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A federal district court in Pennsylvania has denied a life insurer’s motion to dismiss a breach of contract claim brought by the owner of a life insurance policy that arose after the insurer allegedly mailed a “lapse notice” to one of her sons.

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The Case

Sally Perloff and her husband Neil Perloff alleged in the lawsuit they filed against Transamerica Life Insurance Co. that she owned a life insurance policy for her husband issued by Transamerica. After moving from Pennsylvania to Boynton Beach, Florida, the Perloffs asserted, they notified Transamerica of their new address.

The Perloffs contended that Transamerica mailed a “lapse notice” for failure to pay the premiums on the policy to their son Brandon Perloff and to the Perloffs’ home in Florida.

The Perloffs alleged that their son had not previously been aware of the policy, and that they were concerned that after receiving the mailing from Transamerica, he would share that information with his three brothers (all four siblings having been named alternate beneficiaries of the policy). The Perloffs said that they were upset about the potential for their family and friends to learn about the lapse in payments, and were worried that if they were to make any changes to the policy, it would cause “irreparable” family conflict.

Transamerica moved to dismiss.

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The District Court’s Decision

The U.S. District Court for the Eastern District of Pennsylvania declined to dismiss Sally Perloff’s breach of contract claim, but granted Transamerica’s motion to dismiss the other claims.

In its decision, the court explained that Perloff’s breach of contract claim was based on the privacy statement that Transamerica allegedly provided with the policy. She alleged that the contents of the privacy statement “were included in, and made an integral part [] of the policy or contract of insurance either expressly or by implication” and that Transamerica, through its privacy statement, “promised and assured” that it would maintain the privacy and confidentiality of its policy owners and insureds.

The court did not decide whether the alleged disclosure potentially violated the privacy statement, or whether the privacy statement was part of the contract, but it found that Perloff had sufficiently alleged that Transamerica had breached its obligations of privacy and confidentiality included in the privacy statement for it to deny Transamerica’s motion to dismiss this claim “at this time.”

The court reasoned that although “vague corporate mission statements” were not sufficient to support a breach of contract action, policy statements that included specific and definite promises “may be sufficient to support such an action.”

The court concluded by dismissing the Perloffs’ invasion of privacy claim (finding that, as the Perloffs alleged, the information had been disclosed only to one person); negligent infliction of emotional distress claim (finding that such a claim did not arise out of the relationship between an insurer and insured); and breach of fiduciary duty claim (ruling that Transamerica did not have a fiduciary duty to protect Perloff’s privacy).

Attorneys involved include: for Transamerica, Penelope M. Taylor of McCarter & English in Newark, New Jersey.

Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. Meyerowitz is the director of the Insurance Coverage Law Center and editor-in-chief of journals on insurance law, banking law, bankruptcy law, energy law, government contracting law, and privacy and cybersecurity law, among other subjects. He can be contacted at [email protected].