Waronsky, D. v. Ameriprise Financial

CourtSuperior Court of Pennsylvania
DecidedDecember 11, 2020
Docket412 WDA 2020
StatusUnpublished

This text of Waronsky, D. v. Ameriprise Financial (Waronsky, D. v. Ameriprise Financial) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Waronsky, D. v. Ameriprise Financial, (Pa. Ct. App. 2020).

Opinion

J-A28019-20

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

DENNIS WARONSKY : IN THE SUPERIOR COURT OF : PENNSYLVANIA Appellant : : : v. : : : AMERIPRISE FINANCIAL, INC., : No. 412 WDA 2020 AMERIPRISE FINANCIAL SERVICES, : INC., RIVERSOURCE LIFE : INSURANCE COMPANY AND : KENNETH J. ROCK :

Appeal from the Judgment Entered March 17, 2020 In the Court of Common Pleas of Allegheny County Civil Division at No(s): G.D. 01-007921

BEFORE: OLSON, J., MURRAY, J., and McCAFFERY, J.

MEMORANDUM BY MURRAY, J.: FILED DECEMBER 11, 2020

Dennis Waronsky (Appellant) appeals from the judgment entered in

favor of Ameriprise Financial, Inc., Ameriprise Financial Services, Inc.,

Riversource Life Insurance Company, and Kenneth J. Rock (Rock)

(collectively, “Defendants”). The parties’ dispute concerns two “universal” life

(UL) insurance policies that Defendants sold to Appellant in 1988 and 1994.

After careful review, we affirm.

By means of background, UL insurance policies differ from standard

whole life insurance policies. The major distinctions are that UL policies have

an investment savings component and flexible premiums. These policies are

comprised of the savings component and cost of insurance (COI). In sum, J-A28019-20

collected premium payments in excess of the COI accumulate within the

cash/savings component. UL policyholders earn interest on the accumulated

sums in the savings component, at a variable interest rate dependent on

current market conditions.1 Importantly, however, UL policies also contain a

specified “guaranteed” interest rate (guaranteed rate), which provides a floor

on how low the interest rate can go.2 It is advantageous for UL policyholders

to receive the highest guaranteed rate, as the rate increases the amount of

cash that accumulates in the savings component of the policy.

Here, Appellant initially purchased a “Flexible Premium Adjustable” UL

policy from Rock, an insurance agent employed by Defendants, in 1988 (1988

policy). This policy provided for a life insurance benefit of $100,000 (as well

as other benefits to Appellant’s wife not relevant to this appeal). Appellant

paid a monthly premium of $100 for the policy. The guaranteed rate was

4.5%. Before the parties executed the policy documents, Rock showed

Appellant a written illustration (1988 illustration), which contained hand-

written explanatory notes by Rock. This was Rock’s standard practice, which

he did to inform Appellant of the details of the 1988 policy. Rock also

____________________________________________

1 The Pennsylvania Insurance Department (PID) must approve UL policies, and their interest rates, before the policies may be sold.

2 Depending on current market conditions, the actual interest rate earned on a UL policy can be higher than the guaranteed rate. Over the years in which Appellant maintained his UL policies, he often earned interest above the guaranteed rate.

-2- J-A28019-20

presented Appellant with an individually tailored “Disclosure Statement” (1988

Disclosure Statement), which essentially detailed the same information as the

1988 illustration.

For the next several years, Appellant maintained the 1988 policy under

the terms discussed above. In November 1993, Defendants sent an internal

communication to all of their insurance sales agents located in Pennsylvania,

including Rock.3 This communication stated that the PID had authorized

Defendants to reduce the guaranteed rate on all new sales of UL policies to

4%. The interest reduction applied to UL policies purchased after January 1,

1994 (the “1994 interest reduction”).

On December 8, 1993 (1993 meeting), Appellant met with Rock to

discuss a new UL insurance policy that Defendants had offered to Appellant to

replace the 1988 policy. The new proposed policy would increase Appellant’s

death benefit from $100,000 to $150,000. During the 1993 meeting, Rock

again showed Appellant a new written illustration, with hand-written notes, to

inform Appellant of the details of the new proposed policy. This illustration

stated that the guaranteed rate on the proposed policy at that time was 5%.

Although no agreement was reached at the 1993 meeting, Rock and Appellant

agreed to meet again to discuss the matter further.

3Both Rock and an employee of Ameriprise conceded that this communication would have been sent to Rock.

-3- J-A28019-20

On February 2, 1994, Appellant and Rock met again (1994 meeting),

and executed the new UL policy (1994 policy), which increased Appellant’s

death benefit from $100,000 to $150,000, with the same monthly premium

of $100. The accumulated cash in the 1988 policy savings account “rolled

over” into the 1994 policy. This contract, like the 1988 policy, consisted of a

written policy application and a Disclosure Statement (1994 Disclosure

Statement).

The 1994 Disclosure Statement contained a blank section, which

required Defendants to specify both the guaranteed rate and “Guaranteed

Period of Coverage.” Rock did not personally enter this information on the

form; rather, his administrative assistant (Rock’s assistant), did so by hand.

The 1994 Disclosure Statement provided that the guaranteed rate was 5%,

which was inconsistent with the 1994 interest reduction. In actuality, because

Appellant had applied for the 1994 policy after January 1, 1994, he received

a guaranteed rate of 4%, not 5%, pursuant to the 1994 interest reduction,

since he applied for the 1994 policy after January 1, 1994. Further, Rock’s

assistant specified in the 1994 Disclosure Statement that the guaranteed

period of Appellant’s coverage was to age 95. Notably, however, the 1988

Disclosure Statement stated that the guaranteed period of Appellant’s

coverage was to age 75. After Appellant initiated this action, Defendants

alleged that the above inconsistencies were not fraudulently made; rather,

they were mere clerical errors by Rock’s assistant.

-4- J-A28019-20

After Defendants approved the executed 1994 policy, Rock sent

Appellant a copy of the policy documents, including the 1994 Disclosure

Statement. Appellant eventually received the documents in the mail, and filed

them for safekeeping.4 Aside from this mailing, Rock did not separately advise

Appellant that the guaranteed rate of 4% he received under the 1994 policy

differed from the guaranteed rate of 5% that Defendants represented

Appellant would receive: (a) at the 1993 meeting; and (b) in the 1994

Disclosure Statement.

In 2004, Appellant surrendered the 1994 policy. At that time, Appellant

had paid Defendants approximately $19,600 in premiums toward the 1988

and 1994 policies. When Appellant surrendered the 1994 policy, Defendants

sent him a check for approximately $13,000, representing the cash value

accumulated in the savings account component of the policy.

Appellant initiated this action on April 20, 2001 by writ of summons.

Appellant filed a complaint several years later, in September 2008. Appellant

alleged 3 causes of action: fraudulent misrepresentation (FM), negligent

misrepresentation (NM), and violation of the Unfair Trade Practices and

4Appellant testified that he did not thoroughly read the 1994 policy documents because he trusted Rock to fill them out correctly and consistent with his representations at the 1993 meeting.

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Waronsky, D. v. Ameriprise Financial, Counsel Stack Legal Research, https://law.counselstack.com/opinion/waronsky-d-v-ameriprise-financial-pasuperct-2020.