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Docket No. 95051-Agenda 6-November 2003.

KHALID J. BAJWA, Adm'r of the Estate of Muhammad Cheema, a/k/a
Manwar Ahmad Bajwa, Deceased, Appellee and Cross-Appellant, v.
METROPOLITAN LIFE INSURANCE COMPANY,
Appellant and Cross-Appellee.

Opinion filed January 23, 2004.
 

JUSTICE THOMAS delivered the opinion of the court:

Plaintiff, Khalid J. Bajwa, as administrator of the estate ofMuhammad Cheema, filed an action under the Wrongful Death Act (740ILCS 180/1 et seq. (West 1998)), alleging that the negligent issuance ofa life insurance policy by defendant, Metropolitan Life InsuranceCompany (Met Life), proximately caused the murder of MuhammadCheema (decedent or A. Cheema) by the beneficiary of the policy. MetLife filed a motion to dismiss pursuant to section 2-615 of the Code ofCivil Procedure (the Code) (735 ILCS 5/2-615 (West 2000)). Thecircuit court of Cook County granted the motion. The appellate courtreversed and remanded the cause for further proceedings. 333 Ill. App.3d 558. We granted Met Life's petition for leave to appeal pursuant toSupreme Court Rule 315 (177 Ill. 2d R. 315), to consider an issue of firstimpression in Illinois: whether a cause of action for negligent issuance ofa life insurance policy should be recognized, where there are a number ofanomalies in the application process and plaintiff alleges that the insurershould have known that the supposed insured did not know of the policyand did not give his consent to it, thereby proximately causing the deathof the insured.

BACKGROUND

The plaintiff's fourth amended complaint and the attached exhibitsreveal that in December 1992, Muhammad U. Cheema (U. Cheema) metwith Met Life account representative Imtiaz Sheik to fill out an insurancepolicy on the life of A. Cheema. U. Cheema falsely represented himself asthe son of A. Cheema and provided some personal information necessaryto fill out part A of the application. U. Cheema designated himself as thebeneficiary and arranged for the policy premiums to be deducted from hisown bank account. U. Cheema then told the agent that he would take theapplication to his "father" to obtain his signature. This was a violation ofMet Life's standard procedural rules, requiring that the agent meetpersonally with the proposed insured to witness the signature on theapplication and to propound certain questions to the proposed insured.Nevertheless, Sheik agreed to this deviation from procedure, and U.Cheema returned the application with it signed "A. Cheema." AgentSheikh then signed part A of the application, under the heading "Witness,"indicating that he had personally witnessed the proposed insured sign theapplication. When the policy was contested following the decedent'sdeath, Sheikh admitted that he had not witnessed the proposed insured'ssignature.

For part B of Met Life's application process, the proposed insuredwas required to submit to a medical examination conducted by aparamedical examiner hired by Met Life. The medical exam resulted in anumber of discrepancies between part A and part B of the application: theproposed insured's mailing address was listed as 6400 N. Ridge, #305,Chicago, IL in part A, but the address of his residence was listed as 5101N. Slunden, Chicago, IL in part B; the social security numbers listed forthe proposed insured in part A and part B were not the same; and thespaces provided for disclosing previous treatment for high blood pressureand previous surgery were checked "no" in part A, but were checked"yes" in part B.

The paramedical examiner certified in part C of the application thathe had personally examined A. Cheema. However, the person examinedby the paramedical examiner was 5 feet 11 inches tall and 195 pounds,while decedent was actually 5 feet 8 inches tall and 213 pounds.

Prior to the issuance of the policy, a Met Life underwriter noticed anumber of additional irregularities in the application that required furtherinvestigation. In that regard, he questioned why U. Cheema, rather thanA. Cheema's wife, was the policy beneficiary, and why the beneficiarywas paying the premiums rather than the insured, and finally, he questionedwhy the policy was for $200,000 when A. Cheema's income, accordingto Met Life's guidelines, did not qualify him for that large of a policyamount. Despite these discrepancies, the underwriter decided theapplication was acceptable and issued the policy on January 18, 1993.

After the policy was issued, someone identifying himself as"Muhammad Cheema" called Met Life on five different occasions,purporting to be the insured and asking questions about possible coveragein the event of the insured's death. Met Life found these calls "strangeenough" to send the case to the Consulting Services area, where the filewas "noted." Nine days after the last of those calls was made to Met Life,the real A. Cheema was stabbed and beaten to death in his apartment.According to plaintiff, U. Cheema murdered the decedent in order tocollect the life insurance benefits from the policy provided by Met Life.

Plaintiff filed a fourth amended complaint on February 19, 1999,alleging that Met Life negligently issued an insurance policy on the life ofthe decedent. Count IV of that complaint alleged that Met Life wasnegligent in the following ways: (1) issued a life insurance policy on the lifeof the decedent without investigating the veracity of the information on theinsurance application and personally meeting with the insured; (2) issueda policy in favor of a beneficiary who did not possess an insurable intereston the life of the insured; (3) relied upon misrepresentations of its agent inunderwriting the policy; (4) failed to warn decedent of the suspiciousphone calls; and (5) provided motivation for the murder. Count V allegedgross negligence for the same acts. Count VI alleged negligent supervisionof agent Sheik. The trial court granted Met Life's 2-615 motion to dismissthese counts of the complaint.⁽¹⁾

The appellate court reversed, finding that plaintiff could maintain acause of action for negligent issuance of an insurance policy. In so doing,it looked to cases from other jurisdictions that have considered the matterand found that courts in those states have recognized the validity of suchclaims on three different grounds: (1) where the insurer should have knownthat the person who procured and owned the policy, and who was namedas beneficiary, had no insurable interest in the life of the insured; (2) wherethe insurer had knowledge that the insured was unaware of and did notconsent to the policy; and (3) where the insurer had actual knowledge ofthe beneficiary's intent to murder the insured and failed to take action. 333Ill. App. 3d at 565.

As to the insurable interest ground, the appellate court noted that"while it has long been the established law of Illinois that the purchaser ofan insurance policy must have an insurable interest in the insured's life[citation], it has also long been held that 'one may insure his own life forthe benefit of another having no insurable interest therein [citation].' " 333Ill. App. 3d at 568. The court then found that plaintiff's pleadings wereinsufficient because they failed to make this distinction-plaintiff did notallege that Met Life issued an insurance policy on the life of the decedentto an individual who did not possess an insurable interest, but, rather, thatMet Life allowed the policy owner to designate a beneficiary who did notpossess an insurable interest. Accordingly, the court concluded thatplaintiff's allegations as they relate to an insurable interest were insufficientto state a cause of action. 333 Ill. App. 3d at 569.

With respect to the second ground of possible recovery, however,the appellate court found that Met Life had a duty to ascertain, prior to theissuance of a policy on the life of another, whether the individual named asthe insured is aware of and has consented to the procurement of thepolicy. The court found that the various irregularities in the applicationprocess, combined with the suspicious phone calls, were sufficient to putthe insurer on notice that an investigation was warranted. 333 Ill. App. 3dat 580. The court then rejected the notion that actual knowledge wasnecessary to establish liability on the part of the insured. 333 Ill. App. 3dat 578-79.

ANALYSIS

As noted above, the circuit court dismissed plaintiff's complaint afterMet Life brought a section 2-615 motion to dismiss. A section 2-615motion to dismiss challenges the legal sufficiency of the complaint.Chandler v. Illinois Central R.R. Co., 207 Ill. 2d 331, 348 (2003). Inreviewing a section 2-615 dismissal, a reviewing court must decidewhether the allegations, when construed in the light most favorable to theplaintiff, are sufficient to establish a cause of action upon which relief maybe granted. People ex rel. Ryan v. Telemarketing Associates, Inc., 198Ill. 2d 345, 351 (2001). A cause of action should be dismissed only if itis clearly apparent from the pleadings that no set of facts can be provenwhich will entitle the plaintiff to recovery. Chandler, 207 Ill. 2d at 349.Review of a section 2-615 dismissal is conducted de novo.Telemarketing Associates, Inc., 198 Ill. 2d at 351; Chandler, 207 Ill.2d at 349.

To recover in a negligence action, a plaintiff must allege facts fromwhich a court will find a duty of care owed by the defendant to theplaintiff, a breach of that duty, and an injury proximately caused by thebreach. Chandler, 207 Ill. 2d at 340, 349. The existence of a dutydepends on whether the plaintiff and the defendant stood in such arelationship to each other that the law will impose upon the defendant anobligation of reasonable conduct for the benefit of the plaintiff. Happel v.Wal-Mart Stores, Inc., 199 Ill. 2d 179, 186 (2002). Whether a duty ofcare exists is a question of law to be determined by the court. Marshallv. City of Centralia, 143 Ill. 2d 1, 6 (1991). However, the question ofwhether defendant breached its duty and whether the breach was theproximate cause of the plaintiff's injuries are factual matters for the jury todecide. Chandler, 207 Ill. 2d at 340; Thompson v. County of Cook,154 Ill. 2d 374, 382 (1993).

As the appellate court correctly noted, courts in other jurisdictionshave recognized a cause of action for negligent issuance or continuation ofa life insurance policy in three situations: (1) where the beneficiary whoprocured the insurance lacks an insurable interest (Liberty National LifeInsurance Co. v. Weldon, 267 Ala. 171, 100 So. 2d 696 (1957)); (2)where there is a lack of knowledge and consent to the policy by theinsured (Ramey v. Carolina Life Insurance Co., 244 S.C. 16, 135S.E.2d 362 (1964); Williams v. John Hancock Mutual Life InsuranceCo., 718 S.W.2d 611 (Mo. Ct. App. 1986); Wren v. New York LifeInsurance Co., 59 F.R.D. 484 (N.D. Ga. 1973), aff'd, 493 F.2d 839(5th Cir. 1974)); and (3) where the insurer has actual notice of a plot bythe beneficiary to murder the insured (Bodine v. Federal Kemper LifeAssurance Co., 912 F.2d 1373 (11th Cir. 1990); Bacon v. FederalKemper Life Insurance Co., 400 Mass. 850, 512 N.E.2d 941 (1987);Life Insurance Co. of Georgia v. Lopez, 443 So. 2d 947 (Fla. 1983)).Because plaintiff does not challenge the appellate court's ruling that theallegations of plaintiff's fourth amended complaint failed to state a causeof action under the first and third grounds noted above, we will limit ouranalysis to the second ground-whether plaintiff stated a cause of actionbased on the decedent's lack of knowledge and consent to the policy.

The leading case on point is Ramey v. Carolina Life Insurance Co.,244 S.C. 16, 135 S.E.2d 362 (1964). There, the South CarolinaSupreme Court recognized a cause of action for negligent issuance of a lifeinsurance policy based on the lack of knowledge and consent of theinsured. In Ramey, the wife procured the policy on the life of her husbandwithout his consent, forged his signature on the application, and namedherself beneficiary. After surviving his wife's attempt to murder him bypoisoning, the husband brought an action against the insurer for thepersonal injuries he sustained, contending that issuance of the policyproximately caused his wife to poison him with the hope of collecting theproceeds of the policy. The insurer knew that the husband was unawareof the policy and that the signature was a forgery. The court noted thatgenerally a wife has an insurable interest, but nevertheless concluded thateven with an insurable interest, insurance taken out on the life of another,without consent, is against public policy. Ramey, 244 S.C. at 22, 135S.E.2d at 365, citing Hack v. Metz, 173 S.C. 413, 418, 176 S.E. 314,316 (1934); Holloman v. Life Insurance Co. of Virginia, 192 S.C.454, 7 S.E.2d 169 (1940) (the authorities are generally to the effect that,except in the case of an infant, a policy of life insurance taken out withoutthe knowledge and consent of the insured is not enforceable); 29 Am. Jur.Insurance