SPV-LS, LLC v. The Estate of Nancy Bergman
912 F.3d 1106
8th Cir.2019Background
- Nancy Bergman (insured) procured a $10,000,000 life policy in 2007; a trust (N Bergman Insurance Trust) named her grandson Nachman trustee and beneficiary, and investors funded premiums.
- Financial Life Services (FLS) contracted to buy the Policy from the Trust in 2009, rescinded or reduced its payment after discovering misrepresentations (longer life expectancy; investor, not family, funding), and ultimately acquired the Policy at auction through SPV after judgment against the Trust.
- Nancy died in 2014; SPV claimed the $10,000,000 death benefit from Transamerica; competing claims from the Trust/Family and the Estate prompted Transamerica to interplead the proceeds.
- The Estate asserted a New Jersey statute to disgorge proceeds from a STOLI; SPV moved for summary judgment arguing New York law governs and STOLIs were legal under New York law at the time (citing Kramer).
- District court applied New York law, found Nachman had an insurable interest, granted summary judgment to SPV, denied the Estate's reconsideration (which raised new coercion and judicial estoppel theories after summary judgment), and denied sanctions sought by SPV against the Estate's attorneys.
- On appeal the Eighth Circuit affirmed denial of reconsideration and most sanctions rulings but reversed the district court's denial of Rule 26(g) sanctions against attorney Gerald Kroll based on allegedly forged discovery metadata and remanded for further proceedings on that sanction claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court abused discretion in denying Estate's motion for reconsideration of summary judgment | Estate: new evidence/theories (nefarious coercion; judicial estoppel) raise genuine issues of fact warranting reconsideration | SPV: arguments/evidence were available earlier; reconsideration improper to raise new theories; no new evidence shown | Affirmed — denial not an abuse of discretion; motion impermissibly raised arguments that could have been made earlier and produced no supporting evidence after discovery |
| Whether § 1927 sanctions against Estate's attorneys were warranted | SPV: attorneys multiplied proceedings unreasonably and vexatiously | Estate: conduct attributable to clients; attorneys did not act with reckless or intentional disregard | Affirmed — no abuse of discretion; § 1927 requires objective showing of intentional/reckless conduct and SPV did not show specifics |
| Whether Rule 26(g)(3) sanctions against attorney Donahoe were warranted | SPV: discovery violations by Estate counsel | Estate/Donahoe: no participation in alleged forged document or misconduct | Affirmed — no Rule 26(g) violation shown as to Donahoe |
| Whether Rule 26(g)(3) sanctions against attorney Kroll were warranted for producing an allegedly forged retainer agreement (metadata evidence) | SPV: Kroll produced a retainer agreement whose metadata showed it was created two days before production, indicating fabrication; Rule 26(g) requires sanctions for such misconduct | Kroll/Estate argued no proof of forgery; district court relied on supposed absence of a document examiner's report | Reversed and remanded — district court premised denial on erroneous assessment (it mistakenly thought SPV relied on a nonexistent examiner's report); Rule 26(g) sanctions require further consideration as nondiscretionary when fabrication is shown |
Key Cases Cited
- In re Charter Commc’ns, Inc., Sec. Litig., 443 F.3d 987 (8th Cir.) (district court has wide discretion on reconsideration)
- Julianello v. K-V Pharm. Co., 791 F.3d 915 (8th Cir.) (motions for reconsideration cannot introduce arguments/evidence that could have been presented earlier)
- Hagerman v. Yukon Energy Corp., 839 F.2d 407 (8th Cir.) (reconsideration should not serve to tender new legal theories)
- Lee v. L.B. Sales, Inc., 177 F.3d 714 (8th Cir.) (§ 1927 requires intentional or reckless disregards to impose sanctions)
- C.H. Robinson Worldwide, Inc. v. Lobrano, 695 F.3d 758 (8th Cir.) (standard of review for denial of sanctions)
- Perkins v. Gen. Motors Corp., 965 F.2d 597 (8th Cir.) (forgery in discovery conduct supports Rule 26 sanctions)
- Kramer v. Phoenix Life Ins. Co., 940 N.E.2d 535 (N.Y. 2010) (New York law permits certain post-procurement assignments and recognizes circumstances under which STOLIs are actionable)
- MDU Res. Grp. v. W.R. Grace & Co., 14 F.3d 1274 (8th Cir.) (district court commits clear error when it misunderstands the purpose of offered evidence)