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Mook v. Johnson

Court of Appeals of Illinois, Third District

March 27, 2018

SUZETTE R. MOOK and RACHEL M. TRAVELSTEAD, as Independent Executor of the Estate of Jeremy S. Travelstead, Plaintiffs-Appellants,
v.
ROBIN R. JOHNSON and JAMY C. JOHNSON, Defendants-Appellees.

          Appeal from the Circuit Court of the 21st Judicial Circuit, Kankakee County, Illinois Circuit No. 11-L-158 Honorable Michael D. Kramer, Judge, Presiding.

          JUSTICE SCHMIDT delivered the judgment of the court, with opinion. Justices Lytton and Wright concurred in the judgment and opinion.

          OPINION

          SCHMIDT JUSTICE.

         ¶ 1 Plaintiffs, Suzette R. Mook and Rachel M. Travelstead, as independent executor of the estate of Jeremy S. Travelstead, filed suit against defendants, Robin R. Johnson and Jamy C. Johnson, alleging that defendants committed fraud by fraudulently concealing the surrender of a life insurance policy. As a result of surrendering the policy, the insurance company issued a check payable to the seven co-owners of the policy in the amount of $612, 542.81. After forging at least one of the plaintiffs' signatures and cashing the check, defendants unevenly distributed the funds, keeping $317, 440.93 for themselves while distributing $295, 101.88 to the other five beneficiaries under the policy. Following a trial, the jury returned a verdict in favor of both plaintiffs and against each defendant awarding both compensatory and punitive damages. Specifically, the jury awarded (1) Mook a total of $44, 960.56 in compensatory damages ($22, 480.28 against each defendant) and $254, 491.44 in punitive damages ($127, 519.72 against each defendant) and (2) Jeremy's estate a total of $65, 508.56 in compensatory damages ($32, 754.28 against each defendant) and $254, 491.44 in punitive damages ($127, 519.72 against each defendant).

         ¶ 2 Thereafter, the circuit court of Kankakee County remitted Mook's and Jeremy's estate's punitive damage awards to $20, 000 and $10, 000 respectively. Plaintiffs appeal the court's judgment remitting their punitive damage awards. We reverse and remand with directions.

         ¶ 3 FACTS

         ¶ 4 In February 2017, plaintiffs filed an amended two-count complaint against defendants in the circuit court of Kankakee County. The complaint alleged that defendants committed fraud by concealing the surrender of a life insurance policy, insured upon the lives of June R. Lackey and Robert C. Lackey, by (1) forging their signatures on the request for policy surrender form, (2) using the ability to receive the only notice and communication from the life insurance company in order to deceive them, and (3) pursuing a course of conduct designed by artifice and trick to deceive them. Plaintiffs each sought $500, 000 in compensatory damages plus statutory interest, $1 million in punitive damages, and attorney fees and costs associated with their suit.

         ¶ 5 I. Undisputed Facts

         ¶ 6 Jamy is an insurance agent. In August 1999, Jamy sold the life insurance policy at issue, which provided a benefit of $3.5 million upon the death of the last Lackey. Jamy's agency received a commission of $112, 000 on the initial sale of the policy. Initially, Lackey's four daughters and three son-in-laws, Aloha M. and Edwin L. Travelstead, defendants Robin R. and Jamy C. Johnson, Brenda G. and David R. Zack, and Suzette R. Mook were the owners of the policy. Pursuant to the policy, upon the death of the last of the insured, the proceeds were payable in one lump sum to the above-named owners, as beneficiaries, per stirpes. As of October 21, 2002, the owners and beneficiaries of the policy included defendants, plaintiffs, the Zacks, and Jeremy's sister Shannon Oddera. Jeremy and Shannon replaced their parents on the policy following their deaths. Jamy sent a letter to the insurance company informing it that Robin was the "main owner" of the policy and that all bills and information should be sent to her and any questions directed to him. He did not send this document to any of the other policy owners.

         ¶ 7 The policy's annual premium, due in August, was $140, 000. Each of the seven owners paid the annual premium via a $20, 000 gift they received from the Lackeys through the August 2006 payment. Following the August 2006 premium payment, John Lackey announced that he would no longer fund his half of the owners' annual premium payment and, commencing with the August 2007 payment, the owners could either make a loan from the policy against the cash surrender value to pay the premiums or surrender the policy.

         ¶ 8 In early March 2007, Robin called the insurance company to inquire about surrendering the policy. At that time, the insurance company informed her that all seven policy owners needed to sign the surrender form. The insurance company then followed up with Robin by letter, dated March 9, 2007, indicating that surrendering the policy may not be in her best interest and that other options were available. The letter further noted that if the policy was surrendered that day, the early surrender charges would be $126, 000 and its net cash surrender value would be $618, 720.30.

         ¶ 9 On March 20, 2007, Robin submitted a "request for policy surrender form" to the insurance company with only her signature. In an April 2, 2007, letter, the insurance company denied Robin's request to surrender the policy because "[t]he signatures of all [seven co-]owners are required to complete the request." Later that month, Robin submitted additional forms that purportedly bore the signatures of all seven co-owners of the policy. On April 27, 2007, Robin negotiated a check payable to all seven co-owners in the amount of $612, 542.81. She distributed those funds as follows:

$35, 000.00

Robin and Jamy Johnson

Account No. 304-093

$23, 403.90

Robin Johnson

Account No. 139-149

$7, 084.76

Aaron Johnson

Account No. 173-592

$60, 000.00

Robin Johnson

Certificate of Deposit

$15, 084.76

Robin Johnson

Account No. 7252

$6, 000.00

Aaron Johnson

Account No. 7250

$45, 254.29

Robin Johnson

Account No. 2128

$9, 916.00

Robin Johnson

Account No. 7252

$30, 000.00

Robin and Jamy Johnson

Account No. 5407

$1, 000.00

Aaron Johnson

Account No. 7250

$25, 000.00

Jeremy Travelstead

Check

$25, 000.00

Shannon Odera

Check

$24, 000.00

Edwin Travelstead

Check

$25, 000.00

Chad Travelstead

Check

$90, 508.56

Brenda Zack

Check

$90, 508.56

David Zack

Check

$15, 084.76

Matt Zack

Check

$79, 697.22

Centrue Bank

Check to pay off the balance of a note secured by a mortgage on Robin and Jamy Johnson's home

$5, 000.00

Robin Johnson

Cash

         Aaron Johnson is Robin and Jamy Johnson's son. Edwin and Chad Travelstead are Aloha and Edwin L. Travelstead's sons. ...


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