KATHERINE B. FORREST, District Judge.
Plaintiff brings this action against individual defendant Ernest Madera
Before the Court are motions for summary judgment by both insurance companies on the grounds of statute of limitations, failure to state a claim, and failure to raise a triable issue. Plaintiff's claims are frivolous in the extreme. For the reasons stated below, defendants' motions are GRANTED.
In the late 1990s and early 2000s, plaintiff Albert Nassar owned a drug wholesale business. (Lincoln's Local R. 56.1 Stmt. of Undisputed Facts ("Lincoln 56.1") ¶ 13; John Hancock Local R. 56.1 Stmt. of Undisputed Facts ("JH 56.1") ¶ 19, 21.) Upon plaintiff's request, his personal friend Ernest Madera—who plaintiff understood was an independent broker for insurance companies—and other individuals ("Agents") who worked with Madera began assisting plaintiff with obtaining life insurance policies that would bring him, inter alia, investment income and tax benefits. (Am. Compl. ¶¶ 27-28.) Plaintiff alleges that the Agents and Madera advised him that purchasing a variable life insurance policy would result in tax deductions and was a good investment. (Am. Compl. ¶¶ 27-35.) On their advice, plaintiff applied for the two life insurance policies that are the subject of this litigation. (Am. Compl. ¶¶ 33, 54.) Plaintiff applied for both insurance policies himself and knew the face amounts of insurance coverage he was applying for. (Decl. of David L. Moses ("Moses Decl."), ECF No. 64, Ex. A, ("Pl.'s Dep. Tr.") at 169.)
On December 23, 1999, plaintiff submitted an application to the Manufacturers Life Insurance Company of America ("Manulife") for a Venture VUL life insurance policy in the face amount of $6,597,892. (JH 56.1 ¶ 29.)
In his application, plaintiff disclosed that he had a personal net worth of $3.5 million, total assets of $5 million, and gross annual earned income of $3 million. He also submitted individual tax returns that reflected an adjusted gross income of $3.3 million in 2000 and $4.6 million in 1999.
Although plaintiff alleges that John Hancock's policy requires that an applicant for insurance must have an income of at least $100,000 and a net worth of $1 million, (Am. Compl. ¶ 99), there was no such policy at John Hancock.
In December 2001, two years after he applied for the Manulife policy, plaintiff applied for another life insurance policy, this time from Lincoln, with a death benefit of $50 million. (Lincoln 56.1 ¶¶ 1, 2.)
In his application, plaintiff indicated that he intended to keep the $16 million of prior life insurance coverage in place. (Lincoln 56.1 ¶¶ 5, 20.) Along with his application, plaintiff provided Lincoln with his 1999 and 2000 tax returns, which, as discussed above, showed annual incomes of $4.6 and $3.3 million. (Lincoln 56.1 ¶ 17.) Plaintiff also stated in his application that he had a net worth of more than $16 million and that he expected his income in 2001 to be $4.5 million. (Lincoln 56.1 ¶¶ 18, 19.)
Lincoln's 2001-2002 underwriting guidelines allowed for face values of up to 14 times annual income for family protection for someone plaintiff's age at the time of application. (Lincoln 56.1 ¶ 22; Decl. of Jordan Carreira, ECF No. 64-12, ("Carreira Decl.") ¶¶ 7-9; Financial Guidelines, Moses Decl. Ex. F.) It also allowed additional insurance limits to protect estate growth for retirement planning: specifically, the formula for estate growth is a 6% growth rate for the estate, carried over the lesser of 25 years or 3/4ths of the applicant's life expectancy, multiplied by a 55% assumed estate tax rate. (Lincoln 56.1 ¶¶ 25, 26; Carreira Decl. ¶¶ 7-9; Lincoln Financial Group Financial Guidelines, ECF No. 64-15.) On January 25, 2002, Lincoln accepted plaintiff's application and issued him a life insurance policy for $50 million. (Lincoln 56.1 ¶¶ 32, 33.)
Under the terms of the Manulife policy, plaintiff was not required to make regular premium payments on a fixed schedule. So long as the amount paid covered the monthly deductions and the net cash surrender value of the policy is greater than zero, the policy would remain in force. (JH 56.1 ¶ 42.) Any premium payments are credited to the policy's value. (JH 56.1 ¶ 43.) Plaintiff's Manulife policy had a planned annual premium of $333,333 for the first three years. (Am Compl. ¶ 40; Pengelley Decl. Ex. 1, at JH0000072.) Plaintiff alleges that on Madera's advice, he paid premiums of $83,333 in 2000, 2001, and 2002. (Am. Compl. ¶ 42; JH 56.1 ¶¶ 55-56.)
In July 2003, plaintiff signed and submitted a request to Manulife to reduce the face amount of his policy from the original $6,597,897 to $1.75 million. (JH 56.1 ¶ 57; Pengelley Decl. Ex. 1, at JH00000083-87.) Plaintiff did so because he did not like the return and did not want to keep putting money into the policy. (JH 56.1 ¶ 58.)
Plaintiff's Lincoln policy had annual premium payments of $875,000 for the first two years. (Am. Compl. ¶ 57; Lincoln 56.1 ¶ 39.) Plaintiff paid the first annual premium in 2002. He elected not to pay the annual premium in 2003 because he was allegedly dissatisfied with the performance of the investment. (Lincoln 56.1 ¶ 40; Pl.'s Dep. Tr. 190-200.) He did not make any more premium payments after the initial premium payment in 2002. (Pl.'s Dep. Tr. 190.)
John Hancock asserts that throughout the life of the Manulife policy, Manulife and its successor John Hancock regularly sent Annual Policy Statements to plaintiff. (JH 56.1 ¶ 60; Merkl Decl. Ex. 9.) Plaintiff acknowledges that he reviewed at least some of these statements in 2005. (JH 56.1 ¶ 61.)
On October 16, 2012, plaintiff took out a $160,000 loan from the Manulife policy. As of January 28, 2014, the loan balance was $168,296.50. (JH 56.1 ¶¶ 62-63.) The Manulife policy is still in force and would provide a gross death benefit of $1.75 million. (JH 56.1 ¶ 63.)
Plaintiff did not make any additional payments on the Lincoln policy, and the policy lapsed in 2012. (JH 56.1 ¶ 55.) It is not clear when Lincoln sent plaintiff statements related to his insurance policy. However, plaintiff acknowledges that he did not make the second annual premium payment on the Lincoln policy because of the performance in the first year. (Pl.'s Lincoln 56.1 Counterstatement ¶ 40.) In addition, in 2003, plaintiff learned through his divorce lawyer that Madera and the Agents had received large commissions in connection with the sale of the Lincoln policy. (JH 56.1 ¶ 38.)
Plaintiff alleges he began receiving past-due notices from both Lincoln and John Hancock in September 2012. (Am. Compl. ¶ 64.) In the Lincoln notice dated August 30, 2012, plaintiff was encouraged to apply for reinstatement. (ECF No. 64-32.)
Plaintiff originally filed his complaint in state court on August 22, 2014, Defendant John Hancock removed the action to federal court based on diversity jurisdiction. (ECF No. 1.) Plaintiff subsequently amended his complaint on December 15, 2014. (ECF No. 13.) On February 9, 2016, plaintiff informed the Court that defendant Madera had filed a petition for bankruptcy in the Southern District of Florida on December 10, 2015.
"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The moving party bears the initial burden of demonstrating "the absence of a genuine issue of material fact."
In making a determination on summary judgment, the court must "construe all evidence in the light most favorable to the nonmoving party, drawing all inferences and resolving all ambiguities in its favor."
Only disputes relating to material facts—
Plaintiff was a resident of Florida in 1999, when he applied for the Manulife Policy. (Am. Compl. 29.) He moved to New York in 2001, when he applied for the Lincoln Policy. (Lincoln 56.1 ¶ 37; Pl.'s Dep. Tr. (ECF No. 64-3), at 199, 209.)
In determining which state's law applies to plaintiff's claims, we first look to the choice-of-law rules of New York, where this Court sits.
Only the Sixth Cause of Action in plaintiff's Amended Complaint is asserted against the insurer defendants. (Am. Compl. ¶¶ 97-101; Pl.'s JH 56.1 Counterstatement ¶ 66.) The Amended Complaint does not identify a legal claim for this cause of action. (
As a threshold matter, there is neither any allegation in the Amended Complaint nor any record evidence that the insurance policies issued to plaintiff were "false products." Furthermore, there is also no allegation in the Amended Complaint nor any record evidence that the insurance companies made any misrepresentations to plaintiff as to the policies; indeed, the bulk of Plaintiff's Amended Complaint contains allegations that Madera and the Agents—not the insurer defendants—misrepresented the nature of the policies. (
As discussed below, plaintiff's claim against the two insurers fail as a matter of law for several reasons.
Plaintiff's theory of liability against the insurer defendants fails because plaintiff has not alleged that the insurer defendants had a duty of care to him in the form of following their internal underwriting guidelines. "The existence of a duty is thus a sine qua non of a negligence claim: In the absence of a duty, as a matter of law, no liability can ensue."
Furthermore, plaintiff has not pointed to any legal support for the proposition that underwriting policies of insurers in and of themselves create legal duties to applicants.
To adequately plead a claim of negligence, a plaintiff must allege that he suffered injury as a result of a breach of duty.
Furthermore, as to the Manulife policy, plaintiff paid premiums in amounts smaller than the planned premium he had applied for, and those premiums provide the basis for an active life insurance policy that protects him today. After a reduction of the face value of the policy in 2003, plaintiff's Manulife policy provides death benefit of $1.75 million.
Plaintiff's claim against Manulife is also barred by a contractual agreement signed in February 2000 whereby plaintiff agreed to limit Manulife/John Hancock's legal obligations to those arising out of the insurance contract. (JH 56.1 ¶ 34; Merkl Decl. Ex. 5.) Plaintiff does not dispute entering the agreement and the release clause, and does not oppose this basis for dismissal.
Plaintiff's claim against the insurer defendants is also time-barred. Under New York law, a negligence claim has a three-year statute of limitations. N.Y.C.P.L.R. 214(4);
Plaintiff first filed this action on August 22, 2014. Thus, any claim against the insurers must have accrued not later than August 22, 2011 under New York law and August 22, 2010 under Florida law. Plaintiff's claim against the insurer defendants, however, accrued many years prior to that: he applied for the policies in 1999 and 2001; the policies were approved and active as of 2000 and 2002; and he made active decisions related to coverage and premiums on the policies in 2003.
Plaintiff appears to argue that because other individuals—namely, individual defendant Madera and the Agents—made misrepresentations regarding the insurance policies, a six-year statute of limitations should apply and that the cause of action should accrue from the date he became aware of those individuals' misrepresentations.
Notwithstanding plaintiff's failures to plead a claim against either insurance defendant as a matter of law and the untimeliness of his claims, plaintiff also cannot survive summary judgment because he has failed to raise a triable issue. Although plaintiff's case against these defendants rests on the allegation that they issued him insurance policies in violation of their underwriting requirements, plaintiff has failed to adduce any evidence suggesting that actually occurred. On the contrary, insurer defendants have shown that they abided by their internal underwriting policies in issuing the respective policies to plaintiff.
Plaintiff's core assertion appears to be that the insurers violated a policy that applicants have a minimum income of $100,000 and a net worth of $1 million. (Am. Compl. 99.) Not only is there no record evidence that the insurer defendants had such policies, but plaintiff would have also met those minimums when he applied for coverage because his annual income was over $3 million in the years prior to his application and he had a net worth of about $16 million. (Pl.'s JH 56.1 Counterstatement ¶ 30.)
As to the actual underwriting policies that defendants had in place at the time of plaintiff's application, plaintiff does not allege any specific violations. There is also no record evidence supporting any violation. For example, Lincoln has pointed to uncontroverted evidence of its underwriting guidelines in the 2001-2002 period, when plaintiff applied for his $50 million Lincoln policy. The Lincoln guidelines for an individual with plaintiff's characteristics was 14 times annual income; additional insurance could also be sold to an individual for estate planning purposes. (Lincoln 56.1 ¶¶ 22-26.) Plaintiff acknowledges that his annual income at the time was between $3.3 and $4.6 million, which would result in an initial guidelines limit of about $47 million and $63 million. For estate planning purposes, plaintiff's $16 million net worth would result in an additional guidelines limit of about $40 million in coverage. (Lincoln 56.1 ¶¶ 22-28.) Thus, Lincoln's underwriting policies would have limited plaintiff's policy face value to well over $80 million. Plaintiff's $50 million insurance policy—even if combined with his then-existing $16 million in prior coverage—would have been well within Lincoln's guidelines. Plaintiff fails to point to any record evidence to put any of these facts in dispute.
As to Manulife, plaintiff purchased a policy with a face value of $6,597,892. (JH 56.1 ¶ 29.) While the record evidence is not as specific as to the underwriting guidelines set forth by Manulife at the time of plaintiff's application, there is no basis for the suggestion that Manulife exceeded any underwriting guidelines in issuing the policy to plaintiff, whose annual income was at least half of the face value of the policy at the time he applied.
For the reasons stated above, John Hancock and Lincoln's motions for summary judgment are GRANTED. The Clerk of Court is directed to terminate the motions at ECF Nos. 61 & 67 and to terminate John Hancock and Lincoln as defendants.
The action remains STAYED as to defendant Madera.
SO ORDERED.
The Court notes that in opposing summary judgment, plaintiff makes a number of statements in response to defendants' Statements of Undisputed Fact that are simply conclusory denials. For example, he states that "Mr. Nassar disputes or has no knowledge as to whether the underwriting process used in issuing the Manulife Policy to Mr. Nassar followed the correct Manulife's underwriting procedures." (Pl.'s JH 56.1 Counterstatement ¶ 36.) These statements are not supported by any record evidence and do not properly raise triable issues. Local Rule 56.1 requires that "[e]ach statement by the movant or opponent pursuant to Rule 56.1(a) and (b), including each statement controverting any statement of material fact, must be followed by citation to evidence which would be admissible, set forth as required by Fed. R. Civ. P. 56(c)." In many instances, plaintiff has not met that requirement.
Plaintiff has thus failed to specifically controvert many statements of undisputed fact asserted by defendants and has thus failed to carry his burden as to those facts.
