Keenan v. AIG Life Ins. Co.

2003 DNH 126

• Court: District Court, D. New Hampshire
• Decided: July 11, 2003
• Docket: CV-03-31-B
• Status: Published

Opinion

Keenan v . AIG Life Ins. Co. CV-03-31-B 07/11/03

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Patricia Keenan, Individually and as Administratrix of the Estate of Robert Keenan, and on behalf of others similarly situated,

v. Civil N o . 03-31-B Opinion N o . 2003 DNH 126 AIG Life Insurance Company

MEMORANDUM AND ORDER

Patricia Keenan brings this diversity and proposed class

action suit on behalf of herself and her late husband, Robert

Keenan, against AIG Life Insurance Company (“AIG”). 1 Keenan

alleges AIG committed various torts when it issued Wal-Mart

Stores, Inc. (“Wal-Mart”) a corporate owned life insurance

(“COLI”) policy insuring Robert Keenan’s life and designating

Wal-Mart as beneficiary. Specifically, Keenan seeks damages for

commercial appropriation (Count I I I ) , intrusion upon seclusion

(Count I V ) , civil conspiracy (Count V ) , unjust enrichment (Count

1 Pursuant to my oral order at a hearing on April 4 , 2003, I consolidated Keenan v . AIG and its counterpart Rice v . Wal-Mart Stores Inc., et a l . , civil n o . 02-390-B, for pre-trial purposes. Only AIG, however, filed this motion for summary judgment. V I I ) , and intentional infliction of emotional distress (Count

IX). (Doc. N o . 1 ) (Compl. ¶ 23-52). 2 In addition, Keenan seeks

declaratory relief pursuant to N.H. Rev. Stat. Ann. (“RSA”) §

491:22 (1997 & Supp. 2001).

AIG moves for summary judgment arguing that Keenan’s claims

are time-barred by the applicable three-year statute of

limitations, RSA § 508:4 (1997 & Supp. 2002). While conceding

the applicability of the three-year statute of limitations,

Keenan objects to AIG’s motion arguing that her claims are saved

by the New Hampshire discovery rule. (Doc. N o . 5 ) .

BACKGROUND3

Patricia Keenan (“Patricia” or “Keenan”), a resident of

Dover, New Hampshire, is the widow of Robert Keenan (“Robert”), a

former Wal-Mart employee. (Compl. ¶ 4 ) . Robert died in 1995.

2 Counts I I , V I , and VII are entirely missing from Keenan’s complaint. Counts I I , V I , and VII are present in the second amended complaint in Rice. I note this only by way of explanation for their absence. 3 The background facts are set forth in the light most favorable to Keenan, the non-movant. See Navarro v . Pfizer Corp., 261 F.3d 9 0 , 94 (1st Cir. 2001)(describing the summary judgment standard).

-2- Prior to his death, he worked as a maintenance worker in Wal-

Mart’s Somersworth, New Hampshire store. (Compl. ¶ 1 1 ) . He

earned an hourly salary at close to minimum wage and Wal-Mart

provided health insurance benefits to the Keenan family. Aff. of

Patricia Keenan, Ex. 1 to Pl.’s O b j . to Def.’s Mot. for Summ. J.

In addition, Wal-Mart deducted money from each of Robert’s

paychecks to pay premiums for a life insurance policy that named

Patricia as beneficiary. Id. Upon Robert’s death in 1995,

Patricia received $10,000 in life insurance benefits which she

believes came from a policy purchased with deductions from

Robert’s paychecks. Id.

In December 1993, Wal-Mart decided to purchase COLI policies

from AIG and to use funds generated through associated tax

benefits to provide additional death benefits for its employees.4

Id. COLI plans are commonly used by corporations to insure the

lives of certain key officers and directors. (Compl. ¶ 6 ) . In

the early 1990's, Wal-Mart, like other corporations, used COLI

4 Under the Special Death Benefit Wal-Mart agreed “to pay $5,000 to the family of anyone who dies while employed by Wal- Mart, $10,000 for an accidental death. Families of former employees get $1,000.” Ex. B to Def.’s Mot for Summ. J.

-3- policies to insure a “broader class” of corporate employee. This

“broader class” included over 350,000 hourly and salaried

employees in all 50 states. See Aff. of Tom Emerick, Ex. A to

Def.’s Mot. for Summ. J.; Ex. 1 to Pl.’s O b j . to Def.’s Mot to

Dismiss. Wal-Mart paid a substantial premium to AIG to cover the

first year of death benefits. AIG then loaned back to Wal-Mart

approximately 90 percent of the premium affixing an interest rate

to this loan. Next, Wal-Mart deducted its interest payments on

the loans from its total income. Id. This arrangement both

allowed Wal-Mart to take advantage of a loophole, since

rectified, in tax law and yielded “substantial profits” for life

insurers like AIG. Id.

On December 1 4 , 1993, prior to formalizing its COLI policies

with AIG, Tom Emerick, Vice-President of Wal-Mart’s Benefits

Department, drafted a memorandum to all Wal-Mart store managers.

Emerick attached a notice which was distributed to all Wal-Mart

employees later that same month. Aff. of Emerick, Ex. A to

Def.’s Mot. for Summ. J. This notice describes the new special

death benefit and states that it would be funded through life

insurance policies owned by Wal-Mart in which Wal-Mart was the

beneficiary. Id. Specifically, the notice states:

-4- Wal-Mart is providing these new death benefits as a result of financial gains from life insurance policies Wal-Mart will purchase which will cover the lives of associates who participate in the group health plan. Th[e] Wal-Mart owned life insurance will result in financial benefits for the corporation. Any net life insurance proceeds payable to Wal-Mart from this life insurance as a result of the death of an active associate will be contributed to the profit sharing plan.

Id. The notice also clearly indicates that each employee had the

option to not participate and lists the contact information for

the Benefits Department. Id.

Keenan alleges that Wal-Mart used private, confidential

information from Robert’s personnel file to obtain a COLI policy

on his life. She further alleges that upon Robert’s death in

1995, Wal-Mart received benefits from the COLI policy insuring

Robert’s life. Patricia states that neither she nor Robert knew

about, or consented t o , the purchase of a COLI policy covering

Robert’s life.

Wal-Mart’s COLI policies became effective in 1994 and saved

Wal-Mart over $36 million dollars in tax payments that year.

News of the COLI policies on non-key employees spread throughout

the media. In its October 2 3 , 1995 issue, Newsweek published an

article entitled “Deal of Lifetime: How America’s biggest

corporations are cashing in on your mortality.” Ex. B to Def.’s

-5- Mot. for Summ. J. The article begins, in capital letters, “Wal-

Mart Stores” and continues by describing the COLI scheme, and

Wal-Mart’s use of i t , in somewhat harsh detail. Emerick, who

gave an interview for the article, is quoted in the article. A

month earlier, on September 2 4 , 1995, The New York Times printed

“Earning i t ; A Tax Threat to Company Insurance.” Ex. C to Def.’s

Mot. for Summ. J. This article states that Wal-Mart had COLI

policies and described how a typical plan may work. Id. It also

notes that Wal-Mart “informs its workers of the policies,” but

that other companies that held COLI policies did not. Id. Wal-

Mart surrendered and terminated its COLI policies in January

2000.

STANDARD OF REVIEW

Summary judgment is appropriate where “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 a judgment as a matter of law.” Fed. R. Civ. P.

56(c). The party seeking summary judgment must first demonstrate

-6- the absence of a genuine issue of material fact in the record.

See Celotex Corp. v . Catrett, 477 U.S. 3 1 7 , 323 (1986). In this

context, “a fact is ‘material’ if it potentially affects the

outcome of the suit and a dispute over it is ‘genuine’ if the

parties’ positions on the issue are supported by conflicting

evidence.” Intern’l Ass’n of Machinists and Aerospace Workers,

AFL-CIO v . Winship Green Nursing Ctr., 103 F.3d 196, 199-200 (1st

Cir. 1996)(citations omitted).

Once the moving party carries its burden, the burden shifts

to the nonmoving party to “produce evidence on which a reasonable

finder of fact, under the appropriate proof burden, could base a

verdict for i t ; if that party cannot produce such evidence, the

motion must be granted.” Ayala-Gerena v . Bristol Myers-Squibb

Co., 95 F.3d 8 6 , 94 (1st Cir. 1996) (citing Celotex, 477 U.S. at

323; Anderson v . Liberty Lobby, Inc., 477 U.S. 2 4 2 , 249 (1986)).

If the non-moving party provides “evidence that is merely

colorable, or is not significantly probative,” summary judgment

should be granted. Wynne v . Tufts Univ. Sch. of Med., 976 F.2d

791, 794 (1st Cir. 1992) (quoting Anderson, 477 U.S. at 249-50)

(internal quotation marks omitted).

-7- ANALYSIS

AIG contends that Keenan’s claims are time-barred by the

three year statute of limitations set forth in RSA § 508:4. 5 As

an affirmative defense, AIG has the burden of proving that a

statute of limitations applies and acts to bar Keenan’s claims.

See Glines v . Bruk, 140 N.H. 1 8 0 , 181 (1995) (citing Exeter Hosp.

v . Hall, 137 N.H. 3 9 7 , 399 (1993)); see also Pichowicz v . Watson

Ins. Agency, Inc., 146 N.H. 166, 167 (2001). Once AIG

demonstrates that the action was not “brought. . . within [three]

years of the act or omission complained of,” it meets its burden.

At this stage, Keenan has “the burden of raising and proving that

the discovery rule is applicable to an action otherwise barred by

the statute of limitations.” Id. While AIG has met its burden,

Keenan has failed to meet her respective burden for the reasons

that follow.

AIG contends, and I agree, that Keenan’s claims arose in

December 1993 when Wal-Mart paid AIG a substantial premium in

exchange for the COLI policy it purchased on Robert’s life. See

5 Keenan rightfully concedes that RSA § 508:4 states the statute of limitations applicable to all of her claims against AIG.

-8- Pichowicz, 146 N.H. at 167 (“a cause of action arises once all

the necessary elements are present”) (internal citation omitted).

This is so because in December 1993, all the necessary elements

of Keenan’s claim were in place. For example, as to Keenan’s

intrusion upon seclusion claim, AIG allegedly obtained Robert’s

personal and confidential information about him in December 1993

when Wal-Mart obtained the COLI policy. Earlier that same month,

Wal-Mart supplied all of its employees with notification of its

intention to obtain COLI policies on the lives of its employees.

Keenan argues that neither she nor Robert discovered, or

could they have reasonably discovered, that AIG supplied Wal-Mart

with the COLI policy in 1993. In an affidavit attached to her

objection, Keenan avers that she only heard of the COLI policy “a

few months ago” when she was contacted by the attorney who now

represents her. Aff. of Keenan, Ex. 1 to Pl.’s O b j . to Def.’s

Mot. for Summ. J. She further avers that Robert could not have

known of the policy because “he would have told me about this

policy if he knew about it.” Id. Keenan also attaches to her

objection the affidavits of a present Wal-Mart employee, two

former Wal-Mart employees and a widow of a former Wal-Mart

employee. See Ex. 2-5 to Pl.’s O b j . to Def.’s Mot. for Summ. J.

-9- All four affiants claim that they did not know that Wal-Mart was

purchasing COLI policies on its employees in 1993. See id.

Notably, however, they cannot directly challenge Emerick’s claim

that all Wal-Mart employees received the memorandum informing

them of the COLI policies in December 1993. Thus, even when I

construe this evidence in the light most favorable to Keenan, she

has not undermined Wal-Mart’s evidence demonstrating that all of

its employees received the December 1993 memorandum notifying

them about Wal-Mart’s intention to purchase the COLI policies.

Because Keenan does not argue that the 1993 notice was confusing

or ambiguous, I find that Keenan and her late husband should have

reasonably discovered their alleged injuries in December 1993,

when Wal-Mart notified Robert of its intention to purchase a COLI

policy on his life. Her claims, therefore, are time-barred

pursuant to RSA § 508:4.6

6 AIG also argues that the 1995 New York Times and Newsweek articles demonstrate that Keenan should reasonably have known of Wal-Mart’s COLI policies. I decline to analyze this argument because I find Wal-Mart’s 1993 notice of their new special death benefits and COLI policies sufficient to trump Keenan’s discovery rule argument. The New York Times article does, however, provide further evidence that Wal-Mart notified its employees of the COLI policies unlike other corporations.

-10- CONCLUSION

For the forgoing reasons, I grant AIG’s Motion for Summary

Judgment. (Doc. N o . 5 ) . I deny its Motion to Dismiss as moot.

(Doc. N o . 4 ) . Accordingly, the clerk of the court shall enter

judgment and close the case.

SO ORDERED.

Paul Barbadoro Chief Judge

July 1 1 , 2003

cc: Paul W . Hodes, Esq. Paul A . Fischer, Esq. David P. Slawsky, Esq.

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