Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Fidelity & Guaranty Life Insurance Co. v. Frerichs

United States District Court, C.D. Illinois, Springfield Division

October 31, 2017

FIDELITY & GUARANTY LIFE INSURANCE COMPANY, Plaintiff,
v.
MICHAEL W. FRERICHS, in his official capacity as Treasurer of the State of Illinois, Defendant.

          OPINION

          SUE E. MYERSCOUGH UNITED STATES DISTRICT JUDGE

         This cause is before the Court on the parties' objections to U.S. Magistrate Judge Tom Schanzle-Haskins' Report and Recommendation (d/e 31). The objections are overruled and the Court ACCEPTS the Report and Recommendation. The Motion to Dismiss (d/e 18) filed by Michael W. Frerichs, in his official capacity as Treasurer of the State of Illinois (the Treasurer), is GRANTED IN PART and DENIED IN PART. Counts 2, 5, 6, 7, 8, and 9 are dismissed without prejudice for lack of subject matter jurisdiction. Counts 3 and 4 are dismissed without prejudice for failure to state a claim. The Treasurer's motion to dismiss Count 1 is DENIED.

         I. INTRODUCTION

         The Court adopts the Statement of Facts set forth in the Magistrate Judge's Report and Recommendation. In sum, the case concerns unclaimed proceeds to life insurance policies. In 2012, the Treasurer initiated an audit of Plaintiff Fidelity & Guaranty Life Insurance Company (Fidelity) pursuant to the Illinois Disposition of Unclaimed Property Act (the Act), 765 ILCS 1025/0.05 et seq.

         The Treasurer hired Kelmar Associates, LLC (Kelmar) to conduct the audit. The Treasurer agreed to pay Kelmar a percentage of the unclaimed property collected as a result of the audit. In August 2013 and August 2014, Kelmar sent letters to Fidelity instructing Fidelity to provide documents to Kelmar.

         In 2013, Fidelity and the Treasurer agreed to an internal review by Fidelity in lieu of the audit. Fidelity's internal review resulted in Fidelity paying Illinois a total in $786, 866.31 in accelerated payments pursuant to the agreement.

         In February 2017, the Treasurer sent a letter to Fidelity noting that Fidelity had not complied with Kelmar's 2013 and 2014 letters requesting documents. The letter stated: “This letter serves as a final notice and demand that [Fidelity] allow the examination to take place and produce the requested data. If [Fidelity] does not produce the requested data by February 28, 2017, the Treasurer will take necessary legal steps to compel production.” On February 25, 2017, Plaintiff filed a Complaint for Declaratory and Injunctive Relief alleging:

(1) The audit violates the Fourth Amendment as an unreasonable search and seizure (Count 1);
(2) The audit violates Fidelity's right to substantive due process because the Treasurer is acting arbitrarily, irrationally, and without legitimate governmental purpose (Count 2);
(3) The audit violates Fidelity's right to procedural due process because the Treasurer breached the parties agreement for an internal review in lieu of the audit (Count 3);
(4) The audit violates Fidelity's right to procedural due process because Kelmar has a pecuniary interest in the outcome of the audit because it will be paid a contingency fee based on a percentage of the unclaimed funds collected as a result of the audit (Count 4);
(5) The Act unconstitutionally discriminates against companies outside of Illinois in violation of the Commerce Clause by allowing the Treasurer to hire a third-party auditor on a contingency-fee basis with respect to holders of unclaimed property located outside the State of Illinois but not with respect to holders of unclaimed property located inside the State of Illinois (Count 5);
(6) The Audit burdens interstate commerce in violation of the Commerce Clause (Count 6);
(7) The scope of the audit is beyond the statutory authority of the Treasurer under the Act (Count 7);
(8) The Treasurer breached the 2013 Agreement (Count 8); and
(9) The Treasurer is estopped from reinstituting the audit after Fidelity performed on the 2013 Agreement (Count 9).

         Fidelity also seeks to enjoin the Treasurer from proceeding with the audit (Count 10). Count 10 does not ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.