Court Dismisses Fiduciary Breach Claim in COLI Dispute

July 19, 2007 ( - The 5th U.S. Circuit Court of Appeals has determined that an employee of Camelot Music Inc. cannot pursue claims against an insurance company and other defendants for administering a company-owned life insurance policy (COLI) that was established using personal information about him provided by his employer.

In affirming a lower court decision to dismiss David Meadows’ claims of identity misappropriation under Texas law, the appellate court said Meadows did not show that the defendants received financial gain due to the misappropriation of his identity from Camelot. In addition, according to the court opinion, Meadows failed to show the COLI policy resulted in a decrease in the value of his identity as it did not prevent him from obtaining any life insurance on his own.

The appellate panel dismissed Meadows’  claim that defendants knowingly participated in a breach of fiduciary duty, saying he did not first establish proof that his employer owed him any fiduciary duty not to disclose personal information about his identity to the defendants. The court pointed out that the lower court’s denial of Meadows’ prayer for equitable relief was appropriate since his other claims were dismissed – indicating he was not owed any damages.

Meadows sued Hartford Life Insurance Co., Hartford Life Private Placement, L.L.C., and the Newport Group, Inc. after learning that Hartford underwrote, administered, and maintained a life insurance policy in his name using his name, date of birth, state of residence, and social security number as provided by his employer. Meadows claimed Hartford received financial gain from his identity in the form of premiums and also that Hartford used his personal information online to conduct “death sweeps.”

For himself and a putative class of former Camelot employees insured by COLI policies, Meadows set forth four theories of recovery, the opinion said:

  • misappropriation of his name and identity;
  • knowing participation in a breach of fiduciary duty;
  • violation of the Theft Liability Act; and
  • civil conspiracy.

The opinion in Meadows v. Hartford Life Insurance Company is  here .