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First Metlife Investors Insurance Co. v. Zilkha

September 21, 2009

FIRST METLIFE INVESTORS INSURANCE COMPANY PLAINTIFF
v.
MARIAN ZILKHA AND KAREN PATOU AS EXECUTRIX OF THE ESTATE OF STEPHEN BOSNIAK, DEFENDANTS.



The opinion of the court was delivered by: Hon. Harold Baer, Jr., District Judge

OPINION & ORDER

First Metlife Investors Insurance Company ("Metlife") commenced this interpleader action in connection withthe proceeds of a $2 million life insurance policy taken out on the life of Dr. Stephen Bosniak ("Bosniak"), who died intestate in February 2007, just a few months after the policy was issued. Having determined that the claim was payable, the company deposited the proceeds with the Court and Metlife has been dismissed from this action. See Order, dated February 17, 2009 (Docket No. 12). The instant dispute arises between Marian Zilkha ("Zilkha"), the owner and designated beneficiary of the policy and, at a minimum, a business associate of Bosniak, and Karen Patou ("Patou"), Bosniak's sister and administratrix of his estate.*fn1 Zilkha and Patou cross move for summary judgment on Patou's first cross-claim seeking disgorgement and recovery of theproceeds of the Metlife policy. Because Zilkha adduces competent evidence that she had an "insurable interest" in Bosniak's life pursuant to N.Y. Ins. Law § 3205(a)(1) that Patou fails to rebut, and for the reasons further set forth below, Zilkha's motion for summary judgment is GRANTED, and Patou's motion for summary judgment is DENIED.*fn2

I. FACTUAL BACKGROUND

The central and dispositive issue in this litigation is whether Zilkha had an "insurable interest" in the life of Bosniak in October 2006 when the life insurance policy was issued. As discussed below, under applicable New York law, an "insurable interest" includes "a lawful and substantial economic interest in the continued life, health or bodily safety of the person insured, as distinguished from an interest which would arise only by, or would be enhanced in value by, the death, disablement or injury of the insured." N.Y. Ins. Law §3502(a)(1). Zilkha contends that she had an "insurable interest" in Bosniak's continued life because she and Bosniak were partners in a joint business venture to develop cosmetic products and develop new medical techniques. Patou maintains, on the other hand, that "in an effort to satisfy the 'insurable interest' requirement of the New York Insurance Law, Zilkha knowingly, intentionally and unlawfully represented [on the insurance application] that she was a partner in Dr. Bosniak's medical practice." Patou's Mem. In Supp. of Mot. at 5.

Zilkha is an ophthalmic surgeon who was educated and is licensed to practice medicine in Brazil.*fn3 Aff. of Marian Zilkha, dated June 27, 2009 ("Zilkha Aff.') ¶ 6. Bosniak, too, was an ophthalmic surgeon, although he was licensed to practice in New York. Bosniak and Zilkha first met at a medical conference in 1993. Id. The two apparently hit it off and would visit each other's offices in Brazil and New York respectively to observe and learn from each others' surgical techniques. Id. ¶7. According to Zilkha's affidavit, the two doctors decided to pursue their joint business interests as a partnership to create cosmetic beauty products and to develop new surgical techniques and non-surgical rejuvenation techniques. Zilkha Aff. ¶ 19-24. The partnership operated informally under the name Bosniak Zilkha.*fn4 Id. ¶27-29.

In support of her instant motion Zilkha proffers extensive documentary and testimonial evidence that supports the existence of a business enterprise between the two doctors. For example, in an article in a periodical, Dermatology Times, that discusses the "BZ Lift," an eye-lift procedure developed by Bosniak and Zilkha, Bosniak states that the procedure was named after him and "his business partner Marian Cantisano-Zilkha." Spodek Aff. Ex. F. Zilkha also submits affidavits from a medical-business consultant (Anne Akers), an accountant (Barry Berg), and an insurance broker (Jay Hochfelsen) each of which corroborates the existence of a business enterprise between Bosniak and Zilkha that predated October 2006 issuance of insurance policy. Spodek Aff. Exs. B, C, D. The two doctors also jointly retained a lawyer (Wendy Miller) to advise Bosniak Zilkha on intellectual property matters. Spodek Aff. Ex. I. The business activities of Bosniak Zilkha are also well documented. For example, in addition to jointly developing the new surgical procedure the "BZ Lift," the two doctors developed a machine to administer carbon dioxide gas to rejuvenate the appearance of skin and eyelids that they called the CO2 Cellulair, conducted a medical study of 2,241 patients in Brazil pertaining to theuse of a drug named Restylane, created and produced a line of cosmetic products under the name "Beautif-eye" with packaging that bore the name of the partnership, and contracted to establish beauty spas in Equinox Gyms in New York City under the Bosniak Zilkha mark. Zilkha Aff. ¶ 14, 24; Akers Aff. ¶10; Spodek Aff. Exs. H, J, GG. In December 2006, Bosniak and Zilkha published, as co-authors and joint copyright owners, a book titled Beautifeye, to promote their business enterprise and its products. Akers Aff. ¶14-15; Spodek Aff. Ex. M. In early 2007, shortly before Bosniak's death, the two doctors had scheduled meetings with Oprah, Glamour, and Allure magazines to promote the book. Akers Aff. ¶ 17.

The reciprocal life insurance policies issued in October 2006 were not the first "keyman" insurance policies Bosniak and Zilkha took out on one another. In 1999 the two doctors took out $750,000 reciprocal term life insurance policies.*fn5 Spodek Aff. Ex. K. In a sworn affidavit, the accountant to the partnership, Barry Berg, states that he became concerned that the $750,000 life insurance policy was "inadequate given the large-scale plans they had for the partnership." Affidavit of Barry Berg, dated June 25, 2009, ("Berg Aff.") ¶11. Berg recommended that the two doctors consult Jay Hochfelsen, the insurance broker, to discuss an increase in the amount of their coverage. Id. Hochfelsen met with Bosniak and Zilkha on several occasions in 2006 and personally assisted them in completing the life insurance applications. Affidavit of Jay J. Hochfelsen, dated June 10, 2009 ("Hochfelsen Aff."), ¶ 9. Hochfelsen states that he was aware that Zilkha was not licensed to practice medicine in New York and that accordingly she could not have an equity interest in Bosniak's medical P.C. Id. at ¶10. The insurance application for the policy on Bosniak's life specifies, under the section titled "owner," that Zilkha's relation to the proposed insured Bosniak is "partner in practice." Decl. of Alan C. Glassman, dated May 14, 2009 ("Glassman Decl.") Ex. H. On the signature line, following Zilkha's signature, appears the notation "Business Partner." Id.

As noted, Patou's central theory is that Zilkha "knowingly, intentionally and unlawfully represented [on the insurance application] that she was a partner in Dr. Bosniak's medical practice." Patou's Mem. In Supp. of Mot. at 5. Although she asserts several evidentiary objections to the evidence that corroborates the existence of the Bosniak Zilkha partnership- e.g. violation of the so-called Dead Man's Statute, attorney-client privilege, and the parol evidence rule-Patou does not adduce evidence to counter the substantial evidence of some Bosniak Zilkha enterprise.*fn6 Rather, Patou contends that "Bosniak Zilkha[] is an illegal entity by virtue of the fact that no such entity can exist under New York law, since neither Bosniak nor Zilkha were duly licensed to practice medicine outside of their hometowns." Patou's Mem. in Opp'n. at 6. To support her argument that Zilkha's only interest in Bosniak's life was an "illegal" interest in Bosniak's New York medical practice, Patou points to the notation in the insurance application stating that Zilkha is a "partner in practice" to Bosniak, and tax records that show during the years 2004 and 2005 Zilkha received payments designated as compensation from Bosniak's medical professional corporation (the "P.C."). See Glassman Decl. Ex. L. Patou also contends that certain documentary evidence suggests that Zilkha held herself out as a partner in Bosniak's medical practice. For example, a Patou points to an advertisement for Bosniak Zilkha produced by a public relations firm that describes Bosniak and Zilkha as "well respected New York Eyelid surgeons."*fn7 Decl. of Alan C. Glassman, dated August 7, 2009 ("Supp. Glassman Decl."), Ex. C. Patou also points to statements in the affidavits of Zilkha, Hochfelsen, and Akers that reference the two doctors' "international medical practice." Patou argues, in effect, that because there is "no such thing" as an "international medical practice," Zilkha must have been illegally practicing medicine in New York through the P.C.

Patou further contends that Zilkha has failed to establish the prerequisites of a "de facto partnership," because she adduces no evidence that the partnership maintained separate books and records and Zilkha allegedly disclaimed liability to a purported creditor of the partnership; in an email to a supplier who claimed to have worked on a Bosniak Zilkha eye-cream, Zilkha's counsel stated that Zilkha "does not have personal responsibility or the debts of the late Dr. Bosniak or his professional corporation" and directs the alleged creditor to counsel for the estate. See Supp. Glassman Decl. Ex. G. Finally, Patou contends that even if Zilkha has adduced evidence of a lawful partnership, she has failed to show that the business ever earned any money.

II. LEGAL STANDARD, JURSDICTION AND APPLICABLE LAW

A. Summary Judgment Standard

A motion for summary judgment must be granted if the moving party shows "there is no genuine issue as to any material fact" and it "is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). In considering a motion for summary judgment, the Court must view the evidence in the light most favorable to the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Id. 247-48. Summary judgment should be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). "A party opposing summary judgment does not show the existence of a genuine issue of fact to be tried merely by making assertions that are conclusory or based on speculation." Major League Baseball Properties, Inc. v. Salvino, Inc., 542 F.3d 290, 310 (2d Cir. 2008) (internal citation omitted). Rather, he "must come forward with evidence sufficient to allow a reasonable jury to find in [his] favor." Brown, 257 F.3d at 252; see also Fed. R. Civ. P. 56(e) ("When a motion for summary judgment is made and supported as provided in [the] rule, . . . the adverse party's response . . . must set forth specific facts showing that there is a genuine issue for trial.") (emphasis added).

Where, as here, both parties move for summary judgment the court is not required to grant judgment as a matter of law for either. Morales v. Quintel Entm't., Inc., 249 F.3d 115, 121 (2d Cir. 2001). "Rather, each party's motion must be examined on its own merits, and in each case all reasonable ...


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