Thursday, May 20, 1999
Sisters can pursue claim of fraud against insurer
BY BEN L. KAUFMAN
The Cincinnati Enquirer
A federal appeals court Wednesday gave suburban Cincinnati sisters a second chance to prove they were misled into thinking “single-premium” insurance policies would never require further payments.
Peggy Greenberg and Pamela Rossmann sued the Life Insurance Co. of Virginia for fraud, breach of contract and what they said were other missteps.
U.S. District Judge Sandra S. Beckwith dismissed their suit, saying there was no claim on which the court could act.
The sisters' attorney, Ron Parry, appealed and won.
The U.S. Court of Appeals for the 6th Circuit said the sisters' could pursue their key claims.
In 1984, the sisters had three Continental Assurance Co. policies on their father, Charles Phillips, with a total value of $60,000.
What happened next remains a matter of dispute.
Wednesday's opinion said the sisters claimed that salesman Ronald Klein persuaded them to cash the policies and buy larger Life of Virginia policies on their father with single premiums.
Mr. Klein, in an interview Wednesday, said he did not deal with the sisters. Rather, he said, he sold the policies to Mr. Phillips, who listed his daughters as owners.
Either way, Life of Virginia notified the family in 1996 that further premiums would be required to keep the policies active.
Judge Ronald Lee Gilman wrote the unanimous opinion for the 6th Circuit, saying:
• The sisters had sufficient evidence to go to trial on their fraud claim because they said they “justifiably relied” on Mr. Klein's promises of a single premium. Granted, the policies said subsequent premiums might be required, but application forms stated “single payment” under “premiums payable.” A judge or jury should decide whether that inconsistency amounted to fraud.
• With the fraud claim reinstated, the sisters also could argue their claims of negligent misrepresentation, negligent training and supervision of the salesman, and breach of contract.
Neither the company attorney nor the sisters could be reached for comment.
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