Lincoln Benefit Life Co. v. Joanne Bauer Irrevocable Life Ins. Trust 12-2-2005, Case No. 8:12-cv-1729-T-33EAJ
| Decision Date | 02 January 2013 |
| Docket Number | Case No. 8:12-cv-1729-T-33EAJ |
| Parties | LINCOLN BENEFIT LIFE COMPANY, Plaintiff, v. JOANNE BAUER IRREVOCABLE LIFE INSURANCE TRUST 12-2-2005, MICHAEL R. BRAUN, as trustee of the Joanne Bauer Irrevocable Life Insurance Trust 12-2-2005, and JOANNE BAUER, Defendants. |
| Court | U.S. District Court — Middle District of Florida |
This matter is before the Court pursuant to the Motion to Dismiss Complaint (Doc. # 12), filed on September 25, 2012, by Defendants Michael R. Braun and the Joanne Bauer Irrevocable Life Insurance Trust 12-2-2005 (the "Trust"). Plaintiff Lincoln Benefit Life Co. filed its Response in Opposition (Doc. # 18) on October 30, 2012. With leave of Court, Braun and the Trust filed a Reply (Doc. # 26) on December 7, 2012, and Lincoln filed a Sur-Reply (Doc. # 29) on December 20, 2012. Upon due consideration, the Court denies the Motion.
The following factual discussion, taken from Lincoln's Complaint (Doc. # 1), is accepted as true for the purpose ofaddressing the Motion. Lincoln is a life insurance company headquartered in Lincoln, Nebraska, and licensed and authorized to issue insurance policies in the state of Florida. (Id. at ¶ 4). Defendant Joanne Bauer resides in Sarasota County, Florida. (Id. at ¶ 7). The Trust is subject to the ownership and control of its trustee, Braun, who is a citizen of the state of Georgia. (Id. at ¶ 5).
On or about February 15, 2006, Lincoln received an application for a Flexible Premium Adjustable Life Insurance Policy (the "Application") proposing Bauer as the insured. (Id. at ¶ 21). The Application was purportedly signed on January 18, 2006, by Bauer as the proposed insured, by Braun on behalf of the Trust as the intended owner and beneficiary of the policy, and by Suzanne Rubio as the agent. (Id.). At the time the Application was submitted, Rubio was an independent insurance agent with offices in Boca Raton, Florida. (Id. at ¶ 22).
Lincoln received a Statement of Health and Insurability and Verification of Medical Exam purportedly signed on July 26, 2006, by Bauer, Braun and Rubio. (Id. at ¶ 24). The documents reflect that they were faxed between Braun's offices in Georgia and a fax number in the 941 area code, which includes Manatee, Sarasota, DeSoto and Charlotte counties inFlorida. (Id.). Lincoln received an initial premium check dated July 24, 2006, in the amount of $53,688.00, written by the Trust. (Id. at ¶ 25).
Lincoln issued Policy No. 01N1286730 effective May 3, 2006, for $1,200,000.00 in coverage (the "Policy"). (Id. at ¶ 26). The Trust has continued to pay the premiums due on the Policy, which remains current and in force. (Id. at ¶ 27). As of the date of the Complaint, Lincoln has received a total of $242,812.95 in premium payments. (Id. at ¶ 28).
Lincoln alleges that the Policy was procured as part of a "stranger originated life insurance," or "STOLI" scheme. In such an arrangement, investors acquire policies on the lives of persons with whom they have no familial relationship or in whose longevity the investors possess no legally cognizable interest. (Id. at ¶ 12). Often, investors purchase beneficial interests in insurance trusts or ownership in shell corporations that own the policies. (Id.). In any event, the policies are procured with the expectation that the investors will profit by the death of the insureds. (Id.).
STOLI transactions run afoul of state insurable interest laws, which require that a policy owner have a legally cognizable interest in the longevity of the insured at the time the policy is issued. (Id. at ¶ 13). "Although it issometimes permissible for an investor to obtain an interest in a legitimately procured life insurance policy, it is unlawful to procure a policy for the sole purpose of transferring it, directly or indirectly, to an investor." (Id. at ¶ 11).
In August 2005, Bauer was solicited to participate in a STOLI arrangement by Harry Hammond, principal of Hammond Financial Group, who worked with Harvey Altholtz and Adam Altholtz of Wealth Strategy Partners to obtain a policy on Bauer's life. (Id. at ¶¶ 30-31). Both Hammond Financial Group and Wealth Strategy Partners are Florida limited liability companies with their principal place of business in Sarasota, Florida. (Id.).
Lincoln alleges that Braun communicated with these individuals and entities by fax, telephone and otherwise, working with them to procure a second STOLI policy on Bauer's life without Bauer's knowledge or consent. (Id. at ¶ 32). "Bauer first learned of the second STOLI Policy, after it was issued by Lincoln, when she was contacted by her treating physician's office to verify certain medical information in connection with a second STOLI policy." (Id. at ¶ 33). She believes that the individuals involved forged the documents used to obtain the Policy. (Id. at ¶ 34). She further asserts that she never authorized Braun to set up the Trust, of whichBraun is trustee, that is the owner and beneficiary of the Policy. (Id. at ¶ 35).
"Bauer claims that she has been harmed by the unlawful procurement of the Policy because, among other things, the second STOLI policy prevents her from obtaining additional life insurance in her own name." (Id. at ¶ 36). Lincoln claims that the Policy is void ab initio and that it is entitled to retain the premiums paid. (Id. at ¶¶ 43-44). Lincoln further claims that it has incurred substantial damages, including costs and expenses associated with the issuance of the Policy. (Id. at ¶ 50).
Lincoln filed suit in this Court on August 2, 2012, seeking declaratory judgment for rescission and/or voiding the Policy based upon a lack of insurable interest (Count I) and compensatory and consequential damages against Braun and the Trust as a result of misrepresentations made in procuring the Policy (Count II). (Doc. # 1). Braun (as the Court will refer to Braun and the Trust collectively) seeks dismissal of the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(2), for lack of personal jurisdiction. (Doc. # 12).
The plaintiff bears the burden of establishing a prima facie case of personal jurisdiction over a nonresidentdefendant. Stubbs v. Wyndham Nassau Resort & Crystal Palace Casino, 447 F.3d 1357, 1360 (11th Cir. 2006). "A prima facie case is established if the plaintiff presents enough evidence to withstand a motion for directed verdict." Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir. 1990).
Where the defendant submits affidavits contradicting the plaintiff's allegations, the burden generally shifts back to the plaintiff to produce evidence in support of jurisdiction. Meier ex rel. Meier v. Sun Int'l Hotels, Ltd., 288 F.3d 1264, 1269 (11th Cir. 2002). "The allegations in the complaint must be taken as true to the extent they are uncontroverted by the defendant's affidavits." S & Davis Int'l, Inc. v. Republic of Yemen, 218 F.3d 1292, 1303 (11th Cir. 2000). "Where the plaintiff's complaint and supporting evidence conflict with the defendant's affidavits, the court must construe all reasonable inferences in favor of the plaintiff." Meier, 288 F.3d 1264, 1269 (11th Cir. 2002).
The determination of whether the Court has personal jurisdiction over a defendant is governed by a two-part analysis. First, the plaintiff must have alleged facts sufficient to subject the defendant to Florida's long-arm statute. Future Tech. Today, Inc. v. OSF Healthcare Sys., 218F.3d 1247, 1249 (11th Cir. 2000) (citing Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623, 626 (11th Cir. 1996)). Once the Court has determined that Florida's long-arm statute is satisfied, it must decide whether the assertion of jurisdiction comports with traditional notions of fair play and substantial justice under the Due Process Clause of the Fourteenth Amendment. Sculptchair, 94 F.3d at 626 (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
Braun does not contest that Lincoln has alleged facts "that could support personal jurisdiction over Braun consistent with Florida's long-arm jurisdiction." (Doc. # 12 at 5). Braun concedes Florida's long-arm jurisdiction pursuant to Fla. Stat. § 48.193(1)(d), which applies to nonresident defendants who have "contract[ed] to insure any person, property, or risk located within the state at the time of contract." Because Braun has contracted to insure Bauer's life, § 48.193(1)(d) appears to be satisfied.
Despite Braun's concession as to Florida's long-arm jurisdiction, and for reasons that will become apparent below, the Court finds it necessary to sort out the parties' arguments regarding the requirement of "connexity" between Braun's activities and Lincoln's cause of action. UnderFlorida law, a plaintiff's claims must arise from the defendant's acts in order for Florida's long-arm jurisdiction to be triggered. Fla. Stat. § 48.193(1); Wendt v. Horowitz, 822 So. 2d 1252, 1260 (Fla. 2002).
Lincoln asserts that the connexity analysis is relevant only to § 48.193(1)(b), which applies to defendants who have "committ[ed] a tortious act within this state," and has no application to § 48.193(1)(d). That is incorrect. The connexity requirement applies to § 48.193(1) as a whole, including subsection § 48.193(1)(d), which "requires that the cause of action arise from the contracting for insurance." Rinker v. Carnival Corp., No. 09-23154-Civ, 2011 WL 3163473, at *2 (S.D. Fla. July 26, 2011). The Court finds that the connexity requirement is met here because the Policy on Bauer's life is central to Lincoln's claims. Braun is subject to Florida's long-arm jurisdiction under § 48.193(1)(d).1
Next, the court must consider whether the existence of personal jurisdiction over Braun comports with Due Processprinciples. See Pureterra Naturals, Inc. v. Cut-Heal Animal Care Products, 674 F. Supp. 2d 1294, 1298 (M.D. Fla. 2009). This requirement is met "if the non-resident defendant has established certain...
To continue reading
Request your trial