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Barratt v. Metropolitan Life Insurance Co.

United States District Court, D. New Jersey

March 26, 2015

Alwyne BARRATT, individually and as executrix of the estate of Alvin Barratt, Plaintiff,
v.
METROPOLITAN LIFE INSURANCE COMPANY, METROPOLITAN INSURANCE AND ANNUITY COMPANY, METROPOLITAN LIFE AND AFFILIATED COMPANIES, aka METLIFE INSURANCE COMPANY agent of METLIFE, Defendants.

OPINION

KEVIN MCNULTY, District Judge.

This case arises out of an insurance coverage dispute. Plaintiff Alwyne Barratt ("Barratt"), individually and as executrix of the estate of her husband, Alvin Barratt, is suing Defendant Metropolitan Insurance & Annuity Co., Inc., now known as Metropolitan Tower Life Insurance Company ("MetLife"). Barratt alleges that MetLife wrongfully failed to pay her death benefits from her late husband's life insurance policy.[1]

Now before the Court are the parties' cross-motions for summary judgment. For the reasons set forth below, MetLife's motion for summary judgment on Count V (violation of the covenant of good faith and fair dealing) is GRANTED. Both sides' motions for summary judgment are otherwise DENIED.

Barratt has agreed to voluntarily withdraw Counts II (violation of the New Jersey Consumer Fraud Act), III (common law legal and equitable fraud), and VI (estoppel and waiver) of the complaint. Counts II, III, and VI will therefore be DISMISSED without prejudice. Count IV (breach of a covenant of performance) will also be DISMISSED without prejudice because it is redundant in light of Count I (breach of contract).

I. BACKGROUND

a. Facts[2]

i. The 1986 Policy covering Alvin Barratt

On December 11, 1986, Plaintiff Alwyne Barratt's husband, Alvin Barratt ("the Insured" or "Alvin"), purchased a life insurance policy ("1986 Policy") from MetLife. (PS 24 ¶ 1). The value of the 1986 Policy was $100, 000. (Id. ¶ 2). It was a flexible premium policy, meaning that the actual amount that Alvin was obligated to pay each month could be changed upon Alvin's request, so long as there was enough money in the so-called "Accumulation Fund" to maintain coverage. ( See id. ¶ 10; DS 24 ¶ 10 (citing McCarthy Aff. Ex. A, Bates No. 000007)).

The 1986 Policy also contained a Spouse Term Rider, which provided a death benefit to Alwyne Barratt in the amount of $100, 000. (PS 24 ¶ 2). On April 11, 1991, Alvin Barratt increased the value of the 1986 Policy to $250, 000. (Id. ¶ 4).

The 1986 Policy included a "Rider Regarding the Payment of Planned Premiums Under the Check-O-Matic Arrangement, " under which MetLife would automatically withdraw monthly premiums for the 1986 Policy from Alvin Barratt's Merrill Lynch bank account, xxxx3501 ("designated account" or "joint account"). (Id. ¶¶ 5-7; DS 24 ¶¶ 5-7). The terms of the Check-O-Matic Rider are as follows:

This rider provides that planned premiums for this policy will be payable each month under the Check-O-Matic arrangement. Under this arrangement, we are authorized to draw checks or share drafts, or to issue directions to debit a bank account, each month to pay the planned premium.

This rider will end if:

1. We do not receive the full amount of any check, share draft, or account debit charged by us;
2. The insured, the owner if other than the insured, or the account depositor sends us a written request to end the rider; or
3. We send a written notice that the rider will end to the insured, the owner if other than the insured, and the account depositor.
If this rider ends while the policy is in force further planned premiums will be payable directly to us. Premiums may be paid at any time and in any amount subject to the terms of the policy.

(McCarthy Aff. Ex. A, Bates No. 000018).

ii. The 1991 Policy covering Alwyne Barratt

On or about May 11, 1991, the spousal coverage for Alwyne Barratt under Alvin's 1986 Policy was converted into a separate life insurance policy for Alwyne Barratt in the amount of $100, 000 ("1991 Policy"). (PS 24 ¶ 11; DS 24 ¶ 11). The monthly premium payment for the 1991 Policy was $117, and it was paid consistently from April 24, 1991 through June 13, 2011. (DS 24 ¶¶ 17-18). Barratt's bank statements for the Designated Account reflect a monthly deduction to MetLife for $117 during this time period. (PS 24 ¶ 15 (citing Pl. Ex. 8)); DS 24 ¶ 15 ("MetLife's records show that monthly premium payments of $117 consistently were paid on the 1991 Policy via Check-O-Matic From April 24, 1991 through June 13, 2011")).

iii. Payment History for the 1986 Policy

According to MetLife's records, monthly Check-O-Matic payments of $125 were paid for the 1986 Policy until May of 1990. (DS 24 ¶ 8 (citing McCarthy Aff. ¶¶ 4, 6, 8, Ex. B)). MetLife, citing to its record of the Policy Cash Flow History, asserts that from May 1990 to February 1992, sporadic payments were made for the 1986 Policy; from February 1992 to May 1998, monthly payments of $38 were made; and from May 1998 to August 2000, monthly payments of $85.35 were made. (DS 24 ¶ 15 (citing McCarthy Aff. ¶¶ 4, 6, 8, Ex. B)). MetLife also asserts that on April 27, 1998, a single payment of $332.58 was made for the 1986 Policy. (DS 13 ¶ 11).

The fluctuations in the payments to some extent reflect Alvin Barratt's requested changes. On or about January 29, 1991, Alvin executed a Request for Change in the Planned Premium Payment Amount, which reduced the monthly premium payment from $125 to $38. (PS 24 ¶ 12; DS 24 ¶ 12; McCarthy Aff. Ex. C). On or about April 25, 1998, Alvin executed another Request for Change in the Planned Premium Payment Amount, which increased the monthly premium payment from $38 to $85.35. (PS ¶ 4; DS ¶ 4).

MetLife explains that although the payments from May 1990 to February 1992 were sporadic, there were sufficient funds in the Accumulation Fund to pay the monthly premiums for the 1986 Policy for this time period, so that the coverage remained in force. (DS 13 ¶ 7).

Barratt verbally disputes that payments were sporadic, but does not cite any evidence regarding payments. (PS 13 ¶ 6). Rather, Barratt asserts that "MetLife had the contractual obligation to withdraw funds via Check-O-Matic from Barratt's Merrill Lynch account." In support, she cites bank statements for the Designated Account for a time ...


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