Securities Exchange, et al v. Mutual Benefits Corp, et al

Filing 2883

ORDER ADOPTING 2871 Magistrate Judge's Supplemental Report and Recommendations, and Granting in part and denying in part 2653 Motion to Compel. Signed by Judge Federico A. Moreno on 3/16/2021. See attached document for full details. (mmd)

Case 0:04-cv-60573-FAM Document 2883 Entered on FLSD Docket 03/16/2021 Page 1 of 4

UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF FLORIDA
Fort Lauderdale Division
Case Number: 04-60573-CIV-MORENO
SECURITIES AND EXCHANGE
COMMISSION et al.,
Plaintiff,
vs.
MUTUAL BENEFITS CORP. et al.,
Defendants.
_________________________________________/
ORDER ADOPTING MAGISTRATE JUDGE’S SUPPLEMENTAL REPORT AND
RECOMMENDATION AND GRANTING IN PART AND DENYING IN PART MOTION
TO COMPEL LITAI TO PROVIDE THE TRUST WITH ITS DATA
THE MATTER was referred to the Honorable Jared M. Strauss, United States Magistrate
Judge, for a Report and Recommendation on Trustee's Motion to Compel Litai to Provide the
Trust with its Data, filed on May 27, 2020. The Magistrate Judge filed a Report and
Recommendation (D.E. 2830) on November 25, 2020 and a Supplemental Report and
Recommendation (D.E. 2871) filed on February 22, 2021. The Court has reviewed the entire
file and record. The Court has made a de novo review of the issues and notes that the parties have
not filed objections to the Magistrate Judge’s Supplemental Report and Recommendation, which
addresses the issues present in the motion and the objections to the initial Report and
Recommendation. Accordingly, it is
ADJUDGED that United States Magistrate Judge Jared M. Strauss’s Supplemental
Report and Recommendation is AFFIRMED and ADOPTED. Because the Court is adopting
the Supplemental Report (D.E. 2871), the recommendations contained in the initial Report and
Recommendation (D.E. 2830) are moot. Accordingly, it is

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ADJUDGED that the Trustee's Motion to Compel Litai to Provide the Trust with its Data
is GRANTED in part and DENIED in part. Specifically, it is
ADJUDGED that the motion to compel is GRANTED to the extent that the Trustee
seeks a declaratory judgment affirming that the Trust owns the Data pertaining to the “Policy
Files” that the Receiver transferred to the Trust pursuant to the Transaction Documents (D.E.
2266 at 7) that effectuated the disposition of receivership assets in this case. The Court renders a
declaratory judgment as follows:
i.

On April 3, 2009, the Court entered its Order Granting Receiver’s Motion for
Entry of Order Approving Purchase Agreement and Bidding Procedures with
Respect to Sale of VSI Business (“Order”). (DE 2267).

ii.

The Order approved Transaction Documents, which implemented a structure for
the continued maintenance and processing of life insurance policies known as
Keep Policies through the creation of a Trust with a Trustee who would acquire
the ownership and nominal beneficial interest in the Keep Policies. (DE 2266 at
4-7).

iii.

The Order further approved, as part of the Transaction Documents, a Servicing
Agreement providing for the Servicer to manage the portfolio of Keep Policies
and the Policy Files. (DE 2266-3 at 1).

iv.

On December 14, 2009, the Court entered its Order Granting Receiver’s Motion
for Entry of “Sale of Assets, Servicing and Transfer Order” (“Final Judgment in
the Receivership Action for Maintenance of the Keep Policies”). (DE 2367).

v.

The Final Judgment in the Receivership Action for Maintenance of the Keep
Policies vested the Trustee with all claims, options, privileges, right, title and

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interest in, to and under the Trust Assets, free and clear of all Encumbrances.
vi.

The Final Judgment in the Receivership Action for Maintenance of the Keep
Policies further approved the entering into of the Mutual Benefits ‘Keep Policy’
Trust Agreement (DE 2540-1) between the Receiver and the Trustee, which
defines Trust Assets as Policies, the Policy Files and the Trust Cash.

vii.

The Policy Files are defined as follows:
[A]ll files, documents, instruments, papers, correspondence, communications,
books and records (including all originals thereof) evidencing or otherwise
relating to the Keep Policies, whether in physical, electronic or other form or
medium, including, without limitation, (i) the Keep Policies and all
correspondence relating thereto, (ii) all information and records with respect to
the health status and whereabouts of each insured under a Keep Policy, (iii) all
accounting records, including the accounting and bookkeeping records incident
to the ownership, premium payments and receipts and distributions of proceeds
with respect to each Keep Policy made to or received from the insurance
companies that issued the Keep Policies, (iv) all documents and instruments
executed and/or delivered by or to Seller, a Receivership Entity, each Keep
Policy Investor and any Third Party Beneficiary, an insured, a viator or any other
Person in respect of a Keep Policy, or the direct or indirect acquisition,
ownership or disposition thereof by Seller, any Receivership Entity, Keep Policy
Investor or any Third Party Beneficiary (collectively, the “Policy Files”),
provided that, Policy Files shall not include any attorney-client or other
privileged communication between the Receiver as Seller or any Receivership
Entity and their respective attorneys or accountants.

viii.

Furthermore, the content of the Policy Files has necessarily evolved since Final
Judgment in the Receivership Action for Maintenance of the Keep Policies by
virtue of the Servicer’s management of the Policy Files pursuant to the Servicing
Agreement, and includes data that is in electronic form and stored on the
Servicer’s systems. (DE 2809-14).

ix.

Accordingly, it is hereby ORDERED AND ADJUDGED that the Trustee is
vested with all claims, options, privileges, right, title and interest in, to and under
the Policy Files, free and clear of all Encumbrances, to include changes in the
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Policy Files since Final Judgment in the Receivership Action for Maintenance of
the Keep Policies and all historical information with respect thereto, including
data pertaining to the Policy Files that is in electronic form and stored on the
Servicer’s systems. It is also
ADJUDGED that the Motion to Compel be DENIED to the extent that the Trustee seeks
Injunctive Relief in the form of an Order compelling Litai Assets, LLC to provide the Trust with
its data in a usable, industry standard format.
DONE AND ORDERED in Chambers at Miami, Florida, this 16th of March 2021.

______________________________________
FEDERICO A. MORENO
UNITED STATES DISTRICT JUDGE
Copies furnished to:
United States Magistrate Judge Jared M. Strauss
Counsel of Record

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