State v. Nationwide Life Insurance Co.
340 S.W.3d 161
Mo. Ct. App.2011Background
- Missouri’s Deferred Compensation Plan engaged Nationwide and NRS as investment provider and administrator since 1978 under a series of contracts and amendments.
- The IP Contract (1995 RFP-based) authorized both variable and fixed annuity options (GPVA and GPFA) with an MVA provision tied to withdrawal method.
- The IP Contract term was three years, with successive Renewal and Amendments extending the Agreement through 2005; the Fixed Contract form APO-2425 replaced APO-2424 in 1999.
- By 2003–2004 the parties negotiated new MVA methodology via Exhibit A and amended IV.B.12/IV.B.13 to reflect lump-sum withdrawals subject to an MVA under limited conditions.
- In 2005 Missouri re-bid investment services; Nationwide was not awarded the new contract. Transition to ING occurred in 2006, during which Nationwide withheld an MVA on June 2, 2006 from the Fixed Contract funds transferred to ING.
- Nationwide claimed various theories to justify withholding the MVA, while the State argued there was no extant contract permitting such withholding after December 31, 2005.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the IP Contract, as amended, remained operative after December 31, 2005 and authorized an MVA. | State: IP Contract/renewals controlled terms; no authority to withhold MVA post-expiration. | Nationwide: Fourth Amendment extended and preserved rights to MVA under Fixed Contract. | No; the IP Contract and related amendments expired, and no post-expiration authority to withhold MVA existed. |
| Whether the Fixed Contract survived expiration and could independently permit an MVA. | State: Fixed Contract, as part of the overall Agreement, survived and governed withdrawals. | Nationwide: Fixed Contract continued independently and allowed MVA after IP Contract expiration. | No; the Fixed Contract did not have a durational term independent of the IP Contract, and expiration ended the right to withhold MVA. |
| Whether Nationwide breached the implied covenant by resurrecting deleted MVA terms from the IP Contract. | State argued Nationwide’s post-expiration actions breached implied duty not to revive deleted provisions. | Nationwide asserted post-expiration rights via correspondence created an implied contract. | The implied covenant claim failed; the court found no valid post-expiration agreement recreating MVA rights. |
| Whether the MVA calculation dispute presents genuine issues of material fact. | State asserted errors in how MVA was calculated if applicable. | Nationwide contends proper calculation under the applicable contract. | Issues moot to the extent the court invalidated the contract basis for MVA; calculation disputes were not controlling. |
| Whether NRS breached its TPA duties by failing to secure an extension of the IP Contract. | State contends NRS failed to obtain timely extension for the IP Contract. | Nationwide/NRS argue no damage from lack of extension and rights terminated with expiration. | Reversed in part; the State was entitled to judgment on Count I, and NRS breach findings were addressed accordingly. |
Key Cases Cited
- Martin v. U.S. Fid. & Guar. Co., 996 S.W.2d 506 (Mo. banc 1999) (contract interpretation—consider documents as a whole; intent and interrelated instruments)
- Nodaway Valley Bank v. E.L. Crawford Constr., Inc., 126 S.W.3d 820 (Mo.App. W.D. 2004) (contract interpretation; use of surrounding facts to determine intent)
- Guidry v. Charter Commc'ns, Inc., 269 S.W.3d 520 (Mo. App. E.D. 2008) (implied contracts and continuation after expiration; de novo review)
- Johnson v. McDonnell Douglas Corp., 745 S.W.2d 661 (Mo. banc 1988) (formation of contract requires offer, acceptance, consideration)
- Hawkinson v. Johnston, 122 F.2d 724 (8th Cir. 1941) (contract duration; contracts run for their term unless termination conditions met)
- Transatlantic Ltd. v. Salva, 71 S.W.3d 670 (Mo.App. W.D. 2002) (proper scope of summary judgment and intertwined grounds)