In a lawsuit that grew out of allegations that a life insurance policy was part of the STOLI transaction (and that was also discussed in this post), the United States District Court for the Southern District of New York upheld a jury's decision to award $5 million to Settlement Funding.
Here is the court's summary of its latest decision:
This case centers around a $5 million insurance policy (the “Policy”) issued by AXA Equitable Life Insurance Co. (“AXA”) on the life of non-party Esther Adler. Familiarity with the background can be gained by reference to this Court's Opinion and Order dated September 30, 2010, 2010 WL 3825735. In brief, plaintiff Settlement Funding (“SF”) came to acquire the rights to the Policy benefits, which had originally been payable to the Esther Adler Family Trust 20070221 (the “Trust”). Third-party Defendant Alan Rubenstein was the Trustee of the Trust and was one of the people who facilitated the Trust's procurement of the Policy.
Since Mrs. Adler's death on June 6, 2009, the parties have been at loggerheads. The primary concern understandably is the validity of the Policy. Other bones of contention include a dispute as to whether the Policy was procured through fraud, whether the original beneficiary of the Policy had an insurable interest in Mrs. Adler's life – a requirement under New York law – and finally whether any of this matters in light of the Policy's incontestability clause.
A jury trial was held from October 18-25, 2010. The jury found, among other things, that the incontestability clause barred AXA from challenging the Policy's validity. The jury also found for SF on its claim of negligent misrepresentation against AXA. The jury found for Rubenstein on AXA's claim of fraud, and against Rubenstein on AXA's claim of conspiracy to commit fraud. On November 15, 2010, the Court entered judgment for SF against AXA in the amount of $5 million and awarded nominal damages for AXA and against Rubenstein in the amount of $1. AXA and Rubenstein each move separately for judgment as a matter of law and SF moves to correct or amend the judgment. All motions were timely filed. For the reasons that follow, AXA's motion is DENIED, Rubenstein's motion is DENIED, and SF's motion is GRANTED to the extent described below.
Settlement Funding, LLC v. AXA Equitable Life Ins. Co., No. 09 CV 8685(HB), 2011 WL 1097635 (S.D.N.Y. Mar. 21, 2011).