United States District Court, N.D. New York
July 1, 2004.
CAROL B. SPEZIALE, AS ADMINISTRATRIX OF THE ESTATE OF THOMAS A. SPEZIALE AND CAROL B. SPEZIALE, INDIVIDUALLY AND AS BENEFICIARY, Plaintiff,
NATIONAL LIFE INSURANCE COMPANY, Defendant.
The opinion of the court was delivered by: LAWRENCE KAHN, District Judge
MEMORANDUM DECISION and ORDER
Plaintiff Carol B. Speziale commenced the instant action
against Defendant National Life Insurance Company asserting
claims of breach of contract, unjust enrichment, equitable
estoppel, and a violation of N.Y. Gen. Bus. Law § 349 arising out
of Defendant's denial of Plaintiff's claim under a life insurance
policy issued to her deceased husband, Thomas Speziale. By
Decision & Order dated March 19, 2003, Plaintiff's claims under N.Y. Gen. Bus. Law § 349
and for punitive damages were dismissed. Presently before the
Court is: (1) Defendant's motion for summary judgment pursuant to
Fed.R.Civ.P. 56 seeking dismissal of the Complaint in its
entirety; and (2) Plaintiffs' cross-motion for summary judgment
seeking a determination of liability as a matter of law.
Thomas Speziale purchased a term life insurance policy from
Defendant with an inception date of March 22, 1999. Def.'s Ex. D.
Plaintiff was the named beneficiary. The policy had the following
provisions pertinent to the instant dispute:
Entire Contract. This policy and a copy of the
application which is attached . . . are the entire
contract. . . . Any change of this contract must be
written and may be made only by one of our authorized
officers. . . .
Payment of Premiums. The First Premium and its
interval are shown in the Data Section. It is due on
the Policy Date. Each later premium is due at the end
of the interval of time for which the preceding
premium was paid. . . .
Lapse and Grace Period. If any premium due is not
paid on or before the day it is due, this policy
shall lapse as of such date. All our liability shall
then cease. However, a grace period of thirty-one
days from the due date, during which the insurance
shall stay in force, shall be allowed for the payment
of every premium except the first. . . .
Reinstatement. If this policy has lapsed, upon
request it may be reinstated within five years of the
date it lapsed. However, it may not be reinstated
after the Final Expiration Date. We will require
proof to our satisfaction that the insured is
insurable. We will also require the payment of:
1. the premium for the period from the date of
reinstatement to the next premium due date; plus
2. the lesser of:
a. half of all premiums for the period from the date
of lapse to the date of reinstatement; or b. the premiums for the one year period prior to the
date of reinstatement.
Death Benefit.. . . . We will pay the Death Benefit
to the Beneficiary when we receive at our Home Office
due proof that the Insured died while this policy was
in force. . . .
Def.'s Ex. D. Thomas Speziale opted to make premium payments on a
monthly basis. Id.
By letter dated June 1, 1999, Defendant wrote Mr. Speziale
advising him that the policy lapsed due to non-payment of
premiums. Def.'s Ex. G. The letter read, in part, that
since the 31 day grace period has expired, your
policy has lapsed. The policy may be reinstated
without any interest penalty or evidence of
insurability by paying the "amount due" while the
Insured is still living and within 62 days of the due
date. Therefore, payment of $209.43 for the April
premium must be submitted by June 22, 1999 . . . or
reinstatement requirements will be necessary.
Id. It appears that Mr. Speziale made the necessary payments to
bring his premiums up to date. Def.'s Ex. F.
By letter dated March 22, 2000, Defendant wrote Mr. Speziale
concerning unpaid premiums.*fn1 The letter read, in part, as
THANK YOU FOR YOUR RECENT PAYMENT. ALTHOUGH YOUR
REMITTANCE WAS RECEIVED WITH THE MARCH PREMIUM
NOTICE, OUR RECORDS SHOW THAT THE FEBRUARY PREMIUM
WAS UNPAID. CONSEQUENTLY WE HAVE APPLIED YOUR
REMITTANCE TO THE UNPAID PREMIUM. . . . IN ORDER TO BRING YOUR CONTRACT TO A CURRENT STATUS,
WE ARE ENCLOSING ANOTHER PREMIUM NOTICE WITH A RETURN
ENVELOPE TO FACILITATE PAYMENT. . . .
IF THIS INFORMATION DOES NOT AGREE WITH YOUR RECORDS,
PLEASE NOTIFY US AT YOUR EARLIEST CONVENIENCE.
Def.'s Ex. H. Defendant sent Mr. Speziale a similar letter dated
April 19, 2000.*fn2
That letter provided, in part, that
"[a]lthough your remittance was received with the April premium
notice, our records show that the March premium was unpaid."
Def.'s Ex. I.
Mr. Speziale died on February 1, 2002. The next day, February
2, 2002, Mrs. Speziale signed a check payable to Defendant in the
amount of $209.43.*fn3 Defendant received the check sometime
thereafter. Plaintiff also provided Defendant with notice of the
Defendant established a claim file and assigned the matter to
Caroline Buswell. Upon her review of the file, Buswell determined
that the policy was paid through December 22, 2001 and that there
were $418.86 in unpaid premiums (i.e., two months of unpaid
premiums). Buswell also determined that the policy had a
thirty-one day grace period and that the final payment on the
policy was made after Mr. Speziale's death. Buswell concluded
that the policy had lapsed prior to Mr. Speziale's death and,
therefore, no payments were due. Plaintiff denies that the
premiums were in arrears and that the policy had lapsed.
By letter dated February 15, 2002, Buswell informed Plaintiff
that "the . . . policy was not inforce [sic] on the date of your
husband's death. On February 1, 2002 the paid to date on the
policy was December 22, 2001. This paid to date was not within
the thirty-one day grace period. We received a premium payment on February 5, 2002, . . . the check
is dated after your husband's death." Def.'s Ex. M. Defendant
also provided Plaintiff's attorney with a summary of all premium
payments made by Mr. Speziale. Defendant returned to Plaintiff
the February 2, 2002 premium payment.
Plaintiff then commenced the instant action seeking payment
under the terms of the policy. Defendant now moves for summary
judgment pursuant to Fed.R.Civ.P. 56 seeking dismissal of the
Complaint in its entirety. Plaintiff cross-moves for summary
III. STANDARD OF REVIEW
Federal Rule of Civil Procedure 56 provides that summary
judgment is proper when "the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment
as a matter of law." FED. R. CIV. P. 56(c); Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986). In applying this standard,
courts must "`resolve all ambiguities, and credit all factual
inferences that could rationally be drawn, in favor of the party
opposing summary judgment.'" Brown v. Henderson, 257 F.3d 246,
251 (2d Cir. 2001) (quoting Cifra v. General Electric Co.,
252 F.3d 205, 216 (2d Cir. 2001)). Once the moving party meets its
initial burden by demonstrating that no material fact exists for
trial, the nonmovant "must do more than simply show that there is
some metaphysical doubt as to the material facts." Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)
(citations omitted). Rather, the nonmovant "must come forth with
evidence sufficient to allow a reasonable jury to find in her
favor." Brown, 257 F.3d at 251 (citation omitted). Bald
assertions or conjecture unsupported by evidence are insufficient
to overcome a motion for summary judgment. Carey v. Crescenzi,
923 F.2d 18, 21 (2d Cir. 1991); Western World Ins. Co. v. Stack
Oil, Inc., 922 F.2d 118, 121 (2d Cir. 1990). IV. DISCUSSION
a. Breach of Contract
Defendant first moves to dismiss the breach of contract claim
on the ground that, under the plain terms of the contract, it is
not required to pay a death benefit.
Under New York law, "`when parties set down their agreement in
a clear, complete document, their writing should . . . be
enforced according to its terms'." Vermont Teddy Bear Co., Inc.
v. 538 Madison Realty Co., ___ N.Y.2d ___, ___ (2004) (quoting
W.W.W. Assoc. v. Giancontieri, 77 N.Y.2d 157, 162 (1990)).
Absent any ambiguity in the contract, a court looks "solely to
the language used by the parties to discern the contract's
meaning." Id; see National Granite Title Ins. Agency, Inc.
v. Cadlerock Properties Joint Venture, L.P., 773 N.Y.S.2d 86, 87
(2d Dep't 2004).
Here, neither party claims any ambiguities in the policy. The
policy plainly provides that the premium payment "is due at the
end of the interval of time for which the preceding premium was
paid." It is undisputed that Mr. Speziale paid his premiums on a
monthly basis. Each premium payment covered a one month period
and an additional premium payment was due at the end of that
period. In this case, the premium was due on or before the
twenty-second day of each month. The policy did contain a grace
period for late payments. According to the policy, "[i]f any
premium due is not paid on or before the day it is due, this
policy shall lapse as of such date. All our liability shall then
cease. However, a grace period of thirty-one days from the due
date, during which the insurance shall stay in force, shall be
allowed for the payment of every premium except the first."
Pursuant to the plain terms of these provisions, Mr. Speziale
could have paid his premiums up to thirty-one days after the due
date, after which time the policy would lapse. Stated otherwise,
if no premium is received within thirty-one days of the due date, the policy lapses. Once
the policy lapses, it may be reinstated only upon request, proof
of insurability, and the making of certain payments.
Defendant offers evidence in the form of letters sent to Mr.
Speziale, the testimony of Buswell, and the summary of premium
form that, as of February 22, 2000, Mr. Speziale missed a month's
premium payment. Defendant applied each subsequent premium
payment received from Mr. Speziale to the amount in arrears.
Thus, when Defendant received a premium payment in late March
2000, it applied that amount to the February 2000 premium,
thereby leaving an amount due and owing for March 2000. This
process continued onward. When Defendant received a premium
payment in April 2000, Defendant applied it to the March 2000
premium, leaving an amount due and owing for April 2000, etc.
According to the evidence submitted by Defendant, Mr. Speziale
never made up the deficiency such that, at the time of his death,
the policy had only been paid up through December 22, 2001. The
evidence in the record reveals that the last premium payment
before Mr. Speziale's death was made on or about January 3, 2002.
Because of the premium arrears, Defendant applied the January 3
payment to the November 2001 premium, leaving the premiums due in
December 2001 and January 2002 unpaid at the time of death.
In response, Plaintiff has failed to demonstrate a triable
issue of fact whether all required premiums had been paid.
Although Plaintiff denies that the premiums were in arrears, she
has presented no evidence to create a genuine issue of fact
whether the payments were made. See Elston v. Allstate Life
Ins. Co. of New York, 274 A.D.2d 938, 939 (3d Dep't 2000).
Plaintiff points to Mr. Speziale's check register and his
handwritten notation on the premium notice indicating that he cut
a check for the February 2000 premium. However, there is no
competent evidence that this check was ever sent. Plaintiff
testified at deposition that she had no personal knowledge
concerning the premium payment notices or when any payments were made to Defendant.
Pl.'s Dep. at 64-68, 70-5. Plaintiff also testified that she has
no knowledge that she or her husband actually sent any checks to
Defendant that it did not receive. Id. at 75. Moreover, the
evidence further demonstrates that no funds were ever taken from
Mr. Speziale's account for this check, thereby evidencing that it
was never cashed. Id. at 75-76.*fn4 Accordingly, there is
insufficient evidence in the record from which a fair-minded
trier of fact could reasonably conclude that Mr. Speziale made
all necessary premium payments. Elston, 274 A.D.2d at 939.
The undisputed evidence in the record indicates that the
premium due December 22, 2001 was not paid. Accordingly, the
policy lapsed as of that date, subject to the thirty-one day
grace period. Thus, had Mr. Speziale made an additional premium
payment on or before January 22, 2002,*fn5 the policy would
have remained in force. It should be recalled that the policy
provides that the Defendant "will pay the Death Benefit to the
Beneficiary when we receive at our Home Office due proof that the
Insured dies while this policy was in force." Because the policy
lapsed on January 22, 2002 prior to Mr. Speziale's death on
February 1, 2002, under the plain terms of the contract,
Defendant was under no contractual obligation to pay the death
For the foregoing reasons, Plaintiff's breach of contract cause
of action must be dismissed.
b. New York Insurance Law
New York Insurance Law provides that "[n]o 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 . . . in less than one year after such default,
unless a notice shall have been duly mailed at least fifteen and
not more than forty-five days prior to the day when such a
payment becomes due." N.Y. Ins. Law § 3211(a)(1) (McKinney 2004).
This section does not apply to "[a]ny policy of insurance
requiring the payment of premiums monthly or at shorter
intervals, provided in the case of policies of life insurance the
insurer issuing such policy elects with respect to all such
policies to mail a written notice within six months after
termination or lapse to the insured. . . ." N.Y. Ins. Law §
3211(f)(2) (McKinney 2004) (emphasis added).
The First and Third Departments of the New York State Supreme
Court, Appellate Division, have held that the § 3211(f)(2)
exception applies when the insured elects to pay premiums on a
monthly basis, even if a monthly payment is not required under
the terms of the policy. See Elston, 274 A.D.2d at 939;
Brecher, 120 A.D.2d at 427. However, this Court declines to
follow the Appellate Divisions' interpretation as it is
inconsistent with the plain meaning of the statute. See Reeves
v. Johnson Controls World Services, Inc., 140 F.2d 144, 155 (2d.
Cir. 1998) (noting that it is the New York Court of Appeals'
interpretation of a New York State statute that is binding on the
When the language of a statute is clear, effect should be given
to the plain meaning of the words used. Lloyd v. Grella,
611 N.Y.S.2d 799, 802 (N.Y. 1994). In such instances, the court
should look no further than the unambiguous words and need not
delve into legislative history or policy reasons behind the
statute. Id; N.Y. Stat. Law § 76 (McKinney 2004). In addition,
statutes requiring notice before forfeiture of a life insurance
policy for nonpayment of the premiums are to be construed
strictly in favor of the insured. 45 C.J.S. Insurance §
697 (2003). This is because the law does not favor forfeiture for nonpayment of premiums. In re Preston's
Will, 328 N.Y.S.2d 405, 407, 278 N.E.2d 623 (N.Y. 1972).
There is a further reason that the Court declines to follow the
rationale of the previous Appellate Division cases. In holding
that electing to pay premiums on a monthly basis is the
equivalent of requiring them, the Third Department
unequivocally relied on a factual point which it found
significant, but which differs from the factual scenario that is
now presented to the Court. Namely, the Third Department
explained that "[n]otably, the bank authorization signed by the
[insured] advised that by choosing this [automatic withdrawal]
option, defendant would not be sending premium notices."
Elston, 274 A.D.2d at 939 (emphasis added). The "notable" fact
in Elston, therefore, is that Defendant made automatic monthly
withdrawals without providing notice to the insured of the
withdrawal at every payment. Such an automatic monthly procedure
rendered a finding that monthly payments were required. In
stark contrast, as explained by Defendant, Mr. Speziale
"elected to receive his premiums on a monthly basis. As such,
he received monthly premium notices that would have provided a
`due date' for payment of the premium." Dkt. No. 29, Exhibit Q
(Letter from Defendant National Life) at ¶ 1 (emphasis added).
The issuance of such premium notices provide further evidence
that Speziale's policy did not require monthly payments, which
takes his policy outside the realm of Elston and § 3211(f)(2).
Here, § 3211(f)(2) excepts out those policies that require
the payment of premiums monthly or at shorter intervals. Mr.
Speziale's life insurance policy did not require him to pay his
premiums at either monthly or shorter intervals. In fact, the
policy provides that "[t]he first Premium and its interval are
shown in the Data Section." The Data Section contemplates an
annual premium. The policy further states that "[p]remiums after
the first may be paid for 12-, 6-, or 3-month intervals in any manner agreed to by us at the rate currently in effect." Def.'s
Ex. D (emphasis added). Mr. Speziale opted, but was not required,
to make his premium payments on a monthly basis. Id. Because
the clear language of the § 3211(f)(2) exception renders it
inapplicable to Mr. Speziale's policy, § 3211(a)(1) obligated
Defendant to provide him with written notice of its lapse "at
least fifteen and not more than forty-five days prior to the day
when . . . a [premium] payment becomes due."
By letter dated June 1, 1999, Defendant wrote Mr. Speziale to
advise him that the policy lapsed due to his non-payment of
premiums. Def.'s Ex. G. However, Mr. Speziale responded by making
the necessary payments to bring his premiums up to date, thus
reinstating the policy. Def.'s Ex. F. In March and April 2000,
Defendant notified Mr. Speziale that his payments were one month
behind and were being applied retroactively. Def.'s Ex. H; Def's
Ex. I. These payments fell within the thirty-one day grace
period, preventing the policy from lapsing. Prior to Mr.
Speziale's death in February 2002, his premium payments were
behind by two months and Defendant considered his policy lapsed
as of December 2001. However, there is no evidence that Defendant
ever provided him with notification as required by § 3211(a)(1).
Thus, Defendant was prohibited from treating the policy as
Even if the policy at issue did require Mr. Speziale to make
monthly premium payments, as Elston and Brecher may suggest,
the § 3211(f)(2) exception to the more stringent § 3211(a)(1)
notice requirement only applies if "the insurer issuing such
policy elects . . . to mail a written notice within six months
after termination or lapse to the insured." N.Y.C.P.L.R. §
3211(f)(2). As previously discussed, Mr. Speziale remedied the
lapse indicated in the June 1, 1999 letter and never received
notification of the subsequent lapse. Thus, Defendant did not
fulfill its duty under the § 3211(f)(2) exception and was,
therefore, required to provide Mr. Speziale with written notice
within six months of the date of the subsequent lapse. Having failed to give such
notice, Defendant was prohibited from treating the policy as
For the foregoing reasons, Defendant's failure to provide
proper notice of lapse pursuant to N.Y.C.P.L.R. § 3211 prohibited
Defendant from treating the policy as lapsed.
c. Unjust enrichment and equitable estoppel
Plaintiff has also asserted that she is entitled to collect the
death benefit of Thomas Speziale's policy under the theories of
unjust enrichment and equitable estoppel. Because the Court holds
that Defendant must pay on the policy for the reasons stated
previously, it will not address these contentions.
For the foregoing reasons, it is hereby
ORDERED that Defendant's motion for summary judgment is
DENIED; it is further
ORDERED that Plaintiff's cross-motion for summary judgment is
GRANTED; it is further
ORDERED that Defendant pay Plaintiff the death benefit that is
due under the policy; and it is further
ORDERED that the above captioned case is CLOSED; and it is
ORDERED that the Clerk serve a copy of this order on all
IT IS SO ORDERED.