Monday, May 18, 2020

No. 372: The Age 100 Problem—Another Update on the Lebbin Lawsuit Against Transamerica

As regular readers know, I have written extensively about what I call "the age 100 problem" in general, and in particular about the Lebbin lawsuit against Transamerica Life Insurance Company. The most recent update on the case is in No. 341 (November 15, 2019). Here I provide another update. (See Lebbin v. Transamerica, U.S. District Court, Southern District of Florida, Case No. 9:18-cv-80558.)

Gary Lebbin was born in September 1917 in Germany, came to the U.S. in 1938 to escape Nazi persecution, and married in 1944. His wife died in 2015 at age 97. In 1990 he created the Lebbin-Spector Family Trust (Trust), whose trustees are his two children. At the time, the Trust bought two second-to-die universal life policies on Gary and his wife from Transamerica with a total face amount of $3.2 million. When his wife died, the policies became single-life policies on Gary.

In July 2017, when Gary was almost 100 years old, he and the Trust filed an individual lawsuit in federal court in Maryland against Transamerica. The complaint alleged the company had falsely represented the policies as "permanent insurance" for his "whole life," and had refused his request to extend the policies beyond their terminal age of 100. The complaint included a breach-of-contract count and several other counts. In October 2017, at Transamerica's request, the lawsuit was transferred to federal court in Florida, where the policies were originally sold and several potential witnesses were located.

Recent Developments
In February 2019, by which time Gary was afflicted with dementia, Transamerica settled with him for $10,000. The Trust then filed an amended complaint omitting Gary as a plaintiff, leaving the Trust as the only plaintiff. The amended complaint included several counts, including a breach-of-contract count.

In July 2019, the judge granted the Trust's claim for breach of contract. The other counts were denied by the judge or withdrawn by the Trust. The judge canceled the trial, which had been set for early August 2019. The parties said they had agreed to resolve the case, but had not agreed on the damages for the Trust's breach-of-contract claim. Those damages thus became the only remaining issue in the case. The judge set a briefing schedule on the issue of damages.

The Trust requested a return of all premiums paid to Transamerica—a total of $1,670,141 plus prejudgment interest. The prejudgment interest rates the Trust suggested were the Florida statutory rates at the time of each premium payment. The Trust said it would provide the interest figure prior to the entry of final judgment.

Transamerica strongly opposed the amount of the Trust's claim for damages. The Trust replied to Transamerica's opposition. The parties made several further filings, eventually ended their briefings, and awaited the judge's ruling on the damages.

The Judge's Ruling
On April 7, 2020, the judge issued a "Final Order on Damages." For the two policies combined, he awarded the Trust a total of $2,530,154, including interest. He described his reasoning, showed his calculations, and said "Final Judgment will be entered separately." On April 9, the judge issued a "Final Judgment." On April 10, he issued an "Order Closing Case." The three documents are in the complimentary package offered at the end of this post.

The Appeal
On May 7, Transamerica filed a notice of appeal and posted a bond in the amount of $2,783,169. I think the difference between the amount of the bond and the amount of the judgment represents interest and costs of appeal. Transamerica's appellant brief is due June 17. Two court documents relating to the appeal are in the complimentary package offered at the end of this post. (See Transamerica v. Lebbin, U.S. Court of Appeals, Eleventh Circuit, Case No. 20-11756.)

General Observations
I had hoped Transamerica would pay the amount awarded and end this three-year-old lawsuit. However, we now have to wait and see what happens in the appeal. I plan to report developments.

Available Material
I am offering a complimentary 14-page package consisting of the judge's final order on damages (7 pages), his final judgment (1 page), his order closing the case (1 page), and two court documents relating to the appeal (5 pages). Email and ask for the May 2020 package about Lebbin v. Transamerica.