good morning morning roger your honour's may please the court my name is jason gosling i represent sun life assurance company of canada we have two appeals today and a focus now on sun life's appeal when i come back i will address the responses and imperials unpeel two points that i want to make primarily the dismissal of sun life fraud in civil  racketeering claims was ever because the judge relied on the contestable clauses in the policies but the defendant on those claims imperial holdings inc was not a party to those contracts if they were not a party and that helps you on that first argument yes how do you get the clarity or a judgment against them for violating what the policy said they should be doing that the imperial holdings inc was the defendant on the fraud and civil record here in claims the actual policy owners separate l l c entities were the record owners of the policies and they were the defendants on count seven which was the declaratory judgment imperial holdings was not a defendant to that count no it was not and it was it was in it is not a policy on or it never has been a policy on or in fact in imperial holdings inc by design the the design of the scheme kept them out of the picture and they never again your in your complaint are references to imperial being the owner and i don't mean that in a legal sense but being the owner of the policies right there we we did stuart site imperial and we looped the defendants in but we actually specifically identified imperial holdings inc as the defendant on the damages claims and the l l c is as the defendants on the declaratory judgment claim as the policy owners the we raised the standing on the motion for summary judgment the district court never addressed it imperial holdings didn't really address it i don't recall that they addressed it but it was not something that was ever part of the judge's decision from the bench we raised it again on appeal in this case and the only response that we've ever gotten to explain how they could possibly have standing is they now claim that imperial holdings was an undisclosed principle of the actual policy owners and that argument is flawed for two reasons first of all to the extent that florida recognizes that doctrine i've not seen any case where the florida supreme court has adopted that section of the restatement  but to the extent that it applies here under the restatement that the right to be to act on behalf of an undisclosed principal can be limited by the contract itself and in this case the contracts clearly limit it and would not permit an ultimate purchasers of the of the insurance the new the new the original owners were trusts and mind you son life alleged that imperial holdings in kind of orchestrated this whole script scheme from behind the scenes the original owners were trusts the ownership was changed to these various l l c s there were also being orchestrated by imperial according to our allegations but the policy say that all  rights of ownership exclusively reside in the record own or and it's possible to transfer that to somebody else you can assign those rights but that assignment is only effective once you provide notice of the assignment to sun life in its home office they never did that that never happened the we think there's a good reason why it didn't happen but there was never an assignment so they never did what they needed to do in order to create this undisclosed principal this second the th notion they're asking the court to accept that they were an undisclosed principal and that's something that was never addressed at the in the district court so there's no record there are no facts anywhere from which the court might be able to establish that they in fact assuming you do not prevail on that then we get to the question of the in can stability clause is that right yes the the in contestability cause you're taking the position is that the judge kind of gave a categorical approach among barak borrow analysis would you think the judge should have done here with regard to all of the various jurisdictions that were implicated that's exactly true in martinez the martinez court said that the contest will clause will bar a claim for fraud and i want to address that by the court did say that the but it said if there was a claim that the policies lacked uninsurable interest or actually that's all it said if it wouldn't apply because if the policy is void ab initio there is no contestable clause right and there were no claims in that case that the policies lacked in the sure blue interest count seven against the policy owners that's all that the to the acquirers after the two years because at that point it's becomes a wagering it becomes a wagering bet essentially i would i would state it slightly differently if the purpose of the policy from the outset was to wager on human life it offends public policy and in many states not all there is a decision in the florida supreme court the didn't exist when we filed that lawsuit but there were twenty eight policies from multiple states and policy validity is a is governed by the state in which the contract was formed so you have to do a state by state analysis to determine whether an individual policy is valid or not and count seven was dismissed at the pleading stage with and we had we had one hundred ten paid one hundred ten page complaint laying out all of the reasons all of the evidence to the allegations as to why these policies were wagering contracts but there wasn't enough in that complaint was anything in the complaint from which the court could do a choice of law analysis so that that can claim none of the claims should have been dismissed but certainly that one should not have been dismissed if that the other on the other claims states rico position but you were there was a federal rico claim that's why but as far as the contestability clauses appear to believe that that's an open question well in between the jurisdiction trying i thought well what we have a couple of there are two reasons why we think absolutely even under what so so clearly you have to do the choice of law analysis before you can determine like the martinez court did whether it bars a claim or not i mean you have to do that as a minimum where tina as was a little bit different than what we have here this is a damages claim son life issue these policies unknowingly but they told the market they told imperial regardless of whether this is legal or illegal it's not a market we want to participate in the only way imperial could acquire these policies is through fraud in the application even if these policies are deemed valid because we happen to be in a state where you can't you can't avoid them and they're not void because they violate public policy even if all of them were in a state like that we would still say we suffered profitability damages as a result of this block so the son lives damages our broad for too broad for the contestability cause it couldn't possibly reach that is our richard that's exactly what we're saying i'm not sure that every state agrees with you on that i don't know that there's there's much lot of that says you can't do that martinez says that you can't you can't bring a damage claim as kind of an end run around the cause so it would be improper to say ok we can't challenge this policy so here's your death benefit we're now going to sue you in damages for the amount of that death that well to be conceded that to that point isn't there at least one reference in your filings in the district court where you said that the measure of damages was going to be the death benefit yet we have sort of a in our complaint we have a kind of a catch all to be candid i mean i don't know that we would be able to get there we did oh no i'm not asking you whether you win i'm just asking you whether you have claimed in the district court that the measure of damages that you're entitle to have you win is the death benefit that you pay on these policies there was a reference to if that's the case why isn't there a much stronger argument that the in contestability clause applies it would be different if you were said for example said had these policies been issued to normal quote unquote policy holders we would have we would have earned more money on the policies because they would have triggered or used a guaranteed income or guaranteed interest portion of the policy that would have triggered a higher premium to us we would have earned this much profit on the policy during its life and that's the measure of damages but at the end of the day we got to pay the policy the in contestability clause applies and when that person who was initially insured dies we have to pay out the death benefit but we're entitled to the profit we would have made on those policies between now and then you went you went beyond that you said in part and i'm not saying it's the whole ball of wax but you said in part that you are going to try to get the death benefit and if you're trying to do that it starts sounding at least to me like you really are trying to get around the in contestability clause through a different name and the different type of claim the our our primary damage claim is exactly what you just said the testimony from our damages person is that we under wrote these policies as consumer own policies we expected this much revenue to come in and we pay out this many liabilities because they were they were investor owned they behave differently and now the revenue coming in is less the damage amount is the amount of money that we don't have to pay out these liabilities then why didn't you know then why did you seek or tell the district court at some point that you wanted to recover the death benefits because when we filed the when we filed the complaint with count seven the strong possibility existed that that claim would go forward at least in some part and the amount of those potential if if a claim comes in and the policy is void we wouldn't have to pay that death benefit i will of you really you're the master of your own complaint you decide would risk to take in litigation and what claims to put forward and how far to stretch out your neck in the theory of our case is very very clear in that complaint i don't think that we're big because i'm suggesting to you that you made things a lot more difficult for yourself because when you start telling the district court at least in part that what you're trying to get at the end of the day is the benefit that you'll ultimately pay out and that's exactly what the in contestability clause is supposed to get at generally speaking your claim starts looking a whole heck of a lot different fair enough and i accept that what i'm trying i'm hoping to explain is that we  do agree that if if one or two or three or more of these policies were deemed invalid that would affect the damages calculus because you can't find them invalid i don't know if the count seven went forward if count seven went  forward and some of them were deemed void ab initio because they were consider wagering contracts under law the law of new jersey for example if that if that future death is take it out of the calculation then it does affect the amount of loss profitability that we would be able to recover because we would be paying out that death benefit that and i you know complaint sometimes are not as artful as closing arguments but but that's sort of what we're trying to get  so for the entire life of this litigation the district court the now have the benefit of the pro quo case what it had was the sun life and that the embracing judge cohn's opinion in protocol in the sun district of florida which had law that by be more kind to its courses of action in fact go reject each plank of the arguments of sun life as a regionally brought makes clear that policies such as those are issue in these cases these  if the insured had died a year into the policy the next of kin would have benefited from the policy those policies have an insurer of an incurable interest that exception in their four are valid under under get into district court soon as does it not that the inconsistent ability clause question is is can be determined by one in one jurisdictions laws i was heading there judge walker because one of the points on appeal school and of course you know the job of the court of appeals is to fix errors but you will scour the record in vain looking for any choice of law analysis that was ever proffered by sun life now this is sort of important in this case because they performant i am not saying that it was not a law analysis could not have performed could not have been performed here under a klaxon i am saying that some life was the master of its complaint some life as you just heard brought in action income seven for a declaration that all of these listed policies were void i've been issued under rule eleven b to a lawyer signing a pleading is representing that the relief is warranted by existing law or by a reasonable expection extension of existing law therefore they had been some investigation based on life as to what law might possibly govern its own claim nevertheless in response to a motion to dismiss song live said we don't know what the law my government these claims we'll find out later but let me argue the book ok's from southern florida i think in these circumstances where the party who later claims th was an error in failing to aid the doing gaijin an analysis that otherwise would have been required an appropriate fails to proffer it when it was his burden to identify the law that govern its own claim the district judge was perfectly entitled to many different states were the policyholders in count seven from approximately well i'm talking two or three states dozens let me let me be accurate with respect to the numbers because there's an overlap in the complaint when some life are suited listed twenty eight policies by the time of the sec or the second amended complaint there were twenty three policies at issue of the twenty three policies twelve of those list florida residents two of them three in addition i think are two of illinois and one in california which are some of the states are covered in  martina's anyway and you know the others are a handful of other states i know somehow the number twelve sticks in my mind yes twelve are florida now twelve to twelve jurisdictions i don't think they're quite  that many on its own life complain only go to walker but there was hole so a larger number of policies involved the imperial complaint and an additional sort of fact that you may have gathered from the record is that some life keeps claiming that there are sixty four policies out issue we know nothing of the additional policies beyond those that are actually listed in the complaint because the additional policies that they claim are at issue are simply listed in an imperial response to interrupt henri's that was tendered in october twenty third clean i think this docket number two fifteen that one and so on life never followed up to put any evidence as to  asserting that these policies were void under some law that it refused to identify until later and has yet to identify let me i'd but this is a very unusual circumstance because it is not as if some life could not be expected to know the basic facts that he would need to tender a good choice of law analysis as you pointed out in your martinez case under florida law the place where the policy is applied at by the applicant is usually the place of where you know the law a will be applied and if you look at some lives on on occasion forums you will see that these will of course  be in sunlight on files all of the applications have signed at a place and the name of the applicants there was a sample in our in our appendix this is the imperial appendix volume three o five have for seventy two dash one in so it is inconceivable to me that some life could come into court seeking a declaration mind you that all of these listed policies were voided i mean  under law and refused to identify for the court what law it thought it actually applied while then technically arguing that he should win under then xtend law in florida as it understood now this is tactical behavior this is not an error on the part of the district and we know that because even on appeal while purporting to identify an error on the part of the district court some life still has not told you what the law actually applies and how it's up leake asian to the facts of the case would lead to a different outcome than that identified in provable now as we pointed out in our brief one of the reasons for this is that even in those states where the law may be more favorable that this policy is can be ok but if the applicant insured had any intent at the time of application to transfer then it's a week during contract notice that some life in the repeated anything about the intent of the applicants record now but having said all of that point basic point in the choice of law is they urged you know the application of florida law all i can see that they keep saying but we don't know which law applies but at the end of the day as the party suing for a declaration of the policies were void i mean issue under the law they had an affirmative obligation to investigate their claims and to proffer the relevant law and because they never did that and because they haven't done that to this point  they are not entitled to come on appeal and put the district court in error by claiming that the district court should have performed an analysis that they had an obligation to perform themselves before filing suit and which they have never tendered into district court nor have tendered even to you  what's complied with and you know the policies as they themselves alleged were transferred to imperial subsidiaries i think as we point that are in our in our brief we are not claiming that we have standing because we own the policies we have standing because by virtue of the conceded relationship to our subsidiaries which is public and really undisclosed we are after  the or follow the corporate form to what extent can you begin period rely on the in contestability clause as providing a or the breach of it providing a right of action at what point does pretty matter given that imperial holdings is not the title or record owner of the policies and is not a party to the insurance contracts well there are two answers to that as you pointed out we have because there are subsidiaries we have the right to control the principal and agent and the whole issue then is whether the corporate formalities have been observed which is not really an issue to leap to our standing nor has it ever been has it ever been questioned with respect to our own claims they challenge our standing on a different claim but we point that out that there was evidence and director that the claims under the policies had been actually assigned to the top company anyway my way by way of one one one master document that assigned them or on  missed that they were all assignments and these were testified to are i think in the thirty six this is covered in the imperial side of the briefing on the imperial appeal but that has to do with the assignment of the courses of action  in any event ultimately because this case with respect to some of the claims was dismissed depleting stage and later some of the fraud claims after  part of what the district judge had in mind and you cannot blame him is that when some life came into court so life affirmatively pleaded that imperial that is you know the top company actually had ownership of the of the policies and the district judge understandably thought that it could take some life had its word and not have it going to its own pleading now imperial i mean it so life says well you later you know deny that and you ma clear that your ownership was through other corporate entities but i think for the reasons i stated given that we have the undisputed right to control them through appropriate corporate actions that actually old timidly doesn't matter  standing there is one thing about whether this is really covered by the end of the stability clauses that my colleague got into and i think at the end of the day apart from the fact that they're trying to run away from co they're also trying to cast you know the case differently in a in any other number of ways at the end of the day what in contestability clauses are about are disabling insurance companies from going after fraud in applications after two years and theory of these clauses is you have two years to investigate the application and after that hold your peace in cases like martina show that that goes also for not bringing rico claims in a bringing in abetting claims and to bring affirmative claims what you hold your theory of damages ultimately does not matter jordan is right that they started out by saying that they wanted the the premiums and the policies anyway but that ultimately does not matter because under the policies as written each of the insured had the right absolutely to transfer the policy to to to any investment entity the day after issuance and they had no right to impede that so they could have no the little claim to damages on the theory that they were planning on the policy of never having been transferred because it appears under florida law and they want it on the solvency i'm sorry i thought they their position was that they would never have issued the policies had they known what was going to happen one other their position was that they would never have issued the policies if they had known that they were going to be finance yes now the point that i'm making is slightly different which is that that may be true but i could apply for life insurance today fully intending not to finance and change my mind one week from now and if i'm a resident of florida i have a full legal right because you know the policy is property to assign it and sell it and the insurance company has no contract all right to impede that if if if if imperial had been told that these policies were not going to be accepted if premium financed  and then they went out and decided to operate a different way and arrange for policies to be taken out by individuals and then transferred and they did so while misleading some life as to what the what the purposes were then why wouldn't that be sufficient well i don't know what the sufficiency was sufficient to sufficient to state state the fraud claim for instance well i think if you plead facts i mean i will i will point out that the judge let go let if you're getting something that you couldn't get otherwise by misrepresenting it why isn't that a basis for  i i was about to partially agree with you by pointing out that the district judge let the fraud case go forward to summary judgment because in the complaint they're worse they were claims to that effect and therefore he did not this however on a full every denture you record it turned out that song life was full of hot air although he continues to say that imperial had involvement in all of these things british ones of the policies what the record actually showed was the following that there were producers that were contracted agents for sun life who would call the sales department of imperial to say would this type of policy be of interest  the answer would be yeah it might be with a disclaimer we have no power to bind imperial we can only look at issued policies then if a policy was ultimately issued it would go to imperial and this is all in the summary judgment record that had compliance and legal record is that the basis upon which the district court dismissed these claims on this judgment all of the what it was the contestability clause yes but i was answering your question that presuppose that there was actually a fraud and i graveling impression i think that this was the basis upon which it is no not and if i do i do apologize i judge walker but i took your question as implying that there was a fraud and all i'm saying is that i agree with you that not bear out what some life was actually saying that's all i'm saying or does your breach of contract claim based on the in contestability clause depend on whether or not s life's claims are frivolous in other words if you had a valid you know if you had an argue if you had an arguably valid bases to file  the two year period is there still a breach of contract yes yes i mean look thank you for letting me letting me turned at door for about the plan because it seems to me the protocol and you know as together sure the district court was right with respect to this town life i've heard of this appeal but we do think that the district court did commit error in concluding that the in contestability clause even though a part of the contract and even though not complied with by sun life could not limitations and that the florida code requires that they be included in each contract presumably so that they can be acted on like every other contract if there were just a rule that was a binding one insurance company that florida legislator could have said insurance companies may not do x having been included in the contract and having not been complied it seems to me that they stand on the same footing as every other part of the contract a party may in good faith sometimes believe that he's complying with the contract but he may be wrong usually good faith doesn't really have a lot to do with whether at the end of the day you can play with  let me ask you the same question slightly the same question that i asked this regard although the answer to whether or not you've got a valid breach of contract claim doesn't depend on the answer to this question i still have to try to ask you about it what is the measure of damages generally speaking from a breach of the in contestability clause is it the amount of attorney's fees and costs that imperial had to expend in defending the suit and showing at the end of the day that sun life was wrong and shouldn't have sued or do you get to go beyond that and at some at some level hook onto some loss of future profits scenario we we we had two bases for for damages under this part of our contract claim we said of court fees although we and that's actually not an infraction of the of the of the american rule and so we had substantial fees in defending you know this case we we were doing at least twelve point five litigation with a large insurance company we also put in evidence of how the policies have been devalued and this aspect of our prove don't show the fact that as i point out our early insurance policies a form of property that can be value of the policies at death you know because we we agree that what's at issue here is not you know we don't agree because they don't agree but we can and we can assume argue wendell that even if they pay that's not the only value of the policy as i finish just saying the value of the policy also is part of a bundle of rights that includes being able to be pledged and have other uses before the person actually dies and if any surance company interferes with the value of the property as a property even while intending to pay the death benefit that i think it's a combination of will harm from the breach of the contract and i and i know basic point in it is fairly obvious which is that if the florida supreme court held in west that even a provision in the insurance code that is not required to be in a contract can be enforced in a damages of sixteen million dollars in attorney's fees alone they have to be a remedy that is provided by the contract law of the state of florida thank you your honor it's a start i understood you were given twenty minutes i was all wrong about that i mean i thought  regarding their newly minted you're right and i had an opportunity to do my own case though you know my own case has the simplicity of just being stated quickly ok thank you your begin with something that judge walker referred to in what the district judge found the district judge did not find that there was no fraud in fact the it's very well established that imperial was involved from the get go they orchestrated this whole thing judge brennan acknowledged that and in fact imperial has entered into a not they were they were the subject we only knew about this because they were the subject of an f b i raid and a criminal investigation and they resolved that criminal investigation in the non prosecution agreement where they paid an eight million dollar fine and they actually agreed to get out of the premium finance business so the these are newly minted theories these are things that we became aware of because we read about what they were doing in the newspapers and then started to look at  our block of policies but but but some of the argument is that if you are right and i have a two part question if you are right on count seven the law of some states tends to show that you might be able to void the policies ab initio but you have to get into the state of mind or the intent of the initial policy holder you would you would have to show it depends it depends on the standard but well cases yes in some cases yes right and so unless you introduced evidence of that with regard to those jurisdictions you lose on those  claim never got to the evidentiary stage that count seven was dismissed at the pleading stage and our allegations in the complaint there are specific allegations with respect to each and every policyholder each and every policy and how it was from the outset something that was initiated and generated by imperial and imperials people and the purpose of it was to serve imperials desire to own policies in the secondary market and there was never an intent to use the policy for legitimate insurance purposes so from the pleading perspective we as we've established a controversy on that question when we get to if we get if we didn't get dismissed and we got into the evidentially portion of it in summary judgment in some jurisdictions we would have to show what the what the insureds subjectively believe you don't have to do that in every case but we just never got there because that was never it wasn't even dismissed on the basis on that on an assessment of that of that issue exactly is this is the emerged and he said i see no evidence of a scheme i don't know what that meant we i mean if nothing else there's there's we played a scheme here so but the point i want to make is the damage claim have to go back to count before you go to damage and as you said was dismissed it was in the summary judgment granted i write correct so imperial had to move to the to dismiss yes when you responded to that motion to dismiss did you tell the district court that it could not lump all of your policyholders together that it had to conduct the choice of law analysis and the jupiter and the third part is did you provide the district court with the choice of law roadmap yes to the first part no to the second part we why don't you lose then because in you what are you going to expect the district court to go back and do the choice of law  should not have decided a motion that required a choice of a law analysis without facts in the record from which the court could for the doubt tell the district court that it needed facts to conduct the choice of law and house yes yes what facts well we they filed a motion to dismiss and they presume florida law applied we said that presume florida law applies but even under florida law and where did you were did you plead that these policies had been entered into or signed or applied for there were not allegations of where let me even if you didn't the legit those policies become part of the contract because they're part of your claims of the policies were before the district court where they not at the time of dismissal or they weren't i believe they were right it's the place where the contract was formed it with these kinds of policies you often have an insured in one state you have an agent a producer in another state you have a policy owner in a third state you have the insurance company in a fourth state and there's a all of these facts have to be evaluated there was a decision that was decided on that very question by this court last june and it was a sudden life policy it was a the lawsuit was in the in the southern district of florida it was a delaware trust a florida oh florida insured and an owner from another state i'm not even sure where and the whole issue is what is the right law that applies i don't have to give them a judgment it had to go to summary judge the question is is of the district court know that this is what you wanted him to do because we told him we that's exactly that's what we told him we we in our response we said you can't decide count seven at this stage because multiple states laws may apply and there are facts in the pleading from which you can make that determination courts generally don't do don't decide on a motion to dismiss a breach of a claim that's dependent on a choice of law dispute and we have one here we did say but we think under florida law we would win anyway and at the time i thought that was correct the decision changes things a little bit but we made it crystal clear in our briefing we addressed this we we multiple times at the oral argument we actually filed when we saw their reply brief where they were continuing to hammer home florida florida florida we filed a reply because a no it's not florida let us let us submit a server apply to address that question and the judge denied it we made it absolutely crystal clear that this was a choice of law analysis that could not be performed at that time but did you did you did you in your response to the motion to dismiss explain all of these purported legal difficulties with doing a choice of law analysis that the twelve b six stage we did not in the original motion to dismiss at oral argument i definitely did and in our motion for a server apply definitely dinner you've you've so far you've argued that political it doesn't it does not go to the types of claims we have bear in mind our claim did not just involve the policies that remained in force there were a total of sixty four policies that imperial through this criminal scheme acquired from sun life and they selectively lapsed half of those policies so all of the healthy people they they got rid of those policies they stopped paying premium on them and they kept the ones on the on the ones whose health was compromised and that's what created the  profitability problem from an insurance perspective it's a it's a lopsided risk portfolio that we were stuck with because of the fraud and there's never been any mention about those lapsed policies but how in the world could the contestable clause on those last policies which are as much a part of arc or fraud claim or civil racketeering claim how could they possibly be a bar to the civil racketeering and fraud claim if we were trying to if you're trying to seek damages that would otherwise be barred provision that's one way but if we were but the but i think the response to that is you don't get those damages i mean it's not for the something we can be held for her case goes away because we because we had a catchall in our in our complaint i mean it's we would be entitled to those damages but our primary our claim and it's laid out very clearly in our claim and our fraud and civil racketeering counts that this is a profitability damage we're seeking sixteen million dollars not the hundred eighty million in death benefits that's that's clear finally on the if i may the one thing we have not heard anything about we filed this lawsuit i think we should have won this lawsuit i hope we will win this lawsuit but even if we don't it is not a breach of contract for us to file a lawsuit putting to a court the question of contract validity happens all the time no court anywhere has ever indulged what imperial is asking this court to do today florida has an absolute litigation privilege that applies here sun life is entitle to it the edge of area case from two thousand and seven says that the florida litigation privilege applies across the board to all cause of action no matter their origin that's what the court says they have not found a single case where a court has permitted even on to a recognized covenant not to sue they've not found a single case where a court has said that can be the basis of an affirmative claim they've  couple including one from the circuit where a covenant not to sue was used defensively and of course that can be done they did that here successfully at least least thus far but it cannot be the basis of an affirmative claim the closest they came was a two thousand no i'm fine thank you i think that concludes arguments for today the courts and recess and we will reconvene tomorrow morning at nine o'clock