Moskowitz v. Principal Life Insurance Company

Background

Jacob Moskowitz sued Principal Life Insurance Company over its refusal to pay benefits under a $1,000,000 term life-insurance policy covering his deceased wife, Odel Moskowitz. Jacob Moskowitz was the policy’s sole beneficiary. The amended complaint asserted state-law claims for breach of contract and violation of New York Insurance Law § 3211.

Principal Life issued the policy on December 26, 2013. The policy provided for annual renewal and fixed the premium at $632.11 for each of the first ten years. It allowed a policy owner to request a different payment frequency, but only with Principal Life’s approval and subject to an additional charge. The policy also provided a 31-day grace period after Principal Life mailed a notice of impending termination. If the policyholder did not pay the required premium during that period, the policy would terminate on the premium due date.

After Odel Moskowitz failed to make the required annual payment for the next policy year, Principal Life sent a grace-period notice dated December 26, 2015. The notice stated that she had to pay $632.11 by January 28, 2016, or the policy would terminate. She did not make that payment by the deadline. Principal Life then sent a termination notice, and later returned a $632.11 payment she sent in February 2016, explaining that the policy had already terminated. Odel Moskowitz died on or about July 11, 2019.

Motion and parties’ arguments

Principal Life moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not plausibly state a legal claim for relief. Principal Life argued that the policy had properly terminated after nonpayment of the annual premium, so no death benefit was payable.

Moskowitz argued that the 2015 grace-period notice was defective in two respects. First, he contended that it demanded the entire annual premium instead of a smaller semiannual or quarterly installment. Second, he alleged that the notice was not mailed to Odel Moskowitz. He argued that the defective notice prevented the policy from terminating and entitled him to the death benefit.

Court’s analysis

The court applied New York law because both parties relied exclusively on it and the policy contained no choice-of-law provision. The court treated the policy as the governing contract and applied its unambiguous terms as written.

The court rejected the argument that the notice should have offered lower installment amounts. The policy identified the annual premium as $632.11 and stated that changing the payment frequency required Principal Life’s approval. Moskowitz did not allege that Odel Moskowitz had requested or received approval for a different payment schedule. The court therefore held that she was required to pay $632.11 to renew the policy, and that the notice was not defective or excessive under the policy.

The court also rejected the claim under New York Insurance Law § 3211(b)(2), which requires a lapse notice to state the amount due, the due date, and where and to whom payment should be made. The court distinguished the cases cited by Moskowitz because those cases involved universal or flexible life-insurance policies, while this policy used a fixed premium and payment schedule. The court held that Moskowitz had not identified any case invalidating a notice because the insurer failed to state a lower premium amount for a payment frequency the policy owner had not selected or obtained approval to use.

The court assumed, without deciding, that § 3211 applied to this renewable one-year term policy. Even under that assumption, it held that the notice was not defective because it demanded the previously agreed-upon annual premium. The court also found that the complaint’s single, conclusory statement that the notice was not mailed to the policy owner did not plausibly state a claim, particularly because the complaint acknowledged that a payment attempt was made shortly after the grace period ended.

The court did not reach the parties’ remaining arguments concerning the statute of limitations or whether the policy lapsed automatically under another part of § 3211, because its ruling on the notice issue resolved the claims.

Disposition

Chief Judge Laura Taylor Swain granted Principal Life’s motion to dismiss the amended complaint in its entirety. She directed the Clerk of Court to enter judgment in favor of Principal Life and close case number 21-CV-3030.