Title: Geronta Funding v. Brighthouse Life Insurance Company

State: delaware

Issuer: Delaware Supreme Court

Document:

1 
 
IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
GERONTA FUNDING, a Delaware 
Statutory Trust, 
 
 
 
Defendant Below, 
 
 
Appellant, 
 
 
v. 
 
BRIGHTHOUSE LIFE INSURANCE 
COMPANY
, 
 
 
 
Plaintiff Below, 
 
 
Appellee. 
 
§ 
§ 
§ 
§ 
§ 
§ 
§ 
§ 
§ 
§ 
§ 
§ 
§ 
 
 
 
 
 
No. 380, 2021 
 
 
Court Below – Superior Court  
 
of the State of Delaware 
 
 
 
C.A. No. N18C-04-028 
 
Submitted: 
June 8, 2022 
Decided:   
August 25, 2022 
 
Before 
SEITZ, Chief Justice; 
V
ALIHURA, 
V
AUGHN, TRAYNOR, and 
MONTGOMERY-REEVES, Justices, constituting the Court en banc. 
 
Upon appeal from the Superior Court of the State of Delaware. AFFIRMED IN PART, 
REVERSED AND REMANDED IN PART. 
 
Andrew S. Dupre, Esquire (argued), Steven P. Wood, Esquire, Travis J. Ferguson, Esquire, 
MCCARTER & ENGLISH, LLP, Wilmington, Delaware; for Appellant Geronta Funding. 
 
Gregory F. Fischer, Esquire, COZEN O’CONNOR, Wilmington, Delaware; Joseph M. 
Kelleher, Esquire (argued), Brian D. Burack, Esquire, COZEN O’CONNOR, Philadelphia, 
Pennsylvania; for Appellee Brighthouse Life Insurance Company. 
 
 
2 
 
MONTGOMERY-REEVES, Justice: 
This appeal requires the Court to determine whether premiums paid on insurance 
policies declared void ab initio for lack of an insurable interest should be returned.  Geronta 
Funding (“Geronta” or “Appellee”) argues that Delaware law requires the automatic return 
of all premiums paid on the void policy.  Brighthouse Life Insurance Company 
(“Brighthouse” or “Appellant”) argues that Delaware law does not require an automatic 
return of premiums; rather, a party must prove entitlement to restitution.  The court below 
agreed with Brighthouse and relied on the Restatement (Second) of Contracts (the 
“Restatement”) to determine whether Geronta was entitled to restitution.  Specifically, the 
court held that Geronta may obtain restitution under Section 198 of the Restatement 
(“Section 198”) if it could prove excusable ignorance or that it was not equally at fault.  
Applying this test, the court ruled that Geronta was only entitled to the return of the premiums 
it paid after alerting Brighthouse to the void nature of the policy at issue.  Geronta appeals 
this ruling, arguing that the court erred when it adopted Section 198 instead of automatically 
returning the premiums, erred in its actual application of Section 198, even assuming that is 
the proper test, and erred by precluding certain testimony from Geronta witnesses. 
Because this is a matter of first impression, the Court first surveys the applicable legal 
landscape, which reveals that courts across the country generally have adopted one of the 
following approaches: (1) rescission and automatic disgorgement of premiums, (2) 
restitution under a fault-based analysis grounded in considerations specific to insurance 
3 
 
policies declared void ab initio for lack of an insurable interest, and (3) restitution under the 
Restatement.  This Court adopts restitution under a fault-based analysis as framed by the 
Restatement as the test to determine whether premiums should be returned when a party 
presents a viable legal theory, such as unjust enrichment, and seeks the return of paid 
premiums as a remedy.  We hold, however, that despite applying the Restatement, the 
Superior Court’s application of the Restatement failed to account for the relevant questions 
encompassed by that approach. 
Having reviewed the parties’ briefs and the record on appeal, and after oral argument, 
we reverse the court’s holdings regarding entitlement to premiums and remand for 
consideration consistent with this Opinion.  But we find no fault in the Superior Court 
preclusion of certain testimony from Geronta’s witnesses.  As such, the judgment of the 
Superior Court is AFFIRMED, in part, and REVERSED and REMANDED, in part. 
I. 
RELEV
ANT FACTS AND BACKGROUND 
A. 
The Seck Policy 
On July 11, 2007, Mansour Seck Irrevocable Life Insurance Trust (the “Seck Trust”) 
applied to MetLife Investors USA Insurance Company (Brighthouse’s predecessor) for a $5 
million universal life insurance policy insuring the life of a fictitious man identified as 
4 
 
Mansour Seck (the “Policy”), with a birthday of January 1, 1933.1  Seck was identified as a 
French citizen residing at 170 Academy Street, Jersey City, New Jersey.2   
Algren Associates, Inc. (“Algren”), a broker-general-agent organization with whom 
MetLife had a longstanding relationship, conducted a recorded phone interview with 
someone purporting to be Seck.3  In that interview, the individual claiming to be Seck stated 
that he was a retired French ambassador with a yearly income of $500,000 from a pension 
and $1.5 million from investments.4  He also claimed that his net worth was $18 to $20 
million.5   
Algren submitted the following information about Seck to MetLife: “‘Marital Status: 
married [;] Annual earned income: $400,000 [;] unearned income: $0 . . . The applicant is a 
retired U[S] Ambassador to France.  He has diplomatic status[,] and his passport allows him 
to come and go freely.  His passport # is 02Y12556479, exp. 10/20/12.’”6 
Algren also submitted Seck’s general medical information, such as a note from Seck’s 
physicians confirming that Seck regularly attended medical appointments.7  Algren provided 
MetLife with two full paramedical exams from an approved third-party that showed Seck’s 
 
1 Opening Br. Ex. B at 6-7 (hereinafter, “Ex. B at __”).  
2 Id. 
3 Id. at 8. 
4 Id. 
5 Id. 
6 App. to the Opening Br. 558 (hereinafter “A__”). 
7 Ex. B at 9. 
5 
 
medical history, vitals, and EKG readings.8  An approved third party represented that he 
personally took Seck’s blood pressure, performed EKG readings, and witnessed Seck sign 
the application’s medical section.9  “Based on the paramedic’s reports, MetLife waived its 
requirement to have Mansour Seck undergo a ‘MD Exam + EKG,’ which was defined in 
MetLife’s ‘The Life Underwriting Guide’ as a ‘full exam performed by a medical doctor.’”10  
MetLife also received a lab slip for Seck’s lab work that included test results for blood and 
urine.11  MetLife reviewed Algren’s cover letter regarding the results of the test results.12 
If documentation relating to a policy comes from a general agent with whom MetLife 
has an existing relationship, MetLife itself does not further validate the documentation or 
employ a third party to validate the documentation.13 
Sandor Krauss, the trustee of the Seck Trust, executed a trust certificate in which the 
named beneficiary of the Seck Trust was Michael Seck, with an address of 170 Academy 
Street, Suite B23, Jersey City, New Jersey.14  Krauss also confirmed the soundness and 
validity of the Policy.15  Krauss is a licensed attorney in the State of New York.16  He 
acknowledged and agreed in the Policy application’s trust certification that MetLife “is 
 
8 Id. 
9 Id. 
10 Id. at 9-10. 
11 A564; Ex. B at 10. 
12 Id. 
13 Ex. B at 34-35. 
14 Id. at 7; Answering Br. 6. 
15 Ex. B at 10. 
16 Id. 
6 
 
relying exclusively on the representations in this agreement . . . .  [MetLife] is permitted to 
rely upon the representations in this document, unless or until notice of any change, 
amendment, or revocation is provided in writing and delivered to [MetLife].”17  He 
also declared in the Statement of Policyowner Intent Form that the Seck Trust did 
not “intend to sell the applied-for life insurance policy in the future.”18  He later 
testified that he had never met or communicated with anyone by the name of 
Mansour Seck.19   
Talma Nassim, a licensed broker working with Algren, submitted the application for 
the Policy, acted as witness to Seck’s signature, and confirmed that she met Seck in person.20  
She certified that she spoke with Seck personally and witnessed his signature on the 
application.21  MetLife had a policy of relying on the broker’s representations, particularly 
where, as here, MetLife had an established relationship with the general agent.22 
After confirming that its procedures and guidelines were met, MetLife issued the 
Policy on or around July 24, 2007.23 
 
17 A560. 
18 A561. 
19 Ex. B at 11 n.30. 
20 A556-57; Ex. B at 12. 
21 Ex. B at 12. 
22 Id. at 35. 
23 Id. at 12. 
7 
 
For the next two years, the Seck Trust paid $248,711.14 in premiums.24  After the 
two-year contestability period ended, the Seck Trust sold the Policy to EEA Life Settlements, 
Inc..25  Before purchasing the policy, EEA Life Settlements, Inc. consulted with its 
investment advisor, ViaSource Funding LLC (“ViaSource).26  ViaSource is “in the business 
of locating, evaluating, investing in, purchasing, servicing, managing, dealing in and 
collecting upon Life Insurance Policies.”27  Although ViaSource did its own “check of the 
validity of [Seck],”28  EEA Life Settlements, Inc. did not hire a private investigator to locate 
Seck.29  EEA Master Fund, LTD (“EEA”) bought the Policy on August 11, 2009, and paid 
premiums on the Policy for the next six years.30   
On January 25, 2010, ViaSource tried to contact Krauss and Seck’s designated 
contacts for Seck’s contact information.31  Krauss stated that he did not have a valid address 
for Seck and was unable to provide any of Seck’s information.32  Mail sent to Seck was 
marked “return to sender,” and three of the doctors from his application stated that Seck was 
 
24 Id. at 13; A565. 
25 A565. 
26 A566. 
27 Id. 
28 A1649.  ViaSource confirmed Seck’s validity by getting “verification coverage . . . from the carrier 
confirming the policy was enforce [sic], confirming its issue date, confirming the insured’s name 
and address, owner’s name and address, issue date, policy face amount, cash value, if there was any.”  
Id. 
29 A566. 
30 Ex. B at 14. 
31 A572. 
32 Id. 
8 
 
not their patient.33  On October 19, 2010, ViaSource reached out to Krauss again, and he was 
still unable to provide ViaSource with any information.34  As a result, ViaSource and EEA 
placed the Policy on its “Hard to Track” list.35  They did not, however, regard the issue as a 
red flag.36 
On October 11, 2011, ViaSource ran a public records search for Seck, which resulted 
in no findings of any public record for a Mansour Seck with a birthday of January 1, 1933, 
or with a matching Social Security number.37  ViaSource conducted a second search in 2012 
that again turned up no matching results.38   
On December 17, 2012, ViaSource sent a letter to one of Seck’s designated contacts, 
with a reminder that he agreed to “‘[p]rovide updates to as [sic] Mr. Seck’s location once 
every one and a half [sic] months [;] [p]rovide the Insured’s updated medical records, every 
six months [;] [p]rovide immediate written notification if Mr. Seck leaves the country . . . 
.’”39  The letter further stated, “‘[t]o date, you have not fulfilled any of your obligations.  You 
are in breach of this agreement . . . .’”40  EEA, however, continued paying $706,478.29 in 
premiums on the Policy to MetLife until it sold the Policy to Geronta in 2015.41 
 
33 Id. 
34 A578-79. 
35 A579. 
36 Ex. B at 22. 
37 A579. 
38 A581. 
39 A581-82. 
40 Id. 
41 A582. 
9 
 
On September 2, 2015, EEA sold the Policy to Geronta as part of a bulk sale of life 
insurance policies.42  As part of the transaction, EEA created a data room with information 
about all the policies being sold.43  Geronta did not ask for additional information.44  Geronta 
did not review the information in the data room about the Policy, and it did not conduct any 
independent research before purchasing the Policy, other than obtaining confirmation from 
MetLife that the Policy was active.45  It also did not perform a public records search on Seck 
or the Seck Trust.46  Furthermore, “Geronta did not try to confirm whether insureds had 
already died prior to purchasing portfolios because if the seller became aware of this, the 
seller might remove that policy from the portfolio thereby depriving a purchaser . . . from 
collecting the death benefit (without paying any premiums on the policy).”47  According to 
Geronta, “the standard in the tertiary market is not to check before closing because if the 
buyer finds a dead person they want to keep the windfall from the death benefits.”48 
Geronta executed a purchase and sale agreement with EEA Life Settlements, Inc. on 
September 2, 2015 (the “Agreement”).49  Neither MetLife nor Brighthouse, MetLife’s 
 
42 Id. 
43 A584. 
44 Ex. B at 14. 
45 A584-85.  
46 A584. 
47 Ex. B at 46. 
48 Id. 
49 A583. 
10 
 
successor, are parties to the Agreement.50  In the Agreement, Geronta represented that, either 
alone or with its advisors, it had, 
such knowledge and experience both in financial, business 
and tax matters generally, and relating to the acquisition 
of in-force life insurance policies specifically, to enable it 
to identify, understand and independently evaluate the 
merits and risks of the purchase of the Policies and other 
Conveyed Property, the terms and conditions of this 
Agreement and each of the other Transaction Documents 
and the entry into and consummation of the transactions 
contemplated hereby and thereby.51 
 
Geronta also stated that it “had the opportunity to conduct its own independent 
investigation of the Policies and the Conveyed Property.”52 
In 2016, Geronta attempted to update its records regarding the Policy, but was unable 
to find current information about Seck, leading to suspicions about the validity of the 
Policy.53  Geronta subsequently contacted EEA, which hired a private investigator and 
ultimately concluded that Seck was a real person that was “locatable.”54  Geronta doubted 
these findings in part because the information EEA provided about a person named Mansour 
Seck did not match the information about Seck provided in the Policy.55  Thus, Geronta hired 
its own private investigator and discovered that Seck was fictitious.56  
 
50 Id. 
51 A583-84. 
52 A584. 
53 Ex. B at 14. 
54 Id. at 14-15 
55 Id. at 15. 
56 A588. 
11 
 
Geronta reached out to Brighthouse, MetLife’s successor, about its suspicions.57  But 
Geronta continued to pay premiums on the Policy.  Geronta eventually demanded that 
Brighthouse refund all the premiums paid on the Policy; Brighthouse denied that request.58 
B. 
MetLife’s Activities After Issuing the Policy 
In 2009, two years after MetLife issued the Policy, the Seck Trust beneficiary, Pape 
Seck, applied to serve as an agent for three MetLife life insurance applications, all of which 
were unrelated to the Policy.59  As a result, MetLife performed a public records search and 
found that Pape Seck had multiple aliases, including Pape M. Seck, Pape Seck, and Michael 
Seck (collectively, “Pape Seck”).60  The public records search also showed that Pape Seck 
was possibly related to someone named Mansour Seck and that, between July 2007 and 
October 2009, the previous and non-verified address for the possible relative named 
Mansour Seck was 170 Academy Street, B23, Jersey City, New Jersey.61  The search also 
stated that the median household income for this neighborhood was $32,625.62  As a result, 
MetLife denied Pape Seck’s broker application and refused to issue any policies connected 
with his application.63 
 
57 Ex. B at 15. 
58 Id.  
59 A567; Ex. B at 16. 
60 A567; Ex. B at 16-17. 
61 A568. 
62 Id. 
63 Id. 
12 
 
A MetLife Regional Sales Vice President informed Pape Seck’s general agent on or 
around December 8, 2009 that the applications were denied due to “IOLI64 flags and 
financial irregularities.”65  The Regional Sales Vice President later emailed MetLife’s 
Corporate Ethics Department to notify it that Pape Seck’s general agent was surprised that 
his application had been denied.66  The Corporate Ethics Department then emailed Jean 
Philipp, a Senior Fraud Investigator in MetLife’s Ethics and Compliance Department who 
had performed the investigation into Pape Seck’s application, and sought advice or guidance 
to give the Regional Sales Vice President.67  Philipp’s responded that the denial of the 
applications were based on several anomalies: 
I think you can share the following information with [the general 
agent[ [sic] with the understanding [the general agent] can use 
the information internally to determine whether her organization 
wishes to maintain a relationship with this broker . . . [t]he lack 
of real estate ownership certainly brings into question the net 
worth figures provided . . . [a]s to medical info: all three insureds 
completed an[] EKG and blood draw on the same day the app 
was signed and within 30 minutes of each other.  Further, all 
three insureds completed the paramed examination on the same 
day[;] . . . [o]ur underwriters also noted wide variation in blood 
pressure reading on one insured when comparing EKG exam 
(10/28/09) with the paramed exam (11/05/09)[;] . . . I have tried 
to contact Mr. [Pape] Seck to discuss these cases but the 
“business telephone” he provided on our application to contact 
is a cell that does not accept voice messages[;] [w]e have enough 
disconnects with these cases that our Underwriting area felt we 
 
64 The acronym IOLI stands for “investor-owned life insurance.” 
65 A568. 
66 A569. 
67 Id. 
13 
 
could not ever get comfortable with the application 
information.68 
 
 
“On December 17, 2009, David Bishop[, a Brighthouse internal investigator,] sent an 
email to Jean Philipp stating: ‘Just received two wire transfers to review that have strong 
IOLI flags.’  One of the wire transfers related to the Policy, noting that ‘Ownership changed 
7/09 to EEA Life Settlements, Inc. (just after the incontestability period expired)’ and that 
the writing agent was Talma Nassim, through Algren Brokerage.”69   
MetLife did not inform EEA or Geronta that the Policy had strong IOLI flags.70 
C. 
Pape Seck’s Arrest and Prosecution 
In 2010, Pape Seck was the subject of numerous press releases issued by the State of 
New Jersey and other insurance industry publications; they stated that Pape Michael Seck, a 
New York City insurance agent, had been arrested and prosecuted for fraudulent insurance 
schemes.71  
The New Jersey Attorney General’s office issued a press release on April 13, 2010, 
stating, “On April 12, 2010, Pape Seck pleaded guilty to two counts of insurance fraud in 
connection with his submissions, as an agent, between May 22, 2008 and July 27, 2009, of 
fraudulent life insurance applications to Prudential Life Insurance Company and Aviva Life 
 
68 A569-70. 
69 A571. 
70 Id. 
71 Ex. B at 24. 
14 
 
Insurance Company.”72  The insured’s name on these applications was Mansour Seck.73  The 
press release also stated that 
[B]etween May 22, 2008 and July 27, 2009, [Pape Seck] 
submitted false applications…for life insurance policies 
on behalf of Mansour Seck, listing Pape Seck as Mansour 
Seck’s son and the beneficiary under the policies. [Pape 
Seck] admitted that his father, whose name is Mansour 
Seck, did not apply for the life insurance, nor did anyone 
by that name. 
 
Although Mansour Seck is the name of [Pape Seck’s] 
father, [Pape Seck], in filing the applications, also used 
identifying information, including a Social Security 
Number, from two other real people named Mansour Seck, 
one a retired dignitary from Senegal in Africa and the 
other a New Jersey resident. Mansour Seck is a common 
name in the country of Senegal.74 
 
This press release was posted on the New Jersey Attorney General’s website.75 
 
Moreover, Pape Seck’s convictions were published in two online articles, both 
of which are publicly available.76  
 
On April 26, 2010, New Jersey’s Office of the Insurance Fraud Prosecutor 
subpoenaed MetLife’s records concerning Seck, and in response, MetLife produced 
169 pages of documents.77   
 
72 A573. 
73 Id. 
74 A573-74; Ex. B at 25. 
75 A574. 
76 A574-75. 
77 A575; Ex. B at 26. 
15 
 
 
On June 8, 2010, the New Jersey Attorney General issued a second press 
release in which it stated that Pape Seck was sentenced to three years in prison on 
June 7, 2010, for fraudulent insurance applications.78  Several other publications 
published articles about Pape’s conviction and sentencing on or around June 9, 
2010.79  All articles are either publicly available or behind paywalls.80 
 
On October 17, 2011, the New Jersey Attorney General released a third press 
release about Pape Seck, stating that Pape Seck pleaded guilty to one count of 
insurance fraud and two counts of theft by deception.81  It also announced that Pape 
Seck admitted that he knowingly made fraudulent or misleading statements between 
November 12, 2006, and June 4, 2008, in support of seven life insurance policy 
applications, one of which was the Policy.82  The press release thanked MetLife “for 
[its] assistance in the investigation.”83  This press release was posted to the New 
Jersey Attorney General’s website and was publicly available.84 
On October 26, 2011, Jim McCarthy, an investigator with MetLife’s Claims 
Investigation Unit emailed MetLife’s Field Investigation Unit for Corporate Ethics and 
 
78 A575-76. 
79 A577-78. 
80 Id. 
81 A580. 
82 Id.  
83 Id. 
84 Id. 
16 
 
Compliance to make them aware of Pape Seck’s conviction (the “McCarthy Email”).85  The 
email’s subject line contained the name Mansour Seck, the Policy’s policy number, Pape 
Seck’s name, and the MetLife broker number.86  The email noted that Pape Seck was recently 
sentenced for insurance fraud involving Seck and stated that MetLife cooperated with the 
authorities.87   
D. 
Litigation and the Superior Court Ruling 
On April 4, 2018, Brighthouse filed suit, seeking a judicial declaration that the Policy 
was void ab initio for lack of an insurable interest and arguing that it is entitled to keep all 
the premiums paid on the Policy.88  Geronta filed an answer, agreeing that the Policy was 
void ab initio,89 and a counterclaim, alleging that it was entitled to reimbursement of all 
premiums paid, with the exception of the premiums paid by the original owner of the 
Policy.90   
In late 2018, both parties filed motions for judgment on the pleadings.91  Brighthouse 
argued that the Superior Court should leave the parties where it found them, while Geronta 
argued that it should receive all the premiums paid under rescission and disgorgement.92  In 
 
85 A3034. 
86 Id. 
87 Id. 
88 A590. 
89 Id. 
90 Opening Br. Ex. A at 3 (hereinafter, “Ex. A at __”). 
91 Id. at 3. 
92 Id. at 4-8. 
17 
 
its opinion, the court declared the Policy void ab initio.93  The court denied Geronta’s request 
for rescission and disgorgement, holding that rescission is not available where a contract is 
void because there is no contract to “unmake.”94  But the Superior Court also denied 
Brighthouse’s request, noting that Geronta might be entitled to restitution.95  Thereafter, the 
parties conducted discovery in preparation for trial.   
The court conducted a bench trial in March 2021.  After trial, the Superior Court ruled 
that Geronta was only entitled to restitution of the premiums it paid after it informed 
Brighthouse that the Policy was void for lack of an insurable interest.96  In reaching that 
conclusion, the court applied Section 198 of the Restatement.97  Under the Restatement, a 
party is entitled to restitution if it was excusably ignorant under Section 198(a) or not in pari 
delicto with the other party under Section 198(b).98  As such, the Superior Court determined 
that “[i]n order for Geronta to prevail, the Court must find that Geronta was either excusably 
ignorant under §198(a); or not in pari delicto with Brighthouse under §198(b).”99   
The Superior Court first concluded that Geronta was not entitled to restitution under 
Section 198(a) because it was not excusably ignorant of the fact that the Policy was void as 
 
93 Ex. A at 4-5. 
94 Id. at 5. 
95 Id. at 7-8. 
96 Ex. B at 63-66. 
97 Id. at 51-63. 
98 Restatement (Second) of Contracts § 198 (Am. L. Inst. 1981). 
99 Ex. B at 51. 
18 
 
against public policy.100  The court found that Geronta intentionally and strategically refused 
to investigate or verify whether the insureds on the policies they purchased were alive until 
after it purchased the policies.101  Moreover, the court found that “[h]ad Geronta done its 
research, it would have seen circumstances that it might have considered problematic” 
because “[t]he information, which Geronta insists was important, was easily obtainable or 
publicly available.”102  Here, the court pointed to the fact that (1) the EEA data room 
contained information about EEA’s inability to verify any information about Mansour Seck 
or contact Mansour Seck;103 and (2) “[p]ublic records searches would have shown multiple 
press releases and articles regarding Pape Seck’s insurance fraud arrests and convictions; 
repeated references to the name ‘Mansour Seck’ in press releases; and MetLife’s connection 
to the New Jersey investigation.”104  The court also found that Geronta failed on this prong 
of Section 198 because it was unable to show that MetLife’s underwriting process was 
inappropriate or lacked good faith.105  As such, the Superior Court held that Geronta was not 
inexcusably ignorant. 
Next, the Superior Court concluded that Geronta failed to show that it was not in pari 
delicto with Brighthouse or that it was the victim of misrepresentation or oppression by 
 
100 Id. at 51-56. 
101 Id. at 53-54. 
102 Id. at 54. 
103 Id. at 54-55. 
104 Id. at 55. 
105 Id. at 55-56. 
19 
 
Brighthouse.106  In conducting an in pari delicto analysis, the court looked at the diligence 
of both parties, finding that “[t]he evidence shows that MetLife/Brighthouse followed its 
guidelines and practices before issuing the Seck Policy whereas Geronta’s investigation was 
superficial.”107  The court also found that Geronta failed to prove that Brighthouse knew that 
the Policy lacked an insurable interest even after MetLife/Brighthouse learned of issues with 
Pape Seck.108  Additionally, after noting that the Restatement’s comments allow for 
restitution if the party showed that it was the victim of misrepresentation or oppression 
practiced on it by the other party, the court found that Geronta did not satisfy this requirement 
because Brighthouse did not commit fraud on Geronta by not disclosing inconsistencies with 
the Policy since those inconsistencies were publicly available or in the data room.109  Thus, 
the Superior Court concluded that Geronta did not satisfy Section 198(b) of the Restatement 
and denied Geronta’s request for the return of premiums paid before it made Brighthouse 
aware that Seck was fictitious. 
II. 
STANDARD OF REVIEW 
This Court reviews questions of law de novo.110  “We will uphold the Superior Court 
judge’s factual findings unless they are clearly erroneous and the record does not support 
 
106 Id. at 56-62. 
107 Id. at 58. 
108 Id. at 61. 
109 Id. at 61-63. 
110 Bäcker v. Palisades Growth Cap. II, L.P., 246 A.3d 81, 94 (Del. 2021). 
20 
 
them.”111  “Factual findings are not clearly erroneous ‘if they are “sufficiently supported by 
the record and are the product of an orderly and logical deductive process.”’”112  “We will 
not set aside a trial court’s factual findings ‘unless they are clearly wrong and the doing of 
justice requires their overturn.’”113   
“A decision whether to admit testimony as relevant is within the sound discretion of 
the trial judge and will not be reversed absent a clear abuse of discretion.”114  “When an act 
of judicial discretion is under review the reviewing court may not substitute its own notions 
of what is right for those of the trial judge, if his judgment was based upon conscience and 
reason, as opposed to capriciousness or arbitrariness.”115 
III. 
ANALYSIS 
This case requires us to answer the following question: What is the appropriate 
approach when analyzing whether to return premiums paid on an insurance policy that is 
void ab initio as against public policy for lack of an insurable interest?  
Geronta contends that, under case law from the District of Delaware, insurance 
policies that are void ab initio as against public policy must be rescinded.116  According to 
 
111 Lawson v. State, 72 A.3d 84, 88 (Del. 2013) (citing Key Props. Grp., LLC v. City of Milford, 995 
A.2d 147, 150 (Del. 2010)). 
112 Bäcker, 246 A.3d at 94-95 (quoting Biolase, Inc. v. Oracle Partners, L.P., 97 A.3d 1029, 1035 
(Del. 2014)). 
113 DV Realty Advisors LLC v. Policeman’s Annuity and Benefit Fund of Chi., 75 A.3d 101, 108 
(Del. 2013) (quoting Montgomery Cellular Holding Co. v. Dobler, 880 A.2d 206, 219 (Del. 2005)). 
114 Tyree v. State, 510 A.2d 222, 1986 WL 16037, at *1 (Del. May 29, 1986) (ORDER). 
115 Chavin v. Cope, 243 A.2d 694, 695 (Del. 1968). 
116 Opening Br. 16-17. 
21 
 
Geronta, the effect of such rescission is the automatic return of the premiums to the payor in 
order to return parties to the status quo.117  Geronta avers that public policy supports its 
position because, “[i]f an insurance company could retain premiums while also obtaining 
rescission of a policy, it would have the undesirable effect of incentivizing insurance 
companies to bring rescission suits as late as possible, as they continue to collect premiums 
at no actual risk.”118  Thus, Geronta argues, the Superior Court erred in refusing to rescind 
the policy and return all premiums to Geronta.119   
In the alternative, Geronta next argues that if restitution is the correct remedy, the court 
still erred in not returning the premiums.120  Geronta argues that the Superior Court failed to 
apply the disproportionate forfeiture exception under Section 197 of the Restatement, 
incorrectly applied Section 198 of the Restatement by failing to address comparative fault 
between the parties and ignoring conclusive evidence that Brighthouse had actual 
knowledge that the Policy was void in 2011, and erred by failing to address its bona fide-
purchaser-for-value defense.121  Finally, Geronta argues that the Superior Court erred by 
precluding Geronta’s witnesses from testifying about their understanding of customary due 
diligence in the tertiary market.122 
 
117 Id. at 23. 
118 Id. at 22 (citing Lincoln Nat’l Life Ins. Co. v. Snyder, 722 F. Supp. 2d 546 at 565). 
119 Id. at 17. 
120 Id. at 25-42. 
121 Id. 
122 Id. 43-45. 
22 
 
 
Brighthouse responds that the Superior Court properly denied Geronta’s request 
because parties to agreements void ab initio as against public policy typically are not entitled 
to relief, including rescission; instead, courts leave the parties where they find them.123  
Brighthouse argues that the exception to this rule is found in Section 198, which permits 
restitution of contracts void ab initio as against public policy in two specific circumstances.124  
Brighthouse argues that neither of those exceptions applies to Geronta.  
Brighthouse also responds that the Superior Court performed an analysis of the 
comparative fault of the parties and correctly concluded that Geronta was more at fault than 
Brighthouse.125  Moreover, Brighthouse argues that the Superior Court correctly found that 
Brighthouse did not have actual knowledge that the Policy lacked an insurable interest 
because the evidence Geronta relies on would have required the Superior Court to make 
numerous baseless inferences to reach Geronta’s preferred conclusion.126  
Finally, regarding Geronta’s witness testimony, Brighthouse argues that the Superior 
Court did not abuse its discretion by precluding witnesses from testifying about their 
understanding of standard diligence in the tertiary market because Geronta refused to allow 
deposition testimony about the very same topic during discovery.127 
We address each argument in turn. 
 
123 Answering Br. 18-20. 
124 Id. at 19-20. 
125 Id. at 34-35. 
126 Id. at 29. 
127 Id. at 41-43. 
23 
 
A. 
Overview of Potential Remedies for an Insurance Policy That Is Void Ab 
Initio for Lack of an Insurable Interest 
 
 
“A contract of insurance upon a life in which the insured has no interest is a pure 
wager that gives the insured a sinister counter interest in having the life come to an end.”128  
“For hundreds of years, the law has prohibited wagering on human life through the use of 
life insurance that was not linked to a demonstrated economic risk.”129   
In PHL Variable Insurance Co. v. Price Dawe 2006 Insurance Trust ex rel. Christiana 
Bank & Tr. Co., the Court addressed, for the first time, whether the validity of a life insurance 
policy lacking an insurable interest could be challenged after the expiration of the two-year 
contestability period.130  In answering that question in the affirmative, the Court concluded 
that “[u]nder Delaware common law, if a life insurance policy lacks an insurable interest at 
inception, it is void ab initio because it violates Delaware’s clear public policy against 
wagering.”131  “Consequently, the Court held that STOLI policies are void ab initio and ‘a 
fraud on the court,’ meaning that they never legally come into existence . . . .”132 
 
Under Delaware law, “it is against the public policy of this State to permit its courts 
to enforce an illegal contract prohibited by law.  Ordinarily, we think, when such is the fact, 
 
128 Grigsby v. Russell, 222 U.S. 149, 154 (1911). 
129 Lavastone Cap. LLC v. Est. of Berland, 266 A.3d 964, 967-68 (Del. 2022). 
130 28 A.3d 1059 (Del. 2011). 
131 Id. at 1067-68. 
132 Wells Fargo Bank, N.A. v. Est. of Malkin, __ A.3d __, 2022 WL 1671966, at *4 (Del. May 26, 
2022). 
24 
 
neither party has a remedy to any extent against the other.”133  Moreover, this Court has held 
that “[a] court may never enforce agreements void ab initio, no matter what the intentions of 
the parties.”134  Thus, when an agreement is void ab initio as against public policy, the courts 
typically will not enforce a remedy to any extent against either party.  In other words, the 
courts typically will leave the parties where they find them.   
This Court has not yet announced the proper test under Delaware law for determining 
whether premiums paid on an insurance policy that is void ab initio as against public policy 
for lack of an insurable interest should be returned to the payor or retained by the insurer.  A 
survey of case law across the country reveals three potential answers to this question: (1) 
rescission of the policy and the automatic return of the premiums, (2) restitution under a 
fault-based analysis grounded in considerations specific to insurance policies declared void 
ab initio for lack of an insurable interest, and (3) restitution under the Restatement (Second) 
of Contracts.135  
 
 
 
133 Della Corp. v. Diamond, 210 A.2d 847, 849 (Del. 1965). 
134 Price Dawe, 28 A.3d at 1067. 
135 We acknowledge that the vast majority of cases addressing this issue arise in the STOLI 
(“stranger-originated life insurance”) context, where a stranger without an insurable interest buys 
insurance—essentially making a wager—on another person’s life.  However, when analyzing 
whether to return premiums, we see no reason to distinguish between a STOLI case and a case 
involving a lack of an insurable interest because the insured is fictitious.  The parties appear to agree.  
They have cited many of the STOLI cases discussed in this opinion in arguing for their preferred 
outcome.  And they do not argue that there is any reason to analyze this case differently from STOLI 
cases. 
 
25 
 
a. 
Rescission 
Rescission is a contractual remedy that can be sought at law or in equity.136  Generally, 
“rescission results in abrogation or ‘unmaking’ of an agreement, and attempts to return the 
parties to the status quo.”137  “While rescission at law refers to the ‘judicial declaration that a 
contract is invalid and a judicial award of money or property,’ equitable rescission offers a 
platform to provide additional equitable relief, such as cancellation of a valid instrument—
the formal annulment or setting aside of an instrument or obligation.”138  Thus, rescission 
would result in the return of any premiums paid. 
Three main decisions from the United States District Court for the District of 
Delaware have granted the insurer’s request for rescission of void stranger-originated life 
insurance (“STOLI”) policies and required the return of the premiums from the insurer to 
the investor.  These three cases—Sun Life Assurance Co. v. Berck,139 Lincoln National Life 
Insurance Co. v. Snyder,140 and Principal Life Insurance Co. v. Lawrence Rucker 
2007 Insurance Trust141—were all decided before this Court’s decision in PHL 
 
136 Ravenswood Inv. Co., L.P. v. Est. of Winmill, 2018 WL 1410860, at *21 (Del. Ch. Mar. 21, 2018). 
137 Norton v. Poplos, 443 A.2d 1, 4 (Del. 1982); Craft v. Bariglio, 1984 WL 8207, at *12 (Del. Ch. 
Mar. 1, 1984). 
138 Ravenswood, 2018 WL 1410860, at *21 (citing E.I. Du Pont De Nemours & Co. v. HEM Rsch., 
Inc., 1989 WL 122053, at *3 (Del. Ch. Oct. 13, 1989). 
139 719 F. Supp. 2d 410 (D. Del. 2010). 
140 722 F. Supp. 2d 546 (D. Del. 2010). 
141 774 F. Supp. 2d 674 (D. Del. 2011). 
26 
 
Variable Insurance Co. v. Price Dawe 2006 Insurance Trust ex rel. Christiana Bank & Tr. 
Co. 
In Berck, the insurer, Sun Life Assurance Company, sought a declaratory 
judgment that the insurance policy at issue, which lacked an insurable interest, was 
void ab initio.142  It also sought to retain of some or all of the premiums paid on the 
policy.143  There, on a motion to dismiss, the court accepted as true the allegations 
that the defendants fraudulently procured the illegal policy: “Beginning in April 
2007, Lockwood, defendant, and others helped Berman, who was 77 years old at the 
time, apply for a life insurance policy.  They allegedly sought the policy not for any 
legitimate insurance need but as a wagering contract to sell to stranger investors on 
the secondary life insurance market.”144  
In determining whether the insurer could retain the premiums, the District 
Court noted, in relevant part, that “rescission of benefit increases on a life insurance 
policy requires the insurer to refund premiums.”145  The court then noted that 
“rescission is an equity claim that requires all parties to be returned to the status 
quo.”146  Finally, the court determined that “if an insurance company could retain 
premiums while also obtaining rescission of a policy, it would have the undesirable 
 
142 Berck, 719 F. Supp. 2d at 411. 
143 Id. 
144 Id. at 411-12. 
145 Id. at 418. 
146 Id. 
27 
 
effect of incentivizing insurance companies to bring rescission suits as late as 
possible, as they continue to collect premiums at no actual risk.”147  As such, the 
court held that the insurer could not seek both rescission of the agreement and 
retention of the premiums, despite the fact that it accepted that the defendant 
procured the void policy.  Thus, the court “dismiss[ed] plaintiff’s claim seeking 
retainment of premiums in light of the fact that it also seeks to rescind the [policy].  
In an equitable action such as this, plaintiff may not have it both ways.”148    
Similarly, in Snyder, the District Court considered whether to allow an insurer 
to retain premiums on a STOLI policy.149  Again, on a motion to dismiss, the court 
accepted as true the allegation that the policy was wrongly procured by the 
defendants who “sought the policy not for any legitimate insurance need, but as a 
wagering contract to sell to stranger investors on the secondary life insurance 
market.”150  The plaintiff, Lincoln National Life Insurance Company, sought a 
declaratory judgment that the policy was either void or voidable and sought to retain 
some or all of the premiums paid under the policy.151  In response, the defendant 
argued that “plaintiff cannot maintain its action for rescission because it chose to 
 
147 Id. at 418-19. 
148 Id. at 419. 
149 Snyder, 722 F. Supp. 2d at 550. 
150 Id. 
151 Id. 
28 
 
retain premiums even after obtaining [k]nowledge of the alleged STOLI scheme.”152  
As in Berck, the court ruled that “rescission of benefit increases on a life insurance 
policy requires the insurer to refund premiums.”153  Thus, the court ordered that, in 
the event of rescission, the insurer could not retain premiums on the policy, 
regardless of whether the defendant procured the void policy.154 
The court reached the same result on a motion for summary judgment in 
Rucker.  In that case, Principal Life Insurance (“Principal”) sought a declaration 
from the District Court that one of its policies was a STOLI policy that was void ab 
initio or voidable due to a lack of an insurable interest at the policy’s inception.155  
Principal also sought to retain some or all of the premiums paid on the policy.156  The 
District Court examined both Berck’s and Snyder’s holdings that an insurer could 
not both rescind a policy and retain the premiums on that policy.157  Therefore, it 
ordered that Principal could not retain any premiums paid on the policy.158 
In addition to the three District of Delaware cases identified above, two other district 
courts, applying Delaware law, have followed the District of Delaware cases.    
 
152 Id. at 557. 
153 Id. at 564. 
154 Id. at 566. 
155 Rucker, 774 F. Supp. 2d at 677. 
156 Id. 
157 Id. at 680-83. 
158 Id. 
29 
 
In U.S. Bank National Ass’n v. Sun Life Assurance Co. of Canada, U.S. Bank owned 
a $10 million life insurance policy issued by Sun Life.159  Sun Life asserted that the policy 
was an impermissible STOLI policy and sought a declaration that the policy was void ab 
initio.160  After determining that there was no insurable interest at the inception of the policy, 
the Eastern District of New York relied on Berck and returned the premiums paid on the 
policy to U.S. Bank. 
The Southern District of Florida took a similar approach in Sun Life Assurance Co. 
of Canada v. U.S. Bank National Ass’n.161  First, the court noted that under Florida law, 
“‘[w]here a party wrongfully procures a life insurance policy on an individual in whom it 
has no insurable interest, the party is not entitled to a return of premiums paid for the void 
policy.’”162  But because the court was applying Delaware law, it held that, under Berck, a 
person who procures a void policy could receive a refund of its premiums despite its 
actions.163  As such, the court returned the premiums.164 
In all five cases, the court required the return of the premiums to the investor and 
noted that allowing an insurance company to challenge the enforceability of a policy while 
retaining the premiums “would have the undesirable effect of incentivizing insurance 
 
159 2016 WL 8116141, at *6 (E.D.N.Y. Aug. 30, 2016). 
160 Id. at *8. 
161 2016 WL 161598, at *1, *18 (S.D. Fla. Jan. 14, 2016). 
162 Id. (citing TTSI Irrevocable Tr. v. ReliaStar Life Ins. Co., 60 So. 3d 1148, 1150-51 (Fla. 5th DCA 
2011)). 
163 Id. 
164 Id. 
30 
 
companies to bring rescission suits as late as possible, as they continue to collect premiums 
at no actual risk.”165  Thus, these cases stand for the proposition that an insurer cannot seek 
both rescission of the policy and retention of the policy’s premiums.166  In other words, the 
rescinding party must restore everything of value it has received under the contract from the 
other party. 
b. 
Restitution 
Restitution is “[a] body of substantive law in which liability is based not on tort or 
contract but on the defendant’s unjust enrichment.”167  It is “[t]he set of remedies associated 
with that body of law, in which the measure of recovery is usu[ally] based not on the 
plaintiff’s loss, but on the defendant’s gain.”168   
In the relevant case law, restitution has been awarded under two separate approaches: 
(1) a fault-based analysis grounded in considerations specific to insurance policies declared 
void ab initio for lack of an insurable interest and (2) the Restatement. 
 
 
 
165 Snyder, 722 F. Supp. 2d at 565. 
166 See PHL Variable Ins. Co. v. Chong Son Pak Life Ins. Tr., 2012 WL 13201401, at *1 (D. Del. 
July 25, 2012) (holding that the insurance company is not permitted to keep the premiums on a 
policy that is declared void ab initio for lack of an insurable interest at inception); Borden v. Paul 
Revere Life Ins. Co., 935 F.2d 370, 379 (1st Cir. 1991) (noting that the general rule is that “when an 
insurer ventures to rescind a policy on the basis of a material misrepresentation in the application, it 
must first tender to the insured the premiums paid under the policy”). 
167 Restitution, Black’s Law Dictionary (11th ed. 2019). 
168 Id. 
31 
 
i. 
Restitution under a fault-based analysis grounded in 
considerations specific to insurance policies declared void ab 
initio for lack of an insurable interest 
 
The majority of courts considering this issue have adopted a fault-based analysis in 
determining whether to return premiums paid on an illegal or void insurance policy.  This 
approach appears to find its roots in the doctrine of in pari delicto.  In pari delicto, “Latin for 
‘in equal fault,’ . . . is a general rule that courts ‘will not extend aid to either of the parties to 
a criminal act or listen to their complaints against each other but will leave them where their 
own act has placed them.’”169  “The general rule of in pari delicto, however, does not apply 
in certain discrete circumstances.  For example, if . . . the parties are not considered to be in 
truly equal fault.”170  This in pari delicto exception is further supported by Williston, which 
states that “illegal bargains may be enforced, at least to some extent, under certain 
circumstances . . . .  Accordingly, there are exceptions to the general rule that an executed 
transfer cannot be set aside . . . .”171 One such exception applies when “parties not in pari 
 
169 In re Am. Intern. Grp., Inc., Consol. Derivative Litig., 976 A.2d 872, 882 (Del. Ch. 2009) (quoting 
In re LJM2 Co–Investment, L.P., 866 A.2d 762, 775 (Del. Ch. 2004)); see also Burns v. Ferro, 1991 
WL 53834, at *2 (Del. Super. Ct. Mar. 28, 1991) (“Furthermore, it is well-settled law that a court 
will not aid a contractual claim founded on a violation of the law. Where parties to a contract are in 
pari delicto, a court will ‘leave them where it finds them,’ and will refuse to enforce the contract.”); 
Morford v. Bellanca Aircraft Corp., 67 A.2d 542, 547 (Del. Super. Ct. Apr. 27, 1949) (“The 
authorities are practically unanimous in saying that, where parties are in pari delicto, a Court will 
leave them where it finds them. Money paid upon an illegal agreement may not be recovered.”). 
170 In re Am. Intern. Grp., Inc., Consol. Derivative Litig., 976 A.2d 872, 883 (Del. Ch. 2009). 
171 Williston on Contracts § 19:76 (4th ed. 2022); see also Am. Jur. 2d Equity § 24. 
32 
 
delicto.”172  As such, under the doctrine of in pari delicto, a court may return consideration 
paid toward an illegal contract when the parties are not equally at fault.173   
Numerous courts have utilized some form of this doctrine to determine whether to 
return premiums as restitution damages under a theory of unjust enrichment when an 
insurance policy is declared void or illegal.  For example, in Sun Life Assurance Co. of 
Canada v. Wells Fargo Bank, N.A., the United States Court of Appeals for the Third Circuit 
certified to the New Jersey Supreme Court the question whether a downstream purchaser of 
a STOLI policy is entitled to a refund of any premium payments it made on the illegal 
policy.174  After reviewing case law from various jurisdictions, the New Jersey Supreme 
Court adopted a “fact-sensitive approach” under which “trial courts should develop a record 
and balance the relevant equitable factors,” including “a party’s level of culpability, its 
participation in or knowledge of the illicit scheme, and its failure to notice red flags.”175 
 
In Sun Life Assurance Co. of Canada v. Conestoga Trust Services, LLC, the defendant 
asked the District Court for the Eastern District of Tennessee to return all the premiums it 
paid for an illegal STOLI policy.176  The District Court noted that it followed the “majority 
rule” that “an assignee who has paid premiums in good faith is entitled to recover premiums 
 
172 Williston on Contracts § 19:76 (4th ed. 2022) (“Where the parties appear not to have been in pari 
delicto, however, the one whose wrong is less than that of the other may be granted relief. The 
doctrine is often applied as between the parties to a fraudulent or illegal transaction.”). 
173 Williston on Contracts § 19:76, 19:80 (4th ed. 2022). 
174 208 A.3d 839, 841 (2019). 
175 Id. at 859. 
176 263 F. Supp. 3d 695, 704 (E.D. Tenn. 2017), aff’d, 717 F. App’x 600 (6th Cir. 2018). 
33 
 
paid if the policy is later declared void because of the misconduct of others.”177  It then noted 
that the defendant was entitled to the return of the premiums because it “is not to blame for 
the fraud here; it merely acquired a life insurance policy from a predecessor assignee and 
that policy turned out to be void.”178  Moreover, the court found that allowing the insurer to 
retain the premiums would be a windfall.179  Thus, the court determined that the third-party 
investor was entitled to the premiums because it was not at fault for the fraudulent STOLI 
policy.  
 
In Ohio National Life Assurance Corp. v. Davis, an insurer asked the Seventh Circuit 
to reverse the District Court’s return of premiums on a STOLI policy to Egbert, the investor, 
arguing that “Egbert knew or should have known that he had bought an interest in a void 
contract.”180  In affirming the return of the premiums to Egbert, the court noted,  
Generally when an illegal contract is voided, the parties “will be 
left where they have placed themselves with no recovery of the 
money paid for illegal services.”  But there is an exception for 
the case in which the party that made the payments is not to 
blame for the illegality.  There is no evidence that Egbert knew 
the policy was void . . . .  Egbert paid substantial premiums and 
got nothing in return.  He caused no harm, as he was not 
involved in the conspiracy.  The company would be unjustly 
enriched if allowed to keep his $91,000.181 
 
 
177 Id. (emphasis added). 
178 Id.  
179 Id. 
180 803 F.3d 904, 911 (7th Cir. 2015). 
181 Id. at 911-912 (quoting Gamboa v. Alvarado, 941 N.E.2d 1012, 1017 (2011)). 
34 
 
In other words, the court took a fault-based approach and determined that Egbert was entitled 
to a return of the premiums he paid on the STOLI policy because he did not know the policy 
was void and was not involved in the conspiracy. 
 
Similarly, in Carton v. B & B Equities Group, LLC, the investors of an illegal void ab 
initio STOLI policy, the Cartons, sought the return of premiums, arguing that the insurers 
were unjustly enriched because they retained premiums without providing any coverage on 
the void policies.182  The District Court of Nevada analyzed the fault of each party: 
The Insurers were the clear victims of the STOLI scheme.  
Although the Policies were void as against public policy, the 
Insurers are not alleged to have had any knowledge of the 
scheme or that the Policies were void ab initio.  Consequently, 
the Insurers bore the risk that the scheme would not be 
uncovered and that they would unknowingly pay the death 
benefits to the Insured even though the Policies never actually 
came into existence.  In contrast, the Cartons were at least on 
inquiry notice of the illicit scheme . . . .  The transaction 
described to the Cartons was a textbook STOLI arrangement, 
which should have alerted the Cartons to the illicit nature of the 
“investment.”  Several other red flags also should have placed 
the Cartons on inquiry notice, including the fact they were 
guaranteed a 20% return on their investment during a recession, 
the complicated manner in which the arrangement was 
structured (which was unnecessary for a simple loan 
transaction), and the fact they received the Policy applications 
which all implied that the Insured were paying the premiums.  
Although the Cartons may have ultimately been duped into 
entering the arrangement, the facts clearly indicate they were at 
least put on notice that something in the transaction was 
amiss.183 
 
 
182 827 F. Supp. 2d 1235, 1245 (D. Nev. 2011). 
183 Id. at 1247. 
35 
 
Because the court found that the Cartons were at fault and the insurance company was 
faultless, the court concluded that the Cartons were not entitled to the return of the 
premiums.184 
Likewise, in Sun Life Assurance Co. of Canada v. U.S. Bank National Ass’n (“Sol”), 
the District Court of Delaware applied a fault-based analysis in determining whether to return 
the premiums to the investor.  Here, the District Court surveyed the actions of all parties, 
finding that everyone was at fault to some extent.185  For example, the court noted that the 
insurance company’s hands “are not spotless:”  
Sun Life’s hands, like U.S. Bank’s and FCI’s, are not spotless.  
Sun Life may have been unaware at origination that some of its 
policies constituted illegal human life wagers, but Sun Life 
admits (as the facts compel it to) that it subsequently developed 
a list of suspected STOLI policies.  With the release of Price 
Dawe, Sun Life also knew (or should have known) that it could 
invalidate 
STOLI policies even after the two-year 
incontestability period.  Yet, rather than notify policyholders that 
their policies were suspected STOLI, or that the validity of their 
policies may be challenged at any time, Sun Life “made the 
strategic decision not to pursue investigating [these] policies”, 
and continued to collect (often enormous) premiums.  Sun Life 
knowingly assumed the risk that someday a court would order 
it to repay some or all of the millions of dollars it collected in 
such premiums.  If the Court were, instead, to leave the parties 
as it found them, Sun Life would be unjustly enriched.186 
 
The District Court then noted that the investor was also at fault: 
 
184 Id. 
185 2019 WL 8353393, at *4 (D. Del. Dec. 30, 2019). 
186 Id. 
36 
 
FCI does not come to Court with untarnished hands either. FCI 
is not an ignorant or duped party, but a highly-sophisticated 
secondary market investor with nearly $9 billion in life 
insurance portfolio investments.  It knew the Sol Policy was 
premium financed, that Coventry was involved in the policy 
origination, and that the policy portfolio it was acquiring was 
higher risk due to “overzealous origination methods” that were 
subject to legal challenges. . . .  The Court is convinced that FCI 
knew or should have known at the time it purchased the Sol 
Policy there was a substantial risk the Policy was an illegal 
STOLI policy.187 
 
After assessing fault, the court found that “[t]he only equitable remedy justified here is 
restitution damages, in which all premiums paid to Sun Life on the Sol Policy . . . are returned 
to U.S. Bank and/or FCI” because, “[i]n the Court’s view, no party here has shown itself to 
be an innocent victim, and none should leave the Court an undisputed victor. 
 
Although not explicitly arising in the STOLI context, the Tennessee Court of 
Appeals,188 the Supreme Court of Minnesota,189 the Supreme Court of Indiana,190 the 
 
187 Id. 
188 Branson v. Nat. Life & Acc. Ins. Co., 4 Tenn. App. 576, 580 (1927) (“There are many cases like 
this where it is held that a party who had in good faith paid premiums on a void policy could recover 
the premiums.  If the policy is void as against public policy and the agent knew it but the one who 
secured the contract did not, the knowledge of the agent being the knowledge of the company, the 
company has received money on a contract known to be void—has received something for nothing, 
and should not be allowed to retain the premiums paid for which there has been no consideration.”). 
189 In re Millers’ & Mfrs. Ins. Co., 97 Minn. 98, 118, 106 N.W. 485, 494 (1906) (“If the policy is 
illegal the premiums cannot be recovered . . . unless the parties are not ‘in pari delicto.’”). 
190 Am. Mut. Life Ins. Co. v. Bertram, 163 Ind. 51, 70 N.E. 258, 262 (1904) (“If the contract of 
insurance be illegal in its inception, the insured cannot recover the premiums paid, if the parties are 
in pari delicto.  The controlling inquiry, then, in the present case, is, were the parties to the transaction 
equally in fault?”). 
37 
 
Southern District of Florida,191 and the Eighth Circuit192 also have all decided whether to 
return premiums by adopting a fault-based analysis grounded in considerations specific to 
insurance policies declared void or illegal.   
In all of these cases, the court analyzed the fault of the parties in order to determine 
who was entitled to the premiums paid on an illegal insurance policy.  These courts 
considered the following questions: whether the facts surrounding the investment put the 
investor on notice that something was amiss; whether the party failed to notice red flags; 
whether the party knew the policy was void; whether the insurer later learned that the policy 
was or might have been void; whether the investor’s expertise in life insurance portfolio 
investments should have caused it to know or suspect that there was a substantial risk that 
 
191 Neiman v. Provident Life & Accident Ins. Co., 217 F. Supp. 2d 1281, 1288-89 (S.D. Fla. Aug. 
26, 2002) (“Having found the insurance contract void as a matter of public policy, the Court must 
decide whether there are any additional remedies to impose.  Courts will generally leave parties that 
are in pari delicto where they place themselves when ruling a contract unenforceable as a matter of 
public policy.  A plaintiff may recover on an illegal contract only if he has not been guilty of 
wrongdoing or is not in pari delicto.  The in pari delicto doctrine therefore precludes this Court from 
awarding Neiman the premiums he paid on the void contract, much less the disability benefits.  As 
repeatedly mentioned, Neiman’s own wrongdoing caused the contract to be void.  Accordingly, 
Neiman was in pari delicto, if not more at fault than the insurance company, in causing the contract 
to be void and will recover neither benefits nor the premiums he paid.  The Court must leave the 
parties where it found them.”). 
192 Wal-Mart Stores, Inc. v. Crist, 855 F.2d 1326, 1335-35 (8th Cir. Aug. 26, 1988) (“‘The general 
rule with respect to illegal contracts is that neither courts of law nor of equity will interpose to grant 
relief to the parties, if they have been equally cognizant of the illegality.’  The level of culpability of 
the parties was best put, we think, by the district court when it said, ‘there is more than enough fault 
to go around in this case.’  Accordingly, we find that the district court should have found the parties 
in pari delicto and refused to grant relief of any sort.”). 
 
38 
 
the policy it purchased was void; and whether the party was to blame for the illegality of the 
policy. 
Thus, if the downstream investor was equally at fault with, or more at fault than, the 
insurer, the court left the parties where it found them, allowing the insurer to keep the 
premiums.  If the downstream investor was innocent or the insurer was more at fault, the 
courts returned the premiums. 
ii. 
The Restatement (Second) of Contracts 
“[I]t is against the public policy of [most states] to permit its courts to enforce an 
illegal contract prohibited by law.  Ordinarily, we think, when such is the fact, neither party 
has a remedy to any extent against the other.”193  This general rule—that courts will not 
enforce an illegal contract—is reflected in the Restatement at Section 197: “Except as stated 
in §§ 198 and 199, a party has no claim in restitution for performance that he has rendered 
under or in return for a promise that is unenforceable on grounds of public policy unless 
denial of restitution would cause disproportionate forfeiture.”194  As clarified by the comment 
to Section 197: 
 
193 Della, 210 A.2d 847 at 849.  See also United Paperworkers Int’l Union, AFL-CIO v. Misco, Inc., 
484 U.S. 29, 42, 108 S. Ct. 364, 373, 98 L. Ed. 2d 286 (1987); Neiman v. Provident Life & Accident 
Ins. Co., 217 F. Supp. 2d 1281, 1288-89 (S.D. Fla. Aug. 26, 2002); Wal-Mart Stores, Inc. v. Crist, 
855 F.2d 1326, 1335-35 (8th Cir. Aug. 26, 1988); Corbin v. Houlehan, 100 Me. 246, 61 A. 131, 133 
(1905); Lewis v. Davis, 145 Tex. 468, 477, 199 S.W.2d 146, 151 (1947); Morrison v. Marsh & 
McLennan Cos., Inc., 439 F.3d 295, 300 (6th Cir. 2006); City of De Kalb v. Int’l Ass’n of Fire 
Fighters, Loc. 1236, 182 Ill. App. 3d 367, 372 (1989); Zickler v. Shultz, 603 So. 2d 916, 922 (Ala. 
1992). 
194 Restatement (Second) of Contracts § 197 (Am. L. Inst. 1981). 
39 
 
In general, if a court will not, on grounds of public policy, aid a 
promisee by enforcing the promise, it will not aid him by 
granting him restitution for performance that he has rendered in 
return for the unenforceable promise. Neither will it aid the 
promisor by allowing a claim in restitution for performance that 
he has rendered under the unenforceable promise. It will simply 
leave both parties as it finds them, even though this may result 
in one of them retaining a benefit that he has received as a result 
of the transaction.195 
 
Thus, the Restatement reflects that courts typically will not allow any party to obtain any 
remedy, including restitution.  Yet, the Restatement identifies three exceptions to this 
common law rule in Section 197, Section 198, and Section 199.196 
The text of Section 197 sets out a disproportionate forfeiture exception in which a 
party is entitled to restitution if the “denial of restitution would cause disproportionate 
forfeiture.”197  “[A]s elsewhere in this Restatement, the term ‘forfeiture’ is used to refer to 
the denial of compensation that results when the obligee loses his right to the agreed 
exchange after he has relied substantially, as by preparation or performance, on the 
expectation of that exchange.”198   
In determining whether the denial of restitution would cause disproportionate 
forfeiture, comment b to Section 197 articulates a balancing test that directs the court to 
weigh the cost of the forfeiture against the gravity of the public policy involved: “Whether 
 
195 Id. 
196 Id. 
197 Id. 
198 Restatement (Second) of Contracts § 197 cmt. b. 
40 
 
the forfeiture is ‘disproportionate’ for the purposes of this Section will depend on the extent 
of that denial of compensation as compared with the gravity of the public interest involved 
and the extent of the contravention.”199  Specifically, the court should consider “the party’s 
deliberate involvement in any misconduct, the gravity of that misconduct, and the strength 
of the public policy.”200  However, if the “claimant has threatened grave social harm, no 
forfeiture will be disproportionate.”201  Instead, this exception is most “appropriate in the 
case of technical rules or regulations that are drawn so that their strict application would result 
in such forfeiture if restitution were not allowed.”202  Thus, whether a forfeiture is 
disproportionate depends both on the actions of the claimant, as well as the nature of the 
public policy involved. 
The next exceptions articulated by the Restatement are found in Section 198.  Section 
198 states that  
A party has a claim in restitution for performance that he has 
rendered under or in return for a promise that is unenforceable 
on grounds of public policy if (a) he was excusably ignorant of 
the facts or of legislation of a minor character, in the absence of 
which the promise would be enforceable, or (b) he was not 
equally in the wrong with the promisor.203 
   
 
199 Id. 
200 Id. 
201 Id. 
202 Id. 
203 Restatement (Second) of Contracts § 198 (Am. L. Inst. 1981). 
41 
 
Consequently, Section 198 lays out two exceptions to the general rule—when a party is (1) 
excusably ignorant and (2) not equally in the wrong with the party from whom he seeks 
restitution.   
 
Under the first exception, a party may obtain restitution if it is excusably ignorant of 
the facts leading to the unenforceability of the promise.204  Comment a to Section 198 points 
the court to Section 180 of the Restatement for further clarification.  The comments to 
Section 180, which discuss the effect of excusable ignorance, note that “good faith is 
expected on the part of the party who claims ignorance and he cannot blind his eyes because 
he does not wish to see.”205  In other words, a party is not excusably ignorant if it is willfully 
blind to the relevant facts.   
Notably, this exception is enveloped by many of the questions asked by the court in 
the in pari delicto approach noted above.  Specifically, the following questions from those 
cases appear to have the goal of determining whether a party was excusably ignorant of the 
relevant facts: whether the facts surrounding the policy put or should have put the investor 
on notice that something was amiss; whether the party failed to notice red flags; and whether 
the investor’s expertise in life insurance portfolio investments should have caused it to know 
or suspect that there was a substantial risk that the policy it purchased was void.  Thus, both 
Section 198(a) and the factors from the in pari delicto test articulated above seek to discover 
 
204 Id. 
205 Restatement (Second) of Contracts § 180 (Am L. Inst. 1981). 
42 
 
whether the party was excusably ignorant of the facts suggesting that the promise is 
unenforceable. 
If both parties are excusably ignorant, however, restitution under Section 198(a) is 
unavailable, but restitution may still be available to the claimant under Section 198(b).  Under 
Section 198(b), “[t]he general rule that neither party is entitled to restitution is [also] subject 
to an exception in favor of a party who is not equally in the wrong, or as it is sometimes said 
is not in pari delicto, with the party from whom he seeks restitution.”206  In other words, the 
Restatement directs the court to undertake an in pari delicto analysis that is substantively 
identical to those analyses performed in the in pari delicto cases surveyed in Section III.A.b.i. 
Comment b to Section 198 identifies two common scenarios in which this exception 
arises.207  In the first instance, the claimant is regarded as being less in the wrong because the 
public policy is intended to protect persons of the class to which he belongs and, as a member 
of that protected class, he is regarded as less culpable.”208  And, “[i]n the second type of case, 
the claimant is regarded as being less in the wrong because he has been the victim of 
misrepresentation or oppression practiced on him by the other party.”209   
 
206 Restatement (Second) of Contracts § 198 cmt. b. 
207 Comment b identifies two common scenarios in which, “for the most part,” Section 198(b)’s 
exception arises.  Given that these scenarios only arise “for the most part,” comment b does not 
identify every scenario in which a party is not equally in the wrong. 
208 Restatement (Second) of Contracts § 198 cmt. b. 
209 Id.   
43 
 
 
Outside these two common scenarios, the comment instructs courts to undertake an 
in pari delicto analysis to determine whether the parties are equally in the wrong.  The 
remainder of comment b directs the court to consider the reprehensibility of the party’s 
conduct, whether a party engages in improper transactions as a business, and the seriousness 
of the party’s conduct when viewed in light of the social harm.  Moreover, the comment 
notes that a party can be deprived of their gain if “he has enticed the claimant into the 
transaction, where he has devised a scheme to defraud the claimant, or where he engages in 
the misconduct professionally.”210 In other words, comment b allows for consideration of 
questions that are applicable to the context of policies void ab initio for lack of an insurable 
interest in order to determine a party’s fault because it instructs the court to consider a number 
of factors bearing on the fault of the parties.  As noted above, all the cases from Section 
III.A.b.i undertake an in pari delicto analysis or other fault-based analysis to determine the 
fault of the parties.  Those analyses include questions such as whether the party procured the 
void policy, whether the party concealed the void nature of the policy, and whether the party 
knew or later learned that the policy was void.  These same questions are applicable to an in 
pari delicto analysis under Section 198(b). 
Section 198 encompasses all the questions considered by the courts in the in pari 
delicto cases from Section III.A.b.i.  As noted above, those questions all fall within the scope 
of determining whether a party is excusably ignorant or not equally at fault.  Although the 
 
210 Id. 
44 
 
cases that undertake a fault-based analysis do not cite to the Restatement, it appears to us that 
there is no real difference between the in pari delicto cases from Section III.A.b.i, and the 
Restatement.  The Restatement simply provides a framework through which courts can 
undertake a fault-based analysis. 
 
A party may be entitled to restitution under the final exception, which appears in 
Section 199, when that party did not engage in serious misconduct and “(a) he withdraws 
from the transaction before the improper purpose has been achieved, or (b) allowance of the 
claim would put an end to a continuing situation that is contrary to the public interest.”211  
Comment a to Section 199 provides that to come within Section 199(a), “a party must 
actually withdraw by refusing any further participation in or benefits from the transaction.  It 
is not enough that the achievement of the purpose has been prevented by circumstances 
beyond his control.” 212  Whether “an improper purpose has been so substantially achieved 
that withdrawal should no longer give a right to restitution depends on the gravity of the 
social harm threatened under the facts of the particular case.” 213  But “[t]he exception is not 
available in favor of a party whose misconduct is serious when viewed in the light of the 
threatened social harm.”214  Section 199(b) applies “when the denial of restitution would 
leave property in the hands of one whose control of it would be contrary to the public interest, 
 
211 Restatement (Second) of Contracts § 199 (Am. L. Inst. 1981). 
212 Restatement (Second) of Contracts § 199 cmt. a. 
213 Id. 
214 Id. 
45 
 
for example, because its status would be rendered so uncertain as seriously to restrain its 
alienation.” 215   
 
The Restatement has been cited by two courts in four cases, one of which is this 
appeal.  In those cases, the investors asked the court to return premiums paid on insurance 
policies that were void ab initio as against public policy for lack of an insurable interest.  
Those courts identified the Restatement as providing the appropriate framework to analyze 
the issues presented. 216     
B. 
The Delaware Supreme Court Adopts a Fault-Based Analysis, Framed 
Under the Restatement, to Determine Whether Premiums Should Be 
Returned for a Policy Void for Lack of an Insurable Interest 
 
After surveying the applicable case law, this Court adopts a fault-based analysis, 
framed under the Restatement, that considers questions specific to insurance policies 
declared void ab initio as against public policy for lack of an insurable interest as the correct 
test to determine whether premiums should be returned.  We adopt this approach for two 
reasons. 
First, a fault-based analysis as framed under the Restatement would place this Court 
in line with the majority of jurisdictions that have confronted this issue.  As surveyed above, 
 
215 Restatement (Second) of Contracts § 199 cmt. b. 
216 See Columbus Life Ins. Co. v. Wilmington Tr., N.A., 2021 WL 1820573, at *1 (D. Del. May 6, 
2021), adopted by 2021 WL 3886370 (D. Del. Aug. 31, 201); Columbus Life Ins. Co. v. Wells Fargo 
Bank, 2021 WL 106919, at *1 (D. Del. Jan. 12, 2021); Sun Life Assurance Co. of Canada v. 
Wilmington Tr., Nat’l Ass’n, 2022 WL 179008, at *1 (Del. Super. Ct. Jan. 12, 2022). 
46 
 
most courts have adopted a fault-based approach to this question as opposed to a general rule 
that the premiums must be returned to the investor.217 
Second, and more important, applying a nuanced fault-based test, instead of 
rescission, is more consistent with public policy considerations.  Because insurance policies 
that are void as against public policy for lack of an insurable interest are frauds on the court 
that are unenforceable, the Court should take care to discourage these policies from coming 
into existence.  The automatic return of premiums certainly discourages insurance 
companies from hiding the invalidity of a policy for as long as possible in order to continue 
collecting premiums.  But the automatic return of premiums encourages investors to 
continue purchasing life insurance policies without investigation into whether those policies 
are unenforceable policies due to lack of an insurable interest.  After all, under the best-case 
scenario, the investor gets paid the death benefits.  Under the worst-case scenario, the 
investor receives the return of the premiums—other than the time value of money, the 
investor loses nothing in the gamble.   This is despite any role it may have played in procuring 
the void policy or ignoring the fraud.  A fault-based analysis will encourage investors to 
actually investigate all policies to avoid the risk of losing their premiums—a thorough 
investigation of insurance policies will hopefully uncover those that are void ab initio as 
 
217 We note that the majority of the courts surveyed above determined that the premiums should be 
returned to the investor after undertaking a fault-based analysis. 
47 
 
against public policy.  This approach should incentivize investors not to procure or purchase 
these unenforceable policies in the first instance.   
A fault-based analysis also incentivizes insurers to speak up when the circumstances 
suggest that a policy is void for lack of an insurable interest because they will not be able to 
retain premiums if they stay silent after being put on inquiry notice, and they might also be 
responsible for interest payments.  In other words, our test incentivizes each player along the 
chain of these insurance policies to behave in good faith. 
Thus, when analyzing a viable legal theory that seeks as a remedy the return of 
premiums paid on insurance policies declared void ab initio for lack of an insurable interest, 
Delaware courts shall analyze the exceptions outlined in Sections 197, 198, and 199 of the 
Restatement and determine whether any of those exceptions permit the return of the 
premiums.  A court would need to determine whether: (1) there would be a disproportionate 
forfeiture if the premiums are not returned; (2) the claimant is excusably ignorant; (3) the 
parties are not equally at fault; (4) the party seeking restitution did not engage in serious 
misconduct and withdrew before the invalid nature of the policy becomes effective; or (5) 
the party seeking restitution did not engage in serious misconduct, and restitution would put 
an end to the situation that is contrary to the public interest.   
A court analyzing the exceptions outlined in Section 198 should consider the 
following questions: whether the party knew the policy was void at purchase or later learned 
the policy was void; whether the party had knowledge of facts tending to suggest that the 
48 
 
policy is void; whether the party procured the illegal policy; whether the party failed to notice 
red flags; and whether the investor’s expertise in the industry should have caused him to 
know or suspect that there was a substantial risk that the policy it purchased was void. 
Thus, the fault of the parties and public policy considerations will determine which 
party is entitled to the premiums paid on an insurance policy that is void ab initio for lack of 
an insurable interest.  
C. 
The Superior Court Failed to Consider Whether Either Party Had 
Inquiry Notice of the Void Nature of the Policy 
 
Geronta argues that should the Court find that restitution is the correct remedy, the 
Superior Court failed to properly address comparative fault between the parties, instead 
finding that Geronta was not the victim of misrepresentation or oppression.218  Geronta 
contends that the Superior Court failed to acknowledge “conclusive trial evidence (much of 
it stipulated) that Brighthouse had actual knowledge at some point between April 28, 2010 
and October 21, 2011 that the Policy was the product of criminal fraud, and thus void for 
lack of insurable interest.”219  In other words, Geronta believes that, based on the facts, the 
court should have concluded that Brighthouse was at fault.220   
 
218 Opening Br. 25. 
219 Id. at 31. 
220 Id. at 33-39.  The Appellants also allege that the Superior Court erroneously ignored Section 
197’s disproportionate forfeiture exception, erroneously applied Section 198(b), and ignored 
deleterious public policy consequences of its decision.  Id. at 39-42.  Given our ruling and remand, 
we do not address the Appellant’s remaining arguments.  
49 
 
Brighthouse responds that the court properly concluded that Brighthouse was 
excusably ignorant because it (1) followed its sound guidelines and (2) did not have actual 
knowledge that the Policy lacked an insurable interest until Geronta told Brighthouse that 
Seck was fictitious in 2017.221  Brighthouse contends that the Superior Court’s conclusions 
are supported by the text of the press releases, which imply that Seck was a real person.  
Brighthouse further argues that Geronta conflates knowledge of criminal fraud with 
knowledge of lack of an insurable interest, which, according to Brighthouse, are two different 
things.222 
In concluding that Geronta was not entitled to restitution under Section 198 of the 
Restatement, the Superior Court conducted a fault-based analysis that considered two 
questions articulated by this Court.  For example, the court considered Geronta’s expertise 
in the life insurance investor industry: “Geronta is a sophisticated company with knowledge 
and experience in the life insurance investor market.  Indeed, Geronta’s experience and 
assumption of risk were part of the P&S Agreement.”223  The court also considered whether 
Geronta failed to notice red flags: 
• “Here, prior to purchase, Geronta, in consultation with Leadenhall, 
made the deliberate decision to superficially look at the Seck Policy by 
solely focusing on whether it was active.”224 
 
221 Answering Br. 27-31. 
222 Id. at 29-30. 
223 Id. at 52; see A431-32. 
224 Ex. B at 52-53; B4. 
50 
 
• “Geronta purposefully ignored the possibility that some of the 
unexamined policies in the bulk purchase might have been 
unenforceable.”225 
• “Geronta’s due diligence as to the Seck Policy was extremely 
limited.”226 
 
The Superior Court also concluded that Brighthouse was not at fault because Geronta 
failed to show that Brighthouse had actual knowledge of the void nature of the Policy.  In 
other words, the Court found that Brighthouse did not have actual knowledge of the Policy’s 
illegality: 
• “Pape Seck did not broker the Seck Policy application (it was brokered 
by Talma Nassim at Algren).  Also, Pape Seck was not the beneficiary 
of the Seck Policy (the Seck Trust was the beneficiary).  MetLife’s 
denial of Pape Seck’s broker application (and the three policy 
applications) were unrelated to the Seck Policy . . . .”227   
• “While the evidence demonstrates that Brighthouse knew that Pape 
Seck committed fraud in obtaining the Seck Policy, the facts do not 
show that Brighthouse knew that the Seck Policy lacked an insurable 
interest, that it would never pay benefits to the policyholder, that 
Brighthouse had anything to gain by Geronta paying premiums instead 
of EEA, or that it intended to mislead Geronta into purchasing a policy 
that Brighthouse knew was void ab initio.”228 
 
In our view, Section 198 and the in pari delicto cases from Section III.A.b.i focus on 
whether a party had either actual knowledge or inquiry notice of the invalidity of the policy.  
The focus on inquiry notice is why those cases ask whether the party had knowledge of facts 
tending to suggest the void nature of the policy.  Here, the Court failed to consider that 
 
225 Ex. B at 53; B1, 4-5. 
226 Ex. B at 53; B1-5. 
227 Ex. B at 60. 
228 Id. at 61. 
51 
 
question.  As explained above, the court should have also considered whether Brighthouse 
was on inquiry notice of the void nature of the Policy. 
 
We believe the following stipulated facts or factual findings by the court could support 
a finding that Brighthouse was on inquiry notice of facts tending to suggest that the Policy 
was void: 
• “On December 17, 2009, David Bishop [, a Brighthouse internal 
investigator,] sent an email to Jean Philipp stating: ‘Just received two 
wire transfers to review that have strong IOLI flags.’  One of the wire 
transfers related to the Policy, noting that ‘Ownership changed 7/09 to 
EEA Life Settlements, Inc. (just after the incontestability period 
expired)’ and that the writing agent was Talma Nassim, through Algren 
Brokerage.”229 
• On April 26, 2010, New Jersey’s Office of the Insurance Fraud 
Prosecutor subpoenaed MetLife’s records concerning Seck and, in 
response, MetLife produced 169 pages of documents.230 
• On October 17, 2011, the New Jersey Attorney General released a third 
press release about Pape Seck, stating that Pape Seck pleaded guilty to 
one count of insurance fraud and two counts of theft by deception.231  
It also announced that Pape Seck admitted that he knowingly made 
fraudulent or misleading statements between November 12, 2006, and 
June 4, 2008, in support of seven life insurance policy applications, one 
of which was the Policy.232  The press release thanked MetLife “for 
[its] assistance in the investigation.”233 
• On October 26, 2011, Jim McCarthy, an investigator with MetLife’s 
Claims Investigation Unit emailed MetLife’s Field Investigation Unit 
for Corporate Ethics and Compliance to make them aware of Pape 
Seck’s conviction . . . .234 The email’s subject line contained the name 
Mansour Seck, the Policy’s policy number, Pape Seck’s name, and the 
 
229 A571. 
230 A575; Ex. B at 26. 
231 A580. 
232 Id.  
233 Id. 
234 A3034. 
52 
 
MetLife broker number.235  The email noted that Pape Seck was 
recently sentenced for insurance fraud involving Seck and stated that 
MetLife cooperated with the authorities.236   
 
However, we recognize that the Court made factual findings that may be viewed as 
inconsistent with this conclusion.  Given this Court’s deferential standard of review for the 
trial court’s factual findings, the Superior Court should be given an opportunity to review its 
factual findings through the lens of our newly articulated fault-based test.   
As such, we remand for the Superior Court to reconsider its factual findings in light 
of this Court’s articulated test and specifically direct the court to consider whether either party 
had inquiry notice of the void nature of the Policy.   
D. 
The Superior Court Did Not Err by Excluding Testimony 
Geronta contends that the Superior Court erred by precluding Geronta’s witnesses 
from testifying about their understanding of customary due diligence in the tertiary 
market.237  Specifically, Geronta argues that the Superior Court abused its discretion when it 
concluded that witness testimony on the topic of industry standards requires an expert 
opinion.238  That ruling, Geronta contends, contravenes Rule of Evidence 701 because Rule 
of Evidence 701(a) permits lay opinion testimony based on personal knowledge and the 
witnesses’ testimony was permissible fact testimony.239  Geronta argues that the Superior 
 
235 Id. 
236 Id. 
237 Opening Br. 43-45. 
238 Id. at 43. 
239 Id. at 44. 
53 
 
Court’s ruling prejudiced Geronta at trial because “the Trial Court barred [Geronta] from 
testifying for the industry reasons that Geronta it [sic] conducted its diligence, but then ruled 
that diligence was fault-worthy without ever hearing the reasons for it.”240 
“The limitation a trial judge puts on the examination of a witness is an evidentiary 
ruling which we generally review for abuse of discretion.”241  During the pre-trial 
conference, the Superior Court ruled on Brighthouse’s motion in limine, in which 
Brighthouse sought to preclude evidence from Geronta’s witnesses about their investment 
experience and the standards of the tertiary market regarding due diligence.242 Brighthouse 
argued that Geronta’s testimony should be precluded because Geronta refused to answer 
questions about that topic at deposition.243  On that basis, the Superior Court ruled that 
Geronta would not be able to talk about industry standards: 
Brighthouse: We asked him what -- is there some standard 
policy that you use. Instruction not to answer. Now, as Your 
Honor is exactly right, they’re going to take his hat off at the 
trial, so they say, and have him testify to his own personal, not 
the Royal Bank of Scotland, his personal deep experience. That 
was the kind deep experience we were trying to get to and we 
weren’t allowed to.  
The Court: I agree with you on this.244  
 
 
240 Id. at 45. 
241 Jones v. State, 940 A.2d 1, 15 (Del. 2007). 
242 A919. 
243 A919-21. 
244 A927. 
54 
 
In other words, the court also ruled that Geronta’s evidence was precluded because of the 
refusal to testify to this same topic at deposition, not only because the testimony would 
require expert testimony.  We cannot conclude that the Superior Court erred in excluding the 
evidence on this basis.  Because Geronta refused to allow its witness to testify about industry 
standards during discovery, it was not an abuse of discretion for the Superior Court to 
preclude it from testifying about industry standards at trial.  
 
As such, we affirm the Superior Court’s ruling on this issue. 
IV. 
CONCLUSION 
For the foregoing reasons, the Court AFFIRMS in part and REVERSES and 
REMANDS in part the Superior Court’s judgment.