Dameware Development, L.L.C. v. American General Life Insurance
2012 U.S. App. LEXIS 14837
| 5th Cir. | 2012Background
- Dameware purchased life insurance policies from American General to fund a 412(i) plan, seeking tax benefits that did not materialize.
- The Disclosure and Acknowledgment Forms listed TPAs; Dameware chose B&F as its TPA and signed an administrative services agreement on Dec 23, 2003.
- Dameware submitted applications for three employees on Jan 13, 2004 and paid over $2 million to fund the plan for 2003–2004; policies delivered March 24, 2004.
- American General began life insurance coverage but Dameware failed to obtain the anticipated tax benefits; multiple TPAs later failed to complete a viable plan.
- In Dec 2006 Dameware sought return of premiums; American General refunded annuity payments but not life insurance premiums; Dameware sued for rescission and contract breach; district court granted summary judgment for American General.
- The court ultimately affirmed, holding no basis for rescission or breach existed under the contract and Louisiana law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was Dameware's consent vitiated by error concerning cause? | Dameware argues error in cause vitiates consent. | American General contends no error of cause; contract language shows focus on life insurance. | No error of cause; contract valid. |
| Did American General owe a duty to ensure TPAs formed a viable 412(I) Plan? | Dameware asserts American General must ensure TPA competence. | American General had no such duty; TPAs were responsible. | No breach; no implied duty to guarantee plan formation. |
| Did the Disclosure and Acknowledgment Form foreclose duties and reliance on Americans' representations? | Form created implied duties regarding 412(I) Plan formation. | Form disclaims duties and representations beyond policy terms; TPA responsibility lies with the TPA. | Disclaimers foreclose implied duties; no breach. |
| Did American General guarantee the success of establishing a 412(I) Plan through the listed TPAs? | American General guaranteed plan viability via listed TPAs. | No such guarantee; TPAs administer the plan independently. | No guarantee or duty to ensure plan viability. |
Key Cases Cited
- St. Charles Ventures, L.L.C. v. Albertsons, Inc., 265 F. Supp. 2d 682 (E.D. La. 2003) (requirements for contract validity under Louisiana law; consent must be freely given)
- Hanover Petroleum Corp. v. Tennecco Inc., 521 So.2d 1234 (La. Ct. App. 1988) (post-contract price changes do not create error in cause to rescind)
- Desonier v. Golden Gulf Marine Operators, Inc., 474 So.2d 1316 (La. 1989) (error in cause requires a cause contemplated by the code; post-contract events generally not rescissory)