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Richards v. Axa Equitable Life Insurance Co.

October 18, 2007


The opinion of the court was delivered by: Honorable Paul A. Crotty, United States District Judge


Plaintiff Larry E. Richards ("Richards") brings this class action, on behalf of himself and all others similarly situated, against Defendant AXA Equitable Life Insurance Company f/k/a Equitable Variable Life Insurance Company ("AXA"), a New York stock life insurance company with its primary place of business in New York. Plaintiff alleges breach of contract, fraudulent misrepresentation, fraudulent concealment, and unjust enrichment in regards to life insurance policies issued by Defendant for Plaintiff's children. The insurance premiums are alleged to be based on rates charged for smokers, even though the insured were non-smoking children. Defendant now moves to dismiss the Complaint pursuant to Fed. R. Civ. P. 12(b)(6). The Court grants the motion as to the fraudulent misrepresentation, fraudulent concealment and unjust enrichment claims, and denies it as to the breach of contract claim.


Plaintiff purchased two Adjustable Life Plan policies (the "Policies") from Defendant covering his daughter Vanessa (the "Vanessa Richards Policy") and his son Shane (the "Shane Richards Policy"). The Vanessa Richards Policy was purchased in Ohio in 1985 and the Shane Richards Policy was purchased in West Virginia in 1994.*fn2

The Policies set fixed monthly premiums and contain maximum cost of insurance rates. Below those maximums, the Policies state that the cost of insurance rate will be "based on the sex, attained age, and rating class of the insured person." Compl. Ex. 1, at Policy pg. 7. The Policies include no other information regarding the cost of insurance or the rating class of the insured. The Policies each include an identical attached application filled out by Plaintiff. The application, which appears to be generic, includes a single question regarding whether the proposed insured smoked cigarettes in the last twelve months (the "Smoking Question"), to which Plaintiff answered "no." Id. at Application pg. 3. The Policies state that "this policy and the attached application., make up the entire contract." Id. at Policy pg. 15.

Notwithstanding the answer that the children insured were non-smokers, Plaintiff alleges that Defendant determined the cost of insurance, interest and dividend payments under the Policies using a "smoker" risk rating classification. This conduct is part of a nationwide "Juvenile Smoker Rate Scheme" implemented by Defendant. Id. ¶¶ 1, 8. As another facet of the scheme, adult non-smokers who purchase policies from Defendant receive more favorable costs of insurance, interest, and dividend payments than adults who purchased polices from Defendant when they were non-smoking juveniles. In order to gain an adult non-smoking classification, insured persons attaining the age of 18 years must apply for an "upgrade" to a non-smoking adult policy. To obtain such an upgrade to a basic non-smoking rating, the insured person must be completely re-underwritten, and any intervening insurability issues that have arisen may result in denial of the improved risk rating. Id. ¶ 2. To obtain the best possible adult risk classification, an insured person must undergo even more stringent underwriting, even if at time of the juvenile application the insured would have met the requirement for the best adult risk classification. Defendant does not inform prospective or actual purchasers of life insurance policies for juveniles of either its use of a "smoker" risk classification for juveniles or its re-underwriting requirements. Id. ¶¶ 27, 28.


I. Rule 12(b)(6) Standard

The district court may dismiss a claim under Federal Rule of Civil Procedure 12(b)(6) only if the plaintiff's factual allegations are not sufficient "to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1609 (2007). The court accepts as true all factual allegations in the complaint, and views them in the light most favorable to the plaintiff. See De Jesus v. Sears, Roebuck & Co., 87 F.3d 65, 70 (2d Cir. 1996). While specific factual allegations are not required, however, a plaintiff must provide the grounds of his entitlement to relief beyond mere labels and conclusions; a formulaic recitation of the elements of a cause of action is insufficient. See Twombly, 127 S.Ct. at 1964-65.

In ruling on a motion under Rule 12(b)(6), the Court may consider only the allegations made in the complaint and any facts of which judicial notice may be taken.

See Brass v. Amer. Film Techn., Inc., 987 F.2d 142, 150 (2d Cir. 1993). The complaint "is deemed to include any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference." Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991), cert. denied, 503 U.S. 960 (1992).

II. Choice of Law

The parties disagree on the applicable law in this action. Plaintiff argues that his claims are properly governed by New York law, while Defendant argues that the law of the state where the policy was issued should control: Ohio for Vanessa Richards' Policy; and West Virginia for Shane Richards' Policy. In an action based on diversity jurisdiction, the district court applies the choice of law rules of the state in which it sits. See GlobalNet, Inc. v. Frank Crystal & Co., 449 F.3d 377, 382 (2d Cir. 2006). Under New York law, "the first step in any case presenting a potential choice of law issue is to determine whether there is an actual conflict between the laws of the jurisdictions involved." In re Allstate Ins. Co., (Stolarz), 81 N.Y.2d 219, 223 (1993). While Defendant has asserted a number of conflicts that could ultimately bear on the resolution of this case, the Court does not apply ...

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