Security Ben. Life Ins. Co. v. FDIC, 91-4023-S.
| Citation | 804 F. Supp. 217 |
| Decision Date | 06 October 1992 |
| Docket Number | No. 91-4023-S.,91-4023-S. |
| Court | United States District Courts. 10th Circuit. United States District Courts. 10th Circuit. District of Kansas |
| Parties | SECURITY BENEFIT LIFE INS. CO., Plaintiff, v. FEDERAL DEPOSIT INSURANCE CORP., as Receiver of Life Savings of America, F.S.B., Defendant. |
COPYRIGHT MATERIAL OMITTED
J. Craig Anderson, Sec. Ben. Group, Inc., Topeka, Kan., Robert A. Knuti, Damon N. Vocke, Lord, Bissell & Brook, Chicago, Ill., for Sec. Ben. Life Ins. Co.
Lawrence D. Greenbaum, Frank D. Menghini, Douglas M. Greenwald, McAnany, Van Cleave & Phillips, P.A., Kansas City, Kan., for F.D.I.C.
This matter is before the court on the defendant's motion for summary judgment in this declaratory judgment action filed pursuant to 28 U.S.C. § 2201 by Security Benefit Life Insurance Company ("SBL"), a mutual life insurance company domiciled in Kansas. The defendant, Federal Deposit Insurance Corporation ("FDIC"), is the receiver of Life Savings of America, F.S.B. ("Life Savings"), a federally chartered savings bank located in Illinois. SBL seeks a determination that it is not liable to the defendant on an annuity owned by Life Savings. As the receiver for Life Savings, FDIC counterclaims, seeking a judgment against SBL for the unrecovered balance of the annuity's surrender value.
The annuity was originally purchased by Life Savings in 1982 from First Pyramid Life Insurance Company ("First Pyramid"). First Pyramid was acquired as a subsidiary by SBL, which subsequently assumed the obligation on the annuity at issue here. SBL later assigned the annuity obligation to Life Assurance Company of Pennsylvania ("LACOP"), which in turn assigned the obligation to Diamond Benefits Life Insurance Company ("Diamond") of Arizona. SBL claims that it is no longer obligated on the annuity because the later transactions with LACOP and Diamond operated to release SBL from liability on the annuity.
The court has subject matter jurisdiction pursuant to 12 U.S.C. § 1819(b)(2)(A) and 28 U.S.C. § 1331 in that the action is deemed to arise under the laws of the United States. Venue is proper under 28 U.S.C. § 1391(b)(2).
Under Fed.R.Civ.P. 56, the court is compelled to render summary judgment on behalf of a moving party if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Essentially, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986). An issue of fact is genuine if the evidence is sufficient for a reasonable jury to return a verdict for the nonmoving party. Id. at 248, 106 S.Ct. at 2510.
The moving party has the burden of showing the absence of a genuine issue of material fact. This burden "may be discharged by `showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). "A party opposing a properly supported motion for summary judgment may not rest on mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256, 106 S.Ct. at 2514. The nonmoving party must go beyond the pleadings and designate specific facts, by affidavits, depositions, answers to interrogatories, and admissions on file, showing that there is a genuine issue for trial. Celotex Corp., 477 U.S. at 323, 106 S.Ct. at 2553. The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Anderson, 477 U.S. at 256, 106 S.Ct. at 2514.
The court must consider factual inferences tending to show triable issues in the light most favorable to the existence of those issues. United States v. O'Block, 788 F.2d 1433, 1435 (10th Cir.1986). The court must also consider the record in the light most favorable to the party opposing the motion. Bee v. Greaves, 744 F.2d 1387, 1396 (10th Cir.1984), cert. denied, 469 U.S. 1214, 105 S.Ct. 1187, 84 L.Ed.2d 334 (1985). However, a mere scintilla of evidence in favor of the nonmoving party is insufficient to create a genuine issue of material fact. Anderson, 477 U.S. at 252, 106 S.Ct. at 2512.
For purposes of the present motion, the court finds the following relevant facts to have been established.
Life Savings is a federal savings bank located in Rockford, Illinois. In 1982, Life Savings purchased a single premium deferred annuity ("Life Savings annuity") for $2,500,000 from First Pyramid, naming one of its officers, Jeffrey Hansen, as the annuitant. The annuity policy was among a block of single premium deferred annuities known as ValuBuilder annuities. The maturity date of the Life Savings annuity is December 2, 1992.1
As a result of a series of transactions, FDIC now holds all rights to the Life Savings annuity. On February 16, 1984, Jeffrey Hansen assigned all his rights in the annuity to Life Savings. On February 13, 1987, Life Savings was placed in receivership, and the Federal Savings and Loan Insurance Corporation ("FSLIC") was appointed sole receiver. FSLIC was the holder and owner of the Life Savings annuity until August 1989 when FDIC succeeded FSLIC as receiver. Since then, FDIC has been the holder and owner of the Life Savings annuity.
By an independent series of transactions, First Pyramid's annuity obligation was assigned to other entities. In 1984, First Pyramid was acquired by SBL as a subsidiary. In 1986, SBL sold First Pyramid. Incident to that transaction SBL assumed liability to all holders of ValuBuilder annuities, including the Life Savings annuity, effective June 1, 1986.2
Because the ValuBuilder annuities were not the type of insurance business that SBL was writing or servicing at the time SBL assumed liability for them, SBL sought and obtained a transferee for its obligations. On March 31, 1987, SBL entered into a written "reinsurance assumption agreement" with LACOP, under which SBL paid LACOP to assume its liability for the block of ValuBuilder annuities. The effective date of the agreement was April 1, 1987. Under the agreement LACOP was to issue assumption certificates to the owners of each reinsured policy informing them about LACOP's assumption of the annuity obligations and notifying them that SBL would have no further obligation on the annuity policies. However, the assumption certificates were never mailed to the annuity owners.3 By this time FSLIC had been appointed receiver for Life Savings. SBL did not send any notice or make any request to FSLIC or its successor FDIC seeking consent to release SBL from liability; nor did SBL ever receive any written release from either FSLIC or FDIC.
Under a separate written agreement effective April 1, 1987, SBL agreed to continue performing administrative responsibilities associated with the annuities as the agent of LACOP. These services included answering inquiries about the policies and processing ownership changes and surrenders. LACOP agreed to pay SBL certain fees for these services.
On August 12, 1987, a receptionist and clerical employee of FSLIC, then the receiver for Life Savings, initiated a telephone conversation with an employee at SBL regarding the fact that Life Savings was in receivership. The memorandum of the telephone contact, prepared by the SBL employee, indicates that the FSLIC employee inquired as to the original premium amount Life Savings paid for the annuity, and SBL reported that the original premium was $2,500,000. The memorandum also includes a notation that surrender forms were to be sent to FSLIC to the attention of Ray Krey, who at the time was Deputy Director of FSLIC. The SBL employee testified in her deposition that it was standard operating procedure for her to inform ValuBuilder annuitants who requested surrender forms about the fact that LACOP had assumed the obligation on those annuities. It also would have been standard operating procedure to send surrender forms as requested.
Ray Krey's deposition indicates that he never knew that Life Savings had purchased an annuity for $2,500,000 and that he never received surrender forms. Although some inquiries were undertaken to find out the procedure for liquidating the Life Savings annuity, FSLIC never submitted documents to SBL, LACOP, or any other insurance company surrendering the annuity or requesting payment of its cash value.
On August 31, 1987, SBL received a telephone request from LACOP to send the entire Life Savings annuity file. SBL sent a copy of the file by telefacsimile to LACOP as requested.4
On December 31, 1987, LACOP executed a written reinsurance agreement with Diamond, under which LACOP ceded 95 percent of its liability on the annuities to Diamond. This agreement was subsequently amended on February 29, 1988. On June 14, 1988, LACOP and Diamond executed a written "reinsurance assumption agreement" under which Diamond assumed full and complete liability for the block of ValuBuilder annuities. Diamond agreed to mail assumption certificates on the effective date of the latter agreement to the owners of each reinsured policy. By this agreement LACOP also assigned to Diamond its rights under LACOP's separate agreement with SBL for administrative services related to the annuities.5
On or about June 14, 1988, Diamond mailed a letter and assumption certificate to Jeffrey Hansen, the original annuitant, at an Illinois address. Although the letter was dated June 13, 1988, the assumption certificate was dated December 31, 1987, and gave the effective...
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