GWG DLP Funding V, LLC v. PHL Variable Insurance Co., 54 F.4th 1029

Background

PHL issued a life-insurance policy on Barry Keller with a $500,000 death benefit and a contractual death‑benefit guarantee that terminates if a third party without an insurable interest becomes owner/beneficiary.
GWG became policyowner/beneficiary and transferred those rights to Wells Fargo in Sept. 2020; PHL informed Wells Fargo the guarantee terminated and additional premiums were required to avoid lapse.
PHL alleges it sent two default/lapse notices to Wells Fargo; plaintiffs say they did not receive them and made no additional premium payments, so PHL terminated the policy.
In February 2021 parties exchanged emails negotiating reinstatement; plaintiffs accepted terms by email on Feb. 5. PHL sent a longer draft agreement requiring, inter alia, a warranty that the insured was alive as of the agreement’s Effective Date (Feb. 24).
Plaintiffs signed and paid Feb. 26; on Mar. 1 the insured died; PHL refused to sign the draft. Plaintiffs sued for breach of contract, breach of the covenant of good faith and fair dealing, and declaratory relief; the district court dismissed with prejudice. The Eighth Circuit affirmed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1. Did the Feb. email exchange create an enforceable contract to reinstate the policy?	Plaintiffs: their Feb. 5 acceptance bound the parties and formed a contract to reinstate.	PHL: the emails left essential terms open (notably a warranty/date that the insured be alive) and showed no intent to be bound.	Held: No contract; essential term (alive‑as‑of date/warranty) missing and future‑tense language shows no intent to be bound.
2. Did PHL breach the implied covenant of good faith and fair dealing?	Plaintiffs: PHL negotiated reinstatement then refused to honor it, acting in bad faith.	PHL: No enforceable contract existed; even if it did, plaintiffs alleged no dishonest motive.	Held: Claim fails—no contract antecedent; and plaintiffs alleged no dishonest purpose (bad faith).
3. Are plaintiffs entitled to a declaratory judgment that PHL wrongfully terminated the policy?	Plaintiffs: policy termination was improper because they didn’t owe additional premiums and received no proper notice.	PHL: termination was lawful after transfer terminated the guarantee; plaintiffs didn’t plead payment compliance or insurable‑interest facts.	Held: No declaratory relief; plaintiffs pleaded only conclusions and failed to allege facts showing wrongful termination.
4. Was dismissal with prejudice and denial of leave to amend improper?	Plaintiffs: they alternatively sought leave to amend if claims were deficient.	PHL: plaintiffs failed to follow Local Rule 15.1 and did not explain how amendment would cure defects.	Held: No abuse of discretion—plaintiffs did not show how amendment would save claims and did not comply with local rules.

Key Cases Cited

Fowler v. Weiss, 546 A.2d 321 (Conn. App. Ct. 1988) (factors for intent to be legally bound prior to formal contract)
Geary v. Wentworth Labs., Inc., 760 A.2d 969 (Conn. App. Ct. 2000) (if essential matters remain open, contract is incomplete)
Squillante v. Capital Region Dev. Auth., 266 A.3d 940 (Conn. App. Ct. 2021) (agreement to agree versus enforceable contract when essential terms unresolved)
Willow Funding Co. v. Grencom Assocs., 779 A.2d 174 (Conn. App. Ct. 2001) (determination of essential terms is fact‑specific)
Roth v. Garcia Marquez, 942 F.2d 617 (9th Cir. 1991) (affirming dismissal where essential terms were missing)
De La Concha of Hartford, Inc. v. Aetna Life Ins., 849 A.2d 382 (Conn. 2004) (implied covenant of good faith and fair dealing in contracts)
Hoskins v. Titan Value Equity Grp., Inc., 749 A.2d 1144 (Conn. 2000) (existence of contract is necessary antecedent for implied‑covenant claim)
Geysen v. Securitas Sec. Servs., 142 A.3d 227 (Conn. 2016) (bad‑faith breach requires dishonest purpose)
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility pleading standard under Rule 8)