Sun Life Assurance Company of Canada v. Imperial Premium Finance, LLC
904 F.3d 1197
11th Cir.2018Background
- Sun Life issued life insurance policies to seniors; Imperial (via affiliates) financed premiums, foreclosed after defaults, and acquired many policies—creating investor-owned policies (STOLI concerns).
- Sun Life sued, alleging Imperial orchestrated a scheme (via producers, Bank of Utah, Family Insurance Trust) to procure policies through fraudulent applications, conceal financing during the two-year contestability period, and thereby harm Sun Life (RICO, fraud, aiding/abetting, conspiracy, tortious interference, declaratory relief).
- Imperial/IPF counter-sued, alleging Sun Life breached policy terms (incontestability and rights-and-privileges clauses) and committed fraud by challenging policy ownership and by post-contract statements/omissions; IPF sought damages for devalued collateral and lost financing.
- The district court dismissed most claims (mix of 12(b)(6), 12(c), and summary judgment); both parties appealed. The Eleventh Circuit reviewed de novo.
- Court applied Florida law to interpret policies because Sun Life waived reliance on non-Florida law by failing to plead or prove foreign-law sourcing for choice-of-law analysis.
- The Eleventh Circuit affirmed in part, vacated in part, and remanded: it allowed several Sun Life claims to proceed (RICO, RICO conspiracy, fraud (non-rescissory damages), aiding-and-abetting, tortious interference) and allowed IPF's breach claim based on incontestability to proceed, but affirmed dismissal of some conspiracy and fraud theories and IPF fraud and rights-and-privileges damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law for policy interpretation | Sun Life: court should apply each policy's issuing-state law (as in Martinez) | Imperial: Florida law governs; Sun Life failed to plead foreign law | Waiver: Sun Life failed to plead or prove non-Florida law; Florida law applies |
| Effect of incontestability clause on insurer's post-contest fraud/RICO claims | Sun Life: incontestability bars rescission only; insurer may sue for damages not seeking to void policy | Imperial: incontestability bars any post-contest suit that "contests" the policy | Court: Incontestability bars efforts to void policy, but not fraud/RICO suits seeking non-rescissory damages; vacated dismissal of Sun Life's RICO and fraud claims (as to non-rescission remedies) |
| Conspiracy & agency (RICO vs. common-law fraud conspiracy) | Sun Life: alleged Imperial conspired with producers and others to submit fraudulent applications | Imperial: producers were Imperial's agents/employees so intracorporate-conspiracy doctrine bars conspiracy claims; also insufficient specifics | Court: Fraud conspiracy dismissed (agents cannot conspire with principal); RICO conspiracy stands because intracorporate doctrine does not bar civil RICO conspiracy and Sun Life pleaded plausible agreement and predicate acts |
| IPF breach (incontestability & rights-and-privileges) and fraud claims | IPF: Sun Life breached incontestability and rights-and-privileges by filing declaratory action, withholding timely notices, and clouding title, causing lost/different financing costs; also alleged Sun Life fraudulently omitted internal views | Sun Life: filing suit is protected by litigation privilege; incontestability is a defensive shield only; alleged damages speculative/unforeseeable; omissions not actionable | Court: Filing declaratory claim can breach incontestability—IPF's incontestability-based breach claim survives pleadings; litigation privilege does not bar such contract claim; but rights-and-privileges damages were speculative/unforeseeable and IPF's fraud theories fail (duplicative or no induced act) |
Key Cases Cited
- Grigsby v. Russell, 222 U.S. 149 (U.S. 1911) (life insurance policies are property and generally assignable despite wagering concerns)
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (U.S. 1941) (forum choice-of-law rules govern federal courts sitting in diversity)
- Martinez v. Am. United Life Ins. Co., 480 F.3d 1043 (11th Cir. 2007) (applied choice-of-law to incontestability issues under multiple states)
- Bankers Sec. Life Ins. Soc. v. Kane, 885 F.2d 820 (11th Cir. 1989) (incontestability clause bars rescission; suggested fraud claims seeking damages might not be barred)
- Nw. Mut. Life Ins. Co. v. Johnson, 254 U.S. 96 (U.S. 1920) (describing the purpose of incontestability clauses to assure payment of benefits)
- Sciarretta v. Lincoln Nat'l Life Ins. Co., 778 F.3d 1205 (11th Cir. 2015) (discusses STOLI and insurer claims; cited for treatment of non-rescissory fraud claims under Florida law)
- Wells Fargo Bank, N.A. v. Pruco Life Ins. Co., 200 So.3d 1202 (Fla. 2016) (Florida Supreme Court: policies procured as alleged here satisfied insurable-interest statute; forecloses Sun Life's declaratory void-ab-initio theory)
- McAndrew v. Lockheed Martin Corp., 206 F.3d 1031 (11th Cir. 2000) (intracorporate conspiracy doctrine: single entity and agents cannot conspire with itself for common-law conspiracy)
- Kirwin v. Price Commc'ns Corp., 391 F.3d 1323 (11th Cir. 2004) (intracorporate conspiracy doctrine does not bar civil RICO conspiracy)