Lincoln Benefit Life Company v. Joanne Bauer Irrevocable Life Insurance Trust 12-2-2005 et al

Filing 31

ORDER: Defendants Michael R. Braun and the Joanne Bauer Irrevocable Life Insurance Trust 12-2-2005's Motion to Dismiss Complaint 12 is DENIED. Signed by Judge Virginia M. Hernandez Covington on 1/2/2013. (CAC)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
LINCOLN BENEFIT LIFE COMPANY,
Plaintiff,
v.

Case No. 8:12-cv-1729-T-33EAJ

JOANNE BAUER IRREVOCABLE LIFE
INSURANCE TRUST 12-2-2005,
MICHAEL R. BRAUN, as trustee of
the Joanne Bauer Irrevocable
Life Insurance Trust 12-2-2005,
and JOANNE BAUER,
Defendants.
________________________________/
ORDER
This matter is before the Court pursuant to the Motion to
Dismiss Complaint (Doc. # 12), filed on September 25, 2012, by
Defendants Michael R. Braun and the Joanne Bauer Irrevocable
Life

Insurance

Trust

12-2-2005

(the

“Trust”).

Plaintiff

Lincoln Benefit Life Co. filed its Response in Opposition
(Doc. # 18) on October 30, 2012. With leave of Court, Braun
and the Trust filed a Reply (Doc. # 26) on December 7, 2012,
and Lincoln filed a Sur-Reply (Doc. # 29) on December 20,
2012. Upon due consideration, the Court denies the Motion.
I.

Factual and Procedural Background
The following factual discussion, taken from Lincoln’s

Complaint (Doc. # 1), is accepted as true for the purpose of

1

addressing the Motion. Lincoln is a life insurance company
headquartered

in

authorized

issue

to

Lincoln,

Nebraska,

insurance

policies

and

licensed

in

the

state

and
of

Florida. (Id. at ¶ 4). Defendant Joanne Bauer resides in
Sarasota County, Florida. (Id. at ¶ 7). The Trust is subject
to the ownership and control of its trustee, Braun, who is a
citizen of the state of Georgia. (Id. at ¶ 5).
On or about February 15, 2006, Lincoln received an
application for a Flexible Premium Adjustable Life Insurance
Policy (the “Application”) proposing Bauer as the insured.
(Id. at ¶ 21). The Application was purportedly signed on
January 18, 2006, by Bauer as the proposed insured, by Braun
on behalf of the Trust as the intended owner and beneficiary
of the policy, and by Suzanne Rubio as the agent. (Id.). At
the

time

the

independent

Application

insurance

agent

was

submitted,

with

offices

Rubio
in

Boca

was

an

Raton,

Florida. (Id. at ¶ 22).
Lincoln received a Statement of Health and Insurability
and Verification of Medical Exam purportedly signed on July
26, 2006, by Bauer, Braun and Rubio. (Id. at ¶ 24). The
documents reflect that they were faxed between Braun’s offices
in Georgia and a fax number in the 941 area code, which
includes Manatee, Sarasota, DeSoto and Charlotte counties in
2

Florida. (Id.). Lincoln received an initial premium check
dated July 24, 2006, in the amount of $53,688.00, written by
the Trust. (Id. at ¶ 25).
Lincoln issued Policy No. 01N1286730 effective May 3,
2006, for $1,200,000.00 in coverage (the “Policy”). (Id. at ¶
26). The Trust has continued to pay the premiums due on the
Policy, which remains current and in force. (Id. at ¶ 27). As
of the date of the Complaint, Lincoln has received a total of
$242,812.95 in premium payments. (Id. at ¶ 28).
Lincoln alleges that the Policy was procured as part of
a “stranger originated life insurance,” or “STOLI” scheme. In
such an arrangement, investors acquire policies on the lives
of persons with whom they have no familial relationship or in
whose longevity the investors possess no legally cognizable
interest. (Id. at ¶ 12). Often, investors purchase beneficial
interests

in

insurance

trusts

or

ownership

in

shell

corporations that own the policies. (Id.). In any event, the
policies are procured with the expectation that the investors
will profit by the death of the insureds. (Id.).
STOLI transactions run afoul of state insurable interest
laws, which require that a policy owner have a legally
cognizable interest in the longevity of the insured at the
time the policy is issued. (Id. at ¶ 13). “Although it is
3

sometimes permissible for an investor to obtain an interest in
a legitimately procured life insurance policy, it is unlawful
to procure a policy for the sole purpose of transferring it,
directly or indirectly, to an investor.” (Id. at ¶ 11).
In August 2005, Bauer was solicited to participate in a
STOLI arrangement by Harry Hammond, principal of Hammond
Financial Group, who worked with Harvey Altholtz and Adam
Altholtz of Wealth Strategy Partners to obtain a policy on
Bauer’s life. (Id. at ¶¶ 30-31). Both Hammond Financial Group
and Wealth Strategy Partners are Florida limited liability
companies with their principal place of business in Sarasota,
Florida. (Id.).
Lincoln

alleges

that

Braun

communicated

with

these

individuals and entities by fax, telephone and otherwise,
working with them to procure a second STOLI policy on Bauer’s
life without Bauer’s knowledge or consent. (Id. at ¶ 32).
“Bauer first learned of the second STOLI Policy, after it was
issued by Lincoln, when she was contacted by her treating
physician’s office to verify certain medical information in
connection with a second STOLI policy.” (Id. at ¶ 33). She
believes that the individuals involved forged the documents
used to obtain the Policy. (Id. at ¶ 34). She further asserts
that she never authorized Braun to set up the Trust, of which
4

Braun is trustee, that is the owner and beneficiary of the
Policy. (Id. at ¶ 35).
“Bauer claims that she has been harmed by the unlawful
procurement of the Policy because, among other things, the
second STOLI policy prevents her from obtaining additional
life insurance in her own name.” (Id. at ¶ 36). Lincoln claims
that the Policy is void ab initio and that it is entitled to
retain the premiums paid. (Id. at ¶¶ 43-44). Lincoln further
claims that it has incurred substantial damages, including
costs and expenses associated with the issuance of the Policy.
(Id. at ¶ 50).
Lincoln filed suit in this Court on August 2, 2012,
seeking declaratory judgment for rescission and/or voiding the
Policy based upon a lack of insurable interest (Count I) and
compensatory and consequential damages against Braun and the
Trust as a result of misrepresentations made in procuring the
Policy (Count II). (Doc. # 1). Braun (as the Court will refer
to Braun and the Trust collectively) seeks dismissal of the
Complaint

pursuant

to

Federal

Rule

of

Civil

Procedure

12(b)(2), for lack of personal jurisdiction. (Doc. # 12).
II.

Legal Standard
The plaintiff bears the burden of establishing a prima

facie

case

of

personal

jurisdiction
5

over

a

nonresident

defendant. Stubbs v. Wyndham Nassau Resort & Crystal Palace
Casino, 447 F.3d 1357, 1360 (11th Cir. 2006). “A prima facie
case is established if the plaintiff presents enough evidence
to withstand a motion for directed verdict.” Madara v. Hall,
916 F.2d 1510, 1514 (11th Cir. 1990).
Where the defendant submits affidavits contradicting the
plaintiff’s allegations, the burden generally shifts back to
the plaintiff to produce evidence in support of jurisdiction.
Meier ex rel. Meier v. Sun Int’l Hotels, Ltd., 288 F.3d 1264,
1269 (11th Cir. 2002). “The allegations in the complaint must
be taken as true to the extent they are uncontroverted by the
defendant’s affidavits.” S & Davis Int’l, Inc. v. Republic of
Yemen, 218 F.3d 1292, 1303 (11th Cir. 2000). “Where the
plaintiff’s complaint and supporting evidence conflict with
the

defendant’s

affidavits,

the

court

must

construe

all

reasonable inferences in favor of the plaintiff.” Meier, 288
F.3d 1264, 1269 (11th Cir. 2002).
III. Analysis
The determination of whether the Court has personal
jurisdiction over a defendant is governed by a two-part
analysis.

First,

the

plaintiff

must

have

alleged

facts

sufficient to subject the defendant to Florida’s long-arm
statute. Future Tech. Today, Inc. v. OSF Healthcare Sys., 218
6

F.3d 1247, 1249 (11th Cir. 2000) (citing Sculptchair, Inc. v.
Century Arts, Ltd., 94 F.3d 623, 626 (11th Cir. 1996)). Once
the Court has determined that Florida’s long-arm statute is
satisfied,

it

must

decide

whether

the

assertion

of

jurisdiction comports with traditional notions of fair play
and substantial justice under the Due Process Clause of the
Fourteenth Amendment. Sculptchair, 94 F.3d at 626 (citing
Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
A.

Florida’s Long-Arm Statute

Braun does not contest that Lincoln has alleged facts
“that

could

support

personal

jurisdiction

over

Braun

consistent with Florida’s long-arm jurisdiction.” (Doc. # 12
at 5). Braun concedes Florida’s long-arm jurisdiction pursuant
to Fla. Stat. § 48.193(1)(d), which applies to nonresident
defendants

who

have

“contract[ed]

to

insure

any

person,

property, or risk located within the state at the time of
contract.” Because Braun has contracted to insure Bauer’s
life, § 48.193(1)(d) appears to be satisfied.
Despite Braun’s concession as to Florida’s long-arm
jurisdiction, and for reasons that will become apparent below,
the

Court

finds

it

necessary

to

sort

out

the

parties’

arguments regarding the requirement of “connexity” between
Braun’s

activities

and

Lincoln’s
7

cause

of

action.

Under

Florida

law,

a

plaintiff’s

claims

must

arise

from

the

defendant’s acts in order for Florida’s long-arm jurisdiction
to be triggered. Fla. Stat. § 48.193(1); Wendt v. Horowitz,
822 So. 2d 1252, 1260 (Fla. 2002).
Lincoln asserts that the connexity analysis is relevant
only to § 48.193(1)(b), which applies to defendants who have
“committ[ed] a tortious act within this state,” and has no
application

to

§

48.193(1)(d).

That

is

incorrect.

The

connexity requirement applies to § 48.193(1) as a whole,
including subsection § 48.193(1)(d), which “requires that the
cause of action arise from the contracting for insurance.”
Rinker v. Carnival Corp., No. 09-23154-Civ, 2011 WL 3163473,
at *2 (S.D. Fla. July 26, 2011). The Court finds that the
connexity requirement is met here because the Policy on
Bauer’s life is central to Lincoln’s claims. Braun is subject
to Florida’s long-arm jurisdiction under § 48.193(1)(d).1
B.

Due Process

Next, the court must consider whether the existence of
personal jurisdiction over Braun comports with Due Process

1

Braun contests the assertion that he committed any
tortious act that would subject him to Florida’s long-arm
jurisdiction pursuant to § 48.193(1)(b). Lincoln cautiously
sidesteps this issue, noting that it need only satisfy one
prong of § 48.193(1).
8

principles. See Pureterra Naturals, Inc. v. Cut-Heal Animal
Care Products, 674 F. Supp. 2d 1294, 1298 (M.D. Fla. 2009).
This requirement is met “if the non-resident defendant has
established

certain

minimum

contacts

with

the

forum.”

Oldfield v. Pueblo de Bahia Lora, 558 F.3d 1210, 1220 (11th
Cir. 2009) (citations and internal quotations omitted).
The requirements for minimum contacts vary depending upon
whether jurisdiction over a non-resident defendant is general
or specific. Because the Complaint alleges that Braun engaged
in specific conduct directed toward Florida, the Court’s
jurisdiction

would

be

specific

rather

than

general

for

purposes of the minimum contacts analysis.
Specific jurisdiction “arises out of a party’s activities
in the forum that are related to the cause of action alleged
in the complaint” such that the defendant “purposefully avails
[him]self of conducting activities within the forum State.”
Consol. Dev. Corp. v. Sherritt, Inc., 216 F.3d 1286, 1291
(11th Cir. 2000) (internal quotations and citations omitted).
Such activities give the defendant “fair warning” that he may
be subject to suit in the forum State. PVC Windows, Inc. v.
Babbitbay Beach Constr., N.V., 598 F.3d 802, 811 (11th Cir.
2010).

9

Braun contends that he has not conducted any activity in
Florida connected to Lincoln’s claims. (Doc. # 12 at 7). He
argues that the Policy lies at the heart of both claims and,
because the Policy was delivered to Braun in Georgia, it is
subject to Georgia law. (Id.). He further contends that life
insurance is personal property, in this case located in
Georgia. (Id.). In addition, he asserts that he does not
conduct any activities in the State of Florida, that all
services related to the Trust have been provided from his
office in Georgia and that he never performed any acts in
Florida related to the Trust or Policy. (Id. at 8). Finally,
he argues that Bauer provides the only connection to Florida,
and Lincoln claims that she did not participate in procuring
the Policy. (Id.).
Next, Braun argues that Lincoln cannot meet the personal
availment

could

reasonably

anticipate being haled into court here. (Id.

at 9). In

expounding

requirement

this

theory

such

he

that

Braun

focuses

on

the

Policy

as

a

contractual relationship between the parties. (Id.). If this
matter were solely a contract dispute, the Court might be
persuaded that minimum contacts have not been established. The
Supreme Court has cautioned that a contract, standing alone,
does not automatically establish sufficient minimum contacts
10

with a forum. Burger King Corp. v. Rudzewicz, 471 U.S. 462,
478 (1985). The Eleventh Circuit has held that a contractual
relationship can satisfy the minimum contacts requirement if,
among

other

things,

the

parties

engaged

in

significant

negotiations in the forum state or otherwise had a continuing
relationship, or that the contract was to be performed in the
forum. Sea Lift, Inc. v. Refinadora Costarricense de Petroleo,
S.A., 792 F.2d 989, 993-994 (11th Cir. 1986). Those factors
are absent here.2
However, Braun’s arguments overlook Lincoln’s claim of
misrepresentation

against

Braun.

In

cases

involving

intentional torts, minimum contacts are determined using the
“effects test” established in Calder v. Jones, 465 U.S. 783
(1984).

For the effects test to be satisfied, the defendant

must have “(1) committed an intentional tort (2) that was
directly aimed at the forum, (3) causing injury within the
forum that the defendant should have reasonably anticipated.”
Oldfield,

558

F.3d

at

1221

n.28.

2

The

commission

of

an

Braun further contends that this Court cannot exert
personal jurisdiction over him as trustee of a Georgia trust,
citing Hanson v. Denckla, 357 U.S. 235 (1958). However, the
issue in Hanson was the validity of a trust agreement executed
in Delaware by a trust company incorporated there and a
settlor domiciled in Pennsylvania. Id. at 252. Given that the
trust agreement itself is not at issue here, the analysis in
Hanson is inapposite.
11

intentional tort satisfies the personal availment requirement,
and presumes that the defendant should have anticipated being
haled into court in the forum to answer for the resulting
injury. New Lenox Indus., Inc. v. Fenton, 510 F. Supp. 2d 893,
904 (M.D. Fla. 2007).
In his Reply, Braun asserts that the effects test cannot
establish personal jurisdiction in Florida because the alleged
misrepresentations were committed in Georgia and aimed at
Lincoln in Nebraska. (Doc. # 26 at 2). Any actionable injuries
would have been suffered in Nebraska and not in Florida.
(Id.). As Lincoln points out, however, “Braun cites no case
law for the proposition that injury to a foreign company doing
business in Florida necessarily occurs only in the home state
of that company.” (Doc # 29 at 4). Lincoln is licensed to
issue

insurance

specific

injuries

policies
suffered

in

Florida

here,

and

including

has
the

enumerated
costs

of

defending a lawsuit filed by Bauer in Florida state court and
commission payments to Rubio. (Id. at 3). Braun’s reiteration
that Lincoln is headquartered in Nebraska does not alter the
fact that Lincoln’s Florida operations have been affected in
this matter.
Braun further argues that the single fax document Lincoln
claims was sent by Braun to a third party in Florida cannot
12

establish minimum contacts. (Doc. # 26 at 2). He concedes that
such communications can give rise to personal jurisdiction but
raises the issue of Florida’s connexity requirement. (Id.)
Lincoln argues that the connexity requirement pertains to
Florida’s long-arm statute, not the minimum contacts analysis.
The Court agrees.
The

Florida

Supreme

Court

has

explained

that

the

connexity requirement is a creature of state law. White v.
Pepsico, Inc., 568 So. 2d 886, 888 (Fla. 1990). Furthermore,
the

Florida

Supreme

Court

has

emphasized

that

“the

jurisdictional analysis under the Florida long-arm statute and
the jurisdictional analysis under the federal constitution are
distinct.” Madara, 916 F.2d at 1514-15. The United States
Supreme Court has expressly refused to add a state’s connexity
requirement to the constitutional requirement of due process.
Estate of David L. Portnoy v. Cessna Aircraft Co., 603 F.
Supp. 285, 290 (S.D. Miss. 1985). As noted above, the Court
finds that the connexity requirement has been satisfied as to
§

48.193(1)(d)

of

Florida’s

long-arm

statute;

Braun’s

connexity argument is misplaced here.
Furthermore, Braun’s argument ignores other allegations
in

the

Complaint,

namely

that

several

Florida

residents

participated in soliciting Bauer in Florida to participate in
13

the STOLI transaction and in obtaining the Policy; that the
Application and medical documents were purportedly signed by
Bauer, Rubio and Braun; that the Statement of Health and
Insurability

and

Verification

of

Medical

exam

was

faxed

between Braun’s offices in Georgia and a fax number in
Florida; and that Braun has worked with Rubio in procuring
multiple other STOLI policies in Florida. Braun does not
controvert these allegations, which the Court must accept as
true. See Cable/Home Commc’n Corp. v. Network Prod. Inc., 902
F.2d 829, 855 (11th Cir. 1990) (“The district court must
accept the facts alleged in the complaint as true, to the
extent

that

they

are

uncontroverted

by

the

defendant’s

affidavits.”).
In sum, the Court finds that the effects test has been
satisfied. Braun’s alleged activities were directly aimed at
Florida: Lincoln alleges that he communicated with Florida
residents in order to unlawfully procure a policy insuring the
life of a Florida resident. See AXA Equitable Life Ins. Co. v.
Infinity Fin. Group, LLC, 608 F. Supp. 2d 1349, 1355 (S.D.
Fla. 2009) (Delaware trust defendants who conspired with
Florida residents to obtain STOLI policies insuring Florida
residents

“purposely

directed”

their

activities

toward

Florida). Braun should reasonably have anticipated being sued
14

in Florida court for his alleged misrepresentations. See id.
(Trust

defendants

“must

have

been

reasonably

able

to

anticipate being sued in Florida court” for STOLI scheme
involving Florida residents). Thus, minimum contacts have been
satisfied and the Court will turn to the second prong of the
Due Process analysis.
Courts consider the following factors in determining
whether the exercise of personal jurisdiction comports with
traditional notions of fair play and substantial justice:
(a) the burden on the defendant, (b) the forum
State’s interest in adjudicating the dispute, (c)
the plaintiff’s interest in obtaining convenient
and effective relief, (d) the interstate judicial
system’s interest in obtaining the most efficient
resolution of controversies, and ([e]) the shared
interest of the several States in furthering
fundamental substantive social policies.
Future Tech. Today, 218 F.3d at 1251. However, “[t]he presence
of minimum contacts raises a presumption that the court may
constitutionally

exercise

jurisdiction.

To

rebut

that

presumption, the defendant ‘must present a compelling case
that the presence of some other considerations would render
jurisdiction unreasonable.’” Oldfield, 558 F.3d at 1221 n.29
(quoting Burger King, 471 U.S. at 472).
Braun contends that his burden in defending this suit in
Florida is significant. “As an attorney, the disruption to his

15

practice in having to travel to Florida will deprive him of
his personal income during such time away from his practice
and his clients.” (Doc. # 12 at 12). He further argues that
Florida has little interest in this action because the Policy
was delivered in Georgia and is held by a Georgia trust.
(Id.). The only Florida resident who is a party to this
litigation is Bauer and, Braun contends, her rights and
obligations are not involved.3 (Id.).
Braun asserts that “there is nothing about the Florida
forum that makes it more convenient or effective for Plaintiff
to obtain the relief requested against Braun,” since any
judgment would have to be executed in Georgia. (Id. at 13). He
argues that the interstate judicial system’s interest in
obtaining the most efficient resolution weighs in his favor
because the relevant evidence resides outside Florida. (Id.).

3

In his Reply, Braun argues that Bauer is not a
necessary party to this suit. (Doc. # 26 at 3). “In fact, it
is suspected that Ms. Bauer was improperly joined as a
defendant only to justify hauling Braun into Florida.” (Id.).
Braun offers no case law in support of this argument and, in
any event, the Court declines to address it. “District Courts,
including this one, ordinarily do not consider arguments
raised for the first time on reply.” Broughton v. HPA Subway,
Inc., No. 11-0036-WS-N, 2011 WL 1321728, at *1 (S.D. Ala. Apr.
5, 2011); see also Herring v. Sec’y, Dep’t of Corr., 397 F.3d
1338, 1342 (11th Cir. 2005) (“As we repeatedly have
admonished, arguments raised for the first time in a reply
brief are not properly before a reviewing court.”).
16

Finally, he contends that the social policy factor weighs
heavily in his favor because Georgia has an interest in
determining the validity of the Policy and no rights or
interests of a Florida resident are involved. (Id.).
The

Court

is

not

convinced

that

Braun’s

burden

in

defending this suit in this forum is significant. As the
Eleventh Circuit has noted, “modern methods of transportation
and communication have significantly alleviated any burden”
associated with defending a lawsuit in another state. Stubbs,
447 F.3d at 1364. On the other hand, Florida courts have a
strong interest in adjudicating disputes involving intentional
misconduct by non-residents that causes injury in Florida.
Licciardello v. Lovelady, 544 F.3d 1280, 1288 (11th Cir. 2008)
(citing Sculptchair, 94 F.3d at 632). Florida has a further
interest in this matter because a Florida citizen was insured
under the Policy. AXA Equitable Life Ins. Co., 608 F. Supp. 2d
at 1355.
Lincoln has significant interest in obtaining effective
relief in Florida because the Policy was allegedly procured
through the coordinated efforts of Braun and Florida citizens,
and the named insured is a Florida citizen. To the extent that
Georgia has an interest in the outcome of this matter, “the
process of resolving potentially conflicting ‘fundamental
17

substantive social policies’ can usually be accommodated
through choice-of-law rules rather than through outright
preclusion of jurisdiction in one forum.” Burger King, 471
U.S. at 484.
Upon due consideration, the Court determines that its
exercise of personal jurisdiction over Braun comports with
traditional notions of fair play and substantial justice.
Accordingly, Due Process requirements have been satisfied and
this Court may properly exercise personal jurisdiction over
Braun.
The Court must take up one additional matter. In his
Reply, Braun states that “a complaint was filed today in
federal court sitting in Georgia against Lincoln covering all
of the issues in this case.” (Doc. # 26 at 4 n.2). “As such,
the matter is now pending before the appropriate forum and the
prosecution of this matter in Florida – where the Court has no
jurisdiction over Braun – is not justified.” (Id.). Lincoln
responded by indicating an intent to file a motion to dismiss
the Georgia action pursuant to the first-filed rule. (Doc. #
29 at 8 n.1). That motion is now pending before this Court.
The Court will address Lincoln’s motion in due course.
For purposes of Braun’s Motion to Dismiss, the Court notes
that “[w]here two actions involve overlapping parties and are
18

pending in two federal courts, there is a strong presumption
across the federal circuits that favors the forum of the
first-filed
Convergys

suit

Corp.,

under
430

the

F.3d

first-filed
1132,

1135

rule.”
(11th

Manuel

Cir.

v.

2005).

“Moreover, we require that the party objecting to jurisdiction
in

the

first-filed

forum

carry

the

burden

of

proving

‘compelling circumstances’ to warrant an exception to the
first-filed

rule.”

Id.

At

this

juncture,

Braun

has

not

identified compelling circumstances that would warrant such an
exception.
Accordingly, it is
ORDERED ADJUDGED and DECREED:
Defendants

Michael

R.

Braun

and

the

Joanne

Bauer

Irrevocable Life Insurance Trust 12-2-2005’s Motion to Dismiss
Complaint (Doc. # 12) is DENIED.
DONE and ORDERED in Chambers in Tampa, Florida, this 2nd
day of January, 2013.

Copies:
All Counsel of Record

19