United States District Court, D. Rhode Island
FRANK C. MESSINA, in his capacity as Trustee of the Owen B. Gilman Irrevocable Life Insurance Trust dated March 15, 1994
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
REPORT AND RECOMMENDATION
LINCOLN D. ALMOND UNITED STATES MAGISTRATE JUDGE
before me for a report and recommendation (28 U.S.C. §
636(b)(1)(B)) are the parties' Cross-motions for Summary
Judgment. (ECF Doc. Nos. 15 and 17). For the following
reasons, I recommend that Plaintiff's Motion (ECF No. 17)
be GRANTED in part as to Counts I and V and Defendant's
Motion (ECF No. 15) be GRANTED in part as to Counts II, III
Frank C. Messina, C.P.A., is the Trustee of the Irrevocable
Life Insurance Trust Agreement of Dr. Owen B. Gilman dated
March 15, 1994. The Gilman Trust is the Owner and Beneficiary
of the Flexible Adjustable Life Insurance Policy Number
2118069 issued by Defendant Lincoln National Life Insurance
Company's predecessor-in-interest, Chubb Life Insurance
Co. of America. The Policy is a policy of universal life
insurance which provides both life insurance and a savings
element. (ECF Doc. No. 16 at ¶¶ 9-11). It allows
the policyholder to use accumulated savings or value, if
sufficient, to pay premiums. Id.
Gilman passed away on October 16, 2015 at the age of
seventy-seven. Dr. Gilman's widow, Mrs. Katherine E.
Gilman, is the sole beneficiary of the Trust that owns the
as Trustee, has made a claim against Defendant for payment of
the Death Benefit Proceeds under the Policy. Defendant has
denied the claim and contends that the Policy terminated
without value on October 8, 2015, prior to Dr. Gilman's
death, due to nonpayment of a premium due on August 1, 2015.
(See ECF Doc. Nos. 16-12, 16-13 and 16-14).
following undisputed facts are gleaned from the parties'
Local Rule CV 56(a) Statements. (ECF Doc. Nos. 16, 19, 20 and
Plaintiff and Dr. Owen B. Gilman applied for a policy of life
insurance from Chubb Life Insurance Company
(“Chubb”) on or about March 21, 1994.
According to the Application, Dr. Gilman was to be the
insured, and the Owen B. Gilman Irrevocable Life Insurance
Trust dated March 15, 1994 (the “Trust”), was to
be the owner of the Policy.
all relevant times, Plaintiff was the sole Trustee of the
Trust and a Fiduciary to the Trust's beneficiaries.
Application, signed by both Plaintiff and Dr. Gilman,
identifies Dr. Gilman's “Home Address” as
“88 Cooper Road, Warwick, RI 02886.” 5. The
Application also includes a business address for Dr.
Gilman's employer, Medical and Renal Associates. As to
billing, the Application under mailing address provides
“to Trustee see 5. above.” Item 5 identifies the
Proposed Owner as Plaintiff in his capacity as Trustee.
Although requested, no address is provided for Plaintiff.
signing the Application, both applicants certified under
penalties of perjury:
I HAVE READ, or have had read to me, the complete
application. All statements and answers in this application
are full, complete and true to the best of my knowledge and
belief. I UNDERSTAND that any false statements or
misrepresentations may result in the loss of coverage under
Jefferson Pilot Financial (“Jefferson Pilot”)
acquired Chubb in 1997, and Lincoln acquired Jefferson
Pilot's life insurance business in 2006.
Chubb, Lincoln's predecessor-in-interest, accepted the
Application and issued Flexible Premium Adjustable Life
Insurance Policy Number 2118069 (the “Policy”) on
June 6, 1994.
Policy is a policy of universal life insurance, which is a
kind of hybrid between term and whole life insurance.
Universal life insurance offers the flexibility of low-cost
protection, like term life insurance, as well as a savings
element, like whole life.
Universal life insurance typically provides that the death
benefit, savings component and premiums can be reviewed and
altered as a policyholder's circumstances change. For
example, universal life insurance allows the policyholder to
use the accumulated savings to pay premiums. Depending upon
the policy's accumulated value, the policyholder may use
that value to skip one or more premium payments, or the
policyholder may opt to make direct premium payments instead
and leave the savings component to potentially grow over
time. As long as the minimum cost of the insurance is
covered, either through paid premiums or accumulated value,
the insurance will stay in effect. However, if the minimum
cost of the insurance is not paid, either through premiums or
accumulated value, the insurance will lapse.
relevant part, the Policy states as to termination for
Grace Period - During the first three policy
years and subject to the Minimum Premiums Provision, the
policy enters the Grace Period if the cumulative premiums
paid less any partial Withdrawals and policy debt on a
monthly anniversary day is not sufficient to cover the
Minimum Premium requirements for the month following such
monthly anniversary day. A grace period of 61 days shall be
allowed for the payment of a premium sufficient to cover the
Minimum Premium requirements.
For the fourth policy year and thereafter, the policy enters
the Grace Period if the Accumulated Value less any debt on a
monthly anniversary day is not enough to cover the monthly
deduction for the month following such monthly anniversary
day. A grace period of 61 days shall be allowed for the
payment of a premium sufficient to cover the monthly
deduction. The monthly deduction is defined in the Policy
If the premium is not paid within the Grace Period, this
policy will terminate without value. This policy will not
terminate until 31 days after a notice of such premium is
mailed to the last known address of the Owner.
If the Insured dies during the Grace Period, the Company will
deduct any overdue premium which is applicable to the Grace
Period from the proceeds of the policy.
Policy Lapse - If the premium is not paid
within the Grace Period, this policy will lapse or terminate
without value. However coverage will not end until 31 days
after we have mailed a premium notice to you, and any
assignee of record, at the last known address.
the event of a lapse, the Policy also provides for
reinstatement as follows:
Reinstatement - Reinstatement is the
restoration of the policy after it has lapsed so following
reinstatement the policy will have been put back inforce
[sic] as if it had never lapsed.
If this policy lapses or terminates as provided in the Grace
Period subsection, we will reinstate the policy if we
receive: (1) Your written request for reinstatement within
five years after the end of the Grace Period and before the
Maturity Date; (2) satisfactory proof the Insured is living
and insurable at the original rating class; (3) payment of
all cumulative Minimum Premiums required to date if the
policy entered the Grace Period within the first three policy
years or a payment of a premium sufficient to keep the policy
inforce [sic] for two months if the policy entered the Grace
Period in policy year four or later; and (4) payment or
reinstatement of any debt against the policy which existed on
the date of termination.
The effective date of a reinstated policy or reinstatement
date is the date we approve the application for
reinstatement. The Accumulated Value of the policy on the
reinstatement date shall be the Accumulated Value on the date
of termination plus the premium received to reinstate the
policy. Any surrender charges in effect on reinstatement
shall be as defined in the Cash Value subsection of the
Policy Values section based on the original policy date and
Following Chubb's issuance of the Policy, Dr. Gilman and
his wife made initial premium payments on the Policy by
personal checks of $6, 000 on June 3, 1994; $24, 000 on
November 15, 1994; and $21, 218 on January 18, 1995.
Each of these checks bear the Gilman's “88 Cooper
Road” address but no separate address for the Trust.
April 13, 1995, Chubb mailed the Trust an annual premium
notice at the “88 Cooper Road” address.
addition to requesting the planned annual premium of $6, 000,
which was due May 1, 1995, the April 13, 1995 notice
explicitly asks the recipient to “SEND NAME &
ADDRESS CHANGES AND ALL OTHER CORRESPONDENCE” to a
specific Chubb address.
April 13, 1995 notice goes on to say, under a heading that
says, “PLEASE READ:”
If your coverage is a universal life plan, we are simply
reminding you of your current planned premium. Universal life
premium payments may be paid in any amount or at any time
(subject to certain policy limitations). However, variations
from your planned payments may affect this coverage.
Therefore, a periodic review of the planned premium amount
with your Chubb Life America representative, should assure
the premiums are sufficient to keep this coverage inforce
[sic] and attain your financial goals.
discovery, Plaintiff admitted receiving the April 13, 1995
premium notice from the Gilmans in 1995. At that time, the
Gilmans also gave Plaintiff a $6, 000 check to pay the