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SKYVIEW FILM & VIDEO, INC. v. SAFECO LIFE INS. CO.

October 4, 1994

SKYVIEW FILM & VIDEO, INC., Plaintiff,
v.
SAFECO LIFE INSURANCE COMPANY, Defendant.



The opinion of the court was delivered by: CHARLES RONALD NORGLE, SR.,

 CHARLES R. NORGLE, SR., District Judge:

 Before the court is the motion of defendant Safeco Life Insurance Company ("Safeco") to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the motion is granted with prejudice.

 FACTS1

 Plaintiff Skyview Film & Video, Inc. ("Skyview") is an Illinois corporation with its principal place of business in Illinois. Jerome Hummel ("Hummel") was an employee and an officer of Skyview. Safeco is a Washington corporation engaged in the insurance business with its principal place of business in Washington.

 In September 1991, Skyview sought to procure from Safeco a life insurance policy on the life of Hummel. In response, Safeco required Hummel to complete an application. On September 9, 1991, Hummel completed the application and tendered it to Safeco. Upon processing the application, Safeco issued a life insurance policy with a coverage amount of $ 500,000 on October 22, 1991 ("Policy"). The Policy named Skyview as the owner and Hummel as the primary insured. The suicide exclusion provision of the Policy provided that "if [Hummel] commits suicide, while sane or insane, within two years of the Issue Date, the proceeds payable will be limited to the premiums paid . . . " (Pl.'s Compl. P 9.)

 On October 9, 1993, within the two years of the issue date of the Policy, Hummel committed suicide. *fn2" Despite the suicide exclusion clause, Skyview submitted a claim to Safeco seeking the policy benefit of $ 500,000. Asserting the suicide exclusion, Safeco denied the claim. Subsequently, Skyview initiated the instant action against Safeco, invoking the court's diversity jurisdiction.

 Under Count I, Skyview complains that Safeco was negligent in processing the application in 1991, thereby depriving Skyview of the full benefit of the Policy. According to Skyview's allegations, if Safeco processed the application in a timely manner and issued the Policy on or before October 7, 1991, Hummel's death on October 9, 1993, would not be subject to the suicide exclusion. Under count II, Skyview alleges that Safeco's denial of Skyview's claim for $ 500,000 constituted a breach of the contract because Hummel's suicide occurred two years after Safeco approved and agreed to issue the Policy, which was on or before October 7, 1991. In response, Safeco moves to dismiss both counts for failing to state a cause of action.

 DISCUSSION

 On a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), all well-pleaded factual allegations are presumed to be true. Land v. Chicago Truck Drivers, 25 F.3d 509, 511 (7th Cir. 1994). The court must view those allegations in the light most favorable to the plaintiff, Gould v. Artisoft, Inc., 1 F.3d 544, 546 (7th Cir. 1993), and accept all reasonable inferences to be drawn from those allegations as true. Meriwether v. Faulkner, 821 F.2d 408, 410 (7th Cir.), cert. denied, 484 U.S. 935, 98 L. Ed. 2d 269, 108 S. Ct. 311 (1987). The court is not, however, constrained by the plaintiff's legal conclusions. Republic Steel Corp. v. Pennsylvania Eng'g Corp., 785 F.2d 174, 183 (7th Cir. 1986).

 To resolve the issues Safeco raises in its motion to dismiss, the court will look to Illinois law. *fn3" The court agrees with Safeco that Skyview fails to state a cause of action for negligence under count I. Under Illinois law, to properly state a cause of action for negligence, the plaintiff must allege sufficient facts to establish a duty, a breach of that duty, and an injury proximately caused by the breach. Wartenberg v. Dubin, Dubin & Moutoussamy, 259 Ill. App. 3d 89, 630 N.E.2d 1171, 1174, 197 Ill. Dec. 47 (1994). Whether a duty of care existed is a question of law for the court to determine. Curatola v. Village of Niles, 154 Ill. 2d 201, 608 N.E.2d 882, 885, 181 Ill. Dec. 631 (1993); Hansen v. Demarakis, 259 Ill. App. 3d 166, 630 N.E.2d 1202, 1206, 197 Ill. Dec. 78 (1994). To determine whether a duty existed, the court must consider whether the defendant should have reasonably foreseen the plaintiff's injury, the likelihood of injury, the burden of preventing the injury, and the consequence of imposing that burden on the defendant. Kurfess v. Austin Co., 840 F. Supp. 535, 537 (N.D. Ill. 1993) (applying Illinois law).

 In its motion to dismiss, Safeco argues that count I fails to state a cause of action because it fails to allege a duty and an injury proximately caused by the breach of the duty. Alternatively, Safeco contends that Skyview waived any defects in processing the application when it accepted the Policy and remained silent. The court will first determine whether the required elements to state a cause of action for negligence are met. If necessary, the court will then address the waiver argument.

 Skyview relies heavily on Talbot v. Country Life Ins. Co., 8 Ill. App. 3d 1062, 291 N.E.2d 830 (1973), to establish the duty element, hence, a brief discussion of that opinion is warranted. In Talbot, the plaintiff's husband on September 13, 1969, submitted an application for a life insurance policy for $ 15,000 on his own life and designated the plaintiff as the beneficiary of the policy. Talbot, 291 N.E.2d at 831. With the application, the husband paid the first premium. Five months after the husband submitted the application, he died on February 19, 1970. Id. During his lifetime, however, the defendant insurer never issued a life insurance policy or even process the application. On February 21, 1970, the agent of the insurer returned the paid premium. Id.

 The Talbot plaintiff filed a lawsuit against the insurer and the agent for negligence to recover damages, $ 15,000, resulting from the unreasonable delay in processing the application. Id. The trial court dismissed the action for failing to state a cause of action. Id. at 830. The appellate court, however, disagreed. Id. at 833. In reversing the trial court, the Talbot court applied the principles associated with a voluntary assumption of a duty and enunciated ...


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