August 30, 2015

August 28, 2015

CDA Wealth Consulting v. Global One Re: Insurance Litigation

Who:   Plaintiffs:     CDA Wealth Consulting, LLC and Sheik “Abida” Khan

        Defendant:       Global One Financial, Inc. and American General Life Insurance Company

What:  This is the latest in our continuing series of life insurance alerts.  This case concerns a term life insurance policy, however, the complaint alleges that Plaintiffs believed they were obtaining a premium financed equity indexed universal life (EIUL) policy.  While an EIUL policy was not ultimately issued, this complaint nevertheless highlights litigation risks associated with EIUL products.

CDA Wealth Consulting, LLC (CDA Wealth) and Sheik “Abida” Khan (Khan) (collectively, Plaintiffs) filed an action against Global One Financial, Inc. (Global One) and American General Life Insurance Company (American General) (collectively, Defendants) arising from Defendants’ purported breach of contract and misrepresentations relating to a keyperson equity index universal life insurance policy.  According to the complaint, Plaintiffs submitted an application to American General for a keyperson equity index universal life insurance policy, financed by a premium financing arrangement between Global One and Plaintiffs.  Plaintiffs assert that one year after the policy was issued, they discovered that the policy “was amended and altered into a term policy without [their] consent, approval, or authority,” and that Global One had “unilaterally and improperly amended the subject Keyperson Life Insurance Policy from an Equity Index UL policy as Plaintiffs intended into a term life insurance policy, which was never agreed to or consented to by Plaintiffs.”  It is further alleged that “the policy’s base amount was changed to $12,338.00 with a 1.2 million term rider with an annual premium of $50,000 and a five year index with zero return.”  Plaintiffs allege that the original policy provided by American General did not have a term life insurance policy rider. 

According to the complaint, Plaintiffs sought to cancel the policy, but Global One informed them that the policy could not be cancelled without penalties.  Plaintiffs further allege that they surrendered the policy, but due to the Defendants’ breach of contract, they were required to treat the policy as a “Modified Endowment Contract, with its attendant negative tax consequences.” 

Plaintiffs assert causes of action for:  (1) breach of contract; (2) negligent misrepresentation; (3) intentional misrepresentation; (4) fraud; (5) rescission of contract; and (6) unfair competition in violation of California’s Business & Professional Code §§ 17200. Plaintiffs seek monetary damages in an amount equal to or in excess of $150,000, in addition to restitution, statutory penalties, disgorgement of profits, punitive damages, rescission of the policy, a determination that the premium finance arrangement was the product of fraud, attorneys’ fees, and costs.

Where:  United States District Court for the Central District of  California

When:  August 28, 2013

 

 

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About this Author

Stephen C. Baker, insurance, attorney, Drinker Biddle, law firm
Partner

Stephen C. Baker is a nationally known litigator and a partner and a leader of the firm's Life Insurance & Annuities Practice Group.  He represents major insurance company groups in business litigation, regulatory, coverage and claims matters.  He serves both property and casualty and life, health and accident insurers.  For several life carriers and a BGA, he is national counsel for secondary market issues.  In his secondary market work, Steve advises insurers on exposures stemming from viaticals, life settlements, non-recourse premium financing and stranger-...

215-988-2769
Katherine Villanueva, litigation, attorney, Drinker Biddle
Associate

Kate Villanueva is an associate in Drinker Biddle’s insurance department, with experience representing clients in a variety of commercial disputes.  Kate has represented clients at the trial and appellate levels in state and federal courts nationwide. Kate has handled all aspects of civil litigation and has extensive appellate experience, including participating in appellate arguments and drafting numerous petitions for certiorari in the United States Supreme Court.

In addition to commercial litigation, Kate focuses her practice on life insurance and annuities matters and property/casualty insurance litigation and coverage issues. A significant portion of Kate's insurance­related practice involves advising life insurers on issues related to the secondary market for life insurance, fraud and agent misconduct, foreign insureds/death claims, and stranger­originated life insurance (“STOLI”).

215-988-2535
Nolan B. Tully, life insurance Lawyer, Drinker Biddle
Associate

Nolan B. Tully is an associate in the firm’s Insurance Department with experience representing clients in a variety of insurance and commercial disputes.  Nolan has represented clients at the trial and appellate levels in state and federal courts nationwide and has significant experience handling many aspects of civil and appellate litigation.

Insurance Litigation.  Nolan's insurance litigation practice is national in scope.  A significant portion of that practice involves advising life insurers on issues relating to the secondary market for life...

215-988-2975
Robert J. Mancuso, Drinker Biddle Law Firm, Insurance Attorney
Associate

Robert J. Mancuso is an associate in the firm’s Insurance Department.  Bob represents and counsels clients on a variety of life insurance and annuities matters and property and casualty insurance issues.  Bob has significant experience handling many aspects of civil and appellate litigation in state and federal courts nationwide.

Insurance Litigation. A significant portion of Bob’s litigation practice includes representing life insurers in disputes involving the secondary market for life insurance, insurance fraud, policy lapses, policy loans, and...

215-988-2876