FIL ED U.S. COURT OF APPEAL S EL EVENTHCI RCUI T MARCH 14, 2012 J OHN L EY CL ERK [DO N OT PUBLISH]

IN THE UN ITED STATES COURT OF APPEALS FOR THE ELE VENTH CIRCUIT

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PHL VARIABLE INSURANCE COMP ANY, ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll Pl ai nt iff - App el la nt , vers us THE FAYE KEITH JOLLY IRREVOCABLE LIFE INSURANCE TRUST, th ro ug h i ts tru st ee Ken ne th E. Shap iro , Esq ., ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll Defen da nt- App el le e.

__ __ __ __ __ __ __ __ __ __ __ __ App eal fro m

th e Uni te d S ta te s Di st ric t Co urt forth e North ernDis tri ctof Ge or gi a

__ __ __ __ __ __ __ __ __ __ __ __ (Ma rch 14 , 20 12 )Befo re BARKETT, HULL, Ci rcu itJu dg es , andHINKLE, Dis tri ctJu dg e. * PER CURI AM: PHL Variabl e In su ran ce Co m pa ny (“ PHL”) ap pe al s t he de ni al of i ts m ot io n fo r su m m ary jud gm en t an d the grantof s umm ary jud gm en t i n fa vo r of th e Faye Keit h J ol ly T ru st(“ th e Tru st ”). PHL su edbo th Jo ll y an d t he Trus t fo r ne gl ig en t 1
m is rep res en ta ti on of J ol ly’ s as se ts on th e in su ran ce ap pl ic at io n fo r a $ 10 m il li on li fe i ns ur an ce p ol ic y . PHL so ug htres ci ss io n o f th e in su ran ce co nt ractan d 2 ret en ti on of t he in suran ce p rem iu m s p ai d b y th e Tru stun de r th e co nt ract . Jo ll y de fau lt edon PHL’ s cl ai m s ag ai ns t h im , andon th e b as is of t he de fau lt , th e d is tri ct
co urt re sc in de d t he in su ran ce p ol ic y , bu t d en ie d P HL’ s cl ai m s fo r da m ag es an d t o ret ai n t he pa idpre m iu m s, wh ic h t he di st ric t co urt h el d i n t he reg is try of the co urt pe nd in g t he ou tc om e o f PHL’s app eal
. 3

Honora ble Robert L . Hinkle, United States District Judge f or the Nor

thern District of * Florida , sitti ngby

designation. We reviewcross-motions for summar y judgme nt de novo, viewingthe fa cts in the light 1 most favora

ble to the non-movingparty on eac h motion. Am. Banke rs. Ins. Group v. United States, 408 F.3d 1328, 1331 (11th Cir. 2005). B eca use “[s]t ate law

g overns a

diversity action conce rningthe interpre tation of an insura nce c ontrac t,” and the PHL insurancepolicy

is gove rned by Geor g ia law, we must apply Geor g ia law in interpr etingPHL ’s insuranc e contr act. F erna ndez v. Ba nkers Na t’l L ife Ins. Co., 906 F.2d 559, 564 (11th Cir. 1990). Fa ye Ke ith J olly

is not invol ved in this appea l. 2 PHLseeks r eturn of the premiums amounting to $484,843, the c ommissi ons PHLpaid 3 to the insurance broker

who sold the policy , and the attorney s’ fe es PHL paid in the cour se of this litigation. 2PHL firs t cl ai m s tha t b y si gn in g the ap pl ic at io n, the Trus te e, Ken ne th Sh ap iro , fal se ly stat edon be ha lf o f th e Tru st(1) th athe ha d re vi ewedth e ap pl ic at io n b efo re s ig ni ng it , and(2) th atth e st at em en ts inth e ap pl ic at io n reg ard in g J ol ly’ s as se ts were “ th os e o f th e p ro po se d i ns ur ed .” The p ro vi si on up on whi chPHL reli es read s as fol lo ws: I ha ve rev ie wedth is ap pl ic at io n, an d t he st at em en ts m ad e h erei n a re th os e o f th e p ro po se d i ns ur edan d a ll su chst at em en ts m ad e b y th e pr op os edin su redinPartI oran d i n P artII o f th is ap pl ic at io n a re fu ll , co m pl et e, an d t ru e to th e b es t kno wled ge an d b el ie f of th e un de rs ig ne d a ndha ve be enco rrec tl y reco rd ed
. PHL cla im s t ha t Sh ap iro adm it te d h e h adne ve r rev ie wedth e se ct io ns of the ap pl ic at io n d is pl ay in g J ol ly’ s i nc om e an d a ss et s, h owe ve r, th atwas n otSh ap iro ’s te st im on y . At m os t, Sh ap iro tes ti fie d i n d ep os it io n t ha t h is ge ne ral pra ct ic e was to readan d re ly on t he in fo rm at io n p res en te d i n a n i ns ur an ce ap pl ic at io n, an d te st ifi edth athe be li ev edth athe di d s o i n t hi s ca se . Sim il arl y , alt ho ug h P HL cl ai m s t ha t Sh ap iro lac ke d a ny bas is foraffi rm in g t ha t J ol ly hadm ad e th e st at em en ts inth e ap pl ic at io n, Sh ap iro sp eci fic al ly test ifi edth athe ha d s een Jo ll y ’s si gn atur e o n t he ap pl ic at io n b efo re Sh ap iro si gn edithi m se lf. PHL has no t m etit s 4 bu rd enof s ho win g t ha t Sh ap iro fai le d t o re adth e d oc um en t.
Shapiro testified that he ma y not have “ noticed” or

“foc used on” the repr esentation of 4 J olly ’s net wor

th when he signed the insura nce a pplication, but that statement does not constitute an admission that he neve r re viewed the application at a ll. 3PHL als o a rg ue s t ha t, b y si gn in g t he lo anap pl ic at io n s ay in g t ha t i ts co nt en ts were “ fu ll , com

pl et e, an d tru e to [m

y ] be stkn owl ed ge an d b el ie f,” Sh ap iro fal se ly st at edth atth e Tru stha d kno wled ge of t he ex te ntof J ol ly’ s as se ts . For s up po rt, PHL cit es Geor gi a cas es ho ld in g t ha t a d ecl arat io n m ad e “ to th e b es t o f m y kn owl ed ge an d b el ie f” i n an i ns ur an ce ap pl ic at io n m ay be fal se when th e ap pl ic an t rel ie s o n i nf

orm at io n p ro vi de d b y

so m eo ne with n o kno wled ge of t he tru th of t he
m at te r rep res en te d, s uc h a s t he in su rer’s ag en t, o r whe n t he ap pl ic an t m ak es th e de cl arat io n d es pi te kn owi ng th atitis actua ll y fal se . See Whit e v . Am . Fam il y Life Ass ur an ce Co ., 64 3 S .E.2d29 8, 3 00 -3 01 (Ga. Ct . App . 20 07 ); J en ni ng s v . Life In s. Co . of Ga., 4 41 S.E.2d47 9, 4 80 -8 1 (Ga . Ct. Ap p. 1 99 4) ; J am es , Herefo rd , & McC le ll an d, In c. v. Po well , 40 2 S .E.2d34 8, 3 51 (Ga. Ct . App . 19 91 ). 5 Howev er, n on e o f th es e cas es ap pl y to th e fac ts of t hi s ca se be cau se PHL ha s s ub m it te d n o e vi de nc e th atSh ap iro fai le d t o re adth e ap pl ic at io n o r th at Sh ap iro kn ew th atJo ll y ’s st at em en ts were fa ls e. Thu s, Geo rg ialaw d oe s n ot
supp ort PHL’s co nt en ti on he re. We adopted a dif

fer ent interpre tation of a “ best of knowledg e and be lief” c lause in 5 insurance contra cts in two other ca ses, howeve r, neither of these c ases we re de cided unde r Geor g ia law, whic h differ s on this question. S ee H auser v. L ife Ge n. Sec. Ins. Co., 56 F.3d 1330, 1333-34 (11th Cir. 1995) (a pplying f eder al common law with re fer ence to Florida la w); Will iam Penn L ife Ins. Co. v. Sands, 912 F.2d 1359, 1361 (11th Cir. 1990) (a pplying F lorida law) ; see also 1 Har

nett & L esnick, TheL aw of L ife a nd Hea lth Insuranc e § 4.06 (Matthew B ender , Rev. Ed.) (notingdiverg ence betwee n Geor g ia’s interpr etation of “ best of knowledg e and be lief” clause s and other c ourts’ interpr etations). 4Eve n i f th e Tru stm ad e n o m is rep res en ta ti on s, PHL n on ethe le ss arg ue s t ha t

itis equi tabl y

en ti tl edto ret ai n t he po li cy pre m iu m s b ecau se th e d efau ltjud gm en t ag ai ns t J ol ly establ is he d t ha t the in su ran ce p ol ic y was o bt ai ne d b y

frau d. Howev er, Geo rg ialaw p ro vi de s n o s up po rt f orth is pro po si ti on . Georg ialaw ge ne ral ly requ ire s an in su rer s eek in g t o re sc in d a n i ns ur an ce co nt ractto return a ny pr em iu m s p ai d u nd er the co nt ract , eve n wh ere t he in su redpe rs on ori gi na ll y ob ta in edth e p ol ic y

by fraud . See Weem s v . Am . Nat’l In s. Co ., 29 S.E.2d50 0, 50 2 (Ga . 19 44 ); s ee al so Ga. Cod e § 13 -4 -6 0; Co rb it t v . Harri s, 3 54 S.E.2d63 7, 63 9 (Ga . Ct. Ap p. 1 98 7) (“ [O]ne can no t i n e qu it y see k t o re sc in d aco ntract. . . on th e g ro un d o f frau d, an d a t the same tim e ret ai n t he be ne fit s d eri ve d fr om th at
co nt ract .”), o ve rru le d o n o th er g ro un ds by 405 S.E.2d47 4 (Ga . 19 91 ). Altho ug h t he re m ay

be so m e ex cep ti on s t o t hi s g en eral rul e, no ne ap pl y he re. Alt ho ug h P HL has ob ta in eda de fau ltjud gm en t ag ai ns t J ol ly on i ts frau d cl ai m , it s cl ai m s o f ne gl ig en t m is rep res en ta ti on an d c on sp ira cy ag ai ns t the Trus t ha ve be endi sm is se d. Acco rd in gl y , th e Tru stdo es no t o we PHL anyth in g, as th e Trus t d idno t co m

m itan y frau d o r ot he r wro ng th atha rm edPHL. The d is tri ct
co urt d idno t err in de nyin g P HL’ s equi tabl e ret en ti on cla im
. AFFIRMED

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