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A jury in Los Angeles Superior Court has sided with global insurer MassMutual in a case that accused the firm of improperly withholding dividends from a class of hundreds of term life insurance policyholders.
As a mutual insurance company owned by policyholders, MassMutual pays out its excess profits to “participating” policyholders each year in the form of dividends.
After a 12-day trial, the jury found that MassMutual never generated enough profit to warrant dividends under the policy agreements, according to a statement by the insurer’s law firm, Keller/Anderle LLP.
The case stemmed from claims by plaintiff attorney Christina Chavez that MassMutual breached its contracts with hundreds of people who had purchased participating 20-year term life insurance from 2000 to 2004 in the Los Angeles area. Chavez filed the suit in 2010, and claimed the firm owed a total of $717,000 in dividends.
In her trial statements, the plaintiff attorney argued that MassMutual was mandated to annually determine those policies’ contributions to the company’s excess profits, or “divisible surplus,” and return their fair share in a dividend. Chavez also accused the firm of refusing to determine if the policies were entitled to dividends each year. Nevertheless, the jury said the plaintiffs failed to prove that the policies actually generated such profits.
