Q Capital Archive

Judge Upholds Jury’s $5M Verdict Against AXA in Life Settlement Case

A federal judge upheld a $5 million verdict against AXA Equitable Life Insurance Co. yesterday in favor of Peachtree Life Settlements and its assignee Settlement Funding. In his decision, Judge Harold Baer Jr. of the U.S. District Court in Manhattan declined to overrule the jury’s finding.

On Oct. 25, a jury said that AXA must pay a $5 million death benefit on Esther Adler that the insurer claimed lacked insurable interest and was purchased fraudulently.

The judge said that the jury heard that Settlement Funding had relied on AXA’s statements that the policy’s contestability period had expired. He also said that Settlement Funding had relied on documents from AXA saying that the trust owned the policy and it was enforceable and beyond contestability.

“All of this evidence supports the jury’s finding that the Policy – and the incontestability clause – was valid and enforceable and that SF had committed no wrong in connection with the purchase, sale, repurchase or assignment of the Policy,” the decision said.

“I think the judge got it right,” said Jesus Cuza, an attorney with the law firm Greenberg Traurig in Fort Lauderdale, Fla., who represented Peachtree.

“As a matter of law, the policy was beyond the two-year contestability period and the jury found that Settlement Funding and its affiliates acted in accordance with the representations made by AXA,” he said.

Jule Rousseau, an attorney with Arent Fox in New York, said in an email that despite fraud at the inception, the provider wins since AXA provided a verification-of-coverage document.

“If you have a clean settlement, you don’t have to worry about fraud in inception. The unknown fraud is a huge concern for providers and tertiary buyers. Here, they collect since they had no involvement or knowledge,” he said.

He said the decision probably will seem surprising to many others, as well as the carrier, who might have assumed that the fraud would kill the policy.

Source: http://lifesettlements.dealflow.com/wires/article.cfm?title=Judge-Upholds-Jurys-5M-Verdict-Against-AXA-Peachtree-Case&id=hsqcfbrpuhvievh

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