Thompson v. Allianz Life Insurance Company of North America, 0:17-cv-00096

Background

Plaintiff Debra Thompson sues Allianz for breach of contract and breach of the covenant of good faith, claiming Allianz deducted 3% from the annuitization value of a MasterDex 10 annuity after Thompson’s mother (owner) died and Thompson elected annuitization.
The annuity was purchased by Thompson’s mother, Florence Warburg, in 2006; Warburg was an absent class member in Mooney v. Allianz, a prior class action alleging fraudulent inducement under the Minnesota Prevention of Consumer Fraud Act (MPCFA).
Mooney proceeded to trial (jury verdict against class) based on fraudulent inducement theories including challenges to Allianz’s expense recovery adjustment (ERA) that affected annuitization value.
Allianz moved to dismiss Thompson’s suit as barred by res judicata, arguing the claims involve the same factual circumstances (the ERA) and that Thompson is in privity with Warburg as a beneficiary/successor.
The magistrate judge recommended denying the motion, finding (1) the breach claim did not exist at the time of Mooney because the contractual right to annuitization value had not vested, and (2) Thompson lacked privity with Warburg during Mooney because beneficiary rights were revocable and unvested.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Thompson’s breach-of-contract claim is barred by res judicata because it alleges the same factual circumstances litigated in Mooney	Thompson: Different cause of action and evidence; breach claim had not accrued during Mooney	Allianz: Same ERA-based factual core and identical promise/theory as Mooney	Denied — court: not same factual circumstances; breach claim accrued later and relies on different evidence
Whether Thompson was in privity with Warburg for res judicata purposes	Thompson: No privity — beneficiary rights were unvested and distinct from owner’s rights; no control or representation in Mooney	Allianz: Thompson is a third-party beneficiary/successor so privity exists	Denied — court: no privity because interests were revocable/unvested and not aligned during Mooney
Whether a beneficiary’s unvested expectancy can bind the beneficiary to earlier litigation	Thompson: Unvested expectancy gives no standing/control; cannot be bound	Allianz: Beneficiary status creates sufficient relationship to preclude claim	Held: Unvested beneficiary interest does not establish privity or permit preclusion
Whether Mooney afforded a full and fair opportunity to litigate Thompson’s later-arising contract claim	Thompson: Mooney did not and could not litigate a contract breach that had not accrued	Allianz: Class litigation covered ERA issues and provided full opportunity	Held: Court need not reach fully because first two prongs fail; also indicated Thompson had no opportunity to litigate unvested contract right in Mooney

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (standard for pleading plausibility)
Hauschildt v. Beckingham, 686 N.W.2d 829 (Minn.) (four-prong res judicata test)
Drewitz v. Motorwerks, Inc., 728 N.W.2d 231 (Minn.) (res judicata limited to claims existing when first complaint served)
Lincoln Benefit Life Co. v. Heitz, 468 F. Supp. 2d 1062 (D. Minn.) (no contractual privity where policy owner retains right to name new beneficiaries)
McCloud v. Aetna Life Ins. Co., 21 N.W.2d 476 (Minn.) (beneficiary rights vest at death)
Rucker v. Schmidt, 794 N.W.2d 114 (Minn.) (categories of nonparties who may be bound by prior adjudication)
Cargill, Inc. v. Ace Am. Ins. Co., 784 N.W.2d 341 (Minn.) (discussion of contractual privity)