And, as if on cue given the U.S. News & World Report story (here) about how investors run a serious risk if an insured lives longer than expected, a federal court in New York issues a ruling in a lawsuit involving a 1998 viatical investment.
“Nearly twenty years later, the viators are still alive, and plaintiff is without any return on his investment,” said the court in Amberger v. Legacy Capital Corp., 17 Civ. 532(NRB), 2017 U.S. Dist. LEXIS 171816 (S.D.N.Y. Oct. 16, 2017), stating that the viators – the insured under two life insurance policies that the plaintiff invested in – “life twice past their life expectancies.”
The plaintiff, Christopher Amberger, sued Legacy Capital Corporation and its agent, Mills, Potoczak & Company (“Mills”), alleging that the defendants made misrepresentations and false statements about the life expectancy of the viators, back-dated documents, and did not – as promised – track the whereabouts of the viators and took other actions contrary to the viatical investment contract.
The federal court dismissed the claims against Legacy Capital because they were time-barred. Said the court, while it is not clear exactly when the plaintiff had reason to suspect that some type of wrongdoing had injured him, “it must have occurred at some point” over the 12 year period between 2001 and 2013 – three years before the plaintiff commenced the lawsuit. Added the court: “After the viators’ life expectancies were exceeded, plaintiff should have been suspicious that he had been misled.” Moreover, added the court, “after the viators’ life expectancies had been exceeded by a factor of two, plaintiff was not only still awaiting a return on his investment, he was also forced to expend more resources to track the viators.” Thus, even though the plaintiff was “on notice of having potentially been defrauded, plaintiff’s efforts in response were limited to calls at ‘regular intervals’” to the agency, and not to Legacy, “the party who had actually sold him the investments and whom he charges with . . . defrauding him.”
Based on the expiration of the statutes of limitations, the court dismissed the fraud-based and securities law claims against Legacy, as well as the request for a declaratory judgment.
As for the plaintiff’s breach of fiduciary duty claim against Mills, though, some of the complained-of statements that the plaintiff alleged to be misrepresentations occurred up to June, 2015, when the plaintiff alleges that Mills told him that one of the policies was being converted from a group into an individual policy and that the policies would be cancelled if the plaintiff did not make more payments. Up to that time, said the court, “Plaintiff had no reason to inquire further . . . .” But “as soon as he was presented with a situation in which Mills, by threatening to cancel both of his investments, openly acted inconsistently with his interests, plaintiff was on notice and he acted” by contacting an attorney and filing “this lawsuit with reasonable promptness.” Thus, the court denied the motion to dismiss the breach of fiduciary duty claim.