United States District Court, W.D. Louisiana, Monroe Division
JESSE CLARENCE BROWN, JR. ESTATE, ET AL.
NEW YORK LIFE INSURANCE CO., ET AL.
L. HAYES JUDGE
A. DOUGHTY UNITED STATES DISTRICT JUDGE
before the Court are Plaintiffs' Motion for Partial
Summary Judgment [Doc. No. 79] and Defendant New York Life
Insurance Company's (“NY Life”) Motion for
Summary Judgment [Doc. No. 83]. Plaintiffs move the Court for
partial summary judgment, contending that it is undisputed
that the decedent, Jesse Clarence Brown, Sr., was the owner
of three NY Life policies and that NY Life has acted in bad
faith by failing to timely pay the amounts due to them under
the policies. Therefore, Plaintiffs move the Court for
attorney's fees and bad faith penalties.
moves the Court for dismissal of Plaintiffs' case in its
entirety, contending that they failed to raise a genuine
issue of material fact that NY Life had an obligation to
Plaintiffs, that all their claims are time-barred, and that
their fraud claims as to two of the policies are further
barred by res judicata.
following reasons, Plaintiffs' Motion for Partial Summary
Judgment is DENIED, and NY Life's Motion for Summary
Judgment is GRANTED.
Clarence Brown, Sr. (“Mr. Brown”) purchased
multiple life insurance policies from NY Life. First, in
1978, Mr. Brown purchased a whole life NY Life Insurance
Policy No. 36 661185. Mr. Brown was to pay recurring premium
payments for the remainder of his life, but NY Life's
records do not indicate that he did so. Neither NY Life nor
Plaintiffs have a copy of this policy.
Brown then purchased NY Life Policy No. 62 05 1294, dated
November 2, 1984. Mr. Brown was to pay continuing premium
payments until his death, but did not do so. As a result of
the nonpayment of premium, Policy No. 62 05 1294 lapsed.
According to NY Life records, this policy expired February 2,
Brown then purchased Policy No. 44 807 414 (“Policy
414”), dated February 18, 1993. Mr. Brown used the cash
value of Policy No. 62 05 1294 to fund the purchase of Policy
414. Together with policy Nos. 36 661185 and 62 05 1294
(“the Policies”), Mr. Brown was to pay recurring
premium payments in connection with Policy 414 for the rest
of his life.
payments were made from 1993 through 2001.
In July 1995, a group of life insurance policyholders filed a
class action lawsuit against [NY Life] in New York state
court [in Willson v. New York Life Insurance Company, et
al., Index No. 94/127804 (Sup. Ct. Ny. Co.)]. The
allegations of the suit included claims that [NY Life] misled
policyholders regarding the nature of their policy benefits.
The class of plaintiffs was nationwide and included persons
who had purchased certain [NY Life] life insurance policies
between January 1, 1982 and December 31, 1994. In August
1995, the parties filed a proposed settlement of the dispute
with class-members being afforded until October 31, 1995 to
decide whether to participate in the settlement or to
opt-out. The notice of the proposed settlement was mailed to
policyholders nationwide, including Louisiana policyholders.
McConathy v. Ungar, 33, 368 (La.App. 2 Cir.
8/23/00), 4');">765 So.2d 1214, 1215, writ denied,
2000-2678 (La. 11/17/00), 4 So.2d 982');">774 So.2d 982; see also
[Doc. No. 83-4, Exh. B, Affidavit of Robert Rosh (“Rosh
Aff.”), ¶¶ 3-19]. There were “nearly
three million class members” that NY Life sent
court-approved notice of the class action and post-settlement
notice by first class mail. See Couvillon v. New
York Life Ins. Co., No. CV 6:10-1468, 2012 WL 13054649,
at *3 (W.D. La. Jan. 10, 2012). Additionally, notice of the
Willson class action and settlement was published in
numerous national and local newspapers, including The Wall
Street Journal, USA Today, The New York Times, The Times
Picayune and The Baton Rouge Advocate. Id. A
toll-free telephone number was also established for class
members, and this number was included in the notifications.
[Doc. No. 83-4, Rosh Aff., ¶ 18].
Brown's Policy 62 05 1294 and Policy 414 are included in
the Willson class period. Class notices were mailed
to Mr. Brown on September 26, 1995, and September 26, 1996,
for Policy No. 62 05 1294 and for Policy 414. The notices
sent to Mr. Brown were not returned as undeliverable or
undelivered. Mr. Brown did not opt-out of the
Willson class action. [Doc. No. 83-6, Exh. C,
Affidavit of Kevin Welton, ¶¶ 4-5].
Willson settlement was approved by the presiding
court and resulted in the release of all claims of class
members that were or could have been asserted in the lawsuit
and further enjoined all class members from prosecuting
claims in any forum against NY Life based on the released
27, 1997, Mr. Brown took out a cash loan in the amount of $5,
300 on the cash value of Policy 414, which NY Life paid to
Mr. Brown by check.
March 27, 1998, Mr. Brown took out a second cash loan in the
amount of $7, 164.00, which NY Life paid to Mr. Brown by
check. Between the period of May 27, 1997, and April 24,
2001, funds were loaned on the cash value of Policy 414
towards satisfaction of premium payment obligations. Mr.
Brown did not pay into Policy 414 additional funds (beyond
premium payments) sufficient to offset the interest accruing
on his various loans. As a result, the cash value of the
policy was offset by the loan interest.
last premium payment was received by NY Life on or about
April 24, 2001, and it was paid by paid-up additions.
414 provides that “[i]f a premium is not paid by the
end of the grace period, this policy will lapse. All
insurance will end at the time of the lapse, if the policy
has no cash value and no dividend values. If the policy has
cash value or dividend values, insurance can be continued
only as stated in Options 1 or 2 of the Options Upon Lapse
provision, but any insurance or benefits from riders or
dividends will end at the time of the lapse.” [Doc. No.
83-3, Bates No. MSJ0079, attached to Exh. A, Affidavit of
Laura Matyja (“Matyja Aff.”)]. Policy 414 lapsed
on June 19, 2001. On that date, NY Life transmitted a notice
to Mr. Brown and to his assignee, Tensas State Bank. The
When you purchased your New York life policy in 1993, you
enjoyed the benefit of knowing that you made a wise decision
for your future. Because we realize how important this life
insurance coverage is to you, we are ...