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Vera Muller-Paisner, As Executrix v. Tiaa

August 9, 2012

VERA MULLER-PAISNER, AS EXECUTRIX,
PLAINTIFF,
v.
TIAA, ET AL., DEFENDANT.



The opinion of the court was delivered by: Gabriel W. Gorenstein, United States Magistrate Judge

OPINION AND ORDER

Plaintiff Vera Muller-Paisner brings this action in her capacity as executrix of the estate of the late Dr. Mary Engel against TIAA; TIAA-CREF Enterprises, Inc.; Teachers Insurance and Annuity Association; and College Retirement Equities Fund (collectively "TIAA" or "defendants") alleging the following claims: (1) breach of fiduciary duty; (2) negligence; (3) unjust enrichment; and (4) rescission. Muller-Paisner and TIAA have each moved for summary judgment.

For the reasons discussed below, the Court has concluded that its prior order granting plaintiff summary judgment on the question of whether TIAA owed the decedent a fiduciary duty, see Order, filed Sept. 27, 2011 (Docket # 103) ("Sept. 27 Order"), was incorrectly decided and that the Court should have ruled that a jury would decide the question of whether TIAA owed Dr. Engel a fiduciary duty. Nonetheless, the Court concludes that even if a fiduciary duty existed, the defendants would be entitled to summary judgment on the ground that they did not breach any fiduciary duty. Because this conclusion disposes of all claims against the defendants, the case is dismissed in its entirety.

I. BACKGROUND

The following facts are undisputed, unless otherwise stated.

A. Facts Regarding the Purchase of the Annuity For approximately 30 years, Dr. Mary Engel was employed as a psychology professor at various universities, including the University of Michigan, Harvard University, and the City University of New York. See Defendants' Answers and Objections to Plaintiff's First Requests to Admit, dated Jan. 14, 2010 (annexed as Ex. G to Declaration of Max Wild in Support of Motion for Summary Judgment, filed Dec. 20 and 30, 2010 (Docket ## 78, 82) ("Wild Decl.")) ("1st R. Admit") at 8 ¶ 20. Dr. Engel was a beneficiary of the "retirement and/or pension plans of the colleges and universities that employed her." Id. at 8 ¶ 21. These retirement plans were administered by the defendants. Id. at 8 ¶ 22.

Dr. Engel "suffered from emphysema, one of a group of repertory conditions included within the phrase 'chronic congestive pulmonary disorders.'" Plaintiff's Statement of Material Facts as to Which There is no Genuine Issue to be Tried, filed Jan. 4, 2011 (Docket # 85) ("Pl. 56.1 Statement") ¶ 12; Defendants' Counter Statement of Undisputed Material Facts Pursuant to Local Civil Rule 56.1, filed Apr. 7, 2011 (Docket # 93) ("Def. Counter 56.1 Statement") ¶ 12. Decedent's emphysema "adversely impacted her breathing, speaking and imposed physical limitations, such as walking or traveling." Expert's Declaration Submitted by Plaintiff in Support of Motion for Summary Judgment -- Dr. Harlan Weinberg, filed Dec. 20 and 30, 2010 (Docket ## 77, 83) ¶ 3 ("1st Weinberg Decl."). Plaintiff's expert, Dr. Weinberg, states that this disease, commonly referred to as COPD, "shortens" a person's life expectancy. Expert's Declaration Submitted by Plaintiff in Support of Motion for Summary Judgment -- Dr. Harlan Weinberg, filed Feb. 28, 2012 (Docket # 120) ("2d Weinberg Decl.") ¶ 5, though he also testified that it was not possible to make an accurate prediction about mortality because "[a] lot of people with COPD outlive the numbers," Deposition of Dr. Harlan Weinberg, dated July 20, 2010 (annexed as Ex. B to Declaration of Jonathan R. Harwood, filed Apr. 29, 2011 (Docket # 99) ("1st Harwood Decl.")) at 68. Dr. Engel's physical complaints were the reason that she decided to retire. Deposition of Vera Muller-Paisner, dated June 15, 2010 (annexed as Ex. C to 1st Harwood Decl.) ("Muller-Paisner Dep.") at 19--20, 31.

Muller-Paisner, a friend of Dr. Engel's, states that Dr. Engel was "cognitively impaired in financial matters," a conclusion that appears to be based on Dr. Engel's incurring of unnecessary late-payment charges on her credit card and on her appearing unable to understand financing options relating to housing. Plaintiff's Supplemental Declaration in Support of Renewed Motion for Summary Judgment, filed Feb. 28, 2012 (Docket # 121) ¶¶ 6-8; see also 2d Weinberg Decl. ¶ 6 ("Ms. Engel was cognitively impaired at least as to financial matters."). But there is no other evidence of instances in which Dr. Engel displayed cognitive impairments in her interactions with other people. Muller-Paisner testified that Dr. Engel had never exhibited behavior that indicated she was confused. Muller-Paisner Dep. at 115.

In late 1999, Dr. Engel wrote defendants various letters posing questions regarding her retirement benefits. See Letter from Mary Engel to Melvin Roldan, dated Oct. 1, 1999 (annexed as Ex. D to 1st Harwood Decl.) ("Oct. 1, 1999 Letter"); Letter from Mary Engel to Melvin Roldan, dated Nov. 14, 1999 (annexed as Ex. E to 1st Harwood Decl.) ("Nov. 14, 1999 Letter"). In response to these inquiries, defendants contacted Dr. Engel by telephone and provided her with answers to the questions contained in her letters. See Record of Conversation Between Robert Rom and Mary Engel, dated Oct. 8, 1999 (annexed as Ex. D to 1st Harwood Decl.); Record of Conversation Between Angela Lang and Mary Engel, dated Nov. 11, 1999 (annexed as Ex. D to 1st Harwood Decl.); Record of Conversation Between Robert Rom and Dr. Engel, dated Dec. 1, 1999 (annexed as Ex. E to Harwood Support Decl.). None of the inquiries related to annuities.

From October 1999 to January 2001, Dr. Engel spoke to approximately 18 different "counselors" who were employed by defendants in their "call center." Pl. 56.1 Statement ¶ 20; Def. 56.1 Counter Statement ¶ 20."Defendants' call centers were organized so that any of their counselors who [were] available would answer calls of participants." Pl. 56.1 Statement ¶ 16; Def. 56.1 Counter Statement ¶ 16. While Dr. Engel's conversations with the counselors were not memorialized verbatim, each counselor was "required to prepare [a] call sheet either during the actual call or immediately thereafter;" the call sheets provided "a summary of the discussion with a participant during a given telephone call." Affidavit of Robert Ahearn, filed Apr. 7, 2011 (Docket # 92) ("Ahearn Aff.").*fn1

The first mention of an annuity in the record dates from a telephone conversation on August 21, 2000, when Dr. Engel spoke with TIAA counselor Jason Zervakos. Record of Conversation Between Jason Zervakos and Mary Engel, dated Aug. 21, 2000 (annexed as Ex. H to 1st Harwood Decl.) ("Zervakos Conv."). Zervakos' notes from this conversation indicate that Dr. Engel was "difficult to understand" but that she "is electing a single life annuity and an RTB*fn2 that will be directly rolled over to an IRA until she can find a house." Id. There is no evidence that Zervakos recommended the annuity.

On August 22, 2000, Dr. Engel sent a letter to defendants. See Letter from Mary Engel to TIAA-CREF, dated Aug. 22, 2000 (annexed as Ex. I to 1st Harwood Decl.) ("Aug. 22 Letter"). In this letter, she stated:

I understand that my accumulation is $1,342,554.81, as of August 21, 2000. I wish to roll into an IRA $100,000 of this. Please include Transfer Payout Annuity in the sum on which you base my monthly check.

Please set up single life annuity without a guaranteed period, standard payment method.

Id. Attached to this letter was an "Authorization to Begin Retirement Income from Retirement Annuities or Group Retirement Annuities," signed by Dr. Engel. See Authorization. This form allowed for a choice between various annuity options, some of which had guaranteed periods and some of which allowed for the designation of beneficiaries. While the form would have allowed the decedent to elect a "Two-Life Annuity" or one with a guaranteed period of 10, 15 or 20 years, Dr. Engel did not mark any of these choices. Instead, she elected the single life annuity option, which specified that all payments would end at her death. See Authorization at 1 (selection of "Single life annuity (all payments end with your death)"). On the second page, she was given a choice of choosing to annuitize 100% of her "TIAA Traditional accumulation" or some other amount. She chose to annuitize 100%. Id. at 2.

On August 30, 2000, Dr. Engel contacted defendants to confirm receipt of her "request for retirement benefits." See Record of Conversation Between Pat Litzau and Mary Engel, dated Aug. 30, 2000 (annexed as Ex. J to 1st Harwood Decl.) ("Litzau Conv.") at DEF00282. A counselor, Pat Litzau, confirmed receipt of Dr. Engel's submissions and informed her that the defendants were still missing information that was necessary to process her requests, including "the amount to be included for the CREF portion of [Dr. Engel's] annuity." Id. When Litzau attempted to offer Dr. Engel help with her allocation questions, Dr. Engel declined. Id. at DEF00283. As the conversation continued, Litzau questioned Dr. Engel about her election of a Single Life Annuity. Id. Litzau asked Dr. Engel whether "she really wanted to use all of her funds in the conversion of a single life annuity knowing all the payments end with her death with no provision for a beneficiary at all." Id. Litzau told Dr. Engel that "at her age and [with] the balance involved[,] a full annuity would be against normal logic." Id. Litzau wrote that Dr. Engel "appeared very hard of hearing" and that Litzau was not "sure that [Dr. Engel] really understood what I was asking." Id. Dr. Engel then inquired as to when she would expect her first annuity payment, to which Litzau responded "sometime towards the end of the second week of September." Id. at DEF00283-84.

On August 31, 2000, Dr. Engel spoke with TIAA counselor Joyce Heffernan. See Record of Conversation Between Joyce Heffernan and Mary Engel, dated Aug. 31, 2000 (annexed as Ex. J to 1st Harwood Decl.) ("Heffernan Conv.") at DEF00285. After discussing what Dr. Engel intended to do with the funds she was rolling over, Heffernan "reviewed investment options and suggested [Dr. Engel] consider the safety of TIAA traditional." Id. at DEF00286. Dr. Engel then noted that she had not heard back with respect her "pending RB forms" (referring to the request for the annuity). Id. The note of conversation states that Dr. Engel "has submitted forms requesting a SLO [single life option] with no guarantee period." Id. It further states: "[t]here were a number of incomplete items on her forms and [Dr. Engel] was expecting a callback. [Dr. Engel] expressed her concern that she would not be receiving a check on 09/1/00." Id. After "checking into" the status of Dr. Engel's application, Heffernan called back Dr. Engel. Id. Heffernan told Dr. Engel that "she needed to submit a letter of confirmation to clarify the outstanding items in her RB application." Id. Heffernan listed a number of items that needed to be confirmed, including that Dr. Engel wants to annuitize "100% of TIAA" and "100% of CREF." Id. at DEF00287. The note states: "I also confirmed again with [Dr. Engel] that she wanted to annuitize 100% with no guarantee period in SLO." Dr. Engel replied that "she was a holocaust survivor and has no family for which she should leave funds." Id. The notes indictate:

I explained to [Dr. Engel] should she annuitize she would not have a lump sum of cash to access if future expenses should arise. I explained she could not accelerate payments. I suggested an alternative that she could partially annuitize and take MD withdrawals from remaining portions but she would have the benefit of accelerating MD payments or taking single sum withdrawals if she needed to.

Id. Dr. Engel told Heffernan that she "did not realize this was an option and said she needed to think about it." Id. Dr. Engel requested "that an illustration [be] sent to her to assist [her] in her decision." Id. at DEF00287-88. The notes indicate that Heffernan complied with this request. Id.

On September 5, 2000, Dr. Engel wrote a letter to defendants which contained the information that Heffernan had stated was lacking from her forms. See Letter from Mary Engel to Rosemary Odumosu, dated Sept. 5, 2000 (annexed as Ex. K to 1st Harwood Decl.) ("Sept. 5 Letter"). In this letter, Dr. Engel refers to two matters: one is establishing an IRA for $100,000, from which she indicated she needed $34,500 for a down payment on a house. The other matter is the annuity. On this topic she states:

Confirming: please annuitize transfer payment annuity IE05571-1 in addition to all but $100,000 of total sum.

Confirming: annuitize 100% remaining TIAA-CREF accounts under the standard method, 0 year survivorship.

Id. At the conclusion of her letter, Dr. Engel states, "I am ill and cannot come to your offices. My request to you suffers from lack of continuity; I have spoken to many counselors and written and sent materials. Yet, nothing of substance appears to happen." Id.

On September 8, 2000, Dr. Engel spoke with TIAA counselor Rosemary Odumoso. See Record of Conversation Between Rosemary Odumosu and Mary Engel, dated Sept. 8, 2000 (annexed as Ex. E to Wild Decl.) ("Odumosu Conv."). During this conversation, Dr. Engel expressed frustration at not having received "a payment." Id. From previous communications, it appears the "payment" referenced by Dr. Engel was the $34,500 that was to come from her IRA account, not an annuity payment. Compare Sept. 5 Letter, with Odumosu Conv. Odumoso informed Dr. Engel that they needed certain information in writing. Odumosu Conv. Odumoso stated that Dr. Engel "seemed very confused" and that she agreed to fax Odumoso a letter containing the information requested. Id.

On September 12, 2000, defendants sent Dr. Engel an "Acknowledgment of Request for Annuity Payments" ("Acknowledgment"), which provided Dr. Engel with a summary of the annuity benefit she had elected. See Acknowledgment of Request for Annuity Payments, dated Sept. 12, 2000 (annexed as Ex. L to 1st Harwood Decl.) at 1. The Acknowledgment states that Dr. Engel had elected a "Life Annuity With No Guaranteed Period," and that under the option selected, "you receive lifetime income. Upon your death, all payments stop." Id. at 2. It also stated, "There is no beneficiary under the Life Annuity With No Guaranteed Period." Id. In addition, the Acknowledgment directed Dr. Engel to call defendants "as soon as possible before [her] income starting date" in the event Dr. Engel determined that any of the information within the Acknowledgment was incorrect so that defendants could make changes. See id. at 4.

In early September, TIAA issued two annuity contracts. See TIAA Traditional Payout Annuity Contract One-Life Annuity, dated Sept. 1, 2000 (annexed as Ex. M to 1st Harwood Decl.); Real Estate Account One-Life Unit-Annuity, dated Sept. 6, 2000 (annexed as Ex. N to 1st Harwood Decl.). It also issued a document called "Your Service Directory" which summarized the terms of the contracts. See Your Service Directory (annexed Ex. O to 1st Harwood Decl.). Under "income option," it stated that the annuity was a "Life Annuity With No Guaranteed Period -- Under this option, you receive income. Upon your death, all payments stop." Id.

On September 14, 2000, Dr. Engel contacted defendants. See Record of Conversation Between Tom Toxby and Mary Engel, dated Sept. 14, 2000 (annexed as Ex. E to Wild Decl.) ("Toxby Conv."). The counselor, Tom Toxby, wrote that "this woman was difficult to deal with. She is very frustrated with how [TIAA] handled her account our lack of effort in sending her an IRA [withdrawal] of $34,500 for a down payment on a house, in addition she complained how long it took to get an annuity payment." Id. at 1. Toxby then wrote: "[t]his poor lady could have used some counseling, as she annuitized over $1 million dollars and chose no guaranteed peroid [sic], and she sounds frail." Id. The note includes a direction to "rush" Dr. Engel's payment of $34,500 to her as "she needs it for a down payment on a house." Id. at 2.

On September 26, 2000, Norm Krenick, an "Individual Correspondent," employed by TIAA-CREF, sent a letter to Dr. Engel summarizing her annuity benefit. See Letter from Norm Krenick to Mary Engel, dated Sept. 26, 2000 (annexed as Ex. E to Wild Decl.). In this letter, Krenick states that Dr. Engel's annuities, TIAA Contract Y043307-1 and CREF Certificate Z043307-9, were a "Single Life Annuity" which paid Dr. Engel a variable monthly income depending on investment earnings. Id. In addition, Krenick's letter states that "all payment will cease at your death." Id.

Following the creation of her Single Life Annuity, Dr. Engel continued to have communications with defendants' counselors. On January 19, 2001, Dr. Engel spoke with TIAA counselor Sharon Kyle. See Record of Conversation Between Sharon Kyle and Mary Engel, dated Jan. 19, 2001 (annexed as Ex. E to Wild Decl.). During this conversation, Dr. Engel asked Kyle what had happened to "the TPA contract."*fn3 Id. Kyle told Dr. Engel that "she [had] converted [the contract] to another payment option, the annuity option." Id.

On March 10, 2001, Dr. Engel died. See Certificate of Death (annexed as Ex. C to Plaintiff's Declaration in Support of Motion for Summary Judgment, filed Dec. 30, 2010 (Docket # 81) ("Pl. Decl.")). The cause of Dr. Engel's death was determined to be "pseudomonas ...


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