Court Opinion

ID: 4118563
Source: CourtListenerOpinion
Date Created: 2017-01-25 21:01:14.191043+00
Date Added: 2024-06-11T07:46:19.601526
License: Public Domain

Case: 13-12135      Date Filed: 01/25/2017    Page: 1 of 5

                                                                           [PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                        FOR THE ELEVENTH CIRCUIT
                          ________________________

                                    No. 13-12135
                              ________________________

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

PRUCO LIFE INSURANCE COMPANY,

                                                 Plaintiff/Counter-Defendant/Appellee,

                                        versus

WELLS FARGO BANK, N.A.,
as Securities Intermediary,

                                            Defendant/Counter-Claimant/Appellant.

                              ________________________

                                    No. 13-15859
                              ________________________

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

PRUCO LIFE INSURANCE COMPANY,

                                                                   Plaintiff/Appellant,

                                        versus

U.S. BANK, N.A.,
as Securities Intermediary,
                  Case: 13-12135       Date Filed: 01/25/2017   Page: 2 of 5

                                                                    Defendant/Appellee.

                                   ________________________

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

                                       (January 25, 2017)

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

PER CURIAM:

       These consolidated appeals require us to determine the validity of two

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

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

Arguing that the policies were invalid, the insurance company relied on a Florida

statute that requires a person who procures life insurance to have an insurable

interest in the life of the insured at the inception of the policy. 1 The insurance

company contends that no such interest is present when a STOLI policy is

purchased and accordingly such policies should be considered void ab initio. The

owners of the policies relied on a second Florida statute that requires all insurance

       ∗
       Honorable Kristi K. DuBose, United States District Judge for the Southern District of
Alabama, sitting by designation.
       1
           Fla. Stat. § 627.404.
                                               2
                 Case: 13-12135   Date Filed: 01/25/2017    Page: 3 of 5

policies to include a clause providing that the policy is incontestable after it has

been “in force” for two years. 2 The policies at issue in this consolidated appeal

contained such a clause, and the insurance company clearly failed to contest the

policies within that two-year window.

      Thus, the question before this Court was whether an insurance company can

contest a STOLI policy that has been in force for more than two years. Given the

absence of any controlling Florida precedent and the inconsistent answers provided

by district courts within our circuit, we certified the following questions to the

Supreme Court of Florida:

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

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

See Pruco Life Ins. Co. v. Wells Fargo Bank, N.A., 780 F.3d 1327, 1336 (11th Cir.

2015).

      We indicated that the phrasing of the above questions should not restrict the

Florida Supreme Court’s consideration of the issues presented in these appeals. In

providing an answer, the Florida Supreme Court determined that with a STOLI

      2
          Fla. Stat. § 627.455.
                                           3
               Case: 13-12135     Date Filed: 01/25/2017     Page: 4 of 5

policy like the two policies at issue in this consolidated appeal, an insurable

interest exists in the life of the insured at the inception of the policy, as required by

Florida Statute § 627.404. That being so, the Florida Supreme Court indicated that

these policies became incontestable within two years from their issuance, as

provided in Florida Statute § 627.455. Wells Fargo Bank, N.A. v. Pruco Life Ins.

Co., 200 So. 3d 1202, 1206 (2016). The court stated:

      Because STOLI policies like the Berger and Guild policies at issue
      have the insurable interest required by section 627.404(1) at their
      inception, they become incontestable two years after their issuance
      under the plain language of section 627.455. Accordingly, we
      rephrase the questions certified by the Eleventh Circuit into the
      following question:

             Can a party challenge the validity of a life insurance
             policy after the two-year contestability period established
             by section 627.455 because of its creation through a
             STOLI scheme?

      We answer this rephrased question in the negative and return this case
      to the Eleventh Circuit.

Id. at 1206–07.

      We thank the Florida Supreme Court for its guidance. In light of its

response, we AFFIRM the entry of judgment for U.S. Bank as to the Guild policy,

Appeal No. 13-15859, District Court No. 1:12-cv-24441-FAM. We REVERSE

the entry of judgment for Pruco Life Insurance Company as to the Berger policy,

                                            4
              Case: 13-12135    Date Filed: 01/25/2017   Page: 5 of 5

Appeal No. 13-12135, District Court No. 9:10-cv-80804-JIC, and remand for

proceedings consistent with this opinion.

                                            5