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GINOCCHIO v. AMERICAN BANKERS LIFE ASSUR. CO.

June 27, 1995

PETER A. GINOCCHIO and JEANETTE A. GINOCCHIO, Plaintiffs,
v.
AMERICAN BANKERS LIFE ASSURANCE COMPANY OF FLORIDA, Defendant.



The opinion of the court was delivered by: ROBERT W. GETTLEMAN

 Plaintiffs Peter A. Ginocchio ("Peter"), and his wife Jeannette A. Ginocchio ("Jeannette"), bring this diversity action against defendant American Bankers Life Assurance Company of Florida alleging that plaintiffs are entitled to certain disability insurance benefits. Plaintiffs' first amended complaint asserts claims against defendant for breach of contract (Count I), breach of defendant's duty of good faith and fair dealing (Count II), improper claims practices in violation of the Illinois Insurance Code, 215 ILCS 5/154.5, 215 ILCS 5/154.6, and 215 ILCS 5/155 ("§ 155") (Count III), and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2 and 815 ILCS 505/10a (Count IV). Plaintiffs seek insurance benefits, costs, attorney's fees, damages for emotional distress, and punitive damages.

 Before the court is defendant's motion for summary judgment along with the parties' supporting briefs, affidavits, deposition transcripts and Local Rule 12(M) and 12(N) statements. Defendant moves for summary judgment asserting three arguments: (1) Counts I and III should be dismissed based on the unambiguous terms of the insurance policy; (2) Count II should be dismissed because plaintiffs' claim for defendant's breach of its duty of good faith and fair dealing is preempted by their § 155 claim in Count III; and, (3) summary judgment in favor of defendant on Count IV is appropriate because the terms of the policy are unambiguous, and plaintiffs fail to allege any conduct by defendant that would constitute consumer fraud or deceptive trade practices. For the reasons stated below the court grants in part and denies in part defendant's motion for summary judgment.

 Facts

 On June 29, 1989, plaintiffs entered into a mortgage and promissory note (the "Loan"), with Transamerica Financial Services, Inc. ("Transamerica"), in which plaintiffs granted Transamerica a mortgage on plaintiffs' home in Bolingbrook, Illinois. In connection with the Loan, plaintiffs purchased a credit disability insurance policy (the "Policy") that covered plaintiffs' Loan payments in the event Peter became disabled. Mary Drew ("Drew"), a Transamerica employee, was the agent that met with plaintiffs, closed the Loan, and sold them the Policy.

 To purchase the Policy, plaintiffs signed a one page, double sided Insurance Statement (the "Statement"). The Statement named Peter as the primary borrower. On the front of the Statement, at the top of the page, there are boxes in which the "Term of Loan" is noted as 180 months, and the "Term of Insurance" is noted as 36 months. In the middle of the page the Statement reads: "DISABILITY INSURANCE: [ ] SCHEDULED LOAN TERM -or- [x] 36 (months) TRUNCATED TERM." *fn1" On the reverse of the Statement the form provides in part: "The insurance coverage will terminate on: 1) the scheduled expiration date; or 2) prepayment of the indebtedness."

 In April 1990, Peter was diagnosed with acute angina due to coronary artery occlusions, and became permanently disabled. Pursuant to the Policy, defendant started paying plaintiffs' monthly Loan obligations on June 20, 1990. During the period of time that defendant made these payments it sent plaintiffs claim renewal notice letters ("Claim Renewals").

 Plaintiffs received a Claim Renewal dated February 19, 1992, written by Paul Leach ("Leach"), an employee in defendant's financial claims department. The Claim Renewal provided in part:

 
Your claim has been approved for a period of 005 month(s). Payment will be forwarded automatically each month to your creditor.
 
Another continuing claim form will be sent 07/27/92. Upon receipt, promptly complete and return the claim form to American Bankers Insurance Group. We will review the form to determine whether payments to your creditor should be continued. No additional payments will be issued until a completed form is received and we have determined that you are eligible for further payments.
 
* * *
 
If you do not receive a continuing claim form during the month of July, please contact us as soon as possible.

 Plaintiffs then received a letter from defendant dated June 29, 1992, written by Leach, alerting them that their Policy expired July 5, 1992. The letter notified plaintiffs that defendant had paid Transamerica through July 5, 1992, and that no further benefits were due under the Policy. Plaintiffs filed their original complaint in the Circuit Court of Dupage County on December 2, 1993, which ...


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