Court Grants Rescission in Stranger-Originated Life Insurance Lawsuit

Court Grants Rescission in Stranger-Originated Life Insurance Lawsuit

A plaintiff’s lawsuit seeking to enforce a stranger-originated life insurance policy resulted instead in a court ruling in favor of the insurer seeking to rescind the policy.

In addition, the court in Ashkenazi v. AXA Equit. Life Ins. Co., 115034/07, 2016 NY Slip Op 31882(U), Supreme Court, New York County, N.Y. (N.Y. Sup. Ct. Oct. 5, 2016), denied the plaintiff’s motion to dismiss the insurer’s counterclaim for fraud.

The lawsuit was filed by plaintiff Alexander Ashkenazi as Trustee of the Zablidowsky Life Insurance Trust, was for breach of contract to recover the death benefit proceeds from life insurance policies issued by defendant AXA Equitable Life Insurance Company.

AXA argued that the insurance policies were fraudulently obtained, “and are two among at least eight policies totaling almost $44 million, which make up the stranger-owned life insurance (‘STOLI’) mill that the Trustee is using for his own purposes under the guise of a purported charitable entity.”

The decision included extended analysis, with the court concluding that, as one of the policies, there was a material misrepresentation by the insured that there were no other policies in force or pending

The full opinion is available here.

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