United States District Court, D. Connecticut
LAURA L. PALUMBO, individually and as Trustee of the William J. Palumbo Irrevocable Insurance Trust Agreement, dated November 111994, and; WILLIAM J. PALUMBO, individually and as Grantor of the William J. Palumbo Irrevocable Insurance Trust Agreement, dated November 111994, Plaintiffs,
NATIONWIDE LIFE INSURANCE COMPANY, Defendant.
MEMORANDUM OF DECISION ON DEFENDANT'S MOTION TO
W. EGINTON SENIOR UNITED STATES DISTRICT JUDGE
Laura L. Palumbo and William J. Palumbo bring this diversity
action against defendant Nationwide Life Insurance Company to
recover damages sustained as a result of allegedly false
representations regarding the cost of insurance charges and
the cost of insurance rates under variable life insurance
policies numbered 1190193880 and 1190371850. Plaintiffs
allege fraud, violation of the Connecticut Unfair Trade
Practices Act (“CUTPA”), violation of the
Connecticut Unfair Insurance Practices Act
(“CUIPA”), breach of contract, breach of the
implied covenant of good faith and fair dealing, and unjust
enrichment. In addition, plaintiffs seek declaratory relief
as to their rights under the policies. Defendant has moved to
dismiss the complaint in its entirety. For the following
reasons, defendant's motion will be denied.
allege that the life insurance policies purchased from
defendant by the Palumbo Trust in 1994 and 1996 contain false
representations and omissions of material facts regarding the
cost of insurance charges and cost of insurance rates under
policies provide that any changes in the cost of insurance
charges deducted from the policies will be based on changes
in future expectations for such factors as investment
earnings, mortality, persistency, expenses, and taxes. The
policies also provide that "[c]urrent cost of insurance
rates will be determined by [Nationwide] based on our
expectations as to future mortality costs and expenses."
the inception of the policies, defendant has increased the
amount of the cost of insurance charges deducted from the
policies for reasons wholly unrelated to changes in future
expectations for such factors as investment earnings,
mortality, persistency, expenses and taxes, contrary to the
clear and explicit terms of the policies. Defendant has
failed to determine and apply to the policies current cost of
insurance rates based on its expectations as to future
mortality costs and expenses, contrary to the clear and
explicit terms of the policies.
repeated increases in charges was designed solely to increase
the profits of defendant at plaintiffs' expense.
function of a motion to dismiss is "merely to assess the
legal feasibility of the complaint, not to assay the weight
of the evidence which might be offered in support
thereof." Ryder Energy Distribution v. Merrill Lynch
Commodities, Inc., 748 F.2d 774, 779 (2d Cir. 1984).
When deciding a motion to dismiss, the Court must accept all
well-pleaded allegations as true and draw all reasonable
inferences in favor of the pleader. Hishon v. King,
467 U.S. 69, 73 (1984). The complaint must contain the
grounds upon which the claim rests through factual
allegations sufficient “to raise a right to relief
above the speculative level.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 556 (2007). A plaintiff is
obliged to amplify a claim with some factual allegations in
those contexts where such amplification is needed to render
the claim plausible. Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009).
of Plaintiffs' Claims
argues that “plaintiffs' allegations are limited to
the notion that Nationwide was obligated to apply the same
cost of insurance charges to the Policies every year, without
any increases.” The Court disagrees. Plaintiffs do not
allege that Nationwide was prohibited from adjusting the
amounts of cost of insurance charges. Rather, plaintiffs
assert that under the contracts, changes in the cost of
insurance charges must be based on changes in future
expectations for such factors as investment earnings,
mortality, persistency, expenses, and taxes. Further,
plaintiffs proffer that defendant increased the amount of the
cost of insurance for wholly unrelated reasons, contrary to
the clear and explicit terms of the policies. Plaintiffs'
claims will not be dismissed on general plausibility grounds.
argues that plaintiffs were made aware of these allegedly
impermissible increases in charges under both policies no
later than 1997, rendering any claims time-barred. However,
plaintiffs allege that defendant impermissibly increased the
cost of insurance charges at issue up to the filing of the
instant lawsuit. “When the wrong sued upon consists of
a continuing course of conduct, the statute does not begin to
run until that course of conduct is completed.”
Handler v. Remington Arms Co., 144 Conn. 316, 321
(1957). Moreover, plaintiffs point out that they were not
privy to defendant's formulas for calculating the cost of
insurance charges, so they lacked notice of defendant's
misdeeds. Indeed, plaintiffs contend that defendant
fraudulently concealed the existence of the instant causes of
action, preventing their accrual until plaintiffs'
discovery in September 2014. See Conn. Gen. Stat.
responds by reiterating that “any such purported breach
or fraudulent conduct was disclosed to Plaintiffs year after
year since 1997, ” so defendant could not have
intentionally concealed facts from plaintiffs. This argument
is not persuasive, as knowledge of the specific amount of
cost of insurance charges or knowledge that charges were
increasing is not the same as knowledge of fraudulent
calculation by defendant (i.e., knowledge that charges were
not based on the factors set ...