Charleen Corrado, Individually and as the Executrix of the Estate of John M. Corrado; Federal City Region, Inc. Plaintiffs-Appellants
Life Investors Insurance Company of America; Seth Miller; Patrick Melchert; Kevin Crist; Frank Neeland, Jr.; Mark Thiel; Andrew Martin Defendants-Appellees
Submitted: October 18, 2017
from United States District Court for the Northern District
of Iowa - Cedar Rapids
WOLLMAN, BEAM, and SHEPHERD, Circuit Judges.
SHEPHERD, CIRCUIT JUDGE.
most recent installment of the litigious history of the Life
Investors Owners Participation Trust, Charleen Corrado and
Federal City Region, Inc. ("FCR") brought suit
against a number of defendants associated with the Trust,
alleging breaches of fiduciary duties and conversion. The
district court granted summary judgment to the
defendants, and Corrado and FCR appeal. We affirm.
recounted in our previous opinion, John Corrado and
became associated with Life Investors Insurance Company of
America ("Life Investors") in 1977. Corrado sold Life
Investors's insurance policies on a commission basis,
and, as a result, Corrado and FCR were able to maintain
accounts in a pension plan established by Life Investors-the
Life Investors Owners Participation Trust (the
2008, John Corrado and FCR filed a lawsuit in the District of
Maryland against Life Investors, the Life Investors Owners
Participation Trust and Plan, and its trustees-John
Cleavenger, Kevin Crist, Mike Kirby, Frank Kneeland, William
Kuennen, R. Joe Smith, and Mark Thiel. In that suit,
Corrado and FCR alleged six counts: the first three alleged
that the Trustees breached their fiduciary duties; Count IV
alleged that Life Investors knowingly participated in the
breaches alleged in Counts I through III; Count V alleged
that the Trustees failed to provide appropriate documentation
to participants; and Count VI alleged that the Trustees
unjustifiably refused to allow Corrado to withdraw the money
in his account. The Maryland court granted summary judgment
to the defendants, and Corrado did not appeal that ruling.
Life Investors advanced money to the Trustees to pay for the
legal expenses related to the defense of this action.
the pendency of the Maryland suit, Life Investors filed a
lawsuit against Corrado and FCR in the District of Iowa,
alleging that Corrado had breached a settlement agreement
between the parties. After the district court granted summary
judgment to Life Investors in that case, this court reversed
and remanded based on the district court's misapplication
of Iowa law. See Life Inv'rs Ins. Co. of Am. v. Fed.
City Region, Inc., 687 F.3d 1117 (8th Cir. 2012). After
remand, the district court again entered summary judgment in
favor of Life Investors, and we affirmed. See Life
Inv'rs Ins. Co. of Am. v. Corrado, 804 F.3d 908 (8th
Cir. 2015). The final outcome of the Iowa litigation was a
$1.3 million judgment in favor of Life Investors against both
Corrado and FCR, which FCR satisfied by assigning sufficient
funds from its Trust account to Life Investors.
Investors then sent an email to the Trustees informing them
of its desire to be reimbursed for the costs advanced in
defense of the Maryland lawsuit. This result, Life Investors
explained, was authorized by Trust § 11.9, which states
The Trustees shall have a lien upon the Trust Assets for any
costs and attorneys' fees, in the event of any suit or
proceeding regarding the Trust to which the Trustees, or any
of them, may be parties or a party. If any Participant or
beneficiary brings legal action against the Trustees, or any
of them, the result of which shall be adverse to the party
bringing the suit, or if any disputes arise with respect to
the person or persons to whom delivery or payment of any
property shall be made by the Trustees, the cost to the
Trustees of defending the suit shall be charged, to the
extent possible, directly to the account of the Participant
whose interest is in issue, and only the excess, if any,
shall be included in the expenses of the Trust.
Trustees unanimously voted to enforce § 11.9, and they
deducted $431, 925.49-the cost of the defense in the Maryland
litigation-from the Trust accounts of Corrado and FCR. In
turn, the Trustees paid this money to Life Investors as
reimbursement of money advanced in defending the Trustees in
the Maryland action.
of 2014, Corrado and FCR brought the instant lawsuit in the
District of Iowa against the Trustees and Life Investors,
alleging that the Trustees' actions in deducting the
funds from Corrado's and FCR's Trust accounts
constituted breaches of fiduciary duties and conversion.
After discovery, both parties moved for summary judgment, and