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Brimberry v. Northwestern Mutual Life Insurance Co.

United States District Court, C.D. California

April 2, 2014

P. Kellie C. Brimberry, Plaintiff,
v.
The Northwestern Mutual Life Insurance Company, and Does 1 through 50, inclusive Defendant. The Northwestern Mutual Life Insurance Company, a Wisconsin corporation, Counter-Claimants,
v.
P. Kellie C. Brimberry, an individual; Fiduciary Trust International of California, a California corporation; and Does 1 through 10, inclusive, Counter-Defendants.

STATEMENT OF UNCONTROVERTED FACTS AND CONCLUSIONS OF LAW RE: COUNTER-DEFENDANT FIDUCIARY TRUST INTERNATIONAL'S MOTION FOR SUMMARY JUDGMENT [138]

RONALD S.W. LEW, District Judge.

After consideration of all the papers submitted pursuant to Counter-Defendant Fiduciary Trust International of California's ("Fiduciary") Motion for Summary Judgment [138], the Court makes the following findings of fact and conclusions of law:

UNCONTROVERTED FACTS

1. Kurt Brimberry ("Mr. Brimberry") was employed by Fiduciary in its Los Angeles, California office from November 2001 until August 14, 2012. Fiduciary's Statement of Uncontroverted Facts & Conclusions of Law ("SUF") # 1.

2. On August 14, 2012, Fiduciary terminated Mr. Brimberry's employment. Id. at # 615.

3. At the time of his termination, Mr. Brimberry's title was Managing Director and Business Development Officer. Id. at # 2.

4. As Managing Director and Business Development Officer, Mr. Brimberry was responsible for generating, maintaining, and overseeing relationships with high-net-worth clients. Id. at # 3.

5. Mr. Brimberry died in August 2012 of unknown causes. Id. at # 618.

6. Prior to Mr. Brimberry's death, Northwestern Mutual Life Insurance Company ("Northwestern") issued two life insurance policies to Mr. Brimberry - life insurance policy number 15395737 ("Policy 15395737") and life insurance policy number 15404334 ("Policy 15404334") (collectively, "Policies"). Id. at # 619.

7. At the time of Mr. Brimberry's death, Policy 15395737 provided a net benefit of $1, 500, 366.41 and Policy 15404334 provided a net benefit of $2, 001, 325.05. Id. at ## 620-621.

8. The Policies provided a net benefit of $3, 501, 691.46, and the sole designated beneficiary under the Policies was P. Kellie C. Brimberry ("Mrs. Brimberry"). See Mrs. Brimberry's Separate Statement of Material Facts ("SMF") # 12.

9. On August 31, 2012, Mrs. Brimberry notified Northwestern of her claim for benefits under the Policies. Dkt. # 3, ¶ 12.

10. While investigating Mrs. Brimberry's claim, Northwestern was contacted by counsel for Fiduciary. Id. at ¶ 14.

11. Fiduciary's counsel asserted that Fiduciary had an interest in the benefits payable under the Policies because Mr. Brimberry had embezzled funds from Fiduciary during his employment there and had used the embezzled funds to pay some or all of the Policies' premiums. Id.

12. On November 29, 2012, Fiduciary's counsel wrote to Northwestern on behalf of both Fiduciary and Mrs. Brimberry, making a joint demand that Northwestern stay further processing of the separate claims for benefits while Fiduciary and Mrs. Brimberry attempted to informally resolve their competing claims. Id. at ¶ 17.

13. From 2008 through 2012, expense reimbursement requests by employees of Fiduciary were governed by the Franklin Templeton U.S. Employee Handbook ("Handbook") and the Franklin Templeton Travel and Expense Reporting Policy ("T&E Policy"). SUF # 5.

14. The Handbook states that certain behavior "will not be tolerated, " including "[a]ny act which causes doubt about an employee's integrity, such as falsifying company records and documents, " and also "[a]ny act of dishonesty or falsification of any company records or documents." Id. at # 6.

15. The T&E Policy states that Franklin and its subsidiaries, including Fiduciary, will only "reimburse employees for [] reasonable and necessary expenses" and only if the "expense is incurred while conducting Company business in the capacity of an employee" and is "properly substantiated." Id. at # 7.

16. The T&E Policy states that for corporate credit cards for Franklin Templeton and its U.S. subsidiaries - including Fiduciary - the "corporate card is the property of the Company and is for business use only." Id. at # 8.

17. On September 7, 2007, Mr. Brimberry signed a certificate acknowledging that he had received and understood that he was expected to comply with the Handbook. Id. at # 9.

18. From 2006 through 2012, the Handbook and the T&E Policy were posted to the Franklin Templeton intranet, where they could have been accessed at any time by Fiduciary employees. Id. at # 10.

19. Prior to July 2012, Fiduciary was not aware of Mr. Brimberry submitting personal expenses for reimbursement that he falsely characterized as business expenses. Id. at # 15.

20. In late July 2012, Franklin's Internal Audit Department ("Internal Audit") reviewed Mr. Brimberry's expense reimbursement requests. SUF # 16.

21. As part of their review, Internal Audit obtained and analyzed, among other documents: (1) all of the physical expense reports Mr. Brimberry submitted between 2008 and July 2012, including all back up documentation he provided, (2) all available corporate credit card statements issued for Mr. Brimberry's account, (3) duplicate receipts for select vendors that appeared frequently on Mr. Brimberry's expense reports and were willing to provide receipts, (4) Mr. Brimberry's corporate calendar, and (5) a portion of Mr. Brimberry's relevant corporate emails provided by Fiduciary. SUF # 17.

22. The investigation by Internal Audit revealed that from 2008 through 2012, Mr. Brimberry sought and received expense reimbursement for non-business (i.e. personal) expenses ("the Expense Reimbursement Scheme"). Id. at # 18.

23. Mr. Brimberry frequently sought and received expense reimbursement for travel expenses - including flights, car service, and hotel stays - for personal trips for Mr. Brimberry and his family by falsely claiming that the travel expenses were for business-related purposes. Id. at ## 19-25.

24. For example, Mr. Brimberry submitted a Corporate AmEx Charge for reimbursement for $840.00 from Oakmont Executive Transportation Inc. (SUF # 23), characterizing said expense as a "Sales Call and Referral Source" with three listed individuals (SUF # 24), when in fact the charge was for eight hours of SUV service on New Year's Eve, when a car and driver picked up Mr. Brimberry's son and five other passengers (which did not include Mr. Brimberry) and transported them to, among other places, a restaurant and lounge in downtown Los Angeles (SUF # 25).

25. Mr. Brimberry frequently requested reimbursement for purported "business meals" and associated parking expenses when the expenses were actually grocery or meal purchases by a member of Mr. Brimberry's family. Id. at ## 26-30.

26. Mr. Brimberry frequently submitted claims for payment of unauthorized club dues and expenses as well as false "mileage" and "parking" reimbursement requests relating to club dues payments by altering receipts and invoices and falsely asserting that the dues and expenses were purported "business meal" expenses. Id. at # 31.

27. Between April 2008 and August 2012, Mr. Brimberry sought and obtained reimbursement for falsified expense reports. Id. at ## 20-359.

28. For example, on April 18, 2012, Mr. Brimberry submitted a Corporate AmEx charge for reimbursement for $284.93 at Jacob Maarse Florist in Pasadena, California. SUF # 35. Mr. Brimberry characterized this expense as "Birthday Floral Arrangements for 2 Clients;" however, Mr. Brimberry had the flowers delivered to Mrs. Brimberry at their home. Id. at ## 36-37.

29. On August 14, 2012, Fiduciary's President and Chief Executive Officer, Henry P. Johnson, and Franklin's Vice President-Human Resources, Aileen Schiltz, met with Mr. Brimberry. Id. at # 360.

30. Ms. Schiltz showed Mr. Brimberry evidence of his personal expenses that were falsely submitted as business expenses and for which Mr. Brimberry was reimbursed. Id. at # 362.

31. Mr. Brimberry admitted that he could not explain any of the expenses and was extremely apologetic about his actions. Id. at # 363.

32. Ms. Schiltz offered to review additional personal expenses with Mr. Brimberry that Mr. Brimberry had falsely characterized as business ...


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