United States District Court, E.D. New York
SHEA OSTREICHER, Individually and as Trustee of the LINKA LANDAU IRREVOCABLE LIFE INSURANCE TRUST dated May 31, 2007, Plaintiff,
LINCOLN NATIONAL LIFE INSURANCE COMPANY, DOMINIC BRAUS, as the Trustee of the LINKA LANDAU LIFE INSURANCE TRUST dated May 31, 2007, ADVANCED TRUST & LIFE ESCROW SERVICES, LTA, ARYEH SAFERN, AND ALAN RUBENSTELN, Defendants.
MEMORANDUM & ORDER
NICHOLAS G. GARAUFIS, UNITED STATES DISTRICT JUDGE.
Shea Ostreicher brings this action against Defendants Lincoln
National Life Insurance Company ("Lincoln"),
Dominic Braus, Advanced Trust & Life Escrow Services
("ATL"), Aryeh Safern, and Alan Rubenstein alleging
breach of contract, unjust enrichment, fraud, and civil
conspiracy, all arising out of a dispute concerning the
ownership and sale of a life insurance policy. (Am. Compl.
(Dkt. 29).) Lincoln, joined by the remaining Defendants,
moves to dismiss the action for failure to state a claim
under Federal Rule of Civil Procedure 12(b)(6). (Lincoln Not. of
Mot. (Dkt. 42); ATL Mem. in Supp. of Mot. (Dkt. 44-1) at 15;
Safern Not. of Mot. (Dkt. 46); Rubenstein Not. of Mot. (Dkt.
47); Braus Mem. in Supp. of Mot. (Dkt. 49-1) at ECFp. 9).)
reasons set forth below, the motions are GRANTED.
court takes the facts from the complaint and assumes that
they are true for the purposes of this motion. McCarthy
v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d
Cir. 2007). The court also takes notice of public filings in
previous litigation involving Plaintiffs claims. Pani v.
Empire Blue Cross Blue Shield, 152 F.3d 67, 75 (2d Cir.
1998) ("[A] district court may rely on matters of public
record in deciding a motion to dismiss under Rule
12(b)(6)."); Harbinger Capital Partners Master Fund
I, Ltd. v. Wachovia Capital Markets, LLC, No.
07-cv-8139, 2008 WL 3925175, at *1 n.2 (S.D.N.Y. Aug. 26,
2008), affd, 347 Fed.Appx. 711 (2d Cir. 2009)
(taking judicial notice of parties' public filings in a
bankruptcy proceeding when deciding motion to
was appointed as trustee of the Linka Landau Irrevocable Life
Insurance Trust (the "Trust") upon its formation on
May 31, 2007. (Am. Compl. ¶ 9.) As trustee, Plaintiff
was the beneficiary of a life insurance policy held by the
trust (the "Policy"), which was issued by Lincoln
insuring the life of the Trust's settlor, Linka Landau.
(Id. ¶¶ 8-9.)
2011, Plaintiff engaged Defendant Alan Rubenstein, an
attorney, to assist him in managing the Trust. (Id.
¶ 17.) On May 26, 2012, Plaintiff received a letter from
Lincoln informing him that Defendant Aryeh Safem had been
appointed as trustee of the Trust. (Id. ¶ 19.)
Plaintiff provided Lincoln with a forgery affidavit
contesting the legitimacy of the notice that purported to
appoint Safern as trustee. (Id., ¶ 22.) In or around
July 2012, Safern, acting as trustee, sold the Policy to Life
Partners. (Id., ¶¶ 24, 29-30.) As of September
2017, Ms. Landau, the individual covered by the Policy, has
passed away and thus the Policy has come due. (Id.
November 20, 2012, Life Partners filed an action before Judge
Jim Meyer in the McLennan County District Court in McLennan
County, Texas, seeking a declaratory judgment that it, and
not the Trust, was the owner of the Policy. (Id., ¶31;
Original Pet. in Texas Action (Dkt. 42-4).) Although Life
Partners initially named Plaintiff (in both his individual
capacity and his capacity as trustee) as a defendant in the
Texas Action, during the pendency of that suit, the
Trust's settlors and beneficiaries amended the trust
documents to name Defendant Dominic Braus, a Texas attorney,
as sole trustee. (Am. Compl. ¶¶ 31, 46.)
Thereafter, Life Partners voluntarily dismissed its claims
against Plaintiff. (Am. Compl. ¶ 31; Not. of Nonsuit as
to Shea Ostreicher in Texas Action (Dkt. 42-5).) In its final
declaratory judgment, issued April 11, 2013, the Texas court
declared that Plaintiff had no interest in the Trust and that
Braus was the sole trustee. (Final Decl. J. in Texas Action
("Texas J.") (Dkt. 42-6) at 2.) Judge Meyer also
held that Life Partners was the owner of the Policy.
March 2, 2015, Plaintiff filed a suit in the Kings County
Supreme Court against Life Partners, Lincoln, Safern, and
Rubenstein seeking a declaratory judgment that Plaintiff
remained the trustee and owner of the Policy and alleging
causes of action for breach of contract against Lincoln;
conversion and tortious interference with contract against
Life Partners and Aryeh Safern; legal malpractice against
Rubenstein; and unjust enrichment against Life Partners,
Safern, and Rubenstein. (Verified Compl. in New York Action
("New York Compl.") (Dkt. 42-9) ¶¶
39-72.) On May 19, 2015, Life Partners filed a petition for
Chapter 11 protection before Judge Russell Nelms of the
United States Bankruptcy Court for the Northern District of
Texas. (Ch. 11 Pet. (Bankruptcy Action Dkt.
On March 14, 2016, Life Partners removed the New York Action
to the Bankruptcy Court for the Eastern District of New York.
(Not. of Removal in New York Action (Dkt. 42-10).) On March
22, 2016, Chief Judge Carla E. Craig, acting sua
sponte, transferred the New York Action to the
Bankruptcy Court for the Northern District of Texas pursuant
to 28 U.S.C. § 1412 and Federal Rule of Bankruptcy
Procedure 7087, where it proceeded as an adversary proceeding
pursuant to Federal Rule of Bankruptcy Procedure 7001. (Order
Transferring Claim (Adversary Proceeding Dkt. 1); Docket
Sheet, Adversary Proceeding.)
November 1, 2016, Judge Nelms approved a Joint Plan of
Reorganization. (Order Confirming Third Am. Plan of Reorg.
(the "Plan") (Dkt. 42-8 at ECF pp. 2-20).) The
Policy was among the assets covered by the Plan (Ex. A to
Order Confirming Third Am. Plan of Reorg. ("Ex. A to
Plan") (Dkt. 42-8 at ECF p. 22)), and the Plan also
served as "complete satisfaction of ... all Claims and
Interests against the Reorganized Debtors, the Estates, and
their assets, properties, or interests in property . . .
including demands, liabilities, and Causes of Action that
arose before the Effective Date" (Plan at ECF p. 14). On
April 7, 2017, Judge Nelms granted summary judgment in favor
of Life Partners on Plaintiffs claims against it in the
Adversary Proceeding. (Order Granting Summ. J. in Favor of
Life Partners (Dkt. 42-14).) On April 26, 2017, Judge Nelms
granted summary judgment for Lincoln on Plaintiffs claims in
the Adversary Proceeding. (Order Granting Summ. J. in favor
of Lincoln Nat'1 Life Insurance Co. (Dkt. 42-15).) On
September 26, 2018, Judge Nelms granted the Chapter 11
Trustee's objection to the proof of claim that Plaintiff
filed in the Bankruptcy Action related to the Policy and
expunged the claim. (Order Granting Trustee Objection to
Proof of Claim (Dkt. 52 at ECF pp. 4-6).)
The Instant Action
filed this suit in Kings County Supreme Court on November 21,
2017, and Defendants removed it to this court on November 28,
2017. (Not. of Removal ¶ 1 (Dkt. 1).) Plaintiff filed an
amended complaint on April 6, 2018. (Am. Compl.)
avers several causes of action resulting from the allegedly
fraudulent transfer of the Policy to Safern and then to Life
Partners. Plaintiff first requests that the court enter
judgment declaring that he is trustee and owner of the Policy
(id. ¶¶ 58-62) and that any judgments in the
Bankruptcy Action are void as to him (id. ¶¶
77-90). Plaintiff then argues that Lincoln is liable for
breach of contract resulting from its acceptance of
fraudulent documents from Safern and Rubenstein.
(Id. ¶¶ 70-76.) Next, Plaintiff contends
that Defendants are collectively liable for unjust enrichment
for depriving him of the Policy after Plaintiff demanded its
return. (Id. ¶¶ 58-62.) ...