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Macomber v. Travelers Property and Casualty Corp.9/3/2002
The plaintiffs, Lisa Macomber and Kathryn Huaman, the custodian for Joshua Adickes, appeal from the judgment of the trial court rendered in favor of the defendants, namely, Travelers Group, Inc. (Travelers Group), Travelers Property Casualty Corporation (Travelers Casualty), Travelers Equity Sales, Inc. (Travelers Equity), Travelers Life and Annuity Company (Travelers Annuity), and Salomon Smith Barney Holdings, Inc. (Smith Barney), following the granting of the defendants' motion to strike the plaintiffs' complaint. The plaintiffs claim that the trial court improperly concluded that, regardless of the theory of liability offered by the plaintiffs, all counts of their complaint must fail because they did not sufficiently allege any legally cognizable damages. We agree with the plaintiffs. The defendants, however, offer alternate grounds for striking each count of the complaint. After an examination of the defendants' alternate grounds, we affirm in part, and reverse in part, the judgment of the trial court.
The plaintiffs brought this action, in ten substantive counts, based on the defendants' conduct in entering into and funding certain structured settlements to settle claims with the plaintiffs. The defendants moved to strike all counts for the plaintiffs' failure to allege any legally cognizable injury. The trial court granted the motion and rendered judgment accordingly.
The plaintiffs' complaint alleged the following facts. Travelers Group is a diversified financial services holding company that conducts business in, among other areas, property and casualty insurance services. Travelers Group conducts these operations primarily through Travelers Casualty, which was formed in 1996 to hold the property and casualty subdivisions of the Travelers Insurance Group, Inc., an indirect wholly owned subsidiary of Travelers Group. Travelers Group owns approximately 83 percent of Travelers Casualty outstanding common stock. Travelers Group is also the corporate parent of, and controls, wholly owned subsidiaries Smith Barney and Travelers Equity. Smith Barney and Inc. (SBHU) Among the life insurance agencies that Travelers Equity and Smith Barney deal with is Travelers Annuity, another wholly owned subsidiary of Travelers Group.
The plaintiffs' complaint alleged, further, that, in accordance with industry practice, Travelers Casualty routinely utilizes structured settlements to resolve various types of claims. Once a claimant and Travelers Casualty agree on a structured settlement, Travelers Casualty enlists the aid of an insurance broker, whose job it is to arrange the purchase, from a life insurance company, of an annuity by Travelers Casualty that meets the terms previously agreed upon by the claimant and Travelers Casualty. After Travelers Casualty has purchased the annuity, the life insurance company pays a commission to the insurance broker.
The plaintiffs further alleged that Travelers Casualty deals primarily with those insurance brokers with whom it either has an affiliation or some sort of other special relationship. The brokers then pay Travelers Casualty between 25 percent and 75 percent of the commissions that they receive from the life insurance companies that sell annuities to Travelers Casualty. The plaintiffs claimed, specifically, that during the period between 1982 and 1994, Travelers Casualty employed its then affiliate, Travelers Equity, as its insurance broker. Travelers Equity, in turn, arranged for Travelers Casualty to purchase its annuities from Travelers Annuity. Travelers Equity returned to Travelers Casualty between 25 percent and 75 percent of the commissions that it received from Travelers Annuity or any other life insurance company.
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