Nixon et al v. U.S. Small Business Administration et al

Filing 24

MEMORANDUM Opinion and Order Signed by the Honorable John J. Tharp, Jr on 1/4/2013:Mailed notice(air, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
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MADIE NIXON, LATOYA
CONNER, DAVID CONNER,
PORTRICE VERNON, as mother of
Ariana Conner, formerly a minor, and
ARIANA CONNER,
Plaintiffs,
v.
UNITED STATES OF AMERICA,
Defendant.

No. 12 C 0016

Judge John J. Tharp

MEMORANDUM OPINION AND ORDER
This is a negligence action filed against the United States of America (the
“Government”) by a group of plaintiffs who allege that the Government failed to properly
maintain and/or forward a form designating the plaintiffs as beneficiaries on a life
insurance policy, causing them to lose insurance benefits to which they otherwise would
otherwise have been entitled. The Government moves to dismiss pursuant to Rule
12(b)(6). For the reasons stated herein, the Court denies the Government’s motion to
dismiss.
FACTS1
This litigation concerns the life insurance benefit proceeds from a Federal
Employees’ Group Life Insurance (“FEGLI”) policy obtained by Robert L. Conner.
Conner, who was an employee of the United States Small Business Administration

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For the purposes of the motion to dismiss, the Court accepts the plaintiffs’ factual
allegations as true. See Virnich v. Vorwald, 664 F.3d 206, 212 (7th Cir. 2011).

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(“SBA”), died on July 15, 2009. At the time of his death, Conner owned a FEGLI life
insurance policy in the principal sum of $702,000.
On December 15, 2000, Conner signed a designation of beneficiary form naming
his son, Jadonn Harris Conner, as a 40% beneficiary; his nephew, D’Angelo Marzell
Conner, as a 20% beneficiary; and his daughter, Ariana Portrice Conner, as a 40%
beneficiary. The plaintiffs allege that on April 27, 2007, Conner completed and signed an
updated designation of beneficiary form, altering the beneficiaries. The new form named
his son, Jadonn Harris Conner, as a 21% beneficiary; his nephew, D’Angelo Conner, as a
10% beneficiary; his daughter, Ariana Portrice Conner, as a 50% beneficiary; his niece,
Latoya Conner, as an 8% beneficiary; his sister, Madie Nixon, as an 8% beneficiary; and
his brother, David M. Conner, as a 3% beneficiary. Ariana Portrice Conner, Latoya
Conner, Madie Nixon, and David M. Conner are the plaintiffs in this lawsuit.
The plaintiffs further allege that after Conner signed the updated designation of
beneficiary form, the two SBA employees who witnessed his signature, Maria Ramirez
and Sheila Bartolomei, or some other SBA employee, took possession of the form. The
SBA employees failed, however, to send the form to the SBA Office of Human Capital
Management in Denver, or to any other appropriate office, in order for the form to take
effect or for the insurer to pay the correct beneficiaries.2 As a result, the insurance

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As will be discussed in detail below, there is some question whether the SBA’s Chicago
office, or the SBA’s Denver office, was Conner’s “employing office.” The distinction is
important because, under the FEGLI Act (“FEGLIA”), a beneficiary form is effective
only if received in the insured’s employing office before his death. If the Chicago office
was Conner’s employing office, then the updated beneficiary form was effective, and the
plaintiffs’ claim is that the Government negligently failed to notify the insurer of the
correct beneficiaries. If the Denver office was Conner’s employing office, however, then
because there is no allegation that is the form was ever sent to Denver, the updated
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company paid benefits in the amounts listed on the earlier designation form executed in
2000 (which presumably had been forwarded to the appropriate office). Under that
distribution, each of the plaintiffs received less than they would have received under the
updated designation form from 2007; three of the plaintiffs received nothing at all and
Ariana Conner received a 40 percent distribution rather than the 50 percent distribution to
which she was entitled under the 2007 beneficiary designation.
The plaintiffs now bring suit to recover from the Government the difference
between the amounts that they would have received under the 2007 designation form and
the amounts they actually received under the 2000 designation form.
DISCUSSION
The Government makes three arguments in favor of dismissing the plaintiffs’
complaint. First, the Government argues that the plaintiffs’ de facto cause of action is for
negligent misrepresentation, and that the FTCA does not waive sovereign immunity for
claims arising out of misrepresentation. Second, the Government argues that the plaintiffs
allege only economic damages, which are not recoverable in tort under Illinois law.
Third, the Government argues that it had no duty to maintain the designation of
beneficiary form, and because it had no duty, the plaintiffs cannot establish negligence.
The Court rejects each of the Government’s arguments, and finds that the plaintiffs have
stated a claim for negligence.

beneficiary form was not effective, and the plaintiffs’ claim is that the Government
negligently failed to take the necessary steps to effect Conner’s change of beneficiaries.

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I. Sovereign Immunity Is Waived.
A. The FTCA Waives Sovereign Immunity Because Plaintiffs’ Claim is Not for
“Misrepresentation.”
The Government, as a sovereign, is immune from suit except as it consents to be
sued, and the terms of its consent define the federal courts’ jurisdiction to entertain suits
against it. See United States v. Nordic Vill., Inc., 503 U.S. 30, 34 (1992). The FTCA
waives the Government’s immunity for:
“claims against the United States, for money damages, . . .
for injury or loss or property, or personal injury or death
caused by the negligent or wrongful act or omission of any
employee of the Government while acting within the scope
of his office or employment, under circumstances where
the United States, if a private person, would be liable to the
claimant in accordance with the law of the place where the
act or omission occurred.
28 U.S.C. § 1346(b)(1). There are exceptions to the Government’s waiver of sovereign
immunity, however, including an exception for any claim arising out of
“misrepresentation.” 28 U.S.C. § 2680(h). “The exception applies to both negligent and
intentional misrepresentations, as well as to both affirmative acts and omissions of
material fact.” Metropolitan Life Ins. Co. v. Atkins, 225 F.3d 510, 512 (5th Cir. 2000).
The court must “look to the essential act that spawned the damages,” not to “the manner
in which a plaintiff chooses to plead her claim,” in order to determine whether the
misrepresentation exception to the FTCA’s waiver of sovereign immunity bars the claim.
Id.
The Government argues that the Plaintiffs’ claim is for the Government’s
“misrepresentation” concerning Conner’s beneficiary designations. MTD Br. (Dkt. 17) at
5. Therefore, according to the Government, the plaintiffs’ claim is for negligent
misrepresentation. But this argument is misdirected. To the extent that there is a

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misrepresentation involved in the facts of this case, it is a misrepresentation made by the
Government to the insurance company, not to the plaintiffs. If anyone relied on a
representation as to the proper payee of the insurance proceeds, it was the insurer, not the
plaintiffs, and the insurer is not a party to this suit. If the insurer had somehow suffered
damages, it might be able to argue that the Government’s negligent misrepresentation
caused those damages. But the plaintiffs do not seek redress because of any
misrepresentation by the government on which they relied; rather, they claim that the
Government harmed them by failing to send the beneficiary designation form to the
appropriate office—which is an operational task, not a misrepresentation—causing the
insurance company to pay the wrong parties.
In Atkins, the Fifth Circuit examined a virtually identical fact pattern and
determined that the plaintiffs’ claims were not for negligent misrepresentation, but rather
for negligent performance of an operational task.3 225 F.3d at 512-13 (rejecting
argument that claim was for “negligent misrepresentation” where Government failed to
retain employee’s life insurance beneficiary form); see also Redmond v. United States,
518 F.2d 811, 816 (7th Cir. 1975) (“Where the gravamen of the complaint is the
negligent performance of operational tasks, rather than misrepresentation, the
government may not rely upon § 2680(h) to absolve itself of liability.”) (quoting Ingham
v. Eastern Air Lines, Inc., 373 F.2d 227, 239 (2d Cir. 1967)). The court stated that to
determine whether a negligence claim arose “out of misrepresentation, we consider
whether the focal point of the claim is negligence in the communication of (or failure to
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Neither party brought Atkins to the Court’s attention. Though it is not binding
precedent, the Court nonetheless expects counsel for both parties, as a matter of effective
advocacy, to identify and either apply or distinguish readily available case law from
federal courts of appeal involving substantially similar facts.

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communicate) information or negligence in the performance of an operational task, with
misrepresentation being merely collateral to such performance.” Atkins, 225 F.3d at 512.
The Atkins court described the claim as “alleging that the United States employee failed
to preserve and properly file the correct copy” of the designation form, and found that the
“negligent performance of an operational task allegedly caused the harm.” Id. at 513. As
in Atkins, the claim here was not one for negligent misrepresentation, but rather for a
negligent action, and therefore the FTCA waives sovereign immunity.
A look at the elements necessary to prove negligent misrepresentation further
confirms that the plaintiffs’ de facto claim is not for negligent misrepresentation. “The
elements of a negligent misrepresentation claim under Illinois law are: (1) a duty on the
part of [the defendant] to communicate accurate information; (2) false statements of
material fact; (3) carelessness or negligence by [the defendant] in ascertaining the truth of
the statements; (4) intention to induce [the plaintiff] to act; (5) action by [the plaintiff] in
reliance on the truth of the statements; and (6) damages.” F:A J Kikson v. Underwriters
Labs., Inc., 492 F.3d 794, 801 (7th Cir. 2007) (internal citation omitted). The plaintiffs do
not allege that the Government induced them to act or that they acted in reliance on the
truth of the Government’s “statements.” Rather, they argue that the Government failed to
maintain the proper form, which had the legal effect of preventing them from being paid
as beneficiaries to Conner’s life insurance policy. The plaintiffs do not allege
misrepresentation, and therefore the exception to the FTCA waiver of sovereign
immunity does not apply.
B. FEGLIA Also Waives Sovereign Immunity.
Though the plaintiffs argue only that the FTCA waives the Government’s
sovereign immunity, FEGLIA also waives sovereign immunity here. The Act states that
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“[t]he district courts of the United States have original jurisdiction . . . of a civil action or
claim against the United States founded on this chapter.” 5 U.S.C. § 8715. The plaintiffs,
who claim that the Government breached a legal duty it owed under FEGLIA by failing
to correctly maintain or forward Conner’s 2007 beneficiary designation form, assert a
claim founded on FEGLIA and, accordingly, this Court has jurisdiction to hear the claim.
Although there is an argument to be made that “a general grant of jurisdiction to district
courts to entertain actions of a certain class . . . is not a waiver of governmental immunity
from suit or a consent to be sued,” Geurkink Farms, Inc. v. United States, 452 F.2d 643,
644 (7th Cir. 1971), this jurisdictional grant—specifically authorizing suits arising under
this statute—does not, in the Court’s view, constitute a “general” jurisdictional grant; it is
a specific grant of jurisdiction to hear suits arising under FEGLIA, and would be
meaningless if sovereign immunity could be interposed as a defense to any such suit.
Accordingly, numerous courts have held that § 8715’s consent to jurisdiction waives the
Government’s sovereign immunity to claims arising under FEGLIA. See, e.g., Barnes v.
United States, 307 F.2d 655, 657-58 (D.C. Cir. 1962); Laporte v. United States, No. 097247, 2011 WL 3678872, *4 (S.D.N.Y. Aug. 19, 2011) (citing cases). The Government,
to be sure, contests the validity of the claim asserted—specifically arguing that it owes no
duty under FEGLIA—but whether a claim has substantive merit is an entirely separate
question from whether the Government has waived sovereign immunity with respect to
that class of claim, and does not affect the jurisdiction of a court to hear the claim. (cf.,
e.g., Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869, 2877 (2010)). Therefore,
even if the FTCA does not waive the Government’s sovereign immunity, FEGLIA does.

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II. The Plaintiffs Can Recover For Purely Economic Injuries.
Next, the Government argues that the plaintiffs allege a “purely economic injury,”
and therefore cannot recover damages in tort. The Government cites to Moorman Mfg.
Co. v. National Tank Co., 91 Ill.2d 69, 81, 435 N.E.2d 443, 448 (Ill. 1982), which
announced the economic loss doctrine rejecting the “recovery of solely economic
loss[es].” Moorman defined “economic loss” as “damages for inadequate value, costs of
repair and replacement of the defective product, or consequent loss of profits—without
any claim of personal injury or damage to other property.” Id. at 82 (internal citation
omitted).
But the Moorman economic loss doctrine does not apply “[w]here a duty arises
outside of [a] contract.” Neumann v. Carlson Envtl., Inc., 429 F. Supp. 2d 946, 952 (N.D.
Ill. 2006) (quoting Congregation of the Passion, Holy Cross Province v. Touche Ross &
Co., 159 Ill.2d 137, 162, 636 N.E.2d 503, 514 (Ill. 1994)); see also Kanter v. Deitelbaum,
271 Ill. App. 3d 750, 753-55, 648 N.E.2d 1137, 1139-40 (Ill. App. Ct. 1995) (economic
loss doctrine does not apply to insurance broker who failed to maintain health insurance
for client because the broker breached a fiduciary duty, not a contractual duty). Where a
party has a duty independent of any contractual relationship, the economic loss doctrine
does not apply. Golf v. Henderson, 376 Ill. App. 3d 271, 279, 876 N.E.2d 105, 113 (Ill.
App. Ct. 2007) (“The Moorman doctrine, however, does not apply when a duty arises that
is extracontractual.”); R.J. O’Brien & Assocs., Inc. v. Forman, 298 F.3d 653, 656 (7th
Cir. 2002) (“Moorman dictates that, when a contract sets out the duties between the
parties, recovery should be limited to contract damages, even though recovery in tort
would otherwise be available under the common law.”). The economic loss doctrine is

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designed to prevent parties from recovering in tort when they could have (or should have)
recovered in contract. Westfield Ins. Co. v. Birkey’s Farm Store, Inc., 399 Ill. App. 3d
219, 231, 924 N.E.2d 1231, 1243 (Ill. App. Ct. 2010) (“[T]he economic-loss [doctrine] is
founded on the theory that parties to a contract may allocate their risks by agreement and
do not need the special protections of tort law to recover damages caused by a breach of
contract.”) (internal citation omitted). Even Moorman itself implicitly acknowledged that
the economic loss rule applies only to situations where a contract creates the duty, stating
that “[t]he remedy for economic loss . . . lies in contract.” Moorman, 91 Ill.2d at 86, 435
N.E.2d at 450.
Here, neither Conner nor the plaintiffs had any contract with the Government at
all, much less one that required the Government to properly file and preserve Conner’s
designation of beneficiary form. Therefore, any duty the Government owed Conner or the
plaintiffs must have arisen from something other than a contract. As explained below, the
Government’s duty comes from FEGLIA or the common law, rendering the economic
loss doctrine inapplicable. See Bestfoods v. Gen. Warehouse & Transp. Co., No. 99-8118,
2000 WL 1310670, *6 (N.D. Ill. Sep. 13, 2000) (an argument “that the Moorman doctrine
somehow supersedes a statutory duty of care is untenable”); Serfecz v. Jewel Food Stores,
Inc., No. 92-4171, 1998 WL 142427, *3 (N.D. Ill. Mar. 26, 1998) (the economic loss
doctrine does not bar claims “for common law waste in Illinois even though the property
at issue incurred no physical damage”). Therefore, because the plaintiffs have no contract
remedy, and because the Government’s actions here are not the type that are normally
subject to contract, the economic loss doctrine does not apply and the Government may
face tort liability for the plaintiffs’ purely economic damages.

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III. The Government Had a Duty to Properly Maintain or Forward Conner’s 2007
Beneficiary Designation Form.
That neither sovereign immunity nor the economic loss doctrine bars the
plaintiffs’ claims brings into focus the question of whether the Government owes any
duty to the plaintiffs and, if so, whether the plaintiffs breached that duty.
A. The Government’s Duties Related to FEGLI Forms.
The Government argues that it owes no duty to receive or maintain life insurance
forms for federal employees. Courts have come to different conclusions regarding
whether FEGLIA creates duties related to these forms. Compare Atkins, 225 F.3d at 514
(“the United States, through the personnel clerk, has a duty to maintain the designation of
beneficiary forms turned over to its care as a part of its responsibilities under FEGLIA”);
with Frerichs, 2006 WL 200812 at *2 n.3 (“the United States has no duty to properly
receive, maintain, and review benefit election forms”); Graber, 855 F. Supp. 2d at 677
(“the only legal duty imposed on the United States under FEGLIA is to ensure that the
correct FEGLI policy is negotiated and issued”). Agreeing with the case law holding the
Government responsible for, at the very least, properly maintaining or submitting
correctly completed forms, the Court finds that the Government had a duty with respect
to the updated beneficiary form.
FEGLIA requires that life insurance benefits “shall be paid, on the establishment
of a valid claim, to the [designated beneficiaries].” 5 U.S.C. § 8705(a). Payment is
predicated on the Government’s receipt of the designation of beneficiary form before the
insured’s death. Id. This implies that, following receipt of the form, the Government has a
duty to properly preserve it in a manner that permits accurate assessment of the
employee’s designated beneficiaries. The Tenth Circuit, in examining FEGLIA,

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implicitly assumed that the Government has “the responsibility to perform various
ministerial acts—like distributing information and forms to employees and collecting
required forms once employees have reviewed and executed them.” Metropolitan Life
Ins. Co. v. Bush, 154 F.3d 1149, 1153 (10th Cir. 1998). That conclusion must be correct;
otherwise, an insured is left in the untenable position of being required by law to submit
his designation of beneficiary form to an entity (the Government) that has no
corresponding responsibility to maintain or forward the form. By that reasoning, the
Government personnel receiving the forms could simply crumple up the forms and throw
them in the trash upon receipt and the putative insureds, and their beneficiaries, would
have no recourse. Further, with respect to FEGLI, the Government acts as an agent for its
employees, see, e.g., Brinson v. Brinson, 334 F.2d 155, 158 (4th Cir. 1964), and that role
gives rise to certain duties under the common law of agency. Illinois law holds, for
example, that if a life insurance agent accepts an application for insurance, but fails to
process it within a reasonable time, the agent is liable for harm caused by his negligence.
See Bovan v. American Family Life Ins. Co., 386 Ill. App. 3d 933, 940, 897 N.E.2d 288,
294 (Ill. App. Ct. 2008). That same principle applies to the Government’s alleged failure
here.
The Fifth Circuit, addressing facts almost identical to those in this case, held
expressly that although the Government had no duty to ensure that employees’ properly
complete their insurance forms, FEGLIA required the Government to properly maintain
completed forms turned over to its care. Atkins, 225 F.3d at 514. The court also found
that FEGLIA allowed plaintiffs to recover money damages against the Government, and
it reversed the district court’s dismissal of the lawsuit. Id. The Court finds Atkins

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persuasive here. It makes no sense to interpret FEGLIA to require the submission of
beneficiary designation forms to the Government while simultaneously absolving the
Government of any responsibility for processing and maintaining those forms in the
manner required by the statute to make them effective. The Court concludes, then, that
the Government has a duty under FEGLI and the common law to preserve beneficiary
forms submitted by employees in a manner that permits an assessment of the employee’s
current beneficiaries at time of death.
To be sure, other courts have come to the opposite conclusion. In Frerichs, the
plaintiff alleged that the decedent, a governmental employee, incorrectly filled out a life
insurance form, mistakenly declining certain life insurance coverage when he intended to
accept that coverage. 2006 WL 200812, at *1. The decedent contacted the human
resources department of his former employer, a governmental agency, and asked them to
correct his form. Id. The agency assured him that it had corrected the form, but when he
died his beneficiary learned that the agency had not done so. Id. When the putative
beneficiary sued the Government for breach of contract, the court held that because
Congress did not clearly indicate in FEGLIA that it intended to waive sovereign
immunity by creating actionable duties, the Government had no duty to receive or
maintain the forms. Id. at *2 n. 3. But, again, whether Government had a duty to maintain
the forms and whether Congress waived sovereign immunity are two distinct questions.
Frerichs acknowledged that FEGLIA created “legal duties” on the part of the
Government but concluded that the duties were not “actionable” because FEGLIA did not
clearly waive sovereign immunity. Id. But even if FEGLIA itself does not waive
sovereign immunity (contrary to this Court’s conclusion, above), the FTCA plainly does.

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The FTCA did not apply in Frerichs because there the plaintiff alleged only a breach of
contract, but in this tort case, unlike in Frerichs, the FTCA applies and the Government
has therefore waived sovereign immunity.
Further, Frerichs and the cases on which it relied are also readily distinguishable,
as each involved a situation in which the Government’s alleged breach of duty was a
failure to take affirmative action to ensure that the putative insured had filled out
beneficiary designation forms appropriately. Frerichs itself involved an alleged failure by
the government to correct a form that the insured had filled out incorrectly. Id. at *1.
Similarly, Argent v. O.P.M, No. 96-2516, 1997 WL 473975, *2 (S.D.N.Y. Aug. 20,
1997) merely held that the Government has no duty to inspect the beneficiary forms it
receives to determine whether they are authentic or fraudulent. Frerichs also relies on
Barnes, 307 F.2d at 658-59, which held that the Government has no duty to extend an
employee’s life insurance into retirement when the employee fails to fill out the correct
form or pay premiums, and Robinson v. United States, 8 Cl. Ct. 343, 345 (Cl. Ct. 1985),
which held that the Government is not liable for an employee’s failure to complete life
insurance forms even where the Government did not send the employee the forms in a
timely fashion. Each of these cases is qualitatively different than the case at hand,
involving claims that the Government failed not merely to maintain or forward
beneficiary forms submitted by putative insureds, but rather to take affirmative action to
ensure that the decedents completed the forms in a timely and accurate manner. That the
Government has no duty to ensure that its employees properly complete the forms does
not mean that it has no duty to maintain or forward the properly completed forms it has
accepted. Under the statutory scheme, the employee is responsible for submitting the

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designation form to the Government; if submitted, it is the Government’s concomitant
responsibility to maintain the form and to transmit it to the insurer.
So far as the complaint alleges, Conner completely and accurately submitted his
beneficiary form to the Government, but the Government either lost it or otherwise failed
to maintain it and to transmit it to the insurer upon Connor’s death. While the Court takes
no issue with cases holding that the Government has no duty to ensure that each of its
employees has accurately completed their FEGLI forms, or that the forms are otherwise
valid when submitted, the Government—as the statutorily designated recipient of the
forms—must at least maintain the forms that employees submit to it in a manner that
permits the required identification of current beneficiaries set forth in § 8705.
B. By Properly Alleging a Governmental Duty, the Plaintiffs State a Claim for
Negligence.
Plaintiffs’ allege that the Government breached its duties under FEGLIA by
failing to forward the updated beneficiary designation form to the SBA’s Office of
Human Capital Management in Denver. Cmplt. ¶¶ 8-9. Under FEGLIA, a signed and
witnessed beneficiary designation form is effective if it is “received before [the insured’s]
death in the employing office.” 5 U.S.C. § 8705(a). Therefore, if the Chicago SBA was
Conner’s “employing office,” as the plaintiffs argue in their response brief, then the
updated form became effective when Conner submitted it to SBA employees in Chicago.
The Code of Federal Regulations unhelpfully defines “employing office” as “the
agency office or retirement system office that has responsibility for life insurance
actions.” 5 C.F.R. § 870.101. The Tenth Circuit, finding this regulatory language unclear,
stated that the employing office might be the office with “responsibility for determining
the existence and scope of life insurance coverage and the identification of particular

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beneficiaries,” or it might be the office with “the responsibility to perform various
ministerial acts—like distributing information and forms to employees and collecting
required forms once employees have reviewed and executed them.” Bush, 154 F.3d at
1153. Because the regulatory language was unclear, the Bush court found that an
employee could reasonably interpret it as “directing her to file [the beneficiary form] with
the personnel officer at the office where she was stationed.” Id. Bush therefore upheld a
change of beneficiary form that was received at the employee’s place of business before
her death, but was not forwarded on to the national department of human resources until
after the employee had died. Id. at 1154; see also Fair v. Moore, 397 A.2d 976, 978 (D.C.
1979) (“It is, we think, faithful to the use the term ‘employing office’ [to mean] the
immediate government entity in the employment relationship with the insured.”).
Likewise, in this case, the term “employing office” is broad enough to encompass
the office at which Conner worked, and to which he submitted the form. The form need
not have been submitted to the Denver office to become effective, and the insurer should
have paid benefits to the plaintiffs pursuant to 5 U.S.C. § 8705(a). The Government’s
negligent failure to send the updated form to Denver so that it could be forwarded to the
insurer caused the insurer to pay benefits to the beneficiaries listed on the outdated 2000
form. Therefore, the Government violated its duty under FEGLIA by preventing the
properly designated beneficiaries from recovering insurance benefits.4

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And even if the Denver SBA were deemed to be Conner’s employing office, and the
form needed to be received in Denver to become effective, then the Government, by
accepting the updated beneficiary form in Chicago, had a duty under FEGLIA or the
common law to forward the form to the Denver SBA to make it effective. See Bovan, 386
Ill. App. 3d at 940, 897 N.E.2d at 294 (explaining common law duties of insurance
agent).

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The plaintiffs have therefore adequately alleged that the form was effective and
the Government had a duty to forward it to the appropriate location. They have stated a
claim that the Government failed to discharge that duty. Because the plaintiffs also allege
that the Government’s breach caused them damage, and because both the FTCA and
FEGLIA waive the Government’s sovereign liability, the plaintiffs have stated a claim
for negligence upon which relief may be granted.
***
For all of these reasons, the Court denies the Government’s motion to dismiss.

Date: January 4, 2013
John J. Tharp, Jr.
United States District Judge

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