Wilson v. Northwestern Mutual Insurance
2010 U.S. App. LEXIS 22919
2d Cir.2010Background
- Northwestern issued a Whole Life Policy ($150,000) and a Term Life Policy ($350,000) to Kenneth Wilson on May 29, 2004, with premiums paid via a monthly ISA; both policies included a 31-day grace period and reinstatement options.
- Kenneth intermittently failed to fund the ISA due to insufficient funds, causing the ISA to close after several attempts between Aug 2004 and Apr 2005; reinstatement required payment of missed premiums with interest.
- On April 27–29, 2005, Kenneth asked to reopen the ISA for the Term Life Policy only and to cover premiums through Dec 28, 2005; the Whole Life Policy terminated on Feb 28, 2005 for nonpayment.
- Northwestern paid premiums for May–Dec 2005 after Kenneth requested a refund of his last premium and to let the policy lapse, but later issued a second refund for February–April 2005 that Wilson did not receive.
- Kenneth died on June 6, 2005; Wilson claimed benefits under both policies, which Northwestern denied on March 31, 2009, leading to this diversity-based federal suit.
- The district court granted Northwestern summary judgment on the Whole Life Policy and dismissed Wilson’s claims on the Term Life Policy; Wilson appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether oral modifications to the Term Life Policy were required to be in writing | Wilson argues there was an oral modification including the $35 charge and cancellation. | Northwestern contends there were no modifications to the policy terms; actions were consistent with existing terms. | No modification; writing not required. |
| Whether Northwestern’s retroactive refund/termination of the Term Life Policy was proper | Wilson contends Kenneth’s May 2005 instruction to refund and lapse the policy should retroactively terminate the policy. | Northwestern treats the May 2005 refund as limited to post-May payments; the policy remained effective to February 2005. | Genuine factual issues exist; remand needed for the Term Life Policy. |
| Whether Northwestern was required to give written notice for termination of the Whole Life Policy | Wilson asserts lack of written notice violates Insurance Law § 3211(a)(1). | Because Kenneth paid monthly, § 3211(a)(1) does not apply; § 3211(f) exempts such policies. | No notice required; Whole Life Policy termination proper. |
| Whether Wilson can state a viable NYGBL § 349 deceptive practices claim | Wilson argues Northwestern’s handling constitutes deceptive business practices. | Private contract disputes are generally not within § 349; no public-wide deception shown here. | Not viable; no consumer-oriented deception proven. |
Key Cases Cited
- Jaffe v. Paramount Communications, Inc., 222 A.D.2d 17 (1996) (no written termination clause waiver; § 15-301 context)
- Bank of N.Y. v. Kranis, 189 A.D.2d 741 (1993) (no-oral-modification clause; cannot be orally terminated)
- McGarr v. Guardian Life Ins. Co. of Am., 19 A.D.3d 254 (2005) (monthly premium payments govern notice requirements)
- Reczek v. Nat'l Benefit Life Ins. Co., 20 A.D.3d 887 (2005) (monthly premium payments; § 3211 inapplicable)
- Elston v. Allstate Life Ins. Co. of N.Y., 274 A.D.2d 938 (2000) (monthly premium payment option triggers notice rule)
- Greenspan v. Allstate Ins. Co., 937 F. Supp. 288 (S.D.N.Y. 1996) (consumer-oriented inquiry not established in private contract disputes)