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American General Life Insurance Co. v. Diana Spira 2005 Irrevocable Life Insurance Trust

United States District Court, S.D. New York

November 25, 2014



NELSON S. ROMN, District Judge.

Plaintiff American General Life Insurance Company ("American General") commenced this action by complaint filed July 31, 2008, against Defendants Diana Spira 2005 Inevocable Life Insurance Trust, Aaron Azrylewitz as trustee (jointly, the "Trust"), and Simon Spira. With this action, as narrowed by the patties' partial settlement ( see dkt. no. 120), American General seeks to void and rescind a life insurance policy issued in 2005 (the "Policy"), which American General allegedly issued based on material misrepresentations concerning Diana Spira's income and net worth made in a policy application and accompanying financial questionnaire.

Simon Spira ("Simon") and Diana Spira ("Diana") were husband and wife. Both are deceased at this time, and Simon's estate has been terminated from this action pursuant to the parties' partial settlement, which resolved all claims centered on a second life insurance policy issued in 2006. Intervening third-party plaintiffs, the Spiras' children, likewise have been terminated from the action pursuant to the settlement. Thus, American General and the Trust are the only remaining parties. American General and the Trust now move and cross-move, respectively, for summary judgment pursuant to Federal Rule of Civil Procedure 56.

American General moves for summary judgment on Count Three of its complaint, which seeks declaratory relief rescinding the Policy. American General also moves to dismiss the Trust's counter-claim for breach of contract. American General thereby seeks to avoid any contractual obligation to pay the Trust the $5 million face value of the Policy. The Trust opposes American General's motion and cross-moves for summary judgment based on the affirmative defenses of waiver and estoppel.

The two motions are consolidated for purposes of this opinion and order. Both motions are DENIED for the reasons outlined below.


The facts are gleaned from the parties' Rule 56.1 statements, declarations, and exhibits, and are not in dispute, except where so noted. As a threshold matter, American General moves to strike certain statements in the Trust's Rule 56.1 statement of material facts. The Court grants that motion as to argumentative statements in the Trust's Rule 56.1 submission and as to purported factual statements which are unsupported by any citation to record evidence. See Goldstick v. Hartford, Inc., No. 00-cv-8577, 2002 U.S. Dist. LEXIS 15247, at *3 (S.D.N.Y. Aug. 19, 2002). Beyond that, the motion is denied with respect to the Rule 56.1 statement.

American General also moves to strike categories of exhibits accompanying the Trust's Declaration of David Benhaim (the "Benhaim Declaration" or "Benhaim Decl.") which American General contends are either "unauthenticated exhibits" (exhibits A-G, I, AA, BB, GG) or "inadmissible hearsay" (exhibits A-G, I, J, AA, BB). That portion of the motion to strike is denied. It is true that factual assertions in an affidavit from counsel merely "familiar with the facts and circumstances of the matter" are insufficient on summary judgment and may be stricken. See Batori v. Am. Permalight, Inc., No. 03-cv-8960, 2004 U.S. Dist. LEXIS 23233, at *8 (S.D.N.Y. Nov. 16, 2004). Here, however, the Benhaim Declaration, and a supplement thereto, do not contain substantive factual assertions. Rather, the declarations seek to establish only, based on personal knowledge of the litigation, that American General produced in discovery the purportedly "unauthenticated exhibits." The Court finds that the declarations are sufficient at this stage of the proceedings, where there does not appear to be a good faith dispute about the nature or reliability of these documents. Cf. John Paul Mitchell Sys. v. Quality King Distribs. Inc., 106 F.Supp.2d 462, 472 (S.D.N.Y. 2000) (documents' form and content, coupled with the act of production, suffices for authentication purposes at the preliminary injunction stage of the proceedings). Presumably, the Trust will call an American General custodian of records as a trial witness to further authenticate these documents at the appropriate time, or the parties will arrive at a stipulation. Additionally, the Court denies the motion to strike insofar as it is based on the hearsay rule, as the documents in question, on their face, appear to be admissible business records. Century Pac., Inc. v. Hilton Hotels Corp., 528 F.Supp.2d 206, 215 (S.D.N.Y. 2007), aff'd 354 Fed.App'x 496, 496 (2d Cir. 2009) ("Hearsay evidence is admissible at the summary judgment stage if the contents would otherwise be admissible at trial.").

The Court also denies the motion to strike certain exhibits on grounds of relevance, which is an objection that, at this stage, largely goes to the weight accorded any particular document. Finally, based on the representations in the supplemental Benhaim declaration, the Court denies the motion to strike exhibit GG, which is a document summarizing voluminous business records. See Fed.R.Evid. 1006; see also Commercial Data Servers, Inc. v. IBM, 262 F.Supp.2d 50, 58 n. 3 (S.D.N.Y. 2003) (permitting submission of supplemental affidavit or declaration to further authenticate documents on summary judgment).

Having so ruled on the motion to strike, the Court will endeavor to summarize the material facts of this case.

A. Policy Application

On November 7, 2005, Diana Spira as the insured, and the Trust as owner and beneficiary, executed an application for a $5 million Flexible Premium Adjustable Life Insurance Policy from insurer, American General. Declaration of Kathleen Maio ("Maio Decl.") Ex. A-3. Diana was eighty-three years old at that time. The purpose of the Policy was to insure her life, and thereby to provide cash to cover estate taxes and other costs expected at the time of her death. See id. The Trust was the proposed beneficiary of the Policy. Aaron Azrylewitz ("Azrylewitz") was the trustee of the Trust, and the Trust beneficiaries were: Kolel Emems Vemunah Viznitz (a non-profit organization); and the Spiras' two sons, Gershon and Sholem. Id.

Although the Policy application described Diana as "retired, " it also represented household income of $600, 000 (presumably, annualized) and a net worth of $13 million. Id. The anticipated premium payment was $356, 000 annually. Id. The Policy application noted three other life insurance policies previously issued on Diana's life (1991, $100, 000; 1995, $250, 000; and 1999, $1.5 million). Id. [1] Diana signed the application as proposed insured, and Azrylewitz signed on behalf of the Trust. In executing the application, the signatories attested to having read the statements therein, and they affirmed that the statements were "true and complete to the best of [their] knowledge and belief." Id. Inexplicably, Denver, Colorado is listed as the place of execution, but the parties agree that the application and other relevant documents were generated and executed in New York, where all relevant individuals are domiciled.

B. American General's Diligence

1. Financial Questionnaire

Before issuing the Policy, American General gathered other supporting information from Diana, Simon, and Azrylewitz. First, American General procured additional written submissions from Diana on a financial questionnaire dated the same day as the Policy application, November 7, 2005. Maio Decl. Ex. A-4. On the questionnaire, Diana again represented that her pre-tax income from all sources was $600, 000. She specified that this included $120, 000 in salary or wages and $480, 000 in unearned income (interest, dividends, and real estate income). Id. Diana again represented that her net worth was $13 million, which she specified was $11.87 million in personal assets and $1.6 million in business assets, with $397, 000 in liabilities (mortgages and estate taxes). Id. As they did for the Policy application, Diana and Azrylewitz signed the financial questionnaire and thereby affirmed that the information stated therein was "full, complete and true to the best of [their] knowledge and belief, " and moreover, that the questionnaire responses were a continuation and part of the Policy application. Id. In contrast to the application itself, however, the financial questionnaire prompted Diana for her ("your") income and net worth, and neither the prompts nor the responses clarified whether the figures encompassed the entire household (i.e., Diana and Simon) or just Diana. See id.

2. Amplified Inspection Report

On November 15, 2005, a third-party vendor to American General, Infolink, generated an "Amplified Inspection Report, " as an additional form of American General underwriting diligence concerning the Policy application. Benhaim Decl. Ex. M. Infolink's report detailed Diana's medical history and the absence of many risk factors (e.g., smoking cigarettes and driving). In a financial section of the report, it stated that the applicant, Diana, provided joint financial information with annual rental income of $600, 000. The report noted, however, that the applicant "declined to provide specific personal assets, " even while estimating her net worth as $15, 000, 000 to $18, 000, 000, "primarily comprised of real estate, " with "no outstanding liabilities." Id.

3. Mid-Level Inspection Report

On November 18, 2005, American General ordered a second report from third-party vendor, LabOne. The "Mid-Level Inspection Report" was generated on December 12, 2005. Id. Ex. S. This report likewise detailed Diana's medical history and the absence of many risk factors, and then laid out income and asset figures based on Simon's responses gathered ...

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