Opinions of the United
2002 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


4-9-2002

Franklin Life Ins Co v. Bendas
Precedential or Non-Precedential:

Docket No. 01-2819




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Recommended Citation
"Franklin Life Ins Co v. Bendas" (2002). 2002 Decisions. Paper 261.
http://digitalcommons.law.villanova.edu/thirdcircuit_2002/261


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                                                NOT PRECEDENTIAL

                 UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT
                           __________

                          No. 01-2819
                           __________

                FRANKLIN LIFE INSURANCE COMPANY,

                                v.

                     ROBERT A. BENDAS, SR.;
            BOARD OF COMMISSIONERS, of the Township
                     of Coal, Pennsylvania,

                               Robert A. Bendas,
                                              Appellant
                           __________

        ON APPEAL FROM THE UNITED STATES DISTRICT COURT
            FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
                   D.C. Civil No. 00-cv-00417
       Magistrate Judge: The Honorable Thomas M. Blewitt
                           __________

           Submitted Under Third Circuit LAR 34.1(a)
                         April 5, 2002
                           __________

      Before: SLOVITER, BARRY, and ALARCON, Circuit Judges

                (Opinion Filed: April 9, 2002   )
                          ____________

                            OPINION
                          ____________


BARRY, Circuit Judge
     This appeal asks us to decide whether a former police officer is entitled to the
proceeds of an annuity when he did not own the life insurance policies that he used as
consideration to obtain the purported annuity contract. The Magistrate Judge determined
that the annuity contract lacked consideration and granted summary judgment on behalf
of appellee, The Franklin Life Insurance Company ("Franklin"). We have jurisdiction
pursuant to 28 U.S.C. 1291 and will affirm.
     The parties are familiar with the facts of the underlying dispute and we will,
accordingly, discuss them only as necessary to resolve the issue presented.
     Appellant, Robert A. Bendas, Sr., was a full-time police officer for the Township
of Coal, Pennsylvania. The Coal Township Board of Commissioners purchased, and
Coal consequently owned, three life insurance policies from Franklin on behalf of
Bendas. Coal was responsible for paying the premiums of these policies. Ultimately, the
proceeds of these policies, like the proceeds of policies purchased for other Coal police
officers, were intended to be used as part of the Police Retirement Plan.
     On October 19, 1999, after the policies had reached their "paid-in-full" status,
Bendas requested that Franklin pay him the proceeds of the policies. On October 23,
1999, Franklin informed Bendas that the approximate cash surrender value of the policies
was $211,335.04, and explained how Bendas could annuitize the policies, including an
instruction that two officers of the Coal Board of Commissioners must sign the
annuitization form.
     On November 5, 1999, Bendas completed the annuitization paper work, including
the signatures of two officers of the Board. On February 7, 2000, Franklin made
payments on the annuity contract for the months of January and February to Bendas in the
amount of $2,722.50. In exchange for this annuity contract, Franklin received the
proceeds of the policies, calculated, with interest, at $217,799.72. Shortly thereafter,
Franklin was contacted by the Board, which claimed Coal to be the legal owner of the
policies and that the officers who had signed the relevant form had done so in violation of
Pennsylvania Municipal Law, which requires the approval of the majority of the Board (3
of 5) at a public meeting.
     In light of the disputed claim to ownership of the policies, Franklin initiated an
interpleader action on March 9, 2000 and ceased making payments to Bendas. In
response, Bendas claimed that Franklin had breached its annuity contract and that he was
entitled to the payments under that agreement. After the Magistrate Judge denied
Franklin’s motion to interplead the funds, the parties cross-moved for summary judgment.
     The Magistrate Judge granted summary judgment for Franklin because the annuity
contract lacked consideration since Bendas did not own the policies. He reasoned that
"there is no dispute that Bendas never owned those policies or that money. It is actually
mind-boggling how Bendas could argue before this court that he ’paid’ for the annuity
when the money used to pay for that annuity was owned by the Coal Township . . . ."
App. 156. Our review of the Magistrate Judge’s orders of June 7 and June 28, 2001 is
plenary.
     On appeal, Bendas contends that the Magistrate Judge erred because Bendas filled
out all of the requisite paper work correctly, obtained signatures from officers of the
Board, and that Franklin, "acting on the signatures by the two Township Commissioners,
freely and willingly released the cash value for the benefit of Appellant Bendas."
Appellant’s Br. at 7. Significantly, Bendas does not claim that he owned the policies in
question, nor does he dispute the fact that Franklin is obligated to pay the Board
$217,799.72 because Coal is the legal owner. Instead, Bendas claims that he is still
entitled to have the annuity contract enforced because he thought he had done what was
necessary to acquire ownership of the policies, and that because of Franklin’s "legal
misjudgment" it is simply Franklin’s "tough luck" if it owes an additional $217,799.72 to
the town. Appellant’s Br. at 18 n.2; Appellant’s Reply Br. at 5, 6.
     We need not burden this Opinion by discussing and rejecting each of appellant’s
various contentions because the salient issue is the undisputed fact that the Coal
Township is the owner of the insurance policies. Put simply, Bendas cannot prevail
because he tried to form a contract by offering something he did not own, which is to say
that he offered nothing as consideration. See Hoffman v. Bankers Trust Co., 

, 318-19 (M.D. Pa. 1995). The Magistrate Judge put it best: "Bendas places great
emphasis on the fact that he meticulously complied with all of the requirements set forth
by Franklin in completing the forms necessary to transfer the life insurance policies into
the annuity contract. However, he fails to allege how he became entitled to those
policies. To allow Bendas to prevail on his claim would be no different than allowing a
tenant who sold a building that he did not own to collect payment from the hoodwinked
buyer simply because all the closing documents were properly completed." App. 156.
     For the foregoing reasons, we will affirm the orders of the Magistrate Judge
granting Franklin’s motion for summary judgment and ordering Bendas to return the
proceeds he received from Franklin.

TO THE CLERK OF THE COURT:
     Kindly file the foregoing Opinion.

                                   /s/ Maryanne Trump Barry
                                   Circuit Judge