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In Re National Western Life

February 10, 2012

IN RE NATIONAL WESTERN LIFE INSURANCE DEFERRED ANNUITIES
LITIGATION.



The opinion of the court was delivered by: Hon. Anthony J. Battaglia U.S. District Judge

Order Denying Motion for Summary Judgment and Denying As Moot Motion to Exclude the Declaration of Craig Merrill [Doc. Nos. 241 and 274] This Document Relates to:

ALL ACTIONS.

Defendant, National Western Life Insurance Company, ("NWL") filed a motion for summary judgment. (Doc. No. 241.) The Plaintiffs' filed an opposition, (Doc. No. 273), and Defendant's filed a reply, (Doc. No. 283). The Plaintiffs' also filed a motion to exclude the declaration of Craig Merrill filed in support of NWL's motion for summary judgment. (Doc. No. 274.) NWL filed an opposition to Plaintiffs' motion to exclude, (Doc. No. 285), and the Plaintiffs filed a reply, (Doc. No. 287). Based upon the parties moving papers and for the reasons set forth below, NWL's motion for summary judgment is DENIED and Plaintiffs' motion to exclude the declaration of Craig Merrill is DENIED.

Background

I. Factual Background

A. Parties

Defendant, NWL, is a Colorado corporation headquartered in Texas. NWL sells deferred annuities on a national basis through a network of sales agent organizations and individual sales agents, including defendants Centre Point Advisors, Inc. ("Centre Point") and Advanced Business Strategies Institute ("ABSI"). Both Centre Point and ABSI have defaulted in this action, and only NWL brings the present motion.

The named Plaintiffs are Warren Petry of El Cajon, California; Mr. and Mrs. Peter and Mary Glenane of Vista, California; Mary Sweeney of San Diego County, California; and George Miller of Kingston, Pennsylvania (collectively "Plaintiffs"). Each of the Plaintiffs is at least 68 years old. With the exception of plaintiff Miller, Plaintiffs purchased NWL annuities wholly in California. Plaintiff Miller purchased his NWL annuity in Pennsylvania.

The Court appointed two of the named Plaintiffs -- George J. Miller and Marie N. Sweeney -- to serve as representatives for the Class claims, and indicated that the claims of Mr. and Mrs. Glenanes and Mr. Petry would proceed on an individual basis (Dkt. No. 206, Order Granting Plaintiffs' Renewed Motion for Class Certification at 1.)

B. Summary of the Case

This case involves the purchase and sale of deferred annuities to senior citizens. NWL develops, markets, and sells life insurance and annuity products*fn1 across the United States. Plaintiffs allege that Defendants have engaged in a scheme to defraud Plaintiffs and other seniors into purchasing deferred annuities that were not appropriate for them. The Plaintiffs contend that these annuities are inappropriate for the class*fn2 because they would not mature until well after the annuitants' expected life span. Therefore, Plaintiffs will either never receive any payments from their annuity policies, or be forced to access the annuity principal prematurely and incur substantial surrender charges as a result. Plaintiffs contend that Defendants also fail to adequately disclose material information on the risks associated with deferred annuities so that Plaintiffs may make an informed buying decision. Finally, the Plaintiffs contend that NWL fraudulently manipulated the terms of the annuities after purchase in order to erode Plaintiffs' returns on them.

C. Defendants' Products

The certified class includes four annuities: the Confidence Flex 45, the Confidence Flex 85, the Benefit Assurance, and the Future Assurance. The two Confidence Flex annuities were introduced in or about 1998. Merrill Decl., ¶ 8. Purchasers of the Confidence Flex 45 deferred annuity receive a 4% bonus at the time of purchase, and purchasers of the Confidence Flex 85 deferred annuity receive an 8% bonus. Id. Despite the two annuities' different bonuses, from 1998 until November 2009, the first-year interest rates for both products were identical.*fn3 Id.

National Western introduced the Benefit Assurance and Future Assurance deferred annuities in or about 2005. Merrill Decl., ΒΆ 10. The Benefit Assurance pays a 5% bonus, and the Future Assurance pays a 10% bonus. Id. The credited interest rates, for both the first year and in ...


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