PHT Holding I LLC v. ReliaStar Life Insurance Company
0:18-cv-02863
| D. Minnesota | Mar 29, 2022Background
- Plaintiffs (Advance Trust & Life Escrow Services, LTA "ATLES" and Alice Curtis) sue ReliaStar for breach of standardized universal life (UL) insurance contracts, claiming (1) COI charges were not determined based on ReliaStar’s expected future mortality experience (EFME) and (2) waiver-rider charges exceeded contract rates.
- Relevant policy language states COI "will be based on our expected future mortality experience" and that rates will be "determined by us from time to time." ReliaStar has not redetermined COI scales for the challenged forms in ~20 years.
- ReliaStar contends its rates reflect EFME, that "based on" is nonexclusive, and that Curtis’s claims are barred by a prior nationwide Alten settlement releasing related claims.
- ATLES owns the Gutierrez policy at issue as securities intermediary for Life Partners; Curtis surrendered her policy in 2019. ReliaStar also contends ATLES lacks standing and the rider claim is time-barred or barred by laches.
- District Court denied ReliaStar’s motion for summary judgment (COI, Alten preclusion, standing, rider laches/limitations) and certified nationwide COI and Rider classes, appointing ATLES and Curtis as class representatives and Susman Godfrey as class counsel.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether COI clause requiring rates be "based on" EFME mandates exclusivity or is ambiguous | "Based on" can reasonably mean exclusively based on EFME or at least requires consideration of EFME; extrinsic evidence shows EFME improved while rates stayed flat | "Based on" is nonexclusive in plain meaning and insurance practice; insurer may consider multiple factors and need not reset scales annually | Court: "based on" is reasonably susceptible to Plaintiffs' reading (ambiguous); genuine factual disputes exist about whether ReliaStar ignored EFME — summary judgment denied |
| Whether the Alten settlement precludes Curtis’s claims | Curtis’s disputed COI deductions arose after Alten or were not clearly released; record unclear which allegations Alten covered | Alten released claims related to crediting interest and COI charges; Curtis was in Alten class | Court: Record unclear about scope/releases; summary judgment improper — preclusion not resolved now |
| ATLES’s standing to sue as owner/securities intermediary | ATLES owns the policy and has a cognizable contractual injury as securities intermediary for Life Partners | ATLES lacks economic stake; interest in cash value is hypothetical and it is only an escrow agent | Court: ATLES has standing as owner/securities intermediary and alleged legal injury — standing satisfied |
| Rider charge (15% increase) — accrual/limitations and laches defenses | Rider overcharge is an ongoing breach with monthly accruals; statute of limitations does not bar current claims; ReliaStar concealed breach | Change occurred in 1989–1990 so claim accrued then; laches bars ~30-year delay | Court: Ongoing-breach theory applies; statute of limitations/laches issues raise factual questions — summary judgment denied |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment procedure and burdens)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (standard for resisting summary judgment; evidentiary showing required)
- Vogt v. State Farm Ins. Co., 963 F.3d 753 (8th Cir.) ("based on" in COI clause is at least ambiguous)
- Norem v. Lincoln Benefit Life Co., 737 F.3d 1145 (7th Cir.) (interpretation of COI provisions and nonexclusivity analyses)
- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (commonality requirement for class certification)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (predominance/manageability in class certification)
- In re Zurn Pex Plumbing Prods. Liab. Litig., 644 F.3d 604 (8th Cir.) (limited, rigorous predominance inquiry for class certification)