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Kennedy v. Massachusetts Mutual Life Insurance Co.

November 9, 2007


The opinion of the court was delivered by: Matthew F. Kennelly, District Judge


William Kennedy has sued Massachusetts Mutual Life Insurance Company ("MassMutual") to recover benefits he claims are due under a disability insurance policy. MassMutual has moved for summary judgment. For the reasons set forth below, the Court denies MassMutual's motion.


Kennedy purchased a disability insurance policy from MassMutual on October 3, 2000. In the policy, MassMutual agreed to provide disability benefits if Kennedy became partially or totally disabled while the policy was in force. The policy states that "[t]he Insured is Totally Disabled if he/she cannot perform the main duties of his/her Occupation due to Sickness or Injury. The Insured must be under a Doctor's Care." "Occupation" is defined as "[t]he Insured's regular profession(s) or business(es) at the start of Disability." "Doctor's Care" means that "[t]he Insured is receiving care by a Doctor for a condition causing the Insured's Disability." Def. Ex. E, Ex. 2 (policy) at MM0043-44.

At the time Kennedy purchased the insurance policy, he was employed as a pit trader with ING. Pit traders stand on a trading floor all day, move about a lot, and do not get to sit down. In June or July 2002, ING closed its Chicago office. Kennedy remained on the ING payroll until December 31, 2002, although ING no longer had pit traders on the floor after June or July 2002.

In July 2002, Kennedy started computer trading for his own account through Cassandra Group. Kennedy traded from either his home or the office of Cassandra Group. Both parties agree that Kennedy was never an employee of Cassandra Group.

Kennedy had problems with his hip that started to affect his walking in late 2001 and got progressively worse. By December 2002, Kennedy realized that due to the condition of his hip, he would no longer be able to work as a pit trader. His regular doctor, Dr. Lovinger, stated in a December 8, 2003 letter that the onset of Kennedy's disability was November 2, 2002. Kennedy saw an orthopedic surgeon, Dr. Gitelis, in May, 2003 and again in April, 2005, at which point he underwent hip replacement surgery. Kennedy first applied for benefits under the insurance policy in October 2003. In his application, he claimed his disability had begun on January 1, 2003.

MassMutual paid Kennedy benefits for the period from February 4, 2004 to June 30, 2005 but stated that it did so as "a service" to Kennedy while it investigated his claim. MassMutual subsequently denied Kennedy's claim of disability and stopped payment of benefits. Kennedy claims that MassMutual breached the terms of the policy.


Summary judgment is appropriate only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp v. Catrett, 477 U.S. 317, 323 (1986). In considering a summary judgment motion, the Court views the facts in the light most favorable to the non-moving party and draws reasonable inferences in that party's favor. Nelson v. Stewart, 422 F.3d 463, 466 (7th Cir. 2005).

1. Waiver

Kennedy contends that MassMutual waived its right to deny payment of disability benefits by paying him benefits from February 2004 until June 2005. Waiver is the "voluntary and intentional relinquishment of a known and existing right. It arises from an affirmative action and not by operation of law. Waiver may be either express or implied, arising from acts, words, conduct, or knowledge of the insurer." Essex Ins. Co. v. Stage 2, Inc., 14 F. 3d 1178, 1181 (7th Cir. 1994). "The party claiming waiver has the burden of proving that the insurer's words or conduct were inconsistent with an intent to rely on the provisions of the policy. The evidence must be clear, precise, and unequivocal." Loyola Univ. v. Humana Ins. Co., 996 F.2d 895, 901 (7th Cir. 1993).

As MassMutual argues, the cases Kennedy cites in support of his waiver argument involve an insurance company seeking to recover money it had mistakenly paid to the insured. In this case, MassMutual does not seek to recover the money it paid to Kennedy. Thus, the cases Kennedy cites do not govern the issue involved in this case.

In any event, Kennedy has not provided "clear, precise, and unequivocal" evidence that MassMutual intended to waive its defenses. To the contrary, a letter dated July 5, 2005 from MassMutual to Kennedy states, "Although MassMutual reserves all of its rights under the ...

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