Federal Court Allows Plaintiff to Argue that an Insurance Company Owes a Duty to Disclose Life Settlements as an Option July 2014Posted By 0 Comments By Beau Mayfield Judge Jesus Bernal of the United States District Court for the Central District of California has granted, in part, defendant Lincoln National Life Insurance Co.’s motion to dismiss plaintiffs Larry and Joan Grill’s complaint. In his ruling, the Court will allow the plaintiffs leave to amend their complaint in order to address deficiencies from the first and second complaint. More importantly, the court found that the plaintiffs may continue with their claim that Lincoln owed a duty to disclose the option of a life settlement when they consulted Lincoln as to their financial options with their life insurance policy. It all began when Larry and Joan Grill were no longer able to afford their premium payments, so the Grills consulted with one of Lincoln’s agents and discussed their options. The agent informed them of two choices, either continuing to pay the premiums on the policy or partially surrender the policy in order to reduce the premiums. The agent did not discuss or mention to the Grills that a life settlement was a potential option. After surrendering face value of over $5 million of a $7.2 million policy, the Grills were then made aware of the option of a life settlement by one of Lincoln’s agents. Larry and Joan Grill, and their son Steven Grill who serves as trustee of the Grills’ trust (the owner and beneficiary of the life insurance policy at dispute), filed a complaint against Lincoln claiming that it fraudulently concealed the life settlement option as being an alternative to surrendering their life insurance policy. A life settlement allows the owner of a life insurance policy to sell the policy to a third party for an amount greater than the policy’s cash surrender value, but less than the total benefit amount. The Grills claim that Lincoln owed them a duty to disclose all options, including that of a life settlement, in their consultations with life insurance agents of Lincoln. Lincoln claims that it has no duty to inform customers about life settlements, and that it did not actively conceal the possibility of a life settlement as an alternative to surrender in this case. In order to make a claim for fraudulent concealment, the plaintiffs must show, among other things, that Lincoln owed them a duty to disclose the option of a life settlement, and that Lincoln intentionally concealed this option with the intent to defraud the plaintiff. The court found that Lincoln did owe a duty to disclose the option of a life settlement based on Lincoln’s representation that the Grills only had two options (continue paying premiums, or surrender), and will therefore allow the fraudulent concealment claim to continue. By stating that only two options existed, Lincoln concealed that there was in fact another option – a life settlement. The court also held that the plaintiffs had not specifically shown intentional concealment of life settlements by Lincoln, with the prerequisite specificity, but will allow the plaintiffs leave to amend their complaint to include this specificity. Incidentally, the court ruled that Larry and Joan Grill lack standing to bring these claims against Lincoln because they “have not alleged … any ownership or other interest in either the Policy or the Trust, which is the owner and beneficiary of the policy,” and “they have not alleged any nexus between their making premium payments and [Lincoln’s] alleged omissions.” However, Steven Grill, as trustee of the trust owned policy, may proceed as the plaintiff in the subsequent amended complaint. Nonetheless, the court is allowing the plaintiff to continue to pursue the claim that the defendant owes him a duty to disclose life settlements and in the upcoming stages of the case, the plaintiffs will attempt to prove that Lincoln failed to disclose the option of a life settlement contrary to that duty. Typical insurance customers rely on the advice of an insurance company or its agents when purchasing and maintaining life insurance policies. Having a duty to disclose that life settlements are a viable option, the agents would then act in the customers’ best interests when the customers can no longer maintain their policies. Policyholders need to be made aware of life settlements as a valuable alternative to surrendering their policies and this ruling works strongly in that favor. GWG Life Settlements, LLC will continue to track the progress of this case. See Larry Grill, et al. v. Lincoln Nat’l Life Ins. Co., 5:14-cv-00051-JGB-SP, C.D. Cal
Posted on: Thu, 16 Oct 2014 03:42:54 +0000
Trending Topics
Recently Viewed Topics
© 2015