Pickens v. New York Life Insurance Company, et al
Filing
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OPINION AND ORDER The Court GRANTS IN PART and DENIES IN PART the Defendants' 14 Motion for Judgment on the Pleadings. Counts II, III, and IV are DISMISSED. Signed by Chief Judge Theresa L Springmann on 9/27/19. (kjp)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMON DIVISION
MARY PICKENS,
Plaintiff,
v.
NEW YORK LIFE INSURANCE
COMPANY, et al.,
Defendants.
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CAUSE NO.: 2:17-CV-190-TLS
OPINION AND ORDER
Plaintiff Mary Pickens filed a state court Complaint [ECF No. 7] on March 21, 2017,
against Defendants New York Life Insurance Company and AARP Corporation. The case was
removed to federal court [ECF No. 1] on April 25, 2017. The Defendants filed a Motion for
Judgment on the Pleadings [ECF No. 14] on June 16, 2017. The Plaintiff filed her Opposition
[ECF No. 21] on November 7, 2017. On November 14, 2017, the Defendants filed their Reply
[ECF No. 22] in further support of their Motion.
BACKGROUND
On April 30, 2014, Plaintiff Mary Pickens made an application for a life insurance policy
with Defendants New York Life Insurance Company (“New York Life”) and AARP Corporation
insuring the life of her brother, Augustus Williams. A life insurance policy was issued on the life
of Augustus Williams on June 12, 2015 with life insurance certificate number A7532637
(“Insurance Certificate”). Def. New York Life Answer, Ex. 1, ECF No. 12-1. The benefits due
under the insurance policy were in the amount of $25,000. The beneficiaries under the life
insurance policy were the Plaintiff and Shatasha Plump (“Plump”).
Augustus Williams died on March 5, 2016. Subsequently, the Plaintiff filed a claim under
the life insurance policy with New York Life. After several rounds of communication between
the parties, New York Life determined that Augustus Williams “failed to disclose material
information concerning his medical history.” Based on this determination, New York Life denied
that any payment was owed under the Insurance Certificate, which New York Life
communicated to the Plaintiff.
On October 26, 2016, New York Life sent Plaintiff and Plump checks for $419 that
included the following language: “Refund for premiums paid under contract A7532637.
Coverage is hereby rescinded.” Def. New York Life’s Answer, ¶ 9, Exs. 2 & 3. Plaintiff and
Plump signed and cashed the checks on October 31, 2016 and April 18, 2017, respectively. Id.
Plaintiff subsequently brought this instant suit against the Defendants alleging that
rescission of the life insurance policy was unlawful and brought the following claims against the
Defendants: Breach of Contract (Count I); Negligent Infliction of Emotional Distress (Count II);
Intentional Infliction of Emotional Distress (Count III); and Violation of Indiana Deceptive
Practices Act and Consumer Protection Laws (Count IV).
STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 12(c), a party may move for judgment on the
pleadings after the plaintiff has filed a complaint and the defendant has filed an answer. See Fed.
R. Civ. P. 12(c). “A motion for judgment on the pleadings is generally not favored and courts
apply a fairly restrictive standard in ruling on the motion.” Urbanski v. Tech Data, No. 3:07-cv2
17, 2008 WL 141574, at *10 (N.D. Ind. Jan. 11, 2008) (citing Fox v. Terra Haute Indep.
Broads., Inc., 701 F. Supp. 172, 173 (S.D. Ind. 1988)).
A motion for judgment on the pleadings under Rule 12(c) is subject to the same standard
of review as a motion to dismiss under Rule 12(b)(6). See Buchanan–Moore v. Cty. of
Milwaukee, 570 F.3d 824, 827 (7th Cir. 2009). Therefore, the complaint must “contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “‘A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.’” Boucher v. Fin. Sys. of Green
Bay, Inc., 880 F.3d 362, 366 (7th Cir. 2018) (quoting Iqbal, 556 U.S. at 678). When applying
this standard, a Court is to accept all well-pleaded facts as true and draw all reasonable
inferences in favor of the non-moving party. Tobey v. Chibucos, 890 F.3d 634, 646 (7th Cir.
2018)
ANALYSIS
A.
Rescission
The Defendants argue that all four of Plaintiff’s claims fail because the Plaintiff
consented to rescission of the Insurance Certificate. In support of their contention, the
Defendants point to the Plaintiff cashing a check containing the language: “Refund for premiums
paid under contract A7532637. Coverage is hereby rescinded.” Def. New York Life’s Answer, ¶
9, Exs. 2 & 3.
Under Indiana law, parties may rescind a contract through mutual agreement to discharge
and terminate their rights and obligations under the contract. Lindenborg v. M&L Builders &
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Brokers, Inc., 302 N.E.2d 816, 823 (Ind. Ct. App. 1973). The parties do not need to enter into an
express or written agreement to rescind a contract; parties’ actions demonstrating an intent to
rescind the contract is sufficient. See Horine v. Greencastle Prod. Credit Ass’n, 505 N.E.2d 802,
805 (Ind. Ct. App. 1987); Brown v. Young, 110 N.E. 562, 566 (Ind. Ct. App. 1915). “Rescission
is a fact. The trial court looks to the course of conduct of the parties to determine if rescission
occurred in fact.” Horine, 505 N.E.2d at 805.
At this stage, the Court declines to find that the Plaintiff has failed to plead facts
supporting her position regarding the enforceability of the Insurance Certificate. As stated above,
whether the parties mutually agreed to rescind is a question of fact evidenced by the parties’
actions demonstrating an intent to discharge their duties and obligations under the contract. Here,
there is a question as to whether the Plaintiff signing and cashing the check for $419 was a
manifestation by the Plaintiff to discharge the Defendants’ obligations under the Insurance
Certificate.
The Defendants cite to Indiana case law to contend that the Plaintiff signing the check
amounted to an accord and satisfaction discharging the Certificate of Insurance. Defs.’ Reply in
Supp. of Mot., at 4. For example, the Defendants rely on Mominee v. King, where the Court of
Appeals in Indiana found that a creditor cashing a check that was delivered to him in satisfaction
of a disputed debt amounted to an accord and satisfaction discharging the debt. 629 N.E.2d 1280,
1282 (Ind. Ct. App. 1994). What the Defendants fail to acknowledge is that the court in Mominee
stated that when “a check [is] tendered in satisfaction of a claim, . . . most importantly, the
creditor must positively understand the condition upon which the check is tendered.” Id. at 1283
(citation omitted) (emphasis added). The court in Monimee then proceeded to analyze whether
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the creditor “specifically intended to submit his check as payment in full” with respect to the
disputed claim. Id. (emphasis added).
At this stage in the litigation, the Court cannot undertake an analysis of whether Plaintiff
understood New York Life’s check for $419 as payment satisfying her claim of benefits under
the Certificate of Insurance, which provided $25,000 in life insurance proceeds. Relatedly, the
Court cannot determine from the pleadings whether the Plaintiff specifically intended to settle
her claim under the Certificate of Insurance by cashing the check for $419. Consequently, the
Defendants’ rescission argument fails at the pleadings stage.
B.
Promissory Estoppel
The Defendants argue that the Plaintiff’s promissory estoppel claim should likewise be
dismissed as the parties’ pleadings demonstrate the existence of a written agreement, the
Insurance Certificate. The Defendants cite to several cases finding that, under Indiana law, a
plaintiff cannot assert a promissory estoppel claim where a written contract controls the promise
upon which the claim is based. Defs.’ Br. in Supp. at 5.
The Court finds that the issue of promissory estoppel has not been fully briefed to allow
for a decision at this stage. The Defendants have not addressed how the Court should rule on the
promissory estoppel claim if the Insurance Certificate was indeed later decided to have been
rescinded by mutual consent. The interplay between whether the Insurance Certificate was
rescinded and the promissory estoppel claim would appear to be an important one. If the
Insurance Certificate was rescinded by mutual consent, then that perhaps may have some bearing
on whether there was or was not a valid, written contract controlling the parties’ relationship at
the time of Defendants’ alleged improper conduct. Therefore, it is premature at this stage of the
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litigation for the Court to decide whether the Plaintiff’s promissory estoppel claim survives,
especially in light of the Court’s decision on Defendants’ rescission argument.
C.
Negligent Infliction of Emotional Distress
The Defendants next argue that the Plaintiff has failed to state a claim for negligent
infliction of emotional distress, Count II. Under Indiana law, the plaintiff must allege a specific
legal duty that the defendant breached; “stand-alone actions for negligent infliction of emotional
distress are not cognizable in Indiana.” Spangler v. Bechtel, 958 N.E.2d 458, 466 (Ind. 2011).
The Indiana Supreme Court also instructed in Spangler that claims for negligent infliction of
emotional distress are permitted in only two situations: the “bystander rule” and the “modified
impact rule.” Id. at 466. The bystander rule is implicated when a plaintiff witnesses the death or
severe injury of a relative caused by the defendant’s negligent conduct. Id. The modified impact
rule requires a plaintiff to have suffered a direct physical impact from the plaintiff’s direct
involvement in a defendant’s negligent conduct. Id.
In this case, the Plaintiff’s Complaint is devoid of any facts suggesting that the
Defendants owed the Plaintiff any specific legal duty for the purposes of the negligent infliction
of emotional distress claim. Moreover, there are no facts to show that the Plaintiff witnessed the
death of a relative resulting from the Defendants’ negligent conduct that would implicate the
bystander rule nor facts showing any direct physical impact to the Plaintiff that would implicate
the modified impact rule. Hence, the Plaintiff cannot sustain a claim for negligent infliction of
emotional distress.
Furthermore, under Indiana law, when the damages sought are purely for economic or
property loss, then a plaintiff cannot recover pursuant to a negligent infliction of emotional
distress theory. See Ketchmark v. N. Ind. Pub. Serv. Co., 818 N.E.2d 522, 524–25 (Ind. Ct. App.
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2004) (“[W]e concluded that an economic loss and its resulting emotional trauma is not
‘sufficiently serious’ to warrant the imposition of liability. While we recognized that an
economic loss may cause emotional distress, the loss of a loved one cannot be compared to the
loss of an investment. Even if a person is directly involved in a property loss, we decline to
extend liability for negligent infliction of emotional distress to those cases involving purely
property loss and the concomitant emotional distress caused by that loss.”). The allegations in the
Plaintiff’s Complaint indicate that the Plaintiff is seeking damages resulting from an economic
loss—denial of benefits under an insurance policy. As these damages are purely economic,
Plaintiff cannot recover under a negligent infliction of emotional distress theory.
Therefore, for the reasons stated above, the Court finds that the Plaintiff has failed to
state a claim for negligent infliction of emotional distress.
D.
Intentional Infliction of Emotional Distress
The Defendants also move this Court to find that the Plaintiff has failed to state a claim
for intentional infliction of emotional distress, Count III. “The elements of the tort are that the
defendant: (1) engages in extreme and outrageous conduct (2) which intentionally or recklessly
(3) causes (4) severe emotional distress to another. The requirements to prove this tort are
rigorous.” Curry v. Whitaker, 943 N.E.2d 354, 361 (Ind. Ct. App. 2011) (internal quotations and
citations omitted).
The Plaintiff’s Complaint fails to allege facts sufficient to make a claim for intentional
infliction of emotional distress. There are no facts to suggest that the Defendants’ conduct rises
to the level of “extreme and outrageous conduct.” Looking at the facts pleaded in a light
favorable to the Plaintiff, the conduct that the Defendants are alleged to have engaged in is
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unilaterally cancelling an insurance agreement, and thereby denying the Plaintiff insurance
benefits she was due. Although such conduct, if true, is certainly distressing, the parties have
presented no case law to suggest that such conduct “goes beyond all possible bounds of decency
such that it would have been the type of atrocious and utterly intolerable conduct [where a
finding of] intentional infliction of emotional distress claim [would be] appropriate.” Yeatts v.
Zimmer Biomet Holdings, Inc., No. 3:16-CV-706-MGG, 2017 WL 1375117, at *6 (N.D. Ind.
April 17, 2017) (citing to Indiana cases). Hence, the Court finds that the Plaintiff’s intentional
infliction of emotional distress claim does not survive.
E.
Indiana Deceptive Practices act and Consumer Protection Laws
Defendants ask this Court to dismiss Count IV of the Complaint, “Violation of the
Indiana Deceptive Practices Act and Consumer Protection Laws,” for failure to state a claim. The
Plaintiff alleges that Defendants used the Plaintiff’s funds in a manner that violated “federal or
state law governing deceptive practices or the regulation of consumer protection” and violated
“the federal Dodd Frank Act.” Compl. Count IV, ¶¶ 6–7.
First, the Court finds that the Plaintiff has not pled facts sufficient to allege a claim under
the Indiana Deceptive Consumer Sales Act (“DCSA”). The DCSA provides recourse to
consumers for practices deemed deceptive consumer transactions. McKinney v. State, 693 N.E.2d
65, 67 (Ind. 1998) (citing Ind. Code §§ 24-5-0.5-1 to -10). The DCSA, however, defines a
“consumer transaction” as a “sale, lease, assignment, award by chance, or other disposition of an
item of personal property, real property, or an intangible, except securities and policies or
contracts of insurance issued by corporations authorized to transact an insurance business under
the laws of the state of Indiana . . . .” Ind. Code § 24-5-0.5-2(a)(1) (emphasis added). The facts
alleged in the Complaint relate exclusively to the Defendants’ conduct under the Certificate of
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Insurance, an insurance policy. Consequently, as “policies or contracts of insurance” are
explicitly excluded from the DCSA, the Plaintiff cannot hold the Defendants liable under the
DCSA.
Second, the Plaintiff’s one-sentence allegation of Defendants’ Dodd-Frank Wall Street
Reform and Consumer Protection Act violation is insufficient to state a claim upon which relief
can be granted. The Court finds Judge Simon’s decision in Sims v. New Penn Fin. LLC, No.
3:15-CV-263, 2016 WL 6610835 (N.D. Ind. Nov. 8, 2016) instructive. In Sims, the plaintiffs
brought a claim under the Dodd-Frank Act against a mortgage servicer after their home was
foreclosed upon. Id. at 1. The Plaintiffs alleged that the mortgage servicer violated Dodd-Frank
“by failing to have all of its employees that assisted the [the plaintiffs] in applying for the
assumption to be qualified mortgage originators and failed to include the unique qualifiers on its
documents,” thereby violating the duty of care the mortgage servicer owed the plaintiffs. Id. at 6.
In dismissing the claim, Judge Simon stated:
This claim is not viable. “[T]he fact that a federal statute has been violated
and some person harmed does not automatically give rise to a private cause
of action in favor of that person.” Cannon v. Univ. of Chicago, 441 U.S.
677, 699 (1979). While there is no doubt that Dodd-Frank creates a private
cause of action for whistleblowers, courts have been reluctant to find that
Dodd-Frank created any other private cause of action. See Regnante v. Sec.
& Exch. Officials, 134 F. Supp. 3d 749, 760–61 (S.D.N.Y. 2015) (collecting
cases and discussing courts’ reluctance to read a private cause of action into
Dodd-Frank). And the complaint fails to identify any language in DoddFrank that suggests a different course of action here.
Id.
In this case, the Plaintiff alleges that the Defendants violated the Dodd-Frank Act when
they violated a “legal responsibility” owed to the Plaintiff by virtue of the Defendants “us[ing]
Plaintiff’s funds.” Compl. at ¶ 7. Like the plaintiffs in Sims, the Plaintiff here alleges no facts to
suggest she is a protected whistleblower under Dodd-Frank. Consequently, the Plaintiff’s Dodd9
Frank claim does not survive as Dodd-Frank does not provide for a private cause of action for
the conduct the Plaintiff alleges in her Complaint.
CONCLUSION
Accordingly, the Court GRANTS IN PART and DENIES IN PART the Defendants’
Motion for Judgment on the Pleadings [ECF No. 14]. Counts II, III, and IV are DISMISSED.
SO ORDERED on September 27, 2019.
s/ Theresa L. Springmann
CHIEF JUDGE THERESA L. SPRINGMANN
UNITED STATES DISTRICT COURT
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