United States District Court, D. Massachusetts
OPINION AND ORDER
A. O'TOOLE, JR. UNITED STATES DISTRICT JUDGE.
magistrate judge to whom this matter was referred has filed a
report and recommendation (dkt. no. 197)
(“R&R”), recommending that the
plaintiffs' requests for summary judgment and sanctions
(dkt. nos. 171, 179, 181) be denied and that Prudential's
Motion for Summary Judgment (dkt. no. 175) be granted. The
plaintiffs filed timely objections to the recommendation, as
well as a response to Prudential's reply.
reviewing the R&R, the parties' submissions, and the
record, I OVERRULE the plaintiffs' objections and ADOPT
the R&R in its entirety. The Plaintiffs' objections
are meritless. I agree with the magistrate judge that the
policy lapsed in accordance with its terms and that
Prudential properly filed a Form 1099-R as a result.
also in agreement with the magistrate judge on the imposition
of sanctions: Prudential's request for sanctions is
GRANTED insofar as the plaintiffs are hereby enjoined from
filing any further pleadings against Prudential Insurance
Company of America or Prudential Insurance Agency, LLC,
relating to this insurance policy or related tax assessment
without prior leave of court, except for the purposes of
appealing this judgment.
the plaintiffs' requests for summary judgment and
sanctions (dkt. nos. 171, 179, 181) are DENIED.
Prudential's Motion for Summary Judgement (dkt. no. 175)
is GRANTED and its request for sanctions is GRANTED as
described above. Judgement shall enter for Prudential.
AND RECOMMENDATION ON PRUDENTIAL'S MOTION FOR SUMMARY
JUDGMENT AND PLAINTIFFS' MOTIONS FOR SUMMARY
Plaintiffs originally brought this pro se
action against Prudential Insurance Company of America and
Prudential Insurance Agency, LLC alleging those entities
wrongfully cancelled Paul Fraser's life insurance policy,
and fraudulently reported a resulting taxable gain to the
Internal Revenue Service (“IRS”), thereby
requiring Paul and Deborah Fraser to defend against a tax
deficiency notice issued by the IRS. This court previously
dismissed the action against Prudential Insurance Agency,
LLC. (Docket No. 59). Therefore, the sole remaining defendant
is Prudential Insurance Company of America, and that entity
will be referred to herein as “Prudential.”
the court's ruling on various dispositive motions, the
sole remaining count in this action is Count IV against
Prudential for the alleged improper cancellation of Paul
Fraser's insurance policy. (See Docket Nos. 53,
59). This matter is presently before the court on
Plaintiffs' “Objection to Electronic Order 169
[sic] and Renewed Motion for Summary Judgment”
(“Plaintiffs' Objection and Renewed Motion”)
(Docket No. 171), and Prudential's “Motion for
Summary Judgment.” (Docket No. 175).
Plaintiffs filed an opposition and supplemental opposition to
Prudential's motion, in which they also seek entry of
summary judgment in their favor and imposition of sanctions
against Prudential, as well as default judgments against
Prudential and Prudential Insurance Agency, LLC. (Docket Nos.
179, 181). The court has already ruled numerous times that
there is no basis for a default judgment against Prudential
Insurance Agency, LLC since it was dismissed from this case
on November 25, 2015, or against Prudential since it filed a
timely answer on December 9, 2015. (See,
e.g., Docket Nos. 31, 48, 61, 67-69, 74, 157).
Plaintiffs have proffered no reason for this court to revisit
those rulings. Additionally, at the motion hearing on July
11, 2018, Prudential requested that the court issue sanctions
and enjoin Plaintiffs from continuously filing such motions
against them in this court.
the reasons detailed herein, this court recommends to the
District Judge to whom this case is assigned that
Prudential's “Motion for Summary Judgment”
(Docket No. 175) be ALLOWED, and that Plaintiffs'
requests for summary judgment in their favor (Docket Nos.
171, 179, 181) be DENIED. Additionally, this court recommends
that Prudential's request for sanctions be GRANTED in
that the Plaintiffs be precluded from filing any further
pleadings against Prudential or Prudential Insurance Agency
LLC relating to the Policy (as defined herein) or related tax
assessment without prior leave of court, except in connection
with an appeal of the rulings on any of the motions for
summary judgment. Finally, this court recommends that the
Plaintiffs' request for sanctions be DENIED.
STATEMENT OF FACTS
of the Record
following facts are undisputed unless otherwise indicated.
The facts are derived from “The Prudential Insurance
Company's Statement of Facts” (Docket No. 176)
(“DF”) and the exhibits attached to the Affidavit
of Andrew Yonker (“Yonker Aff.”), which is
attached as Exhibit A to “Defendant The Prudential
Insurance Company's Motion for Summary Judgment”
(Docket No. 175) (“Def. Ex. ___”). Although
Plaintiffs aver that the statements made by Prudential are
“completely false” (see Docket No. 179),
they cite no contrary evidence. Plaintiffs did not submit a
counterstatement of facts nor did they dispute
Prudential's Statement of Facts. As a result,
Prudential's facts are deemed admitted pursuant to Local
court during oral argument on those motions, Mr. Fraser
submitted additional documents in support of his contention
that he paid the overdue premium and that, as a result, his
policy did not lapse. In addition, at this court's
request, Prudential provided the court with relevant tax
court filings that were referred to by Mr. Fraser. Prudential
objected to the court's consideration of these documents
as not being properly filed. While the court agrees that they
were not properly or timely filed, the documents are not in
dispute and they form the basis of the claims at issue here.
In order to fully address the outstanding issues, the
documents have been considered by this court. This court has
herewith filed the tax court decision and the
government's pre-trial memorandum in the tax court
provided by Prudential at the court's request as Docket
No. 195, and the following documents provided by Mr. Fraser
as Docket No. 196: a check dated June 15, 2010 (redacted), a
letter dated July 6, 2010, a letter dated July 7, 2010, a
letter dated October 4, 2010, and a letter dated February 2,
of the Policy
issued Paul Fraser a whole life insurance policy (the
“Policy”) on October 1, 1991 with a face value of
$500, 000, insuring his life. (DF ¶ 3; Yonker Aff.
¶ 1). Deborah Fraser is the named beneficiary of the
Policy. (DF ¶ 2). Under the Policy, Mr. Fraser was
obligated to make premium payments of $525 on the first day
of every month to keep the Policy in force. (Id.
¶¶ 4-6). If a premium was not paid by its due date,
the Policy granted thirty-one days of grace (the “Grace
Period”), which kept the Policy in force during those
days. (Id. ¶ 7). If the premium was not paid
before the Grace Period ended, the Policy provided that it
“will end and have no value, except as [Prudential]
state[s] under Contract Value Options.” (Id.;
Def. Ex. A-1 at 6).
Policy ended, the Policy provided that the net cash value
would be used to provide extended term insurance,
which provided a different type of insurance using the cash
value of the Policy. (DF ¶ 11; Def. Ex. A-1 at 8). The
Policy did not contain a provision that states the cash value
of the Policy automatically applies to past due premium
payments. (DF ¶ 12). Mr. Fraser would be able to
reinstate his Policy after the Grace Period, but only after
certain conditions were met, including an obligation that he
“give [Prudential] any facts we need to satisfy us that
the Insured is insurable for the contract” and
“any contract debt . . . must be restored or paid
back.” (Id. ¶ 8).
Policy allowed Mr. Fraser to borrow against the cash value of
the Policy, thereby reducing the net cash value of the
Policy. (Id. ¶ 10). Mr. Fraser did, in fact,
routinely exercise his right to borrow against the cash value
of the policy. (Id. ¶ 13). The loan requests
Mr. Fraser completed provided that there might be tax
consequences if the Policy ended. (Id. ¶ 15;
Def. Ex. A-8). The Loan Request Form Mr. Fraser completed in
1998 provided that he understood “that there may be tax
implications on the request(s) and that the request(s)
(including tax reporting and income tax withholding) cannot
be reversed once processed (because Prudential may not give
legal or tax advice, you may want to consult your tax
advisor)[.]” (Id. ¶ 15; Def. Ex. A-7).
according to Prudential, in the event the Policy ended,
Prudential was obligated to report both to the policyholder
and the IRS on Form 1099-R any loan amount that was
outstanding on the Policy to the extent that it excluded the
total premiums paid to the Policy. (DF ¶
to Pay Premium and Issuance of Form 1099-R
April 1, 2010, Mr. Fraser did not pay his $525 monthly
premium. (Id. ¶ 16). As a result, the Policy
entered into the Grace Period. (Id. ¶ 17). The
Grace Period expired on May 2, 2010. (Id.). On May
10, 2010, Prudential sent Mr. Fraser a notice (the “May
10 Letter”) informing Mr. Fraser that the Policy had
“lapsed” because Prudential had not received his
monthly premium payment on April 1, 2010. (Id.
¶ 18; Def. Ex. A-4). As explained in the May 10 Letter:
We're concerned because we haven't received
your monthly premium payment that was due on April 1,
2010. As a result, your policy [number] lapsed on
May 2, 2010. But don't worry, if you act quickly you can
still reinstate your ...