Neuma, Inc. v. Wells Fargo & Co.
| Decision Date | 19 October 2006 |
| Docket Number | No. 04 C 4213.,04 C 4213. |
| Citation | 515 F.Supp.2d 825 |
| Court | U.S. District Court — Northern District of Illinois |
| Parties | NEUMA, INC., Plaintiffs, v. WELLS FARGO & COMPANY, Defendant. |
Nathan H. Lichtenstein, Howard J. Fishman, Aronberg, Goldgehn, Davis & Garmisa, Chicago, IL, for Plaintiffs.
Nigel. F. Telman, Jessica Kaye Benenson, Michael Brian Segall, Sidley Austin LLP, Chicago, IL, for Defendant.
Plaintiff Neuma, Inc. ("Neuma") entered into a viatical settlement with Rudy Ockhuysen ("Ockhuysen"), an employee on disability leave from Defendant Wells Fargo & Company ("Wells Fargo"), in which Ockhuysen assigned his rights as a beneficiary under his employer-sponsored group life insurance policy to Neuma in exchange for a lump sum payment. Shortly thereafter, Wells Fargo terminated Ockhuysen's employment pursuant to a company policy of limiting disability leaves to 30 months. As neither Neuma nor Ockhuysen subsequently converted the group policy to an individual policy, the policy lapsed.
Neuma brings claims under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq., for recovery of benefits, breach of fiduciary duty, and failure to provide requested documents. Neuma asserts that Wells Fargo breached its fiduciary duty to Neuma as an assignee-beneficiary by neglecting to advise Neuma, when Neuma contacted Wells Fargo to verify Ockhuysen's employment status, that Ockhuysen's employment was scheduled to terminate 30 days later in accordance with Wells Fargo's leave policy. Neuma further asserts that Wells Fargo inadequately responded to Neuma's request for documents related to Ockhuysen's group life policy. Neuma seeks damages, an order reinstating Ockhuysen's coverage, a declaratory judgment that Wells Fargo pay the face amount of the policy upon Ockhuysen's death, and a statutory per-diem penalty for Wells Fargo's alleged failure to produce documents.
The parties have filed cross-motions for summary judgment on the breach of fiduciary duty and document request claims. Wells Fargo further moves for summary judgment on Neuma's claims for recovery of benefits and declaratory relief, moves to strike an affidavit submitted by one of Neuma's attorneys, and moves for sanctions. For the reasons presented here, Wells Fargo's motions are granted and Neuma's motion for summary judgment is denied.
Plaintiff Neuma, an Illinois corporation, (Pl.'s 56.1 ¶ 1), purchases life settlements and viatical settlements from individuals. (Def.'s 56.1 ¶ 1.) A viatical settlement is accomplished when a person, typically an individual with a terminal illness, assigns his or her rights under a life insurance policy to Neuma and, in exchange, receives a discounted lump sum payment from Neuma of the face value of the insurance policy. (Pl.'s 56.1 ¶ 14.) After the assignment is made, Neuma continues to pay any applicable premiums and, upon the insured's death, receives payment under the policy as the designated beneficiary. (Id. ¶ 15.) Viatical settlements may involve individual or group insurance policies. (Def.'s 56.1 ¶ 1.)
Wells Fargo, a Delaware corporation with its principal place of business in California, (Pl.'s 56.1 ¶ 2), is an integrated financial services company with approximately 150,000 employees. (Def.'s 56.1 ¶ 2.) Ockhuysen, who is not a party to this lawsuit, worked at Wells Fargo's San Francisco office from 1978 until December 16, 1998, beginning as a bank teller and eventually becoming an operations analyst in Well's Fargo's courier network. (Id. ¶¶ 17, 21; Pl.'s 56.1 ¶ 4.) In 1995, Ockhuysen fell ill and reduced his work schedule to four days a week from five.2 (Ockhuysen Dep., at 51:10-25.) On June 17, 1996, he went on disability leave from Wells Fargo. (Def.'s 56.1 ¶ 18.) Prior to his going on leave, in May 1996, Wells Fargo implemented a policy under which the company would terminate the employment of any employee on leave in excess of 30 months. (Id. ¶ 19.) Ockhuysen was informed of this policy and that his employment would terminate on December 16, 1998. (Id. ¶ 20.) Ockhuysen did not return to work, and in accordance with Wells Fargo's policy, Wells Fargo terminated his employment on December 16, 1998, after 30 months of leave. (Id. ¶ 21.)
As of October 1998, Ockhuysen was a participant in Wells Fargo's group life insurance plan (the "Plan"). (Def.'s 56.1 ¶ 3.) Wells Fargo was the plan sponsor, plan administrator, and fiduciary of the Plan. (Pl.'s 56.1 ¶ 6.) From 1992 to July 1999, Wells Fargo Senior Counsel Cara Sheean was responsible for all in-house employee benefit plans. (Pl.'s 56.1 Resp. Addnl. ¶ 3.) The insurance coverage under the Plan was provided by Metropolitan Life Insurance Company ("MetLife") pursuant to policy number 4839-G1. (Pl.'s 56.1 ¶ 7; Def.'s 56.1 ¶ 4.) Ockhuysen's life insurance policy had a face amount of $252,000. (Pl.'s 56.1 ¶ 8.) In or around September 1997, however, Ockhuysen received a 50% accelerated benefit option in the amount of $139,000 against the face amount of the policy. (Def.'s 56.1 ¶ 52; Def.'s 56.1 Resp. Addnl. ¶ 7.) Under the terms of the Plan, a participating employee's group life insurance benefits would end on the last day of the calendar month in which the participant's employment with Wells Fargo ended. (Def.'s 56.1 ¶ 24.) An employee could, however, convert the policy to an individual life insurance policy by completing an application during a "conversion period" of 31 days after termination of group life benefits. (Id. ¶¶ 25-26.)
Wells Fargo distributed information about the Plan to its employees in several ways. First, Wells Fargo issued "Benefits Books" to all employees, including those on leave, that described key terms and conditions of the Plan. (Id. ¶¶ 27-28.) Wells Fargo's 1998 Benefits Book provided that employees on approved leaves of absence could maintain their life insurance coverage by paying the premiums for the duration of the leave (to a maximum of 30 months). (Id. ¶¶ 29-30.) Both the 1996 and 1998 Benefits Books explained that employees could convert their group life policies to individual policies by submitting a completed conversion application form to the appropriate insurance carrier and by paying the first premium within 31 days after coverage ended. (Id. ¶ 32.) The 1996 and 1998 books also stated that Wells Fargo, as plan administrator, had "full discretionary authority to administer and interpret" the Plan. (Id. ¶ 31.) Second, Wells Fargo provided copies of the Plan upon request.3 (Id. ¶ 33.) Third, Wells Fargo provided its employees, including those on leave, with an Employee Handbook that described policies and procedures applicable to its employees. (Id. ¶¶ 34-35.) The 1997 Employee Handbook informed employees that their "employment will end" if a leave reached 30 months. (Id. ¶ 36.) During Ockhuysen's employment with Wells Fargo, he received copies of Benefits Books and Employee Handbooks annually, and received a copy of the actual insurance policy upon requesting it from Wells Fargo in 1998.4 (Id. ¶ 37.)
On July 22, 1998, Ockhuysen completed a viatical broker application from Wilbanks & Associates ("Wilbanks"), a viatical settlements broker. (Def.'s 56.1 ¶ 51.) Ockhuysen had contacted Wilbanks to inquire about viatical settlements upon a referral from other Wells Fargo employees.5 (Pl.'s 56.1 ¶ 12.) Wilbanks forwarded the application to Neuma. (Def.'s 56.1 ¶ 51.) In the application, Ockhuysen stated that his policy had a face amount of $252,000 and that he had previously received a 50% accelerated benefit option. (Id. ¶ 52.) Ockhuysen also stated in the application that he was not working; that he had last worked on June 15, 1996 (roughly 25 months prior); and that he was no longer able to work. (Id. ¶ 53.)
On September 24, 1998, Ockhuysen executed a viatical settlement agreement with Neuma (the "Agreement") whereby he agreed to sell to Neuma all his rights as a beneficiary under the Plan. (Id. ¶¶ 7, 55.) Under the terms of the Agreement, Neuma paid Ockhuysen $73,670 in exchange for his naming Neuma the "absolute assignee" of his group life coverage under the Plan. (Id. ¶¶ 8, 58.) Ockhuysen thus assigned to Neuma his title interest in the Plan and Policy, including the right to convert it to an individual policy.6 (Pl.'s 56.1 ¶ 16.) Wells Fargo was not a party to the Agreement. (Def.'s 56.1 ¶ 57.)
Before Neuma enters into a viatical agreement, Neuma requires certain documents and information from the seller of the policy. (Id. ¶ 38.) Neuma requires, inter alia, contact information; medical history and records; and copies of a seller's life insurance policy, summary plan description, and benefit books if the insurance is provided through an employer. (Id. ¶ 39.) Neuma calls the seller's insurance company or employer to confirm that the policy is in effect, and to obtain information about the face value, premiums and cash value of the policy. (Id. ¶ 42.) After executing a viatical agreement and paying the seller, Neuma takes various steps to confirm that the information provided remains accurate. (Id. ¶ 43.) Neuma may contact the seller, the seller's doctor or counsel, or the seller's designated estate representative. (Id. ¶¶ 43-44.) Neuma also provides a seller with 12 preaddressed postcards annually, along with a "contact letter" asking the seller to provide Neuma with information about changes in address, telephone number, or physician. (Id. ¶ 45.) According to Neuma, the postcards "ask [the seller] one or two questions" (FRCP 30(b)(6) Dep., at 16:24, 17:1-2.) Although it is not clear what those questions are, the postcards do not appear to ask for the seller's employment status; rather, the purpose of the monthly postcards is merely...
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