The Muffin Trust v. MONY Life Insurance Company of America

          MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS’ PARTIAL MOTIONS TO DISMISS AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS’ DEMAND FOR RELIEF

          Janet L. Sanders, Justice of the Superior Court

          This case challenges the defendants’ calculation of premiums and other charges on three life insurance policies owned by the plaintiffs. Defendant MONY Life Insurance Company of America (MONY) issued two of the policies (the MONY Policies). Defendant AXA Equitable Life Insurance Company (AXA) issued the third policy (the AXA Policy). Also named as defendants are Dale Peatman, the insurance broker who sold the policies to the plaintiffs, and Protective Life Insurance Company (Protective) which now owns MONY as a subsidiary.

          The First Amended Verified Complaint (the Complaint) asserts the following counts against the defendants: declaratory judgment (Counts I and II); breach of contract (Counts III and IV); breach of implied covenant of good faith and fair dealing (Count V); violation of G.L.c. 93A (Count VI); violation of G.L.c. 19A, § 14 (Count VII); violation of G.L.c. 93A (Count VIII); violation of G.L.c. 110A, § 410 (Count IX); unjust enrichment (Count X); and breach of fiduciary duty (Count XI). Among other relief, plaintiff’s request that the life insurance policies be rescinded. Pursuant to Mass.R.Civ.P. 12(b)(6), defendants now move to dismiss some but not all of these counts, and also request that this Court strike plaintiffs’ demand for rescission.^[1] This Court concludes that the Motions to Dismiss must be ALLOWED in part and DENIED in part, and that the Motion to Strike must be DENIED .

          BACKGROUND

          The three life insurance policies at issue are:

1. Flexible Premium Variable Life to Maturity Age Policy, No. 2VUL008292 ("Policy No. 292 "): This policy was issued by MONY in 1998 as life insurance for plaintiff Leonard Lewis, now 89 years old. The face value of the policy is $ 2.5 million. Plaintiff, the Muffin Trust (the Trust), is the owner of this policy. Plaintiff Ann Marie Lewis is the trustee and beneficiary of the Trust and also named as the beneficiary of Policy No. 292.

2. Flexible Premium Adjustable Life to Maturity to Age Policy, No. 2ULA000309 ("Policy No. 309 "): This policy was issued by MONY in 2003 as life insurance for plaintiff Ann Marie Lewis, currently 83 years old. Ann Marie Lewis is Leonard Lewis’ wife. The face value of this policy is also $ 2.5 million. The owner of this policy is plaintiff Barbara Lewis, Ann Lewis’ daughter. Barbara Lewis is 50 years old.

3. Joint Survivorship Universal Life Insurance Policy, No. 156 231 340 ("Policy No. 340 "): This policy was issued by AXA in 2007 and insures the life of both Leonard Lewis and his wife, Ann Marie. The face value of this policy is $ 5 million. Barbara Lewis is the owner of this policy.

          The defendant, Dale Peatman, was the insurance broker who, as an agent of the defendants MONY and AXA, sold the three policies to plaintiffs. Plaintiffs had a long standing relationship with Peatman dating back to 1993 and relied upon his advice with respect to which insurance products would be suitable for them considering their net worth, their age, and their financial goals.

          When plaintiffs purchased the MONY Policies, they understood that the monthly premiums would be in a fixed amount: $ 3, 410.46 for Policy No. 309 and $ 5, 594 a month for Policy No. 292. They understood that the maximum amount of premiums that would be paid on either policy would not exceed what the policy described as the "Guideline Premium Limit." That Limit was $ 1, 518, 010 for Policy No. 292 and $ 1, 211, 374.30 for Policy No. 309. With respect to the AXA Policy, plaintiffs understood that it had "guaranteed fixed premiums" for the life of the policy. Policy No. 340 further provided that any changes in "policy cost factors ... will be on a basis that is equitable to all policy holders of a given class and will be determined based on reasonable assumptions as to expense, mortality, policy and contract claims, taxes, investment income and lapses." ¶ 54, Complaint.

          At some point (according to the Complaint), MONY began to charge the plaintiffs far in excess of the amounts permitted by the policies. By way of example, the Complaint states that MONY is demanding an annual payment of $ 400, 000 a year under Policy No. 292 such that plaintiffs will have to pay more than the face value of the policy itself within two and a half years. As to both Policy No. 292 and No. 309, MONY has required premium payments that exceed the Guideline Premium Limit. With respect to Policy No. 340, the Complaint alleges that AXA has raised the Cost of Insurance beyond anything that is equitable or actuarially justified. More generally, the Complaint alleges that the defendants have "targeted the elderly" by raising premiums so that policyholders like the plaintiffs are forced to abandon their policies and thus relinquish death benefits paid for with premiums over twenty years. ¶ 1, Complaint. "By indiscriminately and unlawfully raising the Cost of Insurance and the premiums on these policies without proper basis or explanation, [the defendants] have breached the express and implied terms of the policies" which are in any event "unconscionable" and "oppressive." ¶ 4, Complaint.

          DISCUSSION

          I. AXA’s and MONY’s Motions to Dismiss

         The standard that this Court applies to these motions is well established. To withstand a motion to dismiss under Rule 12(b)(6), the complaint must contain "allegations plausibly suggesting (not merely consistent with) an entitlement to relief ..." Iannacchino v. Ford Motor Co.,451 Mass. 623, 636 (2008), quoting Bell A. Corp. v. Twombly,550 U.S. 544, 555-57 (2007). Although a complaint need not set forth detailed factual allegations, a plaintiff is required to present more than labels and conclusions and must raise a right to relief "above the speculative level." Id. Thus, dismissal is proper when a fair reading of the Complaint establishes that the facts alleged do not support a cause of action which the law recognizes. Nguyen v. William Joiner Center for the Study of War and Social Consequences,450 Mass. 291, 295 (2007). It is therefore not enough simply to allege ...