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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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Policy Limits Demand Accepted Settles Claim
Post 5434
Posted on August 26, 2026 by Barry Zalma
See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute
In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange, The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.
FACTUAL BACKGROUND
Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.
Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...
Policy Limits Demand Accepted Settles Claim
Post 5434
Posted on August 26, 2026 by Barry Zalma
See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute
In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange, The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.
FACTUAL BACKGROUND
Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.
Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...
The Largest Residential Burglary of All Time
Post 5407
Fraud & the Fear of Bad Faith Suits
Posted on July 22, 2026 by Barry Zalma
See the full video at https://lnkd.in/gWQQEySW and at https://lnkd.in/gyhdK6wv
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
After ...
Crime Requires 121-151 Months of Imprisonment
Post 5486
Posted on September 9, 2026 by Barry Zalma
Mr. Baiyewu Is Liable For The Loss Resulting From Acts Directly Attributable To Him And For The Loss Resulting From The Reasonably Foreseeable Acts Of Others Taken In Furtherance of the Criminal Activity
In United States Of America v. Oluwasegun Baiyewu, CRIMINAL No. 21-395 (RAM), United States District Court, D. Puerto Rico (August 26, 2026) the court dealt with a case after on October 20, 2021, a grand jury in the District of Puerto Rico returned a single-count Indictment charging Mr. Baiyewu with conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h). About a year and a half later, on March 31, 2023, a grand jury returned a single-count Superseding Indictment charging Mr. Baiyewu and four co-defendants with conspiracy to commit money laundering, in violation of 18 U.S.C.
CONVICTION
Baiyewu was convicted by a jury of conspiracy to commit money laundering under 18 U.S.C. § 1956(h). The charged conspiracy, ...
Insurance Requires Fortuity to be an Insured Risk
Post 5485
Posted on September 8, 2026 by Barry Zalma
In Industrial Park Center, LLC, doing business as Mainspring Capital Group v. Great Northern Insurance Company, a foreign insurer, No. CV-25-0330-CQ, Supreme Court of Arizona (September 1, 2026).
The United States Court of Appeals for the Ninth Circuit certified the following question to this Court:
"Is damage to property a “fortuitous” loss when, based on the insured’s knowledge at the time the insurance policy issued, it was reasonably foreseeable that such damage was almost certain to occur if certain preventative measures were not taken?"
FACTUAL BACKGROUND
Mainspring owned commercial property leased to Star Fisheries for decades. Star Fisheries’ use of water and salt allegedly caused structural damage over time. In 2010, Mainspring learned of damage and made some repairs but did not implement all recommended preventive measures. In 2021–2022, additional similar structural damage was discovered, and ...
Insurance Requires Fortuity to be an Insured Risk
Post 5485
Posted on September 8, 2026 by Barry Zalma
In Industrial Park Center, LLC, doing business as Mainspring Capital Group v. Great Northern Insurance Company, a foreign insurer, No. CV-25-0330-CQ, Supreme Court of Arizona (September 1, 2026).
The United States Court of Appeals for the Ninth Circuit certified the following question to this Court:
"Is damage to property a “fortuitous” loss when, based on the insured’s knowledge at the time the insurance policy issued, it was reasonably foreseeable that such damage was almost certain to occur if certain preventative measures were not taken?"
FACTUAL BACKGROUND
Mainspring owned commercial property leased to Star Fisheries for decades. Star Fisheries’ use of water and salt allegedly caused structural damage over time. In 2010, Mainspring learned of damage and made some repairs but did not implement all recommended preventive measures. In 2021–2022, additional similar structural damage was discovered, and ...
