Quimbee logo
DMCA.com Protection Status
From our private database of 18,400+ case briefs...

Otto v. Variable Annuity Life Insurance Co.

United States Court of Appeals for the Seventh Circuit
814 F.2d 1127 (7th Cir. 1986)


Variable Annuity Life Insurance Company (VALIC) (defendant) sold fixed annuities with an interest rate of 4 percent per year for 10 years followed by a rate of 3.5 percent after 10 years. The funds were held in a separate account to be invested in mortgages and bonds. Any excess interest was to be paid at VALIC’s discretion. Beverly Otto (plaintiff) purchased a fixed annuity from VALIC in 1975 and initiated a class action in 1982 due to VALIC’s failure to disclose how excess interest would be calculated. In particular, VALIC did not disclose whether excess interest was calculated using the banding method or the new-money method. Otto also claimed that VALIC failed to disclose the method used to maximize the rate of return. The district court granted summary judgment in favor of VALIC, and Otto appealed. The court of appeals affirmed but subsequently granted Otto’s petition for a rehearing. At rehearing, VALIC asserted that it had the right to freely alter past interest bonds.

Rule of Law


Holding and Reasoning (Cudahy, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 496,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.

  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.

Here's why 496,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 18,400 briefs, keyed to 985 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Questions & Answers

Have a question about this case?

Sign up for a free 7-day trial and ask it

Sign up for a FREE 7-day trial