Submitted October 8, 2014
Appeal from United States District Court for the District of Minnesota - Minneapolis.
For PHL Variable Insurance Company, Plaintiff - Appellee: Erin E. Bennett, Jarrett E. Ganer, Thomas F. A. Hetherington, Blaire Bruns Johnson, David T. McDowell, Rebecca A. Muff, EDISON & MCDOWELL, Houston, TX; Bryan C. Keane, Stephen P. Lucke, DORSEY & WHITNEY, Minneapolis, MN.
For Midas Life Settlements, LLC, Intervenor Defendant - Appellant: Kadee J. Anderson, Thomas Franklin Nelson, Steven Paul Zabel, STINSON & LEONARD, Minneapolis, MN; Silvia Araxie Babikian, Alec Orenstein, Marc R. Shapiro, Philipp Smaylovsky, ORRICK & HERRINGTON, New York, NY; Khai LeQuang, I, ORRICK & HERRINGTON, Irvine, CA; Robert Mark Loeb, ORRICK & HERRINGTON, Washington, DC; William A. Molinski, ORRICK & HERRINGTON, Los Angeles, CA.
Before LOKEN, COLLOTON, and SHEPHERD, Circuit Judges.
SHEPHERD, Circuit Judge.
PHL Variable Insurance Company brought this action to rescind a $10 million life-insurance policy after it discovered the policy application grossly misrepresented the insured's finances. Following a bench trial, the district court granted rescission. Midas Life Settlements LLC now appeals. We affirm.
Although this was not a simple case below--proceedings before the district court spanned three years, required over two-hundred-fifty docket entries, and included a six-day bench trial--the district court developed the record well. We begin with the relevant facts, as found by the district court, which are not contested here. The insured was a retired seamstress named Christa Joseph. Joseph was of modest means. Her annual household income never exceeded $40,000 and her most valuable property was a condominium worth $169,990, which had gone into foreclosure. Joseph was born in Haiti. Although she had lived in the United States for some years, she did not speak English well.
A man named Johann John Jean indirectly referred Joseph to the insurance agency Diverse Financial. Joseph did not know Jean, and they had never met. Jean referred retirees to Diverse for a fee. In April 2008, Diverse submitted an application for a $10 million life-insurance policy on Joseph's life to PHL. The application falsely stated Joseph's net worth was
$11,906,000 and her other income was $497,000. The application listed the 2008 Christa Joseph Irrevocable Trust as the proposed beneficiary. In early June 2008, Joseph signed an agreement establishing the 2008 Christa Joseph Irrevocable Trust (the " Trust" ). The Trust's intended purpose was to own life insurance policies purchased on Joseph's life and to comply with the terms of a related financing agreement. Joseph designated her daughter, Helen Ramsay, as the beneficiary. She appointed BNC National Bank as the trustee and Jean as the trust protector. Jean served as trust protector at the behest of Doron Amir, who was a principal or agent of Diverse. After Joseph established the Trust, Jean, as trust protector, directed BNC to apply for and purchase a $10 million life-insurance policy from PHL. In June 2008, PHL received an application for insurance that was essentially a copy of the April application. The June application also falsely stated Joseph's net worth was $11,906,000 and her other income was $497,000. Joseph and BNC both signed the June application.
The false financial information was inserted into the application as part of a larger scheme to defraud PHL. Diverse--and in particular one of its principals, Roy ...