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2002 Lawrence R. Buchalter Alaska Trust v. Philadelphia Financial Life Assurance Co.

United States District Court, S.D. New York

March 31, 2015


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For Plaintiffs: Eric Donovan Dowell, Esq., Jonathan Thomas Shepard, Esq., Pryor Cashman LLP, New York, NY.

For Plaintiffs: William Robert Connelly, Esq., Law Offices of William R. Connelly, LLC, Mendham, NJ.

For Defendant: Kendall Johan Burr, Esq., Thomas F.A. Hetherington, Esq., Aaron Christopher Storm, Esq., Hutson Brit Smelley, Esq., Edison, McDowell & Hetherington, LLP, Houston, TX.

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Plaintiffs The 2002 Lawrence R. Buchalter Alaska Trust (" the Trust" ), Alaska Trust Company, and Stephen C. Harris (" Harris" ) assert seven causes of action against Defendant Philadelphia Financial Life Assurance Company (" PFLAC" ), formerly known as AGL Life Assurance Company, from which the Trust purchased a variable universal life insurance policy. Defendant moves to dismiss all seven causes of action. For the following reasons, Defendant's Motion To Dismiss is granted in part and denied in part.

I. Background

A. Factual Background

The following facts are taken from the allegations contained in Plaintiffs' Second Amended Complaint (" SAC" ), as well as the exhibits attached thereto. Lawrence Buchalter (" Buchalter" ) " created and funded the Trust for his and his family's benefit" in November 2002. (SAC ¶ 30 (Dkt. No. 42).) The Trust is an asset protection trust, created under Alaska law. ( See SAC Ex. A (" Trust Instrument" ), at I-3,

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II-11.) Under the terms of the Trust Instrument, payments of the Trust's principal and income to the Trust's beneficiaries were to be made at the discretion of the Trustee. ( Id. at I-11--12, II-12--13.) On or about November 1, 2002, Buchalter appointed the Alaska Trust Company as an Independent Trustee, meaning that, pursuant to the terms of the Trust Instrument, Buchalter " transferred all of his 'right, title and interest in and to the property' . . . to the Trustee." (SAC ¶ 31 (quoting Trust Instrument I-1).) The Alaska Trust Company has a " place of business in Anchorage, Alaska." ( Id. ¶ 23.) " On or about June 25, 2012, Buchalter appointed Harris as an additional Independent Trustee." ( Id. ¶ 31 n.2.) Harris has a place of residence in New Rochelle, New York. ( Id. ¶ 24.) Plaintiffs assert that Jeffrey Brown (" Brown" ) was the Trust's appointed investment advisor, and that " the parties understood" that Buchalter was also an investment advisor, ( id. ¶ 2 n.1), despite the fact that the Trust Instrument provided that the investment advisor was Brown, or anyone else later appointed pursuant to the appointer article, (Trust Instrument I-8).

" The Trust is the Owner and Beneficiary under a variable universal life insurance policy known as the Flexible Premium Survivorship Variable Life Insurance Contract, policy number VL300397, issued in or about December 2002" by Defendant (the " Policy" ). (SAC ¶ 32.) The Policy issued to the Trust is not a widely available, off-the-shelf product. Rather, the " Policy is offered only to qualified investors, including individuals, trusts[,] and other entities that satisfy certain suitability standards." (SAC Ex. C (Private Placement Memorandum) (" PPM" ), at 1.) Specifically, " PURCHASE OF THE POLICY IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL ECONOMIC MEANS AND FINANCIAL SOPHISTICATION," and a wouldbe policy owner is required to " REPRESENT THAT HE OR SHE MEETS CERTAIN MINIMUM FINANCIAL AND OTHER SUITABILITY STANDARDS." ( Id. at 3.) The PPM issued in connection with the Policy provides that the " Policies will be offered for sale only to persons or entities who [Defendant] has reasonable grounds to believe are eligible investors under the securities laws applicable to private placements because the Policies are being sold in an offering that has not been registered with the SEC." ( Id. at 10.) And a purchaser must represent in writing that he, she, or it is an " accredited investor" under Regulation D of the Securities Act of 1933, as amended, a " qualified purchaser" under Section 2(a)(51) of the Investment Company Act of 1940, as amended, and " has substantial experience in making investment decisions of this type," among other qualifications. ( Id. (internal quotation marks omitted).) Thus, before issuing a policy, Defendant will " make inquiry of each potential Policy Owner to determine whether he, she, or it is an eligible investor with sufficient knowledge and experience in investments of this type to evaluate the advantages, as well of the risks involved in purchasing the Policy." ( Id. ) In particular, applicants had to fill out a detailed written questionnaire. ( See id. 49--54.) Additionally, the PPM advised that " [t]he Variable Account is not registered with the SEC under the 1940 Act as an investment company," and therefore the " SEC does not supervise the management or the investment practices or policies of the Variable Account or of the Company." ( Id. at 16.)

In exchange for Defendant maintaining the tax integrity of the insurance coverage and maintaining and administering the Policy's optional investment accounts, the Trust paid Defendant upfront and annual fees for the life of the Policy. ( See SAC ¶ 36.) In total, Plaintiffs allege that the Trust paid more than $345,000 in fees to Defendant in connection with the Policy. ( Id. ¶ 145; see also id. ¶ 20.) Policies such as the one at issue in this case " are designed to allow policy holders, such as the Trust, to invest a portion of their premiums in optional investment accounts that are offered under the policy." ( Id. ¶ 29.) Such policies have certain tax benefits, including that investment gains and the payout upon death are non-taxable and that policy holders " are able to access account balances during their lifetime by borrowing funds, tax free, from the policies." ( Id. ) As such, the policies are " essentially a combination of life insurance and a tax-advantaged investment vehicle." ( Id. ) Plaintiffs allege that the Trust has made a total of $4.5 million in premium payments for the Policy. ( Id. ¶ 35.)

Defendant provided Buchalter and the Trustee with the PPM " in order to allow them to select investment alternatives under the Policy." ( Id. ¶ 37.) " The pre-approved list that [Defendant] presented was a group of private hedge fund partnerships and fund-of-hedge-fund partnerships that created investment vehicles designed specifically for insurance company investment, and [were] designed to be in compliance with relevant tax and insurance regulations." ( Id. ) Furthermore, while the investments were held by the Policy, ( see id. ¶ 40 (explaining that Defendant had exclusive control over and ownership of the invested assets)), the Trust had some degree of control over how the Policy invested the funds. In particular, " the Policy provides that the Trust is permitted to change the direction of the investments."

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( Id. ¶ 43; see also SAC Ex. B (" Second Dec. 20, 2002 Letter Agreement" ),[1] at 3 (" Insurer will permit Policyowner (subject to such restrictions as may be imposed by Insurer in the PPM or in the Policy) to allocate Assets between or among the Accounts." ); PPM 13 (" As soon as practicable . .., Premium will be allocated between or among the Investment Accounts according to the Policy Owner's instructions as specified in the Application, or as subsequently changed." ).)

In September 2005, Defendant provided Plaintiffs with a list of insurance dedicated funds available on Defendant's platform. (SAC Ex. D (" AGL Life Assurance Company -- Insurance Dedicated Funds" ).) [2] One such fund was the Strategic Stable Return Fund ID (" SSR" ), a " hedge fund-of-funds." (SAC ¶ 4.) The document provided by Defendant regarding SSR states,


(SAC Ex. D (" August 2005 SSR Tear Sheet" ), at 2.)[3] In or about December 2005, " the Trust invested nearly $3.2 million of the investment account" in SSR, (SAC ¶ 4; see also id. ¶ 73), which investment reached a peak of $3.904 million in September 2008, ( id. ¶ 96). Plaintiffs allege that in or about July 2008, they sought to redeem the Trust's entire investment in SSR and requested that Defendant's CEO prepare the necessary redemption documentation ASAP. (SAC ¶ ¶ 6, 80; see also SAC Ex. G (Email from William

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D. Lipkind, Esq. to John Hillman (July 30, 2008) (" July 30 Lipkind Email" ) (" I need the applicable person at your shop to send me the applicable documents and describe the applicable procedures whereby the Buchalter policy can sell out all of its positions and reduce everything to cash ASAP." ).) Plaintiffs allege that the request was made with enough time for Defendant to effect the redemption request before the quarter ended, as SSR required 45 days' notice to redeem, and the quarter ended on September 30, 2008. (SAC ¶ ¶ 62, 81.) However, instead of requesting redemption in September, as Plaintiffs wished, Defendant included special instructions " to redeem all funds on December 30, 2008, rather than three months prior as clearly directed in the 'ASAP' email." ( Id. ¶ 7; see also id. ¶ 83; SAC Ex. H (" Investment Account Transfer Requests" ), at unnumbered 2 (listing as special instructions, " Effective Date -- December 31, 2008" ).) Plaintiffs further allege that " [t]he Trustee and the Advisors, expecting that [Defendant] had followed [Buchalter's counsel's] explicit instruction to redeem 'ASAP,' reasonably expected that the Trust's SSR investment would be redeemed as of September 30, 2008 and that [the Trust] would recoup the entire stated balance." (SAC ¶ 85.) However, Plaintiffs allege that this " inexplicably did not occur because of [Defendant's] . . . gross negligence in connection with the most routine process of filling out the redemption forms." ( Id. ) And " [b]y October 2008, SSR had received so many redemption requests that it exercised its right to suspend all such requests until such time it felt it could accommodate the return of capital." ( Id. ¶ 86.) At that point, the " Trust's capital was frozen," and the " Trust's SSR investment account steadily declined in stated value[.]" ( Id. ¶ 8.) Although " SSR sent out letters to investors after the September 2008 suspension of redemptions suggesting that the return of investor capital was imminent in . . . 2008, 2009, 2010[,] and 2011," ( id. ¶ 89; see also id. ¶ ¶ 90--93 (describing these letters)), which letters " offered Buchalter some comfort that the Trust's capital would be returned," ( id. ¶ 94), " no capital has been returned to the Trust," ( id. ¶ 95). Indeed, according to Plaintiffs, the " reported SSR investment account balance has dropped every single month" since its peak in September 2008, ( id. ¶ 96), and as of November 30, 2012, the investment account had a stated balance of $356,900, " indicating a loss of over 90% of capital since the Trust's redemption request," ( id. ¶ 97). Further, Plaintiffs allege, " upon information and belief, . . . [that] there is only a negligible chance of even a token amount of capital being returned to the Trust." ( Id. ) Finally, Plaintiffs allege that " [i]n response to a request for an explanation for this egregious error and a demand for compliance with the redemption request," Defendant sent an email dated November 20, 2008, explaining that Defendant was monitoring developments with SSR on a weekly basis and indicating that SSR was exploring legal options. ( Id. ¶ 88; see also SAC Ex. J (Letter from Joseph A. Fillip, Jr. to William Lipkind (Nov. 20, 2008) (" Nov. 20 Fillip Letter" ).)[4]

Plaintiffs allege that Buchalter then conducted an investigation on the Trust's behalf

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in or around 2012 into Defendant's conduct with respect to the Trust's investment in SSR. (SAC ¶ 9.) Plaintiffs allege that they discovered two categories of wrongdoing, in addition to the failure to effect the redemption request discussed above. The first category relates to Defendant's vetting of SSR, and the second relates to Defendant's failure to alert Plaintiffs to certain negative information about SSR.

First, Plaintiffs allege that Defendant either failed to vet SSR at all, or " more likely, . . . haphazardly ignored critical information in its rush to become a leading carrier of variable universal life policies, which involved signing up as many funds as possible, as quickly as possible, to [Defendant's] platform[.]" (SAC ¶ 10; see also id. ¶ 114.) Plaintiffs allege that Defendant " likely ignored . . . SSR's managers' stunning lack of relevant experience," alleging that " one manager had no material experience in the complex world of structured finance, corporate receivables financing and asset-based lending, while the other had no credit or lending experience and just four years of reported business experience." ( Id. ¶ 11; see also id. ¶ 111 (alleging that neither Steven Helland nor Tim Law, who together formed SSR, " had the requisite material experience in the arcane and complex world of structured finance, corporate receivables financing[,] and asset-based lending" ).) Second, Plaintiffs allege that Defendant " also likely ignored SSR's lucrative, overtly conflicted partnership with a fund manager named William Gunlicks[,] who had been under investigation by the SEC since 2000." ( Id. ¶ 12.) In particular, Plaintiffs allege that SSR's relationship with Gunlicks was conflicted because approximately one-half of SSR's assets were " dedicated to partnerships allocated into funds managed by Gunlicks," but his management company, Founding Partners, had a 33% interest in SSR and Gunlicks " was paid full hedge fund fees on all capital that SSR invested in his funds." ( Id. ¶ 12; see also id. ¶ ¶ 112, 116, 118--22, 143.) " Thus, although Gunlicks owned a significant portion of SSR, he was receiving the largest percentage of SSR's assets to manage himself, [and] charging SSR his full investment fund fee structure[.]" ( Id. ¶ 117.) Additionally, " Gunlicks . . . was on SSR's Board and at one time was listed on a public website . . . as a Registered Investment Advisor for SSR." ( Id. ¶ 116 (footnote omitted).)

Furthermore, Plaintiffs allege that Defendant misrepresented SSR as an approved and vetted investment. Plaintiffs allege that " [i]n September, 2005, [Defendant's] Director of Research sent Buchalter (in his capacity as advisor to the Trust) an email in which he provided information concerning" SSR and, in particular, " identified SSR as one of its vetted and approved investment choices." ( Id. ¶ 58.) The email, contained in Exhibit D to the SAC, states the following: " At your request, please find attached a list of the insurance dedicated funds available through [Defendant's] platform. If you would like additional information on any of the funds, please do not hesitate to contact me." (SAC Ex. D (Email from Sandy Geyelin to Larry Buchalter (Sept. 19, 2005).) Attached to the email was a list of 27 insurance dedicated funds, including SSR. (AGL Life Assurance Company -- Insurance Dedicated Funds.) Plaintiffs allege that " [a]t the time [Defendant] presented SSR as an approved investment choice, there were an estimated 75 to 100 insurance-dedicated hedge funds in existence," and therefore conclude that the fact that Defendant presented only 27 funds " clearly indicat[ed] that it had utilized specific criteria to select said funds, and . . . [had] found that the majority of available funds were not appropriate for its policyholders." (SAC ¶ 60.)

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Second, Plaintiffs allege that Defendant did not pass on certain material information about SSR. The underlying theory behind this allegation is that Plaintiffs were unable to access information about SSR on their own, and therefore Defendant was required to pass on material information in its possession. Plaintiffs allege that they were " completely dependent on [Defendant] for information concerning the ongoing status of the Policy's investments." ( Id. ¶ 2.) According to Plaintiffs, the reasons for this dependence were twofold. First, the Policy " invested in funds that [did] not release information to the public." ( Id. ; see also id. ¶ ¶ 45, 156, 161--62.) Second, " the Trust was prohibited from direct contact with the managers of funds in the Policy's Investment Accounts in order to preserve tax benefits associated with the Policy." ( Id. ¶ 2; see also id. ¶ ¶ 19, 41--42, 45, 101, 148, 161, 172; Second Dec. 20, 2002 Letter Agreement 2 (" Policyowner will not directly or indirectly influence or attempt to influence the Manager's selection, purchase, retention or sale of any investment within the fund." ); PPM 32 (explaining that one factor considered in determining whether a variable life insurance contract owner is an owner of the assets invested through the policy for tax purposes is " whether there is any contact between a variable contract owner and the investment advisor relating to the investment decisions made" ); id. at 33 (" [N]o Policy Owner should ever attempt to contact an investment advisor. Rather, any and all questions, comments, or instructions regarding the Policy should be addressed only to the Company." (emphasis omitted)).) " Given the Trustee's and Advisors' reliance on [Defendant] to provide the relevant information that would allow them to make informed investment decisions on behalf of the Trust," Plaintiffs assert, " it was entirely foreseeable that they would not make a decision (most notably, to redeem a given investment) if [Defendant] failed to meet its obligation to provide such information." (SAC ¶ 3.) Additionally, Plaintiffs allege that the " PPM expressly acknowledges [Defendant's] role as disseminator of information, stating that '[a]ll records and accounts relating to the Investment Accounts will be maintained by the Company.'" ( Id. ¶ 46 (alteration in original) (quoting PPM 30).) However, the PPM provides only that " [t]he Company will mail an annual policy statement to the Policy Owner." (PPM 30.) Similarly, the Policy provides: " Each year . . . we will mail a report to you," which report will " show the Account Value," among other information. (Policy 22.)

Plaintiffs allege that the following categories of information are material to making investment decisions regarding hedge funds and fund-of-hedge funds: (1) " the audited financial statements as presented by the independent auditor of the fund; " (2) " periodic direct communications from the manager itself (e.g., via letters, conference calls, website access); " (3) " reported changes in service providers; " and (4) " for sophisticated investors only, periodic access to the investment manager." (SAC ¶ 47 (underlining omitted).) With regard to the financial statements provided by SSR, Plaintiffs allege that any information about any potential irregularities in the audited financial statement would be critical, as would the fact that SSR had not provided an audited financial statement, and that Defendant knew that this information was critical. ( Id. ¶ 48.) Plaintiffs also allege that information regarding any changes in service providers, especially changes in independent auditor or administrator is critical because such a development would be " viewed by any sophisticated investor as a serious adverse development for a hedge fund or fund-of-hedge fund partnership." ( Id. ¶ 53; see also id. ¶ ¶ 49--53 (explaining that a change in service provider without a reasonable

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explanation is viewed as a serious adverse development for this type of fund because " service providers provide the only outside, objective observations of fund managers," and because service providers " risk impairing their reputation if a fund for which they serve has questionable practices that the provider did not seek to remedy or, in the alternative, if the provider did not resign if no remedy was achievable" ).) Plaintiffs further allege that information regarding any " indictment, SEC investigation, or any other regulatory action commenced against a fund manager, or anyone affiliated with the fund" would be critical as it " would be an immediate catalyst for an investor to evaluate the status of an investment in the partnership, and in all likelihood, redeem at the first opportunity." ( Id. ¶ 54.) Finally, Plaintiffs allege that " [h]edge fund and fund-of-hedge investors also consider various other investment information, including: ownership of the general partner of the investment fund; changes in the investment in the fund by principals of the general partners; related party transactions; concentration of portfolio holdings; major portfolio holdings; change in investment strategy; leverage; portfolio risk; and changes to total assets under management." ( Id. ¶ 55.) Plaintiffs allege that a " material change in any one of these categories would lead an investor to immediately consider redeeming the subject investment and a combination of several of these factors would assuredly lead to an immediate withdrawal of such funds." ( Id. )

Plaintiffs allege that the following information was not passed on to them by Defendant: that in December 2007, the SEC issued a " Cease and Desist" Order against Gunlicks when " SSR and Gunlicks . . . at that point essentially were alter egos of one another," ( id. ¶ 13; see also id. ¶ 129); that Founding Partners and Gunlicks had been under investigation since 2000, ( id. ¶ 127); that Gunlicks had a conflicted relationship with SSR, ( id. ¶ 122); that SSR's auditors did not provide audited financial statements to SSR after 2006, ( id. ¶ ¶ 15, 126, 134--36); that E& Y, the independent auditor at the time of the Trust's investment, was dismissed by SSR prior to any work beginning, ( id. ¶ ¶ 133, 137); that SSR's fund administrator was replaced in January 2007, ( id. ¶ ¶ 16, 138); that SSR made a significant change in strategy, increasing its investment risks by " employing substantial leverage" in 2006, ( id. ¶ 17; see also id. ¶ ¶ 125, 139); [5] and that SSR's assets were 100% lower than what was reported by Defendant in 2007, ( id. ¶ 18). Additionally, Plaintiffs allege that in or about May 2007, in response to Defendant's provision of fund balances for April 2007, Buchalter " noted that he and the Trustee had not received a detailed investment report in approximately one year and requested a copy thereof." ( Id. ¶ 76.) Defendant " thereafter sent a one page marketing sheet that purported to summarize the fund and its performance." ( Id. ¶ 76.)

Additionally, Plaintiffs allege that Defendant generally had " broad access to and regular contact with SSR, and SSR regularly provided information to [Defendant] concerning its various investments." ( Id. ¶ 65.) Specifically, Plaintiffs allege that Defendant was provided with a monthly estimate, a monthly account statement, a

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quarterly investor letter, annual audited financials, and ADV Part II annually,[6] and that a portfolio breakdown was available upon request. ( Id. ¶ 66.) Moreover, Plaintiffs allege that Defendant had a " 'Director of Research' who supposedly was solely dedicated to monitoring and evaluating [Defendant's] investment managers and interfacing with [Defendant's] policyholders with respect to these managers." ( Id. ¶ 69.) Additionally, Defendant had access to information " through SSR's investor website, a fact of which [Defendant] never advised the Trustee []or the Advisors, and to which [Defendant] never provided access for the Trust." ( Id. ¶ 101.) However, while other insurance companies passed on such information to their policyholders, ( id. ¶ ¶ 100, 107), Defendant did not provide any information to Plaintiffs other than basic account value summaries, ( id. ¶ 102; see also id. ¶ ¶ 104, 106), nor did they inform Plaintiffs that other investors had access to such information, ( id. at ¶ ¶ 101--02, 107--09).

Finally, Plaintiffs allege that Defendant made two material misrepresentations, in addition to the alleged vetting misrepresentation. First, Plaintiffs allege that Defendant " recklessly (or worse, deliberately) overstated SSR's assets under management by approximately 100% in a report provided to . . . Buchalter (in his role as Advisor) in 2007." ( Id. ¶ 18.) Specifically, Plaintiffs allege that " [Buchalter], on behalf of the Trust, requested more information about SSR, [and Defendant] reported that SSR had $169 million in assets under management, [but SSR] in fact had only approximately half that amount based on the August 2007 [Alternative Investment Management Association Limited ('AIMA')] disclosure questionnaire containing information supplied by SSR." ( Id. ¶ 141.) Plaintiffs allege that the " higher number . . . would misleadingly indicate increased investor acceptance of SSR, a misstatement of SSR's presence in the markets in which it invested, and, most importantly, a misstatement of SSR's implied ability to meet potential redemption requests from investors." ( Id. ¶ 18.) Second, Plaintiffs allege that " SSR's administrator had been replaced in January 2007[,] tellingly when SSR was in the process of closing their books for the 2006 year." ( Id. ¶ 16.) Plaintiffs further allege that Defendant " sent Buchalter a report in June 2007 erroneously indicating that the replaced SSR administrator still was in place." ( Id. ; see also SAC. Ex. M (" May 2007 SSR Tear Sheet" ).)

Based on these allegations, Plaintiffs bring seven causes of action: negligence, negligent misrepresentation, breach of fiduciary duty, professional malpractice, breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment.

B. Procedural Background

Plaintiffs filed the Complaint on September 7, 2012, and a Summons was issued as to Defendant on the same day. ( See Dkt. No. 1.) With the Court's permission, Plaintiffs subsequently filed an Amended Complaint on February 15, 2013, ( see Dkt. No. 20), and Defendant filed a Motion To Dismiss the Amended Complaint, ( see Dkt. No. 26). After oral argument on the issue of whether Buchalter had standing as a plaintiff, the Court denied without prejudice Defendant's Motion To Dismiss to allow Plaintiffs to further amend their Amended Complaint. ( See Dkt. No. 35.) Pursuant to a scheduling order set by the Court, ( see Dkt. No. 37), Plaintiffs filed the SAC on March 31, 2014, ( see Dkt. No. 42), Defendant filed a Motion To Dismiss the SAC and accompanying papers on June 2, 2014, ( see Dkt. Nos. 44--45), Plaintiffs filed

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a Memorandum of Law in Opposition to Defendant's Motion To Dismiss, ( see Dkt. No. 46), and Defendant filed a Reply, ( see Dkt. No. 47). On February 13, 2015, the Court ordered supplemental briefing from the Parties on the issue of professional malpractice, ( see Dkt. No. 49), which the Parties submitted on February 20, 2015, ( see Dkt. Nos. 50--51). The Court held oral argument on February 24, 2015. ( See Dkt. (minute entry for Feb. 24, 2015).)

II. Discussion

A. Standard of Review

Defendant moves to dismiss Plaintiff's SAC under Rule 12(b)(6) of the Federal Rules of Civil Procedure. " While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (brackets, citations, and internal quotation marks omitted). Rule 8 of the Federal Rules of Civil Procedure " demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). " Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement." Id. (internal quotation marks and brackets omitted). Instead, a complaint's " [f]actual allegations must be enough to raise a right to relief above the speculative level . . . ." Twombly, 550 U.S. at 555. Although " once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint," id. at 563, and a plaintiff must allege " only enough facts to state a claim to relief that is plausible on its face," id. at 570, if a plaintiff has not " nudged [his or her] claim[] across the line from conceivable to plausible, the[] complaint must be dismissed," id ; see also Iqbal, 556 U.S. at 679 (" Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged--but it has not 'show[n]'--'that the pleader is entitled to relief.'" (citation omitted) (second alteration in original) (quoting Fed.R.Civ.P. 8(a)(2))); id. at 678--79 (" Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." ).

" [W]hen ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007); see also Nielsen v. Rabin, 746 F.3d 58, 62 (2d Cir. 2014) (" In addressing the sufficiency of a complaint we accept as true all factual allegations . . . ." (internal quotation marks omitted)); Dixon v. United States, No. 13-CV-2193, 2014 WL 23427, at *1 (S.D.N.Y. Jan. 2, 2014) (" For the purpose of this motion to dismiss, we assume that the facts alleged in [the plaintiff's] complaint are true." ). Further, " [f]or the purpose of resolving [a] motion to dismiss, the Court . . . draw[s] all reasonable inferences in favor of the plaintiff." Daniel v. T& M Prot. Res., Inc., 992 F.Supp.2d 302, 2014 WL 182341, at *1 n.1 (S.D.N.Y. 2014) (citing Koch v. Christie's Int'l PLC, 699 F.3d 141, 145 (2d Cir. 2012)). However, " the tenet that a court must accept as true all of the allegations contained in a complaint

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is inapplicable to legal conclusions." Iqbal, 556 U.S. at 678.

" In ruling on a 12(b)(6) motion, . . . a court may consider the complaint as well as any instrument attached to the complaint as an exhibit or any statements or documents incorporated in it by reference," as well as " matters of which judicial notice may be taken, and documents either in plaintiffs' possession or of which plaintiffs had knowledge and relied on in bringing suit." Kalyanaram v. Am. Ass'n of Univ. Professors at N.Y. Inst. of Tech., Inc., 742 F.3d 42, 44 n.1 (2d Cir. 2014) (brackets and internal quotation marks omitted)); see also Leonard F. v. Isr. Disc. Bank of N.Y., 199 F.3d 99, 107 (2d Cir. 1999) (" In adjudicating a Rule 12(b)(6) motion, a district court must confine its consideration to facts stated on the face of the complaint, in documents appended to the complaint or incorporated in the complaint by reference, and to matters of which judicial notice may be taken." (internal quotation marks omitted)); Hendrix v. City of New York, No. 12-CV-5011, 2013 WL 6835168, at *2 (E.D.N.Y. Dec. 20, 2013) (same). Finally, where " a plaintiff alleges a claim based on a written instrument," if " the documents contradict the allegations of a plaintiff's complaint, the documents control and the [c]ourt need not accept as true the allegations in the complaint." Bill Diodato Photography LLC v. Avon Prods., Inc., No. 12-CV-847, 2012 WL 4335164, at *3 (S.D.N.Y. Sept. 21, 2012) (internal quotation marks omitted); see also L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 419, 422 (2d Cir. 2011) (holding that, for the purposes of deciding a motion to dismiss, courts take allegations as true " unless contradicted by . . . documentary evidence . . . from the exhibits attached" to the complaint); TufAmerica, Inc. v. Diamond, 968 F.Supp.2d 588, 592 (S.D.N.Y. 2013) (" If a document relied on in the complaint contradicts allegations in the complaint, the document, not the allegations, control, and the court need not accept the allegations in the complaint as true." (internal quotation marks omitted)); Koulkina v. City of New York, 559 F.Supp.2d 300, 329 (S.D.N.Y. 2008) (" The exhibits to the [a]mended [c]omplaint contradict the[] allegations [contained in the amended complaint] . . . . [S]uch allegations cannot survive a motion to dismiss when they are contradicted by plaintiffs' own exhibits." ).

B. Analysis

1. General Choice-of-Law Considerations

The basis for subject matter jurisdiction in this case is diversity of citizenship pursuant to 28 U.S.C. § 1332. ( See SAC ¶ 26.) " A federal court sitting in diversity jurisdiction must apply the choice-of-law principles of the forum state, in this case New York." Fargas v. Cincinnati Mach., LLC, 986 F.Supp.2d 420, 2013 WL 6508863, at *3 (S.D.N.Y. 2013) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496--97, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)); see also Bigio v. Coca-Cola Co., 675 F.3d 163, 169 (2d Cir. 2012) (" In cases where jurisdiction is based on the diversity of the parties' citizenship, a federal court will apply the choice-of-law rules of the forum state, which is New York in this instance." ), cert. denied, 133 S.Ct. 952, 184 L.Ed.2d 752 (2013).

" In New York, the forum state in this case, the first question to resolve in determining whether to undertake a choice of law analysis is whether there is an actual conflict of laws." Fieger v. Pitney Bowes Credit Corp., 251 F.3d 386, 393 (2d Cir. 2001) (internal quotation marks omitted). " An actual conflict exists where the applicable law from each jurisdiction provides differing rules that have the potential to affect the outcome of the case significantly." Horton v. Greenwich Hosp., No.

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12-CV-4436, 2014 WL 956468, at *2 n.1 (S.D.N.Y. Mar. 10, 2014).

Under New York law, the choice of law analysis is generally done separately for each claim and defense, under a doctrine called dé peç age. See Fed. Hous. Fin. Agency v. Ally Fin. Inc., No. 11-CV-7010, 2012 WL 6616061, at *5 (S.D.N.Y. Dec. 19, 2012) (" New York embraces a choice-of-law doctrine known as dé peç age . . . ." ). Under that doctrine, " 'the rules of one legal system are applied to regulate certain issues arising from a given transaction or occurrence, while those of another system regulate the other issues.'" Golden v. Wyeth, Inc., No. 04-CV-2841, 2013 WL 4500879, at *3 (E.D.N.Y. Aug. 20, 2013) (quoting Hutner v. Greene, 734 F.2d 896, 901 (2d Cir. 1984)); see also Bigio, 675 F.3d at 169 (same). In other words, the " [d]epecage doctrine recognizes that in a single action different states may have different degrees of interests with respect to different operative facts and elements of a claim or defense." Simon v. Philip Morris Inc., 124 F.Supp.2d 46, 75 (E.D.N.Y. 2000). Here, Defendant argues that all of Plaintiffs' claims are procedurally governed by Alaska's statute of limitations, ( see Mem. of Law in Supp. of Def. Phila. Fin. Life Assurance Co.'s Mot. To Dismiss Pls.' Second Am. Compl. Under Rule 12(b)(6) (" Def.'s Mem." ) 11--12 (Dkt. No. 45)); that Plaintiffs' breach of contract claim is substantively governed by Alaska law, ( see id. at 10); and that Plaintiffs' tort claims are covered by Alaska law if there is a conflict, or by New York law if there is not a conflict, ( see id. at 10--11). For their part, Plaintiffs agree that all of their claims are procedurally governed by Alaska's statute of limitations, ( see Pls.' Mem of Law in Opp'n to PFLAC's Mot. To Dismiss the Second Am. Compl. (" Pls.' Mem." ) 10--11 (Dkt. No. 46)), and do not address head-on the issue of whether substantive New York or Alaska law applies to their claims. Because New York courts apply the dé peç age doctrine, the Court will " conduct the choice-oflaw analysis separately for each of . . . Plaintiffs' claims." Bigio, 675 F.3d at 169.

2. Statute of Limitations

" A motion to dismiss on statute of limitations grounds generally is treated as a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6)[.]" Nghiem v. U.S. Dep't of Veterans Affairs, 451 F.Supp.2d 599, 602--03 (S.D.N.Y. 2006), aff'd, 323 Fed.Appx. 16 (2d Cir. 2009). Statute of limitations defenses are affirmative defenses, and may be made at the motion to dismiss stage, without conversion to a motion for summary judgment, where the " plaintiff adequately states a claim, but [the] plaintiff's own allegations show that the defense exists." Id. at 603 (internal quotation marks omitted). Motions to dismiss on statute of limitations grounds are treated as other motions to dismiss; courts merely are to " determine whether the complaint itself is legally sufficient" to survive the affirmative defense, " not to weigh the evidence that may be presented at a trial." Adams v. Crystal City Mariott Hotel, No. 02-CV-10258, 2004 WL 744489, at *3 (S.D.N.Y. Apr. 6, 2004).

The first issue the Court must address in assessing Defendant's Motion To Dismiss on statute of limitations grounds is which state's statute of limitations to apply. " Federal courts sitting in diversity apply the forum state's statutes of limitation." Universal Trading & Inv. Co. v. Credit Suisse (Guernsey) Ltd., No. 12-CV-198, 2012 WL 6186598, at *6 (S.D.N.Y. Dec/. 12, 2012), aff'd, 560 Fed.Appx. 52 (2d Cir. 2014); see also Vincent v. Money Store, 915 F.Supp.2d 553, 562 (S.D.N.Y. 2013) (same). " In diversity cases in New

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York, federal courts apply New York's borrowing statute, N.Y. C.P.L.R. § 202 . . . ." Vincent, 915 F.Supp. at 562 (citing Stuart v. Am. Cyanamid Co., 158 F.3d 622, 627 (2d Cir. 1998)); see also Cantor Fitzgerald Inc. v. Lutnick, 313 F.3d 704, 710 (2d Cir. 2002) (applying N.Y. C.P.L.R. § 202 in a diversity case where the forum state is New York). Section 202 provides the following guidance:

An action based upon a cause of action accruing without the state cannot be commenced after the expiration of the time limited by the laws of either the state or the place without the state where the cause of action accrued, except that where the cause of action accrued in favor of a resident of the state the time limited by the laws of the state shall apply.

N.Y. C.P.L.R. § 202. The practical import of § 202 is that it " requires non-resident plaintiffs to file claims by the shorter of the statute of limitations of either (a) New York or (b) the jurisdiction where the claim accrued (in order to prevent forum shopping by time-barred claimants)." Deutsche Zentral-Genossenchaftsbank AG v. HSBC N. Am. Holdings, Inc., No. 12-CV-4025, 2013 WL 6667601, at *5 (S.D.N.Y. Dec. 17, 2013); see also BPP Ill., LLC v. Royal Bank of Scotland Grp., PLC, No. 13-CV-638, 2013 WL 6003701, at *4 (S.D.N.Y. Nov. 13, 2013) (" Pursuant to [Section 202], when a nonresident plaintiff sues upon a cause of action that arose outside of New York, the court must apply the shorter limitations ...

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