Pruco Life Insurance Company v. Wells Fargo Bank, N.A.

Filing

Opinion issued by court as to Appellant Wells Fargo Bank, N.A. in 13-12135, Appellant Pruco Life Insurance Company in 13-15859. Decision: Affirmed, Reversed and Remanded. Opinion type: Published. Opinion method: Per Curiam. Affirmed as to 13-15859 and Reversed and Remanded as to 13-12135. The opinion is also available through the Court's Opinions page at this link http://www.ca11.uscourts.gov/opinions. [13-12135, 13-15859]

Case: 13-12135

Date Filed: 01/25/2017

Page: 1 of 5

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 13-12135
________________________
D.C. Docket No. 9:10-cv-80804-JIC
PRUCO LIFE INSURANCE COMPANY,
Plaintiff/Counter-Defendant/Appellee,
versus
WELLS FARGO BANK, N.A.,
as Securities Intermediary,
Defendant/Counter-Claimant/Appellant.
________________________
No. 13-15859
________________________
D.C. Docket No. 1:12-cv-24441-FAM
PRUCO LIFE INSURANCE COMPANY,
Plaintiff/Appellant,
versus
U.S. BANK, N.A.,
as Securities Intermediary,

Case: 13-12135

Date Filed: 01/25/2017

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Defendant/Appellee.
________________________
Appeals from the United States District Court
for the Southern District of Florida
________________________
(January 25, 2017)
Before TJOFLAT and JULIE CARNES, Circuit Judges, and DUBOSE∗, District
Judge.
PER CURIAM:
These consolidated appeals require us to determine the validity of two
individuals’ Stranger-Originated Life Insurance (“STOLI”) policies that the issuing
insurance company sought to have invalidated several years after their issuance.
Arguing that the policies were invalid, the insurance company relied on a Florida
statute that requires a person who procures life insurance to have an insurable
interest in the life of the insured at the inception of the policy. 1 The insurance
company contends that no such interest is present when a STOLI policy is
purchased and accordingly such policies should be considered void ab initio. The
owners of the policies relied on a second Florida statute that requires all insurance
∗

Honorable Kristi K. DuBose, United States District Judge for the Southern District of
Alabama, sitting by designation.
1

Fla. Stat. § 627.404.
2

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policies to include a clause providing that the policy is incontestable after it has
been “in force” for two years. 2 The policies at issue in this consolidated appeal
contained such a clause, and the insurance company clearly failed to contest the
policies within that two-year window.
Thus, the question before this Court was whether an insurance company can
contest a STOLI policy that has been in force for more than two years. Given the
absence of any controlling Florida precedent and the inconsistent answers provided
by district courts within our circuit, we certified the following questions to the
Supreme Court of Florida:
1. Can a party challenge an insurance policy as being void ab initio
for lack of the insurable interest required by Fla. Stat. § 627.404 if
that challenge is made after expiration of the two-year
contestability period mandated by Fla. Stat. § 627.455?
2. Assuming that a party can do so, does Fla. Stat. § 627.404 require
that an individual with the required insurable interest also procure
the insurance policy in good faith?
See Pruco Life Ins. Co. v. Wells Fargo Bank, N.A., 780 F.3d 1327, 1336 (11th Cir.
2015).
We indicated that the phrasing of the above questions should not restrict the
Florida Supreme Court’s consideration of the issues presented in these appeals. In
providing an answer, the Florida Supreme Court determined that with a STOLI
2

Fla. Stat. § 627.455.
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policy like the two policies at issue in this consolidated appeal, an insurable
interest exists in the life of the insured at the inception of the policy, as required by
Florida Statute § 627.404. That being so, the Florida Supreme Court indicated that
these policies became incontestable within two years from their issuance, as
provided in Florida Statute § 627.455. Wells Fargo Bank, N.A. v. Pruco Life Ins.
Co., 200 So.3d 1202, 1206 (2016). The court stated:
Because STOLI policies like the Berger and Guild policies at issue
have the insurable interest required by section 627.404(1) at their
inception, they become incontestable two years after their issuance
under the plain language of section 627.455. Accordingly, we
rephrase the questions certified by the Eleventh Circuit into the
following question:
Can a party challenge the validity of a life insurance
policy after the two-year contestability period established
by section 627.455 because of its creation through a
STOLI scheme?
We answer this rephrased question in the negative and return this case
to the Eleventh Circuit.
Id. at 1206–07.
We thank the Florida Supreme Court for its guidance. In light of its
response, we AFFIRM the entry of judgment for U.S. Bank as to the Guild policy,
Appeal No. 13-15859, District Court No. 1:12-cv-24441-FAM. We REVERSE
the entry of judgment for Pruco Life Insurance Company as to the Berger policy,

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Appeal No. 13-12135, District Court No. 9:10-cv-80804-JIC, and remand for
proceedings consistent with this opinion.

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