Kramer v. Lockwood Pension Services, Inc.
| Citation | 653 F.Supp.2d 354 |
| Decision Date | 01 September 2009 |
| Docket Number | No. 08 Civ. 2429 (DAB).,08 Civ. 2429 (DAB). |
| Parties | Alice KRAMER, as Personal Representative of the Estate of Arthur Kramer, Plaintiff, v. LOCKWOOD PENSION SERVICES, INC., Tall Tree Advisors, Inc., Life Products Clearing, LLC, Transamerica Occidental Life Insurance Co., Lincoln Life & Annuity Co. of New York and Jonathan S. Berck, Defendants. Phoenix Life Insurance Co., Counterclaim Crossclaim and Third-Party Plaintiff, v. Alice Kramer, as Personal Representative of the Estate of Arthur Kramer, Counterclaim Defendant, Lockwood Pension Services, Inc. and Tall Tree Advisors, Inc., Crossclaim Defendants, Steven Lockwood, Third-Party Defendant. Life Product Clearing, LLC, Counterclaim Crossclaim and Third-Party Plaintiff, v. Alice Kramer, as Personal Representative of the Estate of Arthur Kramer, Counterclaim Defendant, Lincoln Life & Annuity Co., Crossclaim Defendant, Liza Kramer and Andrew B. Kramer, Third-Party Defendants. Jonathan S. Berck, Counterclaim Crossclaim and Third-Party Plaintiff, v. Alice Kramer, as Personal Representative of the Estate of Arthur Kramer, Counterclaim Defendant, Lincoln Life & Annuity Co., Crossclaim Defendant, Liza Kramer and Andrew B. Kramer, Third-Party Defendants. Lincoln Life & Annuity Company of New York, Counterclaim Crossclaim and Third-Party Plaintiff, v. Alice Kramer, as Personal Representative of the Estate of Arthur Kramer, Counterclaim Defendant Steven Lockwood, Lockwood Pension Services, Jonathan S. Berck, individually and as Trustee for the Leon Lobel Insurance Trust dated November 15, 2005, Life Product Clearing LLC, Crossclaim Defendants, Joel B. Miller, TD Bank N.A., Third-Party Defendants. |
| Court | U.S. District Court — Southern District of New York |
Andrew A. Wittenstein, Stuart I. Friedman, Claire L. Chau, Friedman & Wittenstein, P.C., New York, NY, for Plaintiff.
Steven Michael Kaplan, Tab Keith Rosenfeld, Rosenfeld & Kaplan, LLP, Andrea B. Bierstein, Hanly Conroy Bierstein Sheridan Fisher & Hayes, LLP, Christopher George Karagheuzoff, Patrick J. Feeley, Stephen Michael Raab, Dorsey & Whitney LLP, Peter Jakab, Fein & Jakab, Arun Srinivas Subramanian, Rebecca Sol Tinio, Susman Godfrey LLP, New York, NY, Charles J. Vinicombe, Elizabeth L. McLachlan, Stephen C. Baker, Katherine Leigh Villanueva, Drinkler, Biddle & Reath, L.L.P., Philadelphia, PA, Michael J. Miller, The Miller Firm, LLC, Orange, VA, Steven Gerald Sklaver, Neal S. Manne, Ryan Christopher Kirkpatrick Susman Godfrey L.L.P., Los Angeles, CA, for Defendants.
Plaintiff Alice Kramer, on behalf of the estate of Arthur Kramer, seeks a declaratory judgment that death benefits from insurance policies on the life of her deceased husband, Arthur Kramer, are properly paid to her. Plaintiff alleges that her husband established two insurance trusts following which various insurance policies were issued naming the insurance trusts as the beneficiaries. At the time the trusts were established, Arthur Kramer named his adult children, either Andrew, Rebecca or Liza ("Kramer Children") as "putative beneficiaries" of the trusts. Plaintiff alleges that her husband directed the adult Kramer Children to execute assignments of their beneficial interests in the trusts to "stranger investors." It is elsewhere alleged that these assignments were made for cash consideration. Plaintiff alleges that the Kramer Children never paid any premiums on those policies. It is elsewhere alleged that the "investors" paid the premiums. After Arthur Kramer's death, Plaintiff alleges the "investors", now holding the beneficial interest in the insurance trusts, submitted claims on the insurance policies for the death benefits. According to Plaintiff, the insurance claims now equal approximately $56,200,000.00 in death benefits.
The Defendants in this action are variously, insurance companies who issued the policies, trustees of the insurance trusts, and insurance brokers who were also "investors" in the insurance arrangement. These Defendants in turn have counter-claimed against the Plaintiff, cross claimed against each other and brought third-party complaints against yet others.
The insurance companies seek, inter alia, to have the policies voided and therefore not paid to anyone, as well as the broker/investors held liable for their conduct. The trustees as well as the broker/investors argue, inter alia, that the benefits are properly paid to those who currently hold the beneficial interest, which they acquired from the adult Kramer Children for cash consideration.
Plaintiff is a citizen of the state of Connecticut and resides in Stamford, Connecticut; she is the widow of Arthur Kramer and the Personal Representative of his Estate. (Dkt. No. 31, Am. Compl. ¶ 1.) Mr. Kramer died on January 26, 2008; at the time of his death, Mr. Kramer was a citizen of Connecticut. (Id. ¶ 2.)
Plaintiff alleges that Defendant Lockwood Pension Services, Inc. is a New York corporation with its principal place of business located in New York, New York. (Dkt. No. 31 at ¶ 3.) Plaintiff alleges that Defendant Tall Tree Advisors, Inc. is a New York corporation with its principal place of business located in Pleasantville, New York. (Id. at ¶ 4.)
Plaintiff alleges that Defendant Life Product Clearing, LLC is a Delaware limited liability company with its principal place of business located in New York, New York. (Id. at ¶ 5.)1 According to Life Product Clearing it "is a limited liability company organized and existing under the laws of the State of Delaware, with its principal place of business in New York, New York, which, inter alia, acts as an agent with respect to beneficial interests under certain life insurance trusts ...". (Dkt. No. 59 at ¶ 69.)
Plaintiff alleges that Defendant Transamerica Occidental Life Insurance Co. ("Transamerica") is an Iowa corporation with its principal place of business located in Cedar Rapids, Iowa. (Dkt. No. 31 at ¶ 6.) Plaintiff alleges that Defendant Phoenix Life Insurance Co., ("Phoenix") is a New York corporation with its principal place of business located in Syracuse, New York. (Id. at ¶ 7.) Plaintiff alleges that Defendant Lincoln Life & Annuity Co. of New York ("Lincoln Life") is a New York corporation with its principal place of business located in Syracuse, New York. (Id. at ¶ 8.)
Phoenix alleges that Steven Lockwood is the owner and chief executive officer of Lockwood Pension Services, Inc. and Tall Tree Advisors, Inc. (Dkt. No. 43 at ¶ 2.) Phoenix alleges that Steven Lockwood, Lockwood Pension Services and Tall Tree Advisors all reside at the same address: 2 Tall Tree Lane, Pleasantville, NY. (Id. at 3.)
Plaintiff alleges that Jonathan Berck is a citizen of the state of New Jersey. (Dkt. No. 31 at ¶ 9.) Phoenix alleges that Berck has served and continues to serve as the trustee for various life insurance trusts that Lockwood helped to establish. (Dkt. No. 43 at ¶ 4.) Berck alleges that he is a citizen of the state of New York and is the Successor Trustee of the Arthur Kramer 2005 Insurance Trust pursuant to the Trust Agreement of Arthur Kramer 2005 Insurance Trust dated August 29, 2005. (Dkt. No. 90 at ¶ 69)
Life Product Clearing alleges that Liza Kramer is a citizen of the state of California with an address at 1940 Los Angeles Avenue, Berkley, California 94707, and is the "daughter and heir of the plaintiff Estate's decedent, Arthur Kramer." (Dkt. No. 59 at ¶ 8.) Life Product Clearing alleges that Andrew B. Kramer is a citizen of the state of New York with a business address c/o Kramer Capital Management, Inc., 622 Third Avenue, 32nd Floor, New York, N.Y. 10017, and is the son and heir of the plaintiff Estate's decedent, Arthur Kramer. (Id. at ¶ 9.)
Lincoln Life and Annuity alleges that Joel B. Miller is an individual residing at 721 NW 108 Ave., Plantation, Florida 33324. (Dkt. No. 140 at ¶ 4.) Lincoln Life and Annuity alleges that TD Bank, N.A. f/k/a TD Banknorth, N.A. ("TD Bank"), is a national association with its principal place of business located at One Portland Square, Portland Maine, 04112. (Id. at ¶ 7.) Lincoln Life alleges that TD Bank acquired Hudson United Bank in January 2006 and is the successor in interest to Hudson. (Id.)
This action is founded solely on diversity jurisdiction. Plaintiff is a citizen and resident of Connecticut. She is the representative of the estate of her husband, Arthur Kramer, who at the time of his death was also a Connecticut resident. 28 U.S.C. § 1332(a), (c).
The Court exercises jurisdiction over the third party actions pursuant to supplemental jurisdiction under 28 U.S.C. § 1367 because the third party actions, except those against Joel Miller and TD Bank (as set forth further herein), share a common nucleus of operative fact with the claims set forth by Plaintiff.
The following facts were alleged by Plaintiff in her Amended Complaint filed on May 7, 2008. Plaintiff alleges that this action "involves an arrangement to procure life insurance policies with the purpose of immediately transferring the beneficial interests in those policies to stranger investors, in contravention of the `insurable interest rule'". (Dkt. No. 31 at ¶ 12.)
The relevant provision of the New York Insurance Law contains the following definitions provisions:
(1) The term, "insurable interest" means:
(A) in the case of persons closely related by blood or by law, a substantial interest engendered by love and affection; (B) in the case of other persons, a lawful and substantial economic interest in the continued life, health or bodily safety of the person insured, as distinguished from an interest which would arise only by, or would be enhanced in value by, the death, disablement or...
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