Matthew Levy v. West Coast Life Insurance Company

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 22-1033
MATTHEW J. LEVY and JASON D. LEVY,
Plaintiffs-Appellants,
v.
WEST COAST LIFE INSURANCE COMPANY,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 21 C 4062 — Matthew F. Kennelly, Judge.
____________________
ARGUED MAY 24, 2022— DECIDED AUGUST 10, 2022
____________________
Before EASTERBROOK, WOOD, and BRENNAN, Circuit Judges.
WOOD, Circuit Judge. For almost 20 years, Benita Levy held
a life insurance policy with West Coast Life Insurance Com-
pany. Approximately five months before she died, Levy
missed a payment. Upon her death, West Coast Life declared
the policy forfeited because of the missed payment and ac-
cordingly refused to pay the benefit to her beneficiaries.
2 No. 22-1033
The beneficiaries—Levy’s two sons—sued West Coast
Life, seeking damages for breach of contract as well as a de-
claratory judgment. Their claims rested on section 234(1) of
the Illinois Insurance Code, which forbids an insurer from
canceling a policy within six months after a policyholder
misses a payment deadline unless the insurer has given the
policyholder a notice that meets certain requirements. See 215
ILCS 5/234(1). The district court ultimately dismissed the ac-
tion for failure to state a claim. We affirm.
I
In 2001, Benita Levy, then a 37-year-old single mother of
two, purchased a 20-year term life insurance policy (the “Pol-
icy”) from West Coast Life. The Policy provided a $3 million
benefit payable upon her death and named her only two sons,
Matthew and Jason (“the Levys”), as beneficiaries. In January
2019, near the end of the 20-year term, Benita—then in deteri-
orating physical and mental health—missed a payment. Ap-
proximately five months later, she died, having never paid the
missed premium. West Coast Life declared the Policy for-
feited and refused to pay the $3 million benefit to her sons.
The Levys filed a lawsuit against West Coast Life for
breach of contract and for a declaration that West Coast Life
was legally obligated to pay them the benefit. (They initiated
their suit in Illinois state court, but West Coast Life timely re-
moved to federal court. See 28 U.S.C. § 1446.) The Levys al-
leged that West Coast Life’s missed-payment notice—which
was sent in late 2018 in advance of the early-2019 deadline—
failed to comply with section 234(1) of the Illinois Insurance
Code.
No. 22-1033 3
That part of the Code forbids an insurer from canceling a
policy within six months of a policyholder’s failure to pay a
premium by its due date (calculated to include a 31-day grace
period) unless the insurer provides a prescribed notice to the
policyholder. See 215 ILCS 5/234(1). The notice “shall state
that unless such premium or other sums due shall be paid to
the company or its agents the policy and all payments thereon
will become forfeited and void, except as to the right to a sur-
render value or paid-up policy as provided for by the policy.”
Id.West Coast Life’s late-2018 notice (the “Notice”) incorpo-
rated much of the statutory language just quoted, as we ex-
plain in more detail below. Even so, the Levys alleged that it
failed to comply with section 234(1). If that is correct, then
West Coast Life was not entitled to cancel its contract with
Benita Levy until at least six months after she missed her pay-
ment, and its cancellation at the five-month mark was ineffec-
tual.
West Coast Life responded to the suit with a motion to dis-
miss for failure to state a claim upon which relief could be
granted. See FED. R. CIV. P. 12(b)(6). In a written order entered
on November 6, 2021, the district court dismissed some theo-
ries, but it did not dispose of the entire case at that point. It
concluded that, at least in substance, the Notice complied
with the statute. But it spotted some suggestion in the com-
plaint that the Notice was sent to the wrong address, which
would also be a violation of section 234(1). For that reason
alone, the court denied West Coast Life’s motion to dismiss
the entire breach-of-contract claim (Count II). It did, however,
dismiss both the claim for declaratory relief (Count I) and the
other contractual theories.
4 No. 22-1033
At a hearing held on December 15, 2021, the Levys
explained that they never meant to suggest that the Notice
was sent to the wrong address. (They conceded, in fact, that
West Coast Life sent it to the correct address.) Since the
wrong-address theory was the only reason the district court
had not granted West Coast Life’s motion in its entirety, and
since the Levys were pursuing no such theory, the Levys
asked the court to dismiss their complaint in full so as to
generate an appealable final judgment.
After a protracted and confused exchange between the
parties and the court, the court suggested that the best course
of action, to ensure finality and appealability, would be for
the Levys voluntarily to dismiss any claims that remained, see
FED. R. CIV. P. 41(a), and for the court then to dismiss the ac-
tion as a whole with prejudice. After repeatedly stating for the
record that they were abandoning only the wrong-address al-
legation, the Levys agreed to that course of action. The court
then entered an order stating that “[p]ursuant to Federal Rule
[of] Civil Procedure 41(a), plaintiff voluntarily dismisses any
remaining claim that the Court has not already dismissed.
Based on that the case is dismissed with prejudice.” The Levys
now appeal.
II
We begin with a couple of preliminary points. First, we re-
mind the parties, the district courts, and the bar as a whole
that Federal Rule of Civil Procedure 58 requires (with only a
few exceptions not applicable here) that “[e]very judgment
and amended judgment … be set out in a separate docu-
ment.” FED. R. CIV. P. 58(a). No such document was filed in
this case.
No. 22-1033 5
At one time, the absence of such a document might have
had adverse implications for our appellate jurisdiction. But
the Federal Rules of Appellate Procedure now address this
situation. See Bankers Trust Co. v. Mallis, 435 U.S. 381, 384
(1978) (explaining that the separate-document requirement is
not “such a categorical imperative that the parties are not free
to waive it.”); FED. R. APP. P. 4(a)(7)(B) (“A failure to set forth
a judgment or order on a separate document when required
by Federal Rule of Civil Procedure 58(a) does not affect the
validity of an appeal from that judgment or order.”).
That does not mean, however, that district courts should
feel free to ignore Rule 58; indeed, Rule 58(a) uses mandatory
language, stating that “[e]very judgment and amended judg-
ment must be set out in a separate document … .” (Emphasis
added.) The separate-document requirement serves the im-
portant purpose of “clarify[ing] when the time for appeal …
begins to run,” Bankers Trust Co., 435 U.S. at 384, and so it
should be heeded. The rule also invites any party to “request
that judgment be set out in a separate document as required
by Rule 58(a).” FED. R. CIV. P. 58(d).
Even though we have no Rule 58 judgment here, we do,
however, have the court’s order of December 15, which makes
it clear that the district court was finished with the case. It
states that “the case is dismissed with prejudice,” and then
says “Civil case terminated.” The Levys filed their notice of
appeal well within 30 days after that order, on January 7, 2022.
This substantially complies with Federal Rule of Appellate
Procedure 4(a)(1)(A), and so we may proceed.
The second preliminary point is somewhat messier. West
Coast Life argues that we may not reach the merits of the
breach-of-contract claim because the Levys voluntarily
6 No. 22-1033
dismissed that claim and have thus waived appellate review.
West Coast Life cites various cases in which this court has ar-
ticulated what we will call the voluntary-dismissal rule: a
party that has received exactly what it requested (such as a
judgment following a voluntary dismissal of a claim) cannot
expect to obtain relief on that claim on appeal. See, e.g., Chavez
v. Illinois State Police, 251 F.3d 612, 628 (7th Cir. 2001); Fairley
v. Andrews, 578 F.3d 518, 521 (7th Cir. 2009); Palka v. City of
Chicago, 662 F.3d 428, 436 (7th Cir. 2011).
There was some suggestion in the briefs and at oral argu-
ment that the voluntary-dismissal rule addresses a problem
of appellate jurisdiction. This is not so, though we can hardly
fault the parties for thinking so. Our decisions have not al-
ways been as clear as they should be. See, e.g., Chavez, 251 F.3d
at 628. In Fairley, however, we sought to clarify matters. 578
F.3d at 521. We explained that “[t]he only prerequisites to ap-
pellate jurisdiction are a final judgment and a timely notice of
appeal.” Id. (citing 28 U.S.C. § 1291). “Whether a party con-
sented to that judgment … is irrelevant.” Id. Two years later,
unfortunately, we once again seemed to describe the issue in
jurisdictional language. See Palka, 662 F.3d at 436. But this ap-
parent inconsistency reflects only an imprecise use of the term
“jurisdiction.”
The problem that some voluntary dismissals present on
appeal is that “[l]itigants aren’t aggrieved when the judge
does what they want.” Fairley, 578 F.3d at 521. Thus, “if plain-
tiffs consented to the entry of judgment against them, we
must affirm.” Id. In other words, there are cases in which no
relief on appeal is possible because the party has not been ag-
grieved. This implicates Article III jurisdiction, not appellate
jurisdiction. It is difficult to see how a party has an “injury in
No. 22-1033 7
fact” for purposes of Article III standing to sue when it re-
ceives exactly the judgment it requests. See Spokeo, Inc. v. Rob-
ins, 578 U.S. 330, 338–40 (2016). This is distinct from the ques-
tion of appellate jurisdiction.
In light of the way the case unfolded here, we conclude
that the voluntary-dismissal rule does not preclude our re-
view of the merits in this case. The Levys can easily show con-
tinuing injury-in-fact, as they got far less than what they
wanted. The district court ruled adversely to them with re-
spect to most of their breach-of-contract theories and their en-
tire request for declaratory relief. The fact that they voluntar-
ily abandoned one last contractual argument does not trans-
form this into an agreed disposition.
The transcript of the December 15, 2021 hearing supports
our view of the proceedings. The court began the hearing by
stating, “there’s, you know, what I think can fairly be referred
to as a slice of the original claims that are left, and it’s the thing
based on the address.” (Emphasis added.) The Levys repeatedly
expressed their “understanding [that] the only part of this
case that’s left is a claim that [West Coast Life] violated the
code by sending this to the wrong address and [that they] are
withdrawing any such claim.” 1 And the court reassured
1 We recognize that the district court may inadvertently have intro-
duced some confusion into the case by stating in its final order that “plain-
tiff voluntarily dismisses any remaining claim that the Court has not al-
ready dismissed.” (Emphasis added.) The remainder of the December 15
transcript makes it clear that plaintiffs’ voluntary dismissal extended only
to the address theory, and that the other three theories had already been
dismissed by the court on November 6. With all theories gone (three in-
voluntarily), the claim for breach of contract as a whole was resolved in
West Coast’s favor. This in turn paved the way for the Levys’ appeal.
8 No. 22-1033
them, although perhaps with a hint of exasperation: “See, the
wonderful thing about court reporters is that you have now
said that about four times. That’s about as clear as it can be.
The court reporter got it all. I’m confident of that.”
No one can read this and think that the Levys had acqui-
esced to the court’s November 6 rejection of their contract the-
ories. What happened is evident: the court understood that
their wrong-address theory was abandoned, and it dismissed
the rest of the theories supporting the breach-of-contract
claim for the reasons it had expressed in its November 6th or-
der. We are thus free to reach the merits of the Levys’ argu-
ments.
III
We review “a district court’s dismissal under Rule 12(b)(6)
de novo, construing the complaint in the light most favorable
to the plaintiff, accepting as true all well-pleaded facts and
drawing reasonable inferences in the plaintiff’s favor.” Bilek v.
Federal Ins. Co., 8 F.4th 581, 586 (7th Cir. 2021) (internal quota-
tions omitted). To survive a motion to dismiss under Rule
12(b)(6) “a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on
its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
We agree with the district court that the Levys’ complaint
falls short. Their chief contention is that the Notice did not
adequately alert the policyholder (their mother) to the conse-
quences of nonpayment. But the single-page, double-sided
Notice addresses the consequences of nonpayment in three
places. The front side of the Notice contains the following lan-
guage: “If we do not receive your payment by 02/09/2019,
your policy will terminate and lapse.” The back side contains
No. 22-1033 9
a similar admonition, roughly halfway down the page: “If a
payment is not made within the grace period as described in
the policy, your policy will terminate and lapse unless other-
wise provided.” Finally, the first sentence on the back side of
the Notice reads:
Unless we receive your payment as requested in this
notice by the stated due date or within the contractu-
ally specified grace period thereafter, your policy will
terminate and lapse, at which time the policy and all pay-
ments thereon will become forfeited and void, except as to the
right, if any, to a surrender value, paid-up policy, or non-
forfeiture benefit as may be provided for by the policy.
(Emphasis added.)
The italicized language follows the statute almost verba-
tim. See 215 ILCS 5/234(1) (“[T]he policy and all payments
thereon will become forfeited and void, except as to the right
to a surrender value or paid-up policy as provided for by the
policy.”). We thus have no trouble concluding that it complies
with section 234(1).
The Levys complain that this language appears on the
back side of the Notice. But section 234(1) nowhere requires
that the required language appear front and center. Signifi-
cantly, too, West Coast Life did not bury the lede. A highly
conspicuous disclaimer on the front side of the Notice directs
policyholders as follows to “[s]ee the reverse side for im-
portant notices.” On the reverse side, policyholders find the
compliant language in the very first sentence at the top of the
page, directly under another conspicuous header:
“IMPORTANT NOTICES.”
10 No. 22-1033
The Levys also complain that the Notice addresses the
consequences of nonpayment in three different statements.
This, they contend, makes the Notice confusing. But nothing
in section 234(1) requires that an insurer’s notice contain only
one such statement. And as the district court observed, all
three statements “convey[] a consistent message.” Each warns
that “your policy will terminate and lapse” should you fail to
pay the premium on time. One of them elaborates: “[Y]our
policy will terminate and lapse, at which time the policy and all
payments thereon will become forfeited and void.” (Emphasis
added.) There is nothing confusing or inconsistent about
these statements; one is just more detailed than the others.
The three statements are also consistent with respect to the
payment due date. Under the Policy, policyholders have a 31-
day grace period after the due date to make a premium pay-
ment before the Policy is forfeited. Thus, the relevant date for
purposes of the consequences of nonpayment is 31 days after
the due date. All three statements refer to that date in one way
or another. The first refers to “02/09/2019” (the due date, Jan-
uary 9, 2019, plus 31 days); the second states that payment
must be received “by the stated due date or within the contrac-
tually specified grace period thereafter”; and the third warns that
the Policy will lapse “[i]f a payment is not made within the
grace period as described in the policy.” (Emphases added.)
The message is consistent throughout: At the latest, policy-
holders must pay their premium before the end of the grace
period to avoid forfeiting the Policy.
In short, the Notice adequately alerts policyholders to the
consequences of nonpayment, and so the Levys cannot state
a breach-of-contract claim on that basis. Their next contention
is that section 234(1) requires that an insurer’s notice inform
No. 22-1033 11
the policyholder that she may pay her premiums to the com-
pany or its agents. Because the Notice does not specify that
payment may be made to an agent, the Levys argue that it
does not comply with section 234(1). See 215 ILCS 5/234(1)
(“Such notice shall also state that unless such premium … due
shall be paid to the company or its agents the policy and all
payments thereon will become forfeited and void”) (empha-
sis added).
We reject that argument, although our reasons differ from
the district court’s. The district court reasoned that the use of
the disjunctive means that a notice must state either (1) that
policyholders must pay the company or (2) that policyholders
must pay the company’s agent. The Levys read it differently.
They assert that a notice must state that policyholders must
pay either (1) the company or (2) its agents. In other words,
they say, the disjunctive modifies the policyholders’ payment
options, not the options the insurer has in drafting the notice.
West Coast Life offers a different and more persuasive in-
terpretation, which views the pertinent language in its statu-
tory context. Section 234(1) consists of only three sentences.
The relevant language quoted above (i.e., “the company or its
agents”) appears in the second sentence. The first sentence re-
quires that a notice state “the place where [the premium] shall
be paid and the person to whom the same is payable.” 215 ILCS
5/234(1) (emphasis added).
West Coast Life highlights the use of the singular “person”
in the first sentence. It argues that it would be incoherent for
the second sentence of section 234(1) to require insurers to list
multiple payees (i.e., “the company or its agents”) when the
first sentence permits the insurer to list only one (i.e., “the per-
son to whom [the premium] is payable”). Because the first
12 No. 22-1033
sentence already specifies to whom payment must be made,
the next sentence should not be read as creating a competing
requirement. Instead, the phrase “the company or its agents”
should be read as alluding to the earlier requirement that the
notice identify “the person to whom [the premium] is paya-
ble.” Id. Either the company or its agents will suffice. On this
reading, the only new requirement created by the second sen-
tence is the one we already have discussed: An insurer’s no-
tice must spell out the consequences of nonpayment.
We find West Coast Life’s interpretation to be the better
way to understand the statute. There was no need for the No-
tice to mention the company’s agents as alternate payees, and
so the Levys cannot state a breach-of-contract claim on this
basis. For what it’s worth, it seems the Illinois Appellate Court
would agree. See Time Ins. Co. v. Vick, 620 N.E.2d 1309, 1316–
17 (Ill. App. Ct. 1993) (concluding that a similarly worded no-
tice “comports with the requirements of section 234(1)” de-
spite the apparent absence of the phrase “the company or its
agents”).
As for the court’s dismissal of the declaratory-judgment
claim, we “review a district court’s decision not to declare the
rights of litigants for abuse of [] discretion.” Amling v. Harrow
Indus., 943 F.3d 373, 379 (7th Cir. 2019). Since the Levys’
breach-of-contract and declaratory-judgment claims were
substantively identical, we find no abuse of discretion in the
court’s decision to dismiss the latter as duplicative.
IV
We AFFIRM the judgment of the district court.