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Thompson v. Allianz Life Insurance Co. of North America

United States District Court, D. Minnesota

January 28, 2019

Debra J. Thompson, on behalf of herself and on behalf of all other similarly situated persons, Plaintiff,
v.
Allianz Life Insurance Company of North America, Defendant.

          MEMORANDUM AND ORDER

          Paul A. Magnuson United States District Court Judge

         This matter is before the Court on Plaintiff's Motion to Certify Class. For the following reasons, the Motion is denied.

         BACKGROUND

         Plaintiff Debra J. Thompson is the beneficiary of an annuity her now-deceased mother purchased from Defendant Allianz Life Insurance Company of North America. Thompson lives in California; her mother was a resident of Florida and bought the annuity in Florida. Allianz is headquartered in Minnesota.

         Thompson asserts that Allianz impermissibly reduced the value of and/or the payouts from its annuities in certain circumstances, by applying what Allianz called an “Expense Recovery Adjustment” (“ERA”) to the value or payouts. Thompson contends that the annuity contracts for multiple Allianz annuity products required Allianz to use the full Annuity or Accumulation Value (both abbreviated as “AV”) to calculate payouts for beneficiaries/annuitants whose annuities were in deferral for at least five years and who elected to receive payouts over a period of at least 10 years or the life of the annuitant, or for beneficiaries who received a death benefit payable over a five-year period. Because Allianz applied an ERA to the AVs, thereby ostensibly reducing payments for some beneficiaries/annuitants, Thompson argues that Allianz breached its contracts with those beneficiaries/annuitants.

         Thompson gleans this requirement from two different provisions in what she contends are form contracts for annuities. First, the contracts provide, “in substance” (Pl.'s Supp. Mem. (Docket No. 137) at 1):

The Annuitization [or Accumulation] Value is the amount used to calculate annuity payments if this policy has been in deferral for at least five policy years and an Annuity Option which extends over a period of at least 10 years or over the life of the annuitant is paid.

(Am. Friedman Decl. (Docket No. 139) Ex. 2 (chart of relevant language from each challenged product).) Next, the annuities provide, again “in substance”:

If the Beneficiary receives the Death Benefit as an Annuity Option over at least a five-year period, the Annuitization [or Accumulation] Value is used to calculate annuity payments.

(Id.) Thompson argues that, because these provisions do not mention that Allianz will reduce the AV by applying the ERA, Allianz was obligated to use the full AV of its products to calculate and pay annuity payments.

         According to Allianz, its annuities all provide a guaranteed payment amount. Its application of the ERA is limited to situations where the AV exceeds the guaranteed payment amount. Allianz also contends that the various annuities contained many more provisions about AV than the provisions to which Thompson points, and that often the same annuity product had different language regarding AV depending on the state in which it issued. These other provisions, Allianz argues, belie Thompson's claim here. Allianz contends that not only did it not breach its contracts with its annuitants and beneficiaries, but those individuals in fact all received a higher payout than those contracts promised and thus suffered no injury.

         Thompson seeks to represent a class consisting of:

All Owners and Beneficiaries under the deferred annuity contracts for the Allianz products listed on Exhibit 1 for which the Annuitization Value or Accumulation Value, or the resulting annuity payment amount, has been reduced by the E[xpense] R[ecovery] A[d]ustment].

(Pl.'s Mot. for Class Cert. (Docket No. 88) at 1.) Exhibit 1 is a list of 46 different Allianz annuity products. Excluded from the class are members of putative class that is currently pending in California state ...


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