Court Opinion

ID: 2782885
Source: CourtListenerOpinion
Date Created: 2015-02-27 16:01:03.594094+00
Date Added: 2024-06-11T11:02:40.015295
License: Public Domain

Case: 13-12135      Date Filed: 02/27/2015   Page: 1 of 21

                                                                           [PUBLISH]

                IN THE UNITED STATES COURT OF APPEALS

                         FOR THE ELEVENTH CIRCUIT
                           ________________________

                                    No. 13-12135
                              ________________________

                        D.C. Docket No. 9:10-cv-80804-JIC

PRUCO LIFE INSURANCE COMPANY,

                                        Plaintiff-Counter Defendant-Appellee,

                                        versus

WELLS FARGO BANK, N.A.,
as securities intermediary,

                                         Defendant-Counter Claimant-Appellant.

                              ________________________

                                    No. 13-15859
                              ________________________

                       D.C. Docket No. 1:12-cv-24441-FAM

PRUCO LIFE INSURANCE COMPANY,

                                                                  Plaintiff-Appellant,

                                        versus

U.S. BANK, N.A.,
as securities intermediary,
               Case: 13-12135       Date Filed: 02/27/2015      Page: 2 of 21

                                                                    Defendant-Appellee.

                              ________________________

                     Appeals from the United States District Court
                         for the Southern District of Florida
                            ________________________

                                   (February 27, 2015)

Before TJOFLAT and JULIE CARNES, Circuit Judges, and DUBOSE, ∗ District
Judge.

JULIE CARNES, Circuit Judge:

       CERTIFICATION FROM THE UNITED STATES COURT OF
       APPEALS FOR THE ELEVENTH CIRCUIT TO THE SUPREME
       COURT OF FLORIDA PURSUANT TO FLORIDA
       CONSTITUTION ARTICLE V, § 3(B)(6).

       TO THE SUPREME COURT OF FLORIDA AND ITS HONORABLE
       JUSTICES:

       These consolidated appeals require us to determine the validity of two

individuals’ Stranger-Originated Life Insurance (“STOLI”) policies that the issuing

insurance company sought to have invalidated several years after their issuance. In

support of the insurance company’s effort is a Florida statute that requires a person

who procures life insurance to have an insurable interest in the life of the insured at

       ∗
       Honorable Kristi K. DuBose, United States District Judge for the Southern District of
Alabama, sitting by designation.
                                           2
                 Case: 13-12135           Date Filed: 02/27/2015      Page: 3 of 21

the inception of the policy. 1 The insurance company contends that, as with most

STOLI policies, there was no such interest when these policies were issued, which

the company says entitles it to have the policies declared void. Undermining the

insurance company’s argument, however, is another Florida statute requiring all

insurance policies to include a clause providing that the policy is incontestable

after it has been “in force” for two years. 2 The policies at issue in this

consolidated appeal contained such a clause, and the insurance company clearly

failed to contest the policies within that two-year window.

       Thus, the question before this Court is which statute controls. Stated another

way, when these two statutes collide, does Florida’s interest in prohibiting the

issuance of insurance policies purchased by an individual with no insurable interest

trump its interest in requiring insurance companies to determine, within a

designated period of time, whether a particular policy is subject to that or any other

challenge? 3 Florida law does not definitively answer these questions, and federal

district courts have disagreed when asked how to interpret the above Florida

       1
           Fla. Stat. § 627.404 (2008).
       2
           Fla. Stat. § 627.455 (1982).
       3
          If the answer to this question is that the Florida statute requiring an insurable interest in
the insured trumps the statute requiring an insurer to challenge a policy’s validity within two
years of issuance, a second question arises as to the Berger policy, discussed infra. That
question is whether § 627.404, the insurable interest statute, is violated when the individual who
procures the insurance has the required insurable interest at the time of issuance, but nonetheless
has procured the policy in bad faith.
                                                   3
               Case: 13-12135       Date Filed: 02/27/2015       Page: 4 of 21

statutes. Accordingly, certification to the Florida Supreme Court is warranted

pursuant to Florida Constitution Article V, § 3(b)(6).

I.     BACKGROUND

       The two cases before us involve three STOLI policies. Wells Fargo, N.A.,

the present owner of a STOLI policy on the life of Arlene Berger, appeals a district

court’s final judgment, entered in favor of Pruco Life Insurance Company,

invalidating this policy. As to the second appeal before us, Pruco has appealed a

different district court’s order dismissing its claim seeking the invalidation of two

STOLI policies issued on the life of Rosalind Guild.

       A.     The Berger Policy

       Throughout 2005 and 2006, Arlene and Richard Berger attended financial

planning seminars at which they were told that they could obtain “free life

insurance.” The Bergers talked with insurance salesman Stephen Brasner, who

arranged for them to participate in his STOLI scheme 4 by obtaining (1) financing

for the payment of premiums from a third-party lender and (2) a fraudulent

financial report listing Arlene Berger’s net worth as $15.9 million and her annual

income as $245,000. Brasner then applied to Pruco for a $10 million insurance

       4
          For a fuller explanation of the workings of STOLI transactions, see PHL Variable Ins.
Co. v. Bank of Utah, Civ. No. 12-1256 ADM/JJK, 2013 WL 6190345, at *1 (D. Minn. Nov. 27,
2013) and Susan Lorde Martin, Betting on the Lives of Strangers: Life Settlements, STOLI, and
Securitization, 13 U. Pa. J. Bus. L. 173, 187–88 (Fall 2010).
                                                 4
               Case: 13-12135    Date Filed: 02/27/2015   Page: 5 of 21

policy on the life of Arlene Berger, naming her husband Richard as beneficiary.

Pruco issued the policy on April 27, 2006.

        Brasner subsequently established an irrevocable trust to hold the Berger

policy. The trust named Wilmington Trust Company as trustee and Richard Berger

as co-trustee and beneficial owner. In conjunction with the financing agreement

and the creation of the trust, Arlene Berger granted the third-party lender a power

of attorney and the authority to obtain her medical records.

        Despite their signed authorizations, the Bergers claim not to have realized

the implications of these actions. Richard Berger was shocked when he discovered

that Arlene Berger had granted an irrevocable power of attorney pursuant to the

financing agreement. Moreover, according to the Bergers, they neither needed nor

wanted life insurance when they joined Brasner’s STOLI scheme, did not intend to

pay any of the premiums, never had any intention of controlling or keeping any

insurance procured through Brasner, and only accepted the policy because it was

free.

        At some point, ownership of the Berger policy was transferred to the trust.

For their participation in this insurance policy transaction, the Bergers received a

payment of nearly $173,000 from Brasner in May of 2008. Then, in September of

2008, Arlene Berger instructed Wilmington Trust to relinquish all her interests and

                                           5
                Case: 13-12135       Date Filed: 02/27/2015       Page: 6 of 21

rights under the policy to the third-party lender in satisfaction of the financing

agreement. The policy was ultimately sold to a client of Wells Fargo.

       On July 9, 2010, approximately four years after it had issued the Berger

policy, Pruco filed suit against Wells Fargo asserting that the policy was void ab

initio for lack of an insurable interest, as required by § 627.404. The district court

granted summary judgment to Pruco on its claim. Adopting its previous analysis

of this issue in an order denying Wells Fargo’s motion to dismiss, the court held

that there was no valid insurable interest in the life of the insured by the party

procuring the insurance, 5 meaning that the policy ran afoul of Florida Statute §

627.404’s requirement of such an interest at the time an insurance policy is issued.

See Pruco Life Ins. Co. v. Brasner, No. 10-80804-CIV, 2011 WL 134056, at *3–6

(S.D. Fla. Jan. 7, 2011) (Cohn, J.). From this conclusion, the court reasoned that

the policy was void ab initio and therefore the incontestability provision of §

627.455 did not bar Pruco’s claim, asserted more than two years after issuance of

the policy.

       5
           The question whether the individual procuring the insurance for Mrs. Berger had the
requisite “insurable interest” in her life was actually a bit more complicated than described
above, and the factual wrinkle creating that complication will be addressed in the second
question to the Florida Supreme Court. But the district court did ultimately hold that the
procurer of the insurance did not have the necessary interest, which therefore rendered the policy
void ab initio.
                                                   6
              Case: 13-12135     Date Filed: 02/27/2015    Page: 7 of 21

      B.     The Guild Policy

      In September of 2005, insurance broker Gary Richardson persuaded

octogenarian Rosalind Guild to participate in a $10 million STOLI scheme by

offering her free life insurance and monetary compensation. To implement the

scheme, Richardson established an irrevocable trust to hold the Guild policies.

Richardson then submitted two life insurance applications to Pruco, each seeking a

$5 million policy and listing Guild’s daughter as primary beneficiary and the trust

as contingent beneficiary. It was understood that Guild’s daughter would not

receive the death benefit from the policies and that any beneficial interest would

eventually be sold to an investor with no insurable interest in Ms. Guild’s life. In

support of the applications, Richardson submitted a fraudulent financial statement

portraying Guild’s net worth as $19.2 million and annual income as $345,000.

      Pruco issued the Guild policies on October 21, 2005. A third party paid over

$2 million in premiums over the course of the next few years. Then, on February

13, 2008, Pruco received a request to change the ownership and beneficiary of the

policies from the Guild Trust to securities intermediary, U.S. Bank, N.A., in

connection with the sale of the beneficial interest in the policies to an investor.

Pruco made the requested change.

                                           7
              Case: 13-12135      Date Filed: 02/27/2015    Page: 8 of 21

      On December 17, 2012, approximately seven years after it had issued the

Guild policies and almost five years after it had approved the change in beneficiary

and ownership to U.S. Bank, Pruco filed suit against U.S. Bank asserting that the

policies were void ab initio under § 627.404. U.S. Bank filed a motion to dismiss

Pruco’s complaint. Analyzing the interplay between the two Florida statutes

differently than did the district court in the Berger case, the district court in Guild

found that, because Pruco had run afoul of the two-year time limit provision to

contest the policy, Pruco’s claim was barred. Accordingly, the district court

granted U.S. Bank’s motion to dismiss Pruco’s claim. See Pruco Life Ins. Co. v.

U.S. Bank, No. 12-24441-CIV, 2013 WL 4496506, at *2, *5 (S.D. Fla. Aug. 20,

2013) (Moreno, J.).

II.   DISCUSSION

      A.     Whether Pruco’s Delay Bars Its Claim to Have the Insurance
             Policies Here Declared Void

      Pruco argues that the Berger and Guild life insurance policies should be

declared void because the purchasers of these policies lacked an insurable interest

in the persons insured. Pruco relies on Florida Statute § 627.404 (the “insurable

interest statute”), which bars the purchase of a life insurance policy on another

individual unless the benefits of the insurance contract are payable to the insured

individual, his or her personal representative, or a person having an insurable
                                            8
                 Case: 13-12135        Date Filed: 02/27/2015    Page: 9 of 21

interest in the insured individual. 6 Section 627.404 defines “insurable interest” to

include “the life, body, and health of another person to whom the individual is

closely related by blood or by law and in whom the individual has a substantial

interest engendered by love and affection.” Fla. Stat. § 627.404(2)(b)(2). Because

the purchasers of the policies here did not have an insurable interest, as defined by

statute, Pruco says the policies must be invalidated.

       The present owners of the Berger and Guild policies (Wells Fargo and U.S.

Bank) respond that, even if Pruco has a winning argument as to the lack of an

“insurable interest,” Pruco waited too long to make that argument and therefore its

request to invalidate the policies should be denied. Like Pruco, Wells Fargo and

U.S. Bank have also found a law that supports their position: Florida Statute §

627.455 (“the incontestability statute”). Section 627.455 states that “[e]very

insurance contract shall provide that the policy shall be incontestable after it has

been in force during the lifetime of the insured for a period of 2 years from its date

       6
           Section 627.404 provides:

       Any individual of legal capacity may procure or effect an insurance contract on
       his or her own life or body for the benefit of any person, but no person shall
       procure or cause to be procured or effected an insurance contract on the life or
       body of another individual unless the benefits under such contract are payable to
       the individual insured or his or her personal representatives, or to any person
       having, at the time such contract was made, an insurable interest in the individual
       insured. The insurable interest need not exist after the inception date of coverage
       under the contract.
Fla. Stat. § 627.404(1).
                                                9
               Case: 13-12135       Date Filed: 02/27/2015        Page: 10 of 21

of issue[.]” Fla. Stat. § 627.455.7 Here, Pruco waited more than four years and

seven years to challenge the Berger and Guild policies, respectively, based on the

absence of an insurable interest at the time of the policies’ issuance: periods of

time that put them well outside the two-year contestability period. That being so,

the present owners of the policies argue that Pruco’s tardiness dooms its efforts to

undo these insurance contracts, on which it had been readily accepting large

premium payments without complaint for several years.

       The question before this Court, then, is which of the above two statutes

controls these disputes. That the two district courts in the consolidated appeal

before us reached different conclusions on the same question suggests that the

answer is not clear cut, and this has proven to be the case. The district court that

ruled on the validity of the Berger policy (hereinafter, “the Berger court”) held that

the STOLI policy at issue was void ab initio because it violated § 627.404, the

insured-interest statute. A contract that is void ab initio is a contract that never

existed. The district court thus reasoned that the two-year incontestability

provision required by § 627.455 never took effect because the incontestability

period applies only to an insurance policy that has been “in force,” and, with no

party having a valid insurable interest, the Berger insurance policy was never “in
       7
          Notably, § 627.455 does not itself impose an incontestability period, but rather
mandates that every policy include a clause to that effect. The Berger and Guild policies all
contain such a clause, in conformity with the statute.
                                                10
             Case: 13-12135     Date Filed: 02/27/2015    Page: 11 of 21

force.” For that reason, the court concluded that the two-year contestability period

was not an obstacle to Pruco’s effort to invalidate the insurance policies. Brasner,

2011 WL 134056, at *4–6.

      The district court that adjudicated the validity of the Guild policy (“the

Guild court”) took a different view of the interplay between the two relevant

statutes, concluding that Pruco’s tardy insurable-interest claim under § 627.404

was barred by the incontestability provision called for by § 627.455. See U.S.

Bank, 2013 WL 4496506, at *2, *5. The Guild court likened § 627.455 to a statute

of limitations that applies regardless of the basis of any challenge to the validity of

the policy. Id. at *3.

      As to the relative merits of the two courts’ analyses, there are arguments to

be made on both sides of the issue. Were we adding up the number of courts that

favor one or the other position, the Berger court would find itself aligned with the

majority view on this issue: that a statute requiring an insurable interest at a

policy’s issuance will take precedence over a statute rendering a policy immune

from any challenges by the insurer after a designated period of time. See W.

Reserve Life Assur. Co. of Ohio v. ADM Assocs., LLC, 737 F.3d 135, 143 (1st Cir.

2013); Susan Lorde Martin, Life Settlements: The Death Wish Industry, 64

Syracuse L. Rev. 91, 104 (2014). Answering a certified question from a federal

                                          11
             Case: 13-12135      Date Filed: 02/27/2015    Page: 12 of 21

district court, the Delaware Supreme Court identified ten other states whose courts

had held that a life insurance policy lacking an insurable interest was a void and

illegal contract that could not be resurrected by an insurer’s failure to challenge the

policy within the statutory contestability period. PHL Variable Ins. Co. v. Price

Dawe 2006 Ins. Trust ex rel. Christiana Bank & Trust Co., 28 A.3d 1059, 1067

n.18 (Del. 2011) (collecting cases). The court interpreted Delaware law as being

aligned with this majority view. Id. at 1068–76.

      The Guild court, however, followed the minority position on this issue,

which holds that the lack of an insurable interest renders an insurance policy

merely voidable, not void ab initio. As this thinking goes, because the policy

holder of a voidable insurance contract can, through an applicable defense,

successfully resist an insurer’s effort to invalidate the policy, a policy lacking a

purchaser with an insurable interest similarly cannot be invalidated if the insurer

has failed to make its challenge within the time period set out in an incontestability

clause. W. Reserve Life Assur. Co. of Ohio, 737 F.3d at 143. At least two states

follow this minority position: New York and Michigan. See New England Mut.

Life Ins. Co. v. Caruso, 535 N.E.2d 270, 273–75 (N.Y. 1989); Bogacki v. Great-

West Life Assur. Co., 234 N.W. 865, 865–67 (Mich. 1931); cf. Equitable Life

Assur. Soc. of U.S. v. Poe, 143 F.3d 1013, 1019–20 (6th Cir. 2013)

                                           12
               Case: 13-12135        Date Filed: 02/27/2015        Page: 13 of 21

(acknowledging that Michigan strictly construes incontestability clauses). Stated

simply, the minority view holds that an incontestability clause applies, no matter

the basis for an insurer’s challenge to the validity of the policy.

       As Pruco acknowledges, there are no cases decided by Florida courts that

specifically address whether an incontestable provision bars a tardy challenge to

the validity of a policy considered to be void ab initio because it lacked an

insurable interest at its inception.8 Breaking down the analysis of each district

court decision before us to determine what support under Florida law each might

have, the Berger court noted that Florida law embraces both the public policy that

prohibits an insurance company from contesting a policy after the contestability

period expires as well as the public policy that an insurable interest is necessary for

an insurance policy to be valid. Brasner, 2011 WL 134056, at *6. The court also

       8
          Other than the two district court cases now on review, the parties identify three other
federal district court cases that touch on this precise question of Florida law. See PHL Variable
Ins. Co. v. Hudson Valley, EPL, LLC, Civ. Action No. 13-1562-SLR-SRF, 2014 WL 4635454, at
*4–5 (D. Del. Sept. 16, 2014) (Fallon, Mag. J.) (interpreting Florida law to require invalidation
of a policy, based on its lack of an insurable interest and notwithstanding the insurer’s failure to
comply with the time limits for challenge found in an incontestability clause) adopted Civ. No.
13-1562-SLR-SRF, 2014 WL 5088854 (D. Del. Oct. 8, 2014) (Robinson, J.); The John Hancock
Life Ins. Co. v. Rubenstein, Case No. 09-21741-Civ-Ungaro, at 5 (S.D. Fla. Aug. 31, 2009)
(Ungaro, J.) (same); Sciaretta v. Lincoln Nat’l Life Ins. Co., 899 F. Supp. 2d 1318, 1328 (S.D.
Fla. 2012) (Middlebrooks, J.) (dictum to the same effect).
        While theses decision support the majority (and Pruco’s) position, they offer no
additional analysis other than that offered by the Berger court: because a policy purchased
without an insurable interest violates public policy and is therefore void ab initio, the policy
never existed and hence an incontestability provision cannot apply to bar the insurer’s request
that the policy be invalidated.
                                                 13
              Case: 13-12135     Date Filed: 02/27/2015    Page: 14 of 21

recognized that neither party before it had cited any binding caselaw requiring the

court “to reconcile one policy over the other.” Id. Finally, the court acknowledged

the reasoning behind the minority position, which holds that an incontestability

clause trumps a requirement of an insurable interest. That is, the minority position

encourages “insurers to timely investigate suspicious circumstances, protects

policyholders, and prevent[s] insures from receiving a windfall years down the

road.” Id. (alteration in original). Yet, the Berger court also noted that, under the

minority view, “if bad actors can disguise their fraud for two years, their hands are

washed clean . . . and they are free to collect on their ill-gotten gains.” Id. (citing

Settlement Funding, LLC v. AXA Equitable Life Ins. Co., 06 CV 5743(HB), 2010

WL 3825735, at *5 (S.D.N.Y. Sept. 30, 2010)).

      Choosing between the two competing positions on this question, as it was

required to do, the Berger court decided to follow the majority view: that because

a policy without an insurable interest was void ab initio, the incontestability clause

never took effect, and therefore it never expired. Brasner, 2011 WL 134056, at *6.

In lining up with the minority view, however, the Guild court noted that an

incontestability clause works to the mutual advantage of the insurer and the insured

by giving the insured a guaranty against expensive litigation and giving the

insurance company a reasonable period of time to ascertain whether the insurance

                                           14
             Case: 13-12135     Date Filed: 02/27/2015    Page: 15 of 21

contract is subject to any valid challenges. U.S. Bank, 2013 WL 4496506, at *3

(citing Allstate Life Ins. Co. v. Miller, 424 F.3d 1113, 1115–16 (11th Cir. 2005)

(because Florida courts have “uniformly held” that § 627.455 bars an insurer from

belatedly contesting a policy based on alleged fraudulent misrepresentations in the

insurance application, an insured’s use of an imposter to undergo the required

medical examination constituted fraud that rendered the policy voidable, not void

ab initio, thereby subjecting the insurance company to the two-year contestability

period)).

      Characterizing the incontestability clause as a de facto statute of limitations,

the Guild court cited several Florida appellate decisions so applying the clause’s

time limitation to bar an insurer’s challenge based on claims of fraud from

misrepresenting the identity of the insured, the fact of death, and the absence of

pre-existing conditions. Id. The Guild court could find little distinction between

the fraud that underlay the misrepresentations in the case before it

(misrepresentations as to the identity of the insurable interest and the financial

resources of the named insured) and the fraud at issue in the above-cited Florida

cases. Id. at *5. In other words, “[i]n a STOLI context, a lack of insurable interest

may not be divided from the fraud that created it.” Id. For these reasons, the Guild

                                          15
               Case: 13-12135       Date Filed: 02/27/2015      Page: 16 of 21

court concluded that the Guild life insurance policies could not be invalidated

because Pruco had waited too long to make its challenge.

       Because there is no controlling Florida precedent on whether the

incontestability clause can bar a challenge to the validity of an insurance policy

lacking the necessary insurable interest at the time of issuance, we find it necessary

to certify this question to the Florida Supreme Court, as set out below.

       B.     Whether An Insurable Interest in the Life of Mrs. Berger
              Existed at the Inception of Her Life Insurance Policy

       If the Florida Supreme Court determines that Pruco’s challenge to the

validity of the Berger and Guild policies is barred by the incontestability clause

mandated by § 627.455, then we pose no additional question for their decision. If,

however, the Florida Supreme Court decides that, notwithstanding Pruco’s failure

to contest the policies within two years of their issuance, Pruco may still seek to

invalidate those policies as being non-compliant with § 627.404, then we must ask

the court one more question regarding the validity of the Berger policy. 9

       Specifically, as set out above, Florida Statute § 627.404(1) permits a third

party to procure an insurance policy on the life of another so long as the benefits

under that policy are payable either to the named insured, her personal

       9
          There has been no briefing on whether the Guild policy potentially satisfied the
“insurable interest” requirement at the time of issuance. Further, at oral argument, counsel for
Wells Fargo and U.S. Bank noted that the appeal concerning the Guild policy concerned only the
issue of incontestability.
                                                 16
             Case: 13-12135       Date Filed: 02/27/2015   Page: 17 of 21

representative, or a person who, at the time the insurance contract is made, has an

“insurable interest” in the insured individual. Further, an insurable interest is not

required to exist after the “inception date of coverage.” Fla. Stat. § 627.404(1).

One can be said to have an “insurable interest” in the life of another individual to

whom one is closely related by blood or by law and in whom one has a substantial

interest engendered by love and affection. Fla. Stat. § 627.404(2)(b).

      Although the Berger policy was eventually assigned to Wells Fargo, Mrs.

Berger was listed as the owner and Mr. Berger was named as the beneficiary at its

inception. Clearly, both of those individuals had an insurable interest in Mrs.

Berger’s life. Thus, Wells Fargo argued before the Berger court that the insurance

contract complied with § 627.404’s requirement that there be an insurable interest

at the inception of the policy.

      The Berger court rejected that argument. The court acknowledged that

Florida law permits a life insurance policy to be assigned to an entity with no

insurable interest in the life of the insured. Yet, citing authority from other federal

Southern District of Florida cases interpreting Florida law, the court held that such

assignments must be made in good faith, and not as sham assignments seeking to

circumvent Florida’s law prohibiting a wagering contract on the life of another, as

embodied in § 627.404. If the insurance policy were procured with the intent of

                                           17
                Case: 13-12135   Date Filed: 02/27/2015    Page: 18 of 21

making such sham assignments, the policy would be deemed to have been obtained

in bad faith.

      In identifying the applicable standard for determining whether a policy has

been procured in bad faith, the Berger court held that bad faith is established if the

policy was obtained with the intent that it would later be assigned to an entity or

person with no insurable interest in the life of the insured. Such an intent could be

proven by evidence of: (1) a preexisting agreement or understanding that the policy

would be assigned to one without an insurable interest; (2) the payment of

premiums by someone other than the insured, and particularly by the assignee; and

(3) the lack of a risk of actual future loss. The Berger court’s authority for this test

was derived from other federal district court decisions.

      Ultimately, the Berger court concluded that the circumstances surrounding

the acquisition of the insurance policy on Mrs. Berger’s life supported a conclusion

that the policy was not obtained in good faith. The court noted that the Bergers

never intended to keep the policy and always knew that ownership would

eventually be transferred to a third party who would receive the benefits should

Mrs. Berger die after her two-year “free insurance period.” In addition, the

Bergers never paid, nor intended to pay, any premium for the policy, and Brasner,

                                           18
             Case: 13-12135     Date Filed: 02/27/2015    Page: 19 of 21

the insurance salesman, had created an “elaborate scheme” to make it look as if

Mrs. Berger was paying the premiums.

      Wells Fargo argues that Florida law does not support the importation of a

good faith requirement into the insurable interest statute. It notes that § 627.404

only requires an insurable interest “at the moment of the policy’s inception.” Fla.

Stat. § 627.404(1). Further, Florida’s assignability statute generally permits the

assignment of an insurance policy to a third party with no insurable interest. Fla.

Stat. § 627.422 (1982). In support of this argument, Wells Fargo cites decisions

from courts in other states that have refused to graft a good faith requirement onto

similar statutory language.

      Finally, even if § 627.404 contains an implied good faith requirement

subject to the standards articulated by the Berger court, there is one potential

factual wrinkle in this case. That is, assuming the accuracy of the Berger court’s

assumption--that, had Mrs. Berger died within that initial two-year period, her

husband, the beneficiary of the policy, would have received the $10 million--does

this fact undermine an argument that an insurable interest was lacking at the

inception of the policy?

      In short, the parties cite no controlling Florida legal authority concerning

whether § 627.404 contains an implied good faith requirement and whether under

                                          19
             Case: 13-12135     Date Filed: 02/27/2015    Page: 20 of 21

the facts of the cases before us, such a requirement would have been satisfied.

Accordingly, we find ourselves in need of guidance on this point from the Florida

Supreme Court.

III.   QUESTIONS TO BE CERTIFIED TO THE FLORIDA SUPREME
       COURT

       “When substantial doubt exists about the answer to a material state law

question upon which the case turns,” our caselaw indicates that it is appropriate to

certify the particular question to the state supreme court in order “to avoid making

unnecessary state law guesses and to offer the state court the opportunity to

explicate state law.” Forgione v. Dennis Pirtie Agency, Inc., 93 F.3d 758, 761

(11th Cir. 1996). Accord Union Planters Bank, N.A. v. New York, 436 F.3d 1305,

1306 (11th Cir. 2006) (certification of a dispositive question that is unanswered by

the pertinent state law enables the federal appellate court “to avoid making

unnecessary Erie guesses and to offer the state court the opportunity to interpret or

change existing law”) (internal quotation marks omitted). Such doubt exists here

on questions that are likely to recur and that are dispositive of the appeals before

us. Further, the Florida Constitution permits this Court to certify a question to the

Florida Supreme Court if it “is determinative of the cause and for which there is no

controlling precedent of the supreme court of Florida.” Fla. Const. art. V, §

3(b)(6).
                                          20
             Case: 13-12135      Date Filed: 02/27/2015    Page: 21 of 21

      As there is no controlling precedent from the Supreme Court of Florida, we

respectfully certify the following questions for a determination of state law:

      1. Can a party challenge an insurance policy as being void ab initio
         for lack of the insurable interest required by Fla. Stat. § 627.404 if
         that challenge is made after expiration of the two-year
         contestability period mandated by Fla. Stat. § 627.455?

      2. Assuming that a party can do so, does Fla. Stat. § 627.404 require
         that an individual with the required insurable interest also procure
         the insurance policy in good faith?

      The phrasing of the above questions should not restrict the Florida Supreme

Court’s consideration of the issues presented in these appeals. In order to assist in

its consideration of the issues, the entire records, along with the briefs of the

parties, shall be transmitted to the Florida Supreme Court. Intervest Const. of Jax,

Inc. v. Gen. Fid. Ins. Co., 662 F.3d 1328, 1333 (11th Cir. 2011).

QUESTIONS CERTIFIED.

                                           21