COLUMBUS LIFE INSURANCE COMPANY v. WILMINGTON TRUST, N.A.
2:20-cv-07959
| D.N.J. | Jul 16, 2021Background
- Columbus Life issued a $5 million life insurance policy that Wilmington alleges is a stranger-oriented life insurance (STOLI) policy; Columbus seeks a declaration that the policy is void ab initio.
- Wilmington, the policy owner and beneficiary, asserted counterclaims including negligent misrepresentation; the negligent-misrepresentation counterclaim was previously dismissed without prejudice.
- Wilmington timely moved for reconsideration, arguing the Court (1) misconstrued the factual basis for negligent misrepresentation, (2) conflated fraud and negligent-misrepresentation standards, and (3) wrongly relied on Sun Life as the benchmark date.
- The Court applied Local Civ. R. 7.1(i) standards and the three traditional grounds for reconsideration (intervening law, new evidence, or clear error/manifest injustice) and noted such motions are extraordinary and not a vehicle to reargue prior positions.
- The Court held that Wilmington failed to plausibly allege Columbus made false statements about the Policy before the New Jersey Supreme Court’s decision in Sun Life (208 A.3d 839), which Columbus’s own allegations identify as the event that rendered similar policies void ab initio.
- For these reasons, the Court denied Wilmington’s motion for reconsideration on July 16, 2021 (Judge John Michael Vazquez).
Issues
| Issue | Columbus's Argument | Wilmington's Argument | Held |
|---|---|---|---|
| Whether reconsideration of dismissal of negligent-misrepresentation counterclaim is warranted | Original dismissal was correct because Wilmington failed to plausibly allege falsity or negligent statements before Sun Life | Court overlooked factual allegations that Columbus knew the Policy was void ab initio and concealed that intent for years | Denied — Wilmington did not meet any reconsideration ground and merely reargued its prior position |
| Whether the Court misconstrued the factual basis for Wilmington’s negligent-misrepresentation claim | Counterclaim lacks factual allegations showing Columbus believed policy was void when statements were made; Sun Life is the first alleged event rendering policy void | Court misread Wilmington’s allegations that Columbus had a long-standing intent to invalidate policies and concealed it | Denied — Court found Wilmington’s pleadings conclusory and not plausibly alleging falsity prior to Sun Life |
| Whether the Court improperly imported scienter from fraud into negligent-misrepresentation analysis | Negligent-misrep requires negligence, not intent; Wilmington argues Court demanded knowledge | Court allegedly required Columbus to "know or should have known," which Wilmington says is a fraud-like standard | Denied — Court applied correct negligent-misrep standard (incorrect statement negligently made + justifiable reliance + loss) and relied on Wilmington’s own allegations for phrasing |
| Whether relying on Sun Life created an inappropriate bright-line rule | Sun Life did not change law; using it as the critical date improperly fixes falsity timing | Sun Life is irrelevant because Columbus allegedly knew earlier and concealed its intent | Denied — Under pleadings, Sun Life (June 4, 2019) is the earliest non-conclusory event making statements about validity false |
Key Cases Cited
- Sun Life Assurance Company of Canada v. Wells Fargo Bank, N.A., 208 A.3d 839 (N.J. 2019) (held STOLI policies are void ab initio)
- Masone v. Levine, 887 A.2d 1191 (N.J. Super. Ct. App. Div. 2005) (elements of negligent misrepresentation require an incorrect statement negligently made, justifiable reliance, and loss)
- NL Indus., Inc. v. Commercial Union Ins. Co., 935 F. Supp. 513 (D.N.J. 1996) (motions for reconsideration are extraordinary and granted sparingly)
- Bowers v. NCAA, 130 F. Supp. 2d 610 (D.N.J. 2001) (reconsideration is not a vehicle to raise matters that could have been raised earlier)
- Florham Park Chevron, Inc. v. Chevron U.S.A., 680 F. Supp. 159 (D.N.J. 1988) (repetition of argument or disagreement with the court is insufficient for reconsideration)
- Caspersen ex rel. Samuel M.W. Caspersen Dynasty Tr. v. Oring, 441 F. Supp. 3d 23 (D.N.J. 2020) (court referenced negligent-misrepresentation standard relied upon by parties)