Correa v. New England Life Insurance Company

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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RAUL CORREA and GLADYS CORREA,

Plaintiffs,

MEMORANDUM & ORDER

20-CV-3711(EK)(MMH)

-against-

NEW ENGLAND LIFE INSURANCE COMPANY

and BRIGHTHOUSE FINANCIAL, INC.,

Defendants.

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ERIC KOMITEE, United States District Judge:

Raul and Gladys Correa seek a declaratory judgment

that a life insurance policy they own remains in effect. The

policy was issued by the New England Life Insurance Company,

which is referred to herein as “NELICO.” The Correas assert

that because they never received proper notice that the policy

would lapse for lack of payment, NELICO could not have legally

terminated the policy.

NELICO now moves for summary judgment, arguing

primarily that the undisputed facts are sufficient to establish

a legal presumption that notice was properly mailed and received

prior to the policy’s termination. For the reasons that follow,

that motion is granted in part and denied in part.

I. Background1

The Correas purchased the life insurance policy at

issue from a bankruptcy estate. Pl. 56.1 Resp., at 24 ¶ 1. The

policy insures the lives of Wilmos and Olga Friedman. Id. at 1

¶ 1. The Correas appear to have made a practice of buying

insurance policies for investment: they own “over seventy life

insurance policies.” Raul Correa Declaration (“Correa Decl.”)

¶ 8, ECF No. 62-2. They manage the policies through an entity

they control called Insurance Advisors and Administrators. Id.

¶¶ 4, 8. The Correas, who reside in Florida, maintain a post

office box in Miami at which they receive insurance notices.

Id. ¶¶ 3, 6.

A. The Policy

NELICO issued the Flexible Premium Adjustable Variable

Survivorship Life insurance policy at issue — hereinafter simply

“the policy” — in 2000. It insured the lives of two Brooklyn

residents, Wilmos and Olga Friedman, for $2.3 million. Policy

at 4, 33, ECF No. 61-4.2 If both Friedmans died before the

1 The facts in this order are drawn from the parties’ submissions in

connection with the motion for summary judgment, including the defendants’

Local Rule 56.1 Statement (“Def. 56.1” (ECF No. 61-2)) and plaintiffs’

response to this statement (“Pl. 56.1 Resp.” (ECF No. 62-1)). The Court

views the facts in the light most favorable to the plaintiff. Citations to a

party’s Rule 56.1 Statement incorporate by reference the documents cited

therein.

2 This was the face amount of the policy, but the amount actually paid

would “depend on the Death Benefit Option in effect” when the last insured

died and would be reduced to reflect an outstanding loan balance. Policy at

16.

policy’s “Maturity Date,” the death benefit would become payable

on the latter death. Policy at 11, 16.

The original owner of the policy — and the beneficiary

thereunder — was the Friedmans’ son Moses. Id. at 34. The

Policy allowed the transfer of ownership, as well as changes to

the designated beneficiary, upon written notice to NELICO. Id.

at 25. In January 2015, ownership transferred to the Correas,

ECF No. 1-4, at 2, who became co-owners and co-beneficiaries.

Id.; ECF No. 1-3, at 5; Pl. 56.1 Resp. at 24 ¶ 1.

The policy required the payment of “annual premiums”

of $45,000 for the first four years of the policy, $15,000 for

years five through ten, and $0 thereafter. Policy at 4. It

also required the payment of monthly expense charges and

administrative charges. Id. at 5. The policy provided some

optionality as to the timing of payments: they could be made “at

any frequency agreed to by” NELICO. Id. at 18.

In the ordinary course, however, the policy holder was

not required to cut a check to pay premiums. Instead, NELICO

would make a monthly deduction from the policy’s “cash value” on

the first of every month — if the cash value exceeded the amount

then due. Id. at 19, 21. That is, to the extent that the cash

value was sufficient to cover the required premium (plus

expenses and administrative charges), NELICO simply reduced the

cash value of the policy by that total.

If, on the other hand, the cash value was insufficient

to cover a monthly deduction, the Policy required NELICO to

“mail a premium notice to [the owner] at [the] address on

record.” Id. 19. It also triggered the beginning of a grace

period — the owner would have “62 days from the date when the

Monthly Deduction was due in which to pay a premium large enough

to permit the Monthly Deduction to be made.” Id. But “[i]f the

premium remain[ed] unpaid at the end of its 62-day grace period,

the Policy [would] lapse without value.” Id.3

B. NELICO “Terminates” the Policy

NELICO used a third-party administrator, Alliance

One, to administer life insurance policies, including by mailing

out notices. Pl. 56.1 Resp. at 5 ¶¶ 15, 17.4 According to

NELICO, Alliance One determined on June 7, 2018, that the cash

value of the Correas’ policy was insufficient to pay the monthly

deduction due that day. Id. at 10 ¶ 30. In a sworn

declaration, Leslie Kress — an employee of Alliance One —

averred that Alliance One mailed the Correas a notice on June

3 This sixty-two day grace period is slightly longer than the grace

period required under New York law for cancellation. See N.Y. Ins. Law §

3203 (requiring all life insurance policies issued in New York to provide

for, at minimum, “a sixty-one day grace period”).

4 The parties dispute whether DXC Technology Company or Alliance One

Services, Inc., was the administrator of the Correas’ policy. Pl. 56.1

Resp., at 5 ¶ 15. But an uncontroverted declaration from Joshua Miller, a

compliance manager at DXC, explains that DXC is the parent company of

Alliance One. Joshua Miller Declaration (“Miller Decl.”) ¶¶ 1-2, ECF No.

63-2. To avoid confusion, this order refers to the third-party administrator

of the Correas’ policy as Alliance One.

14, 2018. Leslie Kress Declaration (“Kress Decl.”) ¶ 13, ECF

No. 61-3. According to Kress, that notice warned the Correas

that the policy had entered its grace period and would lapse on

August 16 unless the Correas made a payment in the amount of

$22,429.69 beforehand. Id. ¶ 16. She attached a copy of the

notice saved to Alliance One’s internal systems to her

declaration as Exhibit C. It is not, however, addressed to the

Correas by name. Instead, it shows only the words “ET AL” and

the address of the Correas’ Miami P.O. box. See Exhibit C

Notice, at 2, ECF No. 61-6.

The Correas maintain that they did not receive any

notice until August 17. Pl. 56.1 Resp., 25 ¶ 8. They attached

a copy of the notice they received in August — addressed to

“Raul Correa” — to their complaint. See Exhibit 15 Notice, ECF

No. 1-16. The parties agree that the Correas did not make the

payment demanded by the notice before August 16. Id. at 14 ¶

42.

In her declaration, Kress attested that Alliance One

mailed a second notice to the Correas on August 16, informing

them that the policy had lapsed. Kress Decl. ¶ 18. She

attached a copy of that notice to her declaration. Aug. 16

Lapse Notice, ECF No. 61-7. Soon thereafter, NELICO received a

check from the Correas for $23,000. Pl. 56.1 Resp., at 15 ¶ 44.

Because, in its view, the policy had already lapsed,

NELICO did not apply the check towards the policy, but instead

refunded it to the Correas. Id. at 17 ¶ 50. Soon thereafter,

NELICO sent Raul Correa a letter informing him that he would

need to complete a reinstatement application if he wished to

bring the policy back into effect. Id. at 16 ¶ 48. The Correas

never applied to reinstate the policy — because, they maintain,

the policy had never properly lapsed. Id. at 16 ¶ 49.

C. Procedural History

The Correas filed this suit in August 2020 against

NELICO and its parent company, Brighthouse Financial, Inc.,

invoking the court’s diversity jurisdiction. Complaint ¶ 6, ECF

No. 1.5

The Correas assert two claims. In Count I, they “seek

a declaratory judgment that Defendants prospectively treat the

Policy as remaining in full force and effect.” Complaint ¶ 71.

In Count II, they seek “a declaratory judgment . . . to clarify

their rights and Defendants’ obligations under the Policy.” Id.

¶ 80. The complaint invoked New York law in support of Count I,

but a Florida statute in support of Count II.

The defendants moved for summary judgment on both claims.

Defendants’ Memorandum of Law (“Def. Mem.”) at 6, ECF No. 61-1.

Following oral argument, the Court invited the Correas to submit

5 The Correas reside in Florida, NELICO is domiciled in Massachusetts,

and Brighthouse is domiciled in Delaware and North Carolina. Id. ¶¶ 2-5.

NELICO sells insurance in New York. Id. ¶ 4.

supplemental briefing “setting out their view as to which

state’s law governs this policy and should be applied in this

case — and why.” April 1, 2024 Order.

II. Legal Standards

Summary judgment is appropriate when “the movant shows

that there is no genuine dispute as to any material fact” and

that he “is entitled to judgment as a matter of law.” Fed. R.

Civ. P. 56(a). A material fact is one that “can affect the

outcome under the applicable substantive law.” Graham v.

Henderson, 89 F.3d 75, 79 (2d Cir. 1996).6 A genuine dispute is

one that can “reasonably be resolved in favor of either party.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). In

performing this analysis, the court must resolve all ambiguities

and draw all inferences in favor of the non-moving party. Gallo

v. Prudential Residential Servs., Ltd. P’ship, 22 F.3d 1219,

1223 (2d Cir. 1994). “If, in this generous light, a material

issue is found to exist, summary judgment is improper.”

Nationwide Life Ins. Co. v. Bankers Leasing Ass'n, 182 F.3d 157,

160 (2d Cir. 1999).

The moving party may establish that there is no

genuine dispute “by showing that little or no evidence may be

found in support of the nonmoving party’s case.” Gallo, 22 F.3d

6 Unless otherwise noted, when quoting judicial decisions this order

accepts all alterations and omits all citations, footnotes, and internal

quotation marks.

at 1223-24 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325

(1986)). If the moving party meets this burden, the non-moving

party “must come forward with specific facts showing that there

is a genuine issue for trial.” LaBounty v. Coughlin, 137 F.3d

68, 73 (2d Cir. 1998). However, the non-moving party “must do

more than simply show that there is some metaphysical doubt as

to the material facts, and may not rely on conclusory

allegations or unsubstantiated speculation.” Brown v. Eli Lilly

& Co., 654 F.3d 347, 358 (2d Cir. 2011). If “no rational finder

of fact could find in favor of the nonmoving party because the

evidence to support its case is so slight, summary judgment must

be granted.” Id.

III. Discussion

In their supplemental submission, the Correas advised

— and the Court agrees — that we “should apply New York law when

analyzing the [insurance] contract” at issue. Plaintiff’s

Supplemental Letter (“Pl. Supp. Ltr.”) at 2, ECF No. 72.

Nonetheless, they seek declarations that NELICO did not validly

“lapse” — i.e., terminate — the policy under both New York and

Florida law. In their view, Florida law applies in addition to

— rather than in place of — New York law, but solely as to the

discrete issue of whether the Correas were entitled to designate

a secondary addressee to receive lapse notices. See Fl. Ins.

Code § 627.4555.

Consequently, the Court first applies New York law to

Count I, before deciding whether Florida law indeed applies to

the Correas’ Count II. See Fed. Ins. Co. v. Am. Home Assur.

Co., 639 F.3d 557, 566 (2d Cir. 2011) (“[W]here the parties

agree that New York law controls, this is sufficient to

establish choice of law.”). On Count I, NELICO has not

sufficiently established under New York law that the Correas

received notice of the policy’s lapse to garner summary

judgment. However, for the reasons discussed below, summary

judgment is granted as to Count II.

A. Declaratory Judgment Under New York Law (Count I)

New York law required NELICO to send a lapse notice to

the Correas prior to terminating the policy, and this

requirement was enshrined in the policy itself. See N.Y. Ins.

Law § 3211(a)(1); Policy, at 19. The defendants argue that they

properly terminated the policy following nonpayment and the

expiration of the grace period. Def. Mem. at 9. At a trial in

this case, the burden of establishing the valid cancellation of

the policy would rest with NELICO. See, e.g., Abuhamra v. New

York Mut. Underwriters, 170 A.D.2d 1003, 1003 (4th Dep’t 1991).

The Correas maintain that they received no

cancellation notice until after the policy had already lapsed.

The defendants argue, in response, that (i) they are entitled to

the benefit of a New York-law “presumption of receipt,” which

the plaintiffs have not adequately rebutted, and (ii) in any

event they can prove actual (and timely) receipt by the

plaintiffs.

1. The Defendants Have Not Established the

Presumption of Receipt

a. Legal Standard

In New York, a common law “presumption of receipt”

arises when a party establishes the existence of “an office

practice and procedure followed by the insurers in the regular

course of their business, which shows that the notices of

cancellation have been duly addressed and mailed.” Nassau Ins.

Co. v. Murray, 46 N.Y.2d 828, 829 (1978).7 Where the presumption

applies, “mere denial of receipt is insufficient” to raise a

genuine dispute of fact on the issue. Ma v. Merrill Lynch,

Pierce, Fenner & Smith, Inc., 597 F.3d 84, 92 (2d Cir. 2010).

Through Insurance Law Section 3211(c), New York has

prescribed the type of evidence sufficient to establish the

presumption in the life insurance context. An insurance company

can submit “[t]he statement of any officer, employee or agent of

[the] insurer, or of any one authorized to mail such notice,

subscribed and affirmed by his as true under the penalties of

7 A similar presumption applies under federal law. There, the “rule is

well settled that proof that a letter properly directed was placed in a post

office creates a presumption that it reached its destination in usual time

and was actually received by the person to whom it was addressed.” Hagner v.

United States, 285 U.S. 417, 419 (1932) (citing cases).

perjury.” N.Y. Ins. Law § 3211(c). New York state courts

appear to read Section 3211(c) to prescribe the medium in which

the insurance company’s showing can be made, but not to alter

the common-law requirements of what needs to be established.

Thus, the submission must “state[] facts” that meet the common

law’s requirement to show “that the notice required by this

section has been duly addressed and mailed.” Id.8

When considering a Section 3211(c) submission, New

York courts ask whether it reveals the “the office practice” in

question to be “geared so as to ensure the likelihood that the

notice is always properly addressed and mailed.” CIT Bank N.A.

v. Schiffman, 36 N.Y.3d 550, 556 (2021). The affirmation must

speak to multiple steps in the mailing process: “how the

envelopes were addressed so as to ensure that the address was

correct”; how and when the envelopes were affixed with postage;

and how they were “transferred to the care and custody of the

United States Postal Service.” Progressive Cas. Ins. Co. v.

Infinite Ortho Prods., Inc., 127 A.D.3d 1050, 1051-52 (2d Dep’t

2015). The affiant’s “personal knowledge is required only to

establish regular office procedure, not the particular mailing.”

Meckel v. Cont'l Res. Co., 758 F.2d 811, 817 (2d Cir. 1985).

8 See Matsil v. Utica First Ins. Co., 150 A.D.3d 982, 982 (2d Dep’t

2017) (applying Section 3211(c) in conjunction with the common-law

presumption); Guckenberger v. Prudential Ins. Co. of Am., 472 F. App’x 69,

69-70 (2d Cir. 2012) (same); Stein v. Am. Gen Life Ins. Co., 665 F. App’x 73,

75-76 (2d Cir. 2016) (same).

In Meckel, Citibank — acting as trustee under an

indenture — claimed to have mailed a redemption notice to the

holders of certain debentures. The notice advised the holders

not only of the pending redemption, but also of “their option to

convert their debentures into common stock by a certain date.”

Id. at 813. This option had substantial value: the common stock

in question was trading at “more than double” the conversion

price available to the holders. Id. at 814. Despite this, a

number of holders failed to exercise the conversion option.

They later sued, alleging that the defendants had “failed to

provide adequate notice of redemption.” Id.

Applying New York State law, the district court

granted summary judgment to the defendants, and the Second

Circuit affirmed. Meckel v. Cont’l Res. Co., 586 F. Supp. 407,

409 (S.D.N.Y. 1984), aff’d 758 F.2d 811 (2d Cir. 1985). The

Court of Appeals held that “[p]roof of mailing [was] established

by the affidavit of a Citibank employee who ‘caused’ the notice

to be mailed, and by the affidavit and deposition of a Citibank

manager who testified about the regular procedures Citibank used

to mail notices.” Meckel, 758 F.2d at 814. First, Citibank

obtained “a mailing list from a computer register,” which

undisputedly “accurately reflected” the recipient’s address.

Id. at 814-15. Citibank then used four methods to verify that

“the number of labels, envelopes, stuffed envelopes and stamped

envelopes conformed to the count of [addresses] as of the record

date.” Id. at 814-15.

But courts have refused to accord the presumption

based on affidavits that do not sufficiently demonstrate the

integrity of a defendant’s process. In Progressive Casualty,

the Second Department declined to apply the presumption based on

an affidavit that did not explain “how the envelopes were

addressed so as to ensure that the address was correct.” 127

A.D.3d at 1051-52. The affidavit also failed to explain whether

the “envelope was addressed by the automated system or by an

employee,” or “how and when the envelopes . . . were transferred

to the care and custody of the United States Postal Service.”

Id.

Similarly, in Riker Danzig et al. v. Premier Capital,

LLC, the presumption was not established because the affiant did

not explain “how the address on the cover letter is generated or

whether anyone confirms its accuracy.” No. 15-CV-8293 (ALC),

2017 WL 2779709, at *6 (S.D.N.Y. June 26, 2017). “Without

testimony regarding the accuracy of the address,” there could be

no presumption of receipt. Id. And in Matter of Government

Employees Insurance Company (Hartford Insurance Company), the

Second Department declined to apply the presumption absent

evidence excluding a possible mistake created by the system.

112 A.D.2d 226, 227 (2nd Dep’t 1985). There, the notices showed

the addresses of both the intended addressee and their insurance

broker. Id. The court declined to apply the presumption

because there was “no proof to exclude the real possibility”

that notices might “mistakenly be sent to a broker whose name

and addresses appeared on the notice along with that of the

insured.” Id. at 228.

b. NELICO’s Process

To establish the presumption in this case, the

defendants rely on the declaration from Ms. Kress — the Senior

Customer Support Associate at NELICO’s third-party administrator

— and her deposition testimony. Kress Decl. ¶ 1; Deposition

Excerpts (“Kress Dep.”), ECF No. 61-12. Kress testified that it

was her job “to keep the policies functioning” by “filling

customer requests and “sending out forms.” Kress Dep. at 12:17-

25.9

Kress describes the administrator’s procedures in some

detail. The picture that emerges is of an antiquated process,

carried out by multiple computer systems that did not speak to

one another and therefore required human input to bridge the

gaps. The first of those is Alliance One’s “VNCH” system. VNCH

was programmed to monitor each policy’s Net Cash Value and

9 The Correas argue that Kress’s testimony cannot be relied upon to

establish the presumption because “she was only in training at the time” that

the Correas’ notice was mailed. Plaintiff’s Memorandum in Opposition (“Pl.

Opp. Mem.”), ECF No. 62, at 14. But her level of seniority is not relevant

to whether or not she has the requisite personal knowledge.

determine, each month, whether that value was adequate to

satisfy the upcoming “Monthly Deduction.” Kress Decl. ¶ 8.

When a cash value was insufficient, VNCH “automatically

generated a Required Payment Notice indicating the amount” the

policyholder had to pay, as well as the date when the Policy

would lapse if payment was not made.” Id. That Notice would be

“electronically sent to an output queue for overnight printing

in Alliance One’s print center.” Id.

So far, so good; but cracks in the process begin to

emerge here. First, the VNCH system is responsible for printing

address information on the Required Payment Notice, but it is

apparently set up to fail in that task with some frequency. One

recurring error arose from the system’s inability to handle

longer names. According to Kress, if a policyholder’s name was

“too long,” the system would not simply print whatever number of

characters could be accommodated. Instead, the system would

replace the entire name with a short, “default” identifier — the

phrase “ET AL.” Kress Dep. at 43:1-17; see also id. 44:1-3

(Kress: “Yeah, we would see statements like that, [which] just

say et al.”). Kress did not know how long was too long; asked

what “limit” the system imposed on the number of characters,

Kress replied, “I don’t know the exact number.” Kress Dep. at

43:4-11. But the parties agree that this error occurred in this

case — on the notice that NELICO relies on, “the recipient’s

name was printed as ‘ET AL’ instead of ‘Raul Correa.’” Kress

Decl. ¶ 13.

Alliance One’s process relied on human inputs to catch

such errors. Id. ¶ 9 (“During the relevant time period, the

printed Required Payment Notices were manually reviewed by

approximately three (3) associates in Alliance One’s Johnstown,

PA office.”). These associates would eyeball the notices. If a

notice was “missing information” or otherwise “looked off,”

Kress Dep. 44:4-9, the associates would consult a second system

— the Client Information File, or CIF — to perform this check.

Kress Decl. ¶ 10. Kress conceded that this step was at the

discretion of the Associate: if “nothing appeared to be

missing,” the associates did not check the Client Information

File. Kress Dep. 44:10-14.

When an Associate concluded that an address was

incorrect, he or she “applied white correction tape over the

incorrect information and re-typed correct information onto the

tape.” Kress Decl. ¶ 10. The record reveals no indication that

an Associate who identified an incorrect address would update

that address in VNCH.10

10 Responsibility for updating CIF rested with a different department.

Id. at 58:15-59:3. Kress testified that the (unnamed) other department would

act only if a notice was returned as “undeliverable.” Id. at 58:10-11.

Asked what that department did upon receiving undelivered notices, Kress

answered: “Depending, then, who was working that case, they would then go in

and start to investigate the address to see why it was undeliverable.” Id.

at 58:15-20.

Given the incompatible systems and the resulting

manual checks, it is understandable that the process called for

the whited-out address corrections to be memorialized. Thus,

after applying the correction tape and typing over it, the

Associate “[t]ypically” “scanned the corrected notice,” saved a

copy into “Alliance One’s system,” and “printed a clean copy for

mailing.” Kress Decl. ¶ 10.

The scanned copy was to be saved into a third computer

system: the “BOSS” system. Kress Dep. 38:20-23. Kress

confirmed that the BOSS system was siloed from CIF: “Those two

do not talk to each other.” Kress Dep. 26:10-12. Therefore, it

appears that any addressing errors would persist, and the entire

process would need to be repeated the next month in which a

cash-value shortfall occurred.

Kress acknowledges that the manual address-correction

process was followed only partially in this case (at best): “the

reviewing associate applied correction tape to the printed June

2018 Required Payment Notice and then typed the correct name

(‘Raul Correa’) onto the correction tape.” Kress Decl. ¶ 13.

But that associate “did not make a copy of the corrected June

2018 Required Payment Notice.” Id. Instead, he or she “mailed

the original” without saving a copy. Id. Only the “uncorrected

June 2018 Required Payment Notice was uploaded to the BOSS

system.” Kress Decl. ¶ 14 (emphasis added). Kress infers that

an associate made the relevant correction because the notice

that the Correas filed alongside their complaint — the Exhibit

15 Notice — carries Raul’s name, rather than ET AL.

To complete the process, the reviewing associate

“inserted [the notice] into an envelope.” Id. ¶ 11. That

envelope would be “sealed by an associate or a machine,” id.,

though the record does not indicate why the two methods

prevailed side-by-side. Sealed envelopes would be placed “on

carts, which were then transported into the mailroom.” Id.

“Mailroom associates” took the envelopes to a loading dock,

where they were picked up by the United States Postal Service.

Id. The USPS was responsible for stamping and delivering the

envelopes. Id.

c. NELICO’s Process Does Not Warrant the

Presumption

At this stage, NELICO’s evidence of procedure is

insufficient to establish the presumption of receipt, for two

reasons. First, the process is set up to generate known errors

in addressing notices (as happened in this case), and then to

rectify those errors through discretionary human inputs (which

failed in this case, at least as to the requirement to

memorialize a copy of the corrected notice). This is not a

process “geared so as to ensure the likelihood that the notice

is always properly addressed.” CIT Bank N.A., 36 N.Y.3d at 556.

Indeed, the Associates were tasked with rectifying the incorrect

address information only on the physical notice in front of

them. No one, apparently, was assigned the task of correcting

the data (or functioning) of the VNCH system. Given that, it is

perhaps unsurprising that (per Raul Correa’s declaration)

Alliance One “continued sending premium notices to the former

owner” of the policy at his address in Texas for several years

after the Correas’ purchase. Correa Decl. ¶ 7.11

And second, Kress’s description explained how the

system addressed the notices — not the envelopes into which

those notices are then inserted. There are cases in which these

addresses are one and the same — the address is printed on the

notice itself, and the notice is placed in the envelope so as to

display that address through a clear window. See, e.g.,

Preferred Mutual Ins. Co. v. Donnelly, 111 A.D.3d 1242, 1244

(4th Dep’t 2013) (according presumption to insurer that used

“envelopes with windows so that the address on the notice was

the one used for mailing”); cf. Matter of Gov. Employees Ins.

Co., 112 A.D.2d at 227 (“There is no evidence to show that any

procedure was followed to ensure that notices [mailed] in window

envelopes, were handled in such a way as to ensure that the

proper address on the notice appeared in the window.”). Here,

11 The Correas attached to the complaint a copy of a letter Raul Correa

sent to NELICO in January 2015, requesting that notices be sent to his P.O.

box in Miami. ECF No. 1-6. They also attached a copy of a lapse notice

NELICO nonetheless incorrectly sent to the former owner of the policy in

Dallas, Texas, a full year later. ECF No. 1-8.

we do not know if that was the case; Alliance One merely tells

us that the notices were “folded” and “inserted into an

envelope.” Kress Decl. ¶ 11.

Given the obligation to draw “all permissible factual

inferences in favor of the party against whom summary judgment

is sought,” NELICO cannot be accorded the presumption here.

Sec. Ins. Co. of Hartford v. Old Dominion Freight Line, Inc.,

391 F.3d 77, 83 (2d Cir. 2004).

2. If the Presumption of Receipt Were Established,

It Has Been Rebutted

Even if the defendants’ evidence was sufficient to

establish a presumption of receipt based on their regular office

procedure, that presumption would be rebutted by the evidence

that those procedures broke down in this instance. The

presumption of receipt is rebutted if the recipient both denies

receipt and shows “proof of a material deviation from an aspect

of the office procedure that would call into doubt whether the

notice was properly mailed.” CIT Bank N.A., 36 N.Y.3d 557.

“[T]he crux of the inquiry is whether the evidence of a defect

casts doubt on the reliability of a key aspect of the process

such that the inference” of proper mailing and receipt “is

significantly undermined.” Id.

The requirement to scan and save a copy of the

corrected notice is a key aspect of Alliance One’s process, and

the failure to follow that procedure significantly undermines

any inference of receipt. Kress claims that the reviewing

associate applied correction tape to the printed June 2018

Notice and then typed Raul Correa’s name onto it. Kress Decl.

¶ 13. But the required memorialization of that action did not

occur. The associate “did not make [or scan] a copy of the

corrected June 2018 Required Payment Notice”; he or she simply

“mailed the original.” Id. The version of the notice saved to

the BOSS system does not include a name, only “ET AL.” ECF No.

61-6, at 2. Thus, the basis for the presumption has been

rebutted.

NELICO then argues that, with or without the

presumption, it can prove that the Correas actually received the

corrected notice. Defendants’ Reply (“Def. Rep.”) at 6-7, ECF

No. 63. In support, they point to Exhibit 15 of the Correa’s

complaint — a Required Payment Notice addressed to Raul Correa

at the Miami P.O. Box. See Exhibit 15 Notice at 2. But that

document is not dated. The notice sets out a “Due Date” of June

7, 2018, but no native indication of when it was printed or

mailed. NELICO’s theory is that this is the “corrected” notice

that was mailed on June 14 — the day the uncorrected notice was

saved to the BOSS system.

The defendants benefit from no presumption in making

this argument: instead, they face the usual summary judgment

burden to show the absence of a genuine dispute. And the

Correas dispute NELICO’s theory. In Raul Correa’s sworn

declaration, he swears that he did not receive the notice until

August 17, 2018 — after the policy had already lapsed. Correa

Decl. ¶ 13. The notice bears a stamp reading “Aug 17 REC’D,”

which provides some further support for this claim. Exhibit 15

Notice at 2. In the end, this is a question for a jury to

resolve.

3. The Defendants’ Remaining Arguments Under New

York Law Fail

The defendants make two other arguments in favor of

summary judgment on the Correas’ claim for a declaratory

judgment in Count I. Neither is persuasive.

a. Termination After One Year

The defendants argue that even if they did not send a

timely notice, the policy still lapsed after a year because the

Correas “did not make a meaningful attempt to pay premiums after

the Policy lapsed on August 16, 2018.” Def. Mem. at 21, ECF No.

61-1. It is true that under Section 3211(a)(1), insurers are

only required to provide notice prior to terminating a policy

for failure to pay premiums if they terminate the policy “less

than one year after such default.” N.Y. Ins. Law § 3211(a)(1).

Ultimately, “after a year of nonpayment the insurer may lapse

the policy without any notice.” Blau v. Allianz Life Ins. Co.

of N. Am., No. 14-CV-3202, 2018 WL 949222, at *6 (E.D.N.Y. Feb.

16, 2018) (citing Weiss v. Sec. Mut. Life Ins. Co. of N.Y., 45

N.Y.S.3d 169, 171 (App. Div. 2017)).

But the defendants cannot claim that lapse was proper

after a year of failing to pay premiums when they also

acknowledge that NELICO actively refused to accept payment

proffered by the Correas. The defendants admit that “five days

after the Policy lapsed, NELICO received a $23,000 check” to

cover the Correas’ payment. Def. 56.1 ¶ 44. NELICO then

“issued a check in the amount of $23,000” on October 22 to

“refund the remittance” to the Correas. Id. ¶ 50. The

defendants argue that the Correas’ policy lapsed because they

failed to make a payment — but that payment failed only due to

NELICO’s own refusal to accept it. An insurance company may not

“depend upon a default in which its own negligence or wrongful

act contributed, and but for which a lapse might not have

occurred.” In re Preston’s Will, 29 N.Y.2d 364, 371 (1972); see

also Jakobovits v. Alliance Life Ins. Co. of N. Am., No. 15-CV-

9977, 2017 WL 3049538, at *6 (S.D.N.Y. July 18, 2018). This

argument fails.12

12 The defendants also argue that the Correas’ “failure to pay premiums

may also be construed as a repudiation or abandonment of the Policy.” Def.

Mem. at 22. They rely on the Pennsylvania Supreme Court’s decision in Walsh

v. Aetna Life Ins. Co., 352 Pa. 429, 443 (1945). Even assuming that

repudiation would function the same way in New York, Walsh is distinguishable

because the Correas attempted to make a payment in August of 2018 and were

rejected. See id. (insured repudiated the policy in part because they “made

no objection to the notice of lapse, no tender of payment of premiums”).

b. Statute of Limitations

Next, the defendants argue that the New York statute

of limitations bars the Correas from bringing this action.

Under Section 3211(d), actions to “recover on any life insurance

policy” must be “instituted within two years from the date of

such default.” N.Y. Ins. Law § 3211(d). But the Correas are

not asking “to recover” any money; they seek instead a

declaration that the policy remains in force. And the time bar

in Section 3211(d) does not apply to actions for a declaratory

judgment. Weiss, 45 N.Y.S.3d at 171 (holding that “because the

instant action is one for a declaratory judgment, rather than to

recover on the policy, it is not time-barred by the two year

statute of limitation”); see Halberstam v. Allianz Life Ins. Co.

of N. Am., No. 16-CV-6854, 2017 WL 10187689, at *23 (E.D.N.Y.

June 9, 2017) (PAREN). Accordingly, this argument fails.

B. Declaratory Judgment Under Florida Law (Count II)

In their second cause of action, the Correas request a

second declaratory judgment that NELICO did not validly lapse

the policy — this time under Florida law. Complaint ¶ 72-80.

The Correas maintain that Florida law applies at least as to the

discrete issue of designating a secondary addressee on the

policy. See id. ¶ 75. Section 627.4555 of the Florida

Insurance Code provides that a life insurance contract “may not

be lapsed for nonpayment of premiums” unless the insurer mails a

lapse notice to both the policyowner “and to a specified

secondary addressee if such addressee has been designated” by

the policyowner. Fl. Ins. Code § 627.4555. It also obligates

insurers to “notify the applicant of the right to designate a

secondary addressee at the time of application for the policy.”

Id. However, Florida law does not govern the policy. Even if

it did, NELICO would not have had the obligation the Correas

invoke.

1. Choice of Law

A federal court sitting in diversity applies the

choice-of-law rules of the forum state. See Klaxon Co. v.

Stentor Elec. Mfg. Co., 313 U.S. 487 (1941). Here, the forum

state is New York, so New York choice-of-law rules govern.

Under New York choice-of-law rules, “[t]he first step in any

case presenting a potential choice of law issue is to determine

whether there is an actual conflict between the laws of the

jurisdictions involved.” Allstate Ins. Co. v. Stolarz, 81

N.Y.2d 219, 223 (1993). “Where the applicable law from each

jurisdiction provides different substantive rules, a conflict of

laws analysis is required.” Curley v. AMR Corp., 153 F.3d 5, 12

(2d Cir. 1998).

Absent a controlling choice-of-law clause in the

contract at issue, New York looks to the contract’s “center of

gravity.” AEI Life LLC v. Lincoln Benefit Life Co., 892 F.3d

126, 132 (2d Cir. 2018) (citing In re Allstate Ins. Co., 81

N.Y.2d at 226). This is determined by reference to “the places

of negotiation and performance; the location of the subject

matter; and the domicile or place of business of the contracting

parties.” Zurich Ins. Co. v. Shearson Lehman Hutton, Inc., 84

N.Y.2d 309, 317 (1994). “In disputes involving life insurance,

this approach often results in the dispute being governed by the

law of the state where the insured resided at the time the

policy was applied for.” U.S. Bank Nat’l Ass'n v. Sun Life

Assurance Co. of Canada, No. 14-CV-4703, 2016 WL 8116141, at *11

(E.D.N.Y. Aug. 30, 2016).

Here, it is undisputed that Wilmos and Olga Friedman

(the insureds), as well as their son Moses (the original

policyowner and beneficiary), applied for the policy from

Brooklyn, New York. Policy at 33-34. New York’s center of

gravity analysis therefore points to the application of New York

law. Indeed, the Correas agree that the Friedmans’ residence in

New York at the time they “applied for the Policy” is

“dispositive of the issue of the governing law for Count 1.”

Pl. Supp. Ltr. at 2.

The Correas nevertheless maintain that Florida law

governs the discrete issue of “Plaintiffs’ rights to assign a

secondary notice addressee” for the policy. Id. But New York

law “generally opposes the application of multiple states’ laws

to a single insurance policy.” Maryland Cas. Co. v. Continental

Cas. Co., 332 F.3d 145, 154 & n.8 (2d Cir. 2003); Narrangansett

Elec. Co. v. Am. Home Assur. Co., 921 F. Supp. 2d 166, 176

(S.D.N.Y. 2013) (“Having multiple states’ laws apply to a single

insurance policy is inconsistent with the approach preferred by

New York courts.”). And plaintiffs have not cited a single New

York state case applying the laws of more than one state to a

contract. The weight of authority is to the contrary. See

Maryland Cas. Co., 332 F.3d at 145 (stating that “[t]he dearth

of New York cases applying the laws of more than one state to an

insurance policy — or any contract — is a significant factor in

our decision” to apply only New York law).

The principles guiding choice of law questions in New

York similarly militate against applying both New York and

Florida law to the policy. “Section 6 of the Restatement

(Second) of Conflict of Laws embodies the general choice of law

principles” of New York. Zurich Ins. Co., 84 N.Y.2d at 318.

Among those principles are “certainty, predictability, and

uniformity of result,” “ease in the determination and

application of the law to be applied,” and “the protection of

justified expectations.” Rest. (Second) of Conflict of Laws

§ 6. The First Department has relied on those principles to

hold that, at least as to “liability insurance policies covering

multistate risk,” only the law of state of the insured’s

domicile applies. Certain Underwriters at Lloyds, London v.

Foster Wheeler Corp., 36 A.D.3d 17, 23 (1st Dep’t 2006). The

court reasoned that the “state of the insured’s domicile is a

fact known to the parties at the time of contracting” and “is

most likely to conform to their expectations.” Id. Abiding by

that simple rule has the additional benefit of “rendering the

resolution of choice-of-law issues less difficult” and making it

“more likely that consistent and uniform results will be reached

in different cases.” Id. Here, the Friedmans were domiciled in

New York at the time of contracting, Policy at 33-34, and under

New York choice of law principles, New York law therefore

applies to the exclusion of Florida law.

2. Florida Law Would Not Provide Relief

Even if Florida law governed the contract, it would

not provide the relief the Correas seek. Section 627.455 of the

Florida Insurance Code only obligates an insurer to notify

applicants of their right to designate a secondary addressee “at

the time of application for the policy.” Fl. Ins. Code

§ 627.4555. The Correas did not apply for the policy — they

purchased it on the secondary market and then notified NELICO of

that purchase via a “Change of Beneficiary” form. Change of

Beneficiary Form at 5, 10, ECF No. 1-3.

Under the policy’s terms, no “application” is

necessary to make a change in the policy’s owner or beneficiary.

The only requirements for making such a change are that it must

be “in written form satisfactory to [NELICO],” and “dated and

signed by the Owner who is making the change.” Policy at 25.

The record shows that the Correas never applied to NELICO to

make a change — they merely informed them that a change had been

made by sending a Change of Beneficiary form. An attached cover

letter stated that the signed form was enclosed, and directed

NELICO to “provide us with written confirmation” once changes

were made in NELICO’s system. Change of Beneficiary Form at 2.

The Correas do not argue that their purchase of the

policy constituted an “application” under Section 627.4555.

Instead, they maintain that the statute applies because they

“paid all their premiums in Florida.” Pl. Supp. Ltr. at 2.

They argue that those payments “created a new contract that was

performed in Florida,” id., citing James v. Hartford Life &

Accident Ins. Co., a decision from the Middle District of

Florida. No. 15-CV-1632, 2016 WL 3102211 (M.D. Fla. Feb. 8,

2016). However, James’s holding is inapplicable to the Correas’

policy.

In James, the court held that Section 627.4555 applied

to a contract “that was initially issued before § 627.4555 took

effect” because the contract was “renewed thereafter.” Id. at

*3. The court found that under Florida law, “the renewal of a

contract of insurance constitutes the making of a new contract

for the purpose of incorporating into the policy changes in the

statutes regulating insurance contracts.” Id. That was

relevant in James because the policy at issue was subject to “a

term of five years” and first expired “on January 19, 1998.”

Id. The policyholder had then “renewed the Policy in five year

terms” stretching from 1998 to 2013. Id. Under Florida law,

those renewals each incorporated into the contract “policy

changes in the statutes regulating insurance contracts” prior to

the renewal. Metro. Prop. & Liab. Ins. Co. v. Gray, 446 So.2d

216, 218 (Fla. 5th DCA 1984).

The Correas’ policy, on the other hand, is not subject

to term periods. It states that it lasts until its maturity

date — “June 7, 2035” — and is not subject to renewal. See

Policy at 2, 4. James is therefore inapplicable — no “new

contract” was formed, and the policy has not been renewed in

Florida. For that reason, and because the Correas did not apply

for the policy, Section 627.4555 is inapplicable.

IV. Conclusion

For the foregoing reasons, the defendants’ motion for

summary judgment is granted as to Count II of the Correas’

complaint, which is therefore dismissed. Summary judgment is

denied as to Count I.

Pursuant to Rule IV.B.1 of the Court’s Individual

Rules in Civil Cases, the parties are directed to file a joint

proposed pre-trial order within thirty days of this order. A

status conference on the remaining count shall be held at 10:00

a.m. on November 14, 2024, in Courtroom 6G North.

SO ORDERED.

/s/ Eric Komitee

ERIC KOMITEE

United States District Judge

Dated: September 30, 2024

Brooklyn, New York