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Life Settlement Agreements Lose Money When People Insured Live Long
Life Settlement Organization Fails to Pay Investors
Post number 5350
In Luis Ramiro Aviles, et al., Fraida Kahan, Saul Raznoszczyk v. Wells Fargo Bank, N.A., Wells Fargo Delaware Trust Company, N.A., Wells Fargo Bank Northwest, N.A., Atc Realty Fifteen, Inc., et al, No. 25-312-cv, United States Court of Appeals, Second Circuit (May 8, 2026)
FACTS
Plaintiffs are investors in Lifetrade funds that invested in “life settlements” (purchasing life insurance policies, paying premiums, and collecting death benefits). In 2008 Lifetrade obtained a one-year, up to $500 million credit facility from Wachovia, later assumed by Wells Fargo after its acquisition of Wachovia.
Lifetrade failed to meet payment obligations, triggering a “Termination Event” and giving Wells Fargo UCC secured-party default remedies. After default, the parties negotiated a consensual strict foreclosure settlement under which Wells Fargo retained the collateral in full satisfaction of the debt; the Settlement Agreement was executed August 14, 2012 after negotiations by Lifetrade executives and counsel and approval by independent directors.
PROCEDURAL HISTORY
In 2017 investors filed multiple actions asserting derivative and individual claims against Lifetrade, Wells Fargo, and others. On a Rule 12(b)(6) motion (2019), the district court dismissed claims including breach of contract, fraudulent conveyance, and unjust enrichment, but allowed unconscionability and aiding-and-abetting breach of fiduciary duty to proceed. The district court granted summary judgment to Wells Fargo.
ISSUES PRESENTED
1. Whether Plaintiffs adequately pleaded a claim for breach of the implied covenant of good faith and fair dealing (having abandoned any express breach theory).
2. Whether the fraudulent conveyance claims were governed by Delaware law (not New York) and therefore time-barred.
3. Whether unjust enrichment was properly dismissed as duplicative of contract/tort theories where a valid settlement agreement governed the subject matter.
4. Whether, on summary judgment, the Settlement Agreement was unconscionable under New York law (procedurally and/or substantively).
5. Whether Wells Fargo could be liable for aiding and abetting Smith and Marcum’s alleged breaches of fiduciary duty.
HOLDINGS & RULES OF LAW
Implied covenant / pleading:
A claim must identify the contractual benefit allegedly denied and tether alleged bad faith to an implied promise “so interwoven” in the contract as necessary to effectuate its purpose; conclusory “loan-to-own” allegations are insufficient on a Rule 12(b)(6) record.
Choice-of-law scope:
Under New York law, a provision stating an agreement is “governed by, and construed in accordance with” New York law generally covers contract claims only, not tort claims.
Fraudulent conveyance as tort & conflicts:
Fraudulent conveyance is treated as a tort and the locus of the tort and the jurisdiction with the greatest interest will generally control.
Unjust enrichment:
Unjust enrichment is unavailable where it duplicates contract or tort claims.
Unconscionability (NY):
Typically requires both procedural and substantive unconscionability.
Aiding and abetting fiduciary breach:
Requires (1) an underlying fiduciary breach, (2) knowing participation, and (3) damages; without evidence of an underlying breach, aiding-and-abetting liability fails.
DISCUSSION / ANALYSIS
Rule 12(b)(6) (Motion to Dismiss)
Implied Covenant / Contract.
Plaintiffs’ complaint alleged “various agreements” and a list of grievances but did not identify which contractual terms were breached or how any specific contractual benefit was denied.
Fraudulent Conveyance / Choice Of Law & Timeliness.
The Settlement Agreement’s New York choice-of-law clause (“governed by, and construed in accordance with”) was not broad enough to reach tort claims like fraudulent conveyance.
Unjust Enrichment.
New York law treats unjust enrichment as an extraordinary equitable remedy, unavailable where a valid contract governs the subject matter.
Aiding and abetting fiduciary breach.
To recover under a theory of unjust enrichment, a litigant must show that (1) the other party was enriched, (2) at that party’s expense, and (3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered.
CONCLUSION / DISPOSITION
The Second Circuit affirmed the district court’s dismissal of the motion-to-dismiss claims and its summary judgment for Wells Fargo.
In short, the Settlement Agreement governs the subject matter of this case and therefore prevents Plaintiffs from pursuing a duplicative claim for unjust enrichment.
ZALMA OPINION
Buying life insurance policies, paying premium and waiting for the death of the person whose life is insured, is speculative, especially when people live longer. Unless early death can be guaranteed, exposing the life insured to an enforced early death, often leads to early bankruptcy. Lifetrade entered into loan contracts it could not pay back because the people whose policies they bought lived longer than expected and it defaulted on the loans. No one was happy before and after the rulings.
(c) 2026 Barry Zalma & ClaimSchool, Inc.
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Insurance Expert May Not Testify to Speculative and Contains Unsupported Conclusions.
Posted on September 18, 2026 by Barry Zalma
See the full video at and at https://rumble.com/v7fmifw-expert-may-only-testify-to-what-experience-supports.html
In Michele A. Over, and The Estate Of Paul R. Over v. State Farm Mutual Automobile Insurance Company, and State Farm Fire And Casualty Company, Civil Action No. 23-cv-02243-PAB-STV, United States District Court, D. Colorado (September 14, 2026) Michele and Paul Over sued State Farm Fire and State Farm Auto over hail-damage and stolen-vehicle claims.
The operative dispute concerned State Farm Auto’s motion to exclude or limit opinions from plaintiffs’ insurance-industry expert, Aaron Castillo. Castillo.
Law
The proponent of expert testimony must establish by a preponderance of the evidence that an expert is qualified and that the opinions are helpful, sufficiently grounded, and reliably derived and applied. Experience-based opinions must explain how the...
150 Months in Prison for Tax Fraud
Post 4846
Posted on September 17, 2026 by Barry Zalma
See the full video at https://lnkd.in/g8rh3JBX and https://lnkd.in/gmkdy-9C, In United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.
FACTS
In United States Of America v. Thomas Addaquay, United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.
FACTS
Thomas Addaquay controlled United Consolidated Accounting and Business Services (UC), nominally a check-cashing business.
The government proved a three-stage tax-refund scheme that converted the resulting refund checks into usable funds through ...
Major Fraud Perpetrator Asserts Fifth Amendment Privilege to Avoid Prosecution
Post 5489
Posted on September 14, 2026 by Barry Zalma
Fraudster Refuses to Answer Questions About His Alleged Fraud
See the full video at https://lnkd.in/gvicAMDr and at https://lnkd.in/gvicAMDr
In Great American Insurance Co. v. Gemstone Property Management, LLC, et al., No. 23-cv-9100 (LJL), United States District Court, S.D. New York (September 8, 2026) Great American Insurance Company alleged that it was defrauded through a scheme in which Subin Associates, LLP recruited individuals to stage construction-site injuries, arranged unnecessary medical treatment and litigation funding, and pursued fraudulent personal-injury claims.
Luis Manuel Garcia Salcedo, resulted in a $6 million settlement. Non-party Jose Hernandez allegedly worked as an assistant manager at Subin, operated Hernandez Associates, and owned litigation-funding companies that shared office space with Subin and provided services to its clients.
After Great American ...
A Proposed Amended Complaint That Includes New Factual Allegations to Remedy Pleading Deficiencies
Posted on November 11, 2026 by Barry Zalma
After Dismissal Fraud Victim May Amend Complaint After Dismissal
Post 4580
If A Proposed Amendment Is Not Clearly Futile, Then Denial Of Leave To Amend Is Improper
In John Hancock Life & Health Insurance Company v. Caring Connections LLC, Arthur Feldheim, and Blime a/k/a Vera Feldheim, Civ. No. 25-7574 (MAS)(JBD), United States District Court, D. New Jersey (November 6, 2026) John Hancock sued Caring Connections LLC, Arthur Feldheim, and Blime a/k/a Vera Feldheim on June 5, 2025, asserting thirteen claims, including fraud, breach of contract, and aiding and abetting fraud.
On March 26, 2026, this Court entered an order granting Caring Connections’ motion to dismiss and granting in part and denying in part the Feldheims’ motion to dismiss. The dismissed claims were dismissed without prejudice, and John Hancock timely sought leave to amend.
They also argued that the New ...
Is Exhaustion Required to Seek Declaratory Relief From an Excess Insurer?
Post 4578
Posted on November 9, 2026 by Barry Zalma
In Fox Paine & Company, LLC, et al. v. Twin City Fire Insurance Company et al., S287404, 593 P.3d 832, 593 P.3d 838, 346 Cal.Rptr.3d 541, Supreme Court of California, (July 27, 2026) the Supreme Court noted that Insurance is sometimes procured in a series of layers, with an insured acquiring a primary insurance policy that provides an initial layer of coverage for loss or liability and an excess insurance policy or policies that provide additional coverage in the event the underlying coverage is exhausted. Usually, the first layer of coverage must be exhausted before the excess layers are available to the insured.
Exhaustion
Fox and Paine’s investment-firm dispute generated extensive litigation and competing insurance claims. Their insurance tower consisted of a $10 million primary policy and four $10 million excess layers.
The Fox Parties alleged that insurers paid their rivals, withheld information,...
Payment of Fines & Completion of Probation Reinstates Right to Vote
Post 4576
Posted on November 5, 2026 by Barry Zalma
To Restore Voting Rights The Felon Must Pay Fines of $546.00
In Florida Supreme Court Mediator Ethics Advisory Committee, ETH F-26-377, No. F-26-377 (October 29, 2026) citizen unnamed and to Ron Desantis Governor, Cord Byrd the Secretary of State Florida Division of Elections provided an advisory opinion to a convicted felon about his right to vote:
To: [redacted] We received your request for an advisory opinion. You indicate that you have one or more felony convictions and request whether you are eligible to vote, including whether you have any outstanding legal financial obligations under section 98.0751, Florida Statutes, and, if so, a statement of the amount that must be paid to make you eligible to vote, and an explanation of how the amount was calculated.
The Division hereby responds to your request pursuant to its legal authority under section 106.23(2), Florida Statutes, and Florida ...
