779 Fed.Appx. 927 (3rd Cir. 2019), 16-4337, Sun Life Assurance Company of Canada v. Wells Fargo Bank NA

Docket Nº16-4337, 16-4387
Citation779 Fed.Appx. 927
Opinion JudgeCHAGARES, Circuit Judge.
Party NameSUN LIFE ASSURANCE COMPANY OF CANADA v. WELLS FARGO BANK NA, as Securities Intermediary, Appellant Sun Life Assurance Company of Canada, Appellant v. Wells Fargo Bank NA, as Securities Intermediary
AttorneyJohn M. Bloor, Esq., Jason P. Gosselin, Esq., Michael D. Rafalko, Esq., Nicole C. Wixted, Esq., Drinker Biddle & Reath, Philadelphia, PA, Charles J. Vinicombe, Esq., Cozen O’Connor, Philadelphia, PA, for Plaintiff - Appellee Eric A. Biderman, Esq., Michael S. Cryan, Esq., Julius A. Rousseau, III,...
Judge PanelBefore: CHAGARES, RESTREPO, and FISHER, Circuit Judges.
Case DateAugust 21, 2019
CourtUnited States Courts of Appeals, Court of Appeals for the Third Circuit

Page 927

779 Fed.Appx. 927 (3rd Cir. 2019)

SUN LIFE ASSURANCE COMPANY OF CANADA

v.

WELLS FARGO BANK NA, as Securities Intermediary, Appellant

Sun Life Assurance Company of Canada, Appellant

v.

Wells Fargo Bank NA, as Securities Intermediary

Nos. 16-4337, 16-4387

United States Court of Appeals, Third Circuit

August 21, 2019

NOT PRECEDENTIAL

Submitted Pursuant to Third Circuit L.A.R. 34.1(a) August 19, 2019

Editorial Note:

This opinion is not regarded as Precedents which bind the court under Third Circuit Internal Operating Procedure Rule 5.7. (See Federal Rule of Appellate Procedure Rule 32.1)

On Appeal from the United States District Court for the District of New Jersey (District Court No. 3:14-cv-05789), District Judge: Honorable Peter G. Sheridan

John M. Bloor, Esq., Jason P. Gosselin, Esq., Michael D. Rafalko, Esq., Nicole C. Wixted, Esq., Drinker Biddle & Reath, Philadelphia, PA, Charles J. Vinicombe, Esq., Cozen O’Connor, Philadelphia, PA, for Plaintiff - Appellee

Eric A. Biderman, Esq., Michael S. Cryan, Esq., Julius A. Rousseau, III, Esq., Arent Fox, New York, NY, for Defendant - Appellant

Before: CHAGARES, RESTREPO, and FISHER, Circuit Judges.

OPINION[*]

CHAGARES, Circuit Judge.

These cross-appeals present novel and important questions of New Jersey law. First, does a stranger-originated life insurance ("STOLI") arrangement, in which the holder of a life insurance policy lacks an insurable interest in the life of the insured, violate public policy under New Jersey law, and as such is it void ab initio? Second, is a later purchaser of the policy who was not involved in the STOLI arrangement entitled to a refund of any premium payments that he or she made? We certified these questions to the Supreme Court of New Jersey. The Court has now responded, answering yes to the first question and yes to the second question depending on the circumstances. Sun Life Assurance Co. of Canada v. Wells Fargo Bank, N.A., 238 N.J. 157, 208 A.3d 839 (2019). Based on these answers, we will affirm.

I.

We write for the parties and so recite only those facts necessary to our decision.

On July 13, 2007, plaintiff Sun Life Assurance Company of Canada issued a $5 million life insurance policy (the "Policy") on the life of Nancy Bergman. The sole owner and beneficiary of the Policy at the time it issued was the Nancy Bergman Irrevocable Trust (the "Trust"). The Policy was issued following an application signed by insurance agent David Kohn, Ms. Bergman, and Nachman Bergman — Ms. Bergman’s grandson and the trustee of the Trust. The Policy had an effective date of April 9, 2007. The Policy contained an incontestability clause that prohibited Sun

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Life from contesting the policy on any grounds except for non-payment of premiums after it had been in force for two years during the life of the insured.

In the course of the application for the Policy, Sun Life received an inspection report that stated that Ms. Bergman had $9.235 million in assets and net worth. However, after an investigation into her assets following Ms. Bergman’s death, Sun Life discovered that Ms. Bergman’s estate was allegedly valued at between $100,000 and $250,000; her only major asset was a condominium that may have been worth as much as $285,000, and her total assets did not exceed $1 million. A group of investors unrelated to Ms. Bergman funded the Policy. These investors deposited money into the Trust’s account that was used to pay most, if not all, of the premium payments. On August 21, 2007, a little over a month after the Policy was issued, Nachman Bergman resigned as trustee and appointed the investors as successor co-trustees. The terms of the Trust were then amended to...

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