Connick v. Teachers Ins. and Annuity Ass'n of America
| Citation | 784 F.2d 1018 |
| Decision Date | 14 March 1986 |
| Docket Number | No. 84-6556,84-6556 |
| Parties | Dr. Charles Milo CONNICK, Plaintiff-Appellant, v. TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA & College Retirement Equities Fund, Defendants-Appellees. CA |
| Court | U.S. Court of Appeals — Ninth Circuit |
J. Thomas Gilbride, Whittier, Cal., for plaintiff-appellant.
Barger & Wolen, Kent Keller, Steven H. Weinstein, Los Angeles, Cal., for defendants-appellees.
Appeal from the United States District Court for the Central District of California.
Before ANDERSON and PREGERSON, Circuit Judges, and SOLOMON, * District Judge.
Appellant, Dr. Charles Milo Connick, upon his retirement demanded a lump sum payment for his annuity contributions and the accrued interest. Appellees, Teachers Insurance and Annuity Association of America and College Retirement Equities Fund (TIAA-CREF), refused to make the lump sum payment because the annuity contracts specifically state that there are no provisions for cash surrender. Connick filed an action for declaratory judgment against TIAA-CREF in which he alleged various state law claims, including breach of contract, reformation, unconscionability, misrepresentation, and changed circumstances. Connick also alleged breach of fiduciary duties, an ERISA violation. 29 U.S.C. Secs. 1001, et seq. The district court granted TIAA-CREF's motions to dismiss and for summary judgment. On appeal, Connick contends that the district court's action was an abuse of discretion and erroneous. We affirm.
TIAA is a non-profit, legal reserve life insurance company. It provides a fixed retirement annuity for employees of institutions of higher education. The funds are invested in mortgages, real estate, bonds, and other debt securities. CREF is a companion non-profit organization. It provides a variable retirement annuity program for college and university employees. Its funds are invested in common stocks and other securities having equity characteristics. Both organizations are New York corporations with their principal places of business in New York.
Connick is sixty-eight years old and is a resident of Whittier, California. He served as a professor and chairman of the Department of Philosophy and Religion at Whittier College from 1946 until 1982.
On September 21, 1949, Connick joined TIAA and began to make contributions. Three years later, Connick also joined CREF and applied a portion of his retirement contributions to this program. In July, 1982, Connick elected to discontinue contributions to both programs. TIAA-CREF provided Connick with information on the available methods of payment of his annuities. Connick demanded a lump sum payment of his contributions and accrued interest. TIAA-CREF rejected the demand because a lump sum payment to Connick was not an available method of payment. The contributions made by Connick and Whittier College on Connick's behalf totalled $75,013.57 to TIAA and $48,986.97 to CREF.
The TIAA application specifically states that all premiums become the property of TIAA and that the contract to be issued will have no provision for cash surrender. By signing the CREF application, the applicant acknowledged that the issued certificate will have no provision for cash surrender. The certificates issued pursuant to these applications state on the front pages that they do not provide for cash surrender. Connick admits that he read the provisions containing these limitations.
Connick is the annuitant and his wife is the beneficiary in each annuity contract. Each contract provides for lump sum payments in specific situations. In the TIAA contract, a single sum payment may be paid if a corporation, association, partnership, or estate is the payee at the annuitant's death, or to the beneficiary's executor or administrator upon the death of the beneficiary if he or she survives the annuitant by forty-eight hours. The CREF contract provides for payment of the present value of the annuity benefits in a single sum to an entity, namely, a corporation, association, partnership, trustee, or estate, if that entity becomes entitled to receive any benefit. Both contracts expressly reserve the right to pay in a lump sum the value of the accumulated units if any periodic payment to a beneficiary is less than $10.00 per month or if any beneficiary's share is less than $1,000.00.
Both annuity contracts provide for annual notices to the annuitant showing the amount of the annuity that was purchased
by the contributions during that year and the amount of interest credited. In addition, TIAA and CREF voluntarily provide an "Annual Report" and an information magazine called "Investment Supplements" to the participants.
On February 7, 1984, Connick filed this action. The district court granted TIAA-CREF's original motion to dismiss or alternatively for summary judgment and allowed Connick leave to amend. Connick filed an amended complaint adding an ERISA claim.
TIAA-CREF moved to dismiss the amended complaint or alternatively for summary judgment. The district court granted both the motions on all counts. The court found that the annuity contracts preclude any lump sum distribution, that the contracts are clear and unambiguous, that Connick had notice of the no cash value provision in each contract, and that this provision had a valid business purpose and was not unconscionable. The court also found that there were no changed circumstances, no false statements or misrepresentations, and that TIAA-CREF did not violate ERISA.
Appellate courts must review motions for summary judgment under the same standards as the trial court. Radobenko v. Automated Equipment Corp., 520 F.2d 540, 543 (9th Cir.1975). Summary judgment is appropriate when there are no issues of material fact and when the evidence, viewed in a light most favorable to the opposing party, entitles the movant to prevail as a matter of law. Fruehauf Corp. v. Royal Exchange Assurance of America, Inc., 704 F.2d 1168, 1171 (9th Cir.1983). The court shall consider all admissible affidavits and supplemental documents on a motion for summary judgment. Fed.R.Civ.P. 56.
Here, the underlying facts are not contested. The main issue is whether the annuity contracts provide for lump sum payments of contributions and interest to an annuitant upon retirement. Summary judgment is uniquely appropriate when the contract is before the court and the issue is contractual interpretation. Brobeck, Phleger & Harrison v. Telex Corp., 602 F.2d 866, 871 (9th Cir.), cert. denied, 444 U.S. 981, 100 S.Ct. 483, 62 L.Ed.2d 407 (1979).
Connick alleges that the "cash surrender statement on its face is vague, ambiguous and misleading" and that the annuities, when read alone or together with the voluntary TIAA-CREF publications, provide for a lump sum distribution on retirement. Connick did not supply the court with copies of the TIAA-CREF publications. A party may not defeat a summary judgment motion by reference to "phantom" documents not supplied to the court. See Blodgett v. County of Santa Cruz, 553 F.Supp. 1090, 1094 (N.D.Cal.1981), aff'd, 698 F.2d 368 (9th Cir.1982). Therefore, the court need only review the annuity contracts themselves.
Words used in an insurance/annuity contract are to be interpreted in their "plain and ordinary sense." McKee v. State Farm Fire & Casualty Co., 145 Cal.App.3d 772, 776, 193 Cal.Rptr. 745, 746 (1983). 1 A claim of ambiguity cannot be based on a strained interpretation of the terms of a policy. Id.
The TIAA and CREF contracts specifically state that they contain no provision for cash surrender. A cash surrender provision allows the owner to receive a single cash payment for the value of the policy upon termination and surrender. See United States v. Mitchell, 349 F.2d 94, 100 (5th Cir.1965).
The no cash surrender provisions at issue here have been construed in four previous decisions. See Beers v. Teachers Insurance and Annuity Association of America, No. 29950 (Boone County, Iowa June 26, 1981); 2 Alexandre v. Chase Manhattan Bank, N.A., 61 App.Div.2d 537, 403 N.Y.S.2d 21 (1978); Overman v. Overman, 570 S.W.2d 857 (Tenn.1978); Abbett v. Teachers Insurance and Annuity Association of America, No. 7883/1968, Supreme Court, New York County (July 8, 1968). 3 In every case, the court determined that the contracts do not provide for lump sum payments.
There is no merit in Connick's contention that the provisions for one sum payments to certain beneficiaries in certain instances makes these contracts ambiguous. The one sum payment provisions come into effect only when an entity becomes entitled to receive benefits upon the death of the annuitant or beneficiary.
Equally without merit is Connick's contention that TIAA-CREF breached the contracts by failing to provide annuitants with accurate annual reports of TIAA-CREF's investment results, by failing to obtain the best management and investment expertise, by failing to bring in the highest returns, and by failing to innovate since 1952. The annuity contracts do not require TIAA-CREF to perform these functions.
Reformation of a contract is available where one party is mistaken on either the terms or effect of a contract and the other party knows or suspects that the mistaken belief existed at the time the contract was executed. City of Cypress v. New Amsterdam Casualty Co., 259 Cal.App.2d 219, 66 Cal.Rptr. 357, 360 (1968).
The agreements specifically state that no cash surrender payments are available under the contract. It is unreasonable to infer that this clause would result in Connick's mistaken belief that a lump sum payment was available or that TIAA-CREF should have known that Connick would mistakenly believe that a lump sum payment was available from his reading of the agreements.
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