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Brzezinski v. Jackson National Life Insurance Co.

United States District Court, W.D. Wisconsin

May 29, 2018

ANTHONY P. BRZEZINSKI and ANTHONY P. BRZEZINSKI REVOCABLE TRUST, Plaintiffs,
v.
JACKSON NATIONAL LIFE INSURANCE COMPANY, Defendant.

          OPINION AND ORDER

          STEPHEN L. CROCKER, MAGISTRATE JUDGE.

         This is a civil removal action in which the plaintiffs, Anthony P. Brzezinski and Anthony P. Brzezinski Revocable Trust, seek rescission of a life insurance policy issued by defendant Jackson National Life Insurance Company in 1997. Plaintiffs contend that defendant violated a state administrative provision that in 1997 required insurers to notify a policyholder that he or she had 20 days to return the policy after delivery for a full refund of all premiums paid on the policy. Although the policy contains this notice, plaintiffs insist they never received a copy of the policy when it was issued, and that therefore they can retroactively invoke their right to return the policy and obtain a full refund of 20 years' worth of premiums totaling $567, 840.

         Even if the court accepts plaintiffs' claim that they did not receive a copy of the policy until 2016, plaintiffs cannot recover on their claim. The reasons are legion: Plaintiffs cannot bring a private cause of action to enforce Wisconsin's insurance regulations; plaintiffs were not the owners of the policy when it originally issued; plaintiffs' have not alleged any misrepresentations of fact by defendant; and, plaintiffs acknowledged and benefitted from the policy prior to bringing this lawsuit. Accordingly, the court is granting summary judgment to defendant and denying plaintiff's cross-motion.

         OPINION

         The material facts are largely undisputed. In 1997, defendant Jackson National Life Insurance Company (JNL) issued a $750, 000 life insurance policy on the life of plaintiff Anthony B. Brzezinski, who then was 69 years old.[1] The policy had a maximum term of 31 years with a $750, 00 death benefit. The policy was a form of a whole life policy, the cost of which was adjusted annually based on actuarial calculations and interest rates. It guaranteed a monthly premium of $2, 535 for at least 15 years. In addition to providing a death benefit of $750, 000, the policy built cash value, meaning that the owner could take loans against it and use it as collateral.

         The owners of the policy were Brzezinski's brother Bernard and his nephew, Paul Stankowski. Ownership changed when the plaintiff Trust was created in 2003 and took sole ownership in 2004. Anthony Brzezinski has never owned the policy, but for nearly 20 years he paid the monthly premiums.

         In January 2016, JNL advised Brzezinski that it was increasing his monthly premium from $2, 535 to $10, 000. Dismayed at this large jump, Brzezinski filed a complaint with Wisconsin's Office of the Commissioner of Insurance, asserting that he was not aware from his agent or the policy that his premiums would increase, and requesting that JNL maintain his monthly premiums at the original rate. In response, JNL offered Brzezinski an endorsement to the policy that would have allowed him to continue paying $2, 535 monthly premiums for the life of the policy. Brzezinski refused to sign the endorsement. The policy subsequently lapsed.

         In early 2017, Brzezinski and the Anthony P. Brzezinski Revocable Trust[2], for which Brzezinski is sole trustee and which is listed as the owner of the policy, filed a lawsuit seeking rescission of the life insurance policy.[3] Plaintiffs contend that they are entitled to rescission because Brzezinski did not receive a copy of the policy in 1997. Plaintiffs' claim for rescission is grounded solely on Wis. Admin. Code Ins. § 2.07(6)(a)(4), which in 1997 required that an insurer selling a replacement policy through an agent must:

Guarantee to the policyholder at least a 20-day right to return the policy after delivery for a full refund of premium, and provide a written notice attached to, or as part of, the first page of the policy informing the policyholder of this right.

         Admin. Code § Ins. § 2.07(5)(a)(4)(d) (1997).

         Plaintiffs allege that JNL violated this provision by not providing Brzezinski with a copy of the policy when it was issued in 1997; therefore, they argue, Brzezinski was not provided with notice of his right to return the policy and receive a refund. According to plaintiffs, this failure now entitles them, 20 years later, to return the policy for a full refund of all premiums paid. Plaintiffs are mistaken.

         As an initial observation, Brzezinski's claim that he never received a copy of the policy is, at best, implausible. Mark Henry, the insurance agent who sold the policy, avers that he hand-delivered a copy of the policy to Brzezinski at his home, which was Henry's customary practice for all life insurance policies that he sold then. Dtk. 27, ¶18. Brzezinski, on the other hand, does not recall any of the circumstances surrounding the application and issuance of this policy other than his belief that he obtained it at the urging of his accountant. Brzezinski admits that he never asked anyone how life insurance worked in general and he never asked anyone any questions about this particular policy until the instant dispute arose over the premium hike. Brzezinski admits that he did not read or pay attention to policy-related documentation provided by JNL; in fact, he routinely threw away correspondence from JNL without reading it. All of this being so, whether Brzezinski actually received a copy of the policy in 1997 is a disputed fact. It is, however, immaterial to the outcome. Plaintiffs' claim fails for a number of other reasons, none of which turns on any disputed fact.

         For starters, Brzezinski has never owned the policy, and the Trust did not become its owner until 2004. Indeed, the Trust, which was established on December 18, 2003, did not exist at the time the policy was issued in 1997. For reasons that no one recalls with certainty, the owners of the policy until the Trust took ownership in 2004 were Brzezinski's brother Paul and nephew Bernard.[4] Wis. Admin. Code § Ins. 2.07 required that notice be provided to “the policyholder, ” which was neither Brzezinski nor the Trust.

         In any case, even if plaintiffs could establish that they were entitled to receive notice under Section 2.07, they cannot assert a private right of action against JNL under that provision. As other courts in this circuit have recognized, “the statutes and regulations of Wisconsin's insurance industry do not create a private right of action.” Van Den Heuvel v. AI Credit Corp., No. 12-C-0327, 2014 WL 12651232, *11 (E.D. Wis. Apr. 11, 2014) (citing Kranzush v. Badger State Mut. Cas. Co., 103 Wis.2d 56, 76-82, 307 N.W.2d 256 (1981)). N.A.A.C.P. v. Am. Family Mut. Ins. Co., 978 F.2d 287, 302 (7th Cir. 1992) (“Wis. Stat. § 601.64(3)(c) and (4) set out penalties for transgressions against insurance statutes and rules; damages in private actions are not among them.”); Mohs v. Metro. Life Ins. Co., No. 00-C-0543-C, 2000 WL 34236003, at *1 (W.D. Wis. Nov. 24, 2000) (“Nothing in Wis.Stat. §§ 610.21or 180.1502 (formerly, § 180.847) suggests that these statutes create private rights of action, that is, rights that would accrue to an individual and allow the individual to sue for violations of the right.”); Duir v. John Alden Life Ins. Co., 573 F.Supp. 1002, 1010 (W.D. Wis. ...


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