United States District Court, N.D. Illinois, Eastern Division
DAVID K. SULLIVAN, as Trustee, of the THOMAS P. SULLIVAN IRREVOCABLE TRUST DATED DECEMBER 27, 1991, Plaintiff,
TRANSAMERICA LIFE INSURANCE COMPANY, Defendant.
MEMORANDUM OPINION AND ORDER
JOHNSON COLEMAN United States District Court Judge
David K. Sullivan, as Trustee of the Thomas P. Sullivan
Irrevocable Trust, brought this two-count complaint against
Transamerica Life Insurance Company alleging breach of
contract and Illinois Consumer Fraud and Deceptive Business
Practices Act (“ICFA”) claims. Transamerica has
moved to dismiss the entire complaint under Federal Rule of
Civil Procedure 12(b)(6). For the reasons below, the Court
grants Transamerica's motion to dismiss with prejudice.
following facts are summarized from the complaint and
attachments to the complaint, including the insurance policy
and the assured coverage endorsement at issue. On August 10,
2002, David Sullivan on behalf of the Trust purchased a
universal life insurance policy for his brother Thomas P.
Sullivan as the insured. The policy had both life insurance
and savings features with a face value and death benefit of
$1, 000, 000. As to the savings feature, after the cost of
insurance (monthly deductions) are subtracted from the
premium payments, the remainder is applied to the
accumulation value of the policy that has a guaranteed
minimum interest rate of 4%. As the policy data indicates,
the accumulation value may decrease over the life of the
required annual premium for the first five years of the
policy was $27, 520. After the five-year required premium
period, the policy allows for flexible payments, as long as
the net cash value of the policy is above a certain
threshold. If the net cash threshold is insufficient, the
policy will lapse after a 60-day grace period. Under the
assured coverage endorsement, however, if the Trust continued
to pay the annual premium of $27, 520 after the five-year
required premium period, the policy would not lapse-even if
the net cash value is insufficient to pay the costs of
Trust alleges that it timely paid an annual premium of $27,
520 from 2002 through 2008. According to the Trust, in August
2009, Tom Sullivan had a conversation with a Transamerica
agent who told him that the 2019 premium would be taken from
the cash value of the policy. The Trust also alleges that on
August 17, 2010, a Transamerica agent told Tom Sullivan that
the 2010 premium would be taken out of the policy's cash
value on a monthly basis and that there was enough cash value
for the coming year.
the Trust alleges that it paid the $27, 520 premium every
year from 2011 until 2018. On August 15, 2018, Transamerica
sent a letter to the Trust stating:
Your policy has entered its grace period and is in danger of
lapsing. Additionally, your Policy Threshold, minus any
existing policy loan(s), is less than zero and therefore does
not meet the requirements to keep your ACE [assured coverage
endorsement] provision in effect on your policy…. We
are therefore providing you information on how to maintain
the ACE provision and, alternatively, the amount needed to
maintain coverage without reliance on ACE.
letter explained that a payment of $15, 996 by September 14,
2018 would maintain the assured coverage endorsement. It also
stated that because “your policy's value is not
sufficient to cover the current Monthly Deductions, ”
to continue coverage without the benefit of the assured
coverage endorsement, a minimum payment of $99, 245 was due
by October 14, 2018. In September 2018, Tom Sullivan paid the
$15, 996 under the first option. On March 15, 2019,
Transamerica sent another letter detailing that the policy
was in its grace period and in danger of lapsing. Instead of
making a payment to continue coverage, the Trust filed this
lawsuit seeking the $15, 996 that Transamerica
“improperly” demanded in August 2018, plus $60,
000, attorney's fees, and costs.
motion to dismiss pursuant to Rule 12(b)(6) for failure to
state a claim tests the sufficiency of the complaint, not its
merits. See Camasta v. Jos. A. Bank Clothiers, Inc.,
761 F.3d 732, 736 (7th Cir. 2014). When considering dismissal
of a complaint, the Court accepts all well pleaded factual
allegations as true and draws all reasonable inferences in
favor of the plaintiff. Erickson v. Pardus, 551 U.S.
89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (per curiam).
To survive a motion to dismiss, plaintiff must “state a
claim for relief that is plausible on its face.”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555,
570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A complaint is
facially plausible when plaintiff alleges “factual
content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662,
678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). When ruling on a
motion to dismiss, courts “may consider documents
attached to the pleadings so long as the documents are
referred to in the complaint and central to the
plaintiff's claims.” Doe v. Columbia College
Chicago, 933 F.3d 849, 854 (7th Cir. 2019). “When
an exhibit incontrovertibly contradicts the allegations in
the complaint, the exhibit ordinarily controls, even when
considering a motion to dismiss.” Bogie v.
Rosenberg, 705 F.3d 603, 609 (7th Cir. 2013).
Trust alleges a breach of contract claim in Count I of its
complaint. Under Illinois law, when ascertaining the meaning
of an insurance policy's language and the parties'
intent, courts must construe the policy as a whole taking
into account the type of insurance at issue. Windridge of
Naperville Condo. Assoc. v. Philadelphia Indem. Ins.
Co., 932 F.3d 1035, 1039 (7th Cir. 2019). As with all
contracts, if the policy language is unambiguous, courts will
enforce the policy as written. Id.; Thounsavath
v. State Farm Mutual Auto. Ins. Co., 104 N.E.3d 1239,
1244, 423 Ill.Dec. 150, 155, 2018 IL 122558, ¶ 17 (Ill.
2018). If the policy is ambiguous, courts can consider
extrinsic evident to determine the parties' intent.
Soarus LLC v. Bolson Materials Int'l Corp., 905
F.3d 1009, 1011 (7th Cir. 2018).
Trust argues that Transamerica breached the insurance
contract by charging more than the annual fixed premium of
$27, 520 in 2018 and 2019. Instead of pointing to an express
provision of the policy to support its assertion that the
annual premium was fixed at $27, 520 throughout the life of
the policy, the Trust relies on a sales illustration from
July 2002, a portion of which is attached to the complaint.
This illustration-which unequivocally states “this is
an illustration not a contract”-shows a table of the
insured's age and year of the policy over an 18-year
period, the projected accumulated ...