HESLIN v. METROPOLITAN LIFE INSURANCE COMPANY

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Supreme Court, Appellate Division, Third Department, New York.

Raymond W. HESLIN Sr. et al., Appellants, v. METROPOLITAN LIFE INSURANCE COMPANY et al., Respondents.

Decided: November 29, 2001

Before:  MERCURE, J.P., PETERS, SPAIN, CARPINELLO and ROSE, JJ. Lynch & Lynch (Gregory W. Kehoe, James, Hoyner, Newcomer & Smiljanich P.A., Tampa, Florida, of counsel), Albany, for appellants. Featherstonhaugh, Conway, Wiley & Clyne L.L.P. (Douglas W. Dunham of Skadden, Arps, Slate, Meagher & Flom L.L.P., New York City, of counsel), Albany, for respondents.

Appeal from an order of the Supreme Court (Teresi, J.), entered October 30, 2000 in Albany County, which granted defendants' motion to dismiss the second amended complaint for failure to state a cause of action.

The instant action was commenced by former and present police officers of the City of Cohoes, Albany County, and certain members of their families 1 against defendant Metropolitan Life Insurance Company and its agent, defendant Jeffrey Roberts, and is one of many lawsuits commenced by purchasers of life insurance policies who were allegedly lured into such sales by a marketing ploy commonly referred to as the “vanishing premium” (see, e.g., Cole v. Equitable Life Assur. Socy. of U.S., 271 A.D.2d 271, 707 N.Y.S.2d 56;  Furey v. Guardian Life Ins. Co., 261 A.D.2d 355, 689 N.Y.S.2d 208, lv. denied 93 N.Y.2d 811, 695 N.Y.S.2d 540, 717 N.E.2d 699;  Goldberg v. Manufacturers Life Ins. Co., 242 A.D.2d 175, 672 N.Y.S.2d 39, lv. dismissed, lv. denied 92 N.Y.2d 1000, 684 N.Y.S.2d 186, 706 N.E.2d 1210;  De Arman v. Liberty Natl. Life Ins. Co., 786 So.2d 1090[Ala.];  Banks v. New York Life Ins. Co., 737 So.2d 1275 [La.], cert. denied 528 U.S. 1158, 120 S.Ct. 1168, 145 L.Ed.2d 1078;  Koehler v. Merrill Lynch & Co., 706 So.2d 1370 [Fla.];  Kortebein v. American Mut. Life Ins. Co., 49 S.W.3d 79[Tex.];   Varacallo v. Massachusetts Mut. Life Ins. Co., 332 N.J.Super. 31, 752 A.2d 807;  Romig v. Jefferson-Pilot Life Ins. Co., 132 N.C.App. 682, 513 S.E.2d 598, affd. 351 N.C. 349, 524 S.E.2d 804;  Kuebler v. Equitable Life Assur. Socy. of U.S ., 219 Mich.App. 1, 555 N.W.2d 496).   In their second amended complaint, which contains eight causes of action (breach of fiduciary duty, fraud, fraudulent inducement, negligent supervision, conspiracy to commit fraud and violations of General Business Law § 349 and Insurance Law §§ 2123 and 4226), plaintiffs allege that they were induced into purchasing whole or universal life insurance policies based on deceptive illustrations and false representations that their policy premiums would “vanish” after a certain period of time.

At issue on appeal is the propriety of Supreme Court's decision dismissing the complaint for failure to state a cause of action.   The allegations in the subject complaint make this case nearly indistinguishable from other cases that have made their way through the court system in this State in recent years, including two separate appeals to the Court of Appeals (see, Gaidon v. Guardian Life Ins. Co. of Am., 96 N.Y.2d 201, 727 N.Y.S.2d 30, 750 N.E.2d 1078;  Gaidon v. Guardian Life Ins. Co. of Am., 94 N.Y.2d 330, 704 N.Y.S.2d 177, 725 N.E.2d 598).   Based upon our review of these cases, we conclude that dismissal of all eight causes of action was warranted and, accordingly, affirm.

Gaidon v. Guardian Life Ins. Co. of Am., 255 A.D.2d 101, 679 N.Y.S.2d 611, mod. 94 N.Y.2d 330, 704 N.Y.S.2d 177, 725 N.E.2d 598, as here, was an action arising out of the defendants' sale of life insurance policies utilizing the “vanishing premium” concept and a preanswer motion to dismiss such action for failure to state a cause of action.   The First Department concluded that the plaintiffs could not state a cause of action for, inter alia, fraud, fraudulent inducement, breach of fiduciary duty, negligent supervision or General Business Law § 349 and Insurance Law §§ 2123 and 4226 violations (id., at 101-102, 679 N.Y.S.2d 611).   Similarly, in Goshen v. Mutual Life Ins. Co. of N.Y. (Sup.Ct., N.Y. County, Oct. 21, 1997, Shainswit, J., affd. 259 A.D.2d 360, 684 N.Y.S.2d 791, mod. 94 N.Y.2d 330, 704 N.Y.S.2d 177, 725 N.E.2d 598), the trial court found that the plaintiffs, also purchasers of life insurance policies marketed under the vanishing premium scheme, failed to state a cause of action for, inter alia, fraud, fraudulent inducement, negligent supervision, breach of fiduciary duty or General Business Law § 349 and Insurance Law § 4226 violations, and this decision was affirmed on appeal to the First Department.   The First Department's decisions in Gaidon and Goshen were companion cases in Gaidon v. Guardian Life Ins. Co. of Am., 94 N.Y.2d 330, 704 N.Y.S.2d 177, 725 N.E.2d 598, supra [hereinafter Gaidon I ] and each was affirmed by the Court of Appeals in all respects but one, namely, the Court determined that the plaintiffs in each case had stated a cause of action under General Business Law § 349.

 Thus, under the strength of the First Department decisions in Gaidon and Goshen, as affirmed by the Court of Appeals in Gaidon I, plaintiffs' causes of action here sounding in breach of fiduciary duty, fraud, fraudulent inducement, negligent supervision and Insurance Law §§ 2123 and 4226 violations were properly dismissed for failure to state a cause of action (see, Batas v. Prudential Ins. Co. of Am., 281 A.D.2d 260, 724 N.Y.S.2d 3;  see generally, Cole v. Equitable Life Assur. Socy. of U.S., 271 A.D.2d 271, 707 N.Y.S.2d 56, supra;  Furey v. Guardian Life Ins. Co., 261 A.D.2d 355, 689 N.Y.S.2d 208, supra ).   Moreover, since civil conspiracy does not exist as an independent cause of action, the conspiracy to commit fraud claim was also properly dismissed (see, Pappas v. Passias, 271 A.D.2d 420, 421, 707 N.Y.S.2d 178).

 The remaining cause of action-defendants' alleged violation of General Business Law § 349-requires an analysis of the Court of Appeals' decision in Gaidon v. Guardian Life Ins. Co. of Am., 96 N.Y.2d 201, 727 N.Y.S.2d 30, 750 N.E.2d 1078, supra [hereinafter Gaidon II ].   Pursuant to Gaidon II, it has been established that the Statute of Limitations for a General Business Law § 349 cause of action is three years and accrues when the owner of a “vanishing premium” life insurance policy is first called upon to pay an additional premium (id., at 210-212, 727 N.Y.S.2d 30, 750 N.E.2d 1078).   Here, even liberally construing the amended complaint, there is no allegation that any plaintiff has reached the “vanish” date or has yet been called upon by either defendant to pay an additional premium on the subject policies.   Thus, no plaintiff has sufficiently pleaded an injury.   Being unpersuaded by plaintiffs' attempt to distinguish their claim from that at issue in Gaidon II, we find that the General Business Law § 349 claim was properly dismissed by Supreme Court as premature .2

ORDERED that the order is affirmed, with costs.

FOOTNOTES

1.   We agree with defendants' claim that plaintiffs Carol Meaker, Theresa Iachetta and Brenda Enfield do not have standing to commence this action as none purchased any of the subject policies (see, Gaidon v. Guardian Life Ins. Co. of Am., 272 A.D.2d 60, 707 N.Y.S.2d 166, affd. 96 N.Y.2d 201, 727 N.Y.S.2d 30, 750 N.E.2d 1078).

2.   Given a January 28, 2000 guarantee by Metropolitan Life to plaintiffs' attorney that no plaintiff will be required to make any additional cash premium payments beyond the “vanish date” of the respective life insurance policies so long as the “premiums are paid to the alleged ‘vanish date’ and if dividend values are left with the policy and available to be applied to future premium payments”, it is doubtful that this claim will ever actually accrue.

CARPINELLO, J.

MERCURE, J.P., PETERS, SPAIN and ROSE, JJ., concur.

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