Summary
noting that "it is undisputed that the defendants' restriction allowing communications solely by regular U.S. mail eliminates any possibility of daily movement of funds from one sub-account to another."
Summary of this case from Prudential Ins. Co. of America v. PruskyOpinion
Civil Action No. 03-6264.
October 25, 2004
MEMORANDUM
Plaintiffs, Paul M. Prusky, individually and as trustee of Windsor Securities, Inc. Profit Sharing Plan ("Plan"), and his son, Steven G. Prusky, also as trustee, bring this diversity action alleging that the defendants, Aetna Life Insurance and Annuity Company ("Aetna") and Lincoln National Life Insurance Company ("Lincoln") have breached a $10,000,000 life insurance contract by prohibiting them from engaging in an activity known as "market-timing." The plaintiffs also contend that the defendants have violated Pennsylvania's Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), PA. STAT. ANN. tit. 73, § 201-1 et seq. The defendants have counterclaimed for a declaratory judgment that they are excused from performance because of impracticality, contravention of public policy, and "possible illegality" and that they have not violated the UTPCPL.
The name of the Plan has apparently been changed to MFI Associates, Ltd. Profit Sharing Plan.
"Market-timing is the movement of funds from capital to money markets (or vice-versa) based on the market timer's evaluation of short-term market conditions." Windsor Sec., Inc. v. Hartford Life Ins. Co., 986 F.2d 655, 657 n. 1 (3d Cir. 1993).
Presently before the court is the motion of the plaintiffs for summary judgment with respect to the defendants' liability for breach of contract and with respect to the defendants' counterclaim related to plaintiffs' breach of contract claim. The defendants seek summary judgment on both counts in the plaintiffs' complaint.
I.
Under Rule 56(c) of the Federal Rules of Civil Procedure we may grant summary judgment only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to summary judgment as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Id. at 254. We review all evidence and make all reasonable inferences from the evidence in the light most favorable to the non-movant. See Wicker v. Consol. Rail Corp., 142 F.3d 690, 696 (3d Cir. 1998). The non-moving party may not rest upon mere allegations or denials of the moving party's pleadings but must set forth specific facts showing there is a genuine issue for trial. Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888 (1990).
II.
The undisputed facts are as follows. On February 8, 1999, the plaintiffs, as trustees of the Plan, purchased from Aetna what is known as a flexible premium variable life insurance policy. The Plan is the owner and the beneficiary of the policy. The insureds are Paul Prusky and his wife, Susan. The $10,000,000 death benefit will not become due until both insureds have died. At a time unspecified by the parties, Lincoln assumed all rights and obligations of Aetna under the policy.The policy requires the payment each month of a certain premium but, at their option, the plaintiffs may pay additional amounts. Under the terms of the policy, the plaintiffs are entitled to invest in certain designated funds known as sub-accounts the portion of their payments which exceeds the sum retained by the insurer for its costs, expenses, and fees. Each sub-account participates in a different mutual fund with its own distinctive investment objective. The growth of the payments invested in the sub-accounts is, we are told, tax-deferred and is used to offset the monthly premiums. Thus, unlike the usual situation where a person pays a life insurance premium with after-tax dollars, any gain in value generated in the sub-accounts will result in pre-tax dollars contributing toward the required monthly payments. The more successful plaintiffs are in making and choosing these transfers, the fewer after-tax dollars they will have to pay each month to sustain the policy.
Steven Prusky explains that the monthly cost of insurance is based on the difference between the face amount of the policy and the value of its investment. Thus, as the value of the investment in the policy increases, the monthly cost of insurance decreases.
The policy's language regarding transfers to and between sub-accounts provides:
At any time prior to the Maturity Date, You may transfer all or part of each Fund Account Value to any other Fund . . . at any time. Funds may be transferred between the Funds. . . . We reserve the right to charge an administrative fee of $25 for more than 12 transfers per year.
We reserve the right to limit the total number of Funds You may elect to 17 over the lifetime of the Policy.
Defs.' Mot. for Summ. J., Doc. 17, 8/30/04, Ex. E at 11. There is no explicit cap in the policy on the number of transfers a policyholder may make and no limitation on the means by which transfer instructions to defendants may be communicated.
Prior to the plaintiffs' purchase of the policy, James Hall, Brokerage Director of Aetna, confirmed by letter (the "Hall letter") dated June 18, 1998 to Joseph Darracq, the plaintiffs' broker, that there was no limit on the number of sub-account transfers that could be made. He also explained that Aetna would accept sub-account transfer requests submitted by fax. The Hall letter read in pertinent part:
We do, as a matter of course, accept trade requests from the policy owner/authorized agent submitted via fax. . . . As you know, there is no limit on the number of trades that can be made, though we do reserve the right, as stated in the prospectus, to charge a nominal fee. We currently have policies in force that make trades daily, and we have never exercised the right to impose the charge.
Contrary to what defendants argue, the letter does not violate the parol evidence rule because it does not vary, alter, or modify the language of the life insurance contract. Globe Motors, Inc. v. Studebaker-Packard Corp., 328 F.2d 645, 649 (3d Cir. 1964).
Pls.' Mot. for Summ. J., Doc. 18, 8/30/04, Ex B.
On March 4, 1999, plaintiffs began to forward to defendants their instructions for sub-account transfers. These instructions were sent frequently and sometimes daily, and many of them were transmitted by fax. The defendants accepted and acted upon these faxed communications for approximately four and one-half years.
For present purposes, matters took a crucial turn on November 6, 2003. On that date Thomas Murray, Second Vice President of Lincoln, wrote to the plaintiffs informing them that restrictions would be placed on the sub-account transfers. The letter stated:
[I]t appears that Paul M. Prusky . . . [is] currently engaging in an excessive amount of sub-account transfers. These policies are not designed to serve as a vehicle for frequent trading in response to short-term fluctuations in the market. Such frequent trading can disrupt management of a Fund and the Fund may incur additional, unnecessary, costs that are likely to be passed along to shareholders.
. . .
Several fund companies have notified The Lincoln National Life Insurance Company that frequent trading activity is a serious concern. The volume and frequency of your transferring activities has surpassed acceptable levels and is considered detrimental to the operation of these funds.
. . .
Effective November 10, 2003, Lincoln will no longer accept telephone, Interactive Voice Response, internet, overnight delivery services or facsimile transfer requests within [this contract]. This restriction will be removed on the next policy anniversary date. . . . During this restriction period, transfer requests will have to be submitted through U.S. Postal Service via regular mail.Id. at Ex. C.
On February 9, 2004, the anniversary date of the policy, Lincoln lifted the restriction as it said it would in the above letter. This removal of the ban turned out to be short-lived. Lincoln reinstated the restriction a few days later on February 13, 2004 but only to remain in effect until February 9, 2005. Despite the defendants' refusal to honor the faxed requests, the plaintiffs have continued to transmit them.
February 8, 2004, the actual anniversary date of the policy, was a Sunday.
III.
The plaintiffs maintain that under the undisputed facts in this case they are entitled to summary judgment as to defendants' liability for breach of contract. Plaintiffs contend that the policy permits unlimited transfers among 17 sub-accounts. While the policy does not explicitly mention whether faxed requests are permissible, plaintiffs assert that the parties' course of performance during the four and one-half years the faxed requests were accepted "constitutes their understanding that plaintiffs have the right to communicate daily [sub-account] transfers by fax." Pls.' Compl., Doc. 1, 11/14/03, at ¶ 46. See Atlantic Richfield Co. v. Razumic, 390 A.2d 736, 741 (Pa. 1978). Moreover, it is undisputed that the defendants' restriction allowing communications solely by regular U.S. mail eliminates any possibility of daily movement of funds from one sub-account to another.
The defendants do not argue that they are in compliance with the terms of the contract when they restrict the plaintiffs' ability to request sub-account transfers by fax. Instead, defendants contend that summary judgment should be granted in their favor because their performance under the contract is excused. Specifically, they assert that due to the current regulatory hostility to market-timing, it would be impracticable, would contravene public policy, and would "possibly be illegal" to permit the plaintiffs to move funds as frequently as they desired through the use of faxed instructions.
Since this is a diversity action, we look to Pennsylvania law. "Under the doctrine of supervening impracticability, a party's duty to perform pursuant to a contract is discharged where such performance is made `impracticable,' through no fault of its own, `by the occurrence of an event, the non-occurrence of which was a basic assumption on which the contract was made.'" Dorn v. Stanhope Steel, Inc., 534 A.2d 798, 811 (Pa.Super.Ct. 1987) (quoting REST. (SECOND) OF CONTRACTS § 261). "Impracticable" means causing "extreme and unreasonable difficulty, expense, injury, or loss to one of the parties . . . involved." Id. (quoting REST. (SECOND) OF CONTRACTS § 261 cmt. d). "If supervening governmental actionprohibits a performance or imposes requirements that make it impracticable, the duty to render that performance is discharged. . . ." Id. (emphasis added).
To support their defense of impracticable performance, defendants cite to statements by certain federal and non-Pennsylvania state regulators who have criticized market-timing as well as to investigations into the practice. Lincoln attests that it has come under investigation for activities related to market-timing. The defendants aver that regulatory actions have resulted in other companies paying millions of dollars in fines, although the defendants are careful not to claim that the fines resulted solely from market-timing.
In particular, defendants reference a 2004 press release of the Securities and Exchange Commission ("SEC") announcing its first enforcement action against insurance companies relating to market-timing. See Defs.' Mot. for Summ. J., Doc. 17, 8/30/04, Ex I. However, a close reading of this press release reveals that the violations were not due to the companies engaging in market-timing in and of itself but rather to the companies' misleading prospectuses. These prospectuses failed to disclose to non-market-timing investors the fact that the companies also sold variable annuity products to market-timers and failed to disclose the risk that the market-timers' activities could have on the non-market-timers' investment returns. Even assuming that the press releases are admissible evidence, there is nothing in the record indicating any limitations imposed upon the defendants or any external events which render performance extremely and unreasonably difficult. The defendants' performance under the contract is not excused as impracticable.
The defendants next argue that their restriction on market-timing activities excuses their compliance with the contract because these activities contravene public policy. "[T]he power of the courts to formulate pronouncements of public policy is sharply restricted; otherwise they would become judicial legislatures rather than instrumentalities for the interpretation of law." Mamlin v. Genoe, 17 A.2d 407, 409 (Pa. 1941).
Public policy is to be ascertained by reference to the laws and legal precedents and not from general considerations of supposed public interest. . . . In the absence of a plain indication of [dominant public policy] through long governmental practice or statutory enactments, or of violations of obvious ethical or moral standards, the Court should not assume to declare contracts . . . contrary to public policy. . . .Hall v. Amica Mut. Ins. Co., 648 A.2d 755, 760 (Pa. 1994) (quoting Muschany v. United States, 324 U.S. 49, 66-67 (1945)). "Only in the clearest cases, therefore, may a court make an alleged public policy the basis of a judicial decision." Mamlin, 17 A.2d at 409.
The practice of market-timing clearly does not contravene Pennsylvania's public policy. The defendants do not call to our attention any Pennsylvania laws, regulations, or judicial decisions in support of their position. The defendants note a speech by the Chairman of the SEC, in which he discusses the deleterious effects of market-timing on investors who do not engage in such a practice. In his speech, however, the Chairman makes clear that his views do not necessarily represent those of the Commission. The defendants also refer to a similar speech given by the Secretary of the Commonwealth of Massachusetts. None of these references, however, reflects Pennsylvania's public policy on market-timing.
Finally, the defendants contend that performance of the contract is "possibly illegal." Under Pennsylvania law, performance is illegal if it "`is criminal, tortious, or otherwise opposed to public policy.'" Contractor Indus. v. Zerr, 359 A.2d 803, 805 (Pa.Super.Ct. 1976) (citation omitted). Again, the defendants do not cite any federal or Pennsylvania statute, regulation, or judicial decision making market-timing illegal. Indeed, the defendants admit that "market-timing itself has never been expressly determined by any regulatory or judicial body to be illegal." Defs.' Am. Answer, Doc. 8, at ¶ 8. The defendants only go so far as to say that market-timing is possibly illegal. There is simply no basis to declare illegal the market-timing permitted under the insurance policy in issue. While certain government officials may wish that the practice engaged in by the plaintiffs were against the law, wishing does not make it so.
The defendants' argument that they are excused from performance by impracticability, public policy, and possible illegality is belied by defendants' chameleon-like approach in allowing, then disallowing, allowing again and then disallowing but only for a certain time period the market-timing activity of plaintiffs. Lincoln first imposed the restriction on plaintiffs on November 10, 2003 after the insurance policy had been in effect for four and one-half years. It then lifted the ban, as it had said it would, on February 9, 2004, at the policy's anniversary date. Four days later, on February 13, it reinstituted the ban, but advised the plaintiffs that it would be removed again on February 8, 2005. If plaintiffs are correct about impracticability, violation of public policy, and possible illegality, this court would have to conclude that these impediments existed only during the specific time when the ban on market-timing was in effect and will not exist after February 8, 2005. There is no evidence in the record to support this proposition of intermittent impracticability, violation of public policy, or possible illegality.
Accordingly, we conclude that the defendants have breached the contract of life insurance. The clear language of the contract, including the parties' course of performance over four and one-half years, allows plaintiffs to engage in market-timing activity by electronic means and as often as plaintiffs wish. See Atlantic Richfield, 390 A.2d at 741. Defendants are not excused from performance because of impracticability, contravention of public policy, or possible illegality.
IV.
The defendants argue that regardless of whether their performance is legally excused, they are entitled to summary judgment because the plaintiffs cannot show a present injury entitling them to either monetary or equitable relief. Defendants also contend that at best any damages suffered by plaintiffs are speculative.
We first turn to the question whether plaintiffs have suffered any harm or injury. The record establishes without any doubt that they have. Defendants have breached the provision of the life insurance contract allowing plaintiffs to engage in market-timing. Defendants have merely rested on their legal defenses of impracticality, violation of public policy, and possible illegality to justify their non-performance. We have rejected defendants' position. Plaintiffs are harmed in not being permitted to make trades on a frequent basis between and among sub-accounts in order to attempt to minimize their costs and maximize the use of pre-tax dollars for the required life insurance premiums. In sum, the defendants' breach of a material term of the contract, which breach prohibits the plaintiffs from seeking to reduce their ultimate out-of-pocket expenditures for the $10,000,000 life insurance policy in issue, constitutes harm or injury.
Since a harm or injury has occurred, we must determine whether plaintiffs are entitled to monetary damages at this time. Under Pennsylvania law, it is well established that a party must be able to prove damages with reasonable certainty. Wilcox v. Regester, 207 A.2d 817, 822 (Pa. 1965). They may not be based on speculation or conjecture. Cohen v. Pelagatti, 528 A.2d 657, 658-659 (Pa.Super.Ct. 1987).
Plaintiffs aver that they have suffered present, nonspeculative monetary damages. According to plaintiffs, if Lincoln had carried out their desired faxed transfer requests, the policy's cash value would have been over $40,000 higher than it is currently. They argue that this diminution in value has resulted in (1) a higher monthly cost of insurance and (2) a lower sale value of the policy.
The plaintiffs also seek treble damages under the UTPCPL. PA. STAT. ANN. tit. 73, § 201-9.2(a).
It is uncontested that there are presently sufficient funds in the sub-accounts to pay the premiums for the next three years without the additional infusion of money by plaintiffs. Thus, as of today, plaintiffs have not suffered any monetary loss with respect to their obligations to pay monthly premiums. Of course, we do not know how the various sub-accounts will perform in the future. We do not know whether the bulls or the bears will prevail or to what extent. Nor can anyone accurately predict how long the insureds Paul Prusky, age 72, and Susan Prusky, age 70, will live. If they should both die within the next three years, there will clearly be no monetary damages. The $10,000,000 will be paid to the beneficiary and the insurance company will not be entitled to any additional sums beyond what it has received as of that time. The failure of plaintiffs to have created additional value in the sub-accounts will be irrelevant. After the three-year period, whether or not the plaintiffs will suffer any pecuniary damages, and if so how much, is currently a matter of speculation and conjecture. Solomon v. The Guardian Life Ins. Co. of America, No. Civ. A. 96-1597, 1997 WL 611586 (E.D. Pa. Sept. 26, 1997) ("Solomon II"); Renkiewicz v. Commercial Union Life Ins. Co. of America, No. Civ. A. 98-1564, 1999 WL 820452 (E.D. Pa. Sept. 29, 1999).
In somewhat analogous circumstances in Windsor Securities, Inc. v. Hartford Life Insurance Co., No. Civ. A. 90-3687, 1991 WL 87891 (E.D. Pa. May 23, 1991), aff'd in part and rev'd in part, 986 F.2d 655 (3d Cir. 1993), the District Court ruled that the monetary damages suffered by an individual were speculative where his contractual right under an insurance policy to engage in market-timing was refused. The District Court reached this result because of plaintiff's failure to mitigate his damages. The Court of Appeals, however, did not make any mention of lack of mitigation as the basis for affirming that the damages were indeed speculative. Windsor, 986 F.2d at 688.
Nor have the plaintiffs suffered any monetary loss as a result of any decreased sale value. The policy here was purchased for estate purposes. Paul Prusky has made it clear that the Plan has no intention of surrendering the policy. Nor is there any indication in the record that the plaintiffs intend to sell the policy. Significantly, the $10,000,000 death benefit remains unaffected at this time. Therefore, plaintiffs are not financially harmed in any quantifiable sense.
Finally, we must resolve the question whether plaintiffs are entitled to equitable relief, that is, specific performance. As we have explained, plaintiffs have clearly suffered harm from defendants' breach of the life insurance policy. As the Pennsylvania Supreme Court observed many years ago inPhiladelphia Ball Club v. Lajoie, 51 A. 973, 974 (Pa. 1902), a breach of contract action, "`an injunction may issue to prevent wrongs of a repeated and continuing character, or which occasion damages which are estimated only by conjecture, and not by any accurate standard. . . .'" Id. at 973 (quoting Com. v. Pittsburgh C.R. Co., 24 Pa. 159, 160 (Pa. 1854). The court further declared, "a court of equity will act where nothing can answer the justice of the case but the performance of the contact in specie. . . ." Id. at 974. Here, "nothing can answer the justice of the case," but specific performance. We cannot turn a blind eye and allow a material breach of contract to continue unabated even though damages cannot now be calculated. Jurisdiction to grant equitable relief exists since any remedy at law is neither adequate nor complete. Allegheny Energy, Inc. v. DQE, Inc., 171 F.3d 153, 160 (3d Cir. 1999); Easton Theatres v. Wells Fargo Land Mortgage Co., 401 A.2d 1333, 1344-45 (Pa.Super.Ct. 1979).
To obtain equitable relief, plaintiffs, of course, must come to court with "clean hands." Precision Instrument Mfg. Co. v. Automotive Maint. Mach. Co., 324 U.S. 806, 814 (1945). While a court "is not bound by formula" in invoking this defense, id. at 815, the Supreme Court of Pennsylvania looks for conduct affecting "the equitable relations between the parties" that would "shock the moral sensibilities of the judge" because of "bad faith", "fraud", or "deceit." In re Estate of Pedrick, 482 A.2d 215, 222 (Pa. 1984) (citations omitted). The defendants' argument that the plaintiffs are barred from obtaining equitable relief because of unclean hands is totally without merit.
In sum, the plaintiffs cannot at this time establish quantifiable monetary damages. On the other hand, they are entitled to specific performance. The court will require the defendants to allow the plaintiffs to engage in market-timing activities in accordance with the terms of the life insurance contract.
V.
The defendants have also moved for summary judgment with respect to the plaintiffs' claim under the UTPCPL. That law provides in relevant part:
Any person who purchases or leases goods or services primarily for personal, family or household purposes and thereby suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment by any person of a method, act or practice declared unlawful by section 3 of this act, may bring a private action to recover actual damages. . . .
PA. STAT. ANN. tit. 73, § 201-9.2(a).
Section 3 of the act makes it unlawful to engage in "unfair or deceptive acts or practices," as defined in § 201-2(4)(i)-(xxi). PA. STAT. ANN. tit. 73, § 201-3. The plaintiffs rely on the "catch-all" provision, found at § 201-2(4)(xxi), which defines unfair or deceptive acts or practices as "[e]ngaging in any other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding." The defendants argue that the record is devoid of any evidence that they engaged in any fraudulent or deceptive conduct.
There are two divergent views in the Pennsylvania courts regarding how a plaintiff may prove fraudulent or deceptive conduct. Section 201-2(4)(xxi) was amended in 1996 by the addition of the words "or deceptive." Several decisions by the Pennsylvania Superior Court, while not discussing the effect of the amendment, have continued to state the long-held principle that a plaintiff must prove the elements of fraud in order to recover under the "catch-all" provision. See e.g. Booze v. Allstate Ins. Co., 750 A.2d 877 (Pa.Super.Ct. 2000). The Commonwealth Court of Pennsylvania, adopting the position of the Bankruptcy Court for the Eastern District of Pennsylvania, has ruled that deceptive conduct differs from fraudulent conduct and that a plaintiff can show "deceptive" conduct without pleading all the elements of fraud. Commonwealth v. Percudani, 825 A.2d 743 (Pa.Commw.Ct. 2003).
The elements of fraud include a false representation made with knowledge of its falsity and with an intent to mislead. Sewak v. Lockhart, 699 A.2d 755, 759 (Pa.Super.Ct. 1997). The fraudulent intent must exist at the time of the transaction.Iscovitz v. Filderman, 6 A.2d 270, 272 (Pa. 1939). An inference of fraudulent intent at the time of the transaction may be shown, however, by subsequent conduct. Stauffer v. Stauffer, 351 A.2d 236, 244 (Pa. 1976). Fraudulent intent must be proven by clear and convincing evidence. Sewak, 699 A.2d at 759.
The plaintiffs have not come forward with any evidence of fraudulent conduct sufficient to raise a genuine issue of material fact. The defendants point to the deposition testimony of Paul Prusky, in which he was asked whether the plaintiffs have any evidence that the defendants intended, at the time the policy was issued, to reject faxed transfer requests. His response was: "I don't know." Defs.' Mot. for Summ. J., Doc. 17, 8/30/04, Ex. A, at 85-86.
Any fraud necessarily had to have occurred in 1998 or early 1999, when the parties began discussing the terms and sale of the policy. Plaintiffs seek to draw an inference of fraudulent intent from the deposition testimony of Ms. Christine Frederick, the Vice President of Lincoln. Ms. Frederick's testimony was taken in 2004. She merely stated she did not believe the statements in the June 18, 1999 letter from James Hall to be promises allowing market-timing. In that letter, Mr. Hall stated, "We do, as a matter of course, accept trade requests from the policy owner/authorized agent submitted via fax. . . . As you know, there is no limit on the number of trades that can be made. . . ." Pls.' Mot. for Summ. J., Doc. 18, 8/30/04, Ex B. Ms. Frederick, however, does not know Mr. Hall, was not involved in the drafting of the Hall letter, and was not in any way involved with the sale of the life insurance policy to the Pruskys that occurred on February 8, 1999, over five years earlier. She had no personal knowledge about Aetna's intention at the time the policy was issued. Rather, her testimony concerned her interpretation of the significance of the Hall letter as it related to the decision of the defendants in 2003 to impose the transfer restrictions. Ms. Frederick's statements have no probative value as to Aetna's state of mind in 1998 and early 1999. Her belief in 2004 does not provide clear and convincing evidence of any fraudulent intent on the part of Aetna representatives at the time of the sale of the policy.
The plaintiffs also cannot show deceptive conduct. As defined by the Commonwealth Court of Pennsylvania in Percudani, deceptive conduct is "`the act of intentionally giving a false impression' or `a tort arising from a false representation made knowingly or recklessly with the intent that another person should detrimentally rely on it.'" Patterson v. Chrysler Fin. Co., 263 B.R. 82, 94 (Bankr. E.D. Pa. 2001) (citation omitted).
Again, the plaintiffs do not point to any evidence in the record showing that the defendants made any false representations before or at the time the policy was issued concerning their intention to honor faxed transfer requests. The defendants honored such faxed transfer requests for four and one-half years. Lincoln, the successor to Aetna, subsequently changed its mind in November, 2003. As our Court of Appeals has explained, "[s]tatements of intention made at the time of contracting are not fraudulent simply because of a later change in mind." Mellon Bank Corp. v. First Union Real Estate Equity and Mortgage Inv., 951 F.2d 1399, 1411 (3d Cir. 1991).
The plaintiffs attempt to assert a cause of action under the Unfair Insurance Practices Act ("UIPA"), PA. Stat. Ann. tit. 40, § 1171.1 et seq., or attempt to utilize the defendants' alleged violation of UIPA as a ground for recovery under the UTPCPL. No private right of action exists, however, under the UIPA. Lombardo v. State Farm Mut. Auto. Ins. Co., 800 F. Supp. 208, 212 (E.D. Pa. 1992). Furthermore, a violation of UIPA may not be asserted as a ground for recovery under the UTPCPL. Id.
The plaintiffs have not come forward with any evidence of fraudulent or deceptive conduct on the part of the defendants. There is no genuine issue of material fact on which plaintiffs may rely. As such, the defendants are entitled to summary judgment in their favor on plaintiffs' UTPCPL claim. Consequently, we need not pass upon the defendants' remaining arguments with respect to the UTPCPL.
ORDER
AND NOW, this ____ day of October, 2004, for the reasons set forth in the accompanying Memorandum, it is hereby ORDERED that:(1) the motion of the plaintiffs for partial summary judgment on Count I of the complaint and on the defendants' counterclaim with respect to the plaintiffs' breach of contract claim (Doc. # 18) is GRANTED;
(2) judgment is entered in favor of the plaintiffs Paul M. Prusky, individually and as Trustee of Windsor Securities, Inc. Profit Sharing Plan (now referred to as MFI Associates, Ltd. Profit Sharing Plan), and Steven G. Prusky, as Trustee of Windsor Securities, Inc. Profit Sharing Plan (now referred to as MFI Associates, Ltd. Profit Sharing Plan), and against the defendants Aetna Life Insurance and Annuity Company and Lincoln National Life Insurance Company on the issue of liability on Count I of the complaint and on the defendants' counterclaim with respect to the plaintiffs' breach of contract claim;
(3) the defendants are hereby ordered to perform specifically their obligation under the paragraph titled "Transfers Within Accounts" on page 11 of the plaintiffs' Flexible Premium Variable Life Insurance Policy, No. F 1 527 383. The defendants are ordered to accept and effect sub-account transfer instructions communicated by the owner of the policy by fax, telephone, or other electronic means without limitation as to the number of transfer instructions;
(4) the motion of the defendants for summary judgment (Doc. # 17) is GRANTED in part and DENIED in part;
(5) judgment is entered in favor of the defendants Aetna Life Insurance and Annuity Company and Lincoln National Life Insurance Company and against the plaintiffs Paul M. Prusky, individually and as Trustee of Windsor Securities, Inc. Profit Sharing Plan (now referred to as MFI Associates, Ltd. Profit Sharing Plan), and Steven G. Prusky, as Trustee of Windsor Securities, Inc. Profit Sharing Plan (now referred to as MFI Associates, Ltd. Profit Sharing Plan), on Count II of the complaint related to the Pennsylvania Unfair Trade Practices and Consumer Protection Law;
(6) the motion of the defendants for summary judgment is otherwise DENIED; and
(7) the defendants' counterclaim with respect to the plaintiffs' claim under the Pennsylvania Unfair Trade Practices and Consumer Protection Law is DISMISSED as moot.