting in severe emotional distress to her. In count III plaintiff alleged as a result of the refusal to pay the claim that she was required to borrow a substantial amount of money for living expenses. In count IV plaintiff sought punitive damages.

John Hancock filed a motion to dismiss pursuant to the provisions of section 2-619(a)(6) of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-619(a)(6)) and also seeking costs and attorney fees under section 2-611 of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-611). This defendant alleged: that deceased, in his application for the insurance, admitted no medical history; that John Hancock issued its policy effective November 8, 1981, in reliance upon deceased's answers in the application; that deceased died on August 30, 1982; and that the cause of death was listed on the death certificate as massive myocardial infarction with hypertension and diabetes mellitus as contributing causes. Subsequently, John Hancock discovered that deceased had been hospitalized and treated for severe myocardial infarction and diabetes mellitus from April 7, 1981, to April 24, 1981, and that deceased did not truthfully disclose his prior medical history, which constituted a material misrepresentation in the application, rendering the policy void ab initio. John Hancock denied liability under the policy based on the deceased's misrepresentations and informed plaintiff, the designated beneficiary.

John Hancock's motion further alleged that after being advised orally and in writing of John Hancock's position, on December 2, 1982, plaintiff accepted a check in the amount of $998.50 refunding the premiums previously paid on the policy and signed a release fully discharging John Hancock from claims on the policy. Attached to the motion was an affidavit of Donald J. Van Heel, who was designated as the home-office representative in the central region for John Hancock. Van Heel averred that he visited plaintiff on December 2, 1982, at her Chicago apartment and advised her of the reasons John Hancock denied liability; he handed her a letter dated November 22, 1982, addressed to her from George E. Halle, the assistant claim consultant for John Hancock. After plaintiff read this letter, Van Heel handed plaintiff John Hancock's check for $998.50, representing a refund of the premiums paid under the policy. When plaintiff accepted the check, Van Heel handed plaintiff a release, which plaintiff read and signed in Van Heel's presence. The November 22, 1982, letter states:

"Dear Mrs. Mehta:

I am writing in regard to your claim for death benefits under this policy.

This policy was issued as of November 8, 1981 and the death of your husband occurred August 30, 1982 within the contestable period of the policy (2 years) as the result of Massive Myocardial Infarction, probably Ventricular Fibrillation and Asystole. Other significant conditions were Hypertension, Diabetes Mellitus.

Medical information contained on the transcript of death as well as that determined through our routine inquiry disclosed that Mr. Mehta had received medical attention as well as hospital attention on several occasions from July 15, 1980 to the date of death.

Had this medical and hospital attention prior to the issue date of the policy been admitted at the time of the writing of the application, no policy would have been issued. Therefore, the Company feels that its liability is limited to the amount of premiums paid, $998.50.

Our representative is authorized to deliver a check in this amount to you upon completion of the necessary release.

If there are any questions, our representative will be pleased to be of help to you.

This letter is without prejudice to any of the Company's legal rights or defenses, all of which are reserved to their fullest ...

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