Cooke v. Jackson Nat'l Life Ins. Co.

NORMA L. COOKE, Plaintiff, v. JACKSON NATIONAL LIFE INSURANCE COMPANY, Defendant.

No. 15 C 817

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

March 15, 2016

Chief Judge Rubén Castillo

MEMORANDUM OPINION AND ORDER

In this diversity breach of contract case, Norma L. Cooke ("Plaintiff") seeks payment of a life insurance policy obtained by her late husband, Charles E. Cooke ("Cooke"). Plaintiff, the policy's beneficiary, alleges that Jackson National Life Insurance Company ("Defendant") breached the terms of the policy by increasing the premium payment due while Cooke's account was in a grace period following a missed payment. (R. 1, Compl. ¶ 31.) Presently before the Court is Plaintiff's motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). (R. 18, Pl.'s Mot.) For the reasons stated below, Plaintiff's motion is denied.

RELEVANT FACTS

On July 28, 1998, Southwestern Life Insurance Company issued a life insurance policy to Cooke. (R. 10, Answer ¶ 7.) Under the policy, Cooke received $200,000 of coverage for a term of fifteen years. (Id. ¶ 8.) The policy also gave Cooke the option to renew his policy at a higher premium once the initial fifteen-year term ended. (R. 1-1. Compl., Ex. A at 13.) At some point during Cooke's coverage, Defendant acquired the policy. (R. 10, Answer ¶ 4.) The policy included a grace period provision for missed payments, containing the following language:

Except for the first premium, we allow a Grace Period of 31 days beginning on the due date to pay the premium. The policy will remain in force during the Grace Period. If the Insured dies during the Grace Period, the unpaid premium will be deducted from the Proceeds.

Any premium not paid on or before its due date is a premium in default. If a premium in default is not paid before the end of the Grace Period, the policy will terminate.

(R. 1-1, Compl., Ex. A at 13.) The policy provides for quarterly premium payments. (Id. at 4.) However, according to Defendant, "[Cooke] entered into a separate and additional contract . . . which authorized the withdrawal of premiums on a monthly basis" subject to "specific terms and conditions." (R. 10, Answer ¶ 46.) Both parties agree that Cooke paid his premium on a monthly basis via automatic bank withdrawal for roughly fifteen years. (Id. ¶ 47.)

As Cooke neared the end of his fifteen-year term, Defendant issued him a notice dated May 30, 2013, informing him that his premium would increase to $2,835.85 beginning July 28, 2013. (Id. ¶ 11.) The letter also informed Cooke that he would "be billed at the same frequency or mode" as the current premium and that $2,835.85 would be his "new modal premium amount." (R. 1-2, Compl., Ex. B.)

On July 28, 2013, Defendant attempted to withdraw $2,835.85 from Cooke's bank account, but the withdrawal failed due to insufficient funds. (R. 10, Answer ¶ 12.) The missed payment triggered a grace period ending on August 28, 2013. (Id. ¶ 18.) Defendant notified Cooke of his account deficiency in a letter dated August 9, 2013. (Id. ¶ 14.) The letter informed Cooke that the policy would "terminate if the renewal premium [was] not received by the last day of the grace period." (R. 1-3, Compl., Ex. C.) Plaintiff also claims that she called Defendant on or about August 15, 2013, to determine the final date for payment under the grace period provision. (R. 1, Compl. at ¶¶ 15-16.) In this conversation, Defendant allegedly informed Plaintiff that it was withdrawing its consent to pay monthly premiums and that a quarterlypayment would be due by September 15, 2013. (Id. ¶ 16.) Defendant, however, denies all of Plaintiff's allegations regarding this telephone call. (R. 10, Answer ¶ 16.)

At some point, Defendant also mailed a separate payment notice to Cooke informing him that he owed a quarterly payment of $8,637.94 by July 28, 2013. (Id. ¶ 17.) The notice indicated that if Defendant did not receive payment by that date, the policy "[would] enter its grace period and [would] terminate if the renewal premium [was] not received by the last day of the grace period." (R. 1-4, Compl., Ex. D at 2.) Plaintiff claims the payment notice was issued on or about August 15, 2013, but the notice attached to Plaintiff's complaint does not display a date. (R. 1, Compl. at ¶ 17.) Defendant only admits that the letter exists, but it does not agree that it was sent on or about August 15, 2013. (R. 10, Answer ¶ 17.)

Cooke failed to make any payments before August 28, 2013, the last day of the grace period. (Id. ¶ 18.) On September 10, 2013, Cooke passed away. (Id. ¶ 19.) Three days later, on September 13, 2013, Defendant received a check from Plaintiff for $8,637.94. (Id. ¶¶ 20-21.) Three days after that, on September 16, 2013, Defendant issued a letter to Cooke stating that the policy had lapsed for failure to pay the premium within the grace period. (Id. ¶ 22.)

Plaintiff filed her complaint on January 27, 2015. (R. 1, Compl.) Plaintiff alleges that Defendant breached the policy in either of two ways: (1) by misrepresenting that an increased quarterly payment was due to satisfy the grace period despite that provision's requirement that "the premium due" at the time of default would suffice, (R. 1, Compl. ¶ 31); or (2) by not extending the grace period by 31 days when it demanded a larger quarterly payment, (id. ¶ 33). Plaintiff also asserts that Defendant waived its right to demand quarterly payments because the May 30 letter changed Cooke's premium frequency to monthly. (Id. ¶¶ 51, 54.) In addition, Plaintiff claims that Defendant should be estopped from enforcing the original grace period anddenying that a new grace period was created by the quarterly payment demand. (Id. ¶ 61.) Lastly, Plaintiff asks this Court to find that Defendant's actions allegedly changing the terms and dates of required payments were "vexatious and unreasonable" in various ways in violation of the Illinois Insurance Code, 215 ILL. COMP. STAT. 5/155. (Id. ¶¶ 63-70.) Defendant answered on March 24, 2015. (R. 10, Answer.) Defendant denies that Plaintiff was entitled to a new grace period, that it waived its right to demand quarterly payments, and that it is bound by promissory estoppel. (Id. ¶¶ 35, 51.) Defendant also denies that it acted in a vexatious and unreasonable manner. (Id. ¶ 66.)

Without seeking any discovery, Plaintiff filed the present motion for judgment on the pleadings on July 2, 2015. (R. 18, Pl.'s Mot.) Plaintiff argues that Defendant has admitted the validity of the documents attached to the complaint and, thus, all that remains is to interpret these documents as a matter of law. (Id. at 2-3.) Defendant responded on August 13, 2015. (R. 24, Def.'s Resp.) Defendant argues that it has denied that the contract attached to the complaint is complete, as there is "a separate contract . . . that set forth the terms governing [Cooke's] monthly installment payment election." (Id. at 4.) Defendant also argues that Plaintiff's motion relies on facts that Defendant has explicitly denied. (Id. at 8-9.) Plaintiff filed her reply on August 30, 2015. (R. 26, Pl.'s Reply.)

LEGAL STANDARD

Federal Rule of Civil Procedure 12(c) permits a party to "move for judgment on the pleadings after the filing of the complaint and answer." Supreme Laundry Serv., L.L.C. v. Hartford Cas. Ins. Co., 521 F.3d 743, 746 (7th Cir. 2008). The pleadings consist of "the complaint, the answer, and any written instruments attached as exhibits." Hous. Auth. Risk Retention Grp., Inc. v. Chi. Hous. Auth., 378 F.3d 596, 600 (7th Cir. 2004). A Rule 12(c) motionis typically "governed by the same standards as a motion to dismiss for failure to state a claim under Rule 12(b)(6)." Lodholtz v. York Risk Servs. Grp., Inc., 778 F.3d 635, 639 (7th Cir. 2015).

However, when a party uses a Rule 12(c) motion to attempt to win its case "on the basis of the underlying substantive merits," the correct standard "is that applicable to summary judgment, except that the court may consider only the contents of the pleadings." Alexander v. City of Chi., 994 F.2d 333, 336 (7th Cir. 1993). Under this standard, judgment on the pleadings will not be granted unless "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citation omitted). "A genuine dispute as to any material fact exists if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Kvapil v. Chippewa Cty., Wis., 752 F.3d 708, 712 (7th Cir. 2014) (citation and internal quotation marks omitted). In deciding whether a dispute exists, the Court must "construe all facts and reasonable inferences in the light most favorable to the non-moving party." Nat'l Am. Ins. Co. v. Artisan & Truckers Cas. Co., 796 F.3d 717, 723 (7th Cir. 2015) (citation omitted).

The Court cannot weigh conflicting evidence, assess the credibility of the witnesses, or determine the ultimate truth of the matter, as these are functions of the jury. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697, 704-05 (7th Cir. 2011). In other words, a motion for judgment on the pleadings "cannot be used to resolve swearing contests between litigants." Payne v. Pauley, 337 F.3d 767, 770 (7th Cir. 2003). Instead, the Court's role is simply "to determine whether there is a genuine issue for trial." Tolan v. Cotton, 134 S. Ct. 1861, 1866 (2014) (quoting Anderson, 477 U.S. at 249).

ANALYSIS

I. Choice of Law

As a preliminary matter, the parties dispute which state's laws apply to the insurance policy. Plaintiff argues that Illinois law is appropriate, as the policy's beneficiary lived in Illinois. (R. 26, Pl.'s Reply at 1.) Although Plaintiff does not provide specific dates, she alleges that Cooke was domiciled at all times in Illinois and simply maintained a separate residence in South Carolina for...