Mauroner v. Massachusetts Indemnity and Life Insurance Company

Susan Mauroner (plaintiff) and her husband, Milton Mauroner, Jr., purchased a life-insurance policy from Massachusetts Indemnity and Life Insurance Company (MILICO) (defendant) through MILICO’s agent, Steve Modica of Steve Modica and Associates (SMA) (defendant). The policy insured Mr. Mauroner’s life for $100,000 and Mrs. Mauroner’s life for $10,000. The Mauroners completed an insurance application and sent the application, one month’s premium, and a transmittal form describing the Mauroners’ desired coverage to MILICO. On November 20, 1981, MILICO notified SMA, through its associate, Bill Whittle and Associates, Inc., (Whittle) (defendant), that there was an error on the transmittal form. Whittle learned that MILICO required additional information. MILCO received this information a few days later. Subsequently, Whittle’s office followed up with MILICO about the Mauroners’ application. The Mauroners’ policy was issued on February 4, 1982. Although MILICO usually processed applications for issued insurance policies within 56 days of the application date, the Mauroners’ application was not issued until 92 days after the application date, which was a delay of 36 days. SMA delivered the policy to the Mauroners on February 28, 1982. SMA advised the Mauroners that the policy had a two-year suicide incontestability clause. On January 13, 1984, Mr. Mauroner committed suicide. MILICO refused to pay Mrs. Mauroner the proceeds of her husband’s life-insurance policy, because Mr. Mauroner died three weeks before the two-year suicide-exclusion period ended. Instead, MILICO refunded the premiums the Mauroners had paid. Mrs. Mauroner then sued SMA, Whittle, and MILICO (defendants). The trial court found in favor of Mrs. Mauroner for the full amount of the policy. The trial court determined that MILICO’s agents, Whittle and SMA, had negligently failed to timely correct the error in the Mauroners’ application. Thus, the issuance date for the Mauroners’ insurance policy was delayed. This delay caused Mr. Mauroner’s suicide to occur during the two-year suicide-exclusion period. The defendants appealed.