No. 00-1980 (DSD) (D. Minn., 7/14/14). Class Actions (Arbitration, Effect on) * Settlement Issues * Arbitrability * Agreement to Arbitrate (Uniform Submission Agreement) * Contract Enforceability (Equitable Estoppel; Revocation) * Reliance. A party that erroneously submits a nonarbitrable claim to arbitration in an Uniform Submission Agreement may validly correct the error in a modified Uniform Submission Agreement.
Defendant Ameriprise Financial Services, Inc. seeks to enforce a class action settlement arising out of claims over the purchase of a whole life insurance policy that insured unnamed class member Pauline Duncavage. Duncavage’s sons, the owners of the policy, despite notice, had failed to opt out of the class. On May 15, 2001, the Court issued an order certifying the class, approving the class settlement, dismissing the complaint and entering final judgment (the “Benacquisto Settlement”). The Benacquisto Settlement included a broad release and waiver provision and covered the period of January 1, 1985 to February 29, 2000.
In September 2013, Duncavage submitted a FINRA arbitration claim against Ameriprise, alleging breach of contract, negligence and breach of fiduciary duty related to acts and omissions of her financial advisors, Herbert and Kurt Wischow. The Court here considers Ameriprise’s motion arguing that the release of claims in the Benacquisto Settlement precludes Duncavage from pursuing her arbitration claims. The Court first rejects Duncavage’s argument that the initial Uniform Submission Agreement filed by Ameriprise agreed to arbitrate the claims. The Court finds that the modified Uniform Submission Agreement subsequently filed by Ameriprise, upon recognition of its error, was valid and clearly provided that the claims barred by the Benacquisto Settlement were not to be submitted to arbitration.
The Court next rejects Duncavage’s assertion that her particular FINRA claims were not released, because her policy was not covered by the Benacquisto Settlement. Duncavage argued Ameriprise is estopped from asserting that her claims are barred by the Benacquisto Settlement, because Kurt Wischow told her that “the class action did not cover her insurance policy and that she could ignore it.” The Court notes, as an initial matter, that Duncavage does not allege that she purchased the policy after the class period, which would have excluded it from the Benacquisto Settlement. The Court finds no support for a claim of equitable estoppel, because Duncavage was not the owner of the policy and, thus, was not in a position to rely upon any such representation. Further, the Court rules that reliance on such a statement was unreasonable as a matter of law, given that Wischow is not a lawyer and the written agreement directly contradicts the statement.
However, the Court agrees with Duncavage’s third argument – that she can persist in her FINRA claims, because certain of the alleged omissions were made after the end of the class period. Specifically, Wischow failed to inform her of changes in estate law that occurred between 2002 and 2012. The Court agrees that the Benacquisto Settlement explicitly reserved a class member’s right to assert various claims that “independently arise from acts, facts or circumstances that occur for the first time after the last day of the class period.” The changes in the estate tax exemption that occurred for the first time after the last day of the class period constitute such circumstances. The Court grants Ameriprise’s motion to enforce settlement in part and denies it in part.
(EIC: The Court addressed several earlier attempts to enforce this class action settlement against arbitration proceedings in SLA 2005-24 (where the issue was left to the arbitrators) and in SLAs 2007-07 and 2013-29 (where the court ruled that the claims were not arbitrable).)
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