Stein v. American General Life Insurance Company

Filing 82

ORDER denying 75 Motion and Cross-Motion for Summary Judgment - For the reasons set forth in the ATTACHED WRITTEN MEMORANDUM AND ORDER, both plaintiff's and defendant's motions for summary judgment are denied. This matter is referred to the magistrate judge for such further pretrial proceedings, including settlement discussions, as may be necessary. SO ORDERED by Judge Dora Lizette Irizarry on 7/22/2014. (Irizarry, Dora)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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ALLEN STEIN, as Trustee of the Rachel Meisels
:
Irrevocable Trust 2006B,
:
:
Plaintiff,
:
:
-against:
:
AMERICAN GENERAL LIFE INSURANCE
:
COMPANY,
:
:
Defendant.
:
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DORA L. IRIZARRY, United States District Judge:

MEMORANDUM AND ORDER
11-CV-6009 (DLI)(JO)

Allen Stein (“Plaintiff” or “Stein”), Trustee of the Rachel Meisels Irrevocable Trust
2006B (the “Trust”), brought this action against American General Life Insurance Company
(“Defendant” or “American General”), seeking a declaration that an insurance policy issued by
the Defendant insuring the life of Rachel Meisels did not lapse due to nonpayment of premiums.
Both parties move for summary judgment pursuant to Rule 56 of the Federal Rules of Civil
Procedure. For the reasons set forth below, both motions are denied.
BACKGROUND
On April 17, 2006, American General issued Flexible Premium Adjustable Life
Insurance Policy No. U10032498L (the “Policy”) to the Trust, insuring the life of Rachel Meisels
in the amount of $2,500,000.00. (Def.’s 56.1 Stmnt ¶ 1, Doc. Entry No. 75-6; Pl.’s 56.1 Resp. ¶
1, Doc. Entry No. 76-4.) Under the Policy, the Trust “had some flexibility in choosing the
amount and frequency of premium payments.” (Id.) However, the Policy required that premium
payments be sufficient to cover monthly deductions. (Def.’s 56.1 Stmnt ¶¶ 2-3; Pl.’s 56.1 Resp.
¶¶ 2-3.)

According to Defendant, the Policy’s balance was insufficient to cover the monthly
deduction on May 18, 2009, and, as a result, American General’s computer system automatically
generated a “Grace Period Notice.” (Def.’s 56.1 Stmnt ¶¶ 9-10.) The Grace Period Notice
stated,
Even though you may have been making regular premium payments on your
policy, the current values are insufficient to cover the monthly charges due May
18, 2009. This policy is in its grace period and will terminate without value
unless a payment of $22,361.91 is received prior to July 20, 2009.
The minimum quarterly premium required is [$]17,175.00. If your billing amount
is less than this amount, future billings will be adjusted upon receipt of your grace
period payment. If your policy has a loan, please pay your loan interest due.
Your policy may have gone into grace due to unpaid loan interest.
We appreciate the confidence you have shown in us, and we thank you for your
business. If you have any questions or need additional assistance, please contact
your servicing agent:
Joseph Lowinger
125 Taylor St Apt 13c
Brooklyn Ny 11211-6813
[phone]
or our Customer Service Center at 1-800/231-3655 or 1-88/436-5256 for Hearing
Impaired/TDD.
(Sutton Decl., Ex. 5 (“Grace Period Notice”), Doc. Entry No. 75-4.) The Grace Period Notice
also contains a header with American General’s full name and the address of its Houston, Texas
headquarters, as well as the logos for “American General” and “AIG.” (Id.) At the bottom of
the Grace Period Notice is a payment stub, again providing Defendant’s Houston address and the
amount owed. (Id.) Defendant contends that the Grace Period Notice was “printed, processed,
stamped, and mailed [to the Trust’s address] within twenty-four hours after it was created.” (Id.
¶¶ 10-11.) Plaintiff asserts that he never received the Grace Period Notice and disputes that it
was mailed. (Pl.’s 56.1 Resp. ¶¶ 13, 34.)

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On June 3, 2009, American General mailed Plaintiff a Quarterly Notice of Payment Due
(the “Quarterly Notice”), indicating that a premium payment of $15,000 was due by July 17,
2009. (Def.’s 56.1 Stmnt ¶¶ 12-13; Pl.’s 56.1 Resp. ¶¶ 12-13.) On July 16, 2009, American
General received a $15,000 check from the Trust dated July 1, 2009 and made out, in error, to
“R. Meisels” (the “check”), along with a payment stub from the June 3, 2009 Quarterly Notice.
(Def.’s 56.1 Stmnt ¶¶ 12-13; Pl.’s 56.1 Resp. ¶¶ 12-13.) The check was mailed to Defendant’s
headquarters in Houston, Texas, and routed to American General’s Treasury Division (the
“Treasury Division”). (Def.’s 56.1 Stmnt ¶ 12; Pl.’s 56.1 Resp. ¶ 12.)
Since the check was made out to R. Meisels rather than to American General, it could not
be deposited or applied to the Policy. (Def.’s 56.1 Stmnt ¶ 14; Pl.’s 56.1 Resp. ¶ 14.) Therefore,
the Treasury Division returned the check to the Trust along with a form letter dated July 20, 2009
(the Treasury Division Letter”) indicating that the check was made payable to the incorrect party.
(Def.’s 56.1 Stmnt ¶¶ 14-15; Pl.’s 56.1 Resp. ¶¶ 14-15.) The Treasury Division Letter also
stated: “Please correct and return to us. We will process promptly upon receipt.” (Def.’s 56.1
Stmnt ¶ 16; Pl.’s 56.1 Resp. ¶ 16.)
On July 20, 2009, American General’s computer system generated a “Lapse Notice,”
indicating that the Policy had lapsed because its balance was insufficient on May 18, 2009 and
the Trust failed to make sufficient payments to cover the monthly deduction within the grace
period. (Def.’s 56.1 Stmnt ¶¶ 17-18; Pl.’s 56.1 Resp. ¶¶ 17-18.) The Lapse Notice advised the
Trust of its right to seek Policy reinstatement and invited the Trust to request the necessary
reinstatement requirements. (Def.’s 56.1 Stmnt ¶ 17; Pl.’s 56.1 Resp. ¶ 17.) Plaintiff received
the Lapse Notice. (Def.’s 56.1 Stmnt ¶¶ 17-18; Pl.’s 56.1 Resp. ¶¶ 17-18.)

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On July 30, 2009, American General received a $15,000 check from the Trust dated July
20, 2009 and made out to “AIG” (the “replacement check”). (Def.’s 56.1 Stmnt ¶ 19; Pl.’s 56.1
Resp. ¶ 19.) The replacement check was “placed into a suspense account pending receipt of
requirements for reinstatement.” (Def.’s 56.1 Stmnt ¶ 20; Pl.’s 56.1 Resp. ¶ 20.) On August 4,
2009, American General sent the Trust a letter explaining that it could not apply the $15,000
replacement check to the Policy because it was received after the end of the grace period.
(Def.’s 56.1 Stmnt ¶ 21; Pl.’s 56.1 Resp. ¶ 21.) The August 4, 2009 letter invited the Trust to
apply for Policy reinstatement, enclosed reinstatement application materials, advised that an
additional remittance of $19,050.00 was required for the Policy to be reinstated, and advised that
the Policy would be terminated if the Trust did not seek reinstatement. (Def.’s 56.1 Stmnt ¶ 21;
Pl.’s 56.1 Resp. ¶ 21.) The Trust did not apply for reinstatement or submit the additional
remittance. (Def.’s 56.1 Stmnt ¶ 22; Pl.’s 56.1 Resp. ¶ 22.) On September 18, 2009, American
General issued a refund check to the Plaintiff in the amount of $15,000 and advised that the
Policy had lapsed. (Def.’s 56.1 Stmnt ¶ 22; Pl.’s 56.1 Resp. ¶ 22.)
On July 20, 2011, Plaintiff filed suit in New York State Supreme Court, Kings County,
seeking a declaration that the Policy was in force. On December 9, 2011, Defendant removed
this action to federal court. On October 15, 2013, both parties moved for summary judgment.
DISCUSSION
I.

Summary Judgment Standard
Summary judgment is appropriate when “the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). “In ruling on a summary judgment motion, the district court must resolve all
ambiguities, and credit all factual inferences that could rationally be drawn, in favor of the party
opposing summary judgment and determine whether there is a genuine dispute as to a material
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fact, raising an issue for trial.” McCarthy v. Dun & Bradstreet Corp., 482 F. 3d 184, 202 (2d
Cir. 2007) (internal quotations omitted).
A fact is “material” within the meaning of Rule 56 when its resolution “might affect the
outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). An issue is “genuine” when “the evidence is such that a reasonable jury could return
a verdict for the nonmoving party.” Id. To determine whether an issue is genuine, “[t]he
inferences to be drawn from the underlying affidavits, exhibits, interrogatory answers, and
depositions must be viewed in the light most favorable to the party opposing the motion.”
Cronin v. Aetna Life Ins. Co., 46 F. 3d 196, 202 (2d Cir. 1995) (citing United States v. Diebold,
Inc., 369 U.S. 654, 655 (1962) (per curiam) and Ramseur v. Chase Manhattan Bank, 865 F. 2d
460, 465 (2d Cir. 1989)). “[T]he evidence of the non-movant is to be believed, and all justifiable
inferences are to be drawn in his favor.” Anderson, 477 U.S. at 255.
However, “[w]hen opposing parties tell two different stories, one of which is blatantly
contradicted by the record, so that no reasonable jury could believe it, a court should not adopt
that version of the facts for purposes of ruling on a motion for summary judgment.” Scott v.
Harris, 550 U.S. 372, 380 (2007).
The moving party bears the burden of “informing the district court of the basis for its
motion, and identifying those portions of [the record] . . . which it believes demonstrates the
absence of a genuine issue of fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal
quotations omitted). Once the moving party has met its burden, “the nonmoving party must
come forward with ‘specific facts showing that there is a genuine issue for trial.’” Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (emphasis omitted). The
nonmoving party must offer “concrete evidence from which a reasonable juror could return a

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verdict in [its] favor.” Anderson, 477 U.S. at 256. The nonmoving party may not “rely simply
on conclusory statements or on contentions that the affidavits supporting the motion are not
credible, or upon the mere allegations or denials of the nonmoving party’s pleading.” Ying Jing
Gan v. City of New York, 996 F. 2d 522, 532-33 (2d Cir. 1993) (citations and internal quotations
omitted). “Summary judgment is appropriate only ‘[w]here the record taken as a whole could
not lead a rational trier of fact to find for the non-moving party.’” Donnelly v. Greenburgh Cent.
Sch. Dist. No. 7, 691 F. 3d 134, 141 (2d Cir. 2012) (quoting Matsushita, 475 U.S. at 587).
II.

Analysis
Plaintiff moves for summary judgment, seeking a declaratory judgment that the Policy

did not lapse, on the grounds that: 1) Defendant never mailed the Grace Period Notice; 2) the
Grace Period Notice did not comply with New York State law and is void; and 3) the Treasury
Division Letter was an offer to accept a replacement check. (Plaintiff’s Memorandum of Law in
Support of his Motion for Summary Judgment and in Opposition to Defendant’s Motion for
Summary Judgment (“Pl.’s Mem.”), Doc. Entry No. 76-2.) Defendant cross-moves for summary
judgment dismissing Plaintiff’s claims against it, on the grounds that: 1) the Grace Period Notice
was mailed in accordance with Defendant’s standard policies and procedures; 2) the Grace
Period Notice complied with all applicable notice requirements; and 3) the Treasury Division
Letter did not waive Defendant’s right to lapse the Policy. (Brief in Support of Defendant
American General Life Insurance Company’s Motion for Summary Judgment (“Def.’s Mem.”),
Doc. Entry No. 75-1.)

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A.

Mailing

The New York Insurance Law obligates insurance companies to notify policyholders who
fail to pay sufficient life insurance premiums before terminating their policies. New York
Insurance Law § 3211 (“Section 3211”) provides, in relevant part,
No policy of life insurance . . . delivered or issued for delivery in this state . . .
shall terminate or lapse by reason of default in payment of any premium . . .
unless, . . . a notice shall have been duly mailed . . . for life insurance policies in
which the amount and frequency of premiums may vary, no earlier than and
within thirty days after the day when the insurer determines that the net cash
surrender value under the policy is insufficient to pay the total charges that are
necessary to keep the policy in force.
N.Y. Ins. Law § 3211(a)(1).
“Proof that a letter properly directed was placed in a post office creates a presumption
that it reached its destination in usual time and was actually received by the person to whom it
was addressed.” Universal Serv. Admin. Co. v. PT-1 Commc’ns, Inc., 437 B.R. 766, 774
(E.D.N.Y. 2010) (quoting Hagner v. United States, 285 U.S. 427, 430 (1932)); see also N.Y. Ins.
Law § 3211(c) (providing that “[t]he statement of any officer, employee or agent of such insurer,
or of any one authorized to mail such notice, subscribed and affirmed by him as true under the
penalties of perjury, stating facts which show that the notice required by this section has been
duly addressed and mailed shall be presumptive evidence that such notice has been duly given.”)
Under New York law, personal knowledge of mailing procedures is required only to
establish regular office procedure, not the particular mailing. Leon v. Murphy, 988 F.2d 303, 309
(2d Cir. 1993) (quoting Meckel v. Cont’l Res. Co., 758 F.2d 811, 817 (2d Cir. 1985)). Where
“there is proof of the office procedure followed in a regular course of business, and these
procedures establish that the required notice has been properly addressed and mailed, a
presumption arises that notice was received. The mere denial of receipt does not rebut that

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presumption. There must be – in addition to denial of receipt – some proof that the regular office
practice was not followed or was carelessly executed so the presumption that notice was mailed
becomes unreasonable.” Id.; see also Akey v. Clinton Cnty., N.Y., 375 F.3d 231, 235 (2d Cir.
2004).
Defendant contends that the Grace Period Notice “was printed, processed, stamped, and
mailed in accordance with American General’s standard policies and procedures for policy grace
notices.” (Def.’s Mem. at 2.) Defendant has provided extensive evidence regarding its office
procedures, including, inter alia: 1) the declaration of James Daniel (“Daniel”), Director of
Information Technology; 2) the declaration of Frank Vallis (“Vallis”), Director of Records
Management; 3) and the deposition testimony of Jeremy Ciszewski (“Ciszewski”), General
Manager for Pitney Bowes, Defendant’s mail processor.
Specifically, Daniel testified that American General’s computer system automatically
generates billing notices, grace period notices, and lapse notices and automatically sends the
notices to be printed. (Daniel Decl. ¶ 3, Doc. Entry No. 75-3.) When notices are sent for
printing, they are also sent to Defendant’s “COLD storage system,” where a copy of each notice
is maintained. (Id. ¶ 4.) If there is a copy of a notice in COLD, then it was generated and
directed to the print facility for printing. (Id.) The Grace Period Notice at issue here is found in
COLD. (Id.) On the same day that a notice is printed, it is directed to Defendant’s mailing
facility. (Id. ¶ 5.) Vallis, who is responsible for Defendant’s mailing facility, testified that the
mailing facility manually sorts and collates the printed documents received from Defendant’s
printing facility. (Vallis Decl. ¶ 4, Doc. Entry No. 75-5.) Once the documents are sorted, they
are placed into envelopes by an “inserting machine,” stamped, sealed, and placed in trays to be
picked up by Defendant’s “presort vendor,” Pitney Bowes. (Id. ¶ 6.) Approximately one in 150

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pieces of mail is quality checked each day. (Id. ¶ 7.) Pitney Bowes picks up mail from
Defendant’s mail facility twice per day. (Id. ¶ 8.) Ciszewski testified that Pitney Bowes
provided “mail and presort” services for AIG companies at its Stafford, Texas facility (the
“Stafford facility”). (Ciszewski Dep. at 12, Doc. Entry No. 75-2.) Ciszewski described Pitney
Bowes’ standard procedures for sorting mail by zip code, according to United States Postal
Service (“USPS”) regulations, and packaging the mail for transportation to the USPS. (Id. at 2123.)
Plaintiff argues that Defendant’s evidence is insufficient to create a presumption that the
Grace Period Notice was mailed and received because Ciszewski did not have personal
knowledge of the mailing as he did not work at the Stafford facility in May 2009. (Pl.’s Mem. at
18 (citing Ciszewski Dep. at 10)). The Court disagrees. Ciszewski testified that he did not begin
working at Pitney Bowe’s Stafford facility until November 2009. (Ciszewski Dep. at 10, 20.)
However, Ciszewski’s testimony clearly demonstrates that he had personal knowledge of Pitney
Bowes’ policies and practices in place in May 2009. Ciszewski testified that he worked at Pitney
Bowes, in both mail sorting and human resources capacities, since 2002. (Ciszewski Dep. at 911, 17-19.) During his time at Pitney Bowes, he worked in at least three mailing facilities,
including the Stafford facility, and he testified that “all of Pitney Bowes’ facilities do essentially
the same thing.” (Id. at 21, 23, 30.) Moreover, Ciszewki testified that the relevant procedures
remained the same from May 2009 until he began working in the Stafford facility in November
2009. (Id. at 24, 26-27, 102-105.) The Court is satisfied that Ciszewski’s testimony was based
on his personal knowledge of mailing procedures and is sufficient to establish regular office
procedure. See Leon, 988 F.2d at 309.

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In sum, Ciszewski’s testimony and the record as a whole shows that Defendant’s policies
were “geared so as to ensure the likelihood that [grace notices are] always properly addressed
and mailed.” Guckenberger v. Prudential Ins. Co. of Am., 472 F. App’x 69, 70 (2d Cir. 2012)
(summary order). Thus, the evidence is sufficient to create a presumption that the Grace Period
Notice was mailed and received. Plaintiff merely denies that he received the Grace Period
Notice and offers no evidence to rebut this presumption.
Accordingly, the Court finds that the Grace Period Notice was mailed to the Plaintiff, and
now considers whether the Grace Period Notice complied with New York State law.
B.

The Grace Period Notice

The notice required by Section 3211 must state: 1) the amount of the payment owed; 2)
the date when due; 3) the place where and the person to whom it is payable; and 4) that unless
such payment is made within the grace period, the policy shall terminate or lapse except as to the
right to any cash surrender value or non-forfeiture benefit. N.Y. Ins. Law § 3211(b)(2). While
“forfeiture of life insurance coverage for late payment of premiums is not favored in the law,”
Speziale v. Nat’l Life Ins. Co., 159 F. App’x 253, 255 (2d Cir. 2005) (citing New York Life Ins.
Co. v. Eggleston, 96 U.S. 572, 577 (1877)) (internal quotations omitted), the New York State
Court of Appeals “does not require strict compliance with Insurance Law § 3211(b)(2).”
Zeligfeld v. Phoenix Life Ins. Co., 42 Misc. 3d 1225(A) (N.Y. Cnty Sup. Ct. 2014) (citing
McDougall v. Provident Sav. Life Assur. Soc., 135 N.Y. 551, 556 (1892)). “Rather, in cases
addressing the language of notices, courts have held that the notice need not follow the exact
wording of the statute as long as the information intended to be provided is conveyed.” Id. “A
statute of this kind should not be construed so as to make it a trap for either side.” Nederland
Life Ins. Co. v. Meinert, 199 U.S. 171, 181 (1905)

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Plaintiff argues that the Grace Period Notice failed to clearly and unequivocally inform
the Trust of the first three pieces of information required by Section 3211. (Pl.’s Mem. at 9-10.)
Defendant argues that the Grace Period Notice complied with all statutory requirements. (Def.’s
Mem. at 4-5.)
1. Amount Owed
Plaintiff claims that the Grace Period Notice failed to clearly identify the amount due,
since it includes two different amounts: $22,361.91 in the first paragraph and $17,175.00 in the
second paragraph. (Pl.’s Mem. at 10). Plaintiff claims that he was further confused by the June
3, 2009 Quarterly Notice, which requested that he pay $15,000. (Id.)
The Court finds that the Grace Period Notice clearly conveyed the amount due. The
Grace Period Notice states that the Policy would “terminate without value unless a payment of
$22,361.91 is received.” (Grace Period Notice.) The payment stub also directed the Plaintiff to
“Pay This Amount: $22,361.91.” (Id.) The additional figure of $17,175.00 is included as “[t]he
minimum quarterly premium required.” (Id.) Viewing the Grace Period Notice as a whole, a
reasonable person could not have been confused about the amount owed. Moreover, the Court
finds that the Quarterly Notice’s request for payment does not create an issue of fact. The
Quarterly Notice, mailed two weeks after the Grace Period Notice, requested a premium
payment as part of Plaintiff’s regular billing cycle. It did not state that $15,000 was sufficient to
avoid lapsing the Policy. Thus, Plaintiff could not reasonably have thought that an amount less
than $22,361.91 was required.
Accordingly, the Court finds that no reasonable trier of fact could find that the Grace
Period Notice failed to convey the amount owed.

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2. Date Due
Plaintiff also contends that the Grace Period Notice is void because it states an incorrect
payment due date. (Pl.’s Mem. at 13.) According to Plaintiff, the grace period ended at
midnight on July 20, 2009. (Id. at 13-15.) Thus, Plaintiff argues, the Grace Period Notice is
void because it states that the payment must be received “prior to July 20, 2009.” (Id. at 15.)
Plaintiff also purports to have been confused by the separate due date included on the June 3,
2009 Quarterly Notice. (Id. at 17.) Defendant argues that the due date listed in the Grace Period
Notice is correct, and that any error was immaterial. (Def.’s Mem. at 8-9.)
Assuming, arguendo, that the Grace Period Notice “diminished the time frame within
which [the] premium [could] be paid by one day” (Pl.’s Mem. at 2), the Court finds that the error
was immaterial. A minor mistake does not necessarily void a grace notice. Nederland, 199 U.S.
at 179 (finding that if a “notice follows the statute . . . it is good, even though it contains [an
immaterial] mistake . . . .”). In this case, it is “scarcely possible to imagine any injury resulting
from” Defendant’s alleged mistake in requiring payment “prior to July 20, 2009” rather than by
midnight on that date. See id. at 180. Plaintiff had ample notice of the deadline, approximately
two months. The “natural result” of the alleged one-day reduction “would be greater care to pay,
or some application to extend the time of payment on or before the day when the payment
became due.” Id. (“It cannot reasonably be assumed that the assured might be betrayed into not
doing at all what the notice tells him must be done on or before a certain day in order to save a
forfeiture, because the notice omits to tell him of the extended time before the forfeiture can
really be enforced.”) Moreover, the Trust would not have been prejudiced by any confusion
resulting from the July 17, 2009 due date listed in the Quarterly Notice, which was only one
business day prior to the end of the grace period on July 20, 2009.

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Accordingly, the Court finds that the Grace Period Notice adequately conveyed the date
payment was due.
3. To Whom the Payment Should be Made
Plaintiff claims that the Grace Period Notice failed to clearly identify the entity and
address to whom payment was to be submitted. (Pl.’s Mem. at 10.) Plaintiff contends that the
Grace Period Notice contained the names of four separate entities or individuals: “American
General Life Insurance Company,” “AIG,” “American General,” and Joseph Lowinger. (Id. at
10-11.) Plaintiff also contends that the Grace Period Notice was confusing because it contains
two addresses: Defendant’s Houston headquarters and the Joseph Lowinger’s Brooklyn address.
(Id. at 12.) Further, the Grace Period Notice did not expressly specify the entity to which the
check should be made out or the address to which it should be mailed. (Id. at 12.)
The Court finds that there is a genuine issue of material fact as to whether the Grace
Period Notice adequately identified the place where and the person to whom a remittance was
payable. While Defendant asserts that it would have accepted a check made out to any of the
entities listed on the Grace Period Notice, it has not cited any admissible evidence in support of
this assertion. (Pl.’s Mem. at 7.) Defendant also contends that the names of these entities were
on grace notices sent to the Trust prior to May 2009, and that the Trust “was able successfully to
determine to whom and where to send the required premium.” (Id.) However, Defendant has
not cited to any evidence showing that Plaintiff made payments in response to early grace
notices, and Plaintiff does not admit that he received any prior grace notices. (Def.’s Mem. at 7;
Def.’s 56.1 Stmnt ¶ 8; Pl.’s 56.1 Resp. ¶ 8.) Moreover, while Defendant’s name and address is
provided on the top of the Grace Period Notice and within the payment stub, the Grace Period
Notice does not include a statement explicitly indicating to whom a check should be made out.

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In sum, the Court finds that a genuine issue of material fact exists as to whether the Grace
Period Notice properly conveys the place where and the person or entity to whom payment was
due.
C.

The Treasury Division Letter

Plaintiff contends that American General cannot lapse the Policy because it offered to
accept a replacement check from the Trust. (Pl.’s Mem. at 20.) Defendant argues that Plaintiff
did not rely to his detriment on the Treasury Division Letter and that any reliance would have
been unreasonable. (Def.’s Mem. at 8.)
The Court finds that the Treasury Division Letter was not an offer to keep the Policy in
force if the Trust submitted a replacement check. The Treasury Division Letter made no mention
of a potential lapse. Instead, it merely advised Plaintiff that the June 1, 2009 check was made
out to the incorrect party, and indicated that a replacement check would be “process[ed]
promptly upon receipt.” By contrast, in Berkshire Settlements, Inc. v. Ashkenazi, a case relied
upon by the Plaintiff, the insurance company sent the insured two letters “ask[ing] that a
replacement check be sent within ten days, and warn[ing] that failure to do so could result in the
policy lapsing for non payment and termination of contract.”

2011 WL 5974633, at *2

(E.D.N.Y. Nov. 29, 2011). The letters at issue in Berkshire Settlements clearly indicated that
providing a replacement check by a certain date would avoid a lapse in the policy. The Treasury
Division Letter here is easily distinguishable, because it merely promises to “process” a new
check and makes no promise about whether a new check would prevent a lapse. Plaintiff could
not reasonably have interpreted such a promise as an offer to reduce the payment amount
necessary to avoid a lapse or otherwise alter the terms of the Policy.

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Moreover, even if the Treasury Division Letter constituted an offer to extend Plaintiff’s
time to submit a payment, the replacement check was insufficient to prevent a lapse. Plaintiff
was required to pay $22,361.91, but his replacement check was for only $15,000.00. Therefore,
the new check could not have prevented the Policy from lapsing. See Berkshire Settlements,
2011 WL 5974633, at *6 (finding that the insurance company’s offer to accept a replacement
check did not, ipso facto, prevent the policy from lapsing; payment still had to be made in
accordance with the offer). Accordingly, the Treasury Division Letter did not prevent the Policy
from lapsing.
In summary, the Court finds that there is no material issue of fact in genuine dispute as to
whether Defendant mailed the Grace Period Notice.

The Grace Period Notice adequately

conveyed the payment amount required to prevent the Policy from lapsing and the date the
payment was due. Moreover, the Treasury Division Letter did not prevent the Policy from
lapsing. However, the Court finds that there is a genuine issue of material fact as to whether the
Grace Period Notice properly conveys the place where and the person to whom payment was
due. Accordingly, both parties’ motions for summary judgment are denied.
CONCLUSION
For the foregoing reasons, both motions for summary judgment are denied.
SO ORDERED.
Dated: Brooklyn, New York
July 22, 2014
/s/
DORA L. IRIZARRY
United States District Judge

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