IN THE SUPERIOR COUR T OF THE STATE OF DE LAWARE

SUN LIFE ASSURANCE C OMPANY ) OF CANADA ) Plaintiff , )

) v . ) ) WILMINGTON SAVINGS F UND SOCIETY, ) FSB, Solely as Securities Intermediary ) Defendant. )

____________________ _________________ ) C.A. N o . N18C
- 08
- 074 ) PRW CCLD WILMINGTON SAVINGS F UND SOCIETY, ) FSB, Solely as Securities Intermediary ) Counterclaim

- Plaintiff, ) ) v . ) ) SUN LIFE ASSURANCE C OMPANY ) OF CANADA )

Counterclaim

- Defendant. )
Submitted: March 27 , 2020 Decided: April 9 , 2020
MEMORANDUM OPINION A ND ORDER ON REARGUMENT Upon Plaintiff/Counterclaim

- Defendant’s Motion for Reargument , DENIED

. Simon E. Fraser, Esquire and Thomas Francella, Esquire, Cozen O’Connor, Wilmington, Delaware, Attorneys for Plaintiff and Counterclaim

- Defendant. Steven L. Caponi, Esquire and Matthew B. Goeller, Esquire, K&L Gates LLP, Wilmington, Delaware, Attorneys for Defendant and Counterclaim

- Plaintiff.

WALLACE, J.- 2

-

This case concerns S un Life Assurance Company of Canada’s allegation that

a certain life insurance policy (“the Policy”) upon which Wilmington Savings Fund Society, FSB (“ WSFS ”) ha s demanded payment is void ab initio as a wager on the
life of another

. Cozen O’Connor (“Cozen”) represents Sun Life.
Cozen is also WSFS’s longstanding outside counsel and currently manages an ongoing matter for WSFS involving life insurance trusts. W SFS immediately brought th is t o Cozen’s attention, and the parties resolved and waived that specific conflict by agreement. But thereafter, WSFS learned that Cozen had previously advised and represented Ocean Gate Life Settlement Program LP (“Ocean Gate”)

. Ocean Gate obtained the Policy by purchase assignment from the original insured and beneficiary. Based on the conflict posed by this prior representation, WSFS fil ed a Motion to Disqualify Cozen . The Court disqualified Cozen o n December 19, 2019. 1
I. T H E D ECEMBER M EMORANDUM O PINION AND O RDER In granting WSFS’s Motion, the Court made clear its bas e s for disqualification. Cozen admitted its prior representation of Ocean Gate, which necessarily involved investigating the business practices Ocean Gate used in

1 Sun Life Assurance Co. of Canada v. Wilmington Savings Fund Society, 2019 WL 6998156 (Del. Super. Ct. Dec. 19, 2019 ).- 3

-

obtaining life insurance policies similar to the Policy. 2 Cozen’s current client Sun
Life ta kes a position materially adverse to Ocean Gate 3 that the Court found was not and could not be waived by WSFS. 4 The Court rejected WSFS’s argument that Co z en has an unfair advantage due
to confidential disclosures from Oc ean Gate made in the context of an attorney

- client relationship

. Cozen promptly instituted an Ethics Screen as soon as the prior conflict was brought to its attention, and the Court credits that it has vigilantly adhered to the

screen. 5 Rather, the Court found that WSFS could potential ly have need to seek or
introduce Cozen

- generate d material fact evidence as to Ocea n Gate’s business practices related to its obtaining and dealing in the type of life insurance policy transaction at issue here; that evidence, the Court found, could be rel evant to whether the Policy is void or was validly obtained by Ocean Gate

. 6 In such a circumstance,

2 Id . at *4.

3 Id

.
4 Id . at *4

- 5

.
5 Id . at * 5.

6 Id . at * 6

.- 4

-

introduction of Cozen attorney work product or even testimony may be properly sought by one party, while Cozen represent s the adverse party. 7 This alignmen t, if realized, would present the “specter of switching sides,” which is one of the key evils Rule 1.9 is intended to prevent. 8 If it reached the jury, the Court cannot predict what inferences the jurors might draw. Either party might potentially be prejudiced. 9 Irrespective of which party would be disadvantaged, and
even if a jury could be entirely shielded from the knowledge that Sun Life was being represented by the selfsame firm that represented Ocean Gate, such proceedings to the Court (not to m ention any right

- minded observer) are infected with the “appearance of duplicity” against which the Rules guard. 10
Justice must be conducted in a manner that hints at not even an appearance of impropriety. 11

7 Id . at * 6

- 7.

8 Id

.
9 Id

. at *6.

10 Id

. at *6

- 7.

11 Id . at * 7. See also Kabi Pharmacia AB v. Alcon Surgical Inc. , 803 F.Supp. 957 , 960 (D. Del. 1992) (“‘The maintenance of the integrity of the legal profession and its high standing in the community are important . . . factors to be considered in determining [whether disqualification is called for

. ] . . . The maintenance of public confidence in the propriety of the conduct of those associated with the administration of justice is so important a consideration that we have held that a court may disqualify an attorney for failing to avoid even the appea rance of impropriety.’ ” ) (quoting IBM v. Levin , 579 F.2d 271, 283 (3d Cir. 1978))

.- 5

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II. T HE T IMELINESS OF THE P ARTIES ’ P OST - D ECISION F ILING s Superior Court Civil Rule 59(e) sets a five

- day deadline for any motion for reargument . Because th at deadline is under 11 days, its calculation excludes
weekends and holidays

. 12 So t he deadline for filing was December 30, 2019

— making S un Life’s filing timely. 13 WSFS did not file a response within the five days permitted by Rule 59(e) , instead filing a response in opposition fully thirty

- one days after Sun Life’s filing. 14 Superior Court Civil Rule 59(e) sets “draconian” time limitations. 15 U ntimel y reargument request s cannot be considered , 16 and untimely responses should be
stricken. 17 WSFS delayed filing its response under the belief that the Motion for

12 Del. Super. Ct. Civ. R. 6(a).

13 State offices were closed by order of the Go vernor on December 24, 2019. And Rule 6(a) expressly includes within its definition of “ ho lidays ” not to be counted “those days provided by statute or appointed by the Governor or the Chief Justice of the State of Delaware.” B ut for this additional day, Sun Life’s reargument deadline would have been Friday December 27, 2019 , and the Court might then have to consider the effect of the Delaware c ourts’ work

- life balance recommendations and orders

. But the deadline became December 30 th , and the Court need not.

14 WSFS Opp’n (D.I. 124).

15 See Pulling v. Original Lincoln Logs, Ltd. , 1990 WL 123008, *1 (Del. Super. Ct. Jul. 26, 1990) (“The time limitations in Rule 59(e) can be rather draconian

. ”).

16 See McDaniel v. Daimler Chrysler Corp. , 860 A.2d 321 , 323 (Del. 2004) (“The reargument period cannot be enlarged.”)

.
17 Tilghman v. Delaware State Univ. , 2012 WL 5551233, *2 (Del. Super. Ct. Oct. 16, 2012). In opposing the Motion to Strike, WSFS relies on precedents refusing to strike a filing under Super. Ct. Civ. R. 12(f), a rule relating to “redundant, immaterial, imper tinent, or scandalous material,” including Pack & Process, Inc. v. Celotex Corp. , 503 A.2d 646, 660 (Del. Super. Ct. 1985); Phillips v. Delaware Power & Light Co. , 194 A.2d 690, 696 (Del. Super. Ct. 1963); and Fowler- 6

-

Reargument was governed by the time limitations for routine motions

. 18 B ut the express provisions of Rule 59(e) displace any more generous limitation s applicable
to other civil motions. 19 Nevertheless, the Court will grant even unopposed requests only if the Court is persuaded that relief is appropriate. 20
III. S TANDARD OF R EVIEW Reargument will usually be denied unless Court has (1) overlooked a controlling precedent or legal principles, or (2) misapprehended the law or facts in a manner affecting the disposition of the underlying matter. 21 To prevail, a party needs
to “demonstrat e newly

- discovered evidence, a change in the law, or manifest injustice.” 22 As our Supreme Court has described, the “manifest purp ose” of motions for reargument under the rules of each Delaware trial court may be “to

v. Mumford , 102 A.2d 535 (Del. Super. C t. 1954). Sun Life moves under Rule 59(e), not Rule 12(f)

.
18 Aff. of Simon E. Fraser ex. A (D.I. 125)

.
19 E.g., Del. Super. Ct. Civ. R. 78(b) (“Responses in opposition to any motion shall be filed no later than four days prior to the hearing on the motion . . .”).

20 Tilghman , 2012 WL 5551233 , at *2

.
21 State v. Brinkley , 132 A.3d 839, 842 (Del. Super. Ct. 2016).

22 Brenner v. Village Green, Inc., 2000 WL 972649, at *1 (Del. Super. Ct. May 23, 2000 ), aff’d , 2000 WL 1587998 ( Del. Oct. 18, 2000).

.- 7

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afford the Trial Court an opportunity t o correct errors prior to appeal” but they aren’t “intended to rehash the arguments already decided by the Court.” 23
IV. A NALYSIS Sun Life in this Rule 59(e) Motion presents no newly discovered evidence

. N or does it reveal controlling law or precedent that w ent overlooked, was misconstrued, or changed during the pendency of the issue . And it certainly
demonstrates no manifest injustice. Instead, Sun Life ’s arguments go to the substance of the underlying Motion, either raising arguments that the Court
consid ered and rejected or pressing new arguments or issues that went un contest ed
earlier.
A. Sun Life Conceded Ocean Gate is a Prior Cozen Client
In its Motion for Reargument, Sun Life disputes the shared corporate identity
of Ocean Gate and 2018 Life Settlement LP (“2018 LS”), the entity with a continuing involvement with the Policy . Sun Life insists that “the only evidence WSFS
submitted regarding 2018 LS’s connection to Ocean Gate was a barebones, conclusory affidavit

. ” 24 This curiously worded qualification sidesteps Sun Life’s concession of the issue in its own filings when resisting Cozen’s disqualification

.

23 Ramon v. Ramon , 963 A.2d 128, 136 (Del. 2008).

24 Sun Life Mot. for Rearg. at 2 (D.I. 123) (italics in original, bold added).- 8

-

Sun Life proffered an affidavit from Cozen’s Conflicts Counsel describing prompt and diligent efforts to detect and mitigate conflicts in the present matter. 25 This includes a computer lock

- out, Conflict Counsel’s collection and custody of physical documents, and the firm’s enactment of an ethics screen. 26 Conf lict
Counsel further noted that

— following a series of na me changes and changes in
g eneral partner

— Ocean Gate is the same entity as 2018 LP. 27
Cozen’s records also indicate that its attorney

- client relationship was with Ocean Gate Capital Management, LP. 28 This may be a different entity than Ocean Gate, but the person who submitted the paperwork forming Ocean Gate was a principal of the ‘Capital Management’ entity. 29 While the connection between Ocean Gate and Ocean Gate Capital Management LP is not entirely clear from the
face of the record, Sun Life described the Conflict Counsel affidavit as establishing “the prior representation of Ocean Gate.” 30 Sun Life claim ed no distinction in

25 Aff. of Douglas B. Fox, Esq. (D.I. 86) [Hereinafter “Fox Aff.”].

26 Id

. ¶¶ 10

- 11.

27 Id

. ¶¶ 14

- 16. See also Delaware Dept. of Transp ortation v . Mactec Engineering and Consulting, Inc., 2011 WL 6400285, at *1 (Del. Super. Ct. Dec. 14, 2011) (“A change of name by a corporation has no more effect upon the identity of a corporation than a change of name by a natural person h as upon the identity of such person

. ”) (quoting 6 F LETCHER C YC

. C ORP . § 2465).

28 Fox Aff. ¶ 14.

29 Id

.
30 Sun Life Br. in Opp’n. at 9 (D.I. 86). In its brief, Sun Life was unambiguous that “Ocean Gate” was the shorthand for “Ocean Gate Life Settlement Program, LP.” Id . at 1.- 9

-

corporate identity between Ocean Gate and Ocean Gate Capital Management, LP

. Sun Life developed no record establishing a true separation between them . No, Sun
Life conced ed prior representation . And Sun Life’s mere wish to now change it s earlier factual concession before the Court doesn’t constitute a new factual development for Rule 59(e) purposes.

B. The interests of Ocean Gate and Sun Life are materially adverse. Sun Life further argues that WSFS failed to demonstrate by clear and convincing evidence that Sun Life’s interests are materially adverse to Ocean Gate’s
because the record , as Sun Life characterizes it, does not demons trate 2018 LS ( the
former Ocean Gate ) retains any beneficial interest in the Policy. Sun Life agrees that Cozen’s representation of Ocean Gate related to the use of the Policy, among hundreds of similar policies, as collateral for loans from the
Californ ia Public Employees’ Retirement System (“CalPERS”). 31 Sun Life further
claims that all beneficial interest now lies with CalPERS

. 32 Even if true, Sun Life’s
characterization of the record still amply demonstrates materially adverse interests
between Ocean Gate and Sun Life. A judicial finding that the Policy is void and worthless potentially exposes Ocean Gate to suit from CalPERS over the

31 Sun Life Mot. for Rearg. at 2 (D.I. 123).

32 Id . at 3.- 10

-

transactions by which Ocean Gate exchanged the Policy for valu e or used it as
collateral

—

the very transactions for which Cozen was retained

. Thus, once again Sun Life itself concedes the predicate facts establishing the
Rule 1.9 conflict.

C. Cozen Work
- Product and Testimony for Ocean Gate is Evidence as to the Validity of the Policy

— a Jury Issue. Sun Life relies heavily on an argument that the jury will never see the material from the Ocean Gate representation, because “[I]t is uncontroverted that they are irrelevant to the primary issue in this case

— whether the Policy was void ab initio as an illegal wager for lack of insurable interest under Illinois law.” 33 As Sun Life sees it, work product produced in 2010 analyzing other life insurance policies Ocean Gate obtained in other jurisdictions has no relevance to whether the Policy was validly
created under Illinois law years earlier

. 34 This is neither uncontrov erted nor necessarily accurate.

33 Sun Life Mot. for Rearg. at 5 (D.I. 123)

.
34 Id

.- 11

-

Sun Life raised this exact argument prior to the Court’s earlier ruling. 35 The
relief a m otion for r eargument seeks is a chance to reargu e
. 36 But that ask to reargue is not itself an opportunity to do so

. 37 As the Court exp lained, in its work Cozen had to consider the procedures
Ocean Gate regularly undertook in obtaining the policies in its portfolios. 38 Precisely
because the material was produced a few years afterwards, Cozen’s work constitutes
evidence of business practic e and habit prevailing at the time the Policy was acquired, admissible to determine how Ocean Gate acted in that acquisition. 39
Sun Life’s argument for voiding the Policy is that its facially legitimate purpose at inception was a “total sham” designed to conceal an investor’s wager. 40 Far from being “uncontroverted” that the material is “irrelevant” to that issue and instead addresses only the equitable remedy of refunding premiums, Cozen’s work

35 See Sun Life Br. in Opp’n. at 16 (D.I. 86) (arguing “The Ocean Gate Matter Is Immaterial” because the Cozen work product “concerned whether as a general matter the laws of several states (excluding Illinois), as of October 15, 2010, prohibited the Ocean Gate Program’s general practice”) (italics in original)

.
36 See Del. Super. Ct. Civ. R. 59(e) (“The Court will determine from the motion and answer whether reargument will be granted.”).

37 Schmidt v. Washington Newspaper Pub. Co. , LLC, 2019 WL 70 00039, *1 (Del. Super. Ct. Dec. 20, 2019).

38 2019 WL 6998156, at *6

.
39 Id . n. 61 ( c iting Delaware Rule of Evidence 406).

40 Amended Compl. ¶ 37

- 38.- 12

-

goes to the very heart of the case , evidencing how the Policy was obtained by documenting (and approving of) Ocean Gate’s habitual business behavior at the
relevant time

. Likewise, Sun Life’s speculation that WSFS may not seek introduction of the Cozen material is unavailing. WSFS raised the possibili ty of Cozen work product and attorney testimony becoming evidence in its opening brief, albeit noting that they m ight first have to obtain a waiver of privilege. 41 Sun Life countered only that the Cozen work product was irrelevant , leaving unchallenged WSF S ’s intent to seek
introduction. 42 A losing party cannot, when moving to r eargue, ret reat to an issue earlier raised by the victor when that same issue was earlier ignored and uncontested by the vanquished

. 43

D. Sun Life’s Proposed Alternative Remedy is Nonresponsive. Sun Life argues that the jury could be shielded from any appearance of Cozen standing on both sides of the case by waiting to see if WSFS actually succeeds in obtaining introduction of the Cozen material, and then bifurcating the issue of unjust

41 WSFS Mot. to Disqualify Op. Br. at 28

- 29 (D.I. 54).

42 Sun Life Br. in Opp’n. at 16

- 18 (D.I. 86)

43 Tilghman , 2012 WL 5551233 , at *3.- 13

-

enrichment into a separate trial with conflict counsel. 44 This propos al fails to grapple with the problems the Court identified in Cozen’s representation in two ways. First, Sun Life’s theory fails to recognize that Cozen’s work for Ocean G ate
is fact evidence as to the validity of the Policy itself. Cozen obtained confidential information from Ocean Gate about its business practices and habits. Those habits are evidence for the jury to consider as to whether Ocean Gate acted as a bona fid e purchaser/assignee of the Policy, or behaved as initial procurer of the Policy using
the insured as a sham and proxy. Bifurcation cannot ameliorate this danger

. Moreover, even if the Court was able to craft another remedy by which to shield the jury from the combination of knowledge of Cozen’s prior involvement with Ocean Gate and current involvement with Sun Life for the trial’s duration, it would be unavailing. T he intolerable specter of swi tching sides here would still
remain ; t hat hazard goes to the heart of the legitimacy of the adjudicatory process
and the legal profession.

E. Sun Life’s Representations (New and Other) in its Motion to Strike Will Not Be Considered. In its most recent filing, Sun Life represents to the Court that “it has recently been brought to the attention of counsel for Sun Life” that that the material from Cozen’s prior representation of Ocean Gate may no longer be protected by

44 Sun Life Mot. for Rearg. at 6 (D.I. 123).- 14

-

privilege. 45 Rule 59(e) does not provide for a reply ( or any other supplement) by the

movant after the initial five

- day window has closed. A n initial timely filing does not keep the window for positing new grounds for reargument open indefinitely.
The novel contents of Su n Life’s motion to strike are time barred.
Sun Life

—

while arguing WSFS’s answer should be wholly stricken as untimely

— emphasizes what it characterizes as WSFS’s failure therein to dispute the
substance of the arguments Sun Life made in its m otion to rearg u e
. 46 Arguments
that WSFS must concede were raised and rejected by the Court at the Motion to Disqualify. 47 But Rule 59(e) does not obligate WSFS to recapitulate its earlier substantive pre

- decision argument , n or indeed to respond at all to the reargument
motion

. 48 And failure to do so will not be viewed as a concession that reargument should be granted. 49

45 Sun Life Mot. to Strike at 4

- 5 (D.I. 125).

46 Id . at 3

- 4.

47 Id . at 6.

48 See Del. Super. Ct. Civ. R. 59(e) (“ . . . the opposing party may serve and file a brief answer to each ground asserted in the motion.”) (emphasis added); Tilghman , 2012 WL 5551233, at *2.

49 Tilghman , 2012 WL 5551233, at *2 (“[E] ven if Plaintiff ’ s Motion for Reargument is, as he contends, ‘unopposed,’ this Court has a responsibility to review, and not simply rubber stamp, Plaintiff ’ s motion. The Court ’ s decision to grant reargument remains discretionary. ”).- 15

-

V. C ONCLUSION Cozen in its prior representation of Ocean G ate collected fact evidence relevant to the central questions of this litigation. Cozen work product and even attorney testimony are potentially pivotal evidence affecting every count of both the Complaint and Counterclaims. At the same time, Cozen represen ts Sun Life , now arguing that its former client Ocean G ate was illegally wagering on the lives of
others

. No individual Cozen attorney has participated in both matters. In every instance, Cozen’s attorneys individually and the firm as a whole promptly
d emonstrated the vigilance appropriate to the profession, and undertook precisely those prophylactic actions necessary to safeguard the confidences of their current and past clients. Nevertheless, and without any fault to the firm or its attorneys, the st rong factual relevance of this prior representation is incompatible with Cozen’s continued representation of Sun Life for the reasons set forth in the Court’s prior Memorandum Opinion and Order.
IT IS SO ORDERED.
/s/ Paul R. Wallace P aul R. Wallace, Judge Original to Prothonotary

cc: All Counsel via File and Serve