United States District Court, D. Oregon, Portland Division
Ordered Date: August 28, 2014
[Copyrighted Material Omitted]
For Paul A. Meunier, Plaintiff: Michael J. Knapp, LEAD ATTORNEY, Michael J. Knapp, Portland, OR.
For Northwestern Mutual Life Insurance Company, Defendant: Kristen A. Chambers, Richard S. Pope, Kirklin Thompson & Pope LLP, Portland, OR.
OPINION AND ORDER
MICHAEL W. MOSMAN, United States District Judge.
On June 18, 2014, Magistrate Judge Jelderks issued his Findings and Recommendation , recommending Plaintiff's Motion for a Determination that there is an Unconscionable Contract Term in the Disability Insurance Policies issued by Defendant  be DENIED and Defendant's Motion for Summary Judgment  should be GRANTED. No objections to the Findings and Recommendation were filed.
The magistrate judge makes only recommendations to the court, to which any party may file written objections. The court is not bound by the recommendations of the magistrate judge, but retains responsibility for making the final determination. The court is generally required to make a de novo determination regarding those portions of the report or specified findings or recommendation as to which an objection is made. 28 U.S.C. § 636(b)(1)(C). However, the court is not required to review, de novo or under any other standard, the factual or legal conclusions of the magistrate judge as to those portions of the F& R to which no objections are addressed. See Thomas v. Arn, 474 U.S. 140, 149, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003). While the level of scrutiny under which I am required to review the F& R depends on whether or not objections have been filed, in either case, I am free to accept, reject, or modify any part of the F& R. 28 U.S.C. § 636(b)(1)(C).
Upon review, I agree with Judge Jelderks' recommendation and I ADOPT the F& R  as my own opinion.
IT IS SO ORDERED.
FINDINGS AND RECOMMENDATION
John Jelderks, United States Magistrate Judge.
Plaintiff Paul Meunier brings this insurance related action against Defendant The Northwestern Mutual Life Insurance
Company (" Northwestern" ). Currently pending before the court are Defendant's motion for summary judgment as to all Plaintiff's claims and Plaintiff's motion seeking a determination from the court that the insurance policies Defendant issued to Plaintiff contain unconscionable contract terms which should be deleted from Plaintiff's policies. Plaintiff also requests that the court then enforce the terms of Plaintiff's policies as they would be without the allegedly unconscionable terms.
For the reasons set out below, Defendant's motion should be granted as to all Plaintiff's claims and Plaintiff's motion should be denied.
Plaintiff brings three claims.
Plaintiff's first claim seeks a determination by the court that there is an unconscionable and, therefore, unenforceable term in certain insurance policy contracts between Plaintiff and Defendant. Plaintiff also seeks a declaration by the court that, with the elimination of this unenforceable term, Plaintiff is and has been entitled to renew Future Increase Benefit coverage and is entitled to a recalculation of his monthly disability benefit based on renewal of this coverage.
Plaintiff's second claim alleges that, if the unconscionable term is excised, Defendant wrongfully refused to renew the Future Increase Benefit coverage sections of Plaintiff's insurance policies and breached the insurance contracts set forth in those policies by failing to pay Plaintiff disability benefits in the full amount that Plaintiff is entitled to receive based on such Future Increase Benefit coverage.
Plaintiff's third claim alleges that Defendant breached the covenant of good faith and fair dealing implied in Plaintiff' insurance policy contracts by improperly using its unilateral discretion to lower policy issue limits.
The parties allege the following facts.
Plaintiff is a radiologist who, between 1991 and 2010, was the self-employed owner of a radiology practice. Plaintiff purchased disability insurance policy No. DI088078, from Defendant with an initial monthly benefit of $11,545 and an initial quarterly premium of $1535.21(" Main Policy" ). This policy became effective on November 10, 1994. Plaintiff then purchased a supplemental policy from Defendant (Policy No. D1098423) with an initial monthly benefit of $2000 and an initial quarterly premium of $281.95 (" Supplemental Policy" ). The Supplemental Policy became effective on January 10, 1995.
There was available, as an optional feature of the policies, a Future Increase Benefit (FIB) provision which permits the insured to have the periodic option to purchase cost-of-living increases in his disability coverage. The FIB feature provides for an increase, based on the consumer price index, of no less than 4% and no more than 8% of the insured's monthly benefit on each annual policy anniversary. There is no cost to include the feature in a policy. However, each time the insured opts to purchase the increased coverage under the FIB, there is an additional premium that must be paid for the increase in coverage. The FIB is initially effective for four years and may then be renewed by the insured every five years if the insured meets certain financial underwriting standards. A policyholder can decline the FIB increases by not paying the increased premium resulting from the FIB or by sending a written notice to Defendant's " Home Office" before the increase takes effect.
In each of the four years of the initial period Plaintiff accepted the option to purchase
the FIB increases on both policies at issue, was sold those increases by Defendant and paid the resulting increased premiums. By 1999, Plaintiff's potential disability benefits from the two policies totaled $16,391.
At the conclusion of the initial four-year period, Defendant was obligated to renew Plaintiff's FIB eligibility for successive five year terms if certain contractual terms and conditions were met at the time of renewal. The renewal section of the FIB provision states:
Page 3 shows the last date on which this Benefit is in effect. However, if it is stated on page 3 that this Benefit is renewable, the Owner may renew this Benefit for subsequent five-year periods. In no event will the Benefit be in effect after the first policy anniversary after the 64th birthday of the insured.
To renew this Benefit, the Insured must meet the Company's financial underwriting standards that are then in effect. These standards include:
o the Insured's earned and unearned income;
o the Insured's net worth;
o the amount and type of disability coverage that the Insured has or for which the Insured may be eligible after a ...