Sun Life Assurance Co. of Canada v. Wells Fargo Bank NA, 082119 FED3, 16-4337

Docket Nº:16-4337, 16-4387
Opinion Judge:CHAGARES, CIRCUIT JUDGE
Party Name: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
Judge Panel:Before: CHAGARES, RESTREPO, and FISHER, Circuit Judges.
Case Date:August 21, 2019
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
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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NOT PRECEDENTIAL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

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

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., 208 A.3d 839 (N.J. 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 Life from contesting the policy on any grounds except for...

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