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Ostreicher v. Lincoln National Life Insurance Co.

United States District Court, E.D. New York

December 23, 2019

SHEA OSTREICHER, Individually and as Trustee of the LINKA LANDAU IRREVOCABLE LIFE INSURANCE TRUST dated May 31, 2007, Plaintiff,
v.
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.

         Plaintiff 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).[1] (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).)

         For the reasons set forth below, the motions are GRANTED.

         I. BACKGROUND

         A. Factual Allegations

         The 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 dismiss).[2]

         Plaintiff 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.)

         In 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. ¶¶ 37-40.)

         B. Procedural History

         1. Prior Litigation

         On 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).)[3] 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. (Id.)

         On 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. 1).)[4] 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.)[5]

         On 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).)

         2. The Instant Action

         Plaintiff 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.)

         Plaintiff 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. ΒΆΒΆ 58-62.) ...


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