United States District Court, D. Massachusetts
NORMA EZELL, LEONARD WHITLEY, and ERICA BIDDINGS, on behalf of themselves and all others similarly situated, Plaintiffs,
LEXINGTON INSURANCE COMPANY; AMERICAN INTERNATIONAL GROUP, INC.; AIG ASSURANCE COMPANY; AIG PROPERTY CASUALTY COMPANY; AIG SPECIALTY INSURANCE COMPANY; AMERICAN GENERAL LIFE INSURANCE COMPANY; NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURG, P.A.; AGC LIFE INSURANCE COMPANY; AMERICAN GENERAL ANNUITY SERVICE CORPORATION; and AIG DOMESTIC CLAIMS, INC., Defendants.
MEMORANDUM & ORDER
Nathaniel M. Gorton United States District Judge.
Norma Ezell (“Ezell”), Leonard M. Whitley, Jr.
(“Whitley”) and Erica Biddings
“plaintiffs”) bring this putative class action
against ten insurance companies and subsidiaries
(collectively “defendants”) alleging that certain
commissions charged in connection with annuity payments are
unlawful. Pending before this Court is defendants' motion
to dismiss. For the reasons that follow, the motion to
dismiss will be allowed.
putative class action arises from a number of structured
settlements of personal injury, wrongful death and
workers' compensation claims against non-parties insured
by Lexington Insurance Company (“Lexington”). The
structured settlements provided that the claimants would
receive a portion of their settlement payments over time
according to a fixed schedule (rather than in a lump sum).
The structured settlement portions of those settlements were
ultimately funded through the purchase of annuities from a
separate life insurance company. Plaintiffs allege that
defendants fraudulently deducted 4% from the cash portion of
the settlement that the settling parties had agreed would
fund the annuity payments.
putative class action is brought by three named plaintiffs,
Norma Ezell, Leonard Whitley and Erica Biddings on behalf of
themselves and similarly situated settling parties.
Norma Ezell (“Ezell”) and Leonard M. Whitley, Jr.
(“Whitley”) are both residents of Aberdeen,
Mississippi. Ezell and Whitley entered into a settlement
agreement in April, 2003 with Community Eldercare Services
and CLC of West Point, LLC, to resolve wrongful death claims
arising from the death of their aunt, Odessa Ware. Lexington
was the insurer of the nursing home. Ezell and Whitely each
brought claims individually and in their capacity as heirs to
the estate of their aunt. Ezell also sued as Administratrix
of the estate.
Erica Biddings (“Biddings”) resides in Southwest
Ranches, Florida. In August, 2009, Biddings settled wrongful
death and personal injury claims brought individually and as
a personal representative of the estate of her husband, Roddy
Major, against Bull Motors LLC, doing business as Maroone
Ford. Lexington was the liability insurer of Maroone Ford and
was obligated to pay any claim made or judgment obtained
against them covered by its policy with Bull Motors.
name ten affiliated insurance companies in their complaint:
(1) Lexington, (2) American International Group, Inc.
(“AIG Parent”), (3) AIG Assurance Company, (4)
AIG Property Casualty Company, (5) AIG Specialty Insurance
Company, (6) AGL, (7) National Union Fire Insurance Company
of Pittsburgh, Pa. (“NUFIC”), (8) AGC Life
Insurance Company, (9) American General Annuity Services
Corporation (“AGASC”) and (10) AIG Domestic
their complaint, plaintiffs state that nine defendants are
subsidiaries of AIG Parent. Throughout their complaint,
plaintiffs refer to defendants collectively as
“AIG”. In their motion to dismiss, defendants
clarify the relationship of the insurers. They state that
Lexington, AIG Assurance Company, AIG Property Casualty
Company, AIG Specialty Insurance Company and AGASC are
AIG's property and casualty (“P&C”)
insurance companies. Defendants contend that the complaint
does not allege that any of AIG's P&C companies,
other than Lexington, had any interaction with the
defendants. Defendants note that AGL, AGC Life Insurance
Company and AGASC are AIG's life insurance companies.
and Whitley settled claims against Community Eldercare
Services and CLC of West Point, which were insured by
Lexington, in April, 2003. The terms of the settlement of
Ezell and Whitley included a lump sum payment and a payment
of $200, 000 to be annuitized to provide periodic payments
beginning in June, 2003. Under that payment structure, Ezell
and Whitley were each allocated one half of the $200, 000, or
$100, 000. The annuity to fund future payments was issued by
American General Life Insurance Company (“AGL”).
and Whitely allege they were unaware that the amount listed
in the settlement agreement, $200, 000, included a commission
that would be paid by defendants to someone working on behalf
of defendants to settle the claim. They contend that
defendants did not inform them that 4% of the annuity premium
would be paid to an AIG Approved Broker, Jim Beatty.
entered into a settlement agreement in August, 2009,
resolving wrongful death and personal injury claims against
Bull Motors LLC, which was insured by Lexington. Like the
settlement of Ezell and Whitley, Biddings's settlement
agreement with Lexington provided for a cash payment and a
set of periodic payments with a then “present
value” of $1, 642, 000. Lexington funded three separate
annuities issued by three life insurance companies who are
unaffiliated with defendants and not named in this action:
Allstate Life Insurance Company, Hartford Life Insurance
Company and New York Life Insurance Company.
alleges that she was unaware that 4% of the $1, 642, 000
annuity premium would be paid to AIG Approved Broker Douglas
“Chuck” Smith. The complaint states that Biddings
did not know that the amount to be annuitized included a
commission that would be paid to someone working on behalf of
defendants to settle the claims brought against Lexington in
its capacity as liability insurer to Bull Motors.
commenced this action on January 3, 2017. On March 31, 2017,
defendants jointly moved to dismiss the complaint in its
Motion to Dismiss
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to “state
a claim to relief that is plausible on its face.”
Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007). In considering the merits of a motion
to dismiss, the Court may look only to the facts alleged in
the pleadings, documents attached as exhibits or incorporated
by reference in the complaint and matters of which judicial
notice can be taken. Nollet v. Justices
of Trial Court of Mass., 83 F.Supp.2d 204, 208 (D. Mass.
2000), aff'd, 248 F.3d 1127 (1st Cir. 2000). Furthermore,
the Court must accept all factual allegations in the
complaint as true and draw all reasonable inferences in the
plaintiff's favor. Langadinos v.
Am. Airlines, Inc., 199 F.3d 68, 69 (1st Cir. 2000).
Although a court must accept as true all of the factual
allegations contained in a complaint, that doctrine is not
applicable to legal conclusions. Ashcroft
v. Iqbal, 556 U.S. 662 (2009).
preliminary matter, defendants assert that plaintiffs have
failed to allege any ascertainable injury to establish
standing, requiring dismissal of all of plaintiffs'
claims. Defendants contend that plaintiffs have received all
of the payments that they are entitled to under the terms of
their settlement agreements. Because plaintiffs have received