# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

__ __ __ __ __ __ __ __ __ __ __ __ __ _

No. 1 7- 13 41

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Lin co ln Ben efi t Li fe

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el la nt

v.

Ja m es W . W il so n

ll ll ll ll ll ll ll ll ll ll l

Defe nd an t - Ap pe ll ee

__ __ __ __ __ __
App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e Dis tri ct of Ne br as ka - Lin co ln

__ __ __ __ __ __

Su bm it te d: May 17, 2 01 8
Fi le d: Octo be r 30 , 20 18

__ __ __ __ __ __

Befo re SM ITH, Chi ef J ud ge , BEAM an d C OLLOTO N, Circ ui t J ud ge s.

__ __ __ __ __ __

SMI TH, Chi ef J ud ge

.

Lin co ln Ben efi t Life (“ Lin co ln Life ”) su ed it s fo rm er ag en t, Ja m es W

. W il so n (“ W il so n” ), fo r da m ag es it in cu rred in a la wsu it br ou g h t b y a po li cy ho ld er who

pu rch as ed a Lin co ln Life po li cy th ro ug h W il so n. W il so n co un te rcl ai m ed

, s e e k in gw i t h he ld co m m is si on s an d bo nu se s fro m th e sa le of th at po li cy

. The di st ric t co ur t 1

gr an te d W il so n su m

m ary jud gm en t wit h res pe ct to Lin co ln Life ’s cl ai m s fo r da m ag es

on th e ba si s th at th ey were ba rred by co ll at eral es to pp el

. At th e cl os e of th e jury tri al

of th e rem ai ni ng cl a i ms , t h e c ou rt en te red jud gm en t as a m at te r of la w in fav or of

W il so n. Li nc ol n Li fe n ow ap pe al s. We affi rm

.

I. Bac kg ro un d 2

At al l rel ev an t ti m es , W il so n wor ke d as a li fe in su ran ce br ok er, ta sk ed wit h

si gn in g up po li cy ho ld er s fo r ins ur an ce co m pa ni es , in cl ud in g Lin co ln Life

. He wor ke d

wit h Lin co ln Life pu rs ua nt to a Sp eci al Age nt ’s Agr eem en t (“ Age nt ’s Agr eem en t” ).

He rece iv ed co m

m is si on s o n t he pre m iu m s p ai d b y po li cy ho ld ers he br ou gh t to th e

co m pa ny.

Sam ue l Gin di (“ Sam

ue l” ) was a co fo un de r an d, al on g wit h se ve ral of his fa m il y

m em be rs , a la rg e sh areh ol de r of Lol lytog s, In c. (“ Lol lyt o g s ” )

, a who le sa le r/

di st r i b u to r of ch il dr en ’s cl ot hi ng

. In or aro un d 19 99

, Sam ue l, al on g wit h ot he r
sh areh ol de rs an d Lol lytog s ex ecu ti ve s, ap pr oa ch ed W il so n ab ou t ob ta in in g a li fe

in su ran ce po li cy

. The pu rp os e of th e po li cy was to al lo w th e m em be rs of th e Su tt on

f a m il y , th e ot he r m ajor sh areh ol de rs of Lol lytog s, to bu y ou t th e Gin di s up o n

Sam ue l’s de at h. The G in di s and Su tt on s exe cu te d a tru st ag reem en t to th at effe ct

. It

req ui red th e pr oc eed s of an y po li cy to be he ld in tru st

. The in te res te d pa rti es so ug ht 3

The Hon or ab le Ri ch ard G. Kop f, Uni te d St at es Dis tri ct Ju dg e fo r th e Dis tri ct 1

of Nebr as ka

.

The fact s reci te d in th is se ct io n co m e, in su bs ta nt ia l pa rt, fro m th e tri al reco rd 2

in th e un de rlyin g li ti ga ti on , G In v’r s Hol di ng LLC v. Li nc ol n Ben ef it Li fe Co

. , No.
1: 09 -cv -0 29 80 (S.D.N.Y.) (“ pr io r act io n” ). The par ti es fil ed th at reco rd in th is cas e by ord er o f th e d is tri ct co ur t.

Fo r eas e of refe ren ce, fro m th is po in t fo rward

, we us e “ Lol lytog s” to 3

co ll ect iv el y r e f

e r to th e co m

pa ny, th e Gin di an d Su tt on fam il ie s, an d th ei r
rep res en ta ti ve s wi th res pe ct to th e p ol ic y un le ss ot he rwis e n ot ed

.

-2

-a co nv ert ib le li fe i ns ur an ce p ol ic y

. Sam ue l was 75 y ears ol d a t t hi s t im e. 4

W il so n su bm it te d Samu e l’s in fo rm at io n to Seco nd Opi ni on , a br ok erag e

ag en cy

. Seco nd Opi ni on rece iv ed pr op os al s fro m a nu m be r of in su ran ce co m

pa ni es

. Afte r ne go ti at io ns , Lol lytog s acce pt ed Lin co ln Life ’s of fer. In la te 19 99

, Lin co ln Life

is su ed two po li ci es on Sam ue l’s li fe; on e in su red hi m fo r $3 m il li on , an d th e ot he r fo r $2 6 m il li on . W il so n s ub m it te d a co m pl et e an d a ccu rat e ap pl ic at io n

The $3 m il li on po li cy was to be in effe ct fro m Octo be r 1, 19 99 th ro ug h
Octo be r 1, 20 19

, wit h a le ve l pr e mi u m p eri od ex pi rin g on Octo be r 1,
20 09 , wh il e th e $2 6 m il li on po li cy was to be in effe ct fro m Nov em be r 8, 19 99 th ro ug h Nov em be r 8, 2 01 9 wit h a le ve l pr em iu m pe rio d

ex pi rin g o n No ve m

be r 8, 2 00 9.

A p p e ll ee’s Br. at 5. Lol lytog s un de rs to od th at bo th po li ci es in cl ud ed a co nv ers io n 5

pr ov is io n.

Und er su ch a po li cy, S a mu e l wou ld be in su red un de r a te rm li fe po li cy an d, 4

aft er t he pa ss ag e o f a cer ta in ti m e se t fo rth in th e po li cy , ha ve th e op ti on to ch an ge ,
or co nv ert

, th e po li c y i n t o an ad jus ta bl e or who le li fe po li cy wit ho ut ha vi ng to go th ro ug h th e un de rwri ti ng pr oc es s ag ai n. Se e In su ra nc e , Bl ack ’s Law Dict io na ry (1 0t h
ed

. 20 14 ) (d efi ni ng “co n v ert ib le in su ran ce” as “ [i]ns ur an ce th at can be ch an ge d to

an ot he r fo rm wit ho ut fu rth er ev id en ce of in su rab il it y , us u. refe rri ng to a
te rm -li fe-i ns ur an ce po li cy th at can be ch an ge d to pe rm an en t in su ran ce w i t h ou t a

m ed ic al ex am in at io n” ).

W e no te th at in th e ab se nc e of an or de r pe rm it ti ng hi m to do so , W il so n fil ed 5

a “ co rrec te d” br ie f in te nd ed to fix two de fic ie nt reco rd ci ta ti on s. Lin co ln Life m ov ed

to st rik e W il so n’s co rrec te d b rie f. W il so n res po nd ed th at co un se l in qu ire d wit h th e Cl erk ’s of

fic e (s eem in gl y by ph on e) as to ho w be st to ad dr es s th e is su e an d was to ld

t h a t du e to th e na tu re of th e co rrec ti on s, he co ul d su bm it hi s br ie f wit ho ut le a v e

. Howev er, un de r Eig ht h Ci rc ui t Ru le 27 A(5 ), “ co rrec ti on s in br ie fs ” are am on g th e

m at te rs fo r whi ch th e Cl erk “ ha s d i s c r e ti on to en te r or de rs on be ha lf of th e co ur t.”
Th i s im pl ie s th at an or de r is req ui red to fil e a co rrec te d br ie f. Add it io na l l y, t h e

co rrec te d br ie f was fil ed aft er th e ti m e fo r br ie fin g ha d ex pi red

, an d Lin co ln Life ha d
al read y fil ed it s rep ly br ie f. Acco rd in gl y , we gr an t Lin co ln Life ’s m ot io n to st rik e an d
ho ld W il so n t o h is in it ia ll y fil ed bri ef.

-3

-L oll y

tog s be ga n m ak in g pa y m en ts on bo th po li ci es be fo re rece iv in g th e writ te n

p o l ic ie s. The writ te n po li ci es were is su ed

, res pe ct iv el y , in Nov em be r 19 99 an d

J a n u a ry 20 00

. Howev er, th ere was a pr ob le m

. The writ te n po li cy co nt a i n e d

co nf li ct in g te rm s as to th e co nv ers io n rig ht s. As req ue st ed

, t h e po li ci es pr ov id ed a rig ht of co nv ers io n a t th e en d of th e te n- y ear le ve l pr em iu m pe rio d. Tho ug h th e

pr em i u m f

o r t h e co nv ert ed po li ci es wou ld be se t “ ba se d on th e in su red ’s se x, th e

pr em iu m cl as s ap pl ic ab le to [th e] po li cy , an d th e in su red ’s ag e [at co nv ers io n],” “ [n ]o

ne w ev id en ce of in su rab il it y [wo ul d] be req ui red .” Decl

. of Jo sh ua Mal li n, Ex. 6, at

10

, Li nc ol n Ben ef

i t L i f e v

. W il so n , Cas e No. 4- 13 -cv -0 32 10 -RGK-CR Z (Feb

. 13

, 20 14 ), ECF No. 2 3- 7. A co nv ert ed po li cy wou ld affo rd Lol lytog s a m or e fav or ab le

pr em iu m le ve l th an a te rm po li cy on ce th e le ve l pr em i u m p e rio d en de d.

Unf or tu na te ly, th e po li ci es al so co nt ai ne d la ng ua ge th at req ui red th at an y co nv ers io n

r i g h t mu s t be ex erci se d by th e earl ie r of ei th er on e y ear aft er th e in su red ’s 70 th

bi rth da y or th e en d of th e le ve l pr em iu m pe rio d. As st at ed earl ie r, Sam ue l was al read y

75 an d th us th e earl ie r ev en t ha d al read y oc cu rred se ve ral y ears pr io r to th e is su an ce

of th e po li ci es

. Rec og ni zi ng a pr ob le m , a Lol lytog s rep res en ta ti ve in fo rm ed W il so n

of th e is su e an d as ke d fo r cl ari fic at io n. W il so n co nt act ed Lin co ln Life ab ou t th e

m at te r. In Ju ly 20 00

, Lin co ln Life cu st om er se rv ic e rep re s e n t a t i ve Ly di a Trev in o

res po nd ed by fax (“ 20 00 Fax ”):

CONVERSION:

Each pl an is co nv ert ib le du rin g t he lev el pre m iu m pe rio d o r to ag e 70

, if earl ie r, to an y who le li fe or f[l e]x i b l e pr em iu m s ad jus ta bl e li fe pl an th en so ld by us wh ic h h as a hi gh er requ ire d pre m iu m (as of th e da te of

co nv ers io n)

.

W he n sp eak in g wit h S t an Sh el le y , Vice Pres id en t of ou r Cu st om er Serv ice Dep art m en t. [s ic ] Thi s po li cy wil l ha ve co nv ers io n pr iv il eg es up
to th e te rm of th e po li cy

. Thi s is li m it ed to wha t pr od uc t th e cl ie nt m ay
go in to ba se d o n c ur ren t ag e.

-4

-Decl

. of Jo sh ua Mal li n, Ex. 2., at 2, Li nc ol n Ben ef it Li fe v. W il so n , Cas e No. 4- 13 -cv

0 3 2 1 0 -RGK-CR Z (Feb

. 13

, 20 14 ), ECF No. 23 -3

. Tha t sa m e da y , Trev in o m ad e a

no te of t hi s i ss ue in an in te rn al em ai l:

[Ag en t] cal le d a nd want ed ve rif ic at io n o n C on ve rs io n ri gh ts .[]

Sp ok e wit h Dan Hert zel an d he ve rif ie d wit h S ta n S he ll ey

th at si nc e it
is ve rb . . [.]

Each pl an is co nv ert ib le du rin g th e le ve l pr em iu m pe rio d. [ ] [ W ]e wil l
al lo w th is to b e co nv ert ed to an y who le li fe or fle xi bl e pr em [iu m ]
ad jus ta bl e li fe pl an so ld by us w h i c h is hi gh er in req ui red pr em iu m .[]

Howev er cu st om er wou ld b e li m it ed to cert ai n pr od uc ts ba se d on hi s

cu rren t ag e.

[A] fax was sen t t o t he ag en t wi th th is in fo rm at io n.

Decl

. of Jo sh ua Mal li n, Ex. 9, at 2, Li nc ol n Ben ef it Li fe v. W il so n , Cas e No. 4- 13 -cv

03 21 0- RGK-CR Z ( F e b

. 13

, 20 14 ), ECF No. 23 -1 0. Seco nd Opi ni on em pl oyee

K our tne y H ar ri s, re ferenc in g in fo rm at io n fro m a Lin co ln Life em pl oyee , ad vis ed L ill y

Ph an , W il so n’s ex ecu ti ve sec ret ary, si m il arl y in a la te 20 02 em ai l: “ [T]his po li cy is

ab le to be co nv er t e d to a pe rm an en t pr od uc t.” Decl

. of Jo sh ua Mal li n, Ex.1 0, at 2,

Li nc ol n Ben ef

it Li fe v. W il so n , Cas e No. 4- 13 -cv -0 32 10 -RGK-CR Z (Feb

. 13

, 20 14 ),

ECF No. 23 -1 1. W he n Ph an res po nd ed by as ki ng whe th er th is wou ld be th e cas e fo r

ne xt fo ur y ears , Harri s rep li ed

, “ Yes

. The y are co nv ert ib le th ru th e le ve l pr em iu m

pa y in g p eri od . Thes e are 10 y r le ve l term s so th ey are con ve rti bl e th ru th e en ti re 1 0

y rs .” Id

. Howev er, in earl y 20 03 whe n Lol lytog s in qu ire d as to th e co st s of co nv ert in g

th e po li cy , Lin co ln Life st at ed th at th e 20 00 Fax was a m is ta ke an d of fere d Lol lytog s

th e op po rtu ni ty to co ve rt th e po li ci es un de r co nd it io ns m uc h le ss fav or ab le th an th os e

se t fo rth in th e po li ci es

. The se ne w te rm s wou ld ha ve rai se d pr em iu m s su bs ta nt ia ll y

an d l im it ed Lol lytog s co nv ers io n o pt io ns

.

-5

-In May 20 07

, St ep he n Carb

, Trus t e e of Lol lytog s, In c., Trus t, co nt act ed

Lin co ln Life to co nv ert th e po li cy to ei th er a Fl ex ib le Prem iu m Adju st ab le Life Pl an

or a Wh o l e Li fe Pl an

. Fo ll owi ng an ot he r de ba te as to whe th er th e po li cy was

co nv ert ib le , Li nc ol n Life de ni ed th e co nv ert ab il it y of th e p o l i c i es ba se d on th e ag e

pr ov is io n.

Lol lytog s su ed Lin co ln Life in 20 09 in th e So ut he rn Dis tri ct of New Yor k. The 6

su it as se rte d cl ai m s fo r br each of co nt ract an d refo rm at io n and so ug ht a de cl arat or y jud gm en t req ui rin g Lin co ln Life to al lo w th e co nv ers io n of th e po li ci es

. Sam ue l di ed

in 20 12 whi le th e cas e was st il l pe nd in g. The cas e wen t to th e jury, whi ch fou nd in

fav or of Lo ll y to gs ba se d o n t he fol lo win g i nt erro ga to rie s:

1. Did Pl ai nt iff pr ov e by a pr ep on de ran ce of th e ev id en ce tha t

th e P l a i n t iff ha d th e rig ht to co nv ert th e Term Po li ci es to

who le or un i v e r s al li fe po li ci es at th e ti m e th e Term

Po li ci es were s ol d i n 1 99 9?

YES T NO

2. Did Pl ai nt iff pr ov e by a pr ep on de ran ce of th e ev id en ce tha t

th e Ju ly 1 3

, 2 0 0 0 Fax m od ifi ed th e su bjec t Term Po li ci es

an d ga ve Pl ai nt iff th e rig ht to co nv ert th e Term Po li ci es to

who le or un iv ers al li fe ins ur an ce p ol ic ie s t hr ou gh th e en d

of th e le ve l p rem iu m

pe rio ds ?

YES T NO

W hi le Carb in it ia te d th e li ti ga ti on , “ th e tru st ’s su cces so r in in te res t, G In ve st or 6

Hol di ng s, LLC, was la te r su bs ti tu te d as th e pl ai nt iff .” Li nc ol n Ben ef

it Li fe v. W il so n (Li nc ol n I) , No . 4 -1 3- cv -0 32 10 -RGK-CR Z, 2 01 5 W L 9 04 86 79 , a t *2 n.4 (Dec. 16

, 20 15 ).

-6

-3. Bas ed up on th e la w of es t o p p e l a s I h av e ch arg ed y ou , is

Defen da nt es to pp ed fro m de nyin g th at th es e po li ci es ha ve

co nv ers io n ri gh ts ba se d u po n i ts co nd uc t?

YES T NO

4. Bas ed up on th e la w of waiv er as I h a v e c h a r ge d y ou , di d

Defen da nt rel in qu is h an y rig ht it ha d t o d en y Pla in ti ff t he
rig ht to co nv ert th e p ol ic ie s?

YES T NO

5. Did Defen da nt pr ov e by a p r e p o nd eran ce of th e ev id en ce

th at Pl ai nt iff acce pt ed Defen da nt ’s on e ti m e, li m it ed of fer

to co nv ert th e su bjec t Term Po li ci es to who le or un iv ers al

li fe p ol ic ie s b y

th e Feb ru ary 26 , 20 03 let te r?

YES NO T

6. W rit e in th e am ou nt du e to Lin co ln in un pa id pre m iu m s:

$7 ,30 9,3 70

7. Did Pl ai nt iff pr ov e by a pr ep on de ran ce of th e ev id en ce tha t

Defen da nt br each ed th e co nt ract by fai li ng to pa y th e Deat h

Ben efi t ($ 29 m il li on )?

YES T NO

-7

-Id

. a t *1 1– 12 (ci ta ti on om it te d)

. Bas ed on th e jury’ s fin di ng s, th e di st ric t co ur t fo r 7

th e So ut he rn Dis tri ct of New Yor k cou rt ent ered jud gm en t in fav or of Lol lytog s for

th e v al ue of t he de at h b en efi t p lu s i nt eres t. 8

Afte r it s lo ss to Lol lytog s, Lin co ln Life br ou gh t s u i t ag ai ns t W il so n in

Neb ras ka st at e co ur t. Lin co ln ’s s u i t al le ge d cl ai m s fo r a rig ht to in de m ni ty or

co nt rib ut io n, br each of co nt ract

, an d ne gl ig en ce, an d so ug ht a de cl arat or y jud gm en t

th at it owe d W il so n no ad di ti on al co m m is si on s. The gr av am en of it s cas e al le ge d th at

W il so n so ld co nv ert ib le li fe in su ran ce po li ci es to a m an ov e r 7 0 ye a r s ol d in

co nt rav en ti on of hi s tra in in g an d cl earl y ex pr es se d co m pa ny po li cy

. W il so n rem ov ed

th e cas e ba se d on d i v e r s i t y juri sd ic ti on , as se rti ng th at he was a res id en t of

Co nn ect ic ut an d th at Lin co ln Life was a Neb ras ka co rp or at io n wit h it s pr in ci pa l pl ace

of bu si ne ss in Neb ras ka

. Se e 28 U.S.C. § 1 33 2( a)(1 ). W il so n al so co un te rcl ai m ed fo r

co m m is si on s o n th e pr em iu m s Lol lytog s pa id to Lin co ln fo ll owi ng th e tri al in th e
New York laws ui t.

Fo ll owi ng di sc ov ery, bo th pa rti es m ov ed fo r su m m ary jud gm en t. The di st ric t

co ur t adv is ed th em th at it was le an in g to ward s ho ld in g th at Lin co ln Life ’s da m ag es
cl ai m s ag ai ns t Wi l so n were co ll at eral ly es to pp ed

. The co ur t di rect ed th em to fil e
br ie fs on th at is su e al on g wit h th e reco rd fro m t h e p r io r act io n in New Yor k. Upo n

rev ie w, th e co ur t det erm in ed th at th e jury’ s fin di ng s prec lu de d a fin di ng of l ia bi li ty

ag ai ns t W il so n on cl ai m s m ad e by Lin co ln Li f e

. Th e refo re, th e co ur t rel ie d on th e
do ct rin e of co ll at eral es to pp el to di sm is s al l of Lin co ln Life ’s cl ai m s th at were ba se d

Co nt rary to th e di st ric t co ur t’s m em or an du m an d or de r an d th e jury’ s ve rd ic t, 7

W es tl aw ’s c it at io n in accu rat el y refl ect s th at th e jury an swe red “ y es ” to qu es ti on 5.
Our op in io n co rrec ts th is erro r an d accu rat el y refl ect s th e ju ry ’s an swe r of “ no ” to

qu es ti on 5.

Thi s am ou nt was of

fs et so m ewh at

, ho wev er, by th e ap pr ox im at el y $7 m il li on 8

Lol lytog s pl aced in es cro w by or de r of th e co ur t in th e pr io r act io n. Thi s su m
rep res en te d t he pre m iu m s t ha t wen t u np ai d fr om 20 09 to 20 12

.

-8

-on al le ga ti on s t h a t W il so n ha d act ed im pr op erl y

. In ad di ti on , th e co ur t pr ecl ud ed

Lin co ln Life fro m as se rti ng as a de fen se ag ai ns t W il so n’s co un te rcl ai m th at he

“ br each ed th e ag en t’s co nt ract in co nn ect io n wit h th e sa le of th e te rm li fe ins ur an ce

po li ci e s.” Li nc ol n I

, 20 15 W L 90 48 67 9, at *1 6. The on ly de fen se th at rem ai ne d to

Lin co ln Life was a li m it ed fai lu re o f co ns id erat io n a ffi rm at iv e d efen se

.

Afte r a two -d ay jury tri al on W il so n’s com m is si on cl ai m s, W il so n m ov ed fo r jud gm en t as a m at te r of la w. Se e Fed

. R. Ci v. P. 50

. The co ur t gr an te d it

, fin di ng th at (1 ) Wi l s o n h ad pr od uc ed th e po li ci es on be ha lf of Lin co ln Life as req ui red by th e

pa rti es ’ ag reem en t, an d (2 ) to th e ex te nt th at he was req ui red to ta ke fu rth er st ep s to

se cu re hi s co m

m is si on , Lin co ln Life ha d pr ev en te d hi m fr o m d o i ng so

. The co ur t

de te rm in ed th at W il so n was en ti tl ed to $9 70 ,77 8.3 9 in co m m is si on s, $1 20

, 0 0 0 in

bo nu se s, an d $ 48 4,2 45 in pre jud gm en t i nt eres t. 9

F ol lo win g en try of jud gm en t, Lin co ln Life ap pe al s th e su m m ary ju d g men t

or de r, th e p ret ria l o rd ers , and th e o rd er g ran ti ng jud gm en t as a m at te r of law.

II. Dis cu ss io n

Th e t h r u s t o f Lin co ln Life ’s arg um en t is th at th e is su es in th is cas e an d th e

pr io r act io n in New Yor k are no t “ id en ti cal ,” as th e do ct rin e of co ll at eral es to pp el

req ui res

. Se e, e.g

. , D’Ara ta v. N.Y

. Cen t. Mut

. Fir e In s

. C o

. , 56 4 N.E.2d 63 4, 63 6
(N. Y

. 19 90 ) (ci ta ti on om it te d)

. In Lin co ln Life ’s vi ew, th e two cas es ad dr es se d

di ffer en t i ss ue s. Linc ol n s ees it s ca se ag ai ns t Wils on as f oc us in g o n e rro rs he m ad e

in th e co ur se o f t h e Lo ll y to gs de al

. The pr io r act io n, on th e ot he r ha nd

, ad dr es se d

whe th er Lin co ln Life was req ui red to al lo w Lol lytog s to co nv ert th e po li cy fro m te rm

to who le li fe. Lol lytog s arg ue s th at th e p r io r act io n di d no t req ui re a fin di ng th at

The pa rti es st ip ul at ed to th e am ou nt of th e co m m is si on s. The y al so st ip ul at ed 9

th at bo nu se s of $ 12 0,0 00 were ap pr op ria te if com m is si on s in th e st ip ul at ed am ou nt

were ap pr op ria te

.

-9

-W il so n was bl am el es s fo r Lin co ln Life ’s li ab il it y to th e tru st

. Add it io na ll y , Lin co ln

Li f e f i n d s fau lt wit h th e di st ric t co ur t’s cu ll in g of m an y of it s de fen se s be fo re tri al

ba se d on it s co ll at eral es to pp el ru li ng

. Last ly, it ch al le ng es th e award of pr ejud gm en t

in te res t. We affi rm

each of t he di st ric t co ur t’s ru li ng s.

A. Su mmar

y Ju dg men t

W e rev ie w a di st ric t co ur t’s de ci si on to gr an t a m ot io n fo r s u mm ary jud gm en t de no vo , ap pl y in g th e sa m e st an da rd s fo r su m m ary jud gm en t

as th e di st ric t co ur t. Su m m ary jud gm en t is ap pr op ria te i f th e m ov an t sh ows th at th ere is no ge nu in e di sp ut e a s t o a ny m at eri al fact an d th e

mo v a n t is en ti tl ed to jud gm en t as a m at te r of la w. In co ns id eri n g

su m m ary jud gm en t m ot i o n s , th e bu rd en of de m on st rat in g th ere are no
ge nu in e is su es of m at eri al fact res ts on th e m ov in g pa rty, an d we rev ie w th e ev id en ce an d th e in fere nc es w h i c h reas on ab ly m ay be dr awn fro m th e ev id en ce in th e li gh t m os t fav or ab le to th e no nm ov in g pa rty. W he re th e reco rd ta ke n as a who le co ul d no t le ad a rat io na l tri er of fact to fin d
fo r th e n on m ov in g p art y , th ere i s n o g en ui ne is su e fo r tr ia l.

Es t a t e of Jo hn so n v. W

eb er , 78 5 F.3 d 26 7, 27 1 (8 th Ci r. 20 15 ) (cl ean ed u p )

. We

rev ie w de no vo th e di st ric t co ur t’s ap pl ic at io n of co ll at eral es to pp el

. Man io n v.

Na gi n , 39 2 F.3 d 29 4, 30 0 (8 th Ci r. 20 04 ) (ci ta ti on om it te d)

. As th is is a di ve rs it y

cas e, ou r go al is to de te rm in e whe th er a New York co ur t wou ld ho ld th at co ll at eral

es to pp el ap pl ie s to th es e fact s. Se e Id eker v. PPG In du s., In c. , 78 8 F.3 d 84 9, 85 2 (8 th

Ci r. 20 15 ) (ci ta ti on s om it te d)

. Co ll at eral es to pp el req ui res th at th e de ci si ve is su e in

th e su bs eq ue nt act io n be id en ti cal to on e ne ces sa ril y de ci de d in th e pr io r act io n and

th e pa rty ag ai ns t who m co ll at eral es to pp el ha s be en in vo ke d m us t ha ve ha d a fu ll an d

fai r op po rtu ni ty to l it ig at e th e is su e:

Co ll at eral es to pp el

, an eq ui ta b l e d oc tri ne , is ba se d up on th e ge ne ral

no ti on th at a pa rty, or on e in pr iv it y wit h a pa rty, sh ou l d n ot be

pe rm it te d to rel it ig at e an is su e de ci de d ag ai ns t it

. A s th is do ct rin e ha s

ev ol ve d, on ly two req ui rem en ts m us t be sa ti sf

ie d. Fi rs t, th e pa rty

se ek in g th e be ne fit of co ll at eral es to pp el m us t pr ov e t h a t t h e id en ti cal

-1 0-is su e was ne ces sa ril y de ci d e d i n t h e pr io r act io n an d is de ci si ve in th e

pr es en t act io n. Seco nd

, th e pa rty to be pr ecl ud ed fro m rel it ig at in g an is su e m us t ha ve ha d a fu ll an d fai r op po rtu ni ty t o c o n t es t th e pr io r de te rm in at io n.

. . . Co ll at eral es to pp el

, we ha ve he ld

, is gr o u n d e d on

co nc ep ts of fai rn es s an d sh ou ld no t be rig id ly or m ech an ic al ly ap pl ie d.

D’Ara ta

, 56 4 N

. E. 2 d at 63 6 (ci ta ti on s om it te d)

. “ [T]he bu rd en of sh owi ng th at th e
is su e was id en ti cal an d n eces sa ril y de ci de d rest s up on th e m ov in g par ty.” Sc hw ar tz

v. Pub

. Adm’r of Bro nx Ct y. , 24 6 N

. E. 2d 72 5, 73 0 (N.Y. 19 69 ). It is th e res is ti ng

pa rty’ s bu rd en to sh ow th at it la ck ed a “ fu ll an d fai r op po rtu ni ty” to li ti ga te th e is su e.

Id

. In de te rm in in g whe th er co ll at eral es to pp el ap pl ie s, we m ay lo ok to th e en ti ret y of

th e reco rd of th e pr io r act io n. S e e Br on xvi ll e Pal mer
, Lt d. v. St at e , 18 N.Y.2d 56 0,

56 3, 22 3 N.E.2d 88 7 (1 96 6)

. W e ho ld th at th e jury’ s fin di ng s pr ecl ud e a su bs eq ue nt

fin di ng of l ia bi li ty agai ns t Wils on

.

W he n as ke d to de ci de whe th er th e po li ci es were co nv ert ib le whe n so ld

, th e j ur y

an swe red “ Yes .” The di st ric t co ur t he ld th at th e jury’ s an swe r in th e affi rm at iv e was
“ei t h e r ba se d up on a de te rm in at io n th at th e te rm po li ces ’ co nv ers io n la ng ua ge is

am bi gu ou s, or up on a de te rm in at io n th at W il so n was au th or iz ed by [Lin co ln Life ] to

se ll th e po li ci es wit h c on ve rs io n rig ht s an d th at th e po li ci es as de li ve red di d no t

refl ect th e te rm s of th e sa le .” Li nc ol n I

, 20 15 W L 90 48 67 9, at *1 5. Tho ug h th e reco rd

le av es us un su re th at th e jury’ s de ci si on was ba se d on th e am bi gu it y a r gu m en t, as

Lin co ln Life co nc ed ed be lo w, th e am bi g u i t y arg um en t is bu t on e ba si s th at wou ld

pr ecl ud e a fin di ng th at W il so n is li ab le fo r so m e m is ta ke m ad e du rin g th e sa le of th e

po li cy

. Se e id

. at *1 2 (“ If th e jury’ s an swe r to t h e fir st qu es ti on was ba se d on an

in te rp ret at io n of th e po li cy la ng ua ge , Lin co ln Ben efi t ag rees th at co ll at eral es to pp el

wou ld ba r th e pr es en t cl ai m s.” (q uo ti ng Su pp l. Mem

. in Opp ’n to W il so n’s Mo t. fo r

Su m m

. J. at 18

, Li nc ol n Ben ef it Li fe v. W il so n , Cas e No. 4- 13 -cv -0 32 10 -RGK-CR Z
(Au g. 31

, 20 15 ), ECF No. 14 9) ). Fu rth er, a f i n d i n g to th e co nt rary—th at th e jury

fo un d th e co nt ract un am bi gu ou s bu t st il l fo un d Lin co ln Life li ab le to

Lol lytog s— wou ld no t pr ev en t co ll at eral es to pp el if th e ot he r ba s e s su pp or t it

.

-1 1-The refo re, we co ns id er whe th er W il so n was no t au th or iz ed to arra ng e f or a

co nv ert ib le po li cy

ev en if t he po li ci es th em se lv es in cl ud ed a co nv ers io n ri gh t.

In an swe rin g it s se co nd in te rro ga to ry in th e affi rm at iv e, th e jury fo un d th at th e

Ju ly 13

, 20 00 Fax “ m od ifi ed th e su bjec t Term Po li ci es an d ga ve [Lol lytog s] th e rig ht

to co nv ert th e Term Po li ci es to who le or un iv ers al li fe in su ran ce po li ci es th ro ug h th e

en d of th e le ve l pr em iu m pe rio ds .” Id

. at *1 1 (ci ta ti on om it te d)

. The jury’ s fin di ng on

th is is su e su pp or te d Lin co ln Life ’s li ab il it y to Lol lytog s, bu t it al so lo gi cal ly en ta il ed

a fin di ng th at Lin co ln Life rat ifi ed W il so n’s act io ns in se ll in g th is po li cy

. Lin co ln ’s

rat ifi cat io n of W il so n’s al le ge d im pr op er act s m il it at es ag ai ns t it s cl ai m th at he act ed

im pr op erl y in th e sa le of t he po li cy

.

To fin d rat ifi cat io n, th ere m us t be a m an ife st at io n of as se nt th at th e act wil l

affe ct th e pr in ci pa l’s le ga l rel at io ns or co nd uc t th at jus ti fie s a “ reas on ab le as su m pt io n

th at th e [p rin ci pa l] so co ns en ts .” Elt in g v. Elt in g , 84 9 N.W .2d 44 4, 41 8 (Neb

. 20 14 )
(q uo ti ng Res ta te m en t (Thi rd ) of Age nc y § 4 .01 ) (2 00 6) ). “ Rat ifi cat io n of an ag en t’s 1 0

un au th or iz ed act s m ay be m ad e by ov ert act io n or in ferr ed fro m si le nc e an d in act io n.”

Id

. (ci ta ti on om it te d)

. Rat ifi cat io n of an ag en t’s act rel eas es hi m fro m an y li ab il it y he

m ig ht ot he rwis e h av e h ad to hi s p rin ci pa l fo r act in g wi th ou t au th or it y

. Se e Bar ta v.

Ki nd sc hu h , 51 8 N.W.2d 9 8, 1 00 –0 1 (Ne b. 1 99 4) (ci ta ti on s o m it te d)

.

In Bar ta

, a co up le who se ho m e ha d a le ak y ro of ret ai ne d a real es ta te ag en t to

as si st th e m i n th e sa le of th ei r ho m e. Id

. at 99

. The real to r pr es en te d th em wit h a
di sc lo su re fo rm th at “ st at ed th at t h e r o o f was in go od co nd it io n.” Id

. The y read th e

fo rm an d, de sp it e kn owi ng th at it co nt ai ne d in co rrec t in fo rm at io n, si gn ed it an y way

.

The di st ric t c o u rt st at ed th at “ [t]he pa rti es are in ag reem en t th at Neb ras ka 1 0

su bs ta nt iv e la w ap pl ie s in th e pr es en t act io n.” Li nc ol n I

, 20 15 W L 90 48 67 9, at *3

. On

ap pe al

, ne it he r pa rty ha s ob jecte d to th e di st ric t co ur t’s us e of New Yor k la w fo r th e

co ll at eral es to pp el an al y si s an d Neb ras ka la w fo r th e la w of ag en cy

. The refo re, we do th e sa m e.

-1 2-Id

. The y cl ai m ed th at th ey on l y d i d so be cau se “ th ey as su m ed [th e real to r] wou ld

m ak e th e ne ces sa ry ch an g e s to th e fo rm .” Id

. Howev er, th e real to r cl ai m ed th at he

“ le ft it to th em to de ci de wha t in fo rm at io n to di sc l o s e o n t h e f o rm ” an d m ad e no
ch an ge s t o t he co up le ’s res po ns e. Id

. at 9 9– 10 0.

Ano th er co up le ev en tu al ly bo ug ht th e ho us e an d di sc ov ered se ve ral pr ob le m s
wit h it aft er th e sa le wen t th ro ug h. Id

. at 10 0. Th ey fil ed su it ag ai ns t th e se ll ers fo r

m is rep res en ta ti on b a s ed on th ei r as su ran ce th at th e ro of was in go od co nd it io n. Id

. The se ll ers su bs eq ue nt ly fil ed a th ird -p art y act io n ag ai ns t th e real to r on th e ba si s th at

he “ was th ei r ag en t in th e sa le an d

. . . sh ou ld be li ab le fo r an y lo ss es in cu rred be cau se

of hi s act io ns as se ll ers ’ ag en t.” Id

. The tri al co ur t gr an te d su m m a r y jud gm en t in

fav or of t he real to r, an d t he Su pr em e Co ur t o f Neb ras ka affi rm ed

. Id

.

The co ur t ack no wled ge d th at a real es ta te ag en t is bo un d by th e la w of ag en cy , in cl ud in g th e pr in ci pl e th at “ [w]hen an ag en t fai l s t o f u l f il l hi s ag en cy du ti es , th e

ag en t m ay b e h e l d li ab le to th e pr in ci pa l fo r lo ss es su ffer ed by th e pr in ci pa l.” Id

. (ci ta ti on s om it te d)

. Howev er, th e co ur t reco gn iz ed th at th is m ax im do es no t ap pl y if

th e pr in ci pa l “ au th or iz ed

. . ., or ot he r w i s e acq ui es ced in or rat ifi ed su ch act s.” Id

. (ci ta ti on om it te d) . The co ur t co nc lu de d:

W e th eref or e fin d th at ev en if [th e real es ta te ag en t] ex ceed ed hi s

au th or it y as se ll ers ’ ag en t by fai li ng to ch an ge th e fo r m t o r e fle ct th e in fo rm at io n pr ov id ed by se ll ers , th e la w wil l no t afford se ll ers pr ot ect io n fo r ig no rin g th e ob vi ou s. W he n sel le rs read an d si gn ed th e fo rm whi ch
in cl ud ed m is rep res en ta ti on s reg ard in g th e co nd it io n of th e ro of

, se ll ers
acq ui es ced in an d rat i f

i e d th e act s of th ei r ag en t, th ereb y rel eas in g th e
ag en t fr om

li ab il it y to sel le rs for th e res ul ti ng da m ag es

.

Id

. at 10 2.

-1 3-Lin co ln Life di sp arag es W il so n’s wor k in th e sa le of th e Lol lytog s po li cy

. Bu t,

it all eg es no m al feas an ce o n h is pa rt i n a rran gi ng for th e po li cy . Fur th er, t he reco rd

in th e pr io r act io n in di cat ed th at by Ju ly 20 00

, th ere ha d be en su bs ta nt ia l

co m m un ic at io n am on g Lol lytog s, W il so n, Lin co ln Li f e, an d Seco nd Opi ni on

reg ard in g th e po ss ib il it y th at th e po li cy was no t co nv ert ib le

. Mo reo ve r, Lin co ln Life

po ss es s e d th e m os t pe rti ne nt in fo rm at io n fro m th e ou ts et

. Sp eci fic al ly, it kn ew it s

own cu st om ary pr act ic e of no t se ll in g co n v e rti bl e po li ci es to pe op le ov er 70 y ears
ol d, Sam ue l’s ag e at th e ti m e of ap pl ic at io n, a n d th e te rm s of th e po li ci es it ha d

dr aft ed

. The fax Trev in o sen t ack no wled ge s th at th e po li cy ho ld er’s 70 th bi rth da y is

us ua ll y th e tri gg eri ng ev en t if it co m es be fo re th e en d of th e le ve l pr em iu m p e r io d.

Non et he le ss , i t in di cat es th at S t a n S h el le y , Vi ce Pres id en t of th e Cu st om er Serv ic e Dep art m en t, in st ru ct ed Trev in o t o c o nv ey th at th e po li cy wou ld be co nv ert ib le “ up

to th e te rm of th e po li cy .” Decl

. of Jo sh ua Mal li n, Ex. 2., at 2. The jury was in st ru ct ed

on rat ifi cat io n and m od ifi cat io n, and it fo un d th at th e 20 00 Fax m od ifi ed th e po li cy

su ch th at Sam

ue l’s ag e was no lo ng er a b arri er t o c on ve rs io n.

As di sc us se d at or al arg um en t, th e di st ric t co ur t in th e pr io r act io n di d no t

pr ov id e an in te rro ga to ry th at sp ok e ex pl ic it ly to rat ifi cat io n. And th e jury in st ru ct io ns
di d no t ex pr es sl y ad dr es s ho w a rat ifi cat io n affe ct s an ag en t’s li ab i l i t y to th e

p rin ci pa l. St il l, th e se co nd in te rro ga to ry m ak es cl ear th at th e jury co nc lu de d t h a t

Lin co ln Life rat ifi ed an y di sc rep an cy as to co nv ert ib il it y of th e po li cy th at m ay ha ve

res ul te d fro m W il so n’s act io ns

. Und er Bar ta

, su ch a fin di ng ab so lv es W il so n of an y

li ab il it y to Lin co ln Life, h is pri nc ip al , wit h re sp ect to th is tra ns act io n.

The di st ric t co ur t co nc lu de d i ts an al y si s as fol lo ws:

As a m at te r of la w, th e ve rd ic t ret ur ne d by t h e ju r y i n th e New Yor k
li ti ga ti on pr ecl u d es [Lin co ln Life ] fro m cl ai m in g th at W il so n is li ab le
fo r an y po rti on of th e m on ey jud gm en t th e Lol lytog s sh areh o l d e r s ob ta in ed ag ai ns t it

. The jury’ s fir st fin di ng was e it he r ba se d up on a de te rm in at io n th at th e te rm po li ci es ’ co nv ers io n la ng ua ge is am bi gu ou s,

-1 4-or up on a de te rm in at io n th at W il so n was au th or i z ed by [Lin co ln Life ]

to se ll th e po li ci es wit h co nv ers io n rig ht s an d t h a t t h e po li ci es as de li ve red di d no t refl ect th e te rm s of th e sa le

. The jury’ s se co nd fin di ng

es ta bl is he s th at to th e ex te nt W il so n m ay ha ve act ed wit ho ut au th or it y ,
or ne gl ig en tl y , [Li nc ol n Life ] rat ifi ed th e sa le of th e po li ci es wit h

co nv ers io n ri gh ts

.

Li nc ol n I , 20 15 W L 90 48 67 9, at *1 5.

To be su re, th e jury in th e pr io r act io n di d no t di rect ly de ci de th e id en ti cal

cl ai m s m ad e by Lin co ln Life ag ai ns t W il so n in th is su it

. The pr io r act io n co nc ern ed

Lin co ln Life ’s li ab il it y to Lol lytog s. Thi s su it co nc ern s W il so n’s li ab il it y to Lin co ln

Life fo r it s li ab il it y to Lol lytog s. Bu t, th e jury’ s fact ua l fin di ng s es ta bl is h cert ai n fact s

t h a t w ou ld be th e sa m e fo r bo th la wsu it s. The fact s fo un d by th e jury in th e pr io r

act io n a r e i r r eco nc il ab le wit h W il so n be in g li ab le to Lin co ln Life fo r it s da m ag es

pa y ab le to Lol lytog s on an y th e o r y o f li ab il it y it ha s pl ead ed ag ai ns t hi m

. Add it io na ll y , th e ap pl ic at io n of co ll at eral es to pp el in th is cas e co m pl ie s wit h “ ge ne ral

no ti on s of fai rn es s.” D’Ara ta

, 56 4 N.E.2d at 63 9 (ci ta ti on om it te d)

. Acco rd in gl y , we

affi rm th e g ran t o f su m

m ary jud gm en t.

B. Aff ir mat iv e Def

en se s

Fo ll owi ng th e en try of su m m ary jud gm en t on Lin co ln Life ’s cl ai m s, th e pa rti es

f i l e d moti on s in li m in e. Rel ev an t to th is ap pe al , t he di st ric t co ur t ru le d in W il so n’s

fav or , st a t i n g “Pl ai nt iff can no t of fer ev id en ce th at Defen da nt br each ed th e ag en t’s

ag reem en t or was ne gl ig en t in th e pl acement of in su ran ce fo r Lol lytog s w i th

Pl ai nt iff .” Li nc ol n Ben ef

it Li fe v. W il so n (Li nc ol n II)

, No. 4- 13 -cv -0 32 10 -RGK-CR Z,

20 16 W L 83 76 40 1, at *1 (D. Neb

. Mar

. 24

, 20 16 ). Lin co ln Life su bs eq ue nt ly m ov ed

fo r cl ari fic at io n as to whi ch of it s ni ne affi rm at iv e de fen se s w e r e no t ba rred by th e

co ll at eral es to pp el ru li ng

. Fo ur were ei th er wit hd rawn or he ld m oo t, le av in g fiv e fo r

th e di st ric t co ur t’s fu rth er co ns id erat io n: (1 ) ne gl ig en ce, (2 ) waiv er an d es to pp el

, (3 )

un cl ean ha nd s, (4 ) jud ic ia l es to pp el , and (5) fai lu re o f co ns id erat io n.

-1 5-The co ur t co nc l u de d th at th e ne gl ig en ce de fen se fel l sq ua rel y wit hi n th e

pu rv ie w of t he su m

m ary jud gm en t ord er and li m in e or de r. The waiv er an d e st op pe l

de fen se was ba se d on a co nt ract pr ov is io n th at al lo wed Lin co ln Life to te rm in at e th e

a g r e e men t wit h W il so n an d wit hh ol d co m m is si on s if he “ co m

m it [s ] an y act th a t

in jure s th e bu si ne ss or rep ut at io n of [Lin co ln Life ]. ” Li nc ol n Ben ef it Li fe v. W il so n (Li nc ol n III) , No . 4 -1 3- cv -0 32 10 -RGK-CR Z, 20 16 W L 2 75 53 32 (D. Neb . M ay 11

, 20 16 ) (em

ph as is om it te d) (ci ta ti on om it te d)

. The co ur t he ld th at th is was , in es se nc e,

a de fen se ba se d on br each of co nt ract an d was th eref or e ba rred by it s pr ev io us or de rs

. The c ou rt al so no te d th at “ [e]ven if th is affi rm at iv e de fen se were no t pr ecl ud ed

, Lin co ln Ben efi t ha s ne ve r cl ai m ed th at th e Age nt ’s Agr eem en t was te rm in at ed

, whi ch

is a co nd it io n pr eced en t to ces sa ti on of th e ag en t’s ri gh t to a co m m is si on un de r th e

‘T erm in at io n’ cl au se .” Id

. at *3 n.5

. The co ur t pe rm it te d Lin co ln Life to m ai nt ai n it s

fai lu re-o f-co ns id erat io n de fen se to th e ex t e n t th at it was no t ba se d on m at te rs th e

co ur t h el d p recl ud ed

. 1 1

On ap pe al

, Lin co ln Life ch al le ng es th e di st ric t co ur t’s ru li ng as to th e m ot io n

in li m in e an d th e ne gl ig en ce, waiv er an d es to pp el de fen se s. W e rev ie w th es e ru li ng s

fo r an ab us e of di sc ret io n. Se e Co u n t r y w i d e S er vs

. Co rp

. v. SI

A In s. Co

. , 23 5 F.3 d

39 0, 3 94 (8t h C ir. 2 00 0)

.

Lin co ln Life arg ue s th at th e di st ric t co ur t sh ou ld n o t ha ve pr oh ib it ed it fro m

of feri ng arg um en ts an d ev id en ce ab ou t W il so n’s al le ge d fai lu res in th e fu lfi ll m en t of

hi s ro le as ag en t. Co ll at eral es to pp el “ ba rs rel it ig at io n of an is su e

. ” T y d i n gs v.

G r een fi el d, St ei n & Se ni or

, LLP

, 89 7 N.E.2d 10 44

, 10 46 (N.Y. 20 08 ) (em ph as i s
ad de d)

. Here, th e pr io r act io n di d no t li ti ga te whe th er W il so n ab id ed by hi s ag reem en t

wit h Lin c o l n Li f

e

. Tha t cas e di d res ol ve , ho wev er, th at Lin co ln Life was th e pa rty

r e s p o ns ib le fo r da m ag es to Lol lytog s. Thi s ne ces sa ril y im pl ic at ed al l of Lin c o l n

Bec au se th ey are no t rel ev an t to th is ap pe al

, w e do no t ad dr es s th e ot he r 1 1

affi rm at iv e d efen se s.

-1 6-Life ’s cl ai m s for reli ef agai ns t W il so n and a su bs ta nt ia l asp ect of it s defe ns es to hi s

co un te rcl ai m

. It st an ds to reas on th at Lin co ln Life can no t as se rt a de fen se th at wou ld

r e q u i r e a co nt rary fin di ng

. Not ab ly, th e di st ric t co ur t le ft Lin co ln Life ’s fai lu re-o f

co ns id erat io n de fen se pa rti al ly in ta ct

. A fin di ng of fai lu re of co ns id erat io n wou ld no t

ne ces sa ril y

co nf li ct wit h t he co ll at eral est op pe l ru li ng

.

W e are al so un pe rs ua de d by Lin co ln Life ’s al te rn at iv e arg um en t th at it sh ou ld

ha ve be en ab le to de fen d ag ai ns t W il so n’s cl ai m s on th e ba si s th at he ha d ha rm ed it s
bu si n e s s o r rep ut at io n. The pa rag rap h in th e Age nt ’s Agr eem en t on whi ch it rel ie s

st at es in rel ev an t p art :

Term in at io n . . . .You r ri gh t to an y co m m is si on or o th er t hi ng of v al ue sh al l ceas e if y ou : co m

m it an y act th at in

jure s th e bu si ne ss or rep ut at io n of [Lin co ln Life ]; fai l to acco un t fo r an d rem it pr om pt ly an y m on ie s

co ll ect ed by y ou fo r [Lin co ln Life ]; or wit hh ol d an y po li ci es , m on ey or
ot he r pr op ert y

be lo ng in g o r ret ur na bl e to [Lin co ln Life].

Li nc ol n II

I , 20 16 W L 27 55 33 2, at *2 (ci ta ti on om it te d)

.

W e ag ree wit h th e di st ric t co ur t’s in te rp ret at io n of th e pr ov is io n. The ces sa ti on

of th e rig ht to co m

m is si on is on ly op erab le up on te rm in at io n fo r a pr oh ib it ed act

. Bec au se Lin co ln Life ne ve r cl ai m ed to ha ve te rm in at ed th e ag reem en t

, t h e di st ric t

co ur t di d no t ab us e it s di sc ret io n by no t al lo win g Lin co ln Life to rai se th e pr ov is io n

as a de fen se

.

In su m m ary, we ho ld th at th e di st ric t co ur t di d no t err in p r e c l u d in g Lin co ln

Life fro m pu rs ui ng th e afo rem en ti on ed affi rm at iv e d efen se s.

C. Prej ud gme nt Int er es t

Lin co ln Life as se rts th at th e di st ric t co ur t im pr op erl y aw a rd ed pr ejud gm en t

in te res t. “ St at e la w go ve rn s whe th er a di ve rs it y li ti ga nt m ay reco ve r pr e-ju dg m en t

-1 7-in te res t.” Li n c o l n Ben ef it Li fe Co

. v. Edw ar ds

, 24 3 F.3 d 45 7, 46 2 (8 th Ci r. 20 01 )
(ci ta ti on om it te d)

. “ [W]het he r pr ejud gm en t in te res t sh ou ld be award ed is rev ie wed

de no vo on ap pe al .” Co un tr ys id e Co -o

p. v. Har ry A. Ko ch Co

. , 79 0 N.W .2d 87 3, 88 9
(Neb . 20 10 ) (ci ta ti on s o m it te d)

. 1 2

The ap pl ic ab le st at ut e g ov ern in g p reju dg m en t i nt eres t s ta te s:

Unl es s ot he rwis e ag reed

, in te res t sh al l be al lo wed at t he rat e of twel ve
pe rcen t pe r an nu m on m on ey du e on an y in s t r u men t in writ in g, or on

se tt le m en t of th e acco un t fro m th e da y th e ba la nc e sh al l be ag reed up on ,
on m on ey rece iv ed t o t h e u s e of an ot he r an d ret ai ne d wit ho ut th e

Bo th pa rti es ci te th e sa m e cas e fo r th e pr op os it io n th at ou r st an da rd of rev ie w 1 2

of th is is su e is fo r an ab us e of di sc ret io n. Se e So c’y Na t’l Ban k v. Par so w P’sh ip

, Lt d.

, 12 2 F

. 3 d 57 4, 57 6 (8 th Ci r. 19 97 ). Howev er, Par so w st at es , “ In a fed eral
d i v e r si ty act io n, th e la w of th e st at e whe re th e cau se of act io n ari se s go ve rn s t h e award of pr ejud gm en t in te res t. Und er Neb ras ka la w, a tri al co ur t’s de ci si on to award
in te res t as pa rt of an eq ui ta bl e re med y is rev ie wed fo r ab us e of di sc ret io n.” Id

. at 57 6 (em ph as is ad de d) (ci ta ti on s om it te d)

. The in st an t cas e, in ou r vi ew, is an act io n at la w, n ot eq ui ty. Th e co un te rcl ai m is su bh ead ed “ Decl arat or y Ju dg m en t Fo r Brea ch
of Co nt ract .” Ans wer to th e Co m pl

. & Praeci pe & Cou nt ercl . at 16

, Li nc ol n Benef it
Li fe v. W il so n , Cas e No. 4- 13 -cv -0 32 10 -RGK-CR Z (J an

. 15

, 20 14 ), ECF No. 17

. “ A

su it fo r de cl arat or y jud gm en t is an act io n s u i ge ne ri s an d m ay in vo lv e qu es ti on s of
la w o r eq ui ty o r bo th ; whe th er a de cl arat or y jud gm en t ac ti on is tre at ed as an act io n
at la w or on e in eq ui ty is to be de te rm in ed by th e na tu re of th e di sp ut e. W he n th e

es se nc e of th e di sp ut e so un ds i n c o n t r a c t , t he act io n is to be tre at ed as on e at la w.”

Lo ne Ced

ar Ran ch es
, In c. v. Ja nd eb eu r , 52 3 N.W .2d 36 4, 36 7

– 6 8 ( N eb

. 19 94 ) (ci ta ti on s om it te d)

. Add it io na l l y, Wi ls on de m an de d a jury tri al

, an d th e cas e was he ard by a jury. Neb ras ka co ur ts “ ha ve tra di ti on al ly d e n i e d ju ry tri al s in eq ui ta bl e
act io ns an d p ro vi de d ju ry tri al s as a m at te r of

rig ht in leg al act io ns .”
Eih us en v. Eih us en , 72 3 N.W.2d 6 0, 6 3 (Ne b. 2 00 6)

.

Acco rd in gl y , we rev ie w de n ov o t he pre jud gm en t i nt eres t awa rd

.

-1 8-own er’s co ns en t, ex pr es s o r im pl ie d, fro m th e rece ip t th ereo f, an d on

m on ey lo an ed or du e an d wit hh el d by u nr eas on ab le de la y of pa y m en t. Unl es s ot he rwis e ag reed or pr ov id ed by l aw, each c h a r g e wit h res pe ct

to un se tt le d acco un ts be twee n pa rti es sh al l be ar in te res t fro m th e da te of
bi ll in g u nl es s p ai d wi th in th irt y da y s fr om

th e d at e o f bi ll in g.

Neb

. Rev

. St at

. Ann

. § 45 -1 04

. Preju dg m en t in te res t is ap pr op ria te on ly fo r li qu id at ed

da m ag es ; da m ag es are li qu id at ed “ on ly whe n no reas on ab le co nt ro ve rs y ex is ts as to

ei th er pl ai nt iff ’s rig ht to reco ve r or as to th e am ou nt of su ch reco ve ry .” Edw ar ds

, 24 3

F.3 d a t 4 62 (cl ean ed up ).

In th e or de r gr an ti ng W il so n’s m ot io n fo r jud gm en t as a m at te r of la w, th e
di st ric t co ur t s ta te d t ha t

W il so n pr ov ed a br each of co nt ract an d da m ag es an d no reas on ab le jury

co ul d co nc lu de ot he rwis e. In th at sa me v ei n, [Lin co ln Ben efi t]’ s affi rm at iv e de fen se of la ck of co ns id erat io n fai ls as a m at te r of la w an d
al so be cau se no reas on ab le jury co ul d co nc lu de th at th ere was a la ck of

or fai lu re o f co ns id erat io n.

Li nc ol n Ben ef

it Li fe v. W il so n (Li nc ol n IV)

, No. 4- 13 -cv -0 32 10 -RGK-CR Z, 20 17 W L

10 80 16

, at *3 (D. Neb

. Ja n. 11

, 20 17 ). It su bs eq ue nt ly “ f[o u]nd th at W il so n’s cl ai m s

are li qu id at ed be cau se th ere is no reas on ab le co nt ro ve rs y ei th er as to th e am ou nt s du e

or as to hi s rig ht to reco ve r, an d th at pr e ju d g men t i nt eres t th eref

or e is reco ve rab le

un de r Ne b

. R e v

. St at

. § 45 -1 04 .” Id

. W e fin d no erro r in th is de te rm in at io n an d

affi rm

.

III. Co nc lu si on

Acco rd in gl y , we affi rm

th e jud gm en t o f th e d is tri ct co ur t.

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __

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