Mary Helen Eller, Ronald Krainz and Paul Harrington alleged, individually and on behalf of a putative class, that EquiTrust Life sold bonus annuities without disclosing to them that the bonuses would be recouped, failed to adequately explain the market value adjustment (MVA), and failed to disclose that its contracts violated state nonforfeiture laws. Plaintiffs claimed this conduct unjustly enriched EquiTrust and violated RICO and state consumer protection statutes.

In Eller v. EquiTrust Life Ins. Co., the federal district court in Arizona granted EquiTrust’s motion for summary judgment on all counts, and denied plaintiffs’ motion for class certification as moot, while noting that it would have “more probably than not, denied the motion for class certification.” The court deemed plaintiffs’ MVA allegations unfounded, because the MVA was clearly explained in the documents and other federal courts have “uniformly” determined that there is no duty to disclose internal pricing structures or spreads. The court also found that the use of the word “bonus” did not trigger a duty to disclose internal pricing plans, and that, as a factual matter, a bonus was added to the account value of plaintiffs’ annuities. Finally, the court determined that plaintiffs failed to offer any evidence that the contracts violated the state’s nonforfeiture law; in any event, a misrepresentation of law would not serve to properly underpin a RICO claim.

The court also rejected the purported RICO enterprise between the insurer and its agents, finding that the materials and training given to the agents differed, as did the meetings between agents and their clients. The court further determined that plaintiffs’ plain assertion of classwide fraud was contradicted by EquiTrust’s disclosure of the bonus, crediting rates, the MVA and its discretion to set crediting rates at or above the guarantee. Plaintiffs’ consumer protection and unjust enrichment claims were dismissed for similar reasons.