Julie F. individually, and as Special Administrator of Estate of Jeffrey F. v. Royal Maccabees Life Insurance Co., Chubb Life Insurance Co., et al.
Published: Apr. 17, 1999 | Result Date: Mar. 11, 1999 | Filing Date: Jan. 1, 1900 |Case number: BC161349 Verdict – $16,983,800
Judge
Court
L.A. Superior Central West
Attorneys
Plaintiff
Stanley K. Jacobs
(Jacobs & Jacobs LLP)
Defendant
David B. Parker
(Parker Shaffie LLP)
Lesley C. Green
(Signature Resolution )
J. Scott Humphrey
(J. Scott Humphrey APC)
Facts
Jeff F., husband of plaintiff Julie F., purchased a $5 million Universal Life Insurance policy on Dec. 28, 1985 from defendant Royal Maccabee. His estate grew and he wanted an additional $5 million in life insurance. His long time friend and agent, Larry T. London, suggested a 1035 exchange of his Royal policy ($5 million) for a Chubb policy ($10 million). Jeff signed a Policy Exchange Absolute Assignment Agreeent making Chubb the owner of the Royal policy concurrently with his Chubb Application for a $10 million policy. The assignment provided that Chubb would not surrender the Royal policy until his Chubb policy was in effect and also stated that if Chubb canceled, declined or postponed for any reason issuing its policy as applied for, it would release Jeff from the assignment of the Royal policy. On Aug. 13, 1996, Chubb counter-offered a $5 million policy, declining the $10 million applied for which offer was never accepted by Jeff. Unknown to Jeff and contrary to the Assignment Agreement, it was Chubb's written procedure to surrender the old policy before its new policy was in effect. The next day on Aug. 14, 1996, after having rejected the $10 million application, Chubb forwarded the assignment and requested Royal to surrender the policy. Royal received the surrender request and documents on Aug. 16, 1996. The Royal policy provided that their policy may be surrendered "upon request" and that coverage would terminate on the next monthly deduction date (28th of every month - in this case Aug. 28, 1996). On Aug. 21, 1996, Royal sent a conversation notice to London. Thereafter, and before August 28, London told Chubb to stop the transaction. On Aug. 28, 1996, Royal deducted the Cost of Insurance (COI) for the period of Aug. 28, 1996 to Sept. 28, 1996, from Jeff's accumulated cash value. On Sept. 3, 1996, London faxed Chubb to put a hold on the surrender transaction. On Sept. 3, 1996, Chubb's employee telephoned Royal and told a clerk to "put a hold" on the transaction until Oct. 1, 1996. On Sept. 13, 1996, Chubb again called Royal and told a clerk to keep the "surrender on hold because Chubb does not have a policy ready." These calls were memorialized by Royal. Royal had a computer that showed the status of Jeff's policy to be "active" at all times until Oct. 4, 1996, at which time it first showed the status as "surrendered." Jeff took his own life on Sept. 25, 1996.
Settlement Discussions
The plaintiff made a demand of $10 million in August 1997, which was withdrawn. On February 1998, the plaintiff made C.C.P. º998 demand of $12.5 million to Royal and a C.C.P. º998 demand of $7.5 million to Chubb.
Damages
Total damages were $16,983,766.62. Damages were awarded against Royal - $5 million for breach of contract, plus prejudgment interest of $1,228,766.62. Royal - $1,555,000 for emotional distress and $7 million for punitive damages. Additionally, the court will determine Brandt attorney fees and court costs (plaintiff had made a $12.5 million C.C.P. º998 offer) and plaintiff believes it will be approximately $1 million. Chubb - $5 million for fraud plus $1,228,766.62 prejudgment interest; $200,000 for emotional distress and $1 million for punitive damages.
Other Information
The plaintiff sued Royal individually, and in her representative capacity on behalf of her husband's estate, for breach of contract and bad faith, Chubb for breach of contract and fraud and London for negligence. London obtained a nonsuit. The court directed a verdict against Royal on breach of contract. The bad faith case went to jury. The court instructed the jury that Chubb failed to perform its contract and submitted the issue of whether or not the failure to perform was material and caused plaintiff damage to the jury. The fraud claim against Chubb went to the jury. The jury found Royal breached the covenant of good faith and its breach was with malice, oppression or fraud. The jury also found that Chubb's breach of contract was material and caused damage; that Chubb's conduct was fraudulent with malice, oppression, or fraud and a cause of damage to both the estate and Julie.
Deliberation
three days, 80 minutes (part I), six hours (part II)
Poll
11-1
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