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Joseph T. Morrison, Trustee of the v. Potective Life Insurance Company

September 21, 2012

JOSEPH T. MORRISON, TRUSTEE OF THE DONALD T. MORRISON TRUST DTD 5/25/00, AN ILLINOIS INTER VIVOS TRUST, DONALD T. MORRISON, AND DANIELLE D. MORRISON, PLAINTIFFS,
v.
POTECTIVE LIFE INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER

Plaintiffs allege that the policy insuring the life of Donald T. Morrison ("Morrison") issued by Defendant's predecessor-in-interest violates the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1, et seq. ("ICFA"). Before the Court are the parties' cross-motions for summary judgment. Because the statute of limitations expired on Plaintiffs' ICFA claims long before Plaintiffs brought this lawsuit, Defendant's motion for summary judgment [54] is granted and Plaintiffs' motion for summary judgment [58] is denied.

I. Background

Morrison, a retired lawyer, has obtained several life insurance policies for himself, helped his wife apply for hers, and counseled her about dropping her policy when it became more expensive than it was worth. He is familiar with a range of life insurance products and the differences among them. For instance, Morrison understands that permanent life insurance is different from term life insurance because, in addition to term insurance being bounded in time, permanent life insurance accumulates cash value. Morrison also understands that term life insurance typically requires an annual premium and a policy that does not require one-where, say, the entire premium is paid at the outset-will be very expensive. In other words, whether through his professional or personal experiences, Morrison knows more than a little about life insurance.

In 2000, when Morrison was 71, he applied for $300,000 "EG-10" policy with Empire General. The first page of that policy states:

TERM LIFE INSURANCE POLICY

Term to Age 96 Coverage Period Premiums Increase After Initial Premium Period Death Benefit Payable If The Insured Dies Before The Expiry Date

Premiums Payable During Lifetime of Insured Until Expiry Date

NON-DIVIDEND PAYING This Policy Is A Legal Contract Between The Owner And The Company

READ THIS POLICY CAREFULLY

The third page gets into details, including that the benefit amount is $300,000, the initial payment period is ten years, and the annual premium is "$12,069.00*." The asterisk next to that number refers the reader to the next line: "*SEE PAGE 3A FOR SUBSEQUENT PREMIUMS." Page 3A has a table titled "POLICY SCHEDULE (CONTINUED)," with the subtitle "SCHEDULE OF GUARANTEED ANNUAL PREMIUMS." The table sets out the year of the policy, the age Morrison will be during that year, and, under the heading "LIFE INSURANCE," a dollar amount. The table also has a column for "WAIVER OF PREMIUM," but it is unmarked. For years one through ten (ages 72 to 82), the amount listed under the LIFE INSURANCE heading is $12,069. In year eleven, the amount jumps to $324,597. The amount increases in each subsequent year, reaching $561,075 in year twenty-four.

The parties disagree about why Morrison's annual premium for the first ten years was set at $12,069. The basic annual premium for an EG-10 policy with a face amount of $300,000 for a "non-rated" (that is, healthy) 72-year-old nonsmoker is $6,072. Morrison believes that he paid a higher rate (nearly double) so he could stop paying premiums after ten years while keeping his coverage for another fourteen, until age 96. The Defendant denies that, and maintains that Morrison was indeed "rated" due to his health and that $12,069 was the correct substandard rate for an EG-10 policy.

Morrison signed the policy application on March 16, 2000. In the application, he named his wife as the proposed owner and beneficiary. That same day, Morrison also signed Empire General's "Notice Regarding the Application for Life Insurance Without a Corresponding Basic Illustration." On June 7, 2000, Empire General issued Morrison the policy. One week later, Morrison executed an amendment to his application changing the owner and beneficiary of his policy to the Donald T. Morrison Trust, and naming his son, Joseph Morrison, as trustee. The amendment lists the amount of insurance as $300,000, the plan as "TERM TO 96 -- 10 YEAR," and "Premium Payable $12069.00 ANNUALLY." The amendment states that "[i]t is agreed by the undersigned that the changes shown above shall be an amendment to and form a part of the application and policy."

Morrison read the policy when it was issued in 2000 and acknowledges that he was confused by its terms. The "SCHEDULE OF GUARANTEED ANNUAL PREMIUMS" had to be, as he put it, "a mistake of some kind, some kind of insurance gobbledygook that I don't understand." Morrison admits, however, that he never asked anyone at Empire General for clarification. Joseph Morrison also read the policy in 2000 or 2001. He also was confused. He testified that "it made absolutely no sense" and "it was inconsistent with [his] understanding of the policy and it was inconsistent with the ...


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