Igielski v. Riversource Life Ins. Co.

TIMOTHY IGIELSKI, et al., Plaintiffs, v. RIVERSOURCE LIFE INSURANCE COMPANY, Defendant.

CASE NO. C15-313RAJ

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE

November 30, 2015

HONORABLE RICHARD A. JONES

ORDER

I. INTRODUCTION

This matter comes before the Court on Plaintiffs Timothy ("Timothy")¹ and Christopher ("Christopher") Igielski's ("Plaintiffs") Motion for Summary Judgment (Dkt. # 6) and Defendant RiverSource Life Insurance Company's ("Defendant") Motion for Summary Judgment (Dkt. # 17). Plaintiffs seek summary judgment solely on their claim for breach of contract while Defendant brings summary judgment as to all of Plaintiffs' claims.

This case involves the Plaintiffs' claims against Defendant relating to Defendant's refusal to pay the benefits on two life insurance policies on their father, Robert Igielski ("Robert"). For the reasons set forth below, the Court DENIES Plaintiffs' Motion and GRANTS in part and DENIES in part Defendant's Motion.

II. BACKGROUND

a. General Factual Background

Plaintiffs are the beneficiaries of two Flexible Premium Variable Life Insurance policies issued by Defendant's predecessor, IDS Life Insurance Company.² See Dkt. # 4 ("Compl.") ¶¶ 3.1-3.3; Dkt. # 10 (Skillings Decl.) ¶ 4.³ The Plaintiffs are brothers and the sons of Robert. See Dkt. # 7 (Timothy Decl.) ¶ 4. The Policies were applied for in December 1991 and have a "Policy Date" of March 4, 1992. See Dkt. # 17-3 (Skillings Decl.) Ex. 2 at 14; Dkt. # 17-4 (Skillings Decl.) Ex. 4 at 2. At some point - Plaintiffs claim in 1993 - Robert became incapacitated. See Dkt. # 17-4 (Skillings Decl.) Ex. 6.⁴ As such, Ruby Igielski, Robert's spouse, was appointed as his limited guardian and held his General-Durable Power of Attorney. Id.

b. The Life Insurance Policies

i. The "Insured," "Owners," and "Beneficiaries" of the Policies

Both the 6004 Policy and the 2004 Policy list Robert as the "Insured." See Dkt. # 17-3 (Skillings Decl.) Ex. 2 at 14; Dkt. # 17-4 (Skillings Decl.) Ex. 4 at 2. The application for the 6004 Policy also lists "Robert J. Igielski" as the "Insured" and "Timothy J. Igielski" as the "Owner" and beneficiary. See Dkt. # 17-3 (Skillings Decl.) Ex. 1 at 2-4. The application for the 2004 Policy lists "Robert J. Igielski" as the "Insured" and "Christopher T. Igielski" as the "Owner" and beneficiary. Id. Ex. 3 at 38-40.

ii. The Terms of the Policies

The terms of both Policies are largely identical. The Policies call for payment of the policy proceeds upon either maturity of the policy or proof of the insured's death during the policy term. See Dkt. # 17-3 (Skillings Decl.) Ex. 2 at 14. The Policies are governed by the Washington law. See id. at 21 (indicating law of the state in which policy was delivered governs the contract).

The Policies also provided certain other, relevant terms, such as:

When will the policy become incontestable?

After this policy has been in force during the insured's lifetime for two years from the policy date, we⁵ cannot contest the policy except for nonpayment of premiums.

Id.

The Policies clarify that they may terminate upon the earliest of five separate events occurring:

1. the date you⁶ request that coverage ends; or

2. the date you surrender the policy in full; or

3. the end of the grace period; or

4. the death of the insured; or

5. the maturity date

Id. at 22.

As the Policies clarify, a "grace period" for paying premiums exists. Id. at 25. As the Policies explain:

Yes. If on a monthly date, the cash surrender value is less than the monthly deduction for the policy month following such monthly date, a grace period of 61 days will begin. (The monthly deduction is described in the Policy Values section.) The grace period will give you time to pay a premium sufficient to continue your coverage. We will mail, to your last known address, a notice as to the premium needed so that the estimated cash surrender value will be sufficient to cover the next three monthly deductions.

If such premium is not paid within the grace period, all coverage under this policy will terminate without value at the end of the 61-day grace period.

Id. at 25.

iii. The Addresses of the Policies

The application forms for both policies ask only for the address of the "owner" of the policy. See Dkt. # 17-3 (Skillings Decl.) Ex. 1 at 3, Ex. 3 at 39. Thus, the application for the 6004 Policy lists a mailing address for Timothy at 19733 38th Pl. S., SeaTac, WA (see id. Ex. 1 at 3) and a mailing address for Christopher at 31214 55th Ave. S., Auburn, WA (see id. Ex. 3 at 39). The only other address in the application form itself is for the address of the insured's primary care physician. See id. Ex. 1 at 6, Ex. 3 at 42; see also Dkt. # 17-1 (Skillings Decl.) ¶¶ 9-10. Nevertheless, Robert provided his address - the same 31214 55th Ave. S. address as Christopher's - on a medical form provided as part of the underwriting process. See Dkt. # 17-4 (Skillings Decl.) ¶ 9, Ex. 5 at 26. Defendant asserts that it has never received any formal request for or notification of a change of address for Robert. See Dkt. # 17-1 (Skillings Decl.) ¶ 10.

Both Christopher and Timothy sent in change of address forms over the years.

Christopher sent a "Client Data Update Form" to Defendant dated March 20, 2000, requesting a change of address from the original 31214 55th Ave. S., Auburn address to P.O. Box 25290, Federal Way, WA. See Dkt. # 17-4 (Skillings Decl.) Ex. 7 at 34. Christopher later sent a letter dated May 22, 2002 requesting a change of address from the post-office box to 1127 NW Irving St., Portland, OR. Id. Ex. 8 at 36. Finally, Christopher sent Defendant a "Client Address and Phone Number Update Form" dated March 19, 2004, which listed a new permanent residence address - 4324 S. 284th St., Auburn, WA - and a mailing address at P.O. Box 24568, Federal Way, WA. Id. Ex. 9 at 38. The form indicated that the post-office box mailing address applied to all accounts. Id. Finally, it appears that sometime in 2013 Christopher again notified defendant of a change of address, requesting all future correspondence be sent to 2600 Fairview Ave. E. Slip 8, Seattle WA. See Dkt. # 17-2 (Skillings Decl.) ¶ 16.

Timothy likewise sent in several change of address forms. In February 2000, he sent in a "Client Data Update Form" requesting a change of address from 4324 S. 284th St., Auburn, WA to 4666 S. 170th St., SeaTac, WA.⁷ See Dkt. # 17-4 (Skillings Decl.) Ex. 10 at 40. In September 2001, Timothy moved but failed to provide Defendant with a change of address form, causing it to send two letters regarding returned mail. See Dkt. # 17-2 (Skillings Decl.) ¶ 18, Ex. 11 at 42-43. Defendant began sending mail to 4127 S. 280th St., Auburn, WA, the address they were given by the United States Postal Service, without incident until June 2005, when Timothy sent a "Client Address and Phone Number Update Form" requesting a change to 2214 S. 308th St., Federal Way, WA for all accounts. See Dkt. # 17-4 (Skillings Decl.) Ex. 12 at 46.

iv. The Notices of Policy Lapses for Nonpayment

Defendant has previously sent letters to Plaintiffs regarding the nonpayment of insurance premiums.

1. The 2010 Lapses

Beginning in September 2010, Defendant began sending Timothy letters regarding insufficient payment of premiums on the 6004 Policy. See Dkt. # 17-4 (Skillings Decl.) Ex. 13 at 48. These letters were each sent to the 2214 S. 308th St., Federal Way address indicated in Timothy's last change of address. See id. Ex. 13 at 48, Ex. 14 at 51, Ex. 15 at 53, Ex. 16 at 55. Defendant sent follow up letters in November 2010 (see id. Ex. 14 at 51), December 2010 (see id. Ex. 15 at 53) and February 2011 (see id. Ex. 16 at 55). Each of these letters indicated that the premium payments Defendant had been receiving was insufficient to cover the minimum premium and that during the grace period, the policy apparently had been paid from its cash surrender value. See id. Ex. 15 at 53. By December 2010, however, the cash surrender value had apparently run out and full payments were required. See id. Accordingly, the letters requested payments to bring thepolicy up to date and indicated that failure to pay would cause the policy to lapse. See id. Timothy sent payments after both the December 2010 and February 2011 letters, ultimately covering the entire payment needed. See Dkt. # 17-2 (Skillings Decl.) ¶ 23.

Similar notices were sent to Christopher in relation to the 2004 Policy starting in October 2010. See Dkt. # 17-4 (Skillings Decl.) Ex. 17 at 58. Another letter was sent in December 2010. See id. Ex. 18 at 60. These letters were sent to the P.O. Box 24568, Federal Way address indicated in Christopher's change of address form from March 2004. See id. Ex. 17 at 58, Ex. 18 at 60. Both letters indicated that the policy had been paying insurance costs from its cash surrender value, but that that was insufficient to continue paying premiums. See id. Ex. 17 at 58. As such, the letters requested payments to bring the premiums current and indicated that the policy would lapse if Defendant did not receive payment. Id. Christopher apparently made payments on both letters, ultimately bringing the policy current. See Dkt. # 17-2 (Skillings Decl.) ¶¶ 25, 27.

2. The 2013 Lapses

In 2013, Defendant once again sent out notices regarding the nonpayment of premiums on the Policies.

The 6004 Policy entered into its grace period for nonpayment of premiums on May 4, 2013.⁸ See id. ¶ 38. A check dated May 15, 2013 from a Charles Schwab account was then sent, bearing the notation "FBO TIMOTHY IGIELSKI." See Dkt. # 17-5 (Skillings Decl.) Ex. 27 at 24. This amount was insufficient to pay the full amount of the past premiums owed. See Dkt. # 17-2 (Skillings Decl.) ¶ 38. As a result, in June 2013, Defendant once again sent a notice to Timothy stating that the premium payments it was receiving were insufficient to cover the minimum premiums on the 6004 Policy. See Dkt. # 17-5 (Skillings Decl.) Ex. 28 at 27. On a...