Malek v. AXA Equitable Life Ins. Co.

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Joel J. Malek, individually and on behalf of all others similarly situated, Plaintiff, v. AXA Equitable Life Insurance Co., Leonard Feigenbaum, and Does 1-1000, Defendants.

No. 20-CV-04885 (DG) (AYS)

United States District Court, E.D. New York

March 29, 2023

ORDER

DIANE GUJARATI, United States District Judge

On October 9, 2020, Plaintiff Joel J. Malek filed the Complaint in this action, individually and on behalf of all others similarly situated, against Defendants AXA Equitable Life Insurance Company (“Equitable”); Leonard Feigenbaum (together with Equitable, the “Moving Defendants”); and Does 1-1000, who are alleged to be certain insurance agents and brokers (together with Feigenbaum, the “Broker Defendants,” and collectively with Equitable and Feigenbaum “Defendants”). See generally Complaint (“Compl.”), ECF No. 1; see also Compl. ¶¶ 13-15.^[1]Plaintiff alleges that Equitable “engineered a deceptive marketing conspiracy implemented by” the Broker Defendants “to trick life insurance consumers into replacing their existing whole life policies into more costly Equitable universal life insurance policies that had lower rates of return and higher risk.” See Compl. ¶ 1. Plaintiff asserts that he brings this action as a class action pursuant to Federal Rule of Civil Procedure 23 and seeks certification of a “Nationwide Class” with regard to the conduct alleged in the Complaint. See Compl. ¶ 87. Plaintiff also seeks certification of various sub-classes: a sub-class of all New York residents who are members of the Nationwide Class (the “New York Sub-Class”) and sub-classes of all residents of each of the states identified in Plaintiff's Fifth Cause of Action who are members of the Nationwide Class (together, the “State Sub-Classes”). See Compl. ¶¶ 88-89.

Plaintiff's Complaint asserts seven causes of action: (1) breach of implied covenant of good faith and fair dealing, against Equitable; (2) breach of contract, against Equitable; (3) violations of New York Insurance Law § 4226, against all Defendants; (4) violation of New York General Business Law § 349, on behalf of the New York Sub-Class and against all Defendants; (5) violations of the state unfair business practices statutes, on behalf of the State Sub-Classes and against all Defendants; (6) unjust enrichment, against the Broker Defendants; and (7) violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), seeking civil remedies against all Defendants. See Compl. ¶¶ 97-158.

Pending before the Court are Defendant Equitable's motion to dismiss Plaintiff's Complaint, see Defendant Equitable's Notice of Motion to Dismiss the Complaint ECF No. 33; Defendant Equitable's Memorandum of Law in Support (“Eq. Br.”), ECF No. 34; Defendant Equitable's Reply Memorandum in Support (“Eq Reply”), ECF No. 39, and Defendant Feigenbaum's motion to dismiss Plaintiff's Complaint, see Defendant Feigenbaum's Notice of Motion to Dismiss the Complaint, ECF No. 36; Defendant Feigenbaum's Memorandum of Law in Support (“Feigenbaum Br.”), ECF No. 37; Defendant Feigenbaum's Reply Memorandum of Law (“Feigenbaum Reply”), ECF No. 40. Plaintiff opposes the Moving Defendants' motions. See Plaintiff's Memorandum of Law in Opposition (“Pl. Br.”), ECF No. 38.

For the reasons set forth below, the Moving Defendants' Motions to Dismiss are granted and the Complaint is dismissed.

BACKGROUND

I. Factual Background^[2]

As alleged in the Complaint, Plaintiff bought a whole life insurance policy from Prudential Life Insurance in 1977 and bought a second whole life insurance policy from MONY in 1987. See Compl. ¶ 39.

Plaintiff alleges that, in 2010, Feigenbaum suggested that Plaintiff surrender his whole life insurance and purchase replacement insurance with Equitable. See Compl. ¶ 40. Plaintiff purchased a replacement policy in 2010. See Compl. ¶ 75.

Plaintiff alleges that, on or about September 29, 2010, Feigenbaum “prepared and communicated a deceptive document” that “misstated the value of the replacement policy [Plaintiff] purchased.” See Compl. ¶ 41. Plaintiff further alleges that, in December 2010, Feigenbaum sent a letter to Plaintiff “touting the benefits” of Equitable's new indexed universal life insurance production and recommending that Plaintiff have a new policy issued as the Indexed Universal Life policy. See Compl. ¶ 42. Plaintiff alleges that, in this letter, Feigenbaum agreed that the rate that could be earned by the policy (the “Growth Cap Rate”) would be 12% per annum. See Compl. ¶ 42; see also Compl. ¶ 80. Plaintiff further alleges that Feigenbaum provided materially false and misleading materials to Plaintiff, which misled Plaintiff as to the terms of his replacement policy. See Compl. ¶ 43; see also Compl. ¶¶ 47-61.^[3]

According to Plaintiff, “[w]hen Defendant Feigenbaum interacted with Plaintiff, he was acting in concert with Equitable to manipulate consumers into replacing their life insurance policies with risky, universal life insurance policies.” See Compl. ¶ 44. Plaintiff alleges that Feigenbaum presented customers with pre-printed marketing materials provided by Equitable that were designed to manipulate customers into replacing their current life insurance with universal life insurance. See Compl. ¶ 47. The Complaint specifically identifies two categories of allegedly deceptive marketing materials presented to customers: (1) prepared illustrations purportedly showing the benefits of the replacement life insurance policies (the “Illustrations”), see Compl. ¶¶ 48-54, and (2) Disclosure Statements as mandated by Insurance Regulation 60 (the “Disclosure Statements”), see Compl. ¶¶ 55-61. Plaintiff alleges that the Illustrations were misleading in that they, inter alia, included a misleading column title, used an artificially inflated interest rate assumption, and gave the impression that the non-guaranteed parts of the Illustration were guaranteed when they were not. See Compl. ¶¶ 49-51. Plaintiff alleges that the Disclosure Statement presented to Plaintiff was misleading because it, inter alia, failed to provide certain information in the “Agent's Statement” section, did not inform Plaintiff that Equitable would impose a 6% to 8% premium charge on the cash released by the rollover of the existing policy into the replacement, and provided incomplete disclosure as to certain other charges associated with the new replacement policy. See Compl. ¶¶ 56-60.

As alleged in the Complaint, Equitable sent annual account statements to Plaintiff regarding the value of Plaintiff's replacement life insurance policy. See Compl. ¶ 145(a); see also ECF Nos. 35-7 through 35-12, 35-14, 35-15, 35-17. The statements indicated the relevant Growth Cap Rate per segment. See, e.g., ECF No. 35-7 at 4 (12% Growth Cap Rate for active segment(s)); ECF No. 35-8 at 4 (11% Growth Cap Rate for active segment(s)); ECF No. 35-9 at 7 (10% Growth Cap Rate for active segment(s)); ECF No. 35-10 at 7 (10% Growth Cap Rate for active segment(s)). And, beginning in at least 2014, the statements provided a telephone number that policyholders could call for information about the “Current Growth Cap Rates that have been established.” See, e.g., ECF No. 35-9 at 3; ECF No. 35-10 at 3; ECF No. 35-11 at 3; ECF No. 35-12 at 3.

Furthermore, as alleged in the Complaint, the Illustration Plaintiff received when he purchased his new policy informed him that there would be certain monthly charges assessed on his policy. See Compl. ¶ 51 & n.2. The annual statements that Plaintiff received summarized monthly charges assessed on Plaintiff's policy. See ECF Nos. 35-7 through 35-12, 35-14, 35-15, 35-17.

Plaintiff alleges that a letter dated September 6, 2019 from an Equitable senior director for the first time informed Plaintiff that “you may have considered other information that was not disclosed in the original disclosure statement to you.” See Compl. ¶ 74. Plaintiff alleges that attached to the September 2019 letter was a revised disclosure statement, which allegedly contained information that had been withheld from Plaintiff when he purchased his replacement policy in 2010. See Compl. ¶ 75. According to the Complaint, the revised disclosure statement “presented Plaintiff with radically different information and perspective as to the wisdom of purchasing replacement universal life insurance.” See Compl. ¶ 78. Plaintiff alleges that the revised disclosure statement informed Plaintiff regarding certain advantages of keeping his existing policies, including: that the contestability and suicide clause on his existing policies had expired; that the existing policy had no surrender charge while the replacement policy had a surrender charge for the first 20 years; and that the replacement policy contained a host of new charges that he did not incur on his existing insurance. See Compl. ¶ 76.

Plaintiff alleges that, after receipt of the September 2019 letter, Plaintiff called Equitable and spoke to a representative regarding the revised disclosure letter. See Compl. ¶ 79. Plaintiff alleges that, in this conversation, Plaintiff made clear that he would not have purchased the replacement policy had he been provided this information in 2010 and that he wanted Equitable to provide him with a written description of his options as well as the values and current growth cap rate of his policy. See Compl. ¶ 79.

According to the Complaint, in November 2019, Plaintiff received a letter from Equitable that stated that Equitable was required to request that Prudential and MONY reinstate Plaintiff's existing coverage. See Compl. ¶ 80. Plaintiff alleges that the letter, inter alia, did not provide any assurance that Plaintiff would be able to obtain his existing coverage, did not address the 12% maximum Growth Cap Rate Plaintiff...