October 21, 2019

October 21, 2019

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Tough Sell for Bechtel: American General Files Suit in Florida

American General Life Insurance Co. v. Kevin H. Bechtel et al., No. 8:15-cv-00192-EAK-AEP

On January 29, 2015, American General Life Insurance Company filed a complaint against Kevin H. Bechtel and Life Brokerage Partners, LLC, in the United States District Court for the Middle District of Florida, Tampa Division.  In the lawsuit, American General is seeking to recoup commissions on two rescinded life insurance policies from Mr. Bechtel (an individual producer) and Life Brokerage Partners (a brokerage). 

The complaint alleges that Mr. Bechtel was appointed as a producer for American General in February 2003.  The complaint further alleges that non-party Stephen Wechsler was also appointed as a producer in May 2006.  Although not named as a defendant, Mr. Wechsler is alleged to have played a significant role in the facts giving rise to the lawsuit.

According to the complaint, in 2007 American General modified its producer agreement with Mr. Bechtel so that all commissions payable to Mr. Bechtel would be directed to Life Brokerage Partners.  Also in 2007, American General agreed to modify its producer agreement with Mr. Bechtel to recognize Mr. Wechsler as a subagent of Mr. Bechtel for purposes of paying bonuses and/or override commissions.

American General subsequently issued two life insurance policies on the life of Michael Sasoni.  The complaint alleges that Mr. Wechsler received a total of $505,013.60 in commissions on the Sasoni policies. The complaint alleges that Mr. Bechtel received a total of $587,994.40 in commissions on the Sasoni policies.

In July 2009, American General sued the owners of the Sasoni policies.  Pursuant to an agreement reached in July 2014, American General rescinded the Sasoni policies and returned all premiums paid in connection with the policies.

In this lawsuit, American General alleges that under the terms of the producer agreement with Mr. Bechtel, in the event a policy is rescinded and premiums refunded, the producer is obligated to return all commissions in connection with such policy.  American General further alleges that the producer agreement renders Mr. Bechtel and Life Brokerage Partners responsible for the debts of subagents, such as Mr. Wechsler.

According to the complaint, Mr. Wechsler filed for bankruptcy and was discharged on August 20, 2012.  Because of his bankruptcy, American General alleges it cannot recoup the commissions paid to Mr. Wechsler directly from him.  American General therefore asserts that Mr. Bechtel and Life Brokerage Partners are obligated to pay the commissions paid to Mr. Wechsler, per the producer agreement.

American General has asserted causes of action for breach of contract and, alternatively, for declaratory relief.

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About this Author

Nolan Tully, Insurance lawyer,Drinker Biddle

Nolan B. Tully advises clients in the insurance and financial services industries in litigation, regulatory and compliance matters. He represents insurers with respect to regulatory compliance issues, policy, insurance benefits, policy lapses, bad faith and fraud. In litigation, Nolan has represented clients on issues relating to policy lapses, the secondary market for life insurance, premium financing, fraud, and stranger-originated life insurance (STOLI).

Nolan is the co-leader of Drinker Biddle’s long term care insurance practice. He has...