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Brown v. New York Life Insurance Co.

January 15, 2008

JACK BROWN AND JACK BROWN BUICK, INC., PLAINTIFFS,
v.
NEW YORK LIFE INSURANCE CO., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Samuel Der-yeghiayan, District Judge

MEMORANDUM OPINION

This matter is before the court on Defendants' motion for summary judgment. For the reasons stated below, we grant Defendants' motion for summary judgment in its entirety.

BACKGROUND

Plaintiffs Jack G. Brown ("Brown") and Jack Brown Buick, Inc. ("JBB") allege that they purchased insurance policies ("Policies") from Defendant New York Life Insurance Co. ("NYL"). According to Plaintiffs, in the early 1980's, Defendant Curtis Schultz ("Schultz"), who was NYL's agent, met with Brown and another JBB employee and made a business presentation referred to as the Premium Offset Proposal ("POP"). Schultz allegedly indicated that, by taking advantage of the POP, the new policies would have greater death benefits, cash values, and surrender values and Plaintiffs would not ultimately be required to make premium payments. According to Plaintiffs, Schultz made misrepresentations concerning how the POP Program operated and also regarding the benefits that Plaintiffs would receive by following the POP. Plaintiffs allegedly purchased policies from Schultz and the results were not as Schultz had allegedly forecasted. Plaintiffs allegedly continued to pay premiums after the time periods that Schultz indicated premiums would not have to be paid. Plaintiffs contend that they were misled by the advice of Schultz concerning the operation of and risks associated with the POP. As a result of Schultz's alleged misrepresentations, Plaintiffs claim that there are substantial loans that have been taken against the Policies, the Policies have little cash value, and the Policies have little value at the death of an insured after the payment of outstanding loans. Plaintiffs also allege that Schultz was trained by NYL to mislead NYL customers in order to lure customers into following the POP and that the alleged scheme began in the early 1980's.

Plaintiffs brought the instant action and include in the amended complaint a breach of contract claim (Count I), a fraud claim (Count II), a negligent misrepresentation claim (Count III), a claim alleging a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act ("Fraud Act"), 815 ILCS 505/1 et seq. (Count IV), and an unjust enrichment and constructive trust claim (Count V). NYL now moves for summary judgment and Schultz joins in NYL's motion.

LEGAL STANDARD

Summary judgment is appropriate when the record, viewed in the light most favorable to the non-moving party, reveals that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). In seeking a grant of summary judgment, the moving party must identify "those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)(quoting Fed. R. Civ. P. 56(c)). This initial burden may be satisfied by presenting specific evidence on a particular issue or by pointing out "an absence of evidence to support the non-moving party's case." Id. at 325. Once the movant has met this burden, the non-moving party cannot simply rest on the allegations in the pleadings, but, "by affidavits or as otherwise provided for in [Rule 56], must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e). A "genuine issue" in the context of a motion for summary judgment is not simply a "metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, a genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Insolia v. Philip Morris, Inc., 216 F.3d 596, 599 (7th Cir. 2000). The court must consider the record as a whole, in a light most favorable to the non-moving party, and draw all reasonable inferences that favor the non-moving party. Anderson, 477 U.S. at 255; Bay v. Cassens Transport Co., 212 F.3d 969, 972 (7th Cir. 2000).

DISCUSSION

Defendants argue that Plaintiffs' claims are barred by the applicable statute of limitations. Defendants also argue that Plaintiffs are barred from bringing the instant action because they were members of a class in a prior action in which the court approved a class action settlement.

I. Statute of Limitations

Defendants argue that Plaintiffs' claims are barred by the statute of limitations periods. Under Illinois law, a breach of contract claim premised upon the breach of a written contract must be brought within 10 years. 735 ILCS 5/13-206; F.D.I.C. v. Wabick, 335 F.3d 620, 627 (7th Cir. 2003). The statute of limitations for a Fraud Act claim is 3 years. 815 ILCS 505/10a(e). Under Illinois law, fraud claims, negligent misrepresentation claims, and breach of contract claims based upon oral contracts such as the ones brought in this case must be brought within 5 years. 735 ILCS 5/13-205; Horbach v. Kaczmarek, 288 F.3d 969, 973 (7th Cir. 2002)(stating that fraud claim had 5 years statute of limitations period); Burns Philp Food, Inc. v. Cavalea Continental Freight, Inc., 135 F.3d 526, 527 (7th Cir. 1998)(stating that an unjust enrichment claim premised on an unwritten contract has a 5 year statute of limitations); Credit General Ins. Co. v. Midwest Indem. Corp., 916 F.Supp. 766, 774 (N.D. Ill. 1996)(stating that negligent misrepresentation claim is governed by 5 year statute of limitations period); Frederickson v. Blumenthal, 648 N.E.2d 1060, 1063 (Ill. App. Ct. 1995)(stating statute of limitations for unjust enrichment claims).

Plaintiffs do not dispute that the above statute of limitations periods apply to their claims. (Ans. SJ 3); (Ans. SJ Mem. 3-5). Plaintiffs instead argue that their claims are timely because the statute of limitations periods were tolled until 2005 due to the discovery rule. (Ans. SJ 3); (Ans. SJ Mem. 3-5). Generally, under Illinois law, a cause of action accrues and the statute of limitations period begins to run when a plaintiff is injured. Hollander v. Brown, 457 F.3d 688, 692 (7th Cir. 2006); Rodrigue v. Olin Employees Credit Union, 406 F.3d 434, 444 (7th Cir. 2005). However, Illinois follows the discovery rule, which provides that the running of a statute of limitations will be tolled "until the plaintiff knows or reasonably should know that he has been injured and that his injury was wrongfully caused." Jackson Jordan, Inc. v. Leydig, Voit & Mayer, 633 N.E.2d 627, 630-31 (Ill. 1994); Rodrigue, 406 F.3d at 444 (stating that "[l]ike the continuing violation rule, the discovery rule is an equitable exception to the ordinary rule that the statute of limitations begins to run with the accrual of the cause of action"); Burns Philp Food, Inc., 135 F.3d at 528 (stating that "in Illinois, as in most states, the period begins not with the injury's actual discovery, but when the injury could have been discovered through the exercise of appropriate diligence").

In the instant action, Plaintiffs contend that they were misled by Defendants into believing that "they could purchase substantial amounts of life insurance with premiums to be paid over a seven (7) year period (approximately)," and that Plaintiffs "were led to believe that after said seven (7) year period, the policies would be paid in full and no further premiums would be required. . . ." (Ans. SJ 2); (R SF Par. 15-16). The Policies at issue in this action were issued as early as in 1963 and others in 1978, 1983 and 1986. (R SF Par. 14). Plaintiffs also allege generally that Schultz misled Plaintiffs as to how the POP operated and as to the risks associated with the POP. (A. Compl. Par. 11-15).

A. Receipt of Premium Notices

Defendants contend that Plaintiffs had notice of their alleged injury and the alleged wrongs done by Defendants when Plaintiffs continued to receive premium notices more than seven years after the Policies were issued. Defendants assert in paragraph 40 of their statement of material facts ("Paragraph 40") that "[e]ach year, Plaintiffs received annual premium notices and anniversary notices for each policy each year after the policies were issued," and that "Plaintiffs continued receiving premium notices on their policies more than seven years after each was issued." (SF Par. 40). Plaintiffs respond to Paragraph 40 by stating merely that "[t]he documents speak for themselves." (R SF Par. 40). Plaintiffs fail, however, to either affirm or deny whether they continued to receive premium notices more than seven years after each policy was issued. Since Plaintiffs have failed to deny the truth of the facts included in Paragraph 40, the facts are deemed undisputed pursuant to Local Rule 56.1. Local Rule 56.1; Dent v. Bestfoods, 2003 WL 22025008, at *1 n.1 (N.D. Ill. 2003)(stating that any facts included in a party's statement of facts that are not properly denied by the opposing party are deemed to be undisputed); Jankovich v. Exelon Corp., 2003 WL 260714, at *5 (N.D. Ill. 2003)(indicating that evasive denials that do not directly oppose an assertion are improper and thus the contested fact is deemed to be admitted pursuant to Local Rule 56.1). Plaintiffs themselves indicate that, sometime in 1977, "Schultz all but guaranteed that dividends would exceed projections" and that "the premium payments would terminate after a period of approximately 7 years." (R SF Par 15). Therefore, contrary to Schultz's alleged promises of "all but ...


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