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Estate of Bain v. Transamerica Life Insurance Company

United States District Court, E.D. Wisconsin

July 6, 2018




         Plaintiff, the Estate of Bernice Bain, initiated this action against Transamerica Life Insurance Company, alleging breach of contract, bad faith, misrepresentation, and entitlement to punitive damages arising out of Transamerica's denial of a claim for benefits under an insurance contract. The court previously entered an order identifying deficiencies in the complaint's pleading of jurisdiction and directing the Estate to file an amended complaint establishing the basis for federal jurisdiction. ECF No. 26. Although the Estate did not timely file an amended complaint, Transamerica has filed a response regarding the citizenship of the parties. ECF No. 27. With regard to Bernice Bain, Transamerica has submitted several documents indicating that she was a resident of Wisconsin, and it represents that her death certificate identifies De Pere, Wisconsin, as her place of residence. ECF No. 27-1. Bain's Estate is therefore a citizen of Wisconsin. 28 U.S.C. § 1332(c)(2). As for Transamerica, it represents that it is an Iowa corporation with it principal place of business in Cedar Rapids, Iowa. ECF No. 27-2. Because the Estate is a citizen of Wisconsin, Transamerica is a citizen of Iowa, and the Estate seeks not only $22, 000 in compensatory damages but also attorney's fees and punitive damages in an amount exceeding $75, 000, the court finds that it has jurisdiction pursuant to 28 U.S.C. § 1332.

         With jurisdiction established, the court will proceed to address Transamerica's pending motion to dismiss Count II (Bad Faith), Count III (Misrepresentation), and Count IV (Punitive Damages) of the complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. ECF No. 13. For the reasons set forth below, Transamerica's motion will be granted-in-part and denied-in-part. The Estate's claim for misrepresentation will be dismissed, and discovery regarding the bad faith claim and entitlement to punitive damages will be stayed pending resolution of the breach of contract claim.


         The following facts are taken from the Estate's complaint, as well as the copy of the insurance policy and denial letter attached to Transamerica's motion to dismiss. Federal Rule of Civil Procedure 12(d) provides that “[i]f, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56.” Seventh Circuit precedent, however, provides that “documents attached to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to his claim, ” although “this is a narrow exception aimed at cases interpreting, for example, a contract.” Levenstein v. Salafsky, 164 F.3d 345, 347 (7th Cir. 1998) (quoting Wright v. Assoc. Ins. Cos., 29 F.3d 1244, 1248 (7th Cir. 1994)). Because both the insurance policy and the denial letter submitted by Transamerica in support of its motion to dismiss are referred to in the complaint and central to the Estate's claim, the court will not convert this motion into one for summary judgment.

         In September 1999, Bernice Bain purchased an insurance policy from Bankers United Life Assurance Company, which later merged with another insurance company that itself ultimately merged with Transamerica. ECF No. 1 ¶ 3; ECF No. 14-1 at 2, 6. The Estate characterizes the policy generally as a “long term care policy, ” whereas Transamerica describes it as a “Nursing Home Care Insurance Policy.” ECF No. 15 ¶ 3. Bain paid all premiums due under the policy. ECF No. 1 ¶ 4.

         Prior to June 29, 2017, Bain submitted a claim for long-term care benefits under the policy to cover her expenses during her stay at the Angels Touch Assisted Living facility. Id. ¶ 5. Transamerica denied the claim in a letter on June 29, 2017. Id. ¶ 7; see also ECF No. 14-2. The letter explained that Angels Touch did not satisfy the definition of Nursing Home in the policy, which therefore did not provide benefits for the stay. ECF No. 14-2 at 2-3. The policy contained the following grant of coverage: “We will pay the actual charges incurred for each day You are confined in a Nursing Home . . . .” ECF No. 14-1 at 29. It also expressly defined “Nursing Home” as follows:

         A facility, or that part of a facility, which:

(1) is licensed by the state as a nursing home or an Alzheimer's Disease facility; and
(2) is engaged in providing, in addition to room and board accommodations, nursing care and related services on a continuing inpatient basis; and
(3) provides, on a formal prearranged basis, a Nurse who is on duty or on call at all times; and
(4) has a planned program of policies and procedures developed with the advice of, and periodically reviewed by, at least one Physician; and
(5) maintains a clinical record of each patient.
A Nursing Home may be either a freestanding facility or a distinct part of a facility such as a ward, wing, unit, or swing-bed of a hospital or other institution. If the facility complex to which You are confined consists of wards, wings, floors, units, or swing-beds the area of the facility in which You are confined must be licensed ...

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