Opinion
CIVIL ACTION NO. 1:21-cv-03973-LMM
2022-07-12
SUN LIFE ASSURANCE COMPANY OF CANADA, Plaintiff / Counter Defendant, v. BANK OF UTAH, Defendant / Counter Claimant.
Danielle Corin Le Jeune, Cozen O'Connor, Atlanta, GA, Gregory J. Star, Pro Hac Vice, Drinker Biddle & Reath, Philadelphia, PA, Ilya Schwartzburg, Pro Hac Vice, Michael J. Miller, Pro Hac Vice, Cozen O'Connor, Philadelphia, PA, Matthew L. Elkin, Pro Hac Vice, Cozen O'Connor, New York, NY, for Plaintiff / Counter Defendant. Amanda Kay Seals, Robert Lawrence Ashe, III, Bondurant Mixson & Elmore, LLP, Atlanta, GA, Seth Ard, Pro Hac Vice, Stephanie N. Spies, Pro Hac Vice, Susman Godfrey L.L.P, New York, NY, Steven Gerlad Sklaver, Pro Hac Vice, Susman Godfrey L.L.P, Los Angeles, CA, for Defendant / Counter Claimant.
Danielle Corin Le Jeune, Cozen O'Connor, Atlanta, GA, Gregory J. Star, Pro Hac Vice, Drinker Biddle & Reath, Philadelphia, PA, Ilya Schwartzburg, Pro Hac Vice, Michael J. Miller, Pro Hac Vice, Cozen O'Connor, Philadelphia, PA, Matthew L. Elkin, Pro Hac Vice, Cozen O'Connor, New York, NY, for Plaintiff / Counter Defendant.
Amanda Kay Seals, Robert Lawrence Ashe, III, Bondurant Mixson & Elmore, LLP, Atlanta, GA, Seth Ard, Pro Hac Vice, Stephanie N. Spies, Pro Hac Vice, Susman Godfrey L.L.P, New York, NY, Steven Gerlad Sklaver, Pro Hac Vice, Susman Godfrey L.L.P, Los Angeles, CA, for Defendant / Counter Claimant.
ORDER
Leigh Martin May, United States District Judge This matter is before the Court on a Motion to Dismiss and to Strike Class Allegations from the Amended Counterclaims, Dkt. No. [28], filed by Plaintiff / Counter Defendant Sun Life Assurance Company of Canada ("Sun Life"). After due consideration, the Court enters the following Order.
I. BACKGROUND
Defendant / Counter Claimant Bank of Utah ("the Bank") is the owner of Sun Life policies 020106379 and 020133147, as securities intermediary for two non-party trusts. Dkt. No. [20] at 38, ¶ 7. Policy number 020106379 was issued by Sun Life in 2004, insuring the life of Elizabeth Turrell (hereinafter, "the Turrell Policy"), and policy number 020133147 was issued by Sun Life in 2006, insuring the life of Robert Krasnoff (hereinafter, "the Krasnoff Policy"). Id. at 38, ¶ 7. Both Policies stated that three death-benefit options were available:
For the purposes of this Order, the Court presumes that all well-pleaded allegations in the Countercomplaint are true. See infra Part III.A.
Option A - Specified Face Amount. The Death Benefit is the greater of:
(1) the Specified Face Amount; or
(2) the Account Value multiplied by the applicable Account Value Percentage shown in Section 2.
Option B - Specified Face Amount Plus Account Value. The Death Benefit is the greater of:
(1) the Specified Face Amount plus the Account Value; or
(2) the Account Value multiplied by the applicable Account Value Percentage shown in Section 2.
Option C - Specified Face Amount Plus Premiums Paid. The Death Benefit is the greater of:
(1) the Specified Face Amount plus the sum of all Premiums paid for this Policy; or
(2) the Account Value multiplied by the applicable Account Value Percentage shown in Section 2.
Id. at 42, ¶ 17; Dkt. No. [28-2] at 16 , ; Dkt. No. [28-3] at 16. The Policies also included a provision for changes to the death-benefit option:
Courts ordinarily "do not consider anything beyond the face of the complaint and documents attached thereto when analyzing a motion to dismiss." Fin. Sec. Assurance Inc. v. Stephens, Inc., 500 F.3d 1276, 1284 (11th Cir. 2007). However, a court may consider documents outside the complaint when (1) the "plaintiff refers to a document in its complaint"; (2) "the document is central to [the plaintiff's] claim"; (3) "its contents are not in dispute"; and (4) "the defendant attaches the document to its motion to dismiss." Id. Because the Policies meet all four of those conditions, the Court considers them in analyzing Sun Life's motion.
Where a document's page numbering differs from the numbering assigned by the Court's electronic filing system, the Court will use the numbers assigned by its electronic filing system.
You may change the Death Benefit option after the first Policy Year subject to our administrative rules. The amount of the Death Benefit at the time of change will not be altered, but the change in Death Benefit option will affect the determination of the Death Benefit from that point on. Requests for a change in the Death Benefit option must be made in writing to Our Principal Office. The effective date of the change will be the Anniversary on or next following the date we approve your request.
Dkt. No. [20] at 43, ¶ 19; Dkt. No. [28-2] at 16; Dkt. No. [28-3] at 16. The original policyholders both selected "Option A - Specified Face Amount." Dkt. No. [20] at 40, ¶ 14; Dkt. No. [28-2] at 4; Dkt. No. [28-3] at 4.
By letter dated February 11, 2021, the Bank, which by then had become owner of record of the Policies, requested to change the death-benefit option to Option C for both Policies, "effective as soon as possible." Dkt. No. [20] at 36-37, 40, ¶¶ 3, 14; Dkt. No. [28-5] at 2. Sun Life rejected the requests in separate letters dated March 5, 2021, both of which stated that the change had not been completed "since Death Benefit Option C can only be chosen at issue." Dkt. No. [20] at 36-37, 46, ¶¶ 3, 20, 25. Thereafter, when Sun Life denied other policyholders’ requests to switch to Option C, it stated in its rejection letters that its "administrative rules" prevented the switch. Id. at 46-47, ¶ 26.
Because the letter is referenced in the counterclaims, it is central to the counterclaims, its contents are not in dispute, and Sun Life has attached the letter to its motion to dismiss, the Court may consider the document. See Fin. Sec. Assurance Inc., 500 F.3d at 1284 ; see also supra n.2.
On June 29, 2021, the Bank filed a class action against Sun Life in the District Court for the Southern District of New York, in which it asserted claims for breach of contract based on Sun Life's refusal to make the requested death-benefit changes to the Turrell and Krasnoff Policies and Sun Life's declared intent to refuse any changes to Option C on any such policy. Brighton Trs., LLC v. Sun Life Assurance Co. of Canada, Civ. Action No. 1:21-cv-5644-JPC, ECF No. 1.
Courts may take judicial notice of documents filed in previous litigation. See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007) (stating that "matters of which a court may take judicial notice" are entitled to consideration on motions to dismiss); United States ex rel. Osheroff v. Humana Inc., 776 F.3d 805, 811 n.4 (11th Cir. 2015) ("Courts may take judicial notice of publicly filed documents ...."); Horne v. Potter, 392 F. App'x 800, 802 (11th Cir. 2010) (per curiam) (district court properly took judicial notice of documents from prior litigation).
On September 27, 2021, Sun Life filed the present lawsuit against the Bank in this Court. Dkt. No. [1]. In the Complaint, Sun Life alleges that the Krasnoff Policy was procured through an unlawful stranger-originated-life-insurance ("STOLI") scheme and therefore seeks a declaratory judgment that the policy is an illegal human-life-wagering contract and a declaratory judgment that the policy is not supported by an insurable interest. In the alternative, Sun Life seeks a declaratory judgment that its refusal of the Bank's post-issuance request to change the death-benefit option to Option C was not a breach of the Krasnoff Policy.
The Bank dismissed its New York case the same day Sun Life filed the present lawsuit. Brighton Trs., LLC, Civ. Action No. 1:21-cv-5644-JPC, ECF No. 18. It subsequently filed an Answer and Countercomplaint in the present action, Dkt. No. [13], and amended the Answer and Countercomplaint, Dkt. No. [20]. In the Amended Countercomplaint, the Bank asserts counterclaims on its own behalf and on behalf of a putative class for breach of contract and violation of Chapter 93A, §§ 9 and 11, of the General Laws of Massachusetts, based on the same conduct that was the subject of the dismissed New York action. Dkt. No. [20] at 42-60. As relief, the Bank seeks damages and an injunction requiring Sun Life to allow it and similarly situated policyholders to change to death benefit Option C after the first policy year. Id. at 58-60.
Sun Life then filed the Motion to Dismiss and to Strike Class Allegations from the Amended Counterclaims, Dkt. No. [28], that is presently before the Court. Following limited discovery, the Bank filed a response in opposition to the motion, Dkt. No. [41], and Sun Life filed a reply in support of the motion, Dkt. No. [44]. With briefing complete, the motion is now ripe for the Court's review.
II. MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
Because it presents a threshold issue, the Court first addresses Sun Life's challenge to its personal jurisdiction over the claims arising from the Turrell Policy. See Dkt. No. [28-1] at 34-38.
A. Legal Standard
Rule 12(b)(2) of the Federal Rules of Civil Procedure allows a defendant to challenge a plaintiff's claim by filing a motion to dismiss for lack of personal jurisdiction. Fed. R. Civ. P. 12(b)(2). "A plaintiff seeking the exercise of personal jurisdiction over a nonresident defendant bears the initial burden of alleging in the complaint sufficient facts to make out a prima facie case of jurisdiction." Diamond Crystal Brands, Inc. v. Food Movers Int'l, Inc., 593 F.3d 1249, 1257 (11th Cir. 2010) (internal quotation marks omitted); accord Posner v. Essex Ins. Co., 178 F.3d 1209, 1214 (11th Cir. 1999). "The court construes the allegations in the complaint as true to the extent that they are uncontroverted by defendant's evidence." Paul, Hastings, Janofsky & Walker, LLP v. City of Tulsa, Okla., 245 F. Supp. 2d 1248, 1253 (N.D. Ga. 2002). Motions to dismiss for lack of personal jurisdiction filed at the pleading stage should be "treated with caution" and granted only if the plaintiff has failed to allege "sufficient facts ... to support a reasonable inference that the defendant can be subjected to jurisdiction within the state." Bracewell v. Nicholson Air Servs., Inc., 680 F.2d 103, 104 (11th Cir. 1982).
"[A] federal court sitting in diversity undertakes a two-step inquiry in determining whether personal jurisdiction exists: the exercise of jurisdiction must (1) be appropriate under the state long-arm statute and (2) not violate the Due Process Clause of the Fourteenth Amendment to the United States Constitution." Diamond Crystal, 593 F.3d at 1257-58 (internal quotation marks omitted). District courts in Georgia should take care not to conflate these two inquiries because Georgia's long-arm statute does not provide personal jurisdiction that is coextensive with due process. Id. at 1259. Instead, the long-arm statute "imposes independent obligations that a plaintiff must establish for the exercise of personal jurisdiction that are distinct from the demands of procedural due process." Id.
B. Discussion
In the Amended Countercomplaint, the Bank alleges that this Court has personal jurisdiction over Sun Life as to all of the Bank's counterclaims because Sun Life commenced this action in Georgia, "has made continuous and systematic contacts with the State of Georgia," and is licensed to do business in Georgia. Dkt. No. [20] at 39, ¶ 10.
Sun Life moves to dismiss the counterclaims arising from the Turrell Policy on grounds that the Turrell Policy was issued in Kentucky and that the allegations in the Countercomplaint do not establish that this Court, located in Georgia, may exercise personal jurisdiction over Sun Life with regard to those claims. Dkt. No. [28-1] at 34-38. In support, Sun Life argues that the Bank cannot show that Sun Life is a citizen of Georgia or otherwise "essentially at home" in Georgia such that the Court might have general jurisdiction of the Turrell Policy claims; that the Bank has not alleged that Sun Life is subject to the Court's specific personal jurisdiction for claims relating to the Turrell Policy; and that Sun Life has not asserted claims arising from the Turrell Policy and thus has not waived the personal jurisdiction defense to claims on the Turrell Policy.
In its response brief, the Bank also refers to the Turrell Policy as the "Kentucky Policy," but it argues nevertheless that the Court may exercise personal jurisdiction over Sun Life with respect to the counterclaims arising from the Turrell Policy. Dkt. No. [41] at 38-43. The Bank contends first that the Court has personal jurisdiction over Sun Life as to the entire Countercomplaint because personal jurisdiction is evaluated per claim, the Bank has brought only two claims, both of which are based on both Policies, and the Court has personal jurisdiction over Sun Life at least as to the Krasnoff Policy. The Bank argues second that the Krasnoff Policy counterclaims are compulsory and identical to the claims arising from the Turrell Policy and that the Turrell Policy claims therefore must also be asserted in this lawsuit. Third, the Bank posits that the Court has personal jurisdiction over the Turrell Policy claims just as it does over absent nonresident class members’ claims, and it therefore "makes no practical sense" to dismiss the individual Turrell Policy claims for lack of personal jurisdiction. Finally, the Bank argues that the Court has pendent personal jurisdiction over the Turrell Policy claims, since those claims and the Krasnoff Policy claims arise from a common nucleus of operative facts.
The Court is not persuaded by any of the Bank's arguments that the Court has personal jurisdiction over Sun Life with regard to the Turrell Policy. The Bank's first argument—that it has asserted only two counterclaims and that personal jurisdiction for both arises from the fact that the Krasnoff Policy was issued in Georgia—relies on a semantic fallacy. The Bank has in fact asserted two counts —one for breach of contract and one for violation of Chapter 93A—and within each of those counts, the Bank asserts two counterclaims: one arising from the Krasnoff Policy and the other arising from the Turrell Policy, for a total of four counterclaims. See Dkt. No. [20] at 52-58. As the Bank concedes, "[p]ersonal jurisdiction is evaluated per claim. " Dkt. No. [41] at 38 (citing Turner v. Regions Bank, 770 F. Supp. 2d 1244, 1248 (M.D. Ala. 2011) ); see also Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 275 (5th Cir. 2006) ("[I]f a plaintiff's claims relate to different forum contacts of the defendant, specific jurisdiction must be established for each claim."). Thus, the Bank has not, by grouping the Krasnoff Policy breach-of-contract claim in a count with the Turrell Policy breach-of-contract claim and grouping the Krasnoff Policy Chapter 93A claim in a count with the Turrell Policy Chapter 93A claim, bootstrapped personal jurisdiction over Sun Life as to the claims arising from the Turrell Policy.
The Bank also overreaches in arguing that the Turrell Policy counterclaims are, in essence, compulsory because they are identical to the claims arising from the Krasnoff Policy. A counterclaim is compulsory—meaning that it is waived if not asserted in response to the complaint—if the counterclaim "arises out of the transaction or occurrence that is the subject matter of the opposing party's claim." Fed. R. Civ. P. 13(a). In other words, a counterclaim is compulsory "when ‘the same operative facts serve[ ] as the basis of both claims or the aggregate core of facts upon which the claim rests activates additional legal rights, otherwise dormant, in the defendant.’ " United States v. Aronson, 617 F.2d 119, 121 (5th Cir. 1980). The Bank's Turrell Policy counterclaims do not arise out of the same transaction or occurrence that is the subject of Sun Life's claims in this case, as Sun Life's claims pertain only to the Krasnoff Policy. Compare Dkt. No. [1] with Dkt. No. [20]. The Bank's Turrell Policy counterclaims also are not based on the same operative facts as the Krasnoff Policy counterclaims, since the requests to change the death-benefit options were made on separate contracts purchased years apart by different original insureds in different states, were rejected separately, and invoke consideration of the laws of contract of two different states.
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to the close of business on September 30, 1981.
For the same reasons, pendant personal jurisdiction also does not apply here. The Bank's argument for the application of pendant personal jurisdiction rests on the presumption that the Krasnoff Policy counterclaims and the Turrell Policy counterclaims are in fact grounded in a common nucleus of operative facts. Dkt. No. [41] at 41-43. Because the claims do not arise from a common nucleus of operative facts, or in other words, "the same jurisdiction-generating event," there also is no pendant personal jurisdiction. See Thomas v. Brown, 504 F. App'x 845, 847 (11th Cir. Jan. 23, 2013) ; Cronin v. Washington Nat'l Ins. Co., 980 F.2d 663, 671 (11th Cir. 1993).
The Bank's argument that the Court's jurisdiction over the putative plaintiff class should confer jurisdiction over the individual Turrell Policy counterclaims is also unavailing. Until a class is certified, the class claims do not create personal jurisdiction. See Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811-12, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985) (holding that while a forum state may exercise jurisdiction over the claim of an absent class-action plaintiff, "even though that plaintiff may not possess the minimum contacts with the forum which would support personal jurisdiction over a defendant," the privilege is grounded in the exhaustion of the class-certification process). Neither case the Bank cites suggests otherwise. See Dkt. No. [41] at 40 (citing Aiuto v. Publix Super Markets, Inc., Civ. Action No. 1:19-cv-04803-LMM, 2020 WL 2039946, at *4 (N.D. Ga. Apr. 9, 2020) ) (finding personal jurisdiction in a collective action under the Fair Labor Standards Act where the suit arose out of and was related to the defendant's contacts with Georgia); Dennis v. IDT Corp., 343 F. Supp. 3d 1363, 1366-67 (N.D. Ga. 2018) (explaining that the class-certification process supplies due-process safeguards that curb the "unfairness in haling the defendant into court to answer to it in a forum that has specific jurisdiction over the defendant based on the representative's claims" (internal quotation marks omitted)). No class has been certified in this action. The class claims therefore are not a basis for exercise of personal jurisdiction over Sun Life as to the Turrell Policy counterclaims. For these reasons, the Court concludes that it does not have personal jurisdiction over Sun Life with regard to the individual counterclaims arising from the Turrell Policy. Sun Life's motion to dismiss is therefore GRANTED as to those counterclaims.
III. MOTION TO DISMISS INSUFFICIENT PLEADINGS
Sun Life contends that the counterclaims arising from the Policies also should be dismissed because they are not plausible. Specifically, it argues that the breach-of-contract counterclaims fail because the Policies do not give the Bank an unequivocal right to change to death-benefit Option C, and it avers that the Chapter 93A counterclaims are subject to dismissal because the allegations do not rise to the level of a consumer-protection violation and are not grounded in conduct occurring in Massachusetts.
A. Legal Standard
"A motion to dismiss a counterclaim pursuant to Federal Rule of Civil Procedure 12(b)(6) is evaluated in the same manner as a motion to dismiss a complaint." United States v. Zak, 481 F. Supp. 3d 1305, 1307 (N.D. Ga. 2020) (quoting Great Am. Assurance Co. v. Sanchuk, LLC, No. 8:10-cv-2568-T-33AEP, 2012 WL 195526, at *2 (M.D. Fla. Jan. 23, 2012) ). To withstand a Rule 12(b)(6) motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A complaint is plausible on its face when the plaintiff pleads factual content necessary for the court to draw the reasonable inference that the defendant is liable for the conduct alleged. Id. (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955 ).
At the motion-to-dismiss stage, " ‘all well-pleaded facts are accepted as true, and the reasonable inferences therefrom are construed in the light most favorable to the plaintiff.’ " FindWhat Inv'r Grp. v. FindWhat.com, 658 F.3d 1282, 1296 (11th Cir. 2011) (quoting Garfield v. NDC Health Corp., 466 F.3d 1255, 1261 (11th Cir. 2006) ). However, this principle does not apply to legal conclusions set forth in the complaint. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.
B. Discussion
i. Breach of Contract
The parties agree that because the Kransnoff Policy was applied for in Georgia and was issued to and delivered to a Georgia trust to insure the life of a Georgia citizen, see Dkt. No. [28-2] at 23-24, Georgia law governs its interpretation. See Dkt. No. [28-1] at 20-21; Dkt. No. [41] at 19-20. The Court also agrees. See Lima Delta Co. v. Global RI-022 Aerospace, Inc., 338 Ga.App. 40, 789 S.E.2d 230, 235 (2016) ("[W]here the contract contains no choice of law provision, Georgia applies the rule of lex loci contractus ," which provides that the court shall apply the substantive law of the state where the contract is executed or will be performed (internal quotation marks omitted)); AIKG, LLC v. Cincinnati Ins. Co., No. 1:20-CV-4051-TWT, 2021 WL 4061542, at *2 (N.D. Ga. Sept. 7, 2021) (applying Georgia law under the lex loci contractus doctrine).
In Georgia, an insurance policy is a matter of contract, and construction of a Georgia policy is a question of law for the Court. Am. Empire Surplus Lines Ins. Co. v. Hathaway Dev. Co., 288 Ga. 749, 707 S.E.2d 369, 371 (2011). "If the language is unambiguous, the court simply enforces the contract according to the terms, and looks to the contract alone for the meaning." Id. (internal quotation marks omitted). Unambiguous terms must be given effect "even if beneficial to the insurer and detrimental to the insured." Jefferson Ins. Co. of N.Y. v. Dunn, 269 Ga. 213, 496 S.E.2d 696, 699 (1998) (internal quotation marks omitted). If the contract is ambiguous, however, the Court must apply the rules of construction to resolve the ambiguity. RLI Ins. v. Highlands on Ponce, LLC, 280 Ga.App. 798, 635 S.E.2d 168, 171 (2006) ; see also O.C.G.A. § 13-2-2 (Ga. rules of contract interpretation). If, after applying the rules of construction, the ambiguity remains, "the issue of what the ambiguous language means and what the parties intended must be resolved by a jury." RLI Ins., 635 S.E.2d at 171 (internal quotation marks omitted).
The Bank's first counterclaim is for breach of contract arising from Sun Life's refusal to change the death benefit on the Policies from Option A to Option C. Dkt. No. [20] at 52, ¶¶ 39-42. Sun Life contends that disallowing the change from Option A to Option C was not a breach of contract because the plain language of the Policies was discretionary ("You may change the Death Benefit option ...") and conditional ("... after the first Policy Year subject to our administrative rules "), Dkt. No. [28-1] at 22-25 (quoting Dkt. No. [28-2] at 16; Dkt. No. [28-3] at 16 (emphasis added)), and because a document it represents is a portion of its "administrative rules" provides that "Option C can only be chosen at issue," Dkt. No. [28-1] at 23-24 (citing Dkt. No. [28-4]).
These arguments do not persuade the Court that the breach-of-contract counterclaims should be dismissed for failure to state a plausible claim for relief. First, Sun Life's argument regarding the word "may" relies on a tortured reading of the contract language. See Dkt. No. [28-1] at 24. The policy states, "You may change the Death Benefit option after the first Policy Year subject to our administrative rules," not "You may request a change ..." or "We may allow a change ...." Dkt. No. [28-2] at 16; Dkt. No. [28-3] at 16. In other words, a plain reading of the text indicates that it is the policy owner's right to change the Death Benefit option after the first policy year, subject to Sun Life's administrative rules, and not that such a change is a mere "possibility or probability." Sun Life therefore overstates the discretion that it had to disallow a change to Option C under the plain text of the Policies. In any event, the argument certainly does not persuade the Court that the Bank has failed to plead a plausible claim for breach of contract.
The Court also is not convinced that Sun Life's proffered "administrative rules" foreclose the Bank's breach-of-contract claims, since the Court cannot consider the documents at this stage of the case, if ever. It would be premature to consider the proffer on a motion to dismiss, since the Bank disputes that the documents are, in fact, the "administrative rules" referenced in the policies, Dkt. No. [41] at 29-30, 32-33. See Fin. Sec. Assurance Inc., 500 F.3d at 1284 ; Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005). Moreover, it is questionable whether the rules may be received into evidence at all, since Georgia law provides that all individual life insurance policies that contain any reference to rules of the insurer "as forming part of or as affecting the contract between the parties [must] include or have attached to the policy a correct copy of the ... rules to which reference is made." O.C.G.A. § 33-25-2(a). Unless the rules are included in or attached to the policy, they may not be considered a part of the contract or as an independent contract, "nor shall they be received in evidence either as part of or as affecting the contract or as an independent contract in any controversy between the parties to or interested in the policy." O.C.G.A. § 33-25-2(b). If, as presently appears to be the case, the "administrative rules" were not included in or attached to the Policies, Sun Life therefore may be precluded from introducing them at any stage in the litigation.
The Court is not persuaded by Sun Life's argument that the authentication provided by its Director of Individual Insurance allows it to consider the documents at the motion-to-dismiss stage. See Dkt. No. [44] at 16-17 (relying on Day, 400 F.3d at 1276 and United States v. Ruiz, 534 F. App'x 911, 913 (11th Cir. 2013) ). Day contains no such holding, and no motion to dismiss was at issue in Ruiz; rather, the court found in Ruiz that authenticating testimony was a sufficient basis for allowing evidence to be admitted at trial but that "it remains for the trier of fact to appraise whether the proffered evidence is in fact what it purports to be," Ruiz, 534 F. App'x at 913.
For these reasons, the motion to dismiss the breach-of-contract counterclaims is due to be denied.
ii. Chapter 93A of the General Laws of Massachusetts
The Bank also asserts counterclaims for unfair business practices pursuant to § 9 of Chapter 93A of the General Laws of Massachusetts, and in the alternative, pursuant to § 11 of Chapter 93A. Dkt No. [20] at 53-61, ¶¶ 44-61. Specifically, the Bank contends that Sun Life knowingly and intentionally made misrepresentations in its denial letters regarding the benefits, advantages, conditions, and terms of the Policies, "including fabricating a time limitation regarding when an owner can switch to Option C"; "refus[ing] to change the Death Benefit Option to Option C under the false pretense that the ‘Death Benefit Option C can only be chosen at issue’ "; and making an "about-face in explaining why it did so." Id. at 47, 54-56, ¶¶ 28, 50, 52, 54. The Bank further alleges that Sun Life made the misrepresentations "for the purpose of inducing or tending to induce the lapse, forfeiture, exchange, conversion, or surrender of the policies and the benefits owed to [the Bank] under the policies," thus "making the policies much less valuable than they would have been under the prior statements and promises Sun Life made regarding the policies’ benefits, advantages, conditions, or terms." Id. at 55, 57, ¶¶ 51, 58.
Sun Life moves for dismissal of the Chapter 93A counterclaims on two grounds. It first argues that the counterclaims amount to garden-variety claims for breach of contract and therefore do not rise to the level of unfair business practices actionable under Chapter 93A. Dkt. No. [28-1] at 28-31. Second, it contends that Massachusetts was not the center of gravity of the circumstances giving rise to the counterclaims and thus that Chapter 93A is inapplicable. Id. at 31-33. The Court finds both arguments premature.
In the reply brief Sun Life filed in support of its motion to dismiss, it raises additional arguments for dismissal of the Chapter 93A claims. However, an argument raised for the first time in a reply brief is not properly before the Court and therefore will not be considered. See United States v. Whitesell, 314 F.3d 1251, 1256 (11th Cir. 2002) ; see also Fogade v. ENB Revocable Tr., 263 F.3d 1274, 1296 n.19 (11th Cir. 2001) (declining to consider arguments raised for the first time in a reply brief because arguments "that clearly are not designated in the initial brief ordinarily are considered abandoned" (internal quotation marks omitted)).
a. Plausibility of the Chapter 93A Claim
Under Chapter 93A, "it is unlawful for those engaged in trade or commerce to employ ‘unfair methods of competition and unfair or deceptive acts or practices’ in business transactions with others engaged in trade or commerce." Arthur D. Little, Inc. v. Dooyang Corp., 147 F.3d 47, 55 (1st Cir. 1998) (quoting Mass. Gen. Laws ch. 93A, §§ 2, 9 ). The statute "was designed to encourage more equitable behavior in the marketplace and impose liability on persons seeking to profit from unfair practices." Id. (internal quotation marks omitted). The statute does not define "unfair" or "deceptive"; rather, courts have held that a practice is "unfair" within the context of the statute "if it is within the penumbra of some common-law, statutory, or other established concept of unfairness; is immoral, unethical, oppressive, or unscrupulous; and causes substantial injury ...." Id. (internal quotation marks omitted); accord Jerome J. Manning Co. v. Realty, LLC, No. 19-P-1474, 155 N.E.3d 775 (table), 2020 WL 6114982, at *3 (Mass. App. Oct. 16, 2020) (unpublished) (explaining that a practice is unfair under Chapter 93A if it falls within "any recognized or established common law or statutory concept of unfairness").
As Sun Life properly notes, mere breach of contract, standing alone, does not amount to a violation actionable under Chapter 93A. Brooks v. AIG SunAmerica Life Assurance Co., 480 F.3d 579, 590 (1st Cir. 2007) (a claim based on an allegation that the defendant breached the insurance contract "falls well short of the Chapter 93A liability threshold"); Commercial Union Ins. Co. v. Seven Provinces Ins. Co., 217 F.3d 33, 40 (1st Cir. 2000) ("A mere breach of contract does not constitute an unfair or deceptive trade practice under 93A ... unless it rises to the level of ‘commercial extortion’ or a similar degree of culpable conduct." (citation omitted)); Duclersaint v. Fed. Nat'l Mortg. Assoc., 427 Mass. 809, 696 N.E.2d 536, 540 (1998) ("[A] good faith dispute as to whether money is owed, or performance of some kind is due, is not the stuff of which a c. 93A claim is made."). Thus, an insurance carrier that in good faith denies a request of the insured "on the basis of a plausible interpretation of its insurance policy is unlikely to have committed a violation of G.L. c. 93A." Commercial Union Ins. Co., 217 F.3d at 40. However, " ‘unlikely’ does not mean ‘never,’ " and "a plausible defense does not automatically preclude a finding of a 93A violation; the defense must be clearly articulated and asserted in good faith." Id. at 40-41.
Viewing the pleadings and inferences in the light most favorable to the Bank, as the Court must do in its consideration of Sun Life's motion to dismiss, the Court finds that the Bank has pleaded facts sufficient to state a plausible claim for relief under Chapter 93A. The reason Sun Life gave for denying the Bank's request for a death-benefit change was asserted summarily, not clearly: rather than pointing to any portion of the Policy as a basis for rejecting the request, Sun Life simply stated that the change had not been completed "since Death Benefit Option C can only be chosen at issue." Dkt. No. [20] ¶ 20. Furthermore, the more particular defense that has been raised in this lawsuit—Sun Life's insistence that "administrative rules" precluded the change—at least suggests prevarication, as the designation "administrative" typically relates to managerial—not substantive—issues. See Administration, The Am. Heritage College Dictionary (3d. ed.) ("Management, esp. of business affairs."). Additionally, the Bank has alleged in the Countercomplaint that the death-benefit change option was a policy feature that Sun Life actively marketed. Dkt. No. [20] at 47-48, ¶ 28 (describing a brochure for the product which stated, "If your insurance needs change, you have the flexibility to change the death-benefit option, as well as increase or decrease the face amount on any policy anniversary"). It therefore can be reasonably inferred from the Countercomplaint that Sun Life deceptively leveraged an undefined rule that was incorporated by reference into the Policy in order to make the Policy appear more flexible, and therefore more valuable, than what it intended to sell, and/or that the reasons Sun Life gave the Bank for declining the change-of-death-benefit request were not given in good faith but rather were an after-the-fact attempt to discourage the Bank from exercising valuable contract rights.
Accordingly, the Court finds that the Bank has pleaded facts giving rise to a plausible inference that the reasons Sun Life has given for denying the death-benefit request were not asserted in good faith and thus that the Bank has alleged a plausible counterclaim for violation of Chapter 93A. Conduct undertaken in disregard of known contractual arrangements and intended to secure benefits for the breaching party may constitute an "unfair act or practice" for Chapter 93A purposes. Arthur D. Little, Inc., 147 F.3d at 55. The Court therefore declines to dismiss the Chapter 93A counterclaim for failure to state a plausible claim for relief.
b. Chapter 93A Jurisdiction
Sun Life argues that Chapter 93A is inapplicable to the Krasnoff Policy because Chapter 93A applies only if the center of gravity of the circumstances giving rise to the claim is primarily and substantially within Massachusetts, and in this case, it was not. Dkt. No. [28-1] at 31-33; Dkt. No. [44] at 24-25. In response, the Bank correctly points out that the "center of gravity" limitation applies only to claims asserted under § 11, not claims asserted under § 9. See Geis v. Nestle Waters N.A., Inc., 321 F. Supp. 3d 230, 241 (D. Mass. 2018) ; Pare v. Northborough Capital Partners, LLC, 89 F. Supp. 3d 192, 193 (D. Mass. 2015). The Bank also contends that it has plausibly alleged that the center of gravity of its claims lies in Massachusetts and argues that the center of gravity of a violation is a fact-dependent inquiry not appropriate for resolution on a motion to dismiss. Dkt. No. [41] at 36-38.
Because there is no requirement under § 9 that the allegedly deceptive activity had to occur primarily and substantially in Massachusetts, it is axiomatic that Sun Life's motion to dismiss the claim asserted under Chapter 93A, § 9, cannot be granted on that basis. The Court therefore turns to the question of whether the jurisdictional limitation precludes the § 11 claim.
Section 11 of Chapter 93A provides that "[n]o action shall be brought or maintained under this section unless the actions and transactions constituting the alleged unfair method of competition or the unfair or deceptive act or practice occurred primarily and substantially within the commonwealth." Mass. Gen. Laws, ch. 93A, § 11. The burden of proof is on "the person claiming that such transactions and actions did not occur primarily and substantially within the commonwealth." Id.
The Massachusetts Supreme Court has held that "the analysis required under § 11 should not be based on a test identified by any particular factor or factors." Kuwaiti Danish Computer Co. v. Digital Equip. Corp., 438 Mass. 459, 781 N.E.2d 787, 799 (2003). Instead, a judge should make findings of fact; consider those findings "in the context of the entire § 11 claim" as well as the "purpose and scope of [Chapter] 93A"; and then "determine whether the center of gravity of the circumstances that give rise to the claim is primarily and substantially within the Commonwealth." Id. Among the factors courts consider in the "center of gravity" analysis are where "the preponderance of the wrongful conduct" and the "essential elements" of the transaction take place; "where the defendant commits the unfair or deceptive act or practice"; "where the plaintiff receives or acts on the wrongful conduct"; and "where the plaintiff sustained losses caused by the wrongful conduct." Id. at 798 n.13. In any event, judges are reluctant to grant motions to dismiss based on locality where the pleadings suggest that the plaintiff suffered a loss within Massachusetts, preferring instead to reserve the assessment until after the factual record has been developed. Bruno Int'l Ltd. v. Vicor Corp., Civ. Action No. 14-10037-DPW, 2015 WL 5447652, at *18-19 (D. Mass. Sept. 16, 2015).
The Court finds that the Bank's pleadings are sufficient to allow discovery of the claim. The Bank's Countercomplaint contains assertions suggesting that substantial elements of the accused conduct took place in Massachusetts and had effects in Massachusetts, as the Bank has alleged that Sun Life signed and sent the Policies from its principle place of business in Massachusetts; Sun Life billed, collected, accepted, and retained the premiums for the Policies in Massachusetts; the letters misrepresenting the terms of the Policies and denying the death-benefit-change requests originated in Massachusetts; and Sun Life wrongfully seeks to retain the premiums in Massachusetts. Dkt. No. [20] at 55-56, ¶ 52. Therefore, the Court concludes that the "center of gravity" analysis is better left for resolution once the factual record is better developed.
For these reasons, the Court also declines to dismiss the Chapter 93A claim on grounds that it arises from conduct that did not occur in Massachusetts.
IV. MOTION TO STRIKE CLASS ALLEGATIONS
The Bank seeks to bring its claims both individually and on behalf of a class it refers to as the "Change of Death Benefit Option Class," which it defines as:
All owners of universal life insurance policies issued by Sun Life Assurance Company of Canada, or their predecessors, successors, or subsidiaries, or affiliates, where the policies (a) have a death benefit option that pays specified face amount [sic] plus premiums paid; and (b) provide that the policyowner may change the Death Benefit option after the first policy year. The Class excludes defendant Sun Life Assurance Company of Canada, its officers and directors, members of their immediate families, and the heirs, successors or assigns of any of the foregoing.
Dkt. No. [20] at 49, ¶ 30. The Bank alleges that the proposed class includes at least 40 members and that class action is appropriate because Sun Life has refused to permit the policyowners to exercise their contractual right to switch to Death Benefit Option C "so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole" and because common questions of law and fact affecting the class predominate over those questions affecting only individual members:
a. the construction and interpretation of the form insurance policies at issue in this litigation;
b. whether Sun Life Assurance Company of Canada's actions to refuse policyholders to switch to Option C violated the terms of those form policies and anticipatorily breached its contracts with the class members;
c. whether Sun Life has violated Mass. Gen. Laws Ann. ch. 93A; and
d. whether Plaintiff and Class members are entitled to receive damages as a result of the unlawful conduct by Sun Life alleged herein and the methodology for calculating those damages.
Id. at 50-51, ¶¶ 35, 36.
A. Legal Standard
"In some instances, the propriety vel non of class certification can be gleaned from the face of the pleadings." Mills v. Foremost Ins. Co., 511 F.3d 1300, 1309 (11th Cir. 2008). In such cases, courts apply the requirements set out in Rule 23 of the Federal Rules of Civil Procedure to determine whether "class treatment [is] inappropriate based on the face of Plaintiffs’ complaint." Herrera v. JFK Med. Ctr. Ltd. P'ship, 648 F. App'x 930, 933 (11th Cir. 2016). The certification prerequisites are:
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests of the class.
Id. (quoting Fed. R. Civ. P. 23(a) ) The class action must also satisfy at least one of the alternative requirements of Rule 23(b), id.; here, that "the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole" or "that the questions of law or fact common to the class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy," Fed. R. Civ. P. 23(b)(2) & (3) (cited in Dkt. No. [20] at 50, ¶¶ 35, 36).
Where class allegations fail to meet these requirements, class certification may be resolved at the pleadings stage. Fitzer v. Am. Inst. of Baking, No. CV 209-169, 2016 WL 4223612, at *11 (S.D. Ga. Aug. 9, 2016) ; Lumpkin v. E.I. Du Pont de Nemours & Co., 161 F.R.D. 480, 482 (M.D. Ga. 1995). However, "[d]ismissal of class allegations at the pleading stage is an extreme remedy appropriate only where a defendant demonstrates from the face of the complaint that it will be impossible to certify the classes alleged by the plaintiff regardless of the facts the plaintiff may be able to prove." Mayfield v. Ace Am. Ins. Co., Civ. Action No. 1:19-cv-02425-SDG, 2020 WL 12029099, at *6 (N.D. Ga. Mar. 19, 2020) (internal quotation marks omitted); accord Mills, 511 F.3d at 1309 ("[T]he parties’ pleadings alone are often not sufficient to establish whether class certification is proper, and the district court will need to go beyond the pleadings and permit some discovery and/or an evidentiary hearing to determine whether a class may be certified."). In fact, "courts in this Circuit routinely find such motions at this stage of proceedings to be premature, preferring instead to address issues raised in the motion in a response filed in opposition to a motion for class certification." Mayfield, 2020 WL 12029099, at *6 (internal quotation marks omitted).
B. Discussion
Sun Life moves to strike the class allegations from the Countercomplaint on grounds that the Bank cannot meet the predominance, typicality, or adequacy requirements of Rule 23. Dkt. No. [20-1] at 41-49. Specifically, it argues that the Court should strike the class claims because STOLI and contract issues predominate over common class issues; because the Bank is atypical of the putative class due to the STOLI nature of the Policies, its unusual position of having actually sought to enact a change to Option C which places it in a unique position with regard to standing, and its litigation history with Sun Life; and because the Bank signaled that it would not be an adequate class representative when it dismissed identical class claims in the New York action. Id. at 43-49.
The Court finds each argument either underbriefed or premature. Sun Life is correct that In re AXA Equitable Life Insurance Co. COI Litigation, No. 16-CV-740 (JMF), 2020 WL 4694172 (S.D.N.Y. Aug. 13 2020), suggests that a STOLI defense may lead a court to deny certification on grounds that common issues do not predominate over individual ones. See AXA, 2020 WL 4694172, at *9. However, this consideration applies "where defendants point to some evidence that a defense will indeed apply to some class members." Id. (internal quotation marks omitted). Because the case is at the motion-to-dismiss stage, there is, of course, no evidence that the STOLI defense will apply to the Bank or to any of the putative class members. Thus, the STOLI defense does not supply a basis for striking the class claims.
The Court also is not persuaded by Sun Life's suggestion that differences in the contracts of the class members may cause individual issues to predominate over common class issues. See Dkt. No. [28-1] at 43. In response to the argument, the Bank asserts that "every Class member is an owner of a Sun Life policy with the same Death Benefit Option language" as the Bank's. Dkt. No. [41] at 47 (citing Dkt. No. [20] at 49, ¶ 30). Granted, presuming that each class members’ policy did include the same death-benefit-option language, this could have allowed policyholders to make different initial selections: the class could contain not only holders of policies where the original policyholders initially selected Option A, like the original holders of the Policies did, but it could also contain holders of policies where the original policyholders initially selected Option B. See Dkt. No. [20] at 42, ¶ 17. However, the equitable relief requested—an injunction requiring Sun Life to allow each policyholder to change to death benefit Option C after the first policy year—is common to the entire class. And at this early stage of the litigation, the Court cannot find that differences in the damages calculations would make it impossible to certify the proposed class. In fact, it is entirely possible that the Bank will be able to show that a simple formula may be applied to calculate the damages attributable to each class member, regardless of the initial death-benefit option selected.
Sun Life's arguments regarding the Bank's having uniquely sought to enact a change to Option C also do not persuade the Court that it will be impossible to certify the class, as Sun Life has provided the Court with no basis for finding that proof of a request to change benefit is so difficult to unearth that the need for proof of a denied death-benefit change request would predominate over common issues. See Dkt. No. [28-1] at 46-48. Nor has Sun Life grappled with the Bank's contention that anticipatory breach is sufficient to give rise to standing. Compare id. with Dkt. No. [20] at 48, 50, 52, ¶¶ 29, 36(b), 40, 67(d).
Sun Life has also failed to convince the Court that the Bank's litigation history with Sun Life somehow renders the Bank's claims atypical of those of the putative class members or shows that the Bank would not adequately represent the interests of the class. Sun Life has not cited any authority suggesting that voluntary dismissal without prejudice of a prior class action involving the same proposed class renders a representative atypical or inadequate as a matter of law. See Dkt. No. [28-1] at 48-49. Instead, in Lumpkin, the case upon which Sun Life relies, the court found that the plaintiffs could not satisfy the typicality or adequacy requirements because cases filed by other putative class members indicated that they wanted "to control their own litigation and pursue independent actions." Lumpkin, 161 F.R.D. at 482. Lumpkin is therefore inapposite, and the Court finds nothing in the New York litigation history, on its face, to suggest that it would affect the typicality analysis or indicate that the Bank would not fairly and adequately represent the interests of the putative class. See Dkt. No. [28-1] at 49. For these reasons, the Court concludes that Sun Life has not borne the burden of demonstrating from the face of the complaint that it will be impossible to certify the class-action counterclaims appearing in the Countercomplaint. The Court therefore will deny the motion to strike the class-action counterclaims.
V. CONCLUSION
In light of the foregoing, the Motion to Dismiss and to Strike Class Allegations from the Amended Counterclaims, Dkt. No. [28], filed by Plaintiff / Counter Defendant Sun Life is GRANTED IN PART AND DENIED IN PART : the individual counterclaims arising from the Turrell Policy are DISMISSED WITHOUT PREJUDICE for lack of personal jurisdiction, and all of the other claims shall proceed.
IT IS SO ORDERED this 12th day July, 2022.