Court Opinion

ID: 805153
Source: CourtListenerOpinion
Date Created: 2012-07-25 14:23:52+00
Date Added: 2024-06-11T18:00:14.787179
License: Public Domain

Case: 11-12611       Date Filed: 07/25/2012      Page: 1 of 4

                                                                      [DO NOT PUBLISH]

                 IN THE UNITED STATES COURT OF APPEALS

                           FOR THE ELEVENTH CIRCUIT
                          _____________________________

                                   No. 11-12611
                          _____________________________

                         D. C. Docket No. 1:07-cv-01541-RWS

LIFE RECEIVABLES IRELAND LIMITED,
                                                                        Plaintiff-Appellant,

       versus

BABCOCK & BROWN INVESTMENT
MANAGEMENT PARTNERS LP,
BABCOCK & BROWN LP,
LIFE SETTLEMENT CORPORATION, d.b.a.
Peachtree Life Settlements, et al.

                                                                     Defendants-Appellees.

                  _________________________________________

                     Appeal from the United States District Court
                        for the Northern District of Georgia
                  _________________________________________
                                   (July 25, 2012)

Before DUBINA, Chief Judge, EDMONDSON, Circuit Judge, and GOLDBERG,*
Judge.

   *
    Honorable Richard W. Goldberg, United State Court of International Trade Judge, sitting
by designation.
              Case: 11-12611     Date Filed: 07/25/2012     Page: 2 of 4

PER CURIAM:

      This case involves the sale between sophisticated parties of an investment

vehicle with returns tied to certain life insurance contracts: contracts insuring the

lives of persons who are not parties to this action. Briefly stated, the vehicle

owned life insurance contracts purchased from people, paid the premiums on the

contracts, and owned rights to the death benefits in the contracts. The investment

vehicle’s return varied depending upon when the insured persons died: the longer

the insured persons lived the lower the vehicle’s return.

      After a long diligence process, Plaintiff Life Receivables Ireland Limited

(“Plaintiff”) purchased the investment vehicle for several million dollars in June

2005. The investment vehicle was created and sold by related corporate entities of

Life Settlement Corporation d/b/a Peachtree Life Settlements (“Peachtree”) and

Babcock & Brown LP (“Babcock”) (together, “Defendants”).

      In creating the vehicle, Defendants obtained contingent cost insurance

policies (“CCI Policies”) from Goshawk Dedicated Limited (“Goshawk”) that

helped limit the variability of the vehicle’s returns by guaranteeing payment of

death benefits to the vehicle within a certain number of years past each covered

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              Case: 11-12611     Date Filed: 07/25/2012    Page: 3 of 4

individual’s actuarial life expectancy, even if that person had not died by then. On

their face, the CCI Policies included an absolute obligation for Goshawk to pay

the contractually-mandated claims. Goshawk’s only opportunity to set-off or

lower its burden under the CCI Policies was to seek indemnification later from

Peachtree through arbitration.

      Plaintiff alleges that, during the diligence process -- before the pertinent sale

-- Goshawk met with Peachtree and told Peachtree that Goshawk would refuse its

obligations under the CCI Policies, unless Defendants agreed to a discounted

commutation of Goshawk’s obligations. The Defendants executed no

commutation and disclosed nothing about this meeting to Plaintiff before the sale.

Later, in July 2005, Goshawk did in fact refuse to pay the first policy claim and

disavowed its obligations on the grounds of actuarial fraud.

      After settling with Goshawk, Plaintiff brought suit against Defendants

alleging federal securities law violations and violations of Georgia common law

based on Defendants’ failure to disclose Goshawk’s threat. The district court

dismissed the complaint with prejudice based in part on its determination that

Defendants had no duty to disclose the contents of the meeting. Plaintiff appealed.

      A defendant is liable for omitting to state a material fact only when we --

after considering several factors -- determine that the defendant had an affirmative

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                Case: 11-12611       Date Filed: 07/25/2012       Page: 4 of 4

duty to disclose. See Ziemba v. Cascade Intern., Inc., 256 F.3d 1194, 1206 (11th

Cir. 2001). Even accepting -- as we must -- Plaintiff’s allegations as true, in this

case Defendants were under no duty to disclose -- simply on their own accord --

the contents of the meeting between Peachtree and Goshawk to Plaintiff. In

particular, that Defendants were in no fiduciary relationship -- or in any other

special relationship like accountant or broker -- with the Plaintiff, that Defendants’

failure to speak would not render Defendants’ own prior speech misleading or

deceptive, the arm’s length nature of the sale, the continuing access Plaintiff,

itself, had to Goshawk during the extensive diligence process, and the

sophisticated nature of the parties weigh against a duty to disclose.1            Absent a

duty to disclose, Plaintiff’s case cannot stand. Seeing no reversible error in the

district court’s handling of this case, we affirm the district court’s dismissal of this

action.

       AFFIRMED.

   1
     No duty to disclose under Georgia law exists under these circumstances. In particular,
Plaintiff’s continuing access to Goshawk weighs against finding a duty to disclose under Georgia
law and -- among other things -- clearly distinguishes this case from Williams v. Dresser Indus.,
Inc., 120 F.3d 1163 (11th Cir. 1997).

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