Court Opinion

ID: 7803698
Source: CourtListenerOpinion
Date Created: 2022-08-25 21:02:17.232419+00
Date Added: 2024-06-11T16:29:42.145838
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF DELAWARE

 GERONTA FUNDING, a Delaware               §
 Statutory Trust,                          §
                                           §         No. 380, 2021
                Defendant Below,           §
                Appellant,                 §         Court Below – Superior Court
                                           §         of the State of Delaware
           v.                              §
                                           §         C.A. No. N18C-04-028
 BRIGHTHOUSE LIFE INSURANCE                §
 COMPANY,                                  §
                                           §
                Plaintiff Below,           §
                Appellee.                  §

                                Submitted: June 8, 2022
                               Decided:   August 25, 2022

Before SEITZ, Chief Justice; VALIHURA, VAUGHN, TRAYNOR,                             and
MONTGOMERY-REEVES, Justices, constituting the Court en banc.

Upon appeal from the Superior Court of the State of Delaware. AFFIRMED IN PART,
REVERSED AND REMANDED IN PART.

Andrew S. Dupre, Esquire (argued), Steven P. Wood, Esquire, Travis J. Ferguson, Esquire,
MCCARTER & ENGLISH, LLP, Wilmington, Delaware; for Appellant Geronta Funding.

Gregory F. Fischer, Esquire, COZEN O’CONNOR, Wilmington, Delaware; Joseph M.
Kelleher, Esquire (argued), Brian D. Burack, Esquire, COZEN O’CONNOR, Philadelphia,
Pennsylvania; for Appellee Brighthouse Life Insurance Company.

                                           1
MONTGOMERY-REEVES, Justice:

       This appeal requires the Court to determine whether premiums paid on insurance

policies declared void ab initio for lack of an insurable interest should be returned. Geronta

Funding (“Geronta” or “Appellee”) argues that Delaware law requires the automatic return

of all premiums paid on the void policy.             Brighthouse Life Insurance Company

(“Brighthouse” or “Appellant”) argues that Delaware law does not require an automatic

return of premiums; rather, a party must prove entitlement to restitution. The court below

agreed with Brighthouse and relied on the Restatement (Second) of Contracts (the

“Restatement”) to determine whether Geronta was entitled to restitution. Specifically, the

court held that Geronta may obtain restitution under Section 198 of the Restatement

(“Section 198”) if it could prove excusable ignorance or that it was not equally at fault.

Applying this test, the court ruled that Geronta was only entitled to the return of the premiums

it paid after alerting Brighthouse to the void nature of the policy at issue. Geronta appeals

this ruling, arguing that the court erred when it adopted Section 198 instead of automatically

returning the premiums, erred in its actual application of Section 198, even assuming that is

the proper test, and erred by precluding certain testimony from Geronta witnesses.

       Because this is a matter of first impression, the Court first surveys the applicable legal

landscape, which reveals that courts across the country generally have adopted one of the

following approaches: (1) rescission and automatic disgorgement of premiums, (2)

restitution under a fault-based analysis grounded in considerations specific to insurance

                                               2
policies declared void ab initio for lack of an insurable interest, and (3) restitution under the

Restatement. This Court adopts restitution under a fault-based analysis as framed by the

Restatement as the test to determine whether premiums should be returned when a party

presents a viable legal theory, such as unjust enrichment, and seeks the return of paid

premiums as a remedy. We hold, however, that despite applying the Restatement, the

Superior Court’s application of the Restatement failed to account for the relevant questions

encompassed by that approach.

       Having reviewed the parties’ briefs and the record on appeal, and after oral argument,

we reverse the court’s holdings regarding entitlement to premiums and remand for

consideration consistent with this Opinion. But we find no fault in the Superior Court

preclusion of certain testimony from Geronta’s witnesses. As such, the judgment of the

Superior Court is AFFIRMED, in part, and REVERSED and REMANDED, in part.

I.     RELEVANT FACTS AND BACKGROUND

       A.     The Seck Policy

       On July 11, 2007, Mansour Seck Irrevocable Life Insurance Trust (the “Seck Trust”)

applied to MetLife Investors USA Insurance Company (Brighthouse’s predecessor) for a $5

million universal life insurance policy insuring the life of a fictitious man identified as

                                               3
Mansour Seck (the “Policy”), with a birthday of January 1, 1933.1 Seck was identified as a

French citizen residing at 170 Academy Street, Jersey City, New Jersey.2

       Algren Associates, Inc. (“Algren”), a broker-general-agent organization with whom

MetLife had a longstanding relationship, conducted a recorded phone interview with

someone purporting to be Seck.3 In that interview, the individual claiming to be Seck stated

that he was a retired French ambassador with a yearly income of $500,000 from a pension

and $1.5 million from investments.4 He also claimed that his net worth was $18 to $20

million.5

       Algren submitted the following information about Seck to MetLife: “‘Marital Status:

married [;] Annual earned income: $400,000 [;] unearned income: $0 . . . The applicant is a

retired U[S] Ambassador to France. He has diplomatic status[,] and his passport allows him

to come and go freely. His passport # is 02Y12556479, exp. 10/20/12.’”6

       Algren also submitted Seck’s general medical information, such as a note from Seck’s

physicians confirming that Seck regularly attended medical appointments.7 Algren provided

MetLife with two full paramedical exams from an approved third-party that showed Seck’s

1
  Opening Br. Ex. B at 6-7 (hereinafter, “Ex. B at __”).
2
  Id.
3
  Id. at 8.
4
  Id.
5
  Id.
6
  App. to the Opening Br. 558 (hereinafter “A__”).
7
  Ex. B at 9.
                                                 4
medical history, vitals, and EKG readings.8 An approved third party represented that he

personally took Seck’s blood pressure, performed EKG readings, and witnessed Seck sign

the application’s medical section.9 “Based on the paramedic’s reports, MetLife waived its

requirement to have Mansour Seck undergo a ‘MD Exam + EKG,’ which was defined in

MetLife’s ‘The Life Underwriting Guide’ as a ‘full exam performed by a medical doctor.’”10

MetLife also received a lab slip for Seck’s lab work that included test results for blood and

urine.11 MetLife reviewed Algren’s cover letter regarding the results of the test results.12

       If documentation relating to a policy comes from a general agent with whom MetLife

has an existing relationship, MetLife itself does not further validate the documentation or

employ a third party to validate the documentation.13

       Sandor Krauss, the trustee of the Seck Trust, executed a trust certificate in which the

named beneficiary of the Seck Trust was Michael Seck, with an address of 170 Academy

Street, Suite B23, Jersey City, New Jersey.14 Krauss also confirmed the soundness and

validity of the Policy.15 Krauss is a licensed attorney in the State of New York.16 He

acknowledged and agreed in the Policy application’s trust certification that MetLife “is

8
  Id.
9
  Id.
10
   Id. at 9-10.
11
   A564; Ex. B at 10.
12
   Id.
13
   Ex. B at 34-35.
14
   Id. at 7; Answering Br. 6.
15
   Ex. B at 10.
16
   Id.
                                               5
relying exclusively on the representations in this agreement . . . . [MetLife] is permitted to

rely upon the representations in this document, unless or until notice of any change,

amendment, or revocation is provided in writing and delivered to [MetLife].”17 He

also declared in the Statement of Policyowner Intent Form that the Seck Trust did

not “intend to sell the applied-for life insurance policy in the future.”18 He later

testified that he had never met or communicated with anyone by the name of

Mansour Seck.19

       Talma Nassim, a licensed broker working with Algren, submitted the application for

the Policy, acted as witness to Seck’s signature, and confirmed that she met Seck in person.20

She certified that she spoke with Seck personally and witnessed his signature on the

application.21 MetLife had a policy of relying on the broker’s representations, particularly

where, as here, MetLife had an established relationship with the general agent.22

       After confirming that its procedures and guidelines were met, MetLife issued the

Policy on or around July 24, 2007.23

17
   A560.
18
   A561.
19
   Ex. B at 11 n.30.
20
   A556-57; Ex. B at 12.
21
   Ex. B at 12.
22
   Id. at 35.
23
   Id. at 12.
                                              6
       For the next two years, the Seck Trust paid $248,711.14 in premiums.24 After the

two-year contestability period ended, the Seck Trust sold the Policy to EEA Life Settlements,

Inc..25 Before purchasing the policy, EEA Life Settlements, Inc. consulted with its

investment advisor, ViaSource Funding LLC (“ViaSource).26 ViaSource is “in the business

of locating, evaluating, investing in, purchasing, servicing, managing, dealing in and

collecting upon Life Insurance Policies.”27 Although ViaSource did its own “check of the

validity of [Seck],”28 EEA Life Settlements, Inc. did not hire a private investigator to locate

Seck.29 EEA Master Fund, LTD (“EEA”) bought the Policy on August 11, 2009, and paid

premiums on the Policy for the next six years.30

       On January 25, 2010, ViaSource tried to contact Krauss and Seck’s designated

contacts for Seck’s contact information.31 Krauss stated that he did not have a valid address

for Seck and was unable to provide any of Seck’s information.32 Mail sent to Seck was

marked “return to sender,” and three of the doctors from his application stated that Seck was

24
   Id. at 13; A565.
25
   A565.
26
   A566.
27
   Id.
28
   A1649. ViaSource confirmed Seck’s validity by getting “verification coverage . . . from the carrier
confirming the policy was enforce [sic], confirming its issue date, confirming the insured’s name
and address, owner’s name and address, issue date, policy face amount, cash value, if there was any.”
Id.
29
   A566.
30
   Ex. B at 14.
31
   A572.
32
   Id.
                                                  7
not their patient.33 On October 19, 2010, ViaSource reached out to Krauss again, and he was

still unable to provide ViaSource with any information.34 As a result, ViaSource and EEA

placed the Policy on its “Hard to Track” list.35 They did not, however, regard the issue as a

red flag.36

       On October 11, 2011, ViaSource ran a public records search for Seck, which resulted

in no findings of any public record for a Mansour Seck with a birthday of January 1, 1933,

or with a matching Social Security number.37 ViaSource conducted a second search in 2012

that again turned up no matching results.38

       On December 17, 2012, ViaSource sent a letter to one of Seck’s designated contacts,

with a reminder that he agreed to “‘[p]rovide updates to as [sic] Mr. Seck’s location once

every one and a half [sic] months [;] [p]rovide the Insured’s updated medical records, every

six months [;] [p]rovide immediate written notification if Mr. Seck leaves the country . . .

.’”39 The letter further stated, “‘[t]o date, you have not fulfilled any of your obligations. You

are in breach of this agreement . . . .’”40 EEA, however, continued paying $706,478.29 in

premiums on the Policy to MetLife until it sold the Policy to Geronta in 2015.41

33
   Id.
34
   A578-79.
35
   A579.
36
   Ex. B at 22.
37
   A579.
38
   A581.
39
   A581-82.
40
   Id.
41
   A582.
                                               8
       On September 2, 2015, EEA sold the Policy to Geronta as part of a bulk sale of life

insurance policies.42 As part of the transaction, EEA created a data room with information

about all the policies being sold.43 Geronta did not ask for additional information.44 Geronta

did not review the information in the data room about the Policy, and it did not conduct any

independent research before purchasing the Policy, other than obtaining confirmation from

MetLife that the Policy was active.45 It also did not perform a public records search on Seck

or the Seck Trust.46 Furthermore, “Geronta did not try to confirm whether insureds had

already died prior to purchasing portfolios because if the seller became aware of this, the

seller might remove that policy from the portfolio thereby depriving a purchaser . . . from

collecting the death benefit (without paying any premiums on the policy).”47 According to

Geronta, “the standard in the tertiary market is not to check before closing because if the

buyer finds a dead person they want to keep the windfall from the death benefits.”48

       Geronta executed a purchase and sale agreement with EEA Life Settlements, Inc. on

September 2, 2015 (the “Agreement”).49 Neither MetLife nor Brighthouse, MetLife’s

42
   Id.
43
   A584.
44
   Ex. B at 14.
45
   A584-85.
46
   A584.
47
   Ex. B at 46.
48
   Id.
49
   A583.
                                              9
successor, are parties to the Agreement.50 In the Agreement, Geronta represented that, either

alone or with its advisors, it had,

                  such knowledge and experience both in financial, business
                  and tax matters generally, and relating to the acquisition
                  of in-force life insurance policies specifically, to enable it
                  to identify, understand and independently evaluate the
                  merits and risks of the purchase of the Policies and other
                  Conveyed Property, the terms and conditions of this
                  Agreement and each of the other Transaction Documents
                  and the entry into and consummation of the transactions
                  contemplated hereby and thereby.51

Geronta also stated that it “had the opportunity to conduct its own independent

investigation of the Policies and the Conveyed Property.”52

       In 2016, Geronta attempted to update its records regarding the Policy, but was unable

to find current information about Seck, leading to suspicions about the validity of the

Policy.53 Geronta subsequently contacted EEA, which hired a private investigator and

ultimately concluded that Seck was a real person that was “locatable.”54 Geronta doubted

these findings in part because the information EEA provided about a person named Mansour

Seck did not match the information about Seck provided in the Policy.55 Thus, Geronta hired

its own private investigator and discovered that Seck was fictitious.56

50
   Id.
51
   A583-84.
52
   A584.
53
   Ex. B at 14.
54
   Id. at 14-15
55
   Id. at 15.
56
   A588.
                                               10
       Geronta reached out to Brighthouse, MetLife’s successor, about its suspicions.57 But

Geronta continued to pay premiums on the Policy. Geronta eventually demanded that

Brighthouse refund all the premiums paid on the Policy; Brighthouse denied that request.58

       B.     MetLife’s Activities After Issuing the Policy

       In 2009, two years after MetLife issued the Policy, the Seck Trust beneficiary, Pape

Seck, applied to serve as an agent for three MetLife life insurance applications, all of which

were unrelated to the Policy.59 As a result, MetLife performed a public records search and

found that Pape Seck had multiple aliases, including Pape M. Seck, Pape Seck, and Michael

Seck (collectively, “Pape Seck”).60 The public records search also showed that Pape Seck

was possibly related to someone named Mansour Seck and that, between July 2007 and

October 2009, the previous and non-verified address for the possible relative named

Mansour Seck was 170 Academy Street, B23, Jersey City, New Jersey.61 The search also

stated that the median household income for this neighborhood was $32,625.62 As a result,

MetLife denied Pape Seck’s broker application and refused to issue any policies connected

with his application.63

57
   Ex. B at 15.
58
   Id.
59
   A567; Ex. B at 16.
60
   A567; Ex. B at 16-17.
61
   A568.
62
   Id.
63
   Id.
                                             11
       A MetLife Regional Sales Vice President informed Pape Seck’s general agent on or

around December 8, 2009 that the applications were denied due to “IOLI64 flags and

financial irregularities.”65 The Regional Sales Vice President later emailed MetLife’s

Corporate Ethics Department to notify it that Pape Seck’s general agent was surprised that

his application had been denied.66 The Corporate Ethics Department then emailed Jean

Philipp, a Senior Fraud Investigator in MetLife’s Ethics and Compliance Department who

had performed the investigation into Pape Seck’s application, and sought advice or guidance

to give the Regional Sales Vice President.67 Philipp’s responded that the denial of the

applications were based on several anomalies:

              I think you can share the following information with [the general
              agent[ [sic] with the understanding [the general agent] can use
              the information internally to determine whether her organization
              wishes to maintain a relationship with this broker . . . [t]he lack
              of real estate ownership certainly brings into question the net
              worth figures provided . . . [a]s to medical info: all three insureds
              completed an[] EKG and blood draw on the same day the app
              was signed and within 30 minutes of each other. Further, all
              three insureds completed the paramed examination on the same
              day[;] . . . [o]ur underwriters also noted wide variation in blood
              pressure reading on one insured when comparing EKG exam
              (10/28/09) with the paramed exam (11/05/09)[;] . . . I have tried
              to contact Mr. [Pape] Seck to discuss these cases but the
              “business telephone” he provided on our application to contact
              is a cell that does not accept voice messages[;] [w]e have enough
              disconnects with these cases that our Underwriting area felt we

64
   The acronym IOLI stands for “investor-owned life insurance.”
65
   A568.
66
   A569.
67
   Id.
                                               12
                  could not ever get comfortable with the application
                  information.68

       “On December 17, 2009, David Bishop[, a Brighthouse internal investigator,] sent an

email to Jean Philipp stating: ‘Just received two wire transfers to review that have strong

IOLI flags.’ One of the wire transfers related to the Policy, noting that ‘Ownership changed

7/09 to EEA Life Settlements, Inc. (just after the incontestability period expired)’ and that

the writing agent was Talma Nassim, through Algren Brokerage.”69

       MetLife did not inform EEA or Geronta that the Policy had strong IOLI flags.70

        C.        Pape Seck’s Arrest and Prosecution

       In 2010, Pape Seck was the subject of numerous press releases issued by the State of

New Jersey and other insurance industry publications; they stated that Pape Michael Seck, a

New York City insurance agent, had been arrested and prosecuted for fraudulent insurance

schemes.71

       The New Jersey Attorney General’s office issued a press release on April 13, 2010,

stating, “On April 12, 2010, Pape Seck pleaded guilty to two counts of insurance fraud in

connection with his submissions, as an agent, between May 22, 2008 and July 27, 2009, of

fraudulent life insurance applications to Prudential Life Insurance Company and Aviva Life

68
   A569-70.
69
   A571.
70
   Id.
71
   Ex. B at 24.
                                             13
Insurance Company.”72 The insured’s name on these applications was Mansour Seck.73 The

press release also stated that

               [B]etween May 22, 2008 and July 27, 2009, [Pape Seck]
               submitted false applications…for life insurance policies
               on behalf of Mansour Seck, listing Pape Seck as Mansour
               Seck’s son and the beneficiary under the policies. [Pape
               Seck] admitted that his father, whose name is Mansour
               Seck, did not apply for the life insurance, nor did anyone
               by that name.

               Although Mansour Seck is the name of [Pape Seck’s]
               father, [Pape Seck], in filing the applications, also used
               identifying information, including a Social Security
               Number, from two other real people named Mansour Seck,
               one a retired dignitary from Senegal in Africa and the
               other a New Jersey resident. Mansour Seck is a common
               name in the country of Senegal.74

This press release was posted on the New Jersey Attorney General’s website.75

       Moreover, Pape Seck’s convictions were published in two online articles, both

of which are publicly available.76

       On April 26, 2010, New Jersey’s Office of the Insurance Fraud Prosecutor

subpoenaed MetLife’s records concerning Seck, and in response, MetLife produced

169 pages of documents.77

72
   A573.
73
   Id.
74
   A573-74; Ex. B at 25.
75
   A574.
76
   A574-75.
77
   A575; Ex. B at 26.
                                          14
      On June 8, 2010, the New Jersey Attorney General issued a second press

release in which it stated that Pape Seck was sentenced to three years in prison on

June 7, 2010, for fraudulent insurance applications.78 Several other publications

published articles about Pape’s conviction and sentencing on or around June 9,

2010.79 All articles are either publicly available or behind paywalls.80

      On October 17, 2011, the New Jersey Attorney General released a third press

release about Pape Seck, stating that Pape Seck pleaded guilty to one count of

insurance fraud and two counts of theft by deception.81 It also announced that Pape

Seck admitted that he knowingly made fraudulent or misleading statements between

November 12, 2006, and June 4, 2008, in support of seven life insurance policy

applications, one of which was the Policy.82 The press release thanked MetLife “for

[its] assistance in the investigation.”83 This press release was posted to the New

Jersey Attorney General’s website and was publicly available.84

      On October 26, 2011, Jim McCarthy, an investigator with MetLife’s Claims

Investigation Unit emailed MetLife’s Field Investigation Unit for Corporate Ethics and

78
   A575-76.
79
   A577-78.
80
   Id.
81
   A580.
82
   Id.
83
   Id.
84
   Id.
                                         15
Compliance to make them aware of Pape Seck’s conviction (the “McCarthy Email”).85 The

email’s subject line contained the name Mansour Seck, the Policy’s policy number, Pape

Seck’s name, and the MetLife broker number.86 The email noted that Pape Seck was recently

sentenced for insurance fraud involving Seck and stated that MetLife cooperated with the

authorities.87

       D.        Litigation and the Superior Court Ruling

       On April 4, 2018, Brighthouse filed suit, seeking a judicial declaration that the Policy

was void ab initio for lack of an insurable interest and arguing that it is entitled to keep all

the premiums paid on the Policy.88 Geronta filed an answer, agreeing that the Policy was

void ab initio,89 and a counterclaim, alleging that it was entitled to reimbursement of all

premiums paid, with the exception of the premiums paid by the original owner of the

Policy.90

       In late 2018, both parties filed motions for judgment on the pleadings.91 Brighthouse

argued that the Superior Court should leave the parties where it found them, while Geronta

argued that it should receive all the premiums paid under rescission and disgorgement.92 In

85
   A3034.
86
   Id.
87
   Id.
88
   A590.
89
   Id.
90
   Opening Br. Ex. A at 3 (hereinafter, “Ex. A at __”).
91
   Id. at 3.
92
   Id. at 4-8.
                                                 16
its opinion, the court declared the Policy void ab initio.93 The court denied Geronta’s request

for rescission and disgorgement, holding that rescission is not available where a contract is

void because there is no contract to “unmake.”94 But the Superior Court also denied

Brighthouse’s request, noting that Geronta might be entitled to restitution.95 Thereafter, the

parties conducted discovery in preparation for trial.

       The court conducted a bench trial in March 2021. After trial, the Superior Court ruled

that Geronta was only entitled to restitution of the premiums it paid after it informed

Brighthouse that the Policy was void for lack of an insurable interest.96 In reaching that

conclusion, the court applied Section 198 of the Restatement.97 Under the Restatement, a

party is entitled to restitution if it was excusably ignorant under Section 198(a) or not in pari

delicto with the other party under Section 198(b).98 As such, the Superior Court determined

that “[i]n order for Geronta to prevail, the Court must find that Geronta was either excusably

ignorant under §198(a); or not in pari delicto with Brighthouse under §198(b).”99

       The Superior Court first concluded that Geronta was not entitled to restitution under

Section 198(a) because it was not excusably ignorant of the fact that the Policy was void as

93
   Ex. A at 4-5.
94
   Id. at 5.
95
   Id. at 7-8.
96
   Ex. B at 63-66.
97
   Id. at 51-63.
98
   Restatement (Second) of Contracts § 198 (Am. L. Inst. 1981).
99
   Ex. B at 51.
                                               17
against public policy.100 The court found that Geronta intentionally and strategically refused

to investigate or verify whether the insureds on the policies they purchased were alive until

after it purchased the policies.101 Moreover, the court found that “[h]ad Geronta done its

research, it would have seen circumstances that it might have considered problematic”

because “[t]he information, which Geronta insists was important, was easily obtainable or

publicly available.”102 Here, the court pointed to the fact that (1) the EEA data room

contained information about EEA’s inability to verify any information about Mansour Seck

or contact Mansour Seck;103 and (2) “[p]ublic records searches would have shown multiple

press releases and articles regarding Pape Seck’s insurance fraud arrests and convictions;

repeated references to the name ‘Mansour Seck’ in press releases; and MetLife’s connection

to the New Jersey investigation.”104 The court also found that Geronta failed on this prong

of Section 198 because it was unable to show that MetLife’s underwriting process was

inappropriate or lacked good faith.105 As such, the Superior Court held that Geronta was not

inexcusably ignorant.

        Next, the Superior Court concluded that Geronta failed to show that it was not in pari

delicto with Brighthouse or that it was the victim of misrepresentation or oppression by

100
    Id. at 51-56.
101
    Id. at 53-54.
102
    Id. at 54.
103
    Id. at 54-55.
104
    Id. at 55.
105
    Id. at 55-56.
                                              18
Brighthouse.106 In conducting an in pari delicto analysis, the court looked at the diligence

of both parties, finding that “[t]he evidence shows that MetLife/Brighthouse followed its

guidelines and practices before issuing the Seck Policy whereas Geronta’s investigation was

superficial.”107 The court also found that Geronta failed to prove that Brighthouse knew that

the Policy lacked an insurable interest even after MetLife/Brighthouse learned of issues with

Pape Seck.108 Additionally, after noting that the Restatement’s comments allow for

restitution if the party showed that it was the victim of misrepresentation or oppression

practiced on it by the other party, the court found that Geronta did not satisfy this requirement

because Brighthouse did not commit fraud on Geronta by not disclosing inconsistencies with

the Policy since those inconsistencies were publicly available or in the data room.109 Thus,

the Superior Court concluded that Geronta did not satisfy Section 198(b) of the Restatement

and denied Geronta’s request for the return of premiums paid before it made Brighthouse

aware that Seck was fictitious.

II.    STANDARD OF REVIEW

       This Court reviews questions of law de novo.110 “We will uphold the Superior Court

judge’s factual findings unless they are clearly erroneous and the record does not support

106
    Id. at 56-62.
107
    Id. at 58.
108
    Id. at 61.
109
    Id. at 61-63.
110
    Bäcker v. Palisades Growth Cap. II, L.P., 246 A.3d 81, 94 (Del. 2021).
                                               19
them.”111 “Factual findings are not clearly erroneous ‘if they are “sufficiently supported by

the record and are the product of an orderly and logical deductive process.”’”112 “We will

not set aside a trial court’s factual findings ‘unless they are clearly wrong and the doing of

justice requires their overturn.’”113

       “A decision whether to admit testimony as relevant is within the sound discretion of

the trial judge and will not be reversed absent a clear abuse of discretion.”114 “When an act

of judicial discretion is under review the reviewing court may not substitute its own notions

of what is right for those of the trial judge, if his judgment was based upon conscience and

reason, as opposed to capriciousness or arbitrariness.”115

III.   ANALYSIS

       This case requires us to answer the following question: What is the appropriate

approach when analyzing whether to return premiums paid on an insurance policy that is

void ab initio as against public policy for lack of an insurable interest?

       Geronta contends that, under case law from the District of Delaware, insurance

policies that are void ab initio as against public policy must be rescinded.116 According to

111
    Lawson v. State, 72 A.3d 84, 88 (Del. 2013) (citing Key Props. Grp., LLC v. City of Milford, 995
A.2d 147, 150 (Del. 2010)).
112
    Bäcker, 246 A.3d at 94-95 (quoting Biolase, Inc. v. Oracle Partners, L.P., 97 A.3d 1029, 1035
(Del. 2014)).
113
    DV Realty Advisors LLC v. Policeman’s Annuity and Benefit Fund of Chi., 75 A.3d 101, 108
(Del. 2013) (quoting Montgomery Cellular Holding Co. v. Dobler, 880 A.2d 206, 219 (Del. 2005)).
114
    Tyree v. State, 510 A.2d 222, 1986 WL 16037, at *1 (Del. May 29, 1986) (ORDER).
115
    Chavin v. Cope, 243 A.2d 694, 695 (Del. 1968).
116
    Opening Br. 16-17.
                                                20
Geronta, the effect of such rescission is the automatic return of the premiums to the payor in

order to return parties to the status quo.117 Geronta avers that public policy supports its

position because, “[i]f an insurance company could retain premiums while also obtaining

rescission of a policy, it would have the undesirable effect of incentivizing insurance

companies to bring rescission suits as late as possible, as they continue to collect premiums

at no actual risk.”118 Thus, Geronta argues, the Superior Court erred in refusing to rescind

the policy and return all premiums to Geronta.119

       In the alternative, Geronta next argues that if restitution is the correct remedy, the court

still erred in not returning the premiums.120 Geronta argues that the Superior Court failed to

apply the disproportionate forfeiture exception under Section 197 of the Restatement,

incorrectly applied Section 198 of the Restatement by failing to address comparative fault

between the parties and ignoring conclusive evidence that Brighthouse had actual

knowledge that the Policy was void in 2011, and erred by failing to address its bona fide-

purchaser-for-value defense.121 Finally, Geronta argues that the Superior Court erred by

precluding Geronta’s witnesses from testifying about their understanding of customary due

diligence in the tertiary market.122

117
    Id. at 23.
118
    Id. at 22 (citing Lincoln Nat’l Life Ins. Co. v. Snyder, 722 F. Supp. 2d 546 at 565).
119
    Id. at 17.
120
    Id. at 25-42.
121
    Id.
122
    Id. 43-45.
                                                21
       Brighthouse responds that the Superior Court properly denied Geronta’s request

because parties to agreements void ab initio as against public policy typically are not entitled

to relief, including rescission; instead, courts leave the parties where they find them.123

Brighthouse argues that the exception to this rule is found in Section 198, which permits

restitution of contracts void ab initio as against public policy in two specific circumstances.124

Brighthouse argues that neither of those exceptions applies to Geronta.

       Brighthouse also responds that the Superior Court performed an analysis of the

comparative fault of the parties and correctly concluded that Geronta was more at fault than

Brighthouse.125 Moreover, Brighthouse argues that the Superior Court correctly found that

Brighthouse did not have actual knowledge that the Policy lacked an insurable interest

because the evidence Geronta relies on would have required the Superior Court to make

numerous baseless inferences to reach Geronta’s preferred conclusion.126

       Finally, regarding Geronta’s witness testimony, Brighthouse argues that the Superior

Court did not abuse its discretion by precluding witnesses from testifying about their

understanding of standard diligence in the tertiary market because Geronta refused to allow

deposition testimony about the very same topic during discovery.127

       We address each argument in turn.

123
    Answering Br. 18-20.
124
    Id. at 19-20.
125
    Id. at 34-35.
126
    Id. at 29.
127
    Id. at 41-43.
                                               22
       A.     Overview of Potential Remedies for an Insurance Policy That Is Void Ab
              Initio for Lack of an Insurable Interest

       “A contract of insurance upon a life in which the insured has no interest is a pure

wager that gives the insured a sinister counter interest in having the life come to an end.”128

“For hundreds of years, the law has prohibited wagering on human life through the use of

life insurance that was not linked to a demonstrated economic risk.”129

       In PHL Variable Insurance Co. v. Price Dawe 2006 Insurance Trust ex rel. Christiana

Bank & Tr. Co., the Court addressed, for the first time, whether the validity of a life insurance

policy lacking an insurable interest could be challenged after the expiration of the two-year

contestability period.130 In answering that question in the affirmative, the Court concluded

that “[u]nder Delaware common law, if a life insurance policy lacks an insurable interest at

inception, it is void ab initio because it violates Delaware’s clear public policy against

wagering.”131 “Consequently, the Court held that STOLI policies are void ab initio and ‘a

fraud on the court,’ meaning that they never legally come into existence . . . .”132

       Under Delaware law, “it is against the public policy of this State to permit its courts

to enforce an illegal contract prohibited by law. Ordinarily, we think, when such is the fact,

128
    Grigsby v. Russell, 222 U.S. 149, 154 (1911).
129
    Lavastone Cap. LLC v. Est. of Berland, 266 A.3d 964, 967-68 (Del. 2022).
130
    28 A.3d 1059 (Del. 2011).
131
    Id. at 1067-68.
132
    Wells Fargo Bank, N.A. v. Est. of Malkin, __ A.3d __, 2022 WL 1671966, at *4 (Del. May 26,
2022).
                                               23
neither party has a remedy to any extent against the other.”133 Moreover, this Court has held

that “[a] court may never enforce agreements void ab initio, no matter what the intentions of

the parties.”134 Thus, when an agreement is void ab initio as against public policy, the courts

typically will not enforce a remedy to any extent against either party. In other words, the

courts typically will leave the parties where they find them.

        This Court has not yet announced the proper test under Delaware law for determining

whether premiums paid on an insurance policy that is void ab initio as against public policy

for lack of an insurable interest should be returned to the payor or retained by the insurer. A

survey of case law across the country reveals three potential answers to this question: (1)

rescission of the policy and the automatic return of the premiums, (2) restitution under a

fault-based analysis grounded in considerations specific to insurance policies declared void

ab initio for lack of an insurable interest, and (3) restitution under the Restatement (Second)

of Contracts.135

133
    Della Corp. v. Diamond, 210 A.2d 847, 849 (Del. 1965).
134
    Price Dawe, 28 A.3d at 1067.
135
    We acknowledge that the vast majority of cases addressing this issue arise in the STOLI
(“stranger-originated life insurance”) context, where a stranger without an insurable interest buys
insurance—essentially making a wager—on another person’s life. However, when analyzing
whether to return premiums, we see no reason to distinguish between a STOLI case and a case
involving a lack of an insurable interest because the insured is fictitious. The parties appear to agree.
They have cited many of the STOLI cases discussed in this opinion in arguing for their preferred
outcome. And they do not argue that there is any reason to analyze this case differently from STOLI
cases.

                                                  24
               a.     Rescission

       Rescission is a contractual remedy that can be sought at law or in equity.136 Generally,

“rescission results in abrogation or ‘unmaking’ of an agreement, and attempts to return the

parties to the status quo.”137 “While rescission at law refers to the ‘judicial declaration that a

contract is invalid and a judicial award of money or property,’ equitable rescission offers a

platform to provide additional equitable relief, such as cancellation of a valid instrument—

the formal annulment or setting aside of an instrument or obligation.”138 Thus, rescission

would result in the return of any premiums paid.

       Three main decisions from the United States District Court for the District of

Delaware have granted the insurer’s request for rescission of void stranger-originated life

insurance (“STOLI”) policies and required the return of the premiums from the insurer to

the investor. These three cases—Sun Life Assurance Co. v. Berck,139 Lincoln National Life

Insurance Co. v. Snyder,140 and Principal Life Insurance Co. v. Lawrence Rucker

2007 Insurance Trust141—were all decided before this Court’s decision in PHL

136
    Ravenswood Inv. Co., L.P. v. Est. of Winmill, 2018 WL 1410860, at *21 (Del. Ch. Mar. 21, 2018).
137
    Norton v. Poplos, 443 A.2d 1, 4 (Del. 1982); Craft v. Bariglio, 1984 WL 8207, at *12 (Del. Ch.
Mar. 1, 1984).
138
    Ravenswood, 2018 WL 1410860, at *21 (citing E.I. Du Pont De Nemours & Co. v. HEM Rsch.,
Inc., 1989 WL 122053, at *3 (Del. Ch. Oct. 13, 1989).
139
    719 F. Supp. 2d 410 (D. Del. 2010).
140
    722 F. Supp. 2d 546 (D. Del. 2010).
141
    774 F. Supp. 2d 674 (D. Del. 2011).
                                                25
Variable Insurance Co. v. Price Dawe 2006 Insurance Trust ex rel. Christiana Bank & Tr.

Co.

       In Berck, the insurer, Sun Life Assurance Company, sought a declaratory

judgment that the insurance policy at issue, which lacked an insurable interest, was

void ab initio.142 It also sought to retain of some or all of the premiums paid on the

policy.143 There, on a motion to dismiss, the court accepted as true the allegations

that the defendants fraudulently procured the illegal policy: “Beginning in April

2007, Lockwood, defendant, and others helped Berman, who was 77 years old at the

time, apply for a life insurance policy. They allegedly sought the policy not for any

legitimate insurance need but as a wagering contract to sell to stranger investors on

the secondary life insurance market.”144

       In determining whether the insurer could retain the premiums, the District

Court noted, in relevant part, that “rescission of benefit increases on a life insurance

policy requires the insurer to refund premiums.”145 The court then noted that

“rescission is an equity claim that requires all parties to be returned to the status

quo.”146 Finally, the court determined that “if an insurance company could retain

premiums while also obtaining rescission of a policy, it would have the undesirable

142
    Berck, 719 F. Supp. 2d at 411.
143
    Id.
144
    Id. at 411-12.
145
    Id. at 418.
146
    Id.
                                           26
effect of incentivizing insurance companies to bring rescission suits as late as

possible, as they continue to collect premiums at no actual risk.”147 As such, the

court held that the insurer could not seek both rescission of the agreement and

retention of the premiums, despite the fact that it accepted that the defendant

procured the void policy. Thus, the court “dismiss[ed] plaintiff’s claim seeking

retainment of premiums in light of the fact that it also seeks to rescind the [policy].

In an equitable action such as this, plaintiff may not have it both ways.”148

       Similarly, in Snyder, the District Court considered whether to allow an insurer

to retain premiums on a STOLI policy.149 Again, on a motion to dismiss, the court

accepted as true the allegation that the policy was wrongly procured by the

defendants who “sought the policy not for any legitimate insurance need, but as a

wagering contract to sell to stranger investors on the secondary life insurance

market.”150 The plaintiff, Lincoln National Life Insurance Company, sought a

declaratory judgment that the policy was either void or voidable and sought to retain

some or all of the premiums paid under the policy.151 In response, the defendant

argued that “plaintiff cannot maintain its action for rescission because it chose to

147
    Id. at 418-19.
148
    Id. at 419.
149
    Snyder, 722 F. Supp. 2d at 550.
150
    Id.
151
    Id.
                                          27
retain premiums even after obtaining [k]nowledge of the alleged STOLI scheme.”152

As in Berck, the court ruled that “rescission of benefit increases on a life insurance

policy requires the insurer to refund premiums.”153 Thus, the court ordered that, in

the event of rescission, the insurer could not retain premiums on the policy,

regardless of whether the defendant procured the void policy.154

       The court reached the same result on a motion for summary judgment in

Rucker. In that case, Principal Life Insurance (“Principal”) sought a declaration

from the District Court that one of its policies was a STOLI policy that was void ab

initio or voidable due to a lack of an insurable interest at the policy’s inception. 155

Principal also sought to retain some or all of the premiums paid on the policy.156 The

District Court examined both Berck’s and Snyder’s holdings that an insurer could

not both rescind a policy and retain the premiums on that policy. 157 Therefore, it

ordered that Principal could not retain any premiums paid on the policy.158

       In addition to the three District of Delaware cases identified above, two other district

courts, applying Delaware law, have followed the District of Delaware cases.

152
    Id. at 557.
153
    Id. at 564.
154
    Id. at 566.
155
    Rucker, 774 F. Supp. 2d at 677.
156
    Id.
157
    Id. at 680-83.
158
    Id.
                                             28
       In U.S. Bank National Ass’n v. Sun Life Assurance Co. of Canada, U.S. Bank owned

a $10 million life insurance policy issued by Sun Life.159 Sun Life asserted that the policy

was an impermissible STOLI policy and sought a declaration that the policy was void ab

initio.160 After determining that there was no insurable interest at the inception of the policy,

the Eastern District of New York relied on Berck and returned the premiums paid on the

policy to U.S. Bank.

       The Southern District of Florida took a similar approach in Sun Life Assurance Co.

of Canada v. U.S. Bank National Ass’n.161 First, the court noted that under Florida law,

“‘[w]here a party wrongfully procures a life insurance policy on an individual in whom it

has no insurable interest, the party is not entitled to a return of premiums paid for the void

policy.’”162 But because the court was applying Delaware law, it held that, under Berck, a

person who procures a void policy could receive a refund of its premiums despite its

actions.163 As such, the court returned the premiums.164

       In all five cases, the court required the return of the premiums to the investor and

noted that allowing an insurance company to challenge the enforceability of a policy while

retaining the premiums “would have the undesirable effect of incentivizing insurance

159
    2016 WL 8116141, at *6 (E.D.N.Y. Aug. 30, 2016).
160
    Id. at *8.
161
    2016 WL 161598, at *1, *18 (S.D. Fla. Jan. 14, 2016).
162
    Id. (citing TTSI Irrevocable Tr. v. ReliaStar Life Ins. Co., 60 So. 3d 1148, 1150-51 (Fla. 5th DCA
2011)).
163
    Id.
164
    Id.
                                                 29
companies to bring rescission suits as late as possible, as they continue to collect premiums

at no actual risk.”165 Thus, these cases stand for the proposition that an insurer cannot seek

both rescission of the policy and retention of the policy’s premiums.166 In other words, the

rescinding party must restore everything of value it has received under the contract from the

other party.

               b.      Restitution

       Restitution is “[a] body of substantive law in which liability is based not on tort or

contract but on the defendant’s unjust enrichment.”167 It is “[t]he set of remedies associated

with that body of law, in which the measure of recovery is usu[ally] based not on the

plaintiff’s loss, but on the defendant’s gain.”168

       In the relevant case law, restitution has been awarded under two separate approaches:

(1) a fault-based analysis grounded in considerations specific to insurance policies declared

void ab initio for lack of an insurable interest and (2) the Restatement.

165
    Snyder, 722 F. Supp. 2d at 565.
166
    See PHL Variable Ins. Co. v. Chong Son Pak Life Ins. Tr., 2012 WL 13201401, at *1 (D. Del.
July 25, 2012) (holding that the insurance company is not permitted to keep the premiums on a
policy that is declared void ab initio for lack of an insurable interest at inception); Borden v. Paul
Revere Life Ins. Co., 935 F.2d 370, 379 (1st Cir. 1991) (noting that the general rule is that “when an
insurer ventures to rescind a policy on the basis of a material misrepresentation in the application, it
must first tender to the insured the premiums paid under the policy”).
167
    Restitution, Black’s Law Dictionary (11th ed. 2019).
168
    Id.
                                                  30
                       i.      Restitution under a fault-based analysis grounded in
                               considerations specific to insurance policies declared void ab
                               initio for lack of an insurable interest

       The majority of courts considering this issue have adopted a fault-based analysis in

determining whether to return premiums paid on an illegal or void insurance policy. This

approach appears to find its roots in the doctrine of in pari delicto. In pari delicto, “Latin for

‘in equal fault,’ . . . is a general rule that courts ‘will not extend aid to either of the parties to

a criminal act or listen to their complaints against each other but will leave them where their

own act has placed them.’”169 “The general rule of in pari delicto, however, does not apply

in certain discrete circumstances. For example, if . . . the parties are not considered to be in

truly equal fault.”170 This in pari delicto exception is further supported by Williston, which

states that “illegal bargains may be enforced, at least to some extent, under certain

circumstances . . . . Accordingly, there are exceptions to the general rule that an executed

transfer cannot be set aside . . . .”171 One such exception applies when “parties not in pari

169
    In re Am. Intern. Grp., Inc., Consol. Derivative Litig., 976 A.2d 872, 882 (Del. Ch. 2009) (quoting
In re LJM2 Co–Investment, L.P., 866 A.2d 762, 775 (Del. Ch. 2004)); see also Burns v. Ferro, 1991
WL 53834, at *2 (Del. Super. Ct. Mar. 28, 1991) (“Furthermore, it is well-settled law that a court
will not aid a contractual claim founded on a violation of the law. Where parties to a contract are in
pari delicto, a court will ‘leave them where it finds them,’ and will refuse to enforce the contract.”);
Morford v. Bellanca Aircraft Corp., 67 A.2d 542, 547 (Del. Super. Ct. Apr. 27, 1949) (“The
authorities are practically unanimous in saying that, where parties are in pari delicto, a Court will
leave them where it finds them. Money paid upon an illegal agreement may not be recovered.”).
170
    In re Am. Intern. Grp., Inc., Consol. Derivative Litig., 976 A.2d 872, 883 (Del. Ch. 2009).
171
    Williston on Contracts § 19:76 (4th ed. 2022); see also Am. Jur. 2d Equity § 24.
                                                  31
delicto.”172 As such, under the doctrine of in pari delicto, a court may return consideration

paid toward an illegal contract when the parties are not equally at fault.173

       Numerous courts have utilized some form of this doctrine to determine whether to

return premiums as restitution damages under a theory of unjust enrichment when an

insurance policy is declared void or illegal. For example, in Sun Life Assurance Co. of

Canada v. Wells Fargo Bank, N.A., the United States Court of Appeals for the Third Circuit

certified to the New Jersey Supreme Court the question whether a downstream purchaser of

a STOLI policy is entitled to a refund of any premium payments it made on the illegal

policy.174 After reviewing case law from various jurisdictions, the New Jersey Supreme

Court adopted a “fact-sensitive approach” under which “trial courts should develop a record

and balance the relevant equitable factors,” including “a party’s level of culpability, its

participation in or knowledge of the illicit scheme, and its failure to notice red flags.”175

       In Sun Life Assurance Co. of Canada v. Conestoga Trust Services, LLC, the defendant

asked the District Court for the Eastern District of Tennessee to return all the premiums it

paid for an illegal STOLI policy.176 The District Court noted that it followed the “majority

rule” that “an assignee who has paid premiums in good faith is entitled to recover premiums

172
    Williston on Contracts § 19:76 (4th ed. 2022) (“Where the parties appear not to have been in pari
delicto, however, the one whose wrong is less than that of the other may be granted relief. The
doctrine is often applied as between the parties to a fraudulent or illegal transaction.”).
173
    Williston on Contracts § 19:76, 19:80 (4th ed. 2022).
174
    208 A.3d 839, 841 (2019).
175
    Id. at 859.
176
    263 F. Supp. 3d 695, 704 (E.D. Tenn. 2017), aff’d, 717 F. App’x 600 (6th Cir. 2018).
                                                 32
paid if the policy is later declared void because of the misconduct of others.”177 It then noted

that the defendant was entitled to the return of the premiums because it “is not to blame for

the fraud here; it merely acquired a life insurance policy from a predecessor assignee and

that policy turned out to be void.”178 Moreover, the court found that allowing the insurer to

retain the premiums would be a windfall.179 Thus, the court determined that the third-party

investor was entitled to the premiums because it was not at fault for the fraudulent STOLI

policy.

          In Ohio National Life Assurance Corp. v. Davis, an insurer asked the Seventh Circuit

to reverse the District Court’s return of premiums on a STOLI policy to Egbert, the investor,

arguing that “Egbert knew or should have known that he had bought an interest in a void

contract.”180 In affirming the return of the premiums to Egbert, the court noted,

                Generally when an illegal contract is voided, the parties “will be
                left where they have placed themselves with no recovery of the
                money paid for illegal services.” But there is an exception for
                the case in which the party that made the payments is not to
                blame for the illegality. There is no evidence that Egbert knew
                the policy was void . . . . Egbert paid substantial premiums and
                got nothing in return. He caused no harm, as he was not
                involved in the conspiracy. The company would be unjustly
                enriched if allowed to keep his $91,000.181

177
    Id. (emphasis added).
178
    Id.
179
    Id.
180
    803 F.3d 904, 911 (7th Cir. 2015).
181
    Id. at 911-912 (quoting Gamboa v. Alvarado, 941 N.E.2d 1012, 1017 (2011)).
                                               33
In other words, the court took a fault-based approach and determined that Egbert was entitled

to a return of the premiums he paid on the STOLI policy because he did not know the policy

was void and was not involved in the conspiracy.

          Similarly, in Carton v. B & B Equities Group, LLC, the investors of an illegal void ab

initio STOLI policy, the Cartons, sought the return of premiums, arguing that the insurers

were unjustly enriched because they retained premiums without providing any coverage on

the void policies.182 The District Court of Nevada analyzed the fault of each party:

                 The Insurers were the clear victims of the STOLI scheme.
                 Although the Policies were void as against public policy, the
                 Insurers are not alleged to have had any knowledge of the
                 scheme or that the Policies were void ab initio. Consequently,
                 the Insurers bore the risk that the scheme would not be
                 uncovered and that they would unknowingly pay the death
                 benefits to the Insured even though the Policies never actually
                 came into existence. In contrast, the Cartons were at least on
                 inquiry notice of the illicit scheme . . . . The transaction
                 described to the Cartons was a textbook STOLI arrangement,
                 which should have alerted the Cartons to the illicit nature of the
                 “investment.” Several other red flags also should have placed
                 the Cartons on inquiry notice, including the fact they were
                 guaranteed a 20% return on their investment during a recession,
                 the complicated manner in which the arrangement was
                 structured (which was unnecessary for a simple loan
                 transaction), and the fact they received the Policy applications
                 which all implied that the Insured were paying the premiums.
                 Although the Cartons may have ultimately been duped into
                 entering the arrangement, the facts clearly indicate they were at
                 least put on notice that something in the transaction was
                 amiss.183

182
      827 F. Supp. 2d 1235, 1245 (D. Nev. 2011).
183
      Id. at 1247.
                                                   34
Because the court found that the Cartons were at fault and the insurance company was

faultless, the court concluded that the Cartons were not entitled to the return of the

premiums.184

       Likewise, in Sun Life Assurance Co. of Canada v. U.S. Bank National Ass’n (“Sol”),

the District Court of Delaware applied a fault-based analysis in determining whether to return

the premiums to the investor. Here, the District Court surveyed the actions of all parties,

finding that everyone was at fault to some extent.185 For example, the court noted that the

insurance company’s hands “are not spotless:”

               Sun Life’s hands, like U.S. Bank’s and FCI’s, are not spotless.
               Sun Life may have been unaware at origination that some of its
               policies constituted illegal human life wagers, but Sun Life
               admits (as the facts compel it to) that it subsequently developed
               a list of suspected STOLI policies. With the release of Price
               Dawe, Sun Life also knew (or should have known) that it could
               invalidate STOLI policies even after the two-year
               incontestability period. Yet, rather than notify policyholders that
               their policies were suspected STOLI, or that the validity of their
               policies may be challenged at any time, Sun Life “made the
               strategic decision not to pursue investigating [these] policies”,
               and continued to collect (often enormous) premiums. Sun Life
               knowingly assumed the risk that someday a court would order
               it to repay some or all of the millions of dollars it collected in
               such premiums. If the Court were, instead, to leave the parties
               as it found them, Sun Life would be unjustly enriched.186

       The District Court then noted that the investor was also at fault:

184
    Id.
185
    2019 WL 8353393, at *4 (D. Del. Dec. 30, 2019).
186
    Id.
                                               35
                FCI does not come to Court with untarnished hands either. FCI
                is not an ignorant or duped party, but a highly-sophisticated
                secondary market investor with nearly $9 billion in life
                insurance portfolio investments. It knew the Sol Policy was
                premium financed, that Coventry was involved in the policy
                origination, and that the policy portfolio it was acquiring was
                higher risk due to “overzealous origination methods” that were
                subject to legal challenges. . . . The Court is convinced that FCI
                knew or should have known at the time it purchased the Sol
                Policy there was a substantial risk the Policy was an illegal
                STOLI policy.187

After assessing fault, the court found that “[t]he only equitable remedy justified here is

restitution damages, in which all premiums paid to Sun Life on the Sol Policy . . . are returned

to U.S. Bank and/or FCI” because, “[i]n the Court’s view, no party here has shown itself to

be an innocent victim, and none should leave the Court an undisputed victor.

        Although not explicitly arising in the STOLI context, the Tennessee Court of

Appeals,188 the Supreme Court of Minnesota,189 the Supreme Court of Indiana,190 the

187
    Id.
188
    Branson v. Nat. Life & Acc. Ins. Co., 4 Tenn. App. 576, 580 (1927) (“There are many cases like
this where it is held that a party who had in good faith paid premiums on a void policy could recover
the premiums. If the policy is void as against public policy and the agent knew it but the one who
secured the contract did not, the knowledge of the agent being the knowledge of the company, the
company has received money on a contract known to be void—has received something for nothing,
and should not be allowed to retain the premiums paid for which there has been no consideration.”).
189
    In re Millers’ & Mfrs. Ins. Co., 97 Minn. 98, 118, 106 N.W. 485, 494 (1906) (“If the policy is
illegal the premiums cannot be recovered . . . unless the parties are not ‘in pari delicto.’”).
190
    Am. Mut. Life Ins. Co. v. Bertram, 163 Ind. 51, 70 N.E. 258, 262 (1904) (“If the contract of
insurance be illegal in its inception, the insured cannot recover the premiums paid, if the parties are
in pari delicto. The controlling inquiry, then, in the present case, is, were the parties to the transaction
equally in fault?”).
                                                    36
Southern District of Florida,191 and the Eighth Circuit192 also have all decided whether to

return premiums by adopting a fault-based analysis grounded in considerations specific to

insurance policies declared void or illegal.

        In all of these cases, the court analyzed the fault of the parties in order to determine

who was entitled to the premiums paid on an illegal insurance policy. These courts

considered the following questions: whether the facts surrounding the investment put the

investor on notice that something was amiss; whether the party failed to notice red flags;

whether the party knew the policy was void; whether the insurer later learned that the policy

was or might have been void; whether the investor’s expertise in life insurance portfolio

investments should have caused it to know or suspect that there was a substantial risk that

191
    Neiman v. Provident Life & Accident Ins. Co., 217 F. Supp. 2d 1281, 1288-89 (S.D. Fla. Aug.
26, 2002) (“Having found the insurance contract void as a matter of public policy, the Court must
decide whether there are any additional remedies to impose. Courts will generally leave parties that
are in pari delicto where they place themselves when ruling a contract unenforceable as a matter of
public policy. A plaintiff may recover on an illegal contract only if he has not been guilty of
wrongdoing or is not in pari delicto. The in pari delicto doctrine therefore precludes this Court from
awarding Neiman the premiums he paid on the void contract, much less the disability benefits. As
repeatedly mentioned, Neiman’s own wrongdoing caused the contract to be void. Accordingly,
Neiman was in pari delicto, if not more at fault than the insurance company, in causing the contract
to be void and will recover neither benefits nor the premiums he paid. The Court must leave the
parties where it found them.”).
192
    Wal-Mart Stores, Inc. v. Crist, 855 F.2d 1326, 1335-35 (8th Cir. Aug. 26, 1988) (“‘The general
rule with respect to illegal contracts is that neither courts of law nor of equity will interpose to grant
relief to the parties, if they have been equally cognizant of the illegality.’ The level of culpability of
the parties was best put, we think, by the district court when it said, ‘there is more than enough fault
to go around in this case.’ Accordingly, we find that the district court should have found the parties
in pari delicto and refused to grant relief of any sort.”).

                                                   37
the policy it purchased was void; and whether the party was to blame for the illegality of the

policy.

          Thus, if the downstream investor was equally at fault with, or more at fault than, the

insurer, the court left the parties where it found them, allowing the insurer to keep the

premiums. If the downstream investor was innocent or the insurer was more at fault, the

courts returned the premiums.

                               ii.    The Restatement (Second) of Contracts

          “[I]t is against the public policy of [most states] to permit its courts to enforce an

illegal contract prohibited by law. Ordinarily, we think, when such is the fact, neither party

has a remedy to any extent against the other.”193 This general rule—that courts will not

enforce an illegal contract—is reflected in the Restatement at Section 197: “Except as stated

in §§ 198 and 199, a party has no claim in restitution for performance that he has rendered

under or in return for a promise that is unenforceable on grounds of public policy unless

denial of restitution would cause disproportionate forfeiture.”194 As clarified by the comment

to Section 197:

193
    Della, 210 A.2d 847 at 849. See also United Paperworkers Int’l Union, AFL-CIO v. Misco, Inc.,
484 U.S. 29, 42, 108 S. Ct. 364, 373, 98 L. Ed. 2d 286 (1987); Neiman v. Provident Life & Accident
Ins. Co., 217 F. Supp. 2d 1281, 1288-89 (S.D. Fla. Aug. 26, 2002); Wal-Mart Stores, Inc. v. Crist,
855 F.2d 1326, 1335-35 (8th Cir. Aug. 26, 1988); Corbin v. Houlehan, 100 Me. 246, 61 A. 131, 133
(1905); Lewis v. Davis, 145 Tex. 468, 477, 199 S.W.2d 146, 151 (1947); Morrison v. Marsh &
McLennan Cos., Inc., 439 F.3d 295, 300 (6th Cir. 2006); City of De Kalb v. Int’l Ass’n of Fire
Fighters, Loc. 1236, 182 Ill. App. 3d 367, 372 (1989); Zickler v. Shultz, 603 So. 2d 916, 922 (Ala.
1992).
194
    Restatement (Second) of Contracts § 197 (Am. L. Inst. 1981).
                                                38
              In general, if a court will not, on grounds of public policy, aid a
              promisee by enforcing the promise, it will not aid him by
              granting him restitution for performance that he has rendered in
              return for the unenforceable promise. Neither will it aid the
              promisor by allowing a claim in restitution for performance that
              he has rendered under the unenforceable promise. It will simply
              leave both parties as it finds them, even though this may result
              in one of them retaining a benefit that he has received as a result
              of the transaction.195

Thus, the Restatement reflects that courts typically will not allow any party to obtain any

remedy, including restitution. Yet, the Restatement identifies three exceptions to this

common law rule in Section 197, Section 198, and Section 199.196

       The text of Section 197 sets out a disproportionate forfeiture exception in which a

party is entitled to restitution if the “denial of restitution would cause disproportionate

forfeiture.”197 “[A]s elsewhere in this Restatement, the term ‘forfeiture’ is used to refer to

the denial of compensation that results when the obligee loses his right to the agreed

exchange after he has relied substantially, as by preparation or performance, on the

expectation of that exchange.”198

       In determining whether the denial of restitution would cause disproportionate

forfeiture, comment b to Section 197 articulates a balancing test that directs the court to

weigh the cost of the forfeiture against the gravity of the public policy involved: “Whether

195
    Id.
196
    Id.
197
    Id.
198
    Restatement (Second) of Contracts § 197 cmt. b.
                                               39
the forfeiture is ‘disproportionate’ for the purposes of this Section will depend on the extent

of that denial of compensation as compared with the gravity of the public interest involved

and the extent of the contravention.”199 Specifically, the court should consider “the party’s

deliberate involvement in any misconduct, the gravity of that misconduct, and the strength

of the public policy.”200 However, if the “claimant has threatened grave social harm, no

forfeiture will be disproportionate.”201 Instead, this exception is most “appropriate in the

case of technical rules or regulations that are drawn so that their strict application would result

in such forfeiture if restitution were not allowed.”202 Thus, whether a forfeiture is

disproportionate depends both on the actions of the claimant, as well as the nature of the

public policy involved.

       The next exceptions articulated by the Restatement are found in Section 198. Section

198 states that

               A party has a claim in restitution for performance that he has
               rendered under or in return for a promise that is unenforceable
               on grounds of public policy if (a) he was excusably ignorant of
               the facts or of legislation of a minor character, in the absence of
               which the promise would be enforceable, or (b) he was not
               equally in the wrong with the promisor.203

199
    Id.
200
    Id.
201
    Id.
202
    Id.
203
    Restatement (Second) of Contracts § 198 (Am. L. Inst. 1981).
                                                40
Consequently, Section 198 lays out two exceptions to the general rule—when a party is (1)

excusably ignorant and (2) not equally in the wrong with the party from whom he seeks

restitution.

          Under the first exception, a party may obtain restitution if it is excusably ignorant of

the facts leading to the unenforceability of the promise.204 Comment a to Section 198 points

the court to Section 180 of the Restatement for further clarification. The comments to

Section 180, which discuss the effect of excusable ignorance, note that “good faith is

expected on the part of the party who claims ignorance and he cannot blind his eyes because

he does not wish to see.”205 In other words, a party is not excusably ignorant if it is willfully

blind to the relevant facts.

          Notably, this exception is enveloped by many of the questions asked by the court in

the in pari delicto approach noted above. Specifically, the following questions from those

cases appear to have the goal of determining whether a party was excusably ignorant of the

relevant facts: whether the facts surrounding the policy put or should have put the investor

on notice that something was amiss; whether the party failed to notice red flags; and whether

the investor’s expertise in life insurance portfolio investments should have caused it to know

or suspect that there was a substantial risk that the policy it purchased was void. Thus, both

Section 198(a) and the factors from the in pari delicto test articulated above seek to discover

204
      Id.
205
      Restatement (Second) of Contracts § 180 (Am L. Inst. 1981).
                                                 41
whether the party was excusably ignorant of the facts suggesting that the promise is

unenforceable.

       If both parties are excusably ignorant, however, restitution under Section 198(a) is

unavailable, but restitution may still be available to the claimant under Section 198(b). Under

Section 198(b), “[t]he general rule that neither party is entitled to restitution is [also] subject

to an exception in favor of a party who is not equally in the wrong, or as it is sometimes said

is not in pari delicto, with the party from whom he seeks restitution.”206 In other words, the

Restatement directs the court to undertake an in pari delicto analysis that is substantively

identical to those analyses performed in the in pari delicto cases surveyed in Section III.A.b.i.

       Comment b to Section 198 identifies two common scenarios in which this exception

arises.207 In the first instance, the claimant is regarded as being less in the wrong because the

public policy is intended to protect persons of the class to which he belongs and, as a member

of that protected class, he is regarded as less culpable.”208 And, “[i]n the second type of case,

the claimant is regarded as being less in the wrong because he has been the victim of

misrepresentation or oppression practiced on him by the other party.”209

206
    Restatement (Second) of Contracts § 198 cmt. b.
207
    Comment b identifies two common scenarios in which, “for the most part,” Section 198(b)’s
exception arises. Given that these scenarios only arise “for the most part,” comment b does not
identify every scenario in which a party is not equally in the wrong.
208
    Restatement (Second) of Contracts § 198 cmt. b.
209
    Id.
                                                42
            Outside these two common scenarios, the comment instructs courts to undertake an

in pari delicto analysis to determine whether the parties are equally in the wrong. The

remainder of comment b directs the court to consider the reprehensibility of the party’s

conduct, whether a party engages in improper transactions as a business, and the seriousness

of the party’s conduct when viewed in light of the social harm. Moreover, the comment

notes that a party can be deprived of their gain if “he has enticed the claimant into the

transaction, where he has devised a scheme to defraud the claimant, or where he engages in

the misconduct professionally.”210 In other words, comment b allows for consideration of

questions that are applicable to the context of policies void ab initio for lack of an insurable

interest in order to determine a party’s fault because it instructs the court to consider a number

of factors bearing on the fault of the parties. As noted above, all the cases from Section

III.A.b.i undertake an in pari delicto analysis or other fault-based analysis to determine the

fault of the parties. Those analyses include questions such as whether the party procured the

void policy, whether the party concealed the void nature of the policy, and whether the party

knew or later learned that the policy was void. These same questions are applicable to an in

pari delicto analysis under Section 198(b).

            Section 198 encompasses all the questions considered by the courts in the in pari

delicto cases from Section III.A.b.i. As noted above, those questions all fall within the scope

of determining whether a party is excusably ignorant or not equally at fault. Although the

210
      Id.
                                               43
cases that undertake a fault-based analysis do not cite to the Restatement, it appears to us that

there is no real difference between the in pari delicto cases from Section III.A.b.i, and the

Restatement. The Restatement simply provides a framework through which courts can

undertake a fault-based analysis.

       A party may be entitled to restitution under the final exception, which appears in

Section 199, when that party did not engage in serious misconduct and “(a) he withdraws

from the transaction before the improper purpose has been achieved, or (b) allowance of the

claim would put an end to a continuing situation that is contrary to the public interest.”211

Comment a to Section 199 provides that to come within Section 199(a), “a party must

actually withdraw by refusing any further participation in or benefits from the transaction. It

is not enough that the achievement of the purpose has been prevented by circumstances

beyond his control.” 212 Whether “an improper purpose has been so substantially achieved

that withdrawal should no longer give a right to restitution depends on the gravity of the

social harm threatened under the facts of the particular case.” 213 But “[t]he exception is not

available in favor of a party whose misconduct is serious when viewed in the light of the

threatened social harm.”214 Section 199(b) applies “when the denial of restitution would

leave property in the hands of one whose control of it would be contrary to the public interest,

211
    Restatement (Second) of Contracts § 199 (Am. L. Inst. 1981).
212
    Restatement (Second) of Contracts § 199 cmt. a.
213
    Id.
214
    Id.
                                               44
for example, because its status would be rendered so uncertain as seriously to restrain its

alienation.” 215

       The Restatement has been cited by two courts in four cases, one of which is this

appeal. In those cases, the investors asked the court to return premiums paid on insurance

policies that were void ab initio as against public policy for lack of an insurable interest.

Those courts identified the Restatement as providing the appropriate framework to analyze

the issues presented. 216

       B.      The Delaware Supreme Court Adopts a Fault-Based Analysis, Framed
               Under the Restatement, to Determine Whether Premiums Should Be
               Returned for a Policy Void for Lack of an Insurable Interest

       After surveying the applicable case law, this Court adopts a fault-based analysis,

framed under the Restatement, that considers questions specific to insurance policies

declared void ab initio as against public policy for lack of an insurable interest as the correct

test to determine whether premiums should be returned. We adopt this approach for two

reasons.

       First, a fault-based analysis as framed under the Restatement would place this Court

in line with the majority of jurisdictions that have confronted this issue. As surveyed above,

215
   Restatement (Second) of Contracts § 199 cmt. b.
216
   See Columbus Life Ins. Co. v. Wilmington Tr., N.A., 2021 WL 1820573, at *1 (D. Del. May 6,
2021), adopted by 2021 WL 3886370 (D. Del. Aug. 31, 201); Columbus Life Ins. Co. v. Wells Fargo
Bank, 2021 WL 106919, at *1 (D. Del. Jan. 12, 2021); Sun Life Assurance Co. of Canada v.
Wilmington Tr., Nat’l Ass’n, 2022 WL 179008, at *1 (Del. Super. Ct. Jan. 12, 2022).
                                               45
most courts have adopted a fault-based approach to this question as opposed to a general rule

that the premiums must be returned to the investor.217

       Second, and more important, applying a nuanced fault-based test, instead of

rescission, is more consistent with public policy considerations. Because insurance policies

that are void as against public policy for lack of an insurable interest are frauds on the court

that are unenforceable, the Court should take care to discourage these policies from coming

into existence.    The automatic return of premiums certainly discourages insurance

companies from hiding the invalidity of a policy for as long as possible in order to continue

collecting premiums. But the automatic return of premiums encourages investors to

continue purchasing life insurance policies without investigation into whether those policies

are unenforceable policies due to lack of an insurable interest. After all, under the best-case

scenario, the investor gets paid the death benefits. Under the worst-case scenario, the

investor receives the return of the premiums—other than the time value of money, the

investor loses nothing in the gamble. This is despite any role it may have played in procuring

the void policy or ignoring the fraud. A fault-based analysis will encourage investors to

actually investigate all policies to avoid the risk of losing their premiums—a thorough

investigation of insurance policies will hopefully uncover those that are void ab initio as

217
    We note that the majority of the courts surveyed above determined that the premiums should be
returned to the investor after undertaking a fault-based analysis.
                                               46
against public policy. This approach should incentivize investors not to procure or purchase

these unenforceable policies in the first instance.

       A fault-based analysis also incentivizes insurers to speak up when the circumstances

suggest that a policy is void for lack of an insurable interest because they will not be able to

retain premiums if they stay silent after being put on inquiry notice, and they might also be

responsible for interest payments. In other words, our test incentivizes each player along the

chain of these insurance policies to behave in good faith.

       Thus, when analyzing a viable legal theory that seeks as a remedy the return of

premiums paid on insurance policies declared void ab initio for lack of an insurable interest,

Delaware courts shall analyze the exceptions outlined in Sections 197, 198, and 199 of the

Restatement and determine whether any of those exceptions permit the return of the

premiums. A court would need to determine whether: (1) there would be a disproportionate

forfeiture if the premiums are not returned; (2) the claimant is excusably ignorant; (3) the

parties are not equally at fault; (4) the party seeking restitution did not engage in serious

misconduct and withdrew before the invalid nature of the policy becomes effective; or (5)

the party seeking restitution did not engage in serious misconduct, and restitution would put

an end to the situation that is contrary to the public interest.

       A court analyzing the exceptions outlined in Section 198 should consider the

following questions: whether the party knew the policy was void at purchase or later learned

the policy was void; whether the party had knowledge of facts tending to suggest that the

                                                47
policy is void; whether the party procured the illegal policy; whether the party failed to notice

red flags; and whether the investor’s expertise in the industry should have caused him to

know or suspect that there was a substantial risk that the policy it purchased was void.

       Thus, the fault of the parties and public policy considerations will determine which

party is entitled to the premiums paid on an insurance policy that is void ab initio for lack of

an insurable interest.

       C.      The Superior Court Failed to Consider Whether Either Party Had
               Inquiry Notice of the Void Nature of the Policy

       Geronta argues that should the Court find that restitution is the correct remedy, the

Superior Court failed to properly address comparative fault between the parties, instead

finding that Geronta was not the victim of misrepresentation or oppression.218 Geronta

contends that the Superior Court failed to acknowledge “conclusive trial evidence (much of

it stipulated) that Brighthouse had actual knowledge at some point between April 28, 2010

and October 21, 2011 that the Policy was the product of criminal fraud, and thus void for

lack of insurable interest.”219 In other words, Geronta believes that, based on the facts, the

court should have concluded that Brighthouse was at fault.220

218
    Opening Br. 25.
219
    Id. at 31.
220
    Id. at 33-39. The Appellants also allege that the Superior Court erroneously ignored Section
197’s disproportionate forfeiture exception, erroneously applied Section 198(b), and ignored
deleterious public policy consequences of its decision. Id. at 39-42. Given our ruling and remand,
we do not address the Appellant’s remaining arguments.
                                               48
       Brighthouse responds that the court properly concluded that Brighthouse was

excusably ignorant because it (1) followed its sound guidelines and (2) did not have actual

knowledge that the Policy lacked an insurable interest until Geronta told Brighthouse that

Seck was fictitious in 2017.221 Brighthouse contends that the Superior Court’s conclusions

are supported by the text of the press releases, which imply that Seck was a real person.

Brighthouse further argues that Geronta conflates knowledge of criminal fraud with

knowledge of lack of an insurable interest, which, according to Brighthouse, are two different

things.222

       In concluding that Geronta was not entitled to restitution under Section 198 of the

Restatement, the Superior Court conducted a fault-based analysis that considered two

questions articulated by this Court. For example, the court considered Geronta’s expertise

in the life insurance investor industry: “Geronta is a sophisticated company with knowledge

and experience in the life insurance investor market. Indeed, Geronta’s experience and

assumption of risk were part of the P&S Agreement.”223 The court also considered whether

Geronta failed to notice red flags:

             • “Here, prior to purchase, Geronta, in consultation with Leadenhall,
               made the deliberate decision to superficially look at the Seck Policy by
               solely focusing on whether it was active.”224

221
    Answering Br. 27-31.
222
    Id. at 29-30.
223
    Id. at 52; see A431-32.
224
    Ex. B at 52-53; B4.
                                              49
              • “Geronta purposefully ignored the possibility that some of the
                unexamined policies in the bulk purchase might have been
                unenforceable.”225
              • “Geronta’s due diligence as to the Seck Policy was extremely
                limited.”226

        The Superior Court also concluded that Brighthouse was not at fault because Geronta

failed to show that Brighthouse had actual knowledge of the void nature of the Policy. In

other words, the Court found that Brighthouse did not have actual knowledge of the Policy’s

illegality:

              • “Pape Seck did not broker the Seck Policy application (it was brokered
                by Talma Nassim at Algren). Also, Pape Seck was not the beneficiary
                of the Seck Policy (the Seck Trust was the beneficiary). MetLife’s
                denial of Pape Seck’s broker application (and the three policy
                applications) were unrelated to the Seck Policy . . . .”227
              • “While the evidence demonstrates that Brighthouse knew that Pape
                Seck committed fraud in obtaining the Seck Policy, the facts do not
                show that Brighthouse knew that the Seck Policy lacked an insurable
                interest, that it would never pay benefits to the policyholder, that
                Brighthouse had anything to gain by Geronta paying premiums instead
                of EEA, or that it intended to mislead Geronta into purchasing a policy
                that Brighthouse knew was void ab initio.”228

        In our view, Section 198 and the in pari delicto cases from Section III.A.b.i focus on

whether a party had either actual knowledge or inquiry notice of the invalidity of the policy.

The focus on inquiry notice is why those cases ask whether the party had knowledge of facts

tending to suggest the void nature of the policy. Here, the Court failed to consider that

225
    Ex. B at 53; B1, 4-5.
226
    Ex. B at 53; B1-5.
227
    Ex. B at 60.
228
    Id. at 61.
                                               50
question. As explained above, the court should have also considered whether Brighthouse

was on inquiry notice of the void nature of the Policy.

       We believe the following stipulated facts or factual findings by the court could support

a finding that Brighthouse was on inquiry notice of facts tending to suggest that the Policy

was void:

            • “On December 17, 2009, David Bishop [, a Brighthouse internal
              investigator,] sent an email to Jean Philipp stating: ‘Just received two
              wire transfers to review that have strong IOLI flags.’ One of the wire
              transfers related to the Policy, noting that ‘Ownership changed 7/09 to
              EEA Life Settlements, Inc. (just after the incontestability period
              expired)’ and that the writing agent was Talma Nassim, through Algren
              Brokerage.”229
            • On April 26, 2010, New Jersey’s Office of the Insurance Fraud
              Prosecutor subpoenaed MetLife’s records concerning Seck and, in
              response, MetLife produced 169 pages of documents.230
            • On October 17, 2011, the New Jersey Attorney General released a third
              press release about Pape Seck, stating that Pape Seck pleaded guilty to
              one count of insurance fraud and two counts of theft by deception.231
              It also announced that Pape Seck admitted that he knowingly made
              fraudulent or misleading statements between November 12, 2006, and
              June 4, 2008, in support of seven life insurance policy applications, one
              of which was the Policy.232 The press release thanked MetLife “for
              [its] assistance in the investigation.”233
            • On October 26, 2011, Jim McCarthy, an investigator with MetLife’s
              Claims Investigation Unit emailed MetLife’s Field Investigation Unit
              for Corporate Ethics and Compliance to make them aware of Pape
              Seck’s conviction . . . .234 The email’s subject line contained the name
              Mansour Seck, the Policy’s policy number, Pape Seck’s name, and the

229
    A571.
230
    A575; Ex. B at 26.
231
    A580.
232
    Id.
233
    Id.
234
    A3034.
                                              51
               MetLife broker number.235 The email noted that Pape Seck was
               recently sentenced for insurance fraud involving Seck and stated that
               MetLife cooperated with the authorities.236

However, we recognize that the Court made factual findings that may be viewed as

inconsistent with this conclusion. Given this Court’s deferential standard of review for the

trial court’s factual findings, the Superior Court should be given an opportunity to review its

factual findings through the lens of our newly articulated fault-based test.

       As such, we remand for the Superior Court to reconsider its factual findings in light

of this Court’s articulated test and specifically direct the court to consider whether either party

had inquiry notice of the void nature of the Policy.

       D.      The Superior Court Did Not Err by Excluding Testimony

       Geronta contends that the Superior Court erred by precluding Geronta’s witnesses

from testifying about their understanding of customary due diligence in the tertiary

market.237 Specifically, Geronta argues that the Superior Court abused its discretion when it

concluded that witness testimony on the topic of industry standards requires an expert

opinion.238 That ruling, Geronta contends, contravenes Rule of Evidence 701 because Rule

of Evidence 701(a) permits lay opinion testimony based on personal knowledge and the

witnesses’ testimony was permissible fact testimony.239 Geronta argues that the Superior

235
    Id.
236
    Id.
237
    Opening Br. 43-45.
238
    Id. at 43.
239
    Id. at 44.
                                                52
Court’s ruling prejudiced Geronta at trial because “the Trial Court barred [Geronta] from

testifying for the industry reasons that Geronta it [sic] conducted its diligence, but then ruled

that diligence was fault-worthy without ever hearing the reasons for it.”240

       “The limitation a trial judge puts on the examination of a witness is an evidentiary

ruling which we generally review for abuse of discretion.”241             During the pre-trial

conference, the Superior Court ruled on Brighthouse’s motion in limine, in which

Brighthouse sought to preclude evidence from Geronta’s witnesses about their investment

experience and the standards of the tertiary market regarding due diligence.242 Brighthouse

argued that Geronta’s testimony should be precluded because Geronta refused to answer

questions about that topic at deposition.243 On that basis, the Superior Court ruled that

Geronta would not be able to talk about industry standards:

               Brighthouse: We asked him what -- is there some standard
               policy that you use. Instruction not to answer. Now, as Your
               Honor is exactly right, they’re going to take his hat off at the
               trial, so they say, and have him testify to his own personal, not
               the Royal Bank of Scotland, his personal deep experience. That
               was the kind deep experience we were trying to get to and we
               weren’t allowed to.
               The Court: I agree with you on this.244

240
    Id. at 45.
241
    Jones v. State, 940 A.2d 1, 15 (Del. 2007).
242
    A919.
243
    A919-21.
244
    A927.
                                                  53
In other words, the court also ruled that Geronta’s evidence was precluded because of the

refusal to testify to this same topic at deposition, not only because the testimony would

require expert testimony. We cannot conclude that the Superior Court erred in excluding the

evidence on this basis. Because Geronta refused to allow its witness to testify about industry

standards during discovery, it was not an abuse of discretion for the Superior Court to

preclude it from testifying about industry standards at trial.

       As such, we affirm the Superior Court’s ruling on this issue.

IV.    CONCLUSION

       For the foregoing reasons, the Court AFFIRMS in part and REVERSES and

REMANDS in part the Superior Court’s judgment.

                                               54