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Estate Wattar v. Hartford Life and Annuity Insurance Co.

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

February 10, 2017

The Estate of Soad Wattar, Haifa Sharifeh as Executrix, and Ragda Sharifeh, Plaintiffs,
Hartford Life and Annuity Insurance Company and Wells Fargo Financial Advisors, Defendants.



         In an attempt to comply with an order issued by a bankruptcy court, defendants Hartford Life and Annuity Insurance Company and Wells Fargo Financial Advisors turned over assets in their possession to a bankruptcy trustee designated by that court. Plaintiffs claim that defendants misinterpreted that order, improperly transferred the assets, and did so without providing plaintiffs with proper notice. They bring claims of breach of contract, breach of fiduciary duty, and negligence. Defendants move to dismiss plaintiffs' claims. For the following reasons, the motions are granted.

         I. Legal Standards

         A court must dismiss an action if it determines, at any time, that it lacks subject-matter jurisdiction, Fed.R.Civ.P. 12(h)(3), and a defendant may move to dismiss an action for lack of subject-matter jurisdiction. Fed.R.Civ.P. 12(b)(1).

         Subject-matter jurisdiction depends in part on Article III standing-the requirement that plaintiffs present an actual case or controversy. See Silha v. ACT, Inc., 807 F.3d 169, 172-73 (7th Cir. 2015). The plaintiff bears the burden of proving that jurisdiction is proper, and must allege facts sufficient to plausibly suggest that subject-matter jurisdiction exists. Silha, 807 F.3d at 173-74.

         To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain factual allegations that plausibly suggest a right to relief. Virnich v. Vorwald, 664 F.3d 206, 212 (7th Cir. 2011) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 554, 558 (2009)). “The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide the merits.” Triad Assocs., Inc. v. Chicago Hous. Authority, 892 F.2d 583, 586 (7th Cir. 1989). On a 12(b)(6) motion, a court may consider only the allegations in the complaint, documents attached to the complaint, documents that are both referred to in the complaint and central to its claims, and information that is subject to proper judicial notice. Geinosky v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012). When analyzing a motion under either Rule 12(b)(1) or 12(b)(6), a court must construe all factual allegations as true and draw all reasonable inferences in the plaintiff's favor, but a court need not accept legal conclusions or conclusory allegations. Virnich, 664 F.3d at 212 (citing Ashcroft v. Iqbal, 556 U.S. 662, 680-82 (2009)); Silha, 807 F.3d at 174.

         II. Facts

         On August 5, 2010, a bankruptcy court, presiding over the bankruptcy of Richard Sharif, entered an order directing the seizure of certain assets. [1] ¶ 1. The court ordered that defendant Hartford Life and Annuity Insurance Company turn over to a designated bankruptcy trustee “any and all beneficial, equitable, legal, or other interests attributable to, concerning, in, or related to any life insurance policies issued by any Hartford insurance entity concerning or related to [Sharif] or Soad Wattar or the Soad Wattar Revocable Living Trust.” [1-4] at 1. At the time, Hartford held $500, 000 in proceeds resulting from a policy insuring the life of Soad Wattar, who had died on March 17, 2010. [1] ¶¶ 12-13. The bankruptcy court also ordered that defendant Wells Fargo Financial Advisors “shall process all necessary documents to reflect change in ownership from Soad Wattar Revocable Living Trust to [the bankruptcy trustee] for the estate of Richard Sharif, for [seven specified accounts].” [1-4] at 1-2. Wells Fargo had been in possession of $1, 600, 000 that had belonged to the Soad Wattar Revocable Living Trust. [1] ¶ 15. Both defendants, upon receiving the bankruptcy court's order, turned over the assets in their possession to the bankruptcy trustee. [1] ¶¶ 3, 16.

         Plaintiffs Ragda Sharifeh and the estate of Soad Wattar allege that, when the bankruptcy court entered the order, the life insurance proceeds held by Hartford rightfully belonged to Sharifeh, and that the assets held by Wells Fargo belonged to the estate of Soad Wattar. [1] ¶¶ 13, 15. Plaintiffs allege that defendants should not have transferred the assets to the bankruptcy trustee and should have notified plaintiffs of their intent to do so. [1] ¶¶ 16, 26. Plaintiffs bring claims for breach of contract, breach of fiduciary duty, and negligence against both defendants.

         III. Analysis

         A. Article III Standing

         Both defendants seek dismissal of the complaint under Federal Rule of Civil Procedure 12(b)(1) for lack of Article III standing. To establish standing under Article III, a plaintiff must allege that she has “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992)). A plaintiff suffered an injury in fact if she “suffered ‘an invasion of a legally protected interest' that is ‘concrete and particularized' and ‘actual or imminent, not conjectural or hypothetical.'” Spokeo, 136 S.Ct. at 1548 (quoting Lujan, 504 U.S. at 560). Here, plaintiffs argue that Hartford caused Ragda Sharifeh financial injury by failing to give her the insurance proceeds that she was owed as beneficiary to the insurance policy, and that the estate of Soad Wattar has standing to pursue claims against Hartford because Soad Wattar was the insured. And plaintiffs argue that Wells Fargo injured the estate by transferring its assets to a third party. Plaintiffs also claim injury based on defendants' failure to notify them of the transfers. Plaintiffs' arguments rest on the assumption that they hold some interest in the assets at issue. But as defendants note, that assumption is invalid, because plaintiffs fail to adequately plead any interest in the assets that were turned over.

         For example, plaintiffs' interest in the insurance proceeds that Hartford turned over is founded on the allegation that Ragda Sharifeh is the beneficiary of the Soad Wattar life insurance policy. In support of that statement, plaintiffs refer to an exhibit to the complaint that they identify as the life insurance policy. But that document is titled “A Life Insurance Policy Illustration, ” states on the bottom of every page, “This is an illustration not a contract, ” and does not identify any beneficiaries. See [1-3]. Hartford attaches to its motion what it identifies as the insurance policy itself, along with all endorsements and beneficiary changes. See [26-2]. According to that document, the owner of the policy, Richard Sharif, submitted a request to change the beneficiary from “Richard Sharif Revocable Living Trust U/A dated 04/24/07” to Ragda Sharifeh on June 4, 2009. [26-2] at 41- 42. But about an hour later, Sharif submitted a request to change the beneficiary back to the Richard Sharif Revocable Living Trust. [26-2] at 38-39. Hartford says, consistent with the document, the trust remained the beneficiary of the policy, and no further changes were made. Moreover, because Sharif had listed the policy among his assets and the trust as an entity within his control when he filed for bankruptcy ([26-4] at 10, 28), Hartford argues that changing the policy's beneficiary to Ragda Sharifeh would have violated several bankruptcy laws and likely would have been voided had Sharif not reversed course.[1] Plaintiffs do not object to the introduction of the document, challenge its authenticity, or otherwise dispute Hartford's characterization of the document or Sharif's actions. Instead, plaintiffs simply restate their position that Ragda Sharifeh is the policy beneficiary and again refer to the Life Insurance Policy Illustration.

         Plaintiffs' allegation that Ragda Sharifeh is named as the beneficiary to the life insurance policy is not plausible. It does not find support in the exhibit to the complaint that is explicitly cited as support, and it is contradicted by the insurance policy attached to Hartford's motion. Further, plaintiffs make no effort to reconcile their allegation with the language of the insurance policy or address Hartford's arguments, and they make no other argument in support of Ragda Sharifeh's standing. Plaintiffs do not adequately plead that Ragda ...

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