Arakelian v. National Western Life Ins. Co., Civ. A. No. 84-1953 SSH.

• Citation: 724 F. Supp. 1033
• Decision Date: 06 November 1989
• Docket Number: Civ. A. No. 84-1953 SSH.
• Parties: Robert ARAKELIAN, et al., Plaintiffs, v. NATIONAL WESTERN LIFE INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — District of Columbia

724 F. Supp. 1033

Robert ARAKELIAN, et al., Plaintiffs, v. NATIONAL WESTERN LIFE INSURANCE COMPANY, et al., Defendants.

Civ. A. No. 84-1953 SSH.

United States District Court, District of Columbia.

November 6, 1989.

Laurence E. Gold, Washington, D.C., for plaintiffs.

Jeffrey J. Hines, Baltimore, Md., for Benefits, Inc.

Gerald I. Katz, Washington, D.C., and Mark J. Stone and Teresa Ann Keough, Vienna, Va., for United Masonry.

Gerald I. Holtz, Washington, D.C., and Charles Martinez, Baltimore, Md., for Builders Cont. & Emp. Ret.

George Beall, James Eyler and Edward Adkins, Baltimore, Md., Richard G. Vernon, Washington, D.C., and Will D. Davis, Austin, Tex., for Nat. Western.

John T. Coyne and David P. Durbin, Washington, D.C., and David Latzko, Vienna, Va., Trustees.

Tarrant H. Lomax, Washington, D.C., for Halco Engineering and Wilcon.

MEMORANDUM OPINION

STANLEY S. HARRIS, District Judge.

Defendants filed a motion requesting the Court to reconsider four rulings made in its Memorandum opinion and Order dated October 30, 1987; plaintiffs opposed; and defendants replied. On consideration of the parties' pleadings and the entire record herein, the Court denies defendants' motion for reconsideration and confirms its October 1987 opinion. Arakelian v. National Western Life Insurance Co., 680 F.Supp. 400 (D.D.C.1987).

First, National Western and the other defendants (henceforth referred to as National Western) ask the Court to reconsider its finding that they violated the "Prudent Man" rule, set forth in 29 U.S.C. § 1104(a)(1)(B). In its October 1987 opinion, the Court held that "National Western failed to analyze the merits of investing all the Plan's assets in National Western annuity contracts because the Plan instrument requires all Plan assets to be used toward the purchase of National Western annuity contracts, precluding National Western from analyzing whether that investment best suits the participants' needs." Arakelian, 680 F.Supp. at 405. Defendants claim that facts already in the record of this case establish that National Western did engage in such an analysis, and thus a genuine issue of material fact exists. Specifically, National Western refers the Court to four sources: (1) National Western's response to Plaintiff's First Request for Admissions; (2) National Western's Supplemental Response to Plaintiffs' Second Set of Interrogatories; (3) National Western's Statement of Points and Authorities in Opposition to Plaintiffs' Motion for Partial Summary Judgment; and (4) National Western's continual improvement of the Plan's underlying group annuity policies. In reviewing sources one through three, the Court finds that defendants still fail to offer any significant evidence to support their claim. In these sources, National Western states that it did obtain information with respect to various types of insurance and annuity policies through advertising material issued by other companies, trade journals, and attendance at presentations given by speakers familiar with the industry. National Western fails to point to one source which gives a material, concrete example of investigation. In no place does National Western specify what trade journals it looked at, what other companies' policies or advertising materials it examined, or what conferences defendants attended. National Western relies exclusively on its naked assertion that it did investigate.

A party against whom summary judgment is sought cannot rely on factually unsubstantiated, conclusory allegations to sustain its claim that questions of fact exist. Jacobson v. John Hancock Mutual Life Insurance Co., 662 F.Supp. 1103, 1106 (D.Conn.1987), citing Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). National Western cannot defeat plaintiffs' properly supported motion for summary judgment without offering any significant probative evidence. Id. at 1106, citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986) (quoting First National Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 1593, 20 L.Ed.2d 569 (1968)). National Western's unsubstantiated claim that it did investigate alternatives and its argument that the Plan could not have been improved without such investigation are not enough to create a genuine issue of material fact. Therefore, the Court reaffirms its earlier conclusion that National Western violated the prudent man rule.

National Western further requests the Court to reconsider its entry of partial summary judgment ruling that National Western violated ERISA's minimum vesting and benefit accrual standards. In the October 1987 opinion the Court found that plaintiffs established a prima facie case that National Western, in amending the Plan in August 1983, violated 29 U.S.C. § 1053(a) and 29 U.S.C. § 1054(g). National Western claims that the record contains facts sufficient to raise significant questions of fact, and therefore that summary judgment on these issues was improperly granted.

National Western's argument that the amendment simply reallocates the front end administrative costs already established in the original Plan through surrender charges borne by those who prematurely "cash-in" is unpersuasive. Regardless of the proposed rationale behind the change, it remains evident to the Court that the amendment is in violation of § 1053(a) and § 1054(g). Section 1054(g) clearly states that the accrued benefit of a participant under a plan may not be decreased by an amendment of the Plan.¹ The original Plan may have allowed surrender...