JENNIFER LANCLOS v. USA

Filing 83

**RE-DOCKETED FOR PUBLICATION**REPORTED OPINION granting 77 Motion for Reconsideration vacating the court's 38 July 12, 2017 reported opinion on Motion for Summary Judgment. The clerk's office is directed to DISMISS plaintiff's complaint with prejudice and ENTER final judgment in defendant's favor. The Clerk is directed to enter judgment. Signed by Judge Patricia E. Campbell-Smith. (ead) Service on parties made.

In the United States Court of Federal Claims
No. 15-358C
(E-Filed: January 7, 2021)
_________________________________
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JENNIFER LANCLOS,
)
)
Plaintiff,
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Motion for Reconsideration;
RCFC 59; Summary Judgment;
)
v.
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RCFC 56; Settlement
Agreement; Annuities.
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THE UNITED STATES,
)
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Defendant.
)
_________________________________ )
Jeffrey E. Dahl, San Antonio, TX, for plaintiff.
Richard P. Schroeder, Trial Attorney, with whom were Ethan P. Davis, 1 Acting Assistant
Attorney General, Robert E. Kirschman, Jr., Director, Deborah A. Bynum, Assistant
Director, Commercial Litigation Branch, Civil Division, United States Department of
Justice, Washington, DC, for defendant.
OPINION
CAMPBELL-SMITH, Judge.
On May 21, 2020, defendant filed an amended motion for reconsideration of this
court’s July 12, 2017 opinion in this matter pursuant to Rules 54(b) and 59(a)(1) of the
Rules of the United States Court of Federal Claims (RCFC). See ECF No. 77. Plaintiff
responded on June 23, 2020, see ECF No. 78, and defendant replied on July 23, 2020, see
ECF No. 81. For the reasons set forth below, defendant’s motion for reconsideration is
GRANTED.
I.

Background

Plaintiff filed her complaint in this matter in 2015, alleging that defendant
breached a 1986 settlement agreement resolving claims against the United States Air
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Joseph H. Hunt was listed as Assistant Attorney General on defendant’s amended motion
for reconsideration, see ECF No. 77, but was replaced with Ethan P. Davis on defendant’s reply,
see ECF No. 81.

Force. See ECF No. 1 (complaint). The settlement agreement included a provision in
which plaintiff agreed to accept in “full satisfaction and final settlement” of her claims:
The purchase of an annuity which will provide the following:
$1,500 per month – from commencement of payment for a period of five
years
$2,000 per month – years 6-10
$2,500 per month – years 11-15
$3,000 per month – years 16-20
$3,500 per month – years 21-25
$4,000 per month – years 26-30
$4,500 per month – years 31-life
Id. at 8, 9. The agreement further provided that “[a]ll monthly payments above are
guaranteed for 30 years or the life of [plaintiff], whichever is longer.” Id. at 8.
Defendant duly purchased the annuity from Executive Life Insurance Company of New
York (ELNY), however, after financial difficulties, ELNY became unable to make the
payments in full in 2013. See id. at 3. Plaintiff alleged that defendant guaranteed the
payments in the settlement agreement and that it breached the agreement when it failed to
ensure the full payment was made. See id. at 4-5.
The parties filed cross motions for partial summary judgment as to liability, which
the court decided on July 12, 2017. See ECF No. 38 (opinion and order). The court
granted plaintiff’s motion, finding that “[t]he specific language of the agreement at issue
in the present matter clearly and unambiguously indicates that the government agreed, by
basic grammatical function of the terms in the agreement, to guarantee payments to
plaintiff.” Id. at 7.
Thereafter, defendant made several motions in fairly quick succession. It first
moved for reconsideration of the court’s opinion on November 22, 2017. See ECF No.
49. It then moved for summary judgment as to damages on January 19, 2018, see ECF
No. 58, and on February 2, 2018, moved to stay proceedings in this case pending the
resolution of several cases involving similar agreements and annuities before the United
States Court of Appeals for the Federal Circuit, see ECF No. 59.
The court granted defendant’s motion to stay on February 22, 2018, pending the
resolution of Hendrickson v. United States, Case No. 17-1996 (Fed. Cir. filed May 9,
2017), and Shaw v. United States, Case No. 17-2136 (Fed. Cir. filed June 8, 2017). See
ECF No. 64 (order). The court later granted defendant’s motion to continue the stay
pending the resolution of Langkamp v. United States, Case No. 18-2052 (Fed. Cir. filed
June 6, 2018). See ECF No. 70 (order). Upon resolution of all three cases at the Federal
Circuit, the court lifted the stay in this matter, dismissed defendant’s motion for
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reconsideration and motion for summary judgment as moot, and directed defendant to file
the amended motion for reconsideration now before the court. See ECF No. 74 (order).
II.

Legal Standards
A.

Motion for Reconsideration

Rule 59(a) governs a motion for reconsideration. The rule provides that rehearing
or reconsideration may be granted: “(A) for any reason for which a new trial has
heretofore been granted in an action at law in federal court; (B) for any reason for which
a rehearing has heretofore been granted in a suit in equity in federal court; or (C) upon
the showing of satisfactory evidence, cumulative or otherwise, that any fraud, wrong, or
injustice has been done to the United States.” RCFC 59(a)(1). Thus, the court, “in its
discretion, ‘may grant a motion for reconsideration when there has been an intervening
change in the controlling law, newly discovered evidence, or a need to correct clear
factual or legal error or prevent manifest injustice.’” Biery v. United States, 818 F.3d
704, 711 (Fed. Cir.), cert. denied, 137 S. Ct. 389 (2016) (quoting Young v. United States,
94 Fed. Cl. 671, 674 (2010)).
B.

Motion for Summary Judgment

Summary judgment is appropriate “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
RCFC 56(a). “[A]ll evidence must be viewed in the light most favorable to the
nonmoving party, and all reasonable factual inferences should be drawn in favor of the
nonmoving party.” Dairyland Power Coop. v. United States, 16 F.3d 1197, 1202 (Fed.
Cir. 1994) (citations omitted). “A nonmoving party’s failure of proof concerning the
existence of an element essential to its case on which the nonmoving party will bear the
burden of proof at trial necessarily renders all other facts immaterial and entitles the
moving party to summary judgment as a matter of law.” Id. (citing Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986)). A summary judgment motion is, therefore, properly
granted against a party who fails to make a showing sufficient to establish the existence
of an essential element to that party’s case and for which that party bears the burden of
proof at trial. Id.
III.

Analysis
A.

New Federal Circuit Precedent Merits Reconsideration

Defendant argues that the court should reconsider its June 12, 2017 opinion
granting plaintiff’s partial motion for summary judgment because the Federal Circuit has
now made clear that defendant did not guarantee the annuity payments in plaintiff’s
settlement agreement. See ECF No. 77 at 7. According to defendant, three newly
decided Federal Circuit cases create “a more robust body of case law than existed when
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the Court granted summary judgment.” Id. at 6. And, defendant contends, those cases
“now establish[], as a matter of law, that the Government did not guarantee the annuity
payments and is not liable to [plaintiff].” Id. Defendant argues that the change in law
thus merits reconsideration. See id.
Plaintiff responds that the three new decisions do not “constitute a change in
controlling law.” ECF No. 78 at 4. Instead, plaintiff contends, the cases “are
interpretations of settlement agreements that are substantially and materially different
than the Lanclos settlement agreement.” Id. Defendant replies that plaintiff’s “attempts
to distinguish [the precedent] are unavailing.” ECF No. 81 at 3.
The court agrees with defendant that the recent Federal Circuit decisions constitute
an intervening change in law that merits reconsideration of the court’s June 12, 2017
opinion pursuant to RCFC 59(a)(1)(C). See Biery, 818 F.3d at 711. In its opinion, the
court reviewed and relied upon two Federal Circuit cases—Massie v. United States, 166
F.3d 1184 (Fed. Cir. 1999), and Nutt v. United States, 837 F.3d 1292 (Fed. Cir. 2016)—
which it characterized as having “divergent conclusions.” ECF No. 38 at 4-7. In the
court’s view, the newly decided precedent clarifies the divergent conclusions in the case
law and offers clear guidance in resolving plaintiff’s claim. Therefore, the court will
reconsider its prior opinion.
B.

Defendant Is Entitled to Judgment as a Matter of Law

Defendant argues that the Federal Circuit cases, in particular Shaw v. United
States, 900 F.3d 1379 (Fed. Cir. 2018), clearly establish that the government agreed
merely to purchase annuities, not to guarantee the payments thereon. See ECF No. 77 at
10. According to defendant, plaintiff’s settlement agreement and the agreement in Shaw
share material provisions, specifically the term requiring defendant to “purchase an
annuity that would make specified periodic payments.” Id. Defendant further contends
that, also like the agreement in Shaw, plaintiff’s settlement agreement “did not provide
that [defendant] would make the annuity payments to [plaintiff],” but rather that the
annuity would make those payments. Id. Therefore, defendant concludes that, like the
Federal Circuit concluded in Shaw, plaintiff’s agreement did not make defendant
guarantor of the payments and defendant does not have an obligation to make up for any
shortfall in payments. See id.
Defendant further contends that the guarantee language in plaintiff’s agreement is
“essentially the same type of language” that the Federal Circuit addressed and interpreted
in Shaw. Id. at 12. That language, defendant argues, referred to the length of time the
payments were to be made, not the amount of the payments. See id. According to
defendant, the court’s explanation in Shaw that “in ‘the context of annuities [the term]
“guaranteed” is generally used as a term of art to establish that an annuity that is
measured by an annuitant’s life will continue to make payments in the event of death
before the end of the guaranteed period,’” should apply in this case as well. Id. (quoting
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Shaw, 900 F.3d at 1383). Defendant also distinguishes the agreements in Massie and
Langkamp from plaintiff’s agreement, arguing that unlike the agreements in those cases,
plaintiff’s agreement contains no ongoing obligation on the part of defendant. See id. at
13-15 (citing Massie, 166 F.3d at 1186, and Langkamp v. United States, 943 F.3d 1346,
1350 (2019)). Therefore, defendant argues, it is not responsible for any shortfall in
plaintiff’s annuity payments. See id. at 17.
Plaintiffs in both Shaw and this case have argued that the language in their
settlement agreements obligated the government to make up any shortfall in the
enumerated payments. See Shaw, 900 F.3d at 1381; ECF No. 1 at 4. The agreement in
Shaw provided for “the purchase of annuities that will provide the periodic or other
payments set forth” in the agreement, ECF No. 78-2 at 5 (settlement document in Shaw,
attached as an exhibit to plaintiff’s response). Similarly, plaintiff’s agreement at issue
here provided for “the purchase of an annuity which will provide the following”
payments set forth in the agreement. ECF No. 1 at 8. Moreover, the agreement in Shaw
provided that “these monthly payments are guaranteed for a period of twenty (20) years”
regardless of the death of the beneficiary, ECF No. 78-2 at 5, and plaintiff’s agreement
provided that “all monthly payments are guaranteed for 30 years or the life of [plaintiff]
whichever is longer,” ECF No. 1 at 8.
Seeking to distinguish these agreements, plaintiff argues that the settlement
agreement at issue in her case is materially different than that in Shaw. See ECF No. 78
at 4-5. Specifically, plaintiff contends that the agreement in Shaw “expressly limit[ed]
the consideration for the release to lump sum payments and the purchase of annuities,” id.
at 4, while the consideration for release in plaintiff’s settlement included the guarantee of
the monthly annuity payments. Id. at 4-5, 8-9. Additionally, plaintiff argues, the
meaning of the guarantee in the Shaw settlement was “explained in detail within the
settlement agreement,” id. at 5, and it was not in her settlement. See id. at 4-5, 10-11.
Thus, according to plaintiff, the Federal Circuit precedent supports her position that the
language in her settlement agreement amounted to “mandatory obligations of [defendant]
to pay in the event of default by the primary obligor.” Id. at 9 (citing Massie, 166 F.3d at
1189); see also id. at 11.
In the court’s view, the distinctions plaintiff raises are insufficient to overcome the
language present in plaintiff’s agreement that the Federal Circuit construed in Shaw. The
Circuit reviewed the guarantee language in the Shaw settlement and concluded that:
[R]elatively little significance can be given to this guarantee language. In
the context of annuities, “guaranteed” is generally used as a term of art to
establish that an annuity that is measured by an annuitant’s life will continue
to make payments in the event of death before the end of the guaranteed
period. In the Shaws’ agreement, the use of the term “guaranteed” indicates
that the monthly payments will be made until 20 years have passed or until
the death of the annuitant, whichever is later.
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Shaw, 900 F.3d at 1383-84 (footnote omitted). The Federal Circuit set forth its view of
the express language in the Shaw contract, and, contrary to plaintiff’s assertions, the court
does not find that the absence of the precise language in the Shaw agreement from
plaintiff’s agreement triggers a different interpretation. The court does not perceive, and
plaintiff has not presented, any material difference between the language in plaintiff’s
agreement and the language in the Shaw agreement. Without more, the presence of
certain explanatory language in the Shaw agreement, that is not present in plaintiff’s
agreement, is not sufficient to distinguish the controlling language that is present in both
agreements. The court, therefore, must conclude that the Federal Circuit’s interpretation
governs in this case, and the guarantee language applies to the term of the payments,
rather than to the amount of the payments. See id.
In Shaw, the Federal Circuit also distinguished the agreement in Massie, noting
that the agreement in that case “described the periodic payments as being made ‘on
behalf of the United States’” and finding “no such language” in the Shaw settlement. Id.
at 1384 (quoting Massie v. United States, 40 Fed. Cl. 151, 155 (1997)). The Circuit
further stated that the Shaw agreement “did not provide that the payments made by the
annuities would discharge the government’s obligations.” Id.
Plaintiff has pointed to no language in the instant agreement that is similar to the
language in Massie and which would indicate an ongoing obligation by defendant to
make payments. See id. And, like in Shaw, the agreement here does not provide that the
payments made by the annuities discharge defendant’s obligation; rather, the agreement
provides for the “purchase of an annuity,” and a lump sum payment, “in full satisfaction
and final settlement” of plaintiff’s claims. ECF No. 1 at 8-9.
Because there is no dispute of material fact in this case, and because Federal
Circuit precedent controls, defendant is entitled to judgment as a matter of law as to
plaintiff’s claims.
IV.

Conclusion

Accordingly, for the foregoing reasons, defendant’s motion for reconsideration,
ECF No. 77, is GRANTED, and the court’s July 12, 2017 opinion, ECF No. 38, is
VACATED. The clerk’s office is directed to DISMISS plaintiff’s complaint with
prejudice and ENTER final judgment in defendant’s favor.
IT IS SO ORDERED.
s/Patricia E. Campbell-Smith
PATRICIA E. CAMPBELL-SMITH
Judge

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