### In the 

# United States Court of Appeals For the Seventh Circuit

____________________ No. 15

- 3446
S AMARON C ORP

. , doing business as Troyer Products
, Plaintiff

- Appellant ,

v.
U NITED OF O MAHA L IFE I NSURANCE C OMPANY , Defendant

- Appellee

.

____________________ Appeal from the United States District Court for the Northern District of Indiana
, South Bend Division. No. 3:12

- CV

- 397

— Rudy Lozano
, Judge

.

____________________
A RGUED A PRIL 1, 2016

— D ECIDED M AY 17, 2016

____________________

Before P OSNER , E ASTERBROOK , and W ILLIAMS , Circuit Judges

. E ASTERBROOK , Circuit Judge

. In 2003 Troyer Products (formally Samaron Corp.), a closely held corporation, pu rchased a policy of insurance on the life of Ron Clark, then its President. Dave Buck, its COO, was the beneficiary. Clark
, who approved the transaction, thought that the death benefit of $1 million would enable Buck to buy out his stock , so that the money would end up in the hands of Clark’s family2 No. 15

- 3446

while Buck would come to control the company. United of Omaha Life Insu rance Company initially wrote the policy that way, but it was soon amended so that the death benefit would go to Troy er

. ( O ne side says that United’s underwri ting department insisted on this change, the other that tax considerations dominated; the reason d oes not matter now.) Troyer did not undertake by contract to turn t he death ben efit over to Buck, but both Buck and Ron Clark’s wife Darlene

re call that this was the plan.
In 2005 Clark retire d and sold a controlling interest to Dan Holtz, who became the f irm’s new President . Buck r emained as COO. After this transaction Holtz owned 61% of the stock and Buck the rest. As part of his purchase, Holtz received a copy of the policy, including the amendment naming Troyer as the beneficiary. Ano ther copy was in Troyer’s files

. Clark died in November 2011. Buck told Holtz that Troyer was the beneficiary, but when Holtz called Uni ted he was told that the money would be paid to Buck

— and it was. When Buck tried to use the proceeds to buy Holtz’s stock, he was removed from the board and soon quit as COO . Troyer filed this suit under the diversity jurisdiction
, contending that the benefits should have been paid to it. United, not wanting to pay $2 million on a $1 million policy, has resisted despite conceding that Troye r was indeed the policy’s beneficiary. What had gone wrong came out during discovery. Uni ted makes electronic copies of its policies. Once policies have been issued, its staff normally works from the electronic file

. Each document receives a code , making i t easier for the staff to know what to look for. As we have mentioned, the first version of the policy named Buck as the beneficiary, but thatNo. 15

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was changed by amendment. Whoever added the amen dment to the electron ic file misclassified it as a “Post

- Issue Re quirement” rather than as a change of beneficiary. When Holtz called after Clark’s death, one of United’s employees looked at the electronic copy of the policy, saw Buck as the beneficiary, and looked for the code denoting an amendment changing the benefic iary. Not finding one, he told Holtz that the death benefit would be paid to Buck. In discovery, this employee testified that it had not occurred to him to look at a document tagged as a “Post

- Issue Requirement.” But someone eventual ly went through the who le file and found the am endment, which led to this suit. United acknowledges its error in paying Buck. But it does not acknowledge liability. It maintains that Troyer knew the truth and allowed Buck to claim the mon ey , carr ying out the plan that Clark and Buck had devised in 2003. United observes that Troyer’s corporate files contain a copy of the amendment, and Holtz’s personal files contain anot her. It’s their own fault for not looking, United maintains. And United adds that
, at a meeting of Troyer’s boar d soon after Clark’s death, the company chose to allow Buck to r eceive the death bene fit. After naming new members to the board, however, Holtz caused it to adopt new minutes reci ting that no such decision had been made. Believing the recording of the meet ing to have been lost, the district court denied United’s motion for summary judgment and set the case for trial. 2014 U.S. Dist. L EXIS 13765 6 (N.D. Ind. Sept. 29, 2014). Shortly after the court i ssued this opinion, however, Troyer admitted that it had fou nd the recording a month earlier and turned it over to United ’s law yers . The judge listened to the recording and4 No. 15

- 3446

found it dis positive

. At the meeting Buck repeatedly told Holtz that Troyer was the policy’s bene ficiary, yet with this knowledge the board unanimously opted to allow Buck to receive the money . The judge found that the minutes of this meeting had been falsified b y Holtz’s new appointees and that Holtz’s fervent denial that he knew the policy’s true beneficiary is conc lusively refuted by the recording. The judge granted United’s motion to reconsider and entered summary judgment in its favor. Troyer’s appellate brief insists that Holtz was misled by United’s error and had no reason to think that Troyer was the policy’s b eneficiary. We agree with the district court that this proposition is untenable in light of the statements Buck made at the board meeting. Buck told Holtz to his face that Troyer was the policy’s beneficiary. He even pulled out a cop y of the policy : “Um, b eneficiary is on page 8. [Flipping through papers.] Um, let me oh , right here. [Reading] ‘This policy is issued with the owner and primary beneficiary as Troyer Products, employer.’” And if that were not enough, Troyer’s files contained a cop y, as did Holt z’s personal files . Let us suppose, as Holtz asserts, that he refused to believe what Buck was saying and thought it unnecessary to look at the policy, in light of what United’s staff had said . Still Troyer (the corporation) knew the truth, because its pri ncipal officers in 2003 (Clark and Buck) had negotiated the policy and were well aware of its contents. What the President and CO O knew, Troyer k new. There is no such thing as corporate amnesia. Prime Eagle Group Ltd. v. Steel Dynamics, Inc

. , 614 F.3d 375 (7th Cir. 2010). Turnover in a corporation’s management does not wipe out the corporation’s fund of knowledge. That Holtz did notNo. 15

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know something does not mean that Troyer the corporation was ignorant

. The fact remains that United paid the death benefit to the wrong party. United contends that Troyer waived its right to the money , and the district judge agreed. There are at least two potential ways to contest that conclusion

— and Troyer does not pursue either of them. The first would be to emphasize that, alt hough the board discussed the issue, it did not adopt a resolution. In Indiana, whose law controls this litigation, board s act by majority
vote

. Ind. Code §23

- 1

- 34

- 5(c) (vote at meeting); cf. Ind. Code §23

- 1

- 34

- 2 (decision without a meeting based on writte n consent of all directors) . Apparently Troyer conducted bus iness informally ; it operated by consensus (at least until Holtz used his 61% interest to get rid of Buck). The district judge wrote that Indiana allows corporate boards to make binding decisions by consensus, without voting on resol utions. The judge did not cite anything for this proposi tion, and our own search did not turn anything up. But Troyer does not contest this aspect of the district court’s analysis. Pages 27

– 28 of Troyer ’ s brief mention in passing that the board did not adopt a resolution waiving the firm’s right to the money, but the brief does not contain any legal argument about the subject. Any potential challenge to this aspect of the district court’s disposition has been forfeited. The second way would start with the observation that the board did not choose between allowing the money to go directly to Buck and having it paid to the firm and then passed on to Buck (provided that it stayed off the books and did not cau se heartburn for the firm’s accountant). But Tro yer does not make anything of this either. It does not contend6 No. 15

- 3446

that direct payment to Buck had adverse tax consequences for the firm. Nor has a tax collector or creditor appeared to argue that, had the mone y passed through the firm’s coff ers, it would have had first dibs. So the board’s failure to decide exactly how the money would end up in Buck’s hands does
not matter. From beginning to end, Troyer’s brief rests on the asse rtions that Holtz was misled by Uni ted and did not know that Troyer was the policy’s beneficiary. That approach commits the legal error of confusing Holtz with Troyer; the corpor ation’s knowledge, not Holtz’s, is what matters. And it co mmits the factual error of ignoring what happened at th e board meeting, where Buck made sure that everyone present knew that Troyer was legally entitled to the proceeds. If this left Troyer the corporation, or Holtz personally, in a state of confusion, either could have had a lawyer investigate and clear thing s up. Instead the board elected to let the money go to Buck, and we have explained why the route it took to get there does not matter.
A FFIRMED