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Benefit Vision Inc. v. Conseco Life Insurance Co.

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

November 3, 2014

BENEFIT VISION INC., and RONALD KLEIMAN, individually and as President of Benefit Vision Inc., Plaintiffs,


GEORGE M. MAROVICH, District Judge.

After many years of paying monthly fees to plaintiffs Benefit Vision Inc. ("Benefit Vision") and Ronald Kleiman ("Kleiman") for life-insurance policies plaintiffs had sold, defendant Conseco Life Insurance Company ("Conseco") stopped paying. Plaintiffs filed this suit.[1] The parties have filed cross-motions for summary judgment. For the reasons set forth below, the Court grants in part and denies in part defendant's motion for summary judgment. The Court grants in part and denies in part plaintiffs' motion for summary judgment.

I. Background

Local Rule 56.1 outlines the requirements for the introduction of facts parties would like considered in connection with a motion for summary judgment. The Court enforces Local Rule 56.1 strictly. Facts that are argued but do not conform with the rule are not considered by the Court. For example, facts included in a party's brief but not in its statement of facts are not considered by the Court because to do so would rob the other party of the opportunity to show that such facts are disputed. Where one party supports a fact with admissible evidence and the other party fails to controvert the fact with citation to admissible evidence, the Court deems the fact admitted. See Ammons v. Aramark Uniform Services, Inc., 368 F.3d 809, 817-818 (7th Cir. 2004). This does not, however, absolve the party putting forth the fact of its duty to support the fact with admissible evidence. See Keeton v. Morningstar, Inc., 667 F.3d 877, 880 (7th Cir. 2012). Asserted "facts" not supported by deposition testimony, documents, affidavits or other evidence admissible for summary judgment purposes are not considered by the Court. At the summary judgment stage, it does not suffice to rely on complaint allegations. Nor is it enough for either party to say a fact is disputed. The Court considers a fact disputed only if both parties put forth admissible evidence of his or its version of the fact.

Defendant Conseco filed a motion to strike plaintiffs' memorandum in support of its motion for summary judgment. Conseco argues that plaintiffs filled their brief with facts plaintiffs did not include in their statement of facts. As the Court explained above, the Court ignores facts that parties include only in a brief and not in a statement of facts. Thus, the Court will ignore any facts included only in plaintiffs' brief. That does not mean, though, that the Court will strike plaintiffs' memorandum, which contains plenty of appropriate argument. The Court need not bother to strike that which it can simply ignore. Conseco's motion to strike is denied.

The following facts are undisputed unless otherwise noted.

Plaintiff Kleiman started a company called Benefit Vision Inc. ("Benefit Vision") to sell life insurance policies to LA County employees. Kleiman needed, however, an insurance product to sell.

Kleiman approached Life Partners Group in early 1995. Benefit Vision and Life Partners Group held a series of meetings to discuss matters. Ultimately, in April 1995, Kleiman and Benefit Vision began selling to LA County employees universal life insurance policies underwritten by Philadelphia Life Insurance, a company owned by Life Partners Group. The LA County employees to whom Kleiman sold policies paid the premiums for the insurance via payroll deduction. Kleiman and Benefit Vision were paid an agent's commission plus $.4166 per month ($5 per year) for each policy sold. Plaintiffs alleged in their second-amended complaint (and therefore admitted) that the monthly fee "recognize[d]" plaintiffs' role "in maintaining and servicing the policies and protecting the block of business."

Kleiman and Benefit Vision continued selling the policies until sometime between 2000 and 2002 (the parties disagree about the timing, but it does not matter). All in all, Kleiman and Benefit Vision sold more than 26, 000 policies. At some point before 2000, defendant Conseco bought (or at least succeeded) Life Partners Group, and it may have been Conseco's subsequent bankruptcy that prompted Kleiman and Benefit Vision to stop selling the policies (though the reason is not relevant).

For years, Conseco continued to pay Kleiman and Benefit Vision the $.4166 fee per policy per month. To be precise, Conseco, like Life Partners Group before it, paid the fee for each policy only so long as the policyholder continued to pay for the policy by payroll deduction. As individual policyholders left LA County's payroll (due to, say, retirement or loss of job) such that those policy holders could no longer pay their premiums via payroll deduction, Conseco stopped paying Kleiman and Benefit Vision the $.4166 per month fee on those policies even if the policyholder continued to pay for the policy directly. As long as the policy holders continued to pay their premiums via payroll deduction, Conseco continued to pay Kleiman and Benefit Vision the monthly fee until 2010, when Conseco abruptly stopped.

As of April 14, 2010, Conseco completely stopped paying the monthly policy fee to Kleiman and Benefit Vision. On August 10, 2011, Kelly Honn, Conseco's Director for Administration, sent Kleiman a letter of explanation. The letter stated, among other things: (1) that Conseco had searched for but had not found any written agreement to pay the $.4166 per policy/per month fee; (2) that Kleiman had not provided one, either; and (3) that any such agreement would need to be in writing. The letter also stated that Conseco had concluded that the prior payments had been in error. Conseco said it would not pay the fees going forward but would not seek to recoup the prior payments.

Kleiman, for his part, does not know whether a signed agreement ever existed. When asked whether the parties ever signed a contract or other document with the terms, he answered, "I'm not aware. I'm just not aware."

Conseco searched for a signed, written agreement between Life Partners Group and Kleiman/Benefit Vision. Conseco did not find a traditional contract. It found two internal business records that are related to this dispute, and it produced them during discovery, at which time Kleiman saw the documents for the first time.

The first internal document (the "Life Partners Group Standard Procedure") is four pages long and is type-written. It contains no handwritten signatures. The first page of the document states:

VIII: The 61JH100 account will be recovered by earnings assigned from the 61JH002. Once the debit is cleared, all monies will be released and the assignment removed from the 61JH002.

(Docket entry 80 at Exh. A p. CLIC000047). The second page states, in relevant part:

CONFIDENTIAL: For Home Office Use Only

FOA will manually annualize and pay commission for Kleiman (see annualization notes).
All commissions earned on 61JH002 (Kleiman) will be assigned to 61JH100 to pay off the debit balance. If the debit is paid off, the assignment will be released and commissions will be paid as earned.
Only one product will be offered, universal life, ULA95. No commissions will be paid on over control premiums.
Jo Delle Roberts will be 1099d for all administrative fees.
Automatic face increases are a product feature that will pay a different commission rate. Need to address in future and write up detailed procedures on how to process commissions. The face increases will pay ...

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