SAMARON CORP., doing business as Troyer Products, Plaintiff-Appellant,
UNITED OF OMAHA LIFE INSURANCE COMPANY, Defendant-Appellee
April 1, 2016.
from the United States District Court for the Northern
District of Indiana, South Bend Division. No. 3:12-CV-397 --
Rudy Lozano, Judge.
SAMARON CORP., doing business as Troyer Products, Plaintiff -
Appellant: Mark F. Criniti, Attorney, Paul E. Harold,
Attorney, Stephen M. Judge, Attorney, LADUE, CURRAN & KUEHN
LLC, South Bend, IN.
UNITED OF OMAHA LIFE INSURANCE COMPANY, Defendant - Appellee:
Brian S. Jones, Attorney, Curtis T. Jones, Attorney, BOSE
MCKINNEY & EVANS, LLP, Indianapolis, IN.
POSNER, EASTERBROOK, and WILLIAMS, Circuit Judges.
Troyer Products (formally Samaron Corp.), a closely held
corporation, purchased a policy of insurance on the life of
Ron Clark, then its President. Dave Buck, its COO, was the
beneficiary. Clark, who approved the transaction, thought
that the death benefit of $1 million would enable Buck to buy
out his stock, so that the money would end up in the hands of
Clark's family while Buck would come to control the
company. United of Omaha Life Insurance Company initially
wrote the policy that way, but it was soon amended so that
the death benefit would go to Troyer. (One side says that
United's underwriting department insisted on this change,
the other that tax considerations dominated; the reason does
not matter now.) Troyer did not undertake by contract to turn
the death benefit over to Buck, but both Buck and Ron
Clark's wife Darlene recall that this was the plan.
Clark retired and sold a controlling interest to Dan Holtz,
who became the firm's new President. Buck remained as
COO. After this transaction Holtz owned 61% of the stock and
Buck the rest. As part of his purchase, Holtz received a copy
of the policy, including the amendment naming Troyer as the
beneficiary. Another copy was in Troyer's files. Clark
died in November 2011. Buck told Holtz that Troyer was the
beneficiary, but when Holtz called United he was told that
the money would be paid to Buck--and it was. When Buck tried
to use the proceeds to buy Holtz's stock, he was removed
from the board and soon quit as COO. Troyer filed this suit
under the diversity jurisdiction, contending that the
benefits should have been paid to it. United, not wanting to
pay $2 million on a $1 million policy, has resisted despite
conceding that Troyer was indeed the policy's
had gone wrong came out during discovery. United makes
electronic copies of its policies. Once policies have been
issued, its staff normally works from the electronic file.
Each document receives a code, making it easier for the staff
to know what to look for. As we have mentioned, the first
version of the policy named Buck as the beneficiary, but that
was changed by amendment. Whoever added the amendment to the
electronic file misclassified it as a " Post-Issue
Requirement" rather than as a change of beneficiary.
When Holtz called after Clark's death, one of
United's employees looked at the electronic copy of the
policy, saw Buck as the beneficiary, and looked for the code
denoting an amendment changing the beneficiary. Not finding
one, he told Holtz that the death benefit would be paid to
Buck. In discovery, this employee testified that it had not
occurred to him to look at a document tagged as a "
Post-Issue Requirement." But someone eventually went
through the whole file and found the amendment, which led to
acknowledges its error in paying Buck. But it does not
acknowledge liability. It maintains that Troyer knew the
truth and allowed Buck to claim the money, carrying out the
plan that Clark and Buck had devised in 2003. United observes
that Troyer's corporate files contain a copy of the
amendment, and Holtz's personal files contain another.
It's their own fault for not looking, United maintains.
And United adds that, at a meeting of Troyer's board soon
after Clark's death, the company chose to allow Buck to
receive the death benefit. After naming new members to the
board, however, Holtz caused it to adopt new minutes reciting
that no such decision had been made.
the recording of the meeting to have been lost, the district
court denied United's motion for summary judgment and set
the case for trial. (N.D. Ind. Sept. 29, 2014). Shortly after
the court issued this opinion, however, Troyer admitted that
it had found the recording a month earlier and turned it over
to United's lawyers. The judge listened to the recording
and found it dispositive. At the meeting Buck repeatedly told
Holtz that Troyer was the policy's beneficiary, yet with
this knowledge the board unanimously opted to allow Buck to
receive the money. The judge found that the minutes of this
meeting had been falsified by Holtz's new appointees and
that Holtz's fervent denial that he knew the policy's
true beneficiary is conclusively refuted by the recording.
The judge granted United's motion to reconsider and
entered summary judgment in its favor.
appellate brief insists that Holtz was misled by United's
error and had no reason to think that Troyer was the
policy's beneficiary. We agree with the district court
that this proposition is untenable in light of the statements
Buck made at the board meeting. Buck told Holtz to his face
that Troyer was the policy's beneficiary. He even pulled
out a copy of the policy: " Um, beneficiary is on page
8. [Flipping through papers.] Um, let me oh, right here.
[Reading] 'This policy is issued with the owner and
primary beneficiary as Troyer Products, employer.'"
that were not enough, Troyer's files contained a copy, as
did Holtz's personal files. Let us suppose, as Holtz
asserts, that he refused to believe what Buck was saying and
thought it unnecessary to look at the policy, in light of
what United's staff had said. Still Troyer (the
corporation) knew the truth, because its principal officers
in 2003 (Clark and Buck) had negotiated the policy and were
well aware of its contents. What the President and COO knew,
Troyer knew. There is no such thing as corporate amnesia.
Prime Eagle Group Ltd. v. Steel Dynamics, Inc., 614
F.3d 375 (7th Cir. 2010). Turnover in a corporation's
management does not wipe out the corporation's fund of
knowledge. That Holtz did not know something does not mean
that Troyer the corporation was ignorant.
fact remains that United paid the death benefit to the wrong
party. United contends that Troyer waived its right to the
money, and the district judge agreed. There are at least two
potential ways to ...