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Lenore S. Raven, As Surviving Wife and Beneficiary of Alan Raven, Deceased. v. the Lincoln National Life Insurance Company

November 15, 2011


The opinion of the court was delivered by: Paul C. HuckUnited States District Judge


This matter is before the Court on Defendant Lincoln National Life Insurance Company's Motion to Dismiss the Third Amended Complaint of Plaintiff Lenore Raven for failure to state a claim for which relief can be granted under Fed. R. Civ. P. 12(b)(6) ("Motion to Dismiss") (D.E. #51). For the reasons stated below, Defendant's Motion to Dismiss is DENIED with respect to each Count as circumscribed below.


This is an action by Lenore S. Raven ("Raven"), as surviving wife and beneficiary of her late husband Alan Raven ("Insured"), against the Lincoln National Life Insurance Company ("Lincoln") seeking: (1) a declaratory judgment that Insured's insurance policy with Lincoln (policy number 20-7126894) (the "Second Contract"), including a Waiver of Premium Rider (the "Disability Rider"), did not lapse, is in full force and effect and that Raven is entitled to all benefits thereunder and other damages; and (2) to recover damages for breach of contract on account of (i) wrongful termination or lapse of coverage under the Second Contract, including the Disability Rider, and (ii) if the Disability Rider is determined not to be in effect, overcharges for premiums attributable to the Disability Rider when it ceased to be in effect. In the alternative, Raven seeks damages for unjust enrichment and/or promissory estoppel.*fn1

In March 1981, Insured contracted with Lincoln for the issuance of a "term" life insurance policy (policy number 64-4068509) (the "First Contract"), which included the Disability Rider. Such Disability Rider provided, in relevant part, that "[i]f Total Disability occurs [and is approved by Lincoln] . . . before age sixty-five, all premiums for this Policy becoming due in the two year period following the beginning of disability and while Total Disability continues will be waived." D.E. #50, Exh. A.*fn2 The Disability Rider also explicitly states that it "terminates . . . when the age of the Insured is sixty-five." Id. Insured was age 59 at the time he entered into the First Contract including the Disability Rider. Plaintiff observes that part of the premium for 1981 was specifically attributable to the Disability Rider in the amount of $436. See Id.

In October 1986, Insured converted the First Contract with Lincoln into the Second Contract, a new "universal" life insurance policy. The Second Contract includes a fill-in form to indicate insured-specific information. D.E. #50, Exh. B. Under the heading "Include the Following Riders," there are seven empty boxes from which the Insured could elect riders to include. One of the electable options was the Disability Rider. A footnote accompanying such rider reads as follows:

Include [the Disability Rider] if the existing policy(ies) now provides this benefit on the person to be the Insured under the new policy. As an inducement for such inclusion, I (we) the undersigned, hereby represent that the Insured (a) is not now prevented by injury, sickness or physical condition from performing all duties of his/her regular occupation, (b) is not now receiving disability benefits of any kind, and/or (c) does not have any claim for disability benefits pending. Id.

The Insured did not check the empty box next to the Disability Rider to affirmatively elect it nor did the Insured check any of the other boxes. See Id. Plaintiff alleges that, although the box was left unchecked, Lincoln's agent Yesner "represented to the Ravens that the [Disability Rider] would carry forward automatically under the Second Contract and that it was standard procedure to leave the box blank." D.E. #50. Insured was age 64 at the time he entered into the Second Contract. Although requested from Lincoln, Plaintiff does not know, with respect to the Second Contract, what additional premium amount, if any, was attributable to the Disability Rider for 1986 or any subsequent year. Unlike the First Contract, there is no indication in the Second Contract that a portion of the premium is attributable to the Disability Rider. See D.E. #50, Exh. B. Plaintiff alleges that Insured was charged the same quarterly premiums before and after his 65th birthday. D.E. #50.

In June 2002, fifteen years after the Insured turned 65, Raven allegedly reported to Lincoln's agent, Yesner, that her husband, the Insured, had suffered paralysis of the spine and was unequivocally disabled. Raven also allegedly called Lincoln directly to notify the company of her husband's declining health and to reiterate*fn3 her husband's right under the Disability Rider to suspend premium payments under the Second Contract. Over the next four years, Raven contacted Lincoln's agent Yesner many other times regarding her husband's declining health. In October 2006, Raven allegedly spoke with Yesner for the last time and alleges "Yesner advised Raven that the Disability Rider was in effect." Id. Later that month, Raven alleges that she also spoke to an unnamed Lincoln representative about the same issue. Raven alleges that "Lincoln's representative confirmed in that October 2006 telephone conversation to Raven that the Disability Rider was in effect and that based on the Insured's disability, he was not required to make any further premium payments under the Second Contract." Id. Allegedly, Raven and Insured, thereafter, in reliance on such statements, made no further premium payments under the Second Contract. Raven alleges that all required premium payments on the Second Contract had been made between October 1986 and August 2006 totaling $76,050.52. Id.

In June 2007, approximately eight months after the October 2006 phone call, Raven allegedly called Lincoln to check the status of the Second Contract. According to Raven, "[i]t was at that time that Raven was informed by a Lincoln representative for the first time that, unbeknownst to Raven, the Second Contract had lapsed, or had been cancelled in October 2006." Id. Later that same month, Raven allegedly sent Lincoln a demand for immediate reinstatement of the Second Contract which Lincoln refused. Id. In its Motion to Dismiss, Lincoln states that "the policy lapsed due to [Raven's] failure to pay the premiums." D.E. #51. Under the terms of the Second Contract, there is a provision regarding lapse that states, "[c]overage will end prior to the Maturity Date [in this case, October 4, 2017], if the premiums paid and interest credited are not sufficient to continue coverage to such date." D.E. #50, Exh. B. Separately, there is a termination provision that states the following:

Termination: All coverage under this Policy will terminate when any one of the following occurs:

1. The grace period ends without payment of required premium, and the Policy is not being continued under the Death Benefit Guarantee Provision.

2. This Policy is ...

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