804 F.3d 908
8th Cir.2015Background
- Life Investors sued Corrado (substituted by his personal representative after his death) for breach of a Settlement Agreement, seeking repayment of advances. The district court initially granted summary judgment for Life Investors; this court reversed and remanded in 2012.
- On remand the district court certified two questions to the Iowa Supreme Court about whether receipt of an executed contract bearing a party’s signature plus six years of accepting benefits/effects ratifies the contract or estops the party from challenging the signature.
- The Iowa Supreme Court adopted Restatement (Third) of Agency, answering the ratification question affirmatively (abandoning the Restatement (Second) "purported to act" rule) and did not address the estoppel question.
- After receiving the Iowa decision the district court reinstated summary judgment for Life Investors, finding Corrado ratified the Settlement Agreement by accepting benefits for years and that the Agreement did not necessarily violate ERISA.
- Corrado appealed again, arguing (1) laches and alleged inconsistencies precluded ratification and (2) the Agreement violated ERISA by allowing OPT plan assets to be used for the debt.
- The Eighth Circuit affirmed: it held the Iowa Supreme Court’s ruling binding; rejected Corrado’s laches and inconsistency arguments; and found Corrado’s ERISA defense precluded by a prior Maryland district court judgment under issue preclusion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Corrado ratified the Settlement Agreement by receipt of an executed copy and years of accepting benefits | Life Investors: Corrado received an executed copy, accepted benefits/obligations for years—so ratified | Corrado: laches, and inconsistencies between Agreement and other Life Investors communications negate ratification | Affirmed: under Iowa law adopting Restatement (Third) ratification may bind a principal who accepts benefits without timely challenge; laches/inconsistencies insufficient |
| Whether enforcement of the Settlement Agreement violates ERISA (use/transfer of OPT assets to Life Investors) | Corrado: Agreement unlawfully allowed plan assets to be used for a party in interest (violating ERISA) | Life Investors: prior Maryland judgment rejected corrado's ERISA claims; preclusion applies | Affirmed: ERISA defense barred by issue preclusion based on final Maryland judgment; judicial estoppel inapplicable |
Key Cases Cited
- Life Investors Ins. Co. of Am. v. Federal City Region, Inc., 687 F.3d 1117 (8th Cir. 2012) (prior Eighth Circuit opinion reversing district court and framing factual/legal issues)
- Shrable v. Eaton Corp., 695 F.3d 768 (8th Cir. 2012) (standard of review for summary judgment)
- David v. Tanksley, 218 F.3d 928 (8th Cir. 2000) (federal courts bound by state supreme court interpretations of state law)
- Ramsay v. U.S. INS, 14 F.3d 206 (4th Cir. 1994) (elements for issue preclusion under Fourth Circuit law)
- Hillary v. Trans World Airlines, Inc., 123 F.3d 1041 (8th Cir. 1997) (res judicata effect of first forum’s judgment governed by first forum’s law)
- State ex rel. Holleman v. Stafford, 584 N.W.2d 242 (Iowa 1998) (elements and burden for asserting laches)
- New Hampshire v. Maine, 532 U.S. 742 (U.S. 2001) (judicial estoppel factors and application)