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JACOBS v. PAUL REVERE LIFE INSURANCE COMPANY

United States District Court, N.D. Illinois, Eastern Division


June 17, 2004.

STEVEN E. JACOBS, Plaintiff,
v.
THE PAUL REVERE LIFE INSURANCE COMPANY d/b/a UNUMPROVIDENT, Defendant.

The opinion of the court was delivered by: CHARLES KOCORAS, District Judge

MEMORANDUM OPINION

This matter comes before the court on the motion of Defendant Paul Revere Life Insurance Company ("Paul Revere") for a declaration that the policy described in the complaint, issued to Plaintiff Steven Jacobs, is not ambiguous with regard to the inclusion of an "Information Sheet." For the reasons that follow, the motion for a declaration is denied, as is the related motion to bar admission of all parol evidence.

BACKGROUND

  Jacobs is a commodities trader. In 1991, he purchased disability income insurance policy number 0102517193 ("the policy") from Paul Revere. Jacobs had a previous back injury that had required him to undergo surgery. He disclosed this condition on his policy application, and the issued policy contained a rider to the effect that benefits for "any loss resulting from the sacroiliac or the lumbosacral joints, or the lumbar spine" would be paid for a period of 12 months. For other losses, policy benefits would continue until Jacobs turned 65. Jacobs was 33 when he bought the policy.

  In November 2001, at the age of 43, Jacobs filed a claim for benefits with Paul Revere, stating that he was totally disabled because of lower back problems. Paul Revere paid benefits to Jacobs for 12 months. Thereafter, Jacobs informed Paul Revere that the 12-month benefit limitation should have been removed from his policy. Jacobs claims that Mark Brody, the agent who sold him the policy, told him when he purchased the policy that the exclusion would be removed from the policy if he remained symptom-free for two years after the policy issued.

  At first, Paul Revere informed Jacobs that the exclusion had not been removed because he had not requested its removal. After he formally requested its removal, he was told that the exclusion would remain in the policy because he had not made the request in a timely manner.

  In early 2004, Jacobs filed suit in the Circuit Court of Cook County, Illinois. The complaint sought a declaratory judgment that Jacobs had satisfied all the requirements to have the exclusion removed from the policy and that he was entitled to continuing benefits for his back problems. The complaint also claimed that Paul Revere was estopped from enforcing the exclusion and sought to reform the policy if the court found that the contract did not provide that the exclusion could be removed. Paul Revere removed the case to this court, and now seeks a declaration that the policy is not ambiguous and a consequent exclusion of all parol evidence bearing on the meaning of the policy terms.

  LEGAL STANDARD

  The construction of an insurance policy and a determination of the rights created and obligations imposed by the policy are questions of law for the court to decide. Crum and Forster Managers Corp. v. Resolution Trust Corp., 620 N.E.2d 1073, 1077 (Ill. 1993). In construing the terms of an insurance policy, as with any other contract, a court looks first solely at the policy's language. See Air Safety v. Teachers Realty Corp., 706 N.E.2d 882, 884 (Ill. 1999). If the contractual provisions are clear and unambiguous, the court will look no further than the "four corners" of the contract itself. See Dean Management Inc. v. TBS Construction, Inc., 790 N.E.2d 934, 939 (Ill.App. Ct. 2003). If the contract contains ambiguous terms, i.e., terms that can reasonably be interpreted in more than one way, extrinsic evidence can be used to resolve the ambiguity. Id. DISCUSSION

  The instant motion is styled as one for a declaration that the entirety of the policy is unambiguous. Paul Revere particularly urges that the provisions of a page designated "Form 809"*fn1 unambiguously provide that the maximum period of benefit for lower back problems such as those Jacobs experienced was 12 months.

  Jacobs does not contend that Form 809 contains an ambiguity. Rather, he claims that the policy included a mechanism for removing the 12-month restriction. Without this limitation, losses caused by back injuries would be subject to the same timeline as any other loss, namely until Jacobs turns 65. He points to a document entitled "Policy Issue Information Sheet" to support his argument. In a section discussing loss resulting from back problems, the sheet cryptically states "On request, reconsideration can be given to removal, modification or reduction subject to NO RECURRENCE, PHYSICIAN'S STATEMENT, IN 02 YRS." According to Jacobs, this statement bears out his assertion that the restriction was not meant to be a permanent fixture of his insurance coverage. Paul Revere insists that the contents of the information sheet are immaterial because it is not a part of the policy. They rely upon ¶ 10.1 of the policy, which provides:

This Policy*fn2 (with the application and attached papers) is the entire contract between [Jacobs and Paul Revere]. No change in this Policy will be effective until approved by a Company officer. This approval must be noted on or attached to this Policy. No agent may change this Policy or waive any of its provisions.
  Paul Revere urges that this provision is an integration clause. Construction of a fully integrated contract is limited to the so-called "four corners" of the agreement; no extrinsic evidence can be considered in interpreting the terms of the parties' agreement. Air Safety, 706 N.E.2d. According to Paul Revere, the information sheet falls within the category of extrinsic evidence outside the four corners of the policy.

  There are several problems with this argument. First, as Jacobs points out, it is not a foregone conclusion that ¶ 10.1 is in fact an integration clause. Compare id. at 885 with Cincinnati Ins. Co. v. River City Construction Co., 757 N.E.2d 676, 681 (Ill.App. Ct. 2001), and Longview Aluminum, LLC v. United Steel Workers of America, 213 F. Supp.2d 876, 881 (N.D. Ill. 2002). Second, even assuming that the agreement is fully integrated, as ¶¶ 1.1 and 10.1 clearly state, the contract between the parties consists of several documents. While the agreement is unambiguous on the issue of what types of documents (riders, amendments, and endorsements) can be considered part of it, it gives no guidance on how to determine whether a particular document is one of the specified types. This does not automatically render these terms ambiguous. See Lapham-Hickey Steel Corp. v. Protection Mut. Ins. Co., 655 N.E.2d 842, 846 (Ill. 1995). Instead, we must give them their plain and ordinary meaning, which can be found in a dictionary. El Rincon Supportive Servs. Org., Inc. v. First Nonprofit Mut. Ins. Co., 803 N.E.2d 532, 536 (Ill.App. Ct. 2004). Webster's Third New International Dictionary defines a rider as an addition or amendment to a document often attached as a separate piece of paper. Webster's at 1953. An amendment is defined as an alteration effected by the process of amending. Id. at 68. An endorsement is defined as "a provision added to an insurance contract altering its scope or application that takes precedence over printed portions of the policy in conflict therewith." Id. at 749.

  Although these terms as written are not ambiguous, there is no itemized list of attached documents or other means within the policy terms that would allow us to determine whether the information sheet fell into any of these categories when the policy issued. Paul Revere strenuously argues that the sheet is none of the listed types of documents, but we are not persuaded that they are correct. In fact, from what we know about the document, it appears that it could fall squarely within the above definition of endorsement. Indeed, statements of Paul Revere representatives made in letters and in court highlight the possibility that the information sheet could fall within each of the specified categories. See Def.'s Exh. G (appearing to refer to the information sheet as an amendment); Def.'s Exh. H at 5, 1. 15 (referring to information sheet as a rider); Pl.'s Exh. E (referring to the information sheet as an endorsement). As a result, we conclude that the contract is ambiguous on the issue of whether the information sheet is among the documents making up the totality of the agreement. Extrinsic evidence is necessary to determine whether the parties intended the policy to include the terms referenced within the sheet. The motion for a declaration that the policy is unambiguous is accordingly denied, as is the request to bar parol evidence.*fn3 CONCLUSION

  Based on the foregoing analysis, Paul Revere's motion for a declaration and related request to bar the admission of all parol evidence are denied.


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