GLOBAL ONE FINANCIAL v. EQUITABLE HOLDINGS INC

Filing 40

ORDER granting in part and denying in part 20 Motion to Dismiss for Failure to State a Claim; terminating 37 Motion for Extension of Time to Amend Ordered by US DISTRICT JUDGE CLAY D LAND on 05/13/2024 (CCL)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
GLOBAL ONE FINANCIAL,

*

Plaintiff,

*

vs.

*

EQUITABLE HOLDINGS, INC., et
al.,

*

CASE NO. 4:23-CV-164 (CDL)

*

Defendants.

*
O R D E R

Global One Financial is a division of Synovus Bank.

It made

loans to two trusts to fund the purchase of life insurance policies
issued by Equitable Holdings, Inc. for the benefit of the trusts
and their beneficiaries.

Global One claims that it had a first-

priority security interest in the policies and all proceeds related
to them.

When one of the trusts defaulted on its loan, Global One

surrendered that trust's policy to Equitable.
that

although

Equitable

paid

some

funds

Global One asserts

to

it

following

the

surrender, Equitable improperly remitted payments to the trusts
that it should have sent to Global One.

Global One brought this

action against Equitable and the trusts.

Equitable moved to

dismiss Global One's claims against it for failure to state a
claim.

For the reasons set forth below, the Court grants the

motion (ECF No. 20) as to Global One's declaratory judgment claim
but otherwise denies it.

MOTION TO DISMISS STANDARD
“To survive a motion to dismiss” under Federal Rule of Civil
Procedure 12(b)(6), “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

(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)).

The

complaint

must

include

sufficient

factual

allegations “to raise a right to relief above the speculative
level.”

Twombly, 550 U.S. at 555.

In other words, the factual

allegations must “raise a reasonable expectation that discovery
will reveal evidence of” the plaintiff’s claims.
“Rule

12(b)(6)

does

not

permit

dismissal

of

Id. at 556.
a

But

well-pleaded

complaint simply because ‘it strikes a savvy judge that actual
proof of those facts is improbable.’”

Watts v. Fla. Int’l Univ.,

495 F.3d 1289, 1295 (11th Cir. 2007) (quoting Twombly, 550 U.S. at
556).
FACTUAL ALLEGATIONS
Global One alleges the following facts in support of its
claims, which the Court accepts as true for purposes of the pending
motion.

Global One is a specialty lender that provides commercial

loans to trusts to fund the purchase of life insurance products.
Global One loaned money to two trusts—the Sadhana Patel Irrevocable
Trust ("Sadhana Trust"), whose trustee is Dinesh Patel, and the
Dinesh Patel Irrevocable Trust ("Dinesh Trust"), whose trustee is
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Sadhana Patel.

The loan proceeds were used to purchase two life

insurance policies issued by Equitable Holdings, Inc. for the
benefit of the trusts and their beneficiaries.

Global One made

all premium payments on the policies directly to Equitable, and
neither trust paid any premiums on the policies.
The trusts, as owners of the insurance policies, assigned the
policies as collateral for the loans and executed collateral
assignments in favor of Global One using a form prepared by
Equitable.

Under the assignment agreements, the insureds granted

to Global One all claims, options, privileges, rights, title, and
interest in the policies, except for certain specific rights that
do not apply here.

Global One's rights include the sole right to

collect and receive all distributions from the policies and the
sole right to surrender the policies and receive their surrender
value.

The assignments authorize Equitable to recognize Global

One's rights based on the assignments, they state that checks for
sums payable under the policies are to be drawn to Global One, and
they state that premiums paid by Global One are part of the
liabilities

secured

by

the

collateral

assignment

agreements.

Equitable received the collateral assignment forms executed by the
trusts, then sent Global One letters acknowledging the collateral
assignments and stating that Equitable had recorded the collateral
assignments.

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The Dinesh Trust defaulted on its loan with Global One, and
Global One surrendered the Dinesh Trust's policy.

When Equitable

processed the surrender, it paid $141,268.59 to Global One as the
policy's surrender value, and it paid the Dinesh Trust $69,379.23
as unaccepted premium payments.

Equitable also paid the Sadhana

Trust $93,357.46 as unaccepted premium payments.

Neither trust

made any premium payments on the policies; all premium payments
were made by Global One, and Global One contends that it—not the
trusts—should

have

received

the

unaccepted

premium

payments.

Global One demanded that Equitable, the trusts, and the Patels
return the funds, but the funds have not been returned.

Global

One asserts claims against Equitable for breach of contract and
conversion.

Global

One

also

seeks

a

declaration

that

the

collateral assignments and other loan documents establish that
Global One has a first-priority security interest in any unapplied
premium payments for other borrowers/insureds.
DISCUSSION
Equitable claims that all of Global One's claims against it
fail.
I.

The Court addresses each claim in turn.

The Breach of Contract Claim
Equitable argues that the breach of contract claim against it

should be dismissed because it is not a party to any of the
contracts that were allegedly breached.

Specifically, Equitable

contends that Global One's contract claim against it is based
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solely on a breach of the collateral assignment agreements, but
Equitable is not a party to those agreements.
Under Georgia law, a life insurance policy may be assigned by
"an assignment executed by the policy owner . . . and delivered to
the insurer."

O.C.G.A. § 33-24-17.

Equitable acknowledges that

the collateral assignment agreements allow Global One to step into
the

trusts'

shoes

under

the

Equitable

policies.

And,

an

"assignment shall entitle the insurer to deal with the assignee as
the owner or pledgee of the policy in accordance with the terms of
the assignment[.]"

Id.

Global One contends that by confirming

and recording the collateral assignments, Equitable assented to
the assignments, acknowledged Global One as the policies' owner,
and agreed to deal with Global One as the owner of the policies.
Global One further alleges that by confirming the assignments and
recording the collateral assignments, Equitable acknowledged a
duty under the policies to pay certain funds to Global One, not
the trusts, including any refund of premiums that had been paid by
Global One—as reflected by Equitable's conduct in remitting the
surrender value of the Dinesh Trust's policy to Global One. Global
One has sufficiently alleged that Equitable was a party to the
assignment which placed it in privity of contract with Global One.
Global One has also adequately alleged that Equitable breached its
contractual duty under the assignment.
dismiss this claim is denied.
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Accordingly, the motion to

II.

The Declaratory Judgment Claim
In addition to its breach of contract claim, Global One

asserts a claim for declaratory judgment, seeking a declaration
that the collateral assignments and the trusts' loan documents
establish

that

Global

One

has

a

first-priority

unapplied premium payments from Equitable.

interest

in

Global One contends

that Equitable wrongfully denied the validity of the collateral
assignments as to the trusts in this action, that in doing so
Equitable

"engaged

in

anticipatory

repudiation"

of

collateral

assignments executed by other borrowers in favor of Global One,
and that it is thus at risk of loss on "all premium financed
contracts with Equitable."

Am. Compl. ¶¶ 74-80.

For there to be jurisdiction to issue a declaratory judgment,
a plaintiff "must assert a reasonable expectation that the injury
[it] suffered will be repeated in the future."

Mack v. USAA Cas.

Ins. Co., 994 F.3d 1353, 1358 (11th Cir. 2021) (quoting Malowney
v. Fed. Collection Deposit Grp., 193 F.3d 1342, 1347 (11th Cir.
1999)) (finding no Article III standing for declaratory judgment
action because the plaintiff's only allegation of potential future
injury rested on the off chance that the plaintiff might total a
car in the future and still be insured by the same insurance
company under a similar policy being interpreted a similar way).
Here, even taking Global One's allegations as true and drawing all
reasonable inferences in Global One's favor, Global One does not
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allege any facts to suggest that it has a reasonable expectation
that the injury it allegedly suffered here – Equitable's refund of
unapplied premiums to the wrong party – will be repeated in the
future.

Rather, the allegations focus only on the two refunds to

the Patel trusts instead of to Global One.

There are no factual

allegations suggesting that a similar pattern has been or will be
repeated

in

other

substantially

similar

cases

involving

a

collateral assignment agreement like the ones at issue here. Under
these circumstances, the Court finds that Global One has not
adequately

alleged

a

factual

basis

to

support

a

reasonable

expectation that the injury it suffered will be repeated in the
future.

Accordingly, the present complaint does not establish

that Global One has standing to pursue its declaratory judgment
claim, and the claim is dismissed.
III. The Conversion Claim
In addition to its other claims, Global One asserts a claim
against Defendants for conversion.

This claim is an alternative

claim to the breach of contract claim; Global One contends that if
its

contract

claim

against

Equitable

fails

for

lack

of

an

enforceable contract (as Equitable argues it should), then it may
seek to recover on a conversion theory.

Equitable contends that

because money generally is not the type of property that is subject
to a conversion action and because it no longer has possession of
the funds, Global One's conversion claim against it fails.
7

As the parties acknowledge, conversion generally "consists of
an unauthorized assumption and exercise of the right of ownership
over personal property belonging to another, in hostility to his
rights; an act of dominion over the personal property of another
inconsistent with his rights; or an unauthorized appropriation."
Cap. Fin. Servs. Grp., Inc. v. Hummel, 721 S.E.2d 108, 110 (Ga.
Ct. App. 2011).

A secured creditor "has a right of action for

conversion if property subject to its security interest is disposed
of without the creditor's authorization."

Trey Inman & Assocs.,

P.C. v. Bank of Am., N.A., 702 S.E.2d 711, 716 (Ga. Ct. App. 2010)
(quoting William Goldberg & Co. v. Cohen, 466 S.E.2d 872, 883 (Ga.
Ct. App. 1995)).
interest

in

So if a secured creditor has a valid security

the

debtor's

property

(including

specific,

identifiable funds) and there is a disposition of that property
without the creditor's authorization that results in damage to the
creditor, then the creditor may pursue a conversion action against
the party that disbursed the funds without authorization.
the type of conversion claim Global One alleges here.

That is

The Court

finds that those allegations state a claim under Georgia law, and
thus Equitable's motion to dismiss that claim is denied. 1
Equitable argues that if the conversion claim is dismissed, then Global
One's payments for punitive damages and attorney's fees under O.C.G.A.
§ 13-6-11 should be dismissed because Global One did not state a viable
tort claim. But the Court declines to dismiss the conversion claim, and
Equitable did not offer another basis for dismissing the requests for
punitive damages and O.C.G.A. § 13-6-11 expenses at this stage in the
litigation, so those issues remain in the case.

1

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CONCLUSION
For the reasons set forth above, the Court grants Equitable's
motion to dismiss (ECF No. 20) as to the declaratory judgment claim
but otherwise denies it.

The Court will enter a separate Rules

16/26 Order to set deadlines for the parties to confer and develop
a proposed discovery plan.

The Patel Defendants filed an amended

answer, so their motion for an extension of time to amend their
answer (ECF No. 37) appears to be moot and shall be terminated.
IT IS SO ORDERED, this 13th day of May, 2024.
S/Clay D. Land
CLAY D. LAND
U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA

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