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MACALUSO v. UNITED STATES LIFE INSURANCE CO.

July 1, 2004.

ROSA DINA MACALUSO, Plaintiff,
v.
UNITED STATES LIFE INSURANCE CO., CITIBANK, N.A., GAETANO MACALUSO, Defendants, ROSALINDA MACALUSO, Third-Party Defendant.



The opinion of the court was delivered by: GERARD E. LYNCH, District Judge

OPINION AND ORDER

This action concerns an annuity that plaintiff Rosa Dina Macaluso ("Rosa Dina") purchased from defendant United States Life Insurance Company ("U.S. Life") in 1992. In 2000, plaintiff requested a distribution of the accrued amount of the annuity, and, following instructions conveyed by plaintiff's estranged husband, defendant Gaetano Macaluso ("Gaetano"), and his daughter, third-party defendant Rosalinda Macaluso ("Rosalinda"), U.S. Life deposited the distribution into a bank account held jointly by Rosa Dina and Gaetano. Gaetano then withdrew the entirety of the distribution and placed the funds into an account held in his name only. Rosa Dina brought this action against U.S. Life for breach of contract and negligence, and against Gaetano for conversion and breach of fiduciary duty. U.S. Life cross-claimed against Gaetano for conversion and unjust enrichment, and Gaetano counterclaimed against Rosa Dina for the recoupment of monies allegedly withdrawn by Rosa Dina from joint accounts. Rosa Dina now moves for summary judgment on her breach of contract claim against U.S. Life and on Gaetano's counterclaims, and U.S. Life moves for summary judgment or, in the alternative, injunctive relief, on its cross-claims against Gaetano. For the reasons discussed below, plaintiff's motions will be granted as against both U.S. Life and Gaetano. U.S Life's motion on its cross-claims against Gaetano will also be granted.

  BACKGROUND

  Rosa Dina and Gaetano Macaluso married in 1979 and resided together at 150-26 Eighth Avenue, Whitestone, New York, until 1995, when the couple became estranged and Rosa Dina moved to Italy. Gaetano continues to reside at the Whitestone address. In October 1992, Rosa Dina purchased a group single premium deferred annuity (the "Annuity") from U.S. Life for $81,000, listing her address as 150-32 Eighth Avenue, Whitestone, New York.*fn1 In exchange for this premium, U.S. Life issued an annuity contract bearing certificate number BA0374353V (Affidavit of Bruno Cilio, Ex. A). The contract provides for withdrawals only upon written request, and similarly requires that any assignment or other instructions are valid only if delivered in writing. (Id.)

  Rosa Dina moved to Italy in 1995 and currently resides in Vicari, Italy. Since at least 1998, U.S. Life has been aware of Rosa Dina's residence in Italy and has regularly sent communications regarding the Annuity to her Italian address. (Cilio Aff., Ex. D.) In December 1999, Rosa Dina requested a partial withdrawal of $16,000 from the Annuity by sending an Annuity Service Request form to U.S. Life, listing her address in Italy and directing that payment be made to a bank account there. (Affidavit of Rhonda Spence, Ex. B.) U.S. Life sent the $16,000 payment to the designated Italian account and Rosa Dina duly received it. (Spence Aff. ¶¶ 3-4.)

  In March 2000, Rosa Dina requested a withdrawal of the total remaining balance on the Annuity by sending a second Annuity Service Request to U.S. Life, again listing the Italy address and the Italian bank account to which U.S. Life had sent the previous withdrawal. (Cilio Aff., Ex. B.) However, U.S. Life neither followed Rosa Dina's written instructions, as required by the Annuity contract, nor sought written clarification of any ambiguities from Rosa Dina. Instead, on April 7, 2000, a representative of U.S. Life, Lauren Nguyen, called the Whitestone phone number listed on the 1992 Annuity application. When Gaetano answered the phone, Nguyen told him that she was having trouble reading Rosa Dina's instructions on the Annuity Service Request and needed to know where to send the requested withdrawal of approximately $96,000. Gaetano told Nguyen that Rosa Dina was in Italy, but that he would call Rosa Dina the next day, Saturday, and ask her what to do, and Nguyen agreed to call Gaetano back to receive instructions regarding the method of distribution. (Gaetano's Rule 56.1 Statement ¶¶ 3-9 and Ex. B.) Telephone records indicate that Gaetano did place a call to Rosa Dina's phone number in Italy on the following day, although the nature of any conversation is disputed. (Id.)

  Early the following week, at the appointed time, Nguyen called Gaetano again and was told, first by Gaetano and then again by his daughter Rosalinda, that Gaetano had spoken with Rosa Dina and that she wanted the distribution sent to a Citibank account in Whitestone, held jointly by Gaetano and Rosa Dina. (Id.) Nguyen noted this instruction on the back of the Annuity Service Request form (Cilio Aff., Ex. B), and a check made out to Rosa Dina for $96,231.86 was sent to the joint account (Cilio Aff., Ex. E). Gaetano promptly withdrew the full amount and deposited it in an account held in his name only. (Affidavit of Randi Knepper, Ex. B at 15-16.)

  After U.S. Life sent the check to Citibank, it sent two written confirmations of the distribution, both addressed to Rosa Dina: one to the Whitestone address where Gaetano resides, and one to the Whitestone address listed on the 1992 Annuity application. (Spence Aff., Ex. F.) No notice was sent to the Italian address provided by Rosa Dina on both of her Annuity Service Requests, and used by U.S. Life to correspond with Rosa Dina since at least 1998. Thereafter, Rosa Dina sent another written instruction to U.S. Life, requesting that it stop payment on the check sent to Citibank and repeating the direction of the Annuity Service Request that any distribution be sent to her in Italy. (Spence Aff., Ex. G.) Following the refusal of both U.S. Life and Gaetano to deliver the Annuity proceeds to her, Rosa Dina filed the present action in this Court on April 1, 2003.*fn2 (Knepper Aff., Ex. A.) DISCUSSION

  I. Standard on Summary Judgment

  Summary judgment must be granted where "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A fact is "material" if it "might affect the outcome of the suit under the governing law," and an issue of fact is "genuine" where "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). On a motion for summary judgment, the evidence must be viewed in the light most favorable to the nonmoving party, and the Court must resolve all ambiguities and draw all reasonable inferences in its favor. Id. at 255; Cronin v. Aetna Life Ins. Co., 46 F.3d 196, 202 (2d Cir. 1995).

  To defeat a motion for summary judgment, however, the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). "[C]onclusory allegations or unsubstantiated assertions" will not suffice. Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998). Rather, the nonmoving party must "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); Matsushita, 475 U.S. at 587 ("Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no `genuine issue for trial.'") (quoting First Nat'l Bank v. Cities Service Co., 391 U.S. 253, 289 (1968)).

  II. Breach of Contract

  In her motion for summary judgment on the breach of contract claim against U.S. Life, plaintiff argues that U.S. Life breached the Annuity contract by failing to comply with her express written instructions in the Annuity Service Request regarding the method of distribution. Instead, U.S. Life distributed the withdrawal to an account held jointly by Rosa Dina and Gaetano, where the funds could be, and were, withdrawn by Gaetano. (P. Mem. 4.)

  To establish a breach of contract claim under New York law, a plaintiff must show: (1) a valid contract; (2) plaintiff's performance; (3) defendant's failure to perform; and (4) damages resulting from the breach. See, e.g., Furia v. Furia, 498 N.Y.S.2d 12, 13 (2d Dep't 1986); 22A N.Y. Jur.2d Contracts § 432. U.S. Life does not dispute that the Annuity created a valid contract and that Rosa Dina performed her obligations under it. However, U.S. Life contends that Rosa Dina has failed to establish the third and fourth elements of a breach of contract. First, U.S. Life asserts there is a material issue of fact as to whether Gaetano was authorized to act as Rosa Dina's agent with respect to the Annuity, and thus whether U.S. Life was in breach when it followed his instructions regarding distribution. (U.S. Life Mem. 5.) Second, it asserts that any mistake by U.S. Life was a "harmless error," and Rosa Dina has suffered no ...


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