United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION & ORDER
Honorable Thomas M. Durkin United States District Judge
case arises from a long-term care insurance policy that
Plaintiff Margery Newman purchased from Defendant
Metropolitan Life Insurance Company. In connection with the
policy, Plaintiff purchased a premium-payment option titled
the “Reduced-Pay at 65 Option.” As set forth more
fully below, the option didn't function as Ms. Newman
anticipated it would. She therefore sues on behalf of herself
and others similarly situated for breach of contract, common
law fraud and fraudulent concealment, and unfair and
deceptive practices under the Illinois Consumer Fraud Act.
This Court has jurisdiction under 28 U.S.C. § 1332 as
modified by the Class Action Fairness Act. Defendant moves to
dismiss the complaint. For the reasons set forth below,
Defendant's motion is granted and the case is dismissed
12(b)(6) motion challenges the sufficiency of the
complaint. See, e.g., Ha linan v.
Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d
811, 820 (7th Cir. 2009). A complaint must provide “a
short and plain statement of the claim showing that the
pleader is entitled to relief, ” Fed.R.Civ.P. 8(a)(2),
sufficient to provide defendant with “fair
notice” of the claim and the basis for it. Be
l Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007). This standard “demands more than an
accusation.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). While “detailed factual allegations”
are not required, “labels and conclusions, and a
formulaic recitation of the elements of a cause of action
will not do.” Twombly, 550 U.S. at 555. The
complaint must “contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is
plausible on its face.'” Iqbal, 556 U.S.
at 678 (quoting Twombly, 550 U.S. at 570).
“‘A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.'” Mann v.
Vogel, 707 F.3d 872, 877 (7th Cir. 2013) (quoting
Iqbal, 556 U.S. at 678). In applying this standard,
the Court accepts all well-pleaded facts as true and draws
all reasonable inferences in favor of the non-moving party.
Mann, 707 F.3d at 877.
age of 56, Plaintiff applied for and purchased MET LIFE
Long-Term Care Policy 04856-20065. R. 22 ¶ 15. She did
so after reading a 12-page marketing brochure that covers a
variety of topics, including likely expenses for common
health conditions in people of advanced age, an explanation
of what Medicare covers and does not cover, an array of plan
benefits, benefit payment options, and optional plan
features. R. 22-1 pp. 1-12. It says nothing of policy classes
or the possibility of class-wide premium adjustments.
titled “Premium Payment Options” lists
“[four] premium payment options which help you pay off
your policy sooner and/or ease financial obligations down the
road, when you might be on a fixed income.”
Id. at 9. One option offered is the “Reduced
Pay at 65 Option, ” which allows an insured to
“pay[ ] more than the regular premium amount you would
pay each year up to the Policy Anniversary on or after your
65th birthday, [in order to] pay half the amount of your
pre-age 65 premiums thereafter.” Id. ¶
17. In a note at the bottom of the “Premium Payment
Options” page, it reads: “This brochure is
intended to provide a general overview, and highlight some of
the provisions and optional benefits of MetLife's
Individual Long-Term Care insurance policies. All rights and
obligations will be governed by the actual policy language,
if and when issued.” R. 22-1 at 9.
opted to purchase a long-term care policy, including the
Reduced Pay at 65 Option, based on the information contained
in the brochure. Id. ¶ 16. She received the
actual policy shortly thereafter. With respect to the Reduced
Pay at 65 Option, the policy says only that “on and
after Policy Anniversary at age 65, ” premiums will be
reduced by half. Id. at 15. Plaintiff alleges that
the statement in the brochure and seemingly consistent
language in the policy caused her to reasonably expect that
her premiums would be locked-in at a particular amount on the
policy anniversary after she turned 65. R. 36 at 1.
the policy, however, in the very first clause on the very
first page, there is a bold, all-caps header: “PREMIUM
RATES ARE SUBJECT TO CHANGE.” R. 22-1 at 13. The header
is followed by a plainly-written provision that reads, in
relevant part, “[Defendant] may change the premium
rates subject to applicable state Insurance Department
approval. Any such change in premium rates will apply to all
policies in the same class as yours where the policy was
issued.” Id. A similarly-worded provision
appears on page 14 of the policy in a section titled
“Premiums, ” indicating that Defendant
“reserve[s] the right to change premium rates on a
class basis, ” id. at 30, a phrase which
appears again, verbatim, in bold text in the 5% Automatic
Compound Inflation Protection Rider (“Inflation
Protection Rider”), an optional feature Plaintiff
elected to purchase, id. at 37. Another rider, the
“Contingent Benefits Upon Lapse Rider”
(“Lapse Rider”), sets forth the parties'
rights and obligations in the event of a “substantial
premium increase” during the life of the policy.
conclusion of the policy, in a list titled “General
Provisions, ” a clause titled, “The Contract,
” reads: “This policy, with any Riders,
endorsements and written application attached, make up the
entire contract.” Id. at 34. Bolded on the
first page of the policy is the following advisory clause:
30-Day Right to Examine Policy. Please read this policy
carefully. It is a legal contract between You and MetLife. If
You are not satisfied for any reason, You may return this
policy to Us or to the sales representative from whom You
bought it within thirty (30) days from the date You receive
it. If you return it within the thirty (30) day period, this
policy will be void . . .
Id. at 13. Plaintiff did not exercise her right to
void the policy. It became effective on September 1, 2004. R.
22 ¶ 15.
eight years, Plaintiff paid larger than regular premiums in
anticipation of a 50% reduction in her premium at age 65. R.
22 ¶ 21. In September 2012, the policy anniversary after
Plaintiff's 65th birthday, her premium was increased by
18% as part of a class-wide premium adjustment. R. 22-1 at
57. However, because the adjustment became effective once
Plaintiff was already 65 years old, she paid only half of the
adjusted amount, and did so without objection. Id.
¶ 23. Two years later, premiums were adjusted on a class
basis again. Id. ¶ 24. This time, however, they
more than doubled. Id. The result was that in 2015,
when Plaintiff was 67 years old, her semi-annual premiums
were higher than they were when she purchased the policy at
age 56. Id. ¶¶ 24-25.
to Plaintiff, this class-wide premium adjustment breached the
“Reduced Pay at 65 Option, ” which she understood
entitled her to premiums “permanently fixed at 50% of
her pre-age 65 premium.” Id. ¶ 26. In
addition, or perhaps in the alternative, she claims that the
marketing materials for the “Reduced Pay at 65
Option” were fraudulent, deceptive and unfair, and that
they concealed that “MetLife would be unable fulfill
its promise to lock-in Plaintiff's premium” after
her 65th birthday. Id. ¶ 73. Defendant moves to
dismiss Plaintiff's class suit arguing that under the
plain and conspicuous language of the fully-integrated
contract, Defendant was entitled to levy the class-wide
premium increase and thus did not breach the contract by
doing so. The Court addresses the parties' arguments
Breach of Contract
rules of contract interpretation apply when considering the
terms of an insurance policy. See United Nat'l Ins.
Co. v. Fasteel, Inc., 550 F.Supp.2d 814, 821 (N.D. Ill.
2008) (citing Nat'l Fid. Life Ins. Co. v.
Karaganis, 811 F.2d 357, 361-63 (7th Cir. 1987).
“Under Illinois law, an insurance policy that contains
no ambiguity is to be construed according to the plain and
ordinary meaning of its terms, just as would any other
contract.” Id. (citing Karaganis, 811
F.2d at 361). “Contracts are to be interpreted as a
whole, giving meaning and effect to each provision.”
Id. (internal quotation marks and citation omitted).
To plead a cause of action for breach of contract, a
plaintiff must allege (1) the existence of a valid and
enforceable contract; (2) performance by the plaintiff; (3)
breach of the contract by the defendant; and (4) resultant
injury to the plaintiff. Gonzalzes v. Am. Exp. Credit
Corp., 733 N.E.2d 345, 351 (Ill.App.Ct. 2000) (citation
omitted). A defendant's failure to comply with a duty
imposed by the contract gives rise to the breach.
Id. (citation omitted). Only the third element of
the claim-the defendant's alleged breach-is at issue
here. In pleading her claim for breach, Plaintiff alleges
simply that “MetLife breached its contract with
Plaintiff by increasing Plaintiff's annual premiums 102%
(to an amount greater than Plaintiff's pre-age 65 annual
premiums) in March 2015, when Plaintiff was 67 years
old.” R. 22 ¶ 39.
only contractual language regarding the Reduced Pay at 65
Option appears in the Schedule of Benefits. It reads as
[Y]ou have selected the following flexible premium payment
option: Reduced Pay at 65 Semi-Annual Premium Amount
Before Policy Anniversary at age 65: $3231.93
On and after Policy Anniversary at age 65: $1615.97
*If you pay premiums more frequently than
annually, an additional cost has been ...