Monday, August 19, 2019

No. 327: The Age 100 Problem—Update on the Lebbin Lawsuit Against Transamerica

I first wrote about "the age 100 problem" in the January 2001 and May 2001 issues of The Insurance Forum. Later, on my blog, I wrote extensively on the subject, including four posts about a lawsuit filed by Gary H. Lebbin, a centenarian, against Transamerica Life Insurance Company: No. 226 (July 20, 2017), No. 241 (November 17, 2017), No. 269 (June 6, 2018), and No. 296 (November 26, 2018). (In those posts I offered complimentary packages that include the two 2001 Forum articles and other items.) Here I provide an update on Gary's lawsuit.

Background
Gary was born in Germany on September 6, 1917. He came to the U.S. in 1938 to escape Nazi persecution. He married Bernice in 1944; she died in 2015 at age 97. He has two children, four grandchildren, and seven great-grandchildren. In 1990 he and his children, Roger M. Lebbin and Carole Sue Lebbin, created the Lebbin-Spector Family Trust ("Trust"), which purchased two second-to-die universal life policies from Transamerica. The first, issued in 1990, had a face amount of $2 million. The second, issued in 1991, had a face amount of $1.2 million. When Bernice died, the policies became single-life universal life policies.

On July 20, 2017, shortly before Gary turned 100, he and the Trust filed a lawsuit against Transamerica. They alleged that the company had falsely represented the policies as "permanent insurance" for his "whole life," had refused his request to extend the policies beyond their terminal age of 100, and he was facing a potentially serious income tax problem. Initially the lawsuit was filed in federal court in Maryland, but later was transferred at Transamerica's request to federal court in Florida. (See Lebbin v. Transamerica, U.S. District Court, Southern District of Florida, Case No. 9:18-cv-80558.)

The case in Florida was assigned to U.S. District Judge Donald M. Middlebrooks. President Clinton nominated him in January 1997, and the Senate confirmed him in May 1997.

Recent Developments
On May 22, 2018, Judge Middlebrooks set a trial date of January 22, 2019 and alluded to the possibility of mediation. On December 14, 2018, Irma S. Raker, a retired Maryland appellate court judge, held a one-day mediation session that did not resolve the case. On December 21, 2018, Judge Middlebrooks changed the trial date to March 18, 2019 because of the "medical needs of the Plaintiffs' lead counsel."

On January 30, 2019, Transamerica filed a motion for summary judgment. On the same day, the Trust filed a motion for summary judgment.

Also on January 30, 2919, by which time Gary was afflicted with dementia and was no longer aware of the lawsuit, Transamerica offered him $10,000 in full and final settlement of all claims for damages that would otherwise be resolved in a final judgment between him and the company, including costs and attorney fees and any other money damages that could be awarded in a final judgment rendered between him and the company in the lawsuit. No portion of the offer was apportioned to settle any claim for punitive damages.

On February 5, 2019, Gary accepted the offer and withdrew from the lawsuit. On February 22, 2019, the Trust filed an amended complaint with Gary no longer listed as a plaintiff. The amended complaint has five counts: (1) declaratory relief, (2) breach of contract, (3) breach of the covenant of good faith and fair dealing, (4) reformation, and (5) rescission. Here is a paragraph from the introductory section of the amended complaint (the full complaint is in the complimentary package offered at the end of this post):
For decades, life insurance carriers, such as Transamerica, sold universal life insurance policies, marketed as "permanent life insurance" or "insurance for life," utilizing outdated mortality tables that did not take into account the fact that Americans were, and are, increasingly living to and past the age of 100. The result has been the improper termination of life insurance policies that were originally sold to policy holders as "permanent insurance." The life insurance industry has left its customers (who faithfully paid their premiums with the expectation that they would have coverage for the remainder of their lives) uninsured.
On February 26, 2019, with the March 5 trial date approaching, the judge postponed the trial until August 5, 2019. On March 22, 2019, Transamerica filed an amended motion for summary judgment. On July 19, 2019, the judge issued an order containing five conclusions (the full order is in the complimentary package offered at the end of this post):
  1. Plaintiff's Motion for Summary Judgment is GRANTED. Summary judgment is ENTERED in Plaintiff's favor on Plaintiff's claim for breach of contract (Count 2).
  2. Defendant's Amended Motion for Summary Judgment is GRANTED IN PART and DENIED IN PART.
  3. With respect to Plaintiff's claims for declaratory judgment (Count 1), reformation (Count 4), and rescission (Count 5), Defendant's Amended Motion for Summary Judgment is GRANTED and summary judgment is ENTERED in Defendant's favor.
  4. Defendant's Motion for Summary Judgment is DENIED with respect to Plaintiff's claims for breach of contract (Count 2) and breach of the covenant of good faith and fair dealing (Count 3).
  5. Calendar Call remains scheduled for July 31, 2019, and trial remains set for the two-week period beginning on August 5, 2019. The issues remaining for adjudication at trial are Plaintiff's claim for breach of the covenant of good faith and fair dealing (Count 3) and damages.
On July 29, 2019, the Trust filed a notice of voluntary dismissal of its claim for breach of the covenant of good faith and fair dealing (Count 3). On July 30, Transamerica filed a motion for reconsideration of the judge's July 19 order. On the same day, the judge denied Transamereica's motion for reconsideration. Also on the same day, the judge held a ten-minute conference. He canceled the trial set for August 5 because the "Parties have resolved the issues and will submit pleading(s) and/or order(s)."

On August 1, 2019, the parties jointly filed a "Notice of Submission of Proposed Order." On August 9, the judge issued an "Order Setting Briefing Schedule and Resolving Various Pre-Trial Motions." The briefing schedule is "to resolve the issue of damages, the sole remaining issue in this action." Here is the four-date briefing schedule:
  1. August 30, 2019: Plaintiff's motion for summary judgment.
  2. September 30, 2019: Defendant's response to plaintiff's motion and cross-motion, if any, for summary judgment.
  3. October 21: 2019: Plaintiff's reply to any cross-motion.
  4. November 8: 2019: Defendant's reply, if any, on cross-motion.
General Observations
In earlier posts about the Lebbin case, I predicted it would be settled, but I did not expect it would be settled only six days before the trial. It will be interesting to see the motions and cross-motions for summary judgment about damages, and what the judge says about them. Instead of waiting for completion of the briefings about damages, I decided to provide this update and write again after the case is fully settled.

Available Material
In previous posts (cited earlier) about the Lebbin case, I offered complimentary packages that are still available. Now I offer a complimentary 43-page PDF consisting of the Trust's February 22, 2019 amended complaint (20 pages) and the judge's July 19, 2019 order (23 pages). Email jmbelth@gmail.com and ask for the August 2019 package about the Lebbin v. Transamerica case.

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