Citigroup Denied Arbitration in Life Insurance Dispute
Saturday, September, 6, 2014
A judge in the Western District of the State of Pennsylvania has denied a subsidiary of Citigroup their bid to compel arbitration in a dispute over a life insurance policy. U.S. Magistrate Judge Robert C. Mitchell found that the arbitration clauses cited by Citigroup in the matter do not directly apply to the specific life insurance policy cited in the dispute, and thus cannot be applied.
The suit was brought by Karen Bucher who, along with her late husband, took out a mortgage with CitiFinancial in 2005. CitiFinancial advised the couple to also take out a life insurance policy on her husband, Clarence, which the Bucher's did in the amount of $100,000. The Buchers continued to work with CitiFinancial, taking out a second mortgage in 2007 as well as buying other financial products. CitiFinancial also advised the couple not to refinance their 2005 mortgage because it would cause them to lose the life insurance policy they had purchased.
When Clarence Bucher passed away in 2013, Karen discovered the insurance policy had been canceled without her knowledge. She filed suit, and the defendants moved to compel arbitration, citing binding arbitration agreements in several of the loans and other products purchased. However, since the life insurance policy itself did not include such language, the motions have been denied and Mrs. Bucher is free to pursue her suit in court. The court found that binding arbitration agreements must be specifically and overly included in the actual contract under dispute, not referencing other notes or documents.