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Nixon v. United States

United States District Court, N.D. Illinois, Eastern Division

January 4, 2013

Madie NIXON, Latoya Conner, David Conner, Portrice Vernon, as mother of Ariana Conner, formerly a minor, and Ariana Conner, Plaintiffs,
v.
UNITED STATES of America, Defendant.

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[Copyrighted Material Omitted]

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Russell M. Kofoed, Law Offices Of Russell M. Kofoed, Chicago, IL, for Plaintiff.

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MEMORANDUM OPINION AND ORDER

JOHN J. THARP, JR., District Judge.

This is a negligence action filed against the United States of America (the " Government" ) by a group of plaintiffs who allege that the Government failed to properly maintain and/or forward a form designating the plaintiffs as beneficiaries on a life insurance policy, causing them to lose insurance benefits to which they otherwise would otherwise have been entitled. The Government moves to dismiss pursuant to Rule 12(b)(6). For the reasons stated herein, the Court denies the Government's motion to dismiss.

FACTS[1]

This litigation concerns the life insurance benefit proceeds from a Federal Employees' Group Life Insurance (" FEGLI" ) policy obtained by Robert L. Conner. Conner, who was an employee of the United States Small Business Administration (" SBA" ), died on July 15, 2009. At the time of his death, Conner owned a FEGLI life insurance policy in the principal sum of $702,000.

On December 15, 2000, Conner signed a designation of beneficiary form naming his son, Jadonn Harris Conner, as a 40% beneficiary; his nephew, D'Angelo Marzell Conner, as a 20% beneficiary; and his daughter, Ariana Portrice Conner, as a 40% beneficiary. The plaintiffs allege that on April 27, 2007, Conner completed and signed an updated designation of beneficiary form, altering the beneficiaries. The new form named his son, Jadonn Harris Conner, as a 21% beneficiary; his nephew, D'Angelo Conner, as a 10% beneficiary; his daughter, Ariana Portrice Conner, as a 50% beneficiary; his niece, Latoya Conner, as an 8% beneficiary; his sister, Madie Nixon, as an 8% beneficiary; and his brother, David M. Conner, as a 3% beneficiary. Ariana Portrice Conner, Latoya Conner, Madie Nixon, and David M. Conner are the plaintiffs in this lawsuit.

The plaintiffs further allege that after Conner signed the updated designation of beneficiary form, the two SBA employees who witnessed his signature, Maria Ramirez and Sheila Bartolomei, or some other SBA employee, took possession of the form. The SBA employees failed, however, to send the form to the SBA Office of Human Capital Management in Denver, or to any other appropriate office, in order for the form to take effect or for the insurer to pay the correct beneficiaries.[2] As a result, the insurance company paid benefits in the amounts listed on the earlier designation form executed in 2000 (which presumably had been forwarded to the appropriate office). Under that distribution, each of the plaintiffs received less than they would have received under the updated designation form from 2007; three of the plaintiffs received nothing at

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all and Ariana Conner received a 40 percent distribution rather than the 50 percent distribution to which she was entitled under the 2007 beneficiary designation.

The plaintiffs now bring suit to recover from the Government the difference between the amounts that they would have received under the 2007 designation form and the amounts they actually received under the 2000 designation form.

DISCUSSION

The Government makes three arguments in favor of dismissing the plaintiffs' complaint. First, the Government argues that the plaintiffs' de facto cause of action is for negligent misrepresentation, and that the FTCA does not waive sovereign immunity for claims arising out of misrepresentation. Second, the Government argues that the plaintiffs allege only economic damages, which are not recoverable in tort under Illinois law. Third, the Government argues that it had no duty to maintain the designation of beneficiary form, and because it had no duty, the plaintiffs ...


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