Sun Life Assurance Company of Canada v. Imperial Premium Finance, LLC , 904 F.3d 1197 ( 2018 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
Nos. 17-10189, 17-10415
________________________
D.C. Docket Nos. 9:13-cv-80385-DLB, 9:13-cv-80730-DLB
SUN LIFE ASSURANCE COMPANY OF CANADA,
Plaintiff - Appellee,
versus
IMPERIAL PREMIUM FINANCE, LLC,
Defendant - Appellant.
SUN LIFE ASSURANCE COMPANY OF CANADA,
Plaintiff - Appellant,
versus
IMPERIAL HOLDINGS, INC.,
IMPERIAL PREMIUM FINANCE, LLC,
IMPERIAL LIFE FINANCING II, LLC,
IMPERIAL LIFE SETTLEMENTS, LLC,
IMPERIAL PFC FINANCING, LLC, et al.,
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Defendants - Appellees.
________________________
Appeals from the United States District Court
for the Southern District of Florida
________________________
(September 18, 2018)
Before MARTIN, JORDAN, and WALKER, * Circuit Judges
WALKER, Circuit Judge:
These two appeals arise from dueling lawsuits pitting Sun Life Assurance
Company of Canada (“Sun Life”), a life insurance company, against Imperial
Holdings, Inc. and its affiliates (“Imperial”), a company that offers financing for
insureds to pay their monthly premium payments. Both suits relate to life
insurance policies that were issued by Sun Life to non-parties and that were
subsequently acquired by Imperial. Imperial is therefore a stranger to the insureds,
yet, as the owner of the policies, it stands to receive the life insurance benefits
upon the deaths of the insureds. Sun Life alleges that Imperial’s ownership of the
policies violates state laws that are designed to prohibit wagering on human lives,
but, more centrally, that Imperial secured the policies through an unlawful and
tortious conspiratorial scheme. Imperial, for its part, contends that its acquisition
and ownership of the policies is lawful, and alleges that Sun Life’s attempts to
*
Honorable John M. Walker, Jr., United States Circuit Judge for the Second Circuit Court of
Appeals, sitting by designation.
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interfere with its ownership of and rights under the policies, including its filing of
its lawsuit here, is itself part of Sun Life’s own fraudulent scheme and in breach of
the policy contracts. In a series of rulings after consolidating the two cases, the
United States District Court for the Southern District of Florida (Dave Lee
Brannon, Magistrate Judge) 1 dismissed all claims in both cases, some at the
pleading stage and the remainder at summary judgment. We VACATE in part,
AFFIRM in part, and REMAND both cases for further proceedings.
BACKGROUND
These appeals require us to address several issues surrounding the rights to
acquire and own life insurance policies that, upon the death of the insured,
distribute benefits to an entity that had no specific interest in the continuation of
the insured’s life. In some contexts referred to as “stranger-originated life
insurance,” or “STOLI,” courts and lawmakers have been grappling for more than
a century with such policies, juggling two competing concerns: (i) limiting the
ability to wager on human life and (ii) promoting the free assignability of property
rights. See Grigsby v. Russell, 222 U.S. 149, 155–57 (1911) (Holmes, J.)
(concluding that, despite the wagering concerns, a life insurance policy is akin to
1
Pursuant to 28 U.S.C. § 636(c), the parties consented for a magistrate judge to conduct the
proceedings in both cases, including the entry of final judgment. See No. 13-80385, Dkt. No. 88
(S.D. Fla. Nov. 5, 2013) (hereinafter generally, “Dkt. []”).
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any other property and may be sold); see also Sciarretta v. Lincoln Nat’l Life Ins.
Co., 778 F.3d 1205, 1207–09 (11th Cir. 2015).
The life insurance policies subject to these disputes were issued initially to
senior citizens by Sun Life but were ultimately procured by Imperial through an
affiliated company that offered loans to the insureds to cover their policy
premiums. As to nearly all of the policies relevant to these cases,2 Imperial’s
ownership came about as follows: (i) a senior citizen applied for and received a life
insurance policy from Sun Life, naming as the policy beneficiary an irrevocable
life insurance trust established for the benefit of his or her spouse and/or children;
(ii) the insured secured non-recourse financing for the payment of the monthly
policy premiums from Imperial, with the policy serving as collateral; (iii) pursuant
to the loan agreements, Imperial was permitted to foreclose on and acquire the
2
Although there is some overlap in the policies that are at issue in these two actions, the set of
policies in each case is distinct. Indeed, the parties dispute which specific policies are at issue in
each case. Imperial contends that Sun Life’s claims are limited to the 23 policies identified in
Sun Life’s operative complaint, Dkt. 231 ¶¶ 2–3, but Sun Life contends that “the scope of [its]
complaint goes beyond those 23 policies to include at least 64 policies, as [listed] by Imperial in
response to Sun Life’s interrogatories.” Dkt. 214 ¶ 2 (sealed).
The parties also dispute which claims are at issue in the action brought by Imperial’s affiliate,
Imperial Premium Finance, LLC (“IPF”). IPF identified 29 policies in its complaint, No. 13-cv-
80730, Dkt. No. 1 ¶ 58 (S.D. Fla July 29, 2013), but asserted in opposition to summary judgment
that its suit involves 33 policies, Dkt. 472 ¶ 16, the same contention it asserts on appeal, see, e.g.,
No. 17-10189 Br. of Appellant at 2. Sun Life contends, however, that Imperial failed to support
the existence of two of those policies (even though, we note, that one such policy, issued on the
life of Robert Good, is included in Sun Life’s complaint). Dkt. 494 ¶ 16. We need not resolve
these disputes at this stage.
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policy if the borrower defaulted; and (iv) the borrower defaulted, leading Imperial
to take ownership of the insured’s policy.
Once Sun Life learned of Imperial’s procurement of the policies, it began to
question the propriety of Imperial’s ownership, both under the insurance contracts
and under state and federal law. Sun Life’s doubts as to the lawfulness of
Imperial’s acquisition and ownership of the policies led to the two competing
lawsuits that are the subjects of the instant appeals.
Sun Life’s Complaint. Sun Life filed suit in the Southern District of
Florida, alleging not just that Imperial’s ownership of the policies violates state law
restrictions on the wagering on human life, but, in what Sun Life refers to as the
“nucleus” of its suit, that Imperial secured its Sun Life policies through a
fraudulent and conspiratorial scheme. No. 17-10415 Br. of Appellant at 35. Sun
Life alleged that Imperial knew that Sun Life, due principally to profitability
concerns, would not have issued a life insurance policy if it knew of the applicant’s
predetermined intent to use premium financing or to transfer ownership of the
policy to a premium finance company, such as Imperial, that would use the policies
primarily as an investment vehicle. Desirous of obtaining profitable Sun Life
insurance policies nonetheless, Imperial orchestrated a scheme to obtain them.
The premise of Imperial’s alleged scheme rested upon the difference
between policies likely to be in effect over a long period (profitable to Sun Life but
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not to Imperial) and policies that would likely be paid out in the short term (less
profitable to Sun Life but more profitable to Imperial). Under the scheme, if
Imperial were the owner or beneficiary of multiple policies it could decide which
ones were more likely to result in an early payout and stop paying premiums on the
rest.
The alleged scheme worked as follows. “At the core of Imperial’s scheme
was a network of insurance producers” that served as “referral sources for
[Imperial’s] premium finance business” by actively “recruit[ing] senior citizens in
order to originate life insurance policies that would be funded by Imperial.” Dkt.
150 (“SL SAC”) ¶¶ 34–36. The producers, at the direction of Imperial, see SL
SAC ¶¶ 34–35, “solicited senior citizens through advertisements in periodicals,
seminars, flyers, and personal solicitation at senior care centers, hospitals,
restaurants, and clubs frequented by senior citizens.” SL SAC ¶ 38. The producers
would then assist the senior citizens in obtaining the requisite medical records and
life expectancy reports, which the producers would submit in the first instance to
Imperial for Imperial to “determine whether the proposed senior was suitable for
Imperial’s purposes.” SL SAC ¶ 39 (emphasis added). If Imperial so concluded,
Imperial would then direct the producers “to move forward with a formal
application, . . . typically direct[ing] the producer in selecting the insurer, the
insurance product, and the face amount of the policy.” SL SAC ¶ 40.
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With each life insurance application submitted to Sun Life, Sun Life
required the producers and the proposed insureds to answer certain questions,
including whether premium financing would be used to fund the policy. SL SAC ¶
42. The producers falsely answered those inquiries in the negative, having full
knowledge that Imperial had already made the decision internally to provide
financing for the insureds’ premium payments. SL SAC ¶¶ 42–44. Although Sun
Life paid the producers a commission for their services, the producers were
required to turn over those commissions in full to Imperial, who would then remit
to the producers between 10 to 50% of the Sun Life commission. SL SAC ¶ 45.
After the policies were issued, Imperial hid from Sun Life the fact that it was
making premium payments, which ultimately meant that Sun Life was unaware of
Imperial’s procurement of the policies until it was too late for Sun Life to contest
it. Imperial accomplished this by “funnel[ing] [the] premium payments through
the Bank of Utah and the Family Insurance Trust.” SL SAC ¶¶ 358, 392. The
Bank of Utah was a co-trustee of the irrevocable life insurance trusts that served as
the ownership vehicles for each of the policies. SL SAC ¶¶ 46–47. Although at
the policies’ outset there was a sole trustee—generally a family member of the
insured—“after the policy was issued Imperial immediately replaced the trust
agreement with its own amended and restated trust agreement . . . [that] name[d]
Bank of Utah as the co-trustee, and virtually eliminated any discretion on the part
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of the original trustee to manage the trust assets.” SL SAC ¶ 47. Imperial would
deposit the funds for the insureds’ policy payments into an account created at the
Bank of Utah (in the name of the Family Insurance Trust), which would then issue
the payments to Sun Life, thereby concealing Imperial’s involvement. SL SAC ¶
48.
The Imperial loans were structured such that the borrowers would generally
default after two years, allowing for Imperial to foreclose on the loans and take
ownership of the insurance policies. Imperial would then “submit[] a policy
ownership and beneficiary change request form to Sun Life,” which would be “the
first time that Imperial revealed its interest in the policy [to Sun Life].” SL SAC
¶ 67. This was no accident, in that it meant Imperial arrived on the scene and
acquired the policies after the expiration of the contractual two-year period during
which Sun Life could “contest” the policies. See SL SAC ¶¶ 53, 67; see also Fla.
Stat. § 627.455 (requiring that all insurance contracts “provide that the policy shall
be incontestable after it has been in force during the lifetime of the insured for a
period of 2 years from its date of issue [with certain exceptions]”). Consequently,
Imperial’s fraudulent scheme was complete: Sun Life was stuck with less
profitable investor-owned policies that it specifically sought to avoid.
In light of these allegations, Sun Life brought seven claims: (i) violation of
the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C.
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§ 1962 (a), (c); (ii) RICO conspiracy, 18 U.S.C. §1962(d); (iii) fraud; (iv) aiding
and abetting fraud; (v) civil conspiracy to commit fraud; (vi) tortious interference
with contractual relations; and (vii) declaratory judgment that the policies are void
ab initio. 3
Imperial Premium Finance, LLC’s Complaint. Imperial, for its part, not
only denied Sun Life’s allegations regarding the lawfulness of Imperial’s
acquisition and ownership of the Sun Life policies, it also (through its subsidiary,
Imperial Premium Finance, LLC (“IPF”)) filed suit in the Southern District of
Florida, alleging in relevant part that Sun Life’s efforts to challenge Imperial’s
ownership of the policies was (i) in breach of the policy agreements and (ii) itself
part of Sun Life’s own fraudulent scheme. 4
IPF’s contract claim alleged that Sun Life breached two provisions in the
policy agreements. First, IPF alleged that Sun Life breached the policies’
“incontestability clause,” which provides:
After this Policy has been in force during the lifetime of the
[i]nsured for a period of two years from its Issue date, we [Sun
Life] cannot contest it except for non-payment of [p]remiums.
3
The first six counts were brought only against Imperial Holdings, Inc., and the seventh count
for a declaratory judgment was brought against all defendants.
4
IPF also brought claims for declaratory judgment, breach of the covenant of good faith and fair
dealing, and promissory estoppel. See No. 13-cv-80730, Dkt. No. 1 (S.D. Fla. July 29, 2013).
IPF voluntarily dismissed its declaratory judgment and promissory estoppel claims prior to
summary judgment. See Dkt. 194, 212. The district court dismissed IPF’s implied covenant
claim at summary judgment. IPF does not appeal this ruling.
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Dkt. 472-1 at 14. Imperial not only invoked the incontestability clause as a
complete defense to Sun Life’s affirmative claims (which were brought more than
two years after issuance of the policies), it also contended (through IPF’s lawsuit)
that Sun Life’s challenges to the policies breached the same clause entitling IPF to
damages.
Second, IPF contended that Sun Life breached the policies’ “rights-and-
privileges clause,” which provides:
You [the policyowner] have the sole and absolute power to
exercise all rights and privileges under [the Policy] without the
consent of any other person.
Dkt. 472-1 at 16. IPF ultimately contended that Sun Life interfered with Imperial’s
“rights and privileges” under the policies in four ways: (i) refusing to honor
requests to name Imperial as a policyowner and beneficiary; (ii) failing to provide
Imperial with timely notice that a policy was lapsing; (iii) interfering with
Imperial’s ability to assign rights under the policies; and (iv) contesting the
policies outside of the contestable period. See Dkt. 471 at 4. IPF alleged that
Imperial was harmed by these breaches because they raised concerns about the
propriety of Imperial’s ownership of the policies, which, in several ways, lowered
the policies’ value and led to increased costs. Most relevant, IPF contended that
the “cloud” placed over the policies by Sun Life’s actions prohibited Imperial from
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using the policies as collateral for certain credit facilities. See No. 17-10189 Br. of
Appellant at 9, 14, 33.
IPF’s fraud claim alleged principally that Sun Life falsely told the policy
owners that it would not contest policies beyond the two-year contestable period
despite its hidden intent to contest beyond that period the validity of any policy
financed or acquired by Imperial (or any other premium finance company). IPF
also asserted a fraudulent omission theory, contending that Sun Life represented in
post-contract communications that the Imperial-owned policies were in force,
active, valid, and incontestable after two years, while omitting its true views to the
contrary. IPF alleged that Sun Life intended by these misrepresentations to induce
“Imperial to continue to pay premiums that Sun Life intended to collect as excess
profits and has been scheming to forever keep.” No. 13-cv-80730, Dkt. No. 1 ¶
115 (S.D. Fla. July 29, 2013).
The district court, in a series of rulings after consolidating the two cases,
dismissed all the claims in each action. We briefly summarize the relevant rulings.
Dismissal of Sun Life’s Claims. In a December 2014 ruling from the bench,
the district court dismissed for failure to state a claim under Fed. R. Civ. P.
12(b)(6) the following of Sun Life’s claims: (i) RICO conspiracy; (ii) aiding and
abetting fraud; (iii) fraud conspiracy; (iv) tortious interference with contractual
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relations; and (v) declaratory judgment.5 Dkt. 191–92. In a February 2015 ruling
on Imperial’s motion for summary judgment, again from the bench, the district
court dismissed Sun Life’s remaining claims for (i) RICO and (ii) fraud,
concluding that those claims are barred by the policies’ incontestability clause.
Dkt. 293 at 18:14–19:21. Sun Life appeals the dismissal of each of its seven
claims.
Dismissal of IPF’s Claims. In a June 2016 ruling from the bench, the
district court dismissed under Fed. R. Civ. P. 12(c) one theory of IPF’s breach of
contract claim, specifically, that Sun Life’s filing of a declaratory judgment claim
breached the incontestability clause.6 Dkt. 441–42. In a September 2016 written
ruling, the district court granted Sun Life’s motion for summary judgment,
dismissing each of IPF’s remaining claims, including breach of contract and fraud.
See Sun Life Assurance Co. of Can. v. Imperial Holdings Inc., 2016 WL 10565034(S.D. Fla. Sept. 22, 2016). IPF appeals the dismissal only of its breach of contract
and fraud claims.
5
The district court had previously granted Imperial’s motion to dismiss an earlier version of Sun
Life’s complaint, principally because Sun Life failed to plead with particularity an agency
relationship between Imperial and its producers. Dkt. 142.
6
The district court had previously denied Sun Life’s motion to dismiss IPF’s complaint under
Fed. R. Civ. P. 12(b)(6), rejecting Sun Life’s assertion that it was absolutely immune from IPF’s
suit under Florida’s litigation privilege, see infra at 37–42. Dkt. 291. Sun Life sought an
immediate appeal to this Court under the collateral order doctrine, but we dismissed the appeal
for lack of jurisdiction. See Sun Life Assurance Co. of Can. v. Imperial Holdings, Inc., No. 15-
10843 (11th Cir. Dec. 17, 2015) (unpublished).
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DISCUSSION
Because all of the claims on appeal by both sides were variously dismissed
on motions to dismiss, Fed. R. Civ. P. 12(b)(6), motions for judgment on the
pleadings, Fed. R. Civ. P. 12(c), or motions for summary judgment, Fed. R. Civ. P.
56, we review each de novo. Jara v. Núñez, 878 F.3d 1268, 1271 (11th Cir. 2018)
(12(b)(6)); Perez v. Wells Fargo N.A., 774 F.3d 1329, 1335 (11th Cir. 2014)
(12(c)); Baas v. Fewless, 886 F.3d 1088, 1091 (11th Cir. 2018) (56).
The standards for reviewing decisions on motions to dismiss and motions for
judgment on the pleadings are the same: “whether the count stated a claim for
relief.” Strategic Income Fund, L.L.C. v. Spear, Leeds & Kellogg Corp., 305 F.3d
1293, 1295 n.8 (11th Cir. 2002). To state a claim, a “complaint must include
‘allegations plausibly suggesting (not merely consistent with)’ the plaintiff’s
entitlement to relief.” Lisk v. Lumber One Wood Preserving, LLC, 792 F.3d 1331,
1334 (11th Cir. 2015) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557
(2007)). In our review, we must accept all facts in the complaint as true and view
those facts in the light most favorable to the plaintiff. See Jara, 878 F.3d at 1271–
72; Perez, 774 F.3d at 1335. To prevail at summary judgment, the movant must
demonstrate that there is “no genuine dispute as to any material fact and [that it] is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A “material” fact is
one that “might affect the outcome of the suit under the governing law.” Baas, 886
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F.3d at 1091 (internal quotation marks omitted). In reviewing the summary
judgment record, we must view the “submitted evidence in the light most favorable
to the non-moving party.” Id.
Turning to the merits, we now explain our decisions to affirm in part, vacate
in part, and remand both causes for further proceedings.
I. Law Governing the Policies
Prior to separately addressing the parties’ claims, we need to resolve a
dispute over which states’ laws should be applied in interpreting the relevant policy
agreements. Florida law, which controls our choice-of-law analysis, see Klaxon Co.
v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941), provides that a contract must
be interpreted according to the law of the state of the contract’s execution. See
State Farm Mut. Auto. Ins. Co. v. Roach, 945 So.2d 1160, 1163 (Fla. 2006).
Determining a contract’s state of execution is generally a “fact-intensive” analysis
that looks to the location of the “last act necessary to complete [the] contract,”
which is most often the offeree’s communication of its acceptance to the offeror.
Prime Ins. Syndicate, Inc. v. B.J. Handley Trucking, Inc., 363 F.3d 1089, 1092–93
(11th Cir. 2004). In dismissing Sun Life and IPF’s claims, the district court
conducted no such choice-of-law analysis. Sun Life asserts this was in error, but
we disagree.
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Sun Life contends that the district court was required, under Florida’s
choice-of-law rules, to interpret the policies at issue under the laws of the myriad
states in which the individual life insurance policies were executed. In doing so,
Sun Life points to American United Life Insurance Co. v. Martinez, 480 F.3d 1043(11th Cir. 2007), where we applied Florida’s choice-of-law rules to interpret
incontestability clauses in life insurance contracts executed outside of Florida. Id.at 1059–60. There, we affirmed dismissal of the insurers’ claims only after
determining which state’s law applied to each policy and how each such state
assesses the impact of incontestability clauses on the claims. Id. at 1059–66. For
example, although Ohio law on incontestability clauses precluded one of the
insurer’s claims, id. at 1061–62, the same was not true as to California law, which
had a potentially relevant exception allowing for circumvention of an
incontestability clause, id. at 1063–64. Sun Life contends that the district court
was required to follow Martinez and determine which state’s law applied to each
life insurance policy and then to subsequently apply that law to the claims in
question.
Sun Life’s issue with the district court suffers from a fatal defect: unlike the
insurers in Martinez, Sun Life neither provided information regarding contract
formation in its pleadings that would have enabled the district court to conduct a
choice-of-law analysis nor informed the district court which states’ laws it believed
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applied. 7 Consequently, Sun Life waived its opportunity for the district court to
apply non-Florida law to the policies at issue.
Under our precedents, a party waives its opportunity to rely on non-forum
law where it fails to timely provide—typically in its complaint or the first motion
or response when choice-of-law matters—the sources of non-forum law on which
it seeks to rely. See Stone v. Wall, 135 F.3d 1438, 1442 (11th Cir. 1998) (per
curiam) (“Foreign law is a fact to be pleaded and proved; and when the contrary is
not alleged, the law of the sister state will be assumed to be the same as Florida
law.”) (citing Collins v. Collins, 36 So.2d 417, 417 (Fla. 1948)); see also Bethell v.
Peace, 441 F.2d 495, 497 (5th Cir. 1971) (“[T]he party relying on foreign law must
plead and prove it. [Plaintiff] . . . made no allegations in her pleadings, nor any
showing at any point in the litigation, as to what is the relevant [foreign] law. In
the absence of any such showing, the district court was entitled to assume that
[foreign law] was the same as Florida law.” (citing Movielab, Inc. v. Davis, 217
So.2d 890, 891 (Fla. 3d DCA 1969)). 8
7
The Martinez plaintiff, unlike Sun Life here, attached to its complaint the relevant insurance
applications, which specifically noted the location where the applications were signed. See, e.g.,
No. 04-cv-61143, Dkt. No. 33 at 170–74 (S.D. Fla. filed Mar. 15, 2005) (Gerald Metoyer
insurance application, noting it was signed in Riverside, California); see Martinez, 480 F.3d at
1063 (applying California law to Metoyer’s insurance policy because “[h]e signed the
application in California”).
8
We are bound by Fifth Circuit decisions issued prior to September 30, 1981. See Bonner v.
City of Pritchard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc).
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Sun Life did not plead non-forum law. Its complaint is not just devoid of a
stated intention to rely on non-Florida law, it also contains almost no facts from
which the court could have determined which state’s law might have applied to
each policy. To be sure, Sun Life’s complaint listed detailed facts about the
formation of many of the policies at issue, at times in granular detail, see, e.g., SL
SAC ¶¶ 55–61, but it said very little as to where any of the policy contracts were
executed, see generally SL SAC ¶¶ 55–348, which is the relevant inquiry under
Florida law. Sun Life also never proffered non-forum law in opposition to IPF’s
claims.
Not only did Sun Life fail to plead non-forum law, it seemed quite content
early in the litigation with the application of Florida law to each of the policies: its
primary argument to the district court in support of its declaratory judgment claim
was that the policies were void ab initio because they lacked an “insurable interest”
under Florida’s insurable interest statute. See Dkt. 61 at 18–19. At the time, Sun
Life likely viewed this as sound strategy, evidenced by its citations to numerous
federal district courts applying Florida law to conclude that life insurance policies
originated by strangers to the insured lacked the statutorily required “insurable
interest.”
Despite the silence of its pleading as to non-forum law, Sun Life contends
that it sufficiently raised the issue to the district court by referring to a choice-of-
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law analysis in opposition to Imperial’s dispositive motions. It relies on the fact
that it told the district court a choice-of-law analysis was “premature” at the motion
to dismiss stage in relation to its declaratory judgment claim, Dkt. 61 at 19–20;
Dkt. 160 at 3 n.1; see also Dkt. 182-1 at 2–3, and that it raised the issue again in
opposition to Imperial’s summary judgment motion, asserting that it was
Imperial’s burden to “come forward with the authority” necessary for the
application of out-of-state law, Dkt. 215 at 6–7 (sealed).
We disagree that Sun Life’s general references to a choice-of-law analysis in
opposition to Imperial’s dispositive motions sufficiently raised the issue with the
district court. Sun Life is the party now seeking the application of non-forum law,
yet it repeatedly abdicated its responsibility to proffer the information necessary
for the choice-of-law analysis to take place. This is not in accord with the steps we
require to raise non-forum law before a district court. See Stone, 135 F.3d at 1442;
Bethell, 441 F.2d at 497. We also disagree with Sun Life that it was “premature”
for the district court to have conducted a choice-of-law analysis at the motion to
dismiss stage. Cf. Martinez (conducting choice-of-law analysis at the 12(b)(6)
stage). The responsibility for any failure by the district court to apply non-forum
law rests squarely with Sun Life and not the district court.
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For the foregoing reasons, we conclude that Sun Life waived its opportunity
to rely on non-forum law to interpret the policies at issue. Consequently, we
interpret the relevant policies in these cases pursuant to Florida law.
II. Sun Life’s Claims
Sun Life appeals the dismissal of each of its claims, two of which (RICO
and fraud) were dismissed at summary judgment and the rest (RICO conspiracy,
aiding and abetting fraud, fraud conspiracy, tortious interference with contractual
relations, and declaratory judgment) dismissed on the pleadings. We affirm the
dismissal of Sun Life’s fraud conspiracy and declaratory judgment claims, but we
vacate the dismissal of Sun Life’s remaining claims.
a. Count I (RICO) & Count III (Fraud)
Sun Life’s claims for RICO and common law fraud depend on the same
alleged fraudulent scheme, discussed supra at 6–8. 9 To summarize, Sun Life
contends that Imperial orchestrated an elaborate scheme to procure Sun Life
policies despite knowing that Sun Life did not want its policies owned by
companies like Imperial, which intended to use the policies solely as investment
vehicles. Using its network of producers, Imperial recruited senior citizens to
apply for Sun Life insurance policies and told them that Imperial would finance the
premium payments. Knowing that Sun Life would reject such an arrangement,
9
The specifically alleged predicate acts underlying Sun Life’s RICO claim are mail fraud, 18
U.S.C. § 1341, and wire fraud, 18 U.S.C. § 1343. SL SAC ¶ 360.
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Imperial directed the producers to falsely represent on the application forms (which
they transmitted to Sun Life through United States mail or interstate wire) that the
insureds did not plan to acquire premium financing or to transfer their policies to
the secondary market. Sun Life issued the policies which it would not have done
had it known of the misrepresentations on the applications.
Aware that Sun Life could challenge the validity of the policies during the
contractual two-year contestable period that followed their issuance, however,
Imperial deceptively hid its involvement during that period, principally by
funneling premium payments to Sun Life through the Bank of Utah and the Family
Insurance Trust as loans. After the expiration of the contestable period, Imperial
forgave the insureds’ debts to induce the insureds to transfer ownership of the
policies to Imperial. Sun Life, now effectively time-barred by the incontestability
clause from contesting the validity of the policies, was stuck with the investor-
owned policies that it actively sought to avoid. Sun Life was harmed by this
scheme, it claims, because sophisticated investors such as Imperial can manipulate
the value of the policies in ways that Sun Life knows a typical policy consumer
does not, which makes the policies less profitable to Sun Life.
The district court dismissed Sun Life’s RICO and fraud claims bottomed on
the foregoing scheme at summary judgment, concluding that those claims are time-
barred by operation of the incontestability clause. On appeal, Imperial defends the
20
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district court’s conclusion. 10 The issue here is therefore straight-forward: does the
incontestability clause bar Sun Life from asserting its RICO and fraud claims? 11
We conclude that it does not and vacate the district court judgment to the contrary.
As discussed, the incontestability clause provides that:
After this Policy has been in force during the lifetime of the
[i]nsured for a period of two years from its Issue date, we [Sun
Life] cannot contest it except for non-payment of [p]remiums.
Dkt. 472-1 at 14. As Sun Life does not dispute that it brought its RICO and fraud
claims more than two years after issuance of each of the relevant policies, the only
issue is whether, through those claims, Sun Life “contest[s]” the policies.
Imperial argues that any fraud-based claim that is related to the policies is a
“contest[ing]” of the policies and is therefore barred by the incontestability clause.
In fact, Imperial goes so far as to contend that the incontestability clause bars Sun
10
Imperial does not contend, as it did below, see Dkt. 201 at 6–21, that Sun Life’s RICO and
fraud claims are otherwise deficient. See No. 17-10415 Br. of Appellees at 21–29.
11
Sun Life also contends that Imperial Holdings, Inc. (“IHI”) (the only defendant named in Sun
Life’s RICO and fraud claims) lacks standing to invoke the incontestability clause as a defense to
Sun Life’s claims because IHI is not a record owner of any of the policies. Although true that
IHI is not a record owner, it is also undisputed that each record owner is itself an IHI subsidiary
or affiliate. See Dkt. 200-61; SL SAC ¶¶ 13–20; Dkt. 193 ¶¶ 13–20. To the extent these
subsidiaries or affiliates are agents of IHI, IHI would have standing to enforce their contractual
rights. See Nardi v. Cont’l Nat’l Bank, 559 So.2d 307, 309 (Fla. 3d DCA 1990). Imperial
(through its affiliate, IPF), later (after Sun Life’s RICO and fraud claims were dismissed)
introduced unrebutted evidence that each of the policy owners are agents of IHI, see Dkt. 472-15
¶ 3(i), but Sun Life ultimately disputed that assertion. Compare Dkt. 472 ¶ 33 n.5, with Dkt. 494
¶ 33. As we conclude that the incontestability clause is not a bar to Sun Life’s RICO and fraud
claims against IHI, we need not resolve this dispute.
21
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Life from “mak[ing] the Policies the subject of a legal case.” 12 No. 17-10415 Br.
of Appellees at 26–27. Sun Life disagrees, contending that an insurer “contests” a
life insurance policy only where it seeks rescission of the policy as a remedy,
which ultimately means a release from the obligation to pay benefits upon the
death of the insured (or a repayment of death benefits already distributed). Here
Sun Life argues that it does not seek to rescind any of the policies through its
RICO and fraud claims, but that these claims seek only to recover lost profits
attributable to the fact that the policies are investor-owned rather than consumer-
owned. We agree with Sun Life.
Although Florida law strictly construes incontestability clauses against
untimely claims to void life insurance policies, see Bankers Sec. Life Ins. Soc. v.
Kane, 885 F.2d 820, 822 (11th Cir. 1989), Florida courts have not addressed
whether an incontestability clause may bar an insurer’s fraud-based claim that
seeks a remedy other than a voiding of the policy. 13 Nevertheless, this is not the
12
This position is certainly incorrect. See, e.g., Allen v. Aetna Life Ins. Co., 563 F.2d 1240, 1241
(5th Cir. 1977) (per curiam) (“An incontestable clause does not bar the insuror from proving that
the loss was not covered by the terms of the policy.”).
13
Contrary to the district court’s analysis, we are not controlled on this question by Martinez.
There, we concluded that Ohio, West Virginia, Massachusetts, and Illinois law would each
interpret the incontestability clauses at issue to bar the plaintiffs-insurers’ fraud-based claims in
those cases. 480 F.3d at 1059–66. Martinez is inapposite for at least two reasons: (i) we had no
occasion in Martinez to address Florida law, which governs our review of the policies here, see
supra at 14–18; and (ii) regardless, we see no indication that we were confronted in Martinez
with the specific argument Sun Life poses here: that where a life insurer seeks non-rescission
damages, it does not seek to “contest” the policy.
22
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first time we have confronted the issue. In Kane, life insurance companies filed
suit beyond the contestable period seeking to void policies on the ground that the
insured fraudulently misrepresented his criminal history in his applications. 885
F.2d at 820–21. As relevant here, the insurers argued that even if the
incontestability clause barred their contract claims, the clause could not bar their
fraud claims, citing Guarantee Trust Life Insurance Co. v. Wood, 631 F. Supp. 15(N.D. Ga. 1984), which stood for just that proposition (under Georgia law). Id. at
822. Although we rejected the argument, we did not disagree with Wood, but
rather concluded that it was inapposite on the facts before us given that the
insurers’ fraud claims in Kane, as opposed to those in Wood, sought to void the life
insurance policies: “[a]lthough Wood may have involved facts that justified the
court’s ruling, in this case a fraud suit would merely provide a different means to
challenge the validity of the insurance contract.” Id. Although it was dictum, we
envisioned in Kane that, under Florida law, a life insurance policy’s
incontestability clause would not bar a fraud claim that did not seek to void the
policy. And at least one court has relied on Kane to conclude that Florida’s
incontestability statute does not bar fraud claims that, like Sun Life’s, “seek[] not
to void the contract, but rather damages for the fraud.” Sciaretta v. Lincoln Nat’l.
Life Ins. Co., 899 F. Supp. 2d 1318, 1328 (S.D. Fla. 2012), aff’d, 778 F.3d 1205.
We think this is the correct approach.
23
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As a textual matter, a lawsuit seeking damages without asking to rescind a
life insurance policy cannot reasonably be construed as “contest[ing]” “th[e]
Policy,” Dkt. 472-1 at 14 (emphasis added), which would remain fully in force
despite the entry of judgment on a fraud claim (such as Sun Life’s) under the exact
terms on which it was executed. Further, to allow damages without rescinding the
death benefit obligation does not significantly impact the rationale behind
incontestability clauses. Justice Holmes noted nearly a century ago that the “object
of the [incontestability] clause is plain and laudable—to create an absolute
assurance of the benefit.” Nw. Mut. Life Ins. Co. v. Johnson, 254 U.S. 96, 101
(1920). That the prevailing function of an incontestability clause is to remove
from any doubt a life insurer’s obligation to pay death benefits (following a
reasonable period to allow the insurer to investigate) helps explain why Florida law
has singularly focused its application of incontestability clauses on efforts to void
policies. See Kane, 885 F.2d at 821 (a principal “purpose of [Florida’s
incontestability] statute is to . . . protect[] consumers from untimely efforts to void
policies.” (emphasis added) (citing Prudential Ins. Co. of Am. v. Prescott, 176 So.
875 (Fla. 1937))); Allstate Life Ins. Co. v. Miller, 424 F.3d 1113, 1115 (11th Cir.
2005) (“Florida’s appellate courts have uniformly held that once the
incontestability clause becomes effective, insurers are barred from attempting to
rescind or cancel the insurance policy based on allegations that the insured
24
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engaged in fraud or misrepresentation.” (emphasis added)); Allstate Life Ins. Co. v.
Fox, 700 So.2d 49, 49–50 (Fla. 5th DCA 1997) (incontestability clauses “prevent[]
the insurer from raising [fraud] as a defense to payment of a claim”) (emphasis
added); cf. Prescott, 176 So. at 878 (incontestability clauses give “the insured a
guaranty against expensive litigation to defeat his policy” (emphasis added)).
Where, as here, a life insurer sues alleging that it was fraudulently induced
to enter into a life insurance contract but does not seek any relief that would call
into question the continuing viability of the policy, we do not think that the insurer
“contest[s]” that policy. Consequently, we vacate the dismissal of Sun Life’s
RICO and fraud claims to the extent those claims seek a remedy other than
effective rescission of the policies.
b. Count II (RICO Conspiracy) & Count V (Fraud Conspiracy)
Sun Life alleged that Imperial conspired with the producers, as well as the
Bank of Utah, and the Family Insurance Trust, to commit RICO predicate acts and
common law fraud. SL SAC ¶¶ 367, 390. The alleged conduct underlying both
conspiracy claims was the submission of fraudulent life insurance applications to
Sun Life. See SL SAC ¶¶ 375, 391. 14 The district court granted Imperial’s motion
to dismiss both claims on the ground that Sun Life failed to plead sufficient facts to
establish a plausible conspiracy. Dkt. 192 at 56–57. We affirm the dismissal of
14
As with its RICO claims, the underlying predicate acts supporting Sun Life’s RICO conspiracy
claim are mail fraud, 18 U.S.C § 1341, and wire fraud, 18 U.S.C. § 1343. SL SAC ¶ 368.
25
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Sun Life’s fraud conspiracy claim but vacate the dismissal of Sun Life’s RICO
conspiracy claim.
“[A] conspiracy requires a meeting of the minds between two or more
persons to accomplish a common and unlawful plan.” McAndrew v. Lockheed
Martin Corp., 206 F.3d 1031, 1036 (11th Cir. 2000) (en banc) (internal citations
omitted). “[W]here a conspiracy claim alleges that two or more parties agreed to
commit fraud, the plaintiff must . . . plead this act with specificity.” Martinez, 480
F.3d at 1065.
Sun Life’s fraud conspiracy claim does not meet these criteria. Sun Life’s
claim that Imperial conspired with the producers to commit fraud fails because Sun
Life did not plausibly allege that the producers and Imperial are independent
entities that were capable of conspiring to commit common law fraud as alleged by
Sun Life. Sun Life repeatedly alleged that the producers were agents (or even
employees) of Imperial in relation to their submission of life insurance applications
to Sun Life, see SL SAC ¶¶ 32, 34, 35, 54, 68, 79, 91, 108, 122, 134, 147, 158,
172, 188, 199, 212, 223, 234, 247, 258, 263, 273, 284, 297, 312, 326, 339, 348,
360, 382,15 and “it is not possible for a single legal entity consisting of the
corporation and its agents to conspire with itself,” McAndrew, 206 F.3d at 1036
15
Indeed, Sun Life argued at summary judgment that “[d]iscovery has revealed overwhelming
evidence that the producers acted as Imperial’s agents in submitting the life insurance
applications.” Dkt. 215 at 2 (sealed).
26
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(discussing federal law). 16 Sun Life’s fraud conspiracy claim cannot survive.17
The same analysis does not apply, however, to Sun Life’s claim for RICO
conspiracy. See 18 U.S.C. § 1962(d). We have concluded that the principle
discussed in McAndrew, known as the “intracorporate conspiracy doctrine,” does
not apply to civil claims for RICO conspiracy. Kirwin v. Price Commc’ns Corp.,
391 F.3d 1323, 1326–27 (11th Cir. 2004) (“[J]ust as the intracorporate conspiracy
doctrine cannot shield a criminal conspiracy from prosecution under the federal
criminal code, the doctrine cannot shield the same conspiracy, alleging the same
criminal wrongdoing, from civil liability arising under [18 U.S.C. § 1962(d)].”).
And we disagree with Imperial’s attacks on the merits of Sun Life’s RICO
conspiracy claim, specifically, that Sun Life did not plead (i) an agreement
between Imperial and the producers, and (ii) racketeering activity. No. 07-10415
Br. of Appellees at 30–35; see Am. Dental Ass’n v. Cigna Corp., 605 F.3d 1283,
1293–96 (11th Cir. 2010).
16
Sun Life contends that it was free to plead a non-agency theory in the alternative. No. 17-
10415 Reply Br. of Appellant at 22–23 (citing Fed. R. Civ. P. 8(d)). While true, it did not so
plead. Rule 8(d)(2) requires that “alternative statements” be “set out” in the pleading, a
requirement that is generally met through “‘either-or’ propositions” or “‘if-then’ allegations,”
Wright & Miller, 5 Fed. Prac. & Proc. Civ. § 1282 (3d ed. Apr. 2018), which Sun Life did not
include. Indeed, in nearly each of its paragraphs under its conspiracy counts Sun Life seems to
reaffirm its allegation that the producers were agents of Imperial, repeatedly referring to Imperial
and “its . . . producers.” SL SAC ¶¶ 367–75, 390, 392 (emphasis added).
17
Sun Life’s claim that Imperial conspired with the Bank of Utah and the Family Insurance Trust
also fails because the complaint contains no non-conclusory allegations supporting a plausible
agreement between those parties specifically to submit false applications to Sun Life, which is
the only fraudulent act alleged in Sun Life’s conspiracy counts. See Martinez, 480 F.3d at 1067–
68 (plaintiff must plead that the “parties agreed to commit fraud . . . with specificity”).
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First, Sun Life’s complaint easily permits the inference that Imperial and the
producers entered into an agreement to effectuate Imperial’s fraudulent plan. As
discussed, the complaint contains myriad details of Imperial’s interaction with and
direction of the producers with respect to Imperial’s alleged scheme, see, e.g., SL
SAC ¶¶ 55–65, 68, which included Imperial compensating the producers for their
knowing submission of fraudulent applications to Sun Life, SL SAC ¶ 42–45. In
light of those allegations, an agreement between Imperial and the producers is
certainly plausible.
Second, Sun Life pled RICO predicate racketeering acts: the commission of
mail and wire fraud, 18 U.S.C. §§ 1341, 1343, which “[b]oth . . . require that a
person (1) intentionally participate[d] in a scheme or artifice to defraud another of
money or property, and (2) use[d] or ‘cause[d]’ the use of the mails or wires for the
purposes of executing the scheme or artifice.” United States v. Ward, 486 F.3d
1212, 1222 (11th Cir. 2007). Sun Life met its burden by alleging that the
producers used the United States mail and interstate wire to submit life insurance
applications to Sun Life that contained several misrepresentations that induced Sun
Life’s issuance of the policies. For example, Sun Life alleged that the producers
misrepresented that the insureds did not intend for policy premiums to be financed
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through a loan “now or in the future.” See, e.g., SL SAC ¶ 62. 18 But, as Sun Life
also alleged, the producers knew the contrary to be true. See, e.g., SL SAC ¶¶ 57–
61. And Sun Life’s reliance on those misrepresentations is supported by the
allegation that Sun Life framed the relevant application questions precisely to
avoid issuing premium-financed policies or policies intended at the outset for the
secondary market. See SL SAC ¶¶ 5, 30. Finally, Sun Life alleged the damages it
faced by issuing less profitable premium-financed policies. SL SAC ¶¶ 364–66.
Consequently, we conclude that the district court properly dismissed Sun
Life’s fraud conspiracy claim but that it erred in dismissing Sun Life’s RICO
conspiracy claim to the extent such claim alleges a conspiracy between Imperial
and the producers.
c. Count IV (Aiding and Abetting Fraud)
Florida courts have for some time assumed without deciding that a cause of
action exists for aiding and abetting fraud, “presum[ing] that [the claim] has three
elements: (1) the existence of an underlying fraud; (2) that the defendant had
knowledge of the fraud; and (3) that the defendant provided substantial assistance
to advance the commission of the fraud.” Chang v. JPMorgan Chase Bank, N.A.,
845 F.3d 1087, 1097–98 (11th Cir. 2017) (internal quotation marks and alterations
18
Imperial argues that the applications did not actually contain misrepresentations made by the
producers to Sun Life. No. 17-10415 Br. of Appellees 34–37. But, its argument depends on
material outside of the pleadings, which may not be considered at the Rule 12(b) stage.
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omitted). 19 Assuming the cause of action exists, the district court concluded that
Sun Life failed to state an aiding and abetting fraud claim under Rule 12(b)(6)
because it did not plead “how the Defendant had knowledge of the alleged fraud.”
Dkt. 192 at 57. We disagree with that conclusion.
For reasons that have largely been discussed, Sun Life adequately pled each
element of an aiding and abetting fraud claim. First, we have already identified the
allegations supporting the plausibility of an underlying fraud of someone other
than Imperial (the producers). See supra at 28–29. Second, Sun Life has alleged
that Imperial knew about the producers’ fraudulent application statements. See SL
SAC ¶ 63. And third, Sun Life has alleged that Imperial provided “substantial
assistance” to the producers’ submission of the fraudulent applications. 20 The
alleged “substantial assistance” is best illustrated by the fact that, prior to directing
the producers to submit applications to Sun Life, Imperial reviewed the applicants’
medical records to determine if the policies were ones that Imperial would want to
finance, see, e.g., SL SAC ¶¶ 39, 57, and that Imperial compensated the producers
for each policy that Sun Life ultimately issued as a result of Imperial’s scheme, see
SL SAC ¶ 45. Consequently, Sun Life alleged not only that Imperial had
19
Imperial does not argue that there is no aiding and abetting fraud claim under Florida law, and
we therefore also assume its existence. See Lamm v. State St. Bank & Trust, 749 F.3d 938, 950
n.9 (11th Cir. 2014).
20
Imperial does not argue (as it does as to Sun Life’s fraud conspiracy and tortious interference
with contractual relations claims) that Sun Life’s aiding and abetting fraud claim fails in light of
Sun Life’s allegations that the producers were agents of Imperial.
30
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knowledge of the producers’ fraud but that it provided “substantial assistance” to
the fraud and that it directed and incentivized it.
Plainly, Sun Life sufficiently pled an aiding and abetting fraud claim, and
we accordingly vacate the district court’s ruling to the contrary.
d. Count VI (Tortious Interference with Contractual Relations)
Sun Life alleged that the producers that conspired with Imperial to defraud
Sun Life were simultaneously under contract with Sun Life, and that those
contracts prohibited the producers from, inter alia, making fraudulent statements
on Sun Life insurance applications. SL SAC ¶¶ 395–96. Sun Life therefore
alleged that Imperial tortiously interfered with these contracts, by, most notably,
directing the producers to submit fraudulent applications to Sun Life. The
elements of a Florida law tortious interference with contractual relations claim are:
(i) the existence of a contract; (ii) the defendant’s knowledge thereof; (iii) the
defendant’s intentional and unjustified procurement of a breach thereof; and
(iv) damages. See Johnson Enters. of Jacksonville, Inc. v. FPL Grp., Inc., 162
F.3d 1290, 1321 (11th Cir. 1998). The district court granted Imperial’s motion to
dismiss the claim, concluding that: “I don’t see that specific facts have been pled
pursuant to Rule 9(b) as to how the Defendant [Imperial] knew of the existence of
the alleged producer contracts, and how Defendant [Imperial] knew that the
producers were in breach of those contracts.” Dkt. 192 at 57. We disagree.
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Imperial raises three arguments in support of the dismissal of Sun Life’s
tortious interference claim: (i) Sun Life failed to plead Imperial’s knowledge of
the producers’ contracts with Sun Life; (ii) Sun Life failed to plead that Imperial
interfered with those contracts; and (iii) Sun Life alleged that the producers are
agents of Imperial, and a principal cannot tortiously interfere with its agents’
contracts. We are unpersuaded.
Imperial’s first two arguments can be quickly set aside. Sun Life expressly
alleged that Imperial knew of the producers’ contracts with Sun Life. SL SAC
¶ 397. Contrary to the district court’s conclusion, Sun Life need not have pled
Imperial’s knowledge of the relevant contracts with specificity, even assuming
Rule 9(b) applies. See Fed. R. Civ. P. 9(b) (“In alleging fraud . . . knowledge . . .
may be alleged generally.”). Sun Life also pled Imperial’s interference with the
relevant contracts. As discussed above, Sun Life alleged that Imperial’s scheme
depended on (and, significantly, incentivized) the producers’ submission of
fraudulent statements on Sun Life’s application forms, acts which allegedly
breached the producers’ contracts with Sun Life. SL SAC ¶ 396.
Finally, we reject at this stage Imperial’s third argument that Imperial could
not have tortiously interfered with the producers’ contracts in light of Sun Life’s
allegations that the producers were Imperial’s agents. Even if there are instances
in which a principal cannot tortiously interfere with its agent’s contracts, the agent
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must have been “acting within his capacity and scope as an agent” when executing
the contract for the rule to apply. See Cedar Hills Props. Corp. v. E. Fed. Corp.,
575 So.2d 673, 676 (Fla. 1st DCA 1991). Although Sun Life pled that the
producers were agents of Imperial for purposes of submitting insurance
applications to Sun Life (thereby precluding the core of Sun Life’s fraud
conspiracy claims), it is not readily apparent that Sun Life also alleged that the
producers were acting as Imperial’s agents when they contracted with Sun Life.
Sun Life did not allege that Imperial directed the producers to enter into the
contracts with Sun Life, or that the producers entered into those contracts for
Imperial’s benefit. See Ilgen v. Henderson Props., Inc., 683 So.2d 513, 515 (Fla.
2d DCA 1996).21
Consequently, we conclude that, at this stage, Sun Life has adequately pled
its tortious interference with contractual relations claim, and we vacate the district
court’s ruling to the contrary.
21
We note, however, that certain of Sun Life’s allegations suggest that the producers were
employees of Imperial when they contracted with Sun Life. And Sun Life states in its brief on
appeal that at least some of the producers entered into the relevant contracts with Sun Life “in
the course and scope of their employment with Imperial.” No. 17-10415 Br. of. Appellant at 47
(emphasis added). To the extent any of the producers’ contracts were executed within the scope
of the producers’ employment (or agency) with Imperial, we think Sun Life will be hard pressed
to make out its tortious interference claim as to that contract (thought it may have a breach of
contract claim). Nevertheless, this dispute is properly the subject of subsequent stages of this
litigation.
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e. Count VII (Declaratory Judgment)
Sun Life sought a declaratory judgment that “each of the policies procured
through the Imperial scheme lacked an insurable interest at its inception and should
be declared void ab initio.” SL SAC ¶ 402. The premise of the claim is that the
policies owned by Imperial are unlawful in light of state law prohibiting the
procurement of life insurance policies in which the beneficiary lacks an “insurable
interest” in the insured individual at the time the policy is issued. See Fla Stat. §
627.404(1). The district court dismissed the claim under Rule 12(b)(6) and we
affirm because Sun Life effectively conceded that its declaratory judgment claim is
foreclosed under controlling Florida law by Wells Fargo Bank, N.A. v. Pruco Life
Insurance Co., 200 So.3d 1202 (Fla. 2016). See No. 17-10415 Reply Br. of
Appellant at 2 n.2; Pruco, 200 So.3d at 1205–06 (concluding that policies procured
in the precise manner in which Sun Life alleges Imperial procured its Sun Life
policies here “have the insurable interest required by section 627.404,” because the
policies, “at their inception, benefitted individuals with insurable interests”
(emphasis added)).
III. IPF’s Claims
As previously discussed, IPF’s suit against Sun Life alleged in relevant part
that Sun Life’s efforts to challenge and undermine Imperial’s ownership of the
policies breached the policy agreements and was itself part of its own fraudulent
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scheme. The district court dismissed one theory of IPF’s contract claim on the
pleadings and dismissed the remainder of the contract claim and IPF’s fraud claim
at summary judgment. We address each claim on appeal in turn.
a. Count II (Breach of Contract)
A breach of contract claim under Florida law requires the existence of a
contract, the breach of the contract, and damages resulting from the breach. See
DNA Sports Performance Lab, Inc. v. Club Atlantis Condo. Assoc., Inc., 219 So.3d
107, 109 (Fla. 3d DCA 2017). IPF asserts that Sun Life’s efforts to obstruct
Imperial’s ownership rights separately breached two provisions of the policy
agreements: (i) the incontestability clause; and (ii) the rights-and-privileges
clause.22
i. Alleged Breach of the Incontestability Clause
22
Sun Life also contends that IPF lacks standing to bring its contract claim because it is not the
record owner of any of the policies. But, IPF sufficiently established, for purposes of defeating
summary judgment, its standing to bring its contract claim given unrebutted evidence that the
policy owners (each an Imperial subsidiary or affiliate, see supra at 21 n.11) orally assigned their
causes of action to IPF. See Dkt. 389-1; see also W.S. Badcock Corp. v. Webb, 699 So.2d 859,
861 (Fla. 5th DCA 1997) (“Contract rights that can be assigned include choses in action arising
out of the parties’ contract. In fact, assignability of a cause of action is the rule rather than the
exception.” (internal citation omitted)); Progressive Express Ins. Co. v. McGrath Cmty.
Chiropractic, 913 So.2d 1281, 1288 (DCA Fla. 2d 2005) (Davis, J., concurring) (“Except where
a writing is required by statute, an assignment may be oral and proven by parol evidence.”). Sun
Life contends on appeal that even if the policy owners did enter agreements to assign their causes
of action to IPF, those agreements are invalid for failure to comply with the assignment
procedures in the policy agreements. No. 17-10189 Br. of Appellee at 24–25. But, Sun Life did
not raise this contention in the district court, despite arguing on several occasions that IPF lacked
standing to assert rights under the policies. See No. 13-cv-80730, Dkt. No. 11 (S.D. Fla. Aug.
23, 2013); Dkt. 356 at 1; Dkt. 357 at 3–4; Dkt. 405 at 2–4. We decline to address this argument
for the first time on appeal. See Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1331 (11th
Cir. 2004).
35
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As relevant here, IPF contends that Sun Life’s filing of its declaratory
judgment claim was an untimely “contest[ing]” of the policy that consequently
breached the incontestability clause. 23 The district court dismissed this theory at
the pleading stage, summarily concluding that the filing of a declaratory judgment
claim cannot constitute a breach of contract. Dkt. 441 at 5. We disagree.
Unlike Sun Life’s fraud-based claims, see supra at 21–25, Sun Life’s claim
for a declaratory judgment that the policies are void ab initio plainly “contest[ed]”
the policies under controlling Florida law. See Pruco, 200 So.3d at 1206–07;
Pruco Life Ins. Co. v. Wells Fargo Bank, N.A., 846 F.3d 1188, 1190 (11th Cir.
2017) (per curiam). And, having filed its declaratory judgment claim more than
two years after issuance of the policies, IPF has plausibly alleged that Sun Life
breached the terms of the incontestability clause.
Sun Life nevertheless contends that IPF’s claim for breach of the
incontestability clause fails as a matter of law. In this regard, we have already
rejected Sun Life’s arguments that: (i) IPF lacks standing to enforce the
incontestability clause, see supra at 35 n.22; (ii) the court must conduct a choice-
of-law analysis prior to addressing the impact of the incontestability clause, see
supra at 14–18; and (iii) a declaratory judgment claim is not a “contest” to the
policies, see supra at 36. Additionally, Sun Life raises the following arguments:
23
To the extent IPF alleges that Sun Life breached the incontestability clause through its fraud-
based claims, we disagree for the reasons stated supra at 19–25.
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(i) its act of filing a declaratory judgment claim is protected by the absolute
immunity afforded by Florida’s litigation privilege; and (ii) a breach of an
incontestability clause is not actionable for a damages suit under Florida law. We
disagree with both contentions.
1. Florida’s Litigation Privilege
Sun Life contends that it cannot be sued for filing its declaratory judgment
claim because its act of filing a lawsuit is absolutely immune from liability under
Florida’s litigation privilege. At its most basic level, Florida’s litigation privilege
“provid[es] legal immunity for actions that occur in judicial proceedings.”
Echevarria, McCalla, Raymer, Barrett & Frappier v. Cole, 950 So.2d 380, 383
(Fla. 2007). Because the filing of a lawsuit is an “action[] that occur[s] in [a]
judicial proceeding,” id., Sun Life contends that its filing of its declaratory
judgment claim is protected by the privilege. The district court ultimately
disagreed. See Dkt. 293 at 24; but see Dkt. 267 at 32–33. We are in accord with
the district court.
Florida adopted its litigation privilege to protect testifying witnesses against
defamation suits premised on statements they made in open court. See Myers v.
Hodges, 44 So. 357, 361–62 (Fla. 1907). The concern was with chilling robust
courtroom testimony. As the Florida Supreme Court stated in Levin,
Middlebrooks, Mabie, Thomas, Mayes & Mitchell, P.A. v. United States Fire
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Insurance Co., 639 So.2d 606 (Fla. 1994), the “absolute immunity [provided by
Florida’s litigation privilege] resulted from the balancing of two competing
interests: the right of an individual to enjoy a reputation unimpaired by defamatory
attacks versus the right of the public interest to a free and full disclosure of facts in
the conduct of judicial proceedings.” Id. at 608.
The privilege reflects a policy judgment that in most cases
participants in litigation must be free to engage in unhindered
communication and to use their best judgment in prosecuting or
defending a lawsuit without fear of civil liability
notwithstanding the potential harm to an individual on the
receiving end of a defamatory statement or other bad act.
AGM Inv’rs., LLC v. Bus. Law Grp., P.A., 219 So.3d 920, 924 (Fla. 2d DCA 2017)
(internal quotation marks omitted).
Although at its inception the privilege offered immunity only from actions
sounding in defamation, see Levin, 639 So.2d at 607–08, the Florida Supreme
Court has significantly expanded the privilege. In Levin, it extended the privilege
to protect not just allegedly defamatory litigation conduct but any “tortious
behavior . . . [which had] some relation to the [judicial] proceeding.” Id. at 608. In
Echevarria, the Court expanded the privilege beyond the tort context to hold
immune from suit a party facing claims that its litigation conduct violated a statute:
The litigation privilege applies across the board to actions in
Florida, both to common-law causes of action, those initiated
pursuant to a statute, or of some other origin. “Absolute
immunity must be afforded to any act occurring during the
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course of a judicial proceeding . . . so long as the act has some
relation to the proceeding.”
950 So.2d at 384 (quoting Levin, 639 So.2d at 608)).
Echevarria, however, is not the Court’s latest word on Florida’s litigation
privilege. In Debrincat v. Fischer, 217 So.3d 68 (Fla. 2017), the Court receded
somewhat from the broad language in Echevarria. There, Fischer filed a malicious
prosecution suit against Debrincat alleging that Debrincat maliciously added
Fischer as a party defendant in an earlier action. Debrincat asserted that the
litigation privilege immunized his conduct of adding Fischer as a defendant in the
earlier action, but the Florida Supreme Court disagreed. It concluded that the
litigation privilege does not provide immunity from claims for malicious
prosecution, principally because if it did so it “would eviscerate [that] long-
established cause of action.” Debrincat, 217 So.3d at 70.
After Debrincat, and despite the broad formulations in Levin and
Echevarria, we do not think that the Florida Supreme Court is of the view that the
litigation privilege offers per se immunity against any and all causes of action that
arise out of conduct in judicial proceedings. See id. Rather, the applicability of the
privilege must be assessed in light of the specific conduct for which the defendant
seeks immunity. In this case, therefore, we must ask whether Florida’s litigation
privilege would immunize a defendant from a breach of contract claim where the
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act that allegedly breached the contract was the filing of a lawsuit. We think it
would not.
We are aware of no case applying a litigation privilege to provide immunity
from a claim that the act of filing a lawsuit breached a contract. In fact, Sun Life
points us to only one instance in which a Florida court has upheld application of
the litigation privilege to extend immunity from a breach of contract claim
generally. In James v. Leigh, 145 So.3d 1006 (Fla. 1st DCA 2014), Leigh sued
James in relation to allegedly defamatory statements that James made in his earlier
divorce proceeding. Leigh not only brought a claim for defamation, but also
asserted that James’ defamatory statements breached the parties’ non-
disparagement agreement. The Florida appellate court held that James was
protected by the litigation privilege from facing suit on both the defamation and the
breach of contract claims. In a straight-forward application of Levin, the court
dismissed the defamation claim because the allegedly defamatory statements “had
some relation to [James’] divorce proceeding.” Id. at 1008. It then briefly
addressed the breach of contract claim, which it dismissed because it refused to
read the non-disparagement agreement as a waiver of the litigation privilege. Id. at
1008–09.
We do not think that James, or any other Florida authority, requires us to
extend absolute immunity to the filing of a lawsuit where that specific act breaches
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a contract. Although James allowed an immunity defense to defeat a breach of
contract claim, the underlying conduct for which immunity was sought—in-court
defamatory statements—went directly to the original purpose of the litigation
privilege. Specifically, James’ statements were made as part of a vigorous defense
in his divorce proceeding and allowing such statements to be the object of a
subsequent lawsuit (either for defamation or breach of contract) could have a
serious “chilling effect.” James, 145 So.3d at 1008 (quoting Levin, 639 So.2d at
608). In contrast, we do not think that applying the privilege here would
meaningfully serve the aims of the privilege. To be sure, disallowing the litigation
privilege where it would otherwise immunize the litigant from breach of contract
suits might to some extent chill the “free and full disclosure of facts in the conduct
of judicial proceedings.” Levin, 639 So.2d at 608. But, the true source of any
chilling effect will be the parties’ duly-entered contract, which itself bars the filing
of the lawsuit.
We are further persuaded by Debrincat, which made plain that the litigation
privilege should not be applied in novel ways that serve to “eviscerate” long-
standing sources of judicially available recovery. 217 So.3d at 70. There, the
Court concluded that application of the privilege to provide immunity from
malicious prosecution suits would effectively eliminate the malicious prosecution
tort precisely because the first element of the tort is the filing of a lawsuit. Id.
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Here too, application of the privilege would virtually extinguish a common form of
relief: the awarding of damages for breaches of agreements not to sue a contract
counterparty. See, e.g., Glob. Commc’ns., Inc. v. Directv, Inc., 2015 WL
10960959, at *2 (N.D. Fla. Nov. 16, 2015); Atlas One Fin. Grp., LLC v. Alarcon,
2015 WL 1191211, at *6 (S.D. Fla. Mar. 16, 2015); Foliar Nutrients, Inc. v. Plant
Food Sys., Inc., 2014 WL 3510594, at *4 n.6 (M.D. Fla. July 14, 2014); In re W.B
Care Ctr., LLC, 419 B.R. 62, 73 (Bankr. S.D. Fla. 2009); Gregoire v. Lucent
Techs., Inc., 2005 WL 1863429, at *3–4 (M.D. Fla. Aug. 5, 2005); see also Hertz
Corp. v. Hellens, 140 So.2d 73, 75 (Fla. 2d DCA 1962). In fact, Sun Life’s
position that a party may never face a breach of contract suit for its litigation
activity would create perverse incentives that would undermine the “strong public
policy favoring freedom of contract” that is “not [to be] lightly interfered with.”
City of Largo v. AHF-Bay Fund, LLC, 215 So.3d 10, 16 (Fla. 2017) (internal
quotation marks omitted). For example, a party could enter into a solemn
agreement not to disclose certain sensitive information (i.e., trade secrets or
personal data), and the following day make the disclosure in a civil complaint
without facing any liability. Surely this does not align with the Florida Supreme
Court’s view of the litigation privilege.
Sun Life has failed to show that Florida’s litigation privilege immunizes it
from IPF’s claim that Sun Life’s suit breached the incontestability clause.
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2. Actionability of a Breach of the Incontestability
Clause
Apart from the litigation privilege, Sun Life contends that Florida law does
not allow damages suits for the breach of an incontestability clause. The district
court accepted the argument, concluding that the incontestability clause may be
“raised [only] as a shield, not a sword.” 2016 WL 10565034, at *3. We disagree.
It is a core principle, of course, that generally a contractual breach by one
party entitles the counterparty to damages. See Walter Int’l. Prods., Inc. v. Salinas,
650 F.3d 1402, 1418 (11th Cir. 2011). Sun Life contends that when an
incontestability clause is breached that basic rule does not apply, but its arguments
are unpersuasive.
Sun Life relies on a line of Florida cases concluding that an incontestability
clause is “in the nature of, and serves a similar purpose as, a statute of limitations.”
Prescott, 176 So. at 878. Because damages actions are not available in relation to
an adversary’s filing of an action outside of a statutory limitations period, the
argument goes, so too are damages unavailable in relation to those filed outside a
contractual contestable period. The argument’s premise is hollow. In cases that
have analogized an incontestability clause and a statute of limitation, the
incontestability clause was invoked defensively, not offensively, and thus it indeed
played a role similar to a statute of limitation. See, e.g., id. at 878–89. But, a
limitations period and a contestable period are fundamentally different: the first is
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solely a creature of statute, violations of which do not generally entitle the
aggrieved person to seek redress, and the second is found in a contractual term, a
breach of which generally allows for a damages claim. And, unlike limitations
periods, the Florida legislature mandates the inclusion of incontestability clauses in
insurance contracts, see Fla. Stat. § 627.455, which strongly indicates that the
legislature intended for damages to be available upon their breach. Otherwise, we
see no reason why the legislature simply would not have directly prohibited
untimely policy contests. See Am. Nat’l Ins. Co. v. Schneider, 2013 WL 1215608,
at *3 (M.D. Fla. May 17, 2013) (holding that under Florida law an insured can sue
insurer for breach of an incontestability provision).
Finally, Sun Life contends that an incontestability clause is akin to certain
other contractual provisions that do not allow for a suit upon their breach. Sun
Life provides as an example a provision in a commercial lease requiring the tenant
to provide 90 days’ notice if it wishes to elect its “option to renew” the lease,
arguing that the “contest[ing]” of a life insurance policy after the contestability
period is analogous to the tenant in its example providing only 45 days’ notice of
its election to renew. No. 17-10189 Br. of Appellee at 28. The comparison is
specious. The incontestability clause here contains clear prohibitive language
(“cannot contest”) that the hypothetical lease (“option to renew”) does not.
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We conclude that an incontestability clause, like nearly all contractual
prohibitions, may allow for damages upon its breach. We therefore vacate the
district court’s dismissal of IPF’s claim that Sun Life breached the incontestability
clause.
ii. Alleged Breach of the Rights-and-Privileges Clause
As discussed previously, the policies at issue provide that the policy owner
has “the sole and absolute power to exercise all rights and privileges under [the
Policy] without the consent of any other person.” Dkt. 472-1 at 16. IPF alleged
that Sun Life violated this “rights-and-privileges clause” in various ways. See
supra at 10. The district court dismissed the claim at summary judgment,
concluding that IPF failed to sufficiently establish the damages element of this
contract theory. We agree.
Each of the harms IPF identifies on appeal relates to the effects of Sun Life’s
conduct on Imperial’s ability to use the life insurance policies as collateral. IPF
focuses on a credit facility an Imperial affiliate entered into in April 2013, the
proceeds of which were to be used by Imperial in part to pay life insurance
premiums on its Sun Life policies. Pursuant to the arrangement, Imperial pledged
the 457 life insurance policies that it owned at the time as collateral for an up to
$300 million loan that carried with it a favorable interest rate structure. See
Imperial Holdings, Inc., Annual Report (Form 10-K) (Mar. 10, 2014), 1–2, 26, F-
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23, F-34–35; see also Dkt. 452-2 at 6–7. Imperial contends that the 33 Sun Life
policies it owned were expected to be included in that collateral pool but were
excluded by the lender “as a consequence of Sun Life’s actions in failing to fulfill
its obligations related to those policies.” Dkt. 452-2 at 7. Because the Sun Life
policies could not be included in that credit facility, IPF contended, Imperial was
required to seek alternative financing for its premium payments but could only do
so on less favorable terms. Imperial asserts that it therefore suffered “interest
related” damages of $5 million. See Dkt. 458 at 2–3.24 We think these asserted
damages were insufficiently foreseeable for IPF’s claim to survive summary
judgment.
Under Florida law, “evidence as to the amount of damages cannot be based
on speculation or conjecture, but must be proven with certainty.” Caulkins
Indiantown Citrus Co. v. Nevins Fruit Co., 831 So.2d 727, 734 (Fla. 4th DCA
2002). “Whether damages are speculative must be determined by inquiry into both
causation of the damage and measurement of damages. . . . Proof must show with
24
IPF also contends that it is entitled to loss-of-use damages in the amount of premium payments
Imperial made to Sun Life. See No. 17-10189 Reply Br. of Appellant at 19; see also Dkt. 452-2
at 12. We disagree. Loss-of-use damages are not available to recover “damages in excess of the
amount which represents the loss actually inflicted by the action of the defendant.” MCI
Worldcom Network Servs., Inc. v. Mastec, Inc., 995 So.2d 221, 223 (Fla. 2008). Unlike the
typical loss-of-use scenario, Imperial did not lose the full use of the life insurance policies.
Indeed, Imperial still stands to receive the main fruit of the policies: death benefits. Rather,
Imperial, at most, lost one tangential use of the life insurance policies, and one that, as we
discuss, was not foreseeable. To award the full measure of Imperial’s premium payments would
therefore “bestow a windfall” on Imperial. Id. at 224.
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reasonable certainty that the plaintiff suffered damages and that the damages
flowed as the natural and proximate result of defendant’s . . . conduct.” Aldon
Indus., Inc. v. Don Myers & Assocs., Inc., 517 F.2d 188, 191 (5th Cir. 1975)
(applying Florida law). Consequently, a key inquiry in a breach of contract suit is
whether a plaintiff’s asserted “damages were reasonably foreseeable to [the
defendant] at the time the contracts were made.” Lipscher v. LRP Publ’ns, Inc.,
266 F.3d 1305, 1317 (11th Cir. 2001) Where a plaintiff has failed to make this
showing, “summary judgment is appropriate.” Id. at 1318; see also ProfiTel Grp.,
LLC v. PolyOne Corp., 238 F. App’x 444, 450 (11th Cir. 2007); Gunster, Yoakley
& Stewart, P.A. v. McAdam, 965 So.2d 182, 184 (Fla. 4th DCA 2007); Bothmann
v. Harrington, 458 So.2d 1163, 1170 (Fla. 3d DCA 1984).
IPF has not sufficiently established the foreseeability of its claimed damages
for breach of the rights-and-privileges clause to withstand summary judgment.
Significant to our foreseeability analysis are Sun Life’s efforts, prior to issuing the
policies subject to these disputes, to avoid having its policies enter the secondary
market in the hands of investors. Although Sun Life might have foreseen that a
few of its policies might nevertheless wind up in the hands of third parties, or that
some policy owners might seek to use the policies as collateral for discrete loan
obligations (such as home mortgages), it had no reason to foresee that: (i) a large
number of its policies would be transferred to the secondary market; (ii) a single
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secondary market investor would collect a large number of those policies; (iii) that
investor would then seek financing to pay the premiums on those policies, and, in
so doing, would try to bundle those policies to serve as collateral supporting a
more than quarter-billion dollar credit facility; (iv) the lender would refuse the
policies as collateral in light of Sun Life’s questioning of the validity of the
investor’s ownership of those policies; (v) the investor would then seek other
outside financing to make the premium payments; and (vi) that outside financing
would be more costly than that offered by the investor’s credit facility.
We do not think this chain of events can conceivably be described as
foreseeable to Sun Life at the time it issued the policies. We thus affirm the
dismissal of IPF’s claim that Sun Life breached the rights-and-privileges clause.
b. Count IV (Fraud)
As we have discussed, a fraud claim under Florida law requires a showing of
“an intentional material misrepresentation upon which the other party relies to his
detriment.” Lance, 457 So.2d at 1011. IPF’s fraud claim proceeds on two
theories: (i) Sun Life fraudulently misrepresented in the policy agreements that it
would comply with the incontestability clause despite harboring a secret intent not
to do so; and (ii) Sun Life fraudulently omitted from post-contract communications
to Imperial its internal view that the policies were invalid and contestable and that
Imperial was not their proper owner. The district court found no triable issue as to
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either theory and therefore dismissed IPF’s fraud claim at summary judgment. We
agree.
First, we agree with the district court that IPF’s “secret intent” theory of
fraud is duplicative of IPF’s breach of contract claim and therefore inactionable.
Under Florida law, “[m]isrepresentations relating to the breaching party’s
performance of a contract do not give rise to any independent cause of action in
tort, [where] such misrepresentations are interwoven and indistinct from the heart
of the contractual agreement.” Thompkins v. Lil’ Joe Records, Inc., 476 F.3d 1294,
1316 (11th Cir. 2007) (quoting Hotels of Key Largo, Inc. v. RHI Hotels, Inc., 694
So.2d 74, 78 (Fla. 3d DCA 1997)); see also Tiara Condo. Ass’n, Inc. v. Marsh &
McLennan Cos., Inc., 110 So.3d 399, 408–09 (Fla. 2013) (Pariente, J., concurring).
IPF contends that this rule is no bar to its fraud claim, which, it argues, is
independent from its breach of contract claim. In so arguing, IPF relies on cases
that it contends permitted a fraud claim to proceed alongside a breach of contract
claim where the plaintiff alleged that the defendant never intended, from the outset,
to comply with the contractual provisions at issue. No. 17-10189 Br. of Appellant
at 36–42 (relying principally on Entron, Inc. v. General Cablevision of Palatka,
435 F.2d 995 (5th Cir. 1970) and Steak House, Inc. v. Barnett, 65 So.2d 736 (Fla.
1953)). IPF’s cited authority is inapposite. Those cases did not turn on a contract
party’s secret intent not to comply with a contractual provision. Rather, in each
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case, the misrepresentation supporting the defendant’s fraud claim was a pre-
contractual representation made by the defendant to the plaintiff expressly
affirming that it would comply with the specific contractual provision that it
ultimately breached.
For example, in Entron, the relevant contract required the defendant to
perform certain work within 60 days, which it did not do. The Fifth Circuit
allowed a fraud claim to proceed not on the fact that the defendant harbored a
secret intent not to comply with the 60-day requirement, but because of “repeated
statements by [the] Vice President [prior to executing the contract] . . . that his
company was strictly limited to the requirement that it have the job completed
within sixty days.” 435 F.3d at 998. Stated differently, the plaintiff was
independently induced into entering the contract by the defendant’s extra-
contractual misrepresentations regarding its intent to comply with the 60-day
provision. Similarly, in Steak House, the plaintiff alleged that the defendant had a
secret intent never to perform under a contract but also that the defendant made
“false and fraudulent statements and representations to plaintiff . . . to induce
plaintiff to execute the agreement.” 65 So. 2d at 737 (internal quotation marks
omitted). And, Steak House relied on Pryor v. Oak Ridge Development Corp., 119
So. 326 (Fla. 1928), which made clear that “[a]s a general rule fraud cannot be
predicated on a mere promise not performed. . . . [T]o be available, there must be
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a false assertion in regard to some existing matter by which a party is induced.”
Id. at 328 (internal quotation marks omitted and emphasis added).
Here, IPF has not alleged that Sun Life made any representation,
independent from the incontestability clause, that it would not challenge the
validity of the policies after the contestable period. Because the only source of
IPF’s alleged inducement is the contract, this theory of IPF’s fraud claim may not
proceed.
Second, we reject IPF’s theory that Sun Life made actionable
misrepresentations in post-contract communications to Imperial. The statements
on which IPF relies for this theory are notices sent by Sun Life stating that the
policies were “in force,” “in good standing,” “active,” or that the contestability
period had expired. No. 17-10189 Br. of Appellant at 42. But, of course, IPF does
not assert that those statements were untrue. Rather, its theory is that Sun Life did
not believe those statements to be true and fraudulently omitted its subjective
beliefs from its notices despite a duty to disclose them.
IPF’s fraudulent omission theory cannot survive summary judgment. Even
assuming arguendo that IPF sufficiently established that Sun Life omitted material
facts in its post-contract correspondence that it had a duty to disclose to Imperial, it
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is unclear what act IPF claims Sun Life induced by those alleged omissions.25
Perhaps IPF refers to Imperial’s continued payment of policy premiums. See No.
13-cv-80730, Dkt. No. 1 ¶ 115 (S.D. Fla. July 29, 2013). But, Imperial was
contractually obligated to make those payments, and surely a counterparty’s
subjective belief that a contract is invalid, without any outward manifestation, is
insufficient to constitute a repudiation that would excuse Imperial from that
obligation. See Mori v. Matsushita Elec. Corp. of Am., 380 So.2d 461, 463 (Fla.
3d DCA 1980) (a repudiation of a contract excusing a counterparty’s non-
performance “must be distinct, unequivocal, and absolute”). IPF therefore has not
shown that Sun Life’s alleged omissions induced Imperial to do anything that it
would not have otherwise done.
We affirm the district court’s dismissal of IPF’s fraud claim.
IV. Conclusion
For the reasons stated above, we hereby AFFIRM in part and VACATE in
part the judgments entered by the district court.
As to Sun Life’s complaint, we AFFIRM the district court’s dismissal of
Count V (fraud conspiracy) and Count VII (declaratory judgment); and we
25
IPF identified no induced action in its briefs on appeal. See No. 17-10189 Br. of Appellant at
42–47; Reply Br. of Appellant at 22–23. Nor did it appear to tell the district court. In its brief
presentation of its fraud by omission theory at the district court, the closest it came to asserting
an induced act is contending that Sun Life’s omissions “misled Imperial into believing that [Sun
Life] intended to honor its obligations under the Policy when in fact the opposite was true.” Dkt.
471 at 18. A fraud claim requires an induced and harmful act, not simply an induced belief
uncoupled from a corresponding act that manifested in an identifiable harm.
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VACATE the district court’s dismissal of Count I (RICO), Count II (RICO
conspiracy), Count III (fraud), Count IV (aiding and abetting fraud), and Count VI
(tortious interference with contractual relations).
As to IPF’s complaint, we AFFIRM the district court’s dismissal of Count II
(breach of contract) to the extent it asserts a breach of the rights-and-privileges
clause, and Count IV (fraud); and we VACATE the district court’s dismissal of
Count II (breach of contract) to the extent it asserts a breach of the incontestability
clause.
Both cases are REMANDED for further proceedings consistent with this
opinion.
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JORDAN, Circuit Judge, concurring.
I join Judge Walker’s well-written opinion for the court, and add the
following on Imperial’s claim that Sun Life breached the incontestability provision
in the policies.
As far as I can tell, only one court in the United States has addressed
whether an insurer’s declaratory judgment action against an insured to void a
policy, in violation of an incontestability provision, gives rise to a breach of
contract claim by the insured. See American Nat’l Ins. Co. v. Schneider, 2013 WL
12156086, *3 (M.D. Fla. 2013) (holding, under Florida law, that an insured can sue
its insurer for breach of an incontestability provision). Despite this general
absence of authority, I agree with the court that Imperial’s breach of contract claim
against Sun Life should proceed beyond the pleadings stage. As I explain,
however, issues remain for the district court on remand with respect to this claim.
One leading insurance treatise posits that “an incontestability provision is
designed to safeguard an insured from excessive litigation” after a certain period of
time. See 17 Couch on Insurance 3d § 240:5 (2005). If this is so, there is a rough
analogy to a contract not to sue (sometimes called a covenant not to sue). See
generally Restatement (Second) of Contracts § 285(1) (1981) (“A contract not to
sue is a contract under which the obligee of a duty promises never to sue the
obligor or a third person to enforce the duty[.]”).
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In at least some jurisdictions, an action filed in violation of a contract not to
sue may under certain circumstances—which vary by jurisdiction—permit a suit
for breach, with the measure of damages usually being the attorney’s fees and costs
incurred in defending against the claim that was precluded. See, e.g., Lubrizol
Corp. v. Exxon Corp., 957 F.2d 1302, 1305-06 (5th Cir. 1997) (New York law);
Anchor Motor Freight, Inc. v. Int’l Bhd. of Teamsters et al., 700 F.2d 1067, 1072
(6th Cir. 1983) (federal law – labor relations); Artvale, Inc. v. Rugby Fabrics
Corp., 363 F.2d 1002, 1008 (2d Cir. 1966) (federal law – patent infringement –
and/or New York law); Borbely v. Nationwide Mut. Ins. Co., 547 F.Supp. 959, 977
(D.N.J. 1981) (New Jersey law); Quill Co. v. A.T. Cross Co., 477 A.2d 939, 944
(R.I. 1984) (Rhode Island law); Smith v. Garrett, 29 Tex. 48, 52 (1867) (Texas
law). Consistent with these authorities, one district court applying Florida law has
ruled that the breach of a contract not to sue is actionable. See Gregoire v. Lucent
Technologies, Inc., 2005 WL 1863429, *4 (M.D. Fla. 2005) (citing, among other
cases, the Sixth Circuit’s decision in Anchor Motor Freight).
Admittedly, other jurisdictions take a different approach. They allow a
defending party to seek attorney’s fees and costs for breach of a contract not to sue
as long as the contract expressly authorizes such recovery. See, e.g., McKissick v.
Yuen, 618 F.3d 1177, 1191-92 (10th Cir. 2010) (Oklahoma law); Bukuras v.
Mueller Group, LLC, 592 F.3d 255, 266-67 (1st Cir. 2010) (Massachusetts law);
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Convey Compliance Sys. Inc. v. 1099 Pro, Inc., 443 F.3d 327, 333-34 (4th Cir.
2006) (Minnesota law); In re Weinschneider, 395 F.3d 401, 404 (7th Cir. 2005)
(Illinois law); Astor v. IBM Corp., 7 F.3d 533, 540 (6th Cir. 1993) (federal law –
ERISA).
Our holding today is that Imperial’s breach of contract claim, which is based
on the incontestability provision, is viable under Florida law. But we leave a
number of related (and important) issues unanswered. On remand, the district
court will need to figure out the scope of Imperial’s breach of contract claim,
including the appropriate measure of damages.
In Florida, the damages typically available in a breach of contract action are
those causally related to the breach so long as they were contemplated by, or
reasonably foreseeable to, the parties at the time they entered into the contract. See
Poinsette Dairy Products v. Wessel Co., 166 So. 306, 310 (Fla. 1936); Capitol Env.
Services, Inc. v. Earth Tech, Inc., 25 So.3d 593, 596 (Fla. 1st DCA 2009);
Mnemonics, Inc. v. Max Davis Associates, Inc., 808 So.2d 1278, 1279 (Fla. 5th
DCA 2002); Olin’s, Inc. v. Avis Rental Car Sys. of Fla., Inc., 172 So.2d 250, 252
(Fla. 3d DCA 1965). Another formulation is that, “[g]enerally, a person or entity
injured by either a breach of contract or by a wrongful or negligent act or omission
of another is entitled to recover a fair and just compensation that commensurate
with the resulting injury or damage.” MCI Worldcom Network Services, Inc. v.
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Case: 17-10189 Date Filed: 09/18/2018 Page: 57 of 57
Mastec, Inc., 995 So.2d 221, 223 (Fla. 2008). I am confident that the parties, at the
appropriate time, will provide the district court with their views on the issue.
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