Nitkewicz v. Lincoln Life & Annuity Company of New York
- John Cronan
- 1:20-cv-06805
- U.S. District Court · Southern District of New York
- 19
In Nitkewicz v. Lincoln Life, Judge Cronan granted Lincoln’s dismissal motion with prejudice and denied its judicial-notice request as moot.
The ruling ended Andrew Nitkewicz’s breach-of-contract claim on behalf of the Joan C. Lupe Family Trust and the proposed class against Lincoln Life & Annuity Company of New York. The opinion does not identify any separate effect on other policyholders.
What happened
Nitkewicz v. Lincoln Life & Annuity Company of New York involved a proposed class action by Andrew Nitkewicz, trustee of the Joan C. Lupe Family Trust. He claimed Lincoln had to refund part of an annual planned premium after the insured died.
Nitkewicz paid $53,877.72 into a universal life insurance policy on May 7, 2018, and the insured died on October 6, 2018. He sought a refund for the period after the policy month of the insured’s death. Lincoln argued that the payment went into the policy’s account and did not pay for a specific period of insurance.
Judge John P. Cronan ruled that this planned premium was not a premium actually paid for coverage beyond the end of the policy month under New York law. He granted Lincoln’s motion to dismiss with prejudice, denied Lincoln’s request for judicial notice as moot, and closed the case.
The detailed version
- Nitkewicz v. Lincoln Life & Annuity Company of New York · No. 1:20-cv-06805
- John Cronan
- July 2, 2021
Background
Andrew Nitkewicz, as successor trustee of the Joan C. Lupe Family Trust, brought a proposed class action against Lincoln Life & Annuity Company of New York for breach of contract. The dispute concerned a universal life insurance policy issued to the Trust to insure Joan C. Lupe’s life. The policy had a $1.5 million specified amount, and the Trust had selected a death-benefit option under which the policy account would not necessarily be paid in addition to that specified amount.
On May 7, 2018, the Trust paid an annual planned premium of $53,877.72. The policy deposited the net premium into an interest-bearing policy account. Monthly deductions from that account paid the cost of insurance and administrative charges. The insured died on October 6, 2018. Lincoln paid the specified death benefit but did not refund any part of the planned premium for the period after the policy month of the insured’s death.
Nitkewicz argued that New York Insurance Law § 3203(a)(2) required Lincoln to refund a proportional part of the premium for November 2018 through May 7, 2019. Lincoln moved to dismiss under Rule 12(b)(6), which permits dismissal when a complaint does not plausibly state a legal claim. Lincoln also asked the Court to take judicial notice of publicly available product outlines from the New York State Department of Financial Services.
The Court’s Analysis
Section 3203(a)(2) requires a life insurance policy to provide a refund of any premium “actually paid for any period” beyond the end of the policy month in which the insured dies. The parties agreed for purposes of the motion that the planned premium was a premium under the statute. They disagreed about whether it was actually paid for a specific period of coverage.
The Court concluded that, under this policy, a planned premium was not paid for any specific period. The policy described a planned premium as the amount the owner intended to pay and stated that payment was optional. The amount and timing of planned premiums were largely left to the owner’s discretion. A planned premium could be less than or greater than the monthly cost of insurance, and paying or failing to pay one did not itself determine whether the policy would remain in force.
The Court determined that the monthly deductions from the policy account, rather than the planned premium deposit, actually paid for insurance coverage. The fact that a portion of the premium was retained through a net-premium factor did not show that the payment covered a particular period. Nor did the policy’s reinstatement provision or its Coverage Protection Guarantee Rider establish that the planned premium paid for a defined period. The rider used an alternative reference value to determine whether the policy would enter a grace period; it did not change how the policy’s actual value or monthly insurance charges operated.
The Court also rejected the argument that the word “annual” meant the planned premium purchased one year of coverage. The policy defined premium frequency as how often the owner intended to pay the planned premium, not as the period of coverage purchased by each payment. The Court further reasoned that treating a planned premium as payment for a particular period would create tension with the statute’s related provision concerning unpaid premiums during a grace period, because planned premiums were optional statements of intent rather than binding promises.
Because the planned premium was not actually paid for coverage beyond the end of the policy month, the Court held that § 3203(a)(2) did not require Lincoln to refund any part of it. The Court did not reach Lincoln’s alternative arguments that the plaintiff had already received the policy-account value or that the proposed class allegations had standing problems.
Disposition
Judge John P. Cronan granted Lincoln’s motion to dismiss with prejudice. He denied as moot Lincoln’s request for judicial notice of the product outlines, directed the Clerk to terminate all motions, and closed the case.
Read the full 19-page opinion on CourtListener, the free public archive maintained by the Free Law Project.