United States District Court, S.D. New York
OPINION & ORDER
VALERIE CAPRONI, District Judge.
Plaintiff Fondation Dixhuit ("Dixhuit") filed suit on March 27, 2014, seeking payment of a $20, 000, 000 life insurance policy (the "Policy") that had been issued by Defendant Pruco Life Insurance Company of New Jersey ("Pruco") to the late billionaire Yaron Bruckner. Dixhuit, a private foundation formed under the laws of the Principality of Liechtenstein to benefit Mr. Bruckner's family, is the beneficiary of the Policy and alleges Pruco breached the insurance contract when it refused to pay the Policy proceeds. Compl. ¶¶ 1, 16-17. About a week earlier, Pruco had filed a declaratory judgment action in Liechtenstein to invalidate the Policy on the basis of allegedly fraudulent representations made by Mr. Bruckner in procuring the Policy. Def. Mem. Law at 1. Pruco moves pursuant to Fed.R.Civ.P. 12(b)(1) for this Court to abstain in favor of the Liechtenstein proceeding, or, alternatively, to dismiss the Complaint on the basis of forum non conveniens. Def. Mem. Law at 1-2. If the Court denies Pruco's motion to dismiss, Pruco asks the Court to stay this matter pending the outcome of the Liechtenstein proceeding. Def. Mem. Law at 19. For the following reasons, Pruco's motions are DENIED.
Yaron Bruckner was a resident of Monaco and citizen of Belgium and Israel; he acquired the life insurance policy at the center of this dispute from Pruco on March 28, 2008. Compl. ¶ 5. Mr. Bruckner died from a brain tumor on August 4, 2013, and Dixhuit filed a claim for the Policy benefits on October 16, 2013. Def. Mem. Law at 4. Upon investigating the claim, Pruco uncovered facts that led it to believe Mr. Bruckner had misrepresented his medical history in his Application for Life Insurance (the "Application"). Id at 4. Specifically, Pruco learned that Mr. Bruckner had undergone surgery to remove a brain tumor in 2006 and had received chemoand radiation therapy. Id. In contrast, on the Application, Mr. Bruckner denied that he had ever been treated for or diagnosed with cancer, tumors, or any disorder of the brain or nervous system. Id. at 2-3.
On March 21, 2014, Pruco initiated a proceeding in Lichtenstein, Dixhuit's home country, seeking a declaratory judgment that the Policy was invalid due to fraud. Def. Mem. Law at 4; Pl. Mem. Law Opp. at 7. Days later, on March 27, 2014, Dixhuit filed its complaint in this Court for breach of the insurance contract, claiming Pruco must pay the insurance proceeds because the Policy's incontestability period had lapsed.
Mr. Bruckner acquired the Policy as part of a portfolio of life insurance valued at approximately $100 million; the portfolio was brokered by a New York agent and the policies were solicited and negotiated in New York. Pl. Mem. Law Opp. at 5. Pruco issued one of the policies, valued at $20 million, and delivered the Policy in New York. Compl. ¶¶ 7-8. The bottom of each page of the Application was marked with a stamp that says "New York." Pendleton Decl. Exh. 1, "Application." Mr. Bruckner indicated in the Application that his home and billing addresses were in Monaco; in the space for "current employer" Bruckner wrote "New York." Id. at 1, 3. Mr. Bruckner signed the Application in New York on March 25, 2008. Id. at 8. Pruco issued the Policy on March 28, 2008. Pendleton Decl. Exh. 1, "Policy, " at 1. Each page of the Policy is stamped with the code "ULNT-2005-NY, " indicating it was issued on a New York form. See id.
Consistent with New York law, the Policy contains an incontestability clause that reads:
Except as we state in the next sentence, we will not contest this contract after it has been in force during the Insured's lifetime for two years from the issue date. The exceptions are: (1) non-payment of enough premium to pay the required changes; and (2) any change in the contract that requires our approval and that would increase our liability.
Pendleton Exh. 1, "Policy, " at 5; cf. N.Y. Ins. Law § 3203(a)(3) (McKinney's 2013). The Policy also included an integration clause:
This policy and any attached copy of an application, including an application requesting change, form the entire contract. We assume that all statements in an application are made to the best of the knowledge and belief of the person(s) who make them; they are deemed to be representations and not warranties. We rely on those statements when we issue the contract and when we change it. We will not use any statement, unless made in an application, to try to void the contract, to contest a change, or to deny a claim.
Pendleton Exh. 1, "Policy, " at 5; cf. N.Y. Ins. Law § 3203(a)(4) (requiring life insurance policies delivered in New York to include a provision stating that "the policy, together with the application therefor if a copy of such application is attached to the policy when issued, shall constitute the entire contract between the parties"). The crux of the dispute in this action and the action before the Liechtenstein court is whether Pruco may deny Dixhuit's claim to the Policy proceeds if Bruckner intentionally made material misrepresentations in the Application, given the lapse of the incontestability period.
Just as Pruco asks this Court to stay its hand in favor of the Liechtenstein action, Dixhuit asked the Liechtenstein court to stay its hand in favor of this action. The Liechtenstein court acted first and, in a decision issued on July 15, 2014, while this motion was being briefed, suspended Pruco's declaratory judgment action "until such a time as a legally-binding conclusion of the proceedings pending before the U[.]S[.] District Court [of the] Southern District of New York is reached." Pendleton Reply Decl. Exh. B at 1. The Liechtenstein court reasoned that a resolution of the breach of contract claim before this Court would be enforceable in New York against either party and would resolve the dispute before the Liechtenstein court, whereas a declaratory judgment in Dixhuit's favor by the Liechtenstein court would not be enforceable against Pruco in New York. Pendleton Reply Decl. Exh. B at 5. Notwithstanding the Liechtenstein court's decision, Pruco argues that this Court should stay its hand in favor of that proceeding or dismiss based on comity or forum non conveniens. Pruco argues that New York courts have little interest in enforcing the Policy because neither party nor the insured is (or was) a resident of New York and Bruckner's financial ties with New York were trivial compared to his overall wealth. Def. Reply Mem. Law at 2-3, 5. It follows, Pruco argues, that Liechtenstein has a greater interest in the outcome of the dispute as the beneficiary's domicile and is a more convenient forum because the witnesses and evidence are located around Europe. Pruco also argues that the Liechtenstein court is better equipped than this court to apply Monegasque law, which, it argues, governs the dispute. Def. Mem. Law at 16-17.
For the sake of clarity and because it is relevant to both abstention and the forum non conveniens analysis, the Court will first resolve what ...