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Zena Phillips v. the Prudential Insurance Company of America

November 28, 2011


The opinion of the court was delivered by: Herndon, Chief Judge


I. Introduction and Background

Before the Court is defendant The Prudential Insurance Company of America's motion to dismiss plaintiff Zena Phillips' putative class action complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6) (Doc. 27). Plaintiff opposes the motion (Doc. 38). For the following reasons, the Court grants the motion to dismiss.*fn1

Plaintiff, a resident of the state of Illinois, is one of the beneficiaries of an insurance policy purchased by her deceased fiance Michael S. Strang (Doc. 18). The policy stated that Prudential would pay the beneficiary "promptly" upon receipt of due proof that the beneficiary died in the term period (Doc. 28--4). It also provided that the beneficiary "may choose to have any death benefit paid in a single sum" (Doc. 28--4, p. 13). Also, under the policy, the insured could choose from five other optional methods of settlement in the form of installment payments for a fixed period, life income, interest payment (the Alliance Account), installments for a fixed amount, and non-participating income. Id. When Strang died, plaintiff filed a claim under the policy, and Prudential determined that she was entitled to $103,053.20 (Doc. 28). Thereafter, she received a Claim Form which stated that "unless you elect an alternative settlement option or select payment option, eligible death benefit claims will be paid by way of the Alliance Account settlement option." (Doc. 28-3, p. C21). It also stated that "[i]f you would like to select an alternative settlement option, indicate your settlement option below (as described in the Settlement Options brochure)." Id. Plaintiff left this space blank. (Doc. 28). Following the submission of her claim form, plaintiff received documents that confirmed the selection of her Alliance Account.*fn2 Id. She also received a checkbook to access the account and was informed that she could "withdraw the entire amount immediately-or over time." (Doc. 28--3, pp. C2, C1).

On December 10, 2010, plaintiff brought this putative Illinois-only class action against Prudential Financial, Inc. ("PFI"), in the Williamson County, Illinois Circuit Court (Doc. 28--3). Plaintiff asserts claims for breach of contract (Count I), breach of statute (Count II), breach of fiduciary duty (Count III), and breach of duties arising from a special, confidential relationship (Count IV). These claims stem from allegations that PFI delays the payment of life insurance benefits and invests the proceeds without disclosing to the beneficiaries the identity of the account in which they are being invested, the types of investments in which the proceeds are placed, and the interest or earnings generated by these investments.

On January 21, 2011, PFI filed a notice of removal based on diversity jurisdiction, 28 U.S.C. § 1332 (Doc. 2). On February 28, 2011, PFI moved to dismiss the original complaint in its entirety (Doc. 27). Thereafter, Plaintiff filed an amended complaint on March 18, 2011, dropping PFI as a defendant and substituting The Prudential Insurance Company of America and Pruco Life Insurance Company (collectively "Prudential") (Doc. 18). The amended complaint made no substantive changes in the allegations or causes of action. The Court now turns to address the merits of the motion to dismiss.

II. Standard of Review

A motion to dismiss under Fed. R. Civ. P. 12(b)(6) challenges the sufficiency of the complaint for failure to state a claim upon which relief may be granted. General Elec. Capital Corp. V. Lease Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997). To survive a motion to dismiss, a complaint must establish a plausible right to relief. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Furthermore, "when ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 94 (2007). Nevertheless, plaintiffs must produce more than "threadbare recitals of the elements of a cause of action, supported by mere conclusory statements. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009).

The Court may also consider documents apart from the complaint itself if they are referred to in the plaintiff's complaint and are central to [the plaintiff's] claim. Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993). Ultimately, "[w]here the allegations of a pleading are inconsistent with the terms of a written contract attached as an exhibit, the terms of the latter, fairly construed, must prevail..." Ogden Martin Systems of Indianapolis, Inc. v. Whiting Corp., 179 F.3d 523. 529 (7th Cir, 1999) (quoting Graue Mill Development Corp. v. Colonial Bank & Trust Co. of Chicago, 927 F.2d 988, 991 (7th Cir. 1991)) (citations omitted).

III. Analysis

A. Breach of Contract

Plaintiff alleges that Prudential breached the terms of the form policy in that it was required to distribute the proceeds to her in a single sum and instead it established the Alliance Account which she could access through a checkbook provided to her. She maintains that pursuant to the Policy, defendants were required to pay the death benefit to her in a single sum.*fn3

When dealing with an insurance policy, the same rules of construction that are applicable to other types of contracts apply. Nicor, Inc. v. Associated Ele. & Gas Ins. Services Ltd., 223 Ill. 2d 407,416 (Ill. App. Ct. 2006). To plead a cause of action for breach of contract, a plaintiff must allege the existence of a valid and enforceable contract, performance by the plaintiff, breach of the contract by the defendant, and resultant injury to the plaintiff. Gonzalzes v. Am. Exp. Corp., 315 Ill. App. 199, 206 (Ill. App. Ct. 2000). Prudential does not dispute the existence of the first two elements, however, it argues that it did not breach the contract and that plaintiff has not suffered an injury. The Court agrees that plaintiff has not alleged sufficient facts supporting the existence of a breach on the part of defendants nor a resultant injury to plaintiff.

In the complaint, plaintiff alleges that "[b]ecause..[insured] had not made a request for an optional mode of settlement under the terms of the policy, Prudential was required to pay the death benefit to his a ...

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