Richard Torti, Sr. v. John Hancock Life Insurance Co, 2017 U.S. App. LEXIS 15496

Layton Stuart created the Stuart Family 1997 Trusts; Michael Heald was trustee and obtained a $20 million Hancock variable life policy naming the Trusts as owner.
The Trusts entered a split-dollar agreement with One Bank: One Bank paid premiums and the Trusts assigned the policy to One Bank; the agreement barred trustee transfers/loans against the policy during its term.
In 2011 Heald appointed Hoag successor trustee; Hoag submitted a Hancock policy-loan request signed only by her as trustee and received a $1,761,000 loan check, which Layton Stuart endorsed and used personally.
After Hoag resigned, Torti became trustee; upon Stuart’s death Hancock withheld proceeds pending a release; the government later seized the death benefit funds.
Torti sued Hoag, Gentry, and Hancock alleging breach of contract and negligence; after settlements, Hancock moved to dismiss Torti’s second amended complaint, which the district court granted with prejudice. The Eighth Circuit affirmed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Hancock’s loan forms and procedures were incorporated into the insurance contract, supporting a breach-of-contract claim	Torti: Section 28 allows post-issue written applications to become part of the policy and Section 11 requires a “completed form satisfactory to [Hancock],” so the loan forms (exhibits) were part of the contract	Hancock: The policy unambiguously defines the contract as the policy and the attached written application only; the loan forms were not attached or clearly incorporated and policy changes require specified Hancock officer approval	Court: Loan forms were not part of the contract; plaintiff failed to allege clear, unequivocal incorporation or officer approval, so breach-of-contract claim fails
Whether Hancock owed Torti an independent duty of care (negligence) to follow its internal loan procedures when processing Hoag’s loan request	Torti: Hancock had a duty to follow its own procedures and, had it done so, would have discovered the loan violated the split-dollar agreement, preventing harm to the Trusts	Hancock: Any contractual procedures were not part of the insurance contract; no independent duty to ensure proceeds reached a particular recipient existed	Court: No actionable duty alleged independent of the contract; negligence claim premised on contract performance failed because loan forms were not part of the contract

Neubauer v. FedEx Corp., 849 F.3d 400 (8th Cir. 2017) (standard for drawing facts from complaint on motion to dismiss)
In re Pre-Filled Propane Tank Antitrust Litig., 860 F.3d 1059 (8th Cir. 2017) (plausibility standard for Rule 12(b)(6) pleading)
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (complaint must plead factual content supporting plausible liability)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (labels and conclusions insufficient to survive dismissal)
Ingersoll-Rand Co. v. El Dorado Chem. Co., 283 S.W.3d 191 (Ark. 2008) (requirements for incorporation of a separate writing into a contract)
Dye v. Diamante, 510 S.W.3d 759 (Ark. 2017) (incorporation of another writing when contract refers to it)
Farris v. Conger, 512 S.W.3d 631 (Ark. 2017) (elements of a breach-of-contract claim under Arkansas law)