Professional Documents
Culture Documents
Come now defendants Transamerica Life Insurance Company (“Transamerica”) and Clark
Consulting, Inc. (“Clark”), and for their Answer to the Complaint filed against them by plaintiffs
Fifth Third Bank, an Ohio banking corporation, (“Fifth Third Ohio”) and Fifth Third Bank, a
Michigan banking corporation, (“Fifth Third Michigan” and, together with Fifth Third Ohio, “Fifth
1. The defendants admit that paragraph 1describes the claims that the plaintiffs have
asserted against the defendants, but defendants deny that they are liable to plaintiffs and therefore
2. The defendants admit that the plaintiffs invested approximately $612 million in Bank
Owned Life Insurance (“BOLI”) products, that Transamerica issued the relevant variable life
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insurance policies, and that Clark acted as an insurance broker in connection with the transactions.
Defendants state that the plaintiffs’ rights and obligations are governed by the various contracts
entered into in connection with the transactions. Further answer, defendants deny all remaining
4. The deefendants admit that the value of the plaintiffs’ investment has declined, but
they state that this is the result of investment risks that the plaintiffs knowingly assumed and the
plaintiffs’ own investment decisions. The defendants deny the remaining allegations in paragraph
4 of the Complaint.
THE PARTIES
7. The defendants are without knowledge or information sufficient to ascertain the truth
8. The defendants are without knowledge or information sufficient to ascertain the truth
THE FACTS
11. The defendants admit that, in general, the first four sentences of paragraph 11
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accurately describe the operation of BOLI products, but they deny the allegations in paragraph 11
to the extent that they purport to describe the respective roles and responsibilities of the BOLI
policyholder, the insurer and the broker. Fifth Third’s losses in this case were the result of allocation
and re-allocation decisions that it made and for which it was responsible. Further answering, the
12. The defendants admit that, in general, the first sentence of paragraph 12 accurately
describes the treatment of cash surrender value. In response to the second sentence of paragraph 12,
they state that the cash surrender value available to Fifth Third at any given time was governed by
the precise terms of the written agreements applicable to the insurance policy and stable value sub-
account that Fifth Third had elected at that time. The defendants deny the allegations in paragraph
12 to the extent that they are inconsistent with those precise terms. The defendants admit that
contractual terms required by state law are set forth in the insurance policy filed with the state.
Further, answering the defendants deny the remaining allegations in paragraph 12 of the Complaint.
13. The defendants admit that, in general, paragraph 13 accurately describes the
relationship that should exist between the investment manager of a sub-account and the owner of a
separate account/variable BOLI policy. To the extent, however, that paragraph 13 is meant to imply
that Fifth Third received performance reports on only a quarterly basis, the allegations are denied.
In fact, Fifth Third received performance reports more frequently than quarterly.
14. The defendants admit that, in general, paragraph 14 accurately describes the operation
of stable value agreements, but they state that the stable value protection available to Fifth Third at
any given time was governed by the precise terms of the Stable Value Agreement underlying the
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stable value sub-account that Fifth Third had elected at that time. Further answering, The defendants
deny the allegations in paragraph 14 to the extent that they are inconsistent with those precise terms.
15. The defendants admit that, in general, paragraph 15 accurately describes the operation
of automatic re-allocation provisions, but they deny the allegations in paragraph 15 to the extent that
they imply that any of Fifth Third’s loss was caused by a failure to recognize that an automatic re-
allocation event had occurred or a failure to fulfill any duty to notify the policyholder or investment
manager.
16. The defendants admit that Fifth Third had the ability to elect to make re-allocations.
The defendants deny the remaining allegations in paragraph 16 of the Complaint. Fifth Third’s
losses in this case were the result of allocation and re-allocation decisions that it made and for which
it was responsible.
17. The defendants are without knowledge or information sufficient to ascertain the truth
of the allegations in paragraph 17 about Fifth Third’s state of mind and therefore deny them. The
defendants admit that, in approximately 2004, Clark and Fifth Third began to discuss the possibility
of Fifth Third making a BOLI investment, that Clark was one of several brokers invited by Fifth
Third to submit a BOLI proposal, that Clark and Fifth Third had an existing business relationship,
that Clark often recommended Transamerica insurance products to prospective investors, and that,
in 2007, Clark and Transamerica became corporate affiliates. Further, answering, the defendants
18. The defendants admit that paragraph 18 summarizes some of the contents of the
offering memorandum. The defendants deny the allegations of paragraph 18 to the extent that they
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are incomplete or inconsistent with the complete contents of the documents presented to Fifth Third.
The sub-account initially elected by Fifth Third was the Stable Value Sub-account with Falcon
19. The defendants admit that paragraph 19 summarizes some of the information that was
provided to Fifth Third concerning the sub-account that it elected. The defendants deny the
allegations of paragraph 19 to the extent that they are incomplete or inconsistent with the complete
21. The defendants admit the allegations in the first sentence of paragraph 21, and deny
23. The defendants admit that paragraph 23quotes one passage from the documents
provided to Fifth Third. The defendants admit that Transamerica had certain contractual obligations
to Fifth Third as set forth in the pertinent documents. The allegation that the defendants owed
fiduciary duties to Fifth Third is a legal conclusion to which no response is required. To the extent
a response is required, the defendants deny that allegation. The defendants deny the remaining
allegations in this paragraph. Decisions to allocate and re-allocate assets between sub-accounts are
the responsibility of the BOLI purchaser. Fifth Third’s losses in this case were the result of
allocation and re-allocation decisions that it made and for which it was responsible.
24. The stable value protection applicable at any given time was specified by the terms
of the written Stable Value Agreement underlying the stable value sub-account that Fifth Third had
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elected at that time. The defendants deny the allegations in paragraph 24 of the Complaint to the
extent that they are inconsistent with those specific contractual terms.
25. In response to the first sentence of paragraph 25, the defendants admit that
Transamerica entered into the Stable Value Agreement to which reference is made. In response to
the remainder of this paragraph, the defendants state that the stable value protection applicable at any
given time was specified by the terms of the written Stable Value Agreement underlying the stable
value sub-account that Fifth Third had elected at that time. Further answering, the defendants deny
the allegations of paragraph 25 to the extent that they are inconsistent with those specific contractual
terms.
26. The defendants deny the allegations in paragraph 26 of the Complaint. If Fifth Third
had chosen to withdraw assets from the sub-account in which its assets were invested in the Summer
of 2006, it is impossible to know how Fifth Third would have chosen to re-invest those assets or how
that other investment would have performed over the full period Fifth Third held such investment
and thus whether Fifth Third would have recovered the full amount of its investment.
27. The defendants deny the allegations in paragraph 27.In the Summer of 2006, Fifth
Third, a sophisticated financial institution, made its own decision to continue to hold assets in a sub-
account that had Falcon Strategies LLC as the underlying portfolio. Fifth Third elected to reallocate
assets from the Stable Value Sub-account with Falcon Strategies LLC as the underlying portfolio
into Stable Value Sub-account B with Falcon Strategies LLC as the underlying portfolio. The stable
value protection applicable to Fifth Third’s investment at any given time was specified by the terms
of the written Stable Value Agreement underlying the sub-account that Fifth Third had elected. The
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defendants deny the allegations of paragraph 27 to the extent that they are inconsistent with those
30. The defendants deny the allegations in paragraph 30 of the Complaint. This is not a
32. The defendants deny the allegations in paragraph 32. If Fifth Third had chosen to
withdraw assets from the sub-account in which its assets were invested in the Summer of 2007, it
is impossible to know how Fifth Third would have chosen to re-invest those assets or how that other
investment would have performed over the full period Fifth Third held such investment and thus
whether Fifth Third would have recovered the full amount of its investment.
33. The defendants deny the allegations in paragraph 33. In the Summer of 2007, Fifth
Third, a sophisticated financial institution, made its own decision to continue to hold assets in a sub-
account that had Falcon Strategies LLC as the underlying portfolio. Fifth Third elected to reallocate
assets from the Stable Value Sub-account B with Falcon Strategies LLC as the underlying portfolio
into Stable Value Sub-account C with Falcon Strategies LLC as the underlying portfolio. The stable
value protection applicable to Fifth Third’s investment at any given time was specified by the terms
of the written Stable Value Agreement underlying the sub-account that Fifth Third had elected. The
defendants deny the allegations in paragraph 33 to the extent that they are inconsistent with those
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34. The defendants admit that, in September 2007, as they had done on prior occasions,
the parties discussed the terms of the Stable Value Agreement underlying the sub-account that Fifth
Third had elected. The defendants deny the remaining allegations in paragraph 34 of the Complaint.
37. The defendants admit that the value of Fifth Third’s BOLI investment has declined
and that Fifth Third has written down its BOLI investment on its balance sheet. Fifth Third’s losses
were the result of allocation and re-allocation decisions that it made and for which it was responsible.
Further answering, the defendants deny the remaining allegations in paragraph 37 of the Complaint.
42. The defendants deny the allegations in paragraph 42 of the Complaint. The defendants
performed all of their obligations, and there was no guarantee that Fifth Third’s own investment
45. The defendants repeat their responses to paragraphs 1 through 44 as though fully
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rewritten herein.
46. The defendants admit the allegations in the first sentence of paragraph 46 and deny
47. The defendants are without knowledge or information sufficient to ascertain the truth
48. The defendants deny the allegations in paragraph 48 of the Complaint. This is not a
50. The defendants deny that this is a complete or accurate summary of the parties’
agreement. The stable value protection applicable at any given time was specified by the terms of
the written Stable Value Agreement underlying the stable value sub-accounts that Fifth Third had
elected at that time. The defendants deny the allegations in paragraph 50 to the extent that they are
55. The defendants repeat their responses to paragraphs 1 through 54 as though fully
rewritten herein.
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56. The defendants deny the allegations in paragraph 56 of the Complaint.
61. The defendants repeat their responses to paragraphs 1 through 60 as though fully
rewritten herein.
66. The defendants repeat their responses to paragraphs 1 through 65 as though fully
rewritten herein.
67. The defendants are without knowledge or information sufficient to ascertain the truth
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71. The defendants deny the allegations in paragraph 71 of the Complaint.
74. The defendants repeat their responses to paragraphs 1 through 73 as though fully
rewritten herein.
75. The defendants are without knowledge or information sufficient to ascertain the truth
81. The defendants repeat their responses to paragraphs 1 through 80 as though fully
rewritten herein.
82. This paragraph states a legal conclusion to which no response is required. To the
83. This paragraph states a legal conclusion to which no response is required. To the
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84. The defendants deny the allegations in paragraph 84 of the Complaint.
87. The defendants deny any and all allegations in the Complaint not specifically
AFFIRMATIVE DEFENSES
88. The plaintiffs’ Complaint fails to state a claim upon which relief can be granted.
89. The plaintiffs’ claims are barred by their own contributory negligence.
90. The plaintiffs’ claims are barred by their own assumption of the risk.
94. The plaintiffs have failed to state a claim upon which relief can be granted.
96. The plaintiffs’ alleged damages were the direct and proximate result of the actions
or inactions of some other person, not employed by nor under the control of the defendants, and for
100. At all times, the defendants’ actions were in good faith, reasonable and justified under
the circumstances.
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101. Any award of punitive damages in this case would be violative of the United States
102. Defendants hereby give notice that they intend to rely upon and utilize any such other
affirmative defenses as may become available or apparent during the course of discovery and
therefore reserves the right pursuant to Civil Rule 15 to amend their Answer to assert and include
WHEREFORE, the defendants deny that the plaintiffs are entitled to any relief and request
that the Court enter a judgment in the defendants’ favor and award them their costs and any other
Respectfully submitted,
OF COUNSEL:
Robert J. Mathias
David Clarke, Jr.
DLA PIPER US LLP
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6225 Smith Avenue
Baltimore, MD 21209
(410) 580-3000
JURY DEMAND
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CERTIFICATE OF SERVICE
I hereby certify that on the 16th day of June 2008, a copy of the foregoing Answer was
filed electronically. Notice of this filing will be sent to all parties by operation of the Court's
electronic filing system. I further certify that copies of the foregoing Answer were served upon
the following by ordinary US mail:
Peter E. Calamari
Quinn Emanuel Urquhart Oliver & Hedges, LLP
51 Madison Avenue, 22nd Floor
New York, New York 10010
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