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Rabin v. Mony Life Insurance Co.

November 25, 2009


The opinion of the court was delivered by: Laura Taylor Swain, District Judge


Plaintiff I. Stephen Rabin ("Plaintiff") brings this putative class action against MONY Life Insurance Company ("MONY" or "Defendant") asserting claims for: (1) breach of contract; (2) breach of fiduciary duty; (3) unjust enrichment; and (4) deceptive practices under New York General Business Law ("GBL") § 349.*fn1 Plaintiff's claims arise from MONY's practice of making certain policy surrender disbursements by placing the funds in a "MONY Market" checking account in the former policyholder's name. Plaintiff seeks damages measured by the difference between the interest rate paid and the rates allegedly available on similar investments, as well as injunctive relief and attorneys' fees. The amended complaint adequately avers that this Court has jurisdiction of the instant claims pursuant to Section 1332(d) of the Judicial Code, 28 U.S.C. § 1332(d), as amended by the Class Action Fairness Act of 2005.

Plaintiff has moved for class certification and Defendant has moved for summary judgment dismissing the complaint as a matter of law. The Court has reviewed the parties' submissions thoroughly. By Order dated October 21, 2009, the Court granted Defendant's summary judgment motion and declined to address the class certification motion. This Opinion and Order explains the reason for those decisions.


The following material facts are undisputed unless otherwise indicated.*fn2 Plaintiff purchased two life insurance policies from Defendant, Nos. 1056-71-75 and 1081-05-94, dated January 1, 1977, and January 1, 1979, respectively (the "Policies"). (Angst Decl., Exs. 17A, 17B.) The Policies permitted Plaintiff to surrender them for their cash value and were silent as to the specific manner of payment. (Id.) During the course of Plaintiff's ownership of the Policies, Defendant adopted a procedure for disbursing surrender payments under which it provided the surrendering policyholder with a checkbook (the "Account Checkbook") for a "MONY Market Draft Account" (the "Account") that was credited with funds in the amount the surrendering policyholder was due. The surrendering policyholder could immediately write himself a check for the full value of the Account or he could maintain some or all of the funds in the Account, which would carry a variable interest rate. Defendant elected to establish such accounts rather than mail settlement checks to surrendering policyholders based on the finding of its Policyholder Service Committee that settlement checks were often not cashed for long periods of time or were misplaced. (Def. 56.1 St. ¶¶ 2-3.)

In December 2004, Plaintiff elected to surrender the Policies by submitting a "Surrender Request Form," which described the manner in which the disbursement would be made as follows:

Proceeds are made available to you by means of an interest-bearing checking account. This account will be opened in your name, and you will receive a supply of checks with which you can immediately access all or a portion of the funds, by writing checks for $250 or more. The funds in the account earn interest at a competitive, variable rate. (Id.) In January 2005, shortly after submitting the Surrender Request Form, Plaintiff received an Account Checkbook, a MONY Market Account Brochure (the "Brochure"), and a Confirmation Certificate. (Def. 56.1 St. ¶¶ 9-10.) The Brochure's first explanatory section, titled "Immediate Access," provided that Plaintiff could "write a single check for the entire balance in [his] account." (Def. 56.1 St. ¶ 21.) Plaintiff concedes that, when he received the Account Checkbook, he understood that he could write a check to himself for the entire balance of the Account immediately. (Def. 56.1 St. ¶ 32.)

The second explanatory section of the Brochure, titled "Competitive Interest Rates," provided, Interest is credited to your account on the last day of each month . . . The interest rate is a competitive rate and will always equal or exceed the national average for bank money market deposit accounts, as measured by the Bank Rate Monitor National Index . . . You may obtain the current rate at any time by calling our Toll-Free Number. (Angst Decl., Ex. 17D.) The first page of the Confirmation Certificate contained a simple table with just four entries: Plaintiff's account number, his opening balance, the current interest rate (0.75%), and the annual percentage yield (also 0.75%). (Angst Decl., Ex. 17E.)

An additional explanatory section of the Brochure, titled "Guaranteed Safety," provided,

The balance in your account and all your interest earnings are fully guaranteed by your MONY company, either MONY Life Insurance Company or its subsidiary MONY Life Insurance Company of America. (Angst Decl., Ex. 17D.) The Brochure did not represent that the Account was either insured by the Federal Deposit Insurance Corporation ("FDIC") or subject to the regulations designed to protect investors promulgated under the Investment Company Act of 1940. (Id.) The Brochure did not make any representation that Defendant would deploy any financial expertise to manage the Account for Plaintiff's benefit. (Id.)

Defendant provides monthly statements to Account holders. (Def. 56.1 St. ¶ 7.) This monthly statement, which Plaintiff received at the end of January 2005 (the "January 2005 Monthly Statement"), identifies the interest rate currently being paid on the Account and the amount of interest accrued during the statement period. (Id. ¶¶ 17-18.) On February 11, 2005, Plaintiff wrote a check to himself for the full amount in his Account, thereby liquidating and closing the Account. (Id. ¶ 22.) Throughout the period that Plaintiff maintained funds in the Account, Defendant paid an interest rate that equaled or exceeded the national average for bank money market deposit accounts, as measured by the Bank Rate Monitor National Index ("BRMNI"). (Id. ¶ 13.)


Summary judgment is to be granted in favor of a moving party where the "pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party bears the burden of establishing that there is no genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). A fact is considered material "if it 'might affect the outcome of the suit under the governing law,'" and an issue of fact is a genuine one where "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Holtz v. Rockefeller & Co. Inc., 258 F.3d 62, 69 (2d Cir. 2001) (quoting Anderson, 477 U.S. at 248). The Second Circuit has explained, however, that "[t]he party against whom summary judgment is sought . . . 'must do more than simply show that there is some metaphysical doubt as to the material facts. . . . ...

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