The Lincoln National Life Insurance Company

Filing 148

ORDER: For the reasons set forth in the attached Memorandum & Order, Wells Fargo's motion for summary judgment declaring that Wells Fargo is entitled to the Policy proceeds is granted. Inzlicht-Sprei's motion for summary judgment declaring that he is entitled to the Policy proceeds is denied. Inzlicht-Sprei's motion for summary judgment as to LSH CO's breach of contract/indemnification claim is denied as moot. LSH CO's motion for summary judgment as to Inzlicht-Sprei& #039;s cross-claim for aiding and abetting a breach of fiduciary duty by the Trustee is granted. The Clerk of Court is respectfully directed to release and disburse all funds, with interest, to Wells Fargo, enter judgment, and terminate this case accordingly. Ordered by Judge Pamela K. Chen on 3/31/2020. (Brodziak, Maya)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-------------------------------------------------------x
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY,
MEMORANDUM & ORDER
16-CV-5171 (PKC) (RML)

Plaintiff,
- against ELI INZLICHT-SPREI, individually, as trustee
and/or beneficiary of the Sara Sprei Family
Trust, and as Executor of the Estate of Sara
Sprei; WELLS FARGO BANK, N.A.; and LSH
CO, as intervenor,
Defendants.
-------------------------------------------------------x
PAMELA K. CHEN, United States District Judge:

This interpleader action involves competing claims for a $20 million life insurance policy
(the “Policy”) issued by Plaintiff The Lincoln National Life Insurance Company on the life of Sara
Sprei. Current interpleader defendants are Eli Inzlicht-Sprei, in his personal capacity, as current
Trustee of the Sara Sprei Family Trust (the “Trust”), and as executor of Sara Sprei’s estate; Wells
Fargo Bank N.A; and LSH CO.1 Defendants Wells Fargo and Inzlicht-Sprei now each move for
summary judgment asserting that they are entitled to all the Policy proceeds. Inzlicht-Sprei also
seeks summary judgment on LSH CO’s breach of contract and indemnification claims against him.
Finally, LSH CO seeks summary judgment on Inzlicht-Sprei’s cross-claim against it for inducing
and aiding and abetting a breach of fiduciary duty. For the reasons stated below, Wells Fargo’s
and LSH CO’s motions are granted in their entirety, and Inzlicht-Sprei’s motion is denied.

1

LSH CO joined this action via a motion to intervene. (See Sept. 13, 2018 Minute Order.)
1

BACKGROUND
I.

Relevant Facts2
In 2008, Sara Sprei, who was 84-years-old at the time, and her son, Dr. Eli Inzlicht-Sprei3,

working with various employees and associates of Signature Capital, procured the Policy, a $20
million life insurance policy on Sara Sprei’s life.4 (See Wells Fargo Bank N.A. 56.1 Statement
(“Wells Fargo 56.1”), Dkt. 119-2, ¶¶ 26–27, 84.) Signature Capital was founded by Herman Segal
for the primary purpose of writing insurance policies. (Id. ¶¶ 16, 18.) His son, William Segal, was
an insurance agent for Signature Capital. (See id. ¶¶ 14, 16.) Brothers Steven and Alan Spiegel
frequently collaborated with Signature Capital on various endeavors including the purchase,
maintenance, and sale of insurance policies. (Id. ¶ 26.) Signature Capital had a reputation for
writing high-value insurance policies for elderly clients. (Id. ¶ 19.) Their business model ensured
that the insured and his or her family would not be responsible for paying the premiums on these
2

Unless otherwise noted, a standalone citation to a party’s 56.1 Statement or 56.1
Counterstatement denotes that this Court has deemed the underlying factual allegation undisputed.
Any citations to a party’s 56.1 Statement, Response, or Counterstatement incorporates by reference
the documents cited therein. Where relevant, however, the Court may cite directly to the
underlying document. The Court has deemed facts averred in a party’s 56.1 Statement to which
the opposing party cites no admissible evidence in rebuttal as undisputed. See Lumbermens Mut.
Cas. Co. v. Dinow, No. 06-CV-3881 (TCP), 2012 WL 4498827, at *2 n.2 (E.D.N.Y. Sept. 12,
2012) (“Eastern District Local Rule 56.1 requires . . . that disputed facts be specifically
controverted by admissible evidence. Mere denial of an opposing party’s statement or denial by
general reference to an exhibit or affidavit does not specifically controvert anything.”) (emphasis
in original). Additionally, to the extent a party’s 56.1 statement “improperly interjects arguments
and/or immaterial facts in response to facts asserted by [the opposing party] without specifically
controverting those facts,” the Court has disregarded the statement. Risco v. McHugh, 868 F.
Supp. 2d 75, 87 n.2 (S.D.N.Y. 2012).
3

Inzlicht-Sprei is a medical doctor whose office is in located in New York City. (See Wells
Fargo 56.1, Dkt. 119-2, ¶ 66.)
4

The parties dispute the extent of Sara Sprei’s involvement in procuring the Policy. (See,
e.g., Inzlicht-Sprei 56.1 Response, Dkt. 139-1, ¶¶ 26, 139.) However, for the reasons discussed
infra, the Court does not need to resolve this dispute.
2

high-value policies. (Id. ¶ 22.) Instead, Signature Capital would be responsible for the premiums
themselves, typically arranging for premium financing with H.M. Ruby, L.P., with the aim of
selling the policy after the two-year contestability period expired.5 (Id. ¶¶ 21, 24.) As part of this
scheme, the insurance policy was typically owned by a trust in the name of the insured, with a
member of the insured’s family listed as the beneficiary of the trust. (Id. ¶ 23; see also Deposition
of Herman Segal (“Herman Segal Dep.”), Dkt. 120-2, at 32:3–17.) Most of the time, these types
of agreements between Signature Capital, on the one hand, and the insured and his/her family, on
the other hand, were “done just by handshake.” (Wells Fargo 56.1, Dkt. 119-2, ¶ 25.)
A.

The Scheme

Here, though Inzlicht-Sprei entered into a handwritten (versus a hand-shake) agreement
(the “Agreement”) with Signature Capital, the terms of that Agreement largely followed
Signature’s typical practices. For example, the Agreement, dated April 28, 2008, provided that
Signature Capital would pay all of the premiums for the Policy either directly or through third
parties. (The Agreement, Dkt. 120-33.) The Agreement also gave Signature Capital the right to
sell the Policy at any time. (Id.) Finally, it provided that, in the event of the sale of the Policy or
Sara Sprei’s death, Inzlicht-Sprei would receive 5% of the Policy’s gross proceeds.6 (Id.) The
Agreement also noted that Signature Capital was under no obligation to maintain the Policy and
that if the Policy lapsed, Inzlicht-Sprei would be paid $50,000 “as compensation.” (Id.) InzlichtSprei does not dispute that he signed the Agreement, but asserts that he had a verbal agreement

5

There is no market for life insurance policies for the first two years after they are issued
because carriers have the option to contest the validity of the policy during that time period. (Wells
Fargo 56.1, Dkt. 119-2, ¶ 20.)
6

The Agreement does not specify in what role Inzlicht-Sprei was claiming this money, i.e.,
individually or as the beneficiary of the Trust. The Agreement states that Inzlicht-Sprei signed the
Agreement “for the family.” (The Agreement, Dkt. 120-33.)
3

with Herman Segal that superseded the Agreement. (Inzlicht-Sprei 56.1 Response, Dkt. 139-1,
¶ 29.) Specifically, Inzlicht-Sprei asserts that, pursuant to this oral agreement, he was entitled to
10%, rather than 5%, of the Policy proceeds in the event of sale of the Policy or Sara Sprei’s death,
and that he also would have the first right to buy the Policy before Signature Capital sold it to a
third party. (Id.)
The Sprei Family and Signature Capital established the Trust to own the Policy on March
28, 2008. (Wells Fargo 56.1, Dkt. 119-2, ¶¶ 23, 52; see also Herman Segal Dep., Dkt. 120-2, at
182:14–20.) The Trust Agreement was executed in New York. (Wells Fargo 56.1, Dkt. 119-2,
¶ 53.) The Trust Agreement was drafted by Avi Rosenfeld, a lawyer licensed in New York, who
was designated as the Trustee. (Id. ¶¶ 42–43, 47.) Though Rosenfeld initially specified New York
as the location of the Trust, he changed the location to New Jersey at the behest of Signature
Capital, which informed Rosenfeld that “they [Signature Capital] need[ed] a New Jersey trust.”
(Id. ¶¶ 48–49; see also Dkt. 120-87.) However, despite the Trust’s stated location, Rosenfeld did
not know if any activity related to the Trust occurred in New Jersey. (Wells Fargo 56.1, Dkt. 1192, ¶ 57.) The Trust Agreement permitted the designation of more than one Trustee (see Trust
Agreement, Dkt. 120-75, at 7) and gave the Trustee numerous powers, including the power “[t]o
sell . . . or otherwise dispose of such [Trust] property at public or private sale, for cash or on credit,
and upon such terms and agreements as they may see fit” (id. at 8). The Trustee was also
authorized to “borrow money and to pledge or mortgage any such property upon such terms and
arrangements as they deem proper.” (Id.) Finally, the Trust Agreement noted that the Trustee
“shall have full and complete discretion in the exercise of the powers given to them, and their
determination as to matters left to their judgment or decision shall, to the extent permitted by law,
be final and conclusive on all persons . . . .” (Id. at 10.) Inzlicht-Sprei was listed as the sole

4

beneficiary of the Trust. (Wells Fargo 56.1, Dkt. 119-2, ¶ 8.) Despite being listed as the
beneficiary, Inzlicht-Sprei never asked for information about the Trust, and disputes that he was
aware that there was a Trustee. (Inzlicht-Sprei 56.1 Response, Dkt. 139-1, ¶¶ 40–41.)
On or about March 25, 2008, around the same time the Trust was created, an application
for life insurance was submitted to Lincoln (the “Application”), listing Sara Sprei as the proposed
life insured and the Trust as the proposed owner and beneficiary of the Policy. (Id. ¶ 58.) In
support of the Application, Sara Sprei underwent a medical examination in New York. (Id. ¶ 65.)
The Application represented that Sprei had a total net worth of $48,450,000. (Id. ¶ 60; see also
The Application, Dkt. 120-69, at 1a.) Inzlicht-Sprei disputes that Sara Sprei had anything to do
with providing the information about her and her family’s net worth to Lincoln, asserting that Sara
Sprei signed the Application before any information was filled in. (Inzlicht-Sprei 56.1 Response,
Dkt. 139-1, ¶¶ 60, 62–63.) The Application also asked whether the “proposed insured,” i.e., Sara
Sprei, would (1) receive any compensation if the insurance policy was issued; (2) had discussed
selling or assigning the policy to another entity, such as a trust; and (3) whether the insurance
policy would be funded via a premium funding loan or other third-party funds. (Wells Fargo 56.1,
Dkt. 119-2, ¶ 59; see also The Application, Dkt. 120-69, at 1a.) The Application responded “no”
to all three questions. (Wells Fargo 56.1, Dkt. 119-2, ¶ 59; see also The Application, Dkt. 12069, at 1a.) Though the Application states that it was signed in New Jersey (The Application, Dkt.
120-69, at 8), there is no evidence that any of the signatories to the Application, i.e., Sara Sprei,
Avi Rosenfeld, or William Segel, signed the Application or other relevant documents in New
Jersey. Inzlicht-Sprei, for example, stated that he has no knowledge of Sara Sprei traveling to New
Jersey around the time the Application was signed. (Wells Fargo 56.1, Dkt. 119-2, ¶ 82.)
Rosenfeld testified that he had not signed any of the Application documents in New Jersey, was

5

not aware of any meetings related to the Application occurring in New Jersey, and did not
recognize the handwriting on a form that noted that the Application was executed in New Jersey.
(Id. ¶ 81.) Likewise, though William Segal did not remember whether he was in New Jersey when
the Application was signed (id. ¶ 77), he testified that he met with Inzlicht-Sprei to discuss the
Application at Signature Capital’s New York Office (id. ¶ 69–70; see also Deposition of William
Segal (“William Segal Dep.”), Dkt. 120-10, at 54:13–19.)7
Lincoln issued the Policy on April 29, 2008. (Wells Fargo 56.1, Dkt. 119-2, ¶ 84.)
Signature Capital, consistent with the terms of the Agreement, provided the funds to pay the first
premium payment, and thereafter worked to find third-party funders for the insurance premiums.
(Id. ¶¶ 88, 90–94, 98–99.) In August 2008, Signature Capital entered into a financing arrangement
with H.M. Ruby to secure a loan to pay the premiums in exchange for H.M. Ruby receiving a
security interest in the Policy. (Id. ¶¶ 100–02.) Sara Sprei signed two forms in connection with
the H.M. Ruby premium financing transaction.8 (Id. ¶ 103.) In April and July 2010, the Policy
was at risk of lapsing for failure to make the premium payments. (Id. ¶¶ 116, 123.) In April 2010,
Signature Capital secured additional funding from H.M. Ruby to make the overdue premium

7

Inzlicht-Sprei does not dispute that there was one meeting regarding the Policy or that the
meeting occurred in New York. (Declaration of Inzlicht-Sprei (“Inzlicht-Sprei Dec.”), Dkt. 1392, ¶ 9.) In his 56.1 Response, he notes that William Segal was on painkiller medication around the
time that the Application was being signed and that “[h]is memory was fuzzy during that time
period.” (Inzlicht-Sprei’s 56.1 Response, Dkt. 139-1, ¶¶ 69–70.) However, without specific
evidence contesting the location of William Segal’s meeting with Inzlicht-Sprei, the Court does
not find that William Segal’s testimony regarding his ability to recall facts from this time period
is sufficient to create a material dispute of fact over where the Policy was signed; the credible
evidence establishes that it was signed in New York.
8

Though the parties dispute whether, by executing these forms, Sara Sprei actually
disclaimed any interest in the Policy proceeds for her and her heirs (see Inzlicht-Sprei 56.1
Response, Dkt. 139-1, ¶ 104), the Court does not find that this dispute is relevant. However, the
Court notes that Inzlicht-Sprei does not dispute that Sara Sprei did, in fact, sign these documents.
(Deposition of Dr. Eli Inzlicht-Sprei (“Inzlicht-Sprei Dep.”), Dkt. 120-8, at 81:24–83:13.)
6

payments. (Id. ¶¶ 119–121.) As was Signature Capital’s practice, all of the premium payments to
Lincoln were made through the Trust account relying on funding from third parties, like H.M.
Ruby. (Id. ¶¶ 24, 99, 107, 110, 122, 125; see also Dkt. 120-84.) Similarly, in August 2010, the
Trust made additional payments to keep the Policy from lapsing.9 (Id. ¶ 125.) However, at the
same time, Signature Capital also began trying to sell the Policy. (Id. ¶¶ 135, 137.)
Also, in August 2010, Signature Capital asked Rosenfeld to resign as Trustee. (Deposition
of Avi Rosenfeld (“Rosenfeld Dep.”), Dkt. 129-5, at 88:4–15.) Rosenfeld believed that “[his]
resignation was requested because someone thought that I would have been too honest to engage
in this type of activity.” (Id. at 89:17–20.) Rosenfeld agreed to resign and memorialized his
resignation in a Resignation and Appointment of Trustee document (the “Trustee Resignation”).
(Id. at 66:7–13; see also Trustee Resignation, Dkt. 120-81.) The Trustee Resignation contains
signatures for the outgoing and incoming Trustees and Sara Sprei. (Trustee Resignation, Dkt. 12081.)

Inzlicht-Sprei, however, asserts that it is not his mother’s signature on the Trustee

Resignation. (Inzlicht-Sprei Dep., Dkt. 129-8, at 54:7–12.) Though Rosenfeld signed the Trustee
Resignation on or around September 5, 2010 (Rosenfeld Dep., Dkt. 129-5, at 66:17–20), the
Trustee Resignation stated that it was effective on August 18, 2010 (Trustee Resignation, Dkt.
120-81). Alan Rubenstein, who frequently worked with Signature Capital, was appointed the
Successor Trustee. (See Declaration of Avi Rosenfeld (“Rosenfeld Dec.”), Dkt. 120-88, ¶¶ 6, 16;
Declaration of Alan Rubenstein (“Rubenstein Dec.”), Dkt. 119-16, ¶ 2.) Rubenstein does not
remember when he signed the Trustee Resignation, but testified that it was “probably” on August
18, 2010. (Deposition of Alan Rubenstein (“Rubenstein Dep.”), Dkt. 129-7, at 39:9–25.) When
9

It is unclear where this additional funding came from. In general, Rosenfeld would tell
Signature Capital that the Policy was at risk of lapsing and then rely on Signature Capital to procure
the additional funds. (Wells Fargo 56.1, Dkt. 119-2, ¶ 118.)
7

he signed it, Sara Sprei’s purported signature was already on the Trustee Resignation. (Id. at
32:21–23.) Rubenstein also confirmed with Rosenfeld that he had signed the document as well.
(Id., Dkt. 120-7, at 135:3–19.)
The Trust Agreement states that “[a]ny Trustee may resign at any time delivering or
mailing a notice in writing of such resignation to the others then acting, or, if none, to his
designated successor, if such designee has indicated his willingness to act, and thirty days
thereafter such resignation shall take effect.” (Trust Agreement, Dkt. 120-75, at 6.) Rubenstein
understood that, by signing the Trustee Resignation, he would become a Trustee immediately.
(See Rubenstein Dep., Dkt. 120-7, at 158:12–17.) Specifically, he understood that he would be a
co-Trustee for thirty days until Rosenfeld’s resignation took effect. (See id.) On September 20,
2010, Lincoln sent Rubenstein, at his New York address, a confirmation that it had received and
processed a change of Trustee for the Trust. (Wells Fargo 56.1, Dkt. 119-2, ¶ 133.)
B.

The Sale

When he signed the Trustee Resignation, Rubenstein knew that the Trust was at risk of
default on the H.M. Ruby loan, that the Policy would be remitted to H.M. Ruby if the premium
financing was not repaid, and that Signature Capital was trying to sell the Policy to address this
risk. (Id. ¶¶ 136–37.) He believed it would be better to get some money for the Trust, rather than
nothing. (Rubenstein Dep., Dkt. 120-7, at 190:17–23 (testifying that he believed that “getting the
family something was better than getting them nothing and returning the [P]olicy”).) In September
2010, Berkshire Settlements (“Berkshire”) offered a bid to buy the Policy. (Wells Fargo 56.1, Dkt.
119-2, ¶ 139.) Berkshire sources life insurance policies for secondary market purchasers. (Id.
¶ 141.) In response, Alan Spiegel submitted a Viatical Settlement Application and associated
documents to Berkshire. (Id. ¶ 142.) The documents sent by Alan Spiegel had execution dates of
September 14 and 15, 2010 (Wells Fargo 56.1, Dkt. 119-2, ¶ 142); however, Berkshire required
8

that several documents be re-executed, and the re-executed documents had an execution date of
September 21, 2010. (Id. ¶ 143.) These documents bore the purported signatures of Alan
Rubenstein, Sara Sprei, and Inzlicht-Sprei and most were notarized by Nachum Salzman. (Viatical
Settlement Application, Dkt. 120-19; see also Dkts. 120-20, 120-21, 120-22.) Inzlicht-Sprei
asserts that his, Sara Sprei’s and the notary’s signatures were all forged. (Dr. Eli Inzlicht-Sprei
56.1 Statement (“Inzlicht-Sprei 56.1”), Dkt. 123-2, ¶¶ 15–16; see also Inzlicht-Sprei Dep., Dkt.
129-8, at 108:15–110:20.) On September 27, 2010, Lincoln sent a letter to Sara Sprei informing
her that the Policy was potentially going to be sold. (See Wells Fargo 56.1, Dkt. 119-2, ¶ 150.)
Inzlicht-Sprei disputes that he or his mother ever received this document.10 (Inzlicht-Sprei Dec.,
Dkt. 139-2, ¶ 19.)
After conducting due diligence,11 the Trust, represented by Rubenstein, and Berkshire
entered into a Viatical Settlement Agreement (the “VSA”) where the Trust sold the Policy to
Berkshire for $4,365,863. (Wells Fargo 56.1, Dkt. 119-2, ¶¶ 153, 156.) Rubenstein executed the
VSA on October 4, 2010 and Berkshire counter-signed on October 7, 2010. (Id. ¶ 153.) InzlichtSprei asserts that the signatures of Sara Sprei and the notary are forged on these documents as well.
(Inzlicht-Sprei 56.1, Dkt. 123-2, ¶¶ 15–16; Inzlicht-Sprei Dep., Dkt. 129-8, at 132:16–133:2; see
also Deposition of Nachum Salzman (“Salzman Dep.”), Dkt. 129-9, at 12:17–18:3.) The VSA

10

As noted infra at n.14, Inzlicht-Sprei’s testimony about his mother never having received
Lincoln’s notice of potential sale, to the extent it is based on her statements to him are hearsay,
which makes Inzlicht-Sprei’s testimony inadmissible at trial and thus generally not competent
evidence for purposes of a summary judgment motion.
11

Inzlicht-Sprei does not dispute that Berkshire conducted due diligence before buying the
Policy, but disputes that the due diligence conducted by Berkshire was adequate. However,
Inzlicht-Sprei provides no evidence that the additional due diligence measures he proposes were
legally required or standard industry practice. (Inzlicht-Sprei 56.1 Response, Dkt. 139-1, ¶ 144.)
9

stated that “[the Trust] acknowledges and agrees that the exclusive ownership of the Policy will
be transferred to [Berkshire]” and that
[the Trust] acknowledges that after the closing the Death Benefit of the Policy will
be paid to [Berkshire] or its designated beneficiary . . . and [the Trust] will not be
entitled to receive payment of any death benefit proceeds, cash value, dividends,
guaranteed insurability options, advantages, policy loan, or other benefit provided
under the Policy.
(Wells Fargo 56.1, Dkt. 119-2, ¶ 154; see also the VSA, Dkt. 120-11, at 8–9, 10.) Of the sale
proceeds, $3,163,363 was transmitted directly to H.M. Ruby for repayment of the outstanding
premium financing and the remaining $1,200,000 was transmitted to the Trust’s new J.P Morgan
checking account opened by Rubenstein on September 14, 2010. (Id. ¶¶ 157, 160–61.)
Sometime in 2010, Steven Spiegel told Inzlicht-Sprei that the Policy could not be salvaged.
(Id. ¶¶ 175, 177.) Inzlicht-Sprei asked whether he would be paid pursuant to the Agreement and
Spiegel replied that he would receive a “good will payment” of $50,000. (Id. ¶¶ 176–77.) On
November 23, 2010, at the direction of Spiegel, Rubenstein transferred $50,000 from the Trust’s
account, to his attorney IOLA account, and then to Inzlicht-Sprei’s account.12 (Id. ¶ 179.) The
rest of the $1,200,000 was paid to the Segals, Spiegels, and various companies, in part, at least, as
commissions for facilitating the sale of the Policy, as well as either $7,500 or $10,000 in trustee
fees to Rubenstein. (Rubenstein Dep., Dkt. 129-7, at 69:2–71:23.)
On October 26, 2010, Mills, Potoczak, & Company, which acted as an escrow agent for
the sale, sent Lincoln a Life Ownership Change Form and a Life Beneficiary Name Change Form
requesting that the ownership of the Policy be changed from the Trust to Wells Fargo.13 (Wells
12

Though Inzlicht-Sprei communicated directly via email with Rubenstein to help
effectuate this transfer, nothing in the email identified Rubenstein as the Trustee. (See Dkt. 12045.)
13

Though the VSA was executed by Berkshire, it had sourced the policy for Quantlife,
who chose to use Wells Fargo as a securities intermediary. (Wells Fargo 56.1, Dkt. 119-2, ¶¶ 141,
10

Fargo 56.1, Dkt. 119-2, ¶¶ 166–67.) The Life Ownership Change Form was executed by
Rubenstein and a representative of Wells Fargo on October 25, 2010. (Id. ¶ 168.) On November
2, 2010, Lincoln confirmed the change in ownership. (Id. ¶ 169.) There is no evidence that the
Trust or Sara Sprei contested the change of ownership before 2016. (Id. ¶ 183.)
C.

Further Sales, Death of Sara Sprei, and the Instant Litigation

The Policy underwent a series of title transfers until the Policy was sourced for LSH CO
by CMG Life Services. (Id. ¶¶ 186–89.) LSH CO paid $9,196,153 for the Policy in January 2012.
(See id. ¶¶ 192–93.) Following the sale of the Policy, CMG continued to monitor the Policy on
LSH CO’s behalf. (Id. ¶ 195.) As part of this monitoring, CMG sent a letter to Sara Sprei at her
New York address on January 23, 2012 stating that LSH CO had purchased the Policy, noting that
her health and medical information would be processed for the purpose of managing the Policy,
and identifying Rubenstein as the current Trustee. (Id. ¶ 197.) CMG also asked Mills, the escrow
agent from the 2010 sale, to try to contact Sara Sprei to determine whether she was still alive. (Id.
¶ 200.) Mills attempted to contact Sara Sprei at least twice, including sending a letter via certified
mail to Sara Sprei’s New York address on October 26, 2012. (Id. ¶ 201.) There is no evidence
that Sara Sprei or Inzlicht-Sprei ever responded to any of these outreach attempts.14 (Id. ¶¶ 199,
185; Deposition of Wells Fargo Representative (“Wells Fargo Dep.”), Dkt. 120-4, at 14:7–10.) By
acting as the securities intermediary, it is easier for a beneficial owner, like Quantlife, to continue
selling the policy because Wells Fargo remains listed as the Policy owner and all that is required
for the sale is an “Entitlement Order.” (Wells Fargo Dep., Dkt. 120-4, at 14:10–16:1.)
Accordingly, Wells Fargo has been listed as the Policy’s owner and beneficiary since November
2, 2010 even as the beneficial owners have changed. (Wells Fargo 56.1, Dkt. 119-2, ¶ 2.)
14

Inzlicht-Sprei denies that he or Sara Sprei ever received these letters. (Inzlicht-Sprei
56.1 Response, Dkt. 139-1, ¶¶ 196, 201.) In support of his claim, he references his declaration
where he implies that Sara Sprei never told him that she received these letters. (Inzlicht-Sprei
Dec., Dkt. 139-2, ¶¶ 19–21.) However, because Sara Sprei’s purported statements to her son are
hearsay and thus inadmissible at trial, they are also not competent evidence on a motion for
summary judgment. See Fleming v. MaxMara USA, Inc., 644 F. Supp. 2d 247, 259 n.9 (E.D.N.Y.
2009) (“[H]earsay that would not be admissible at trial is likewise not competent evidence on a
11

202.) Finally, in 2015, Inzlicht-Sprei’s medical office in New York, in response to a request by
CMG, provided CMG with Sara Sprei’s updated medical records. (Id. ¶ 205.)
Sara Sprei died on April 9, 2016. (Id. ¶ 211.) At this point, LSH CO paid a total of
$5,059,506 in premiums. (Id. ¶ 209.) On August 3, 2016, Inzlicht-Sprei, as purported Trustee15
of the Trust, submitted a claim to Lincoln for the Policy proceeds. (Id. ¶ 214.) He prepared the
claim with the help of Herman Segal. (Id. ¶ 215.) On August 12, 2016, Lincoln sent a letter to
Wells Fargo stating that Sara Sprei had died and confirmed that Wells Fargo was listed as the
beneficiary of record for the Policy. (Id. ¶ 224.) In response, Wells Fargo also submitted a claim
for the Policy proceeds on August 31, 2016. (Id. ¶ 225.) Unable to determine who the rightful
owner of the Policy was, Lincoln initiated the instant interpleader action on September 16, 2016.
(See generally Complaint, Dkt. 1.)
In the course of the instant litigation, Rubenstein, who was named as a defendant in this
action in his role as Trustee, filed an Answer on behalf of the Trust that explicitly stated that the
Trust “has not and does not assert any right, title, or interest to the proceeds of” the Policy.
(Rubenstein Answer, Dkt. 64, at ECF16 5.) Before filing his answer, Rubenstein, through his
motion for summary judgment.”) (citing Sarno v. Douglas Elliman–Gibbons & Ives, Inc., 183 F.3d
155, 160 (2d Cir. 1999)), aff’d, 371 F. App’x 115 (2d Cir. 2010). Inzlicht-Sprei also states, though,
that “[d]uring the entire time period involved with [the] Policy, it was [his] custom and practice to
read all of [his] mother’s mail. . . . [He] never saw this letter nor any of the other letters Wells
Fargo relies on” (Inzlicht-Sprei Dec., Dkt. 139-2, ¶ 20)—evidence that can be considered on
summary judgment. However, the Court finds that this self-serving assertion, unsupported by any
other evidence, is insufficient to establish a material dispute of fact as to whether Inzlicht-Sprei
was aware of the Policy’s sale.
15

Inzlicht-Sprei claims that no one had explained the mechanics of a Trust to him, so he
believed that being the beneficiary was the same as being the Trustee. (Inzlicht-Sprei Dec., Dkt.
139-2, ¶ 17.)
16

Citations to “ECF” refer to the pagination generated by the Court’s CM/ECF docketing
system and not the document’s internal pagination.
12

counsel, sent a draft of the Answer to Wells Fargo’s counsel. (LSH CO 56.1 Statement (“LSH CO
56.1”), Dkt. 122-2, ¶ 121.) Wells Fargo’s counsel stated that he was fine with Rubenstein’s
proposed Answer. (Id. ¶ 122.) At the same time, Wells Fargo, LSH CO, and Rubenstein, through
their respective counsel, were engaged in settlement discussions. (See id. ¶ 125.) The Settlement
Agreement provided that Wells Fargo would dismiss its breach of contract and indemnification
claims against the Trust provided that Rubenstein, as Trustee, would execute a declaration17 setting
forth various factual matters related to the Policy and a filing by the Trust stating that it was not
claiming any right, title, or interest in the Policy proceeds. (Id. ¶ 126; see generally Settlement
Agreement, Dkt. 124-46.) The Settlement Agreement also included releases for Rubenstein, both
individually and in his role as Trustee. (Settlement Agreement, Dkt. 124-46, at 4.) After months
of negotiation, Rubenstein executed the Settlement Agreement on December 11, 2017. (LSH CO
56.1, Dkt. 122-2, ¶¶ 125, 133.) The same day, Rubenstein also filed an Answer in the instant
action. (Rubenstein Answer, Dkt. 64 (dated December 11, 2017).) Rubenstein’s executed
Settlement Agreement included Rubenstein’s declaration. (Rubenstein Dec., Dkt. 119-16, at 4;
see also Dkt. 124-72 (transmitting the executed Settlement Agreement with executed Declaration
via email on December 11, 2017).) Though Rubenstein was aware that Inzlicht-Sprei, as the
Trust’s beneficiary, was claiming that the sale of the Policy in 2010 was fraudulent, Rubenstein
believed that he was fulfilling his fiduciary duties as Trustee by entering into the Settlement
17

Wells Fargo had hoped to have the declaration to use in its mediation session with
Inzlicht-Sprei, but Rubenstein did not execute it in time. (Dkt. 131, at ECF 20; see also Dkt. 134,
at ECF 2 (asking, via email on December 4, 2017, when Wells Fargo can anticipate the executed
Settlement Agreement and Declaration).) After that, it appears that Wells Fargo was planning on
using the declaration for its anticipated motion for summary judgment. (Dkt. 133, at ECF 24
(noting that Rubenstein’s attorney was not comfortable with a draft of the proposed declaration
that stated it was being made in support of Wells Fargo’s motion for summary judgment); see also
Rubenstein Dec., Dkt. 119-16, at 1 (noting that Rubenstein was making the declaration “for all
purposes allowed by law”).)
13

Agreement. (LSH CO 56.1, Dkt. 122-2, ¶¶ 134–35.) On April 24, 2018, Rubenstein resigned as
Trustee and appointed Inzlicht-Sprei as his successor. (Id. ¶ 154.)
II.

Procedural History
Lincoln initiated this interpleader action on September 16, 2016. (Complaint, Dkt. 1.) On

December 21, 2016, it filed an amended interpleader complaint naming, as Defendants, Wells
Fargo, Avi Rosenfeld as Trustee, Alan Rubenstein as Trustee, and Inzlicht-Sprei, individually, as
Trustee/Beneficiary, and as executor of the Sara Sprei estate. (Dkt. 16.) It deposited the Policy
proceeds with the Clerk of Court and was terminated as a party on May 5, 2017. (Dkt. 43.) Avi
Rosenfeld was also terminated as a party on March 21, 2017 on the consent of all parties. (See
March 21, 2017 Docket Order.)
The remaining Defendants all filed answers to the amended interpleader complaint. (See
Wells Fargo Answer, Dkt. 27; Inzlicht-Sprei Answer, Dkt. 28; Wells Fargo Amended Answer,
Dkt. 54; Rubenstein Answer, Dkt. 64.) In Wells Fargo’s Amended Answer, it asserted declaratory
judgment claims that (1) it is entitled to the Policy’s proceeds and (2) that no other party is entitled
to the property because of unjust enrichment. (Wells Fargo Amended Answer, Dk. 54, at 7–9.) It
also raised indemnification cross-claims against Inzlicht-Sprei, individually, as executor and
beneficiary of the Sara Sprei estate, as well as against Rubenstein, who was the Trustee at the time
(id. at 9–13), but it subsequently voluntarily dismissed those claims (see Wells Fargo Letter, Dkt.
59; Aug. 25, 2017 Docket Order; Notice of Voluntary Dismissal, Dkt. 67; Jan. 9, 2018 Docket
Order).
On July 17, 2018, Inzlicht-Sprei was substituted as the Defendant Trustee replacing Alan
Rubenstein, who resigned as Trustee on April 24, 2018. (See July 17, 2017 Docket Order; see also
LSH CO 56.1, Dkt. 122-2, ¶ 154.) Before he resigned, Rubenstein filed an Answer on behalf of

14

Trust disclaiming any rights in the Policy Proceeds.18 (See Rubenstein Answer, Dkt. 64, at 5.)
When Inzlicht-Sprei was substituted in as Defendant Trustee, he filed a new Answer on behalf of
the Trust claiming it was entitled to the proceeds. (See Trust Answer, Dkt. 94.) LSH CO’s motion
to intervene was granted on September 13, 2018 (Sept. 13, 2018 Minute Order) and it raised two
cross-claims against Inzlicht-Sprei in his role as Trustee: (1) breach of contract, and (2)
indemnification (LSH CO Cross-Claims, Dkt. 102). In response, Inzlicht-Sprei raised a crossclaim against LSH CO for “inducing/aiding and abetting a breach of fiduciary duty” arguing, inter
alia, that LSH CO had induced Rubenstein into filing an Answer in this case, on behalf of the
Trust, disclaiming any right in the Policy proceeds. (Inzlicht-Sprei Answer and Cross-Claims,
Dkt. 103.)
After discovery, Wells Fargo, LSH CO, and Inzlicht-Sprei all requested, and were granted
permission to file dispositive motions addressing their various claims. (Dkts. 108–110; Feb. 20,
2019 Docket Order.) Specifically, Wells Fargo seeks summary judgment on its declaratory
judgment claim, seeking a declaration that Wells Fargo is entitled to the interpleader property.
(See generally Dkt. 119.) LSH CO moves for judgment on the pleadings, or in the alternative,
summary judgment on Inzlicht-Sprei’s cross-claim for aiding and abetting. (See generally Dkt.
122.) Inzlicht-Sprei is seeking summary judgment for a declaration that the Trust is entitled to the
interpleader property and dismissing LSH CO’s cross-claim against him. (See generally Dkt. 123.)
The parties’ respective motions were fully briefed on June 24, 2019. (See Dkts. 119–144.) The
Court held oral argument on the parties’ motions on March 10, 2020. (See Mar. 10, 2020 Minute
Entry.)

18

As discussed supra, Rubenstein filed this Answer as part of his Settlement Agreement
with Wells Fargo and LSH CO.
15

LEGAL STANDARD
Summary judgment is appropriate where the submissions of the parties, taken together,
“show[] that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a); see Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 251–52 (1986) (noting that the summary judgment inquiry is “whether the evidence presents
a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party
must prevail as a matter of law”). A dispute of fact is “genuine” if “the [record] evidence is such
that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248.
The initial burden of “establishing the absence of any genuine issue of material fact” rests
with the moving party. Zalaski v. City of Bridgeport Police Dep’t, 613 F.3d 336, 340 (2d Cir.
2010). Once this burden is met, however, the burden shifts to the nonmoving party to put forward
some evidence establishing the existence of a question of fact that must be resolved at trial. Spinelli
v. City of New York, 579 F.3d 160, 166–67 (2d Cir. 2009); see also Celotex Corp. v. Catrett, 477
U.S. 317, 322–23 (1986). A mere “scintilla of evidence” in support of the non-moving party is
insufficient; “there must be evidence on which the jury could reasonably find for the [nonmovant].” Hayut v. State Univ. of N.Y., 352 F.3d 733, 743 (2d Cir. 2003) (internal quotation marks
and citation omitted) (alteration in original). In other words, “[t]he nonmoving party must come
forward with specific facts showing that there is a genuine issue for trial.” Caldarola v. Calabrese,
298 F.3d 156, 160 (2d Cir. 2002) (internal quotation marks and citation omitted). The same
standard of review applies when the Court is faced with cross-motions for summary judgment, as
here. See Lauria v. Heffernan, 607 F. Supp. 2d 403, 407 (E.D.N.Y. 2009) (internal citations
omitted). When evaluating cross-motions for summary judgment, the Court reviews each party’s
motion on its own merits, and draws all reasonable inferences against the party whose motion is

16

under consideration. Morales v. Quintel Entm’t, Inc., 249 F.3d 115, 121 (2d Cir. 2001).
In determining whether a genuine issue of fact exists, the court must resolve all ambiguities
and draw all reasonable inferences against the moving party. See Major League Baseball Props.,
Inc. v. Salvino, Inc., 542 F.3d 290, 309 (2d Cir. 2008). The court also construes any disputed facts
in the light most favorable to the nonmoving party. See Adickes v. S. H. Kress & Co., 398 U.S.
144, 157–59 (1970). However, “the mere existence of some alleged factual dispute between the
parties will not defeat an otherwise properly supported motion for summary judgment.” Anderson,
477 U.S. at 247–48.
DISCUSSION
I.

Entitlement to the Policy Proceeds
Wells Fargo and Inzlicht-Sprei both move for summary judgment, each arguing that they

are entitled to the Policy proceeds. Inzlicht-Sprei argues that valid title to the Policy did not pass
from the Trust to Wells Fargo because the VSA and related documents contained forged and
unauthorized signatures. In response, Wells Fargo argues that Inzlicht-Sprei cannot prove that the
signatures were forged or unauthorized, and that, in the alternative, equitable principles prevent
Inzlicht-Sprei, on behalf of the Trust, from receiving the Policy proceeds.
A.

The 2010 Sale of the Policy Was Valid

Wells Fargo argues that the VSA, which memorialized the sale of the Policy from the Trust
to Berkshire, demonstrates that valid title passed from the Trust. (Wells Fargo Brief, Dkt. 119-1,
at 13–15.) The Court agrees.
The VSA was signed on October 4, 2010 by Alan Rubenstein. (The VSA, Dkt. 120-11, at
23–24.) His signature was notarized. (Id.)19 By October 2010, Alan Rubenstein, pursuant to a
19

Sara Sprei’s signature also appears on the VSA and is dated October 8, 2010, four days
after Rubenstein’s signature and one day after Berkshire’s signature. (The VSA, Dkt. 120-11, at
17

Trustee Resignation effective August 18, 2010, was the new Trustee and, per the Trust Agreement,
had “full and complete discretion” to sell the Policy. (Trustee Resignation, Dkt. 120-81; Trust
Agreement, Dkt. 120-75, at 10.) He sold the Policy because he believed that it was in the Trust’s
best interest to receive some benefit from the Policy, rather than to let it remit entirely to H.M.
Ruby. (See Rubenstein Dep., Dkt. 120-7, at 190:17–23.) In recognition of the valid sale, Lincoln
changed the Policy’s owner and beneficiary to Wells Fargo in early November. (Wells Fargo 56.1,
Dkt. 119-2, ¶ 169.) Inzlicht-Sprei’s arguments to the contrary are unavailing.
1.

Forged Signatures

Inzlicht-Sprei first argues that valid title to the Policy did not pass because his, his mother’s,
and even the notary public’s signatures on the VSA and other related documents were fake.
(Inzlicht-Sprei Brief (“Inzlicht-Sprei Br.”), Dkt. 123-1, at 12–14.) “Under New York law, a
certificate of acknowledgment by a notary public gives rise to a presumption of due execution that
can be rebutted only upon ‘a showing of clear and convincing evidence to the contrary.’” First
Indem. of Am. Ins. Co. v. Shinas, No. 03-CV-6634 (KMW) (KNF), 2009 WL 3154282, at *6
(S.D.N.Y. Sept. 30, 2009) (quoting Spilky v. Bernard H. La Lone Jr., P.C., 641 N.Y.S.2d 916, 918
(N.Y. App. Div. 1996)); see also Orix Fin. Servs., Inc. v. Thunder Ridge Energy, Inc., No. 01-CV4788 (RJH) (HBP), 2006 WL 587483, at *18 (S.D.N.Y. Mar. 8, 2006) (“As to presumptions, the
Evidence Rules specifically provide that a presumption respecting a fact that is an element of a
claim or defense to which state law applies is to be determined in accordance with state law.”)
(quoting 9 Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 2408 at 556

23–25.) Although Inzlicht-Sprei asserts that Sprei’s signature on the VSA was forged, her
signature was likely superfluous because, as discussed infra, Rubenstein, as Trustee for the Trust,
which owned the Policy, had full discretion and authority to sell it. And, as also discussed infra,
Inzlicht-Sprei cannot demonstrate that Sprei’s signature was a forgery.
18

(2d ed. 1995)). “To rebut this presumption, a plaintiff must present evidence that is not ‘of a
doubtful character, such as the unsupported testimony of interested witnesses, nor upon a bare
preponderance of evidence, but only on proof so clear and convincing as to amount to a moral
certainty.’” Orix Fin. Servs. v. Phipps, No. 91-CV-2523 (RPP), 2009 WL 30263, at *4 (S.D.N.Y.
Jan. 6, 2009) (quoting Lum v. Antonelli, 476 N.Y.S.2d 921, 923 (N.Y. App. Div. 1984)). InzlichtSprei asserts that both Sara Sprei’s signature on the VSA, as well as other supplemental documents,
and the notary’s signature notarizing those documents are fake. (Inzlicht-Sprei 56.1, Dkt. 123-2,
¶¶ 14–18.) He also asserts that his signature on various documents related to the sale are fake as
well, which is why he was purportedly unaware of the sale. (Id. ¶¶ 15, 18.)
First, Inzlicht-Sprei’s mere assertation that both his and his mother’s signatures are fake is
insufficient to rebut the presumption. First Indem. of Am. Ins. Co., 2009 WL 3154282, at *6 (“The
mere ‘unsupported testimony of an interested witness’ that he or she did not sign the document is
insufficient to rebut the presumption that a notarized signature is authentic.”) (quoting Demblewski
v. Demblewski, 701 N.Y.S.2d 567, 568 (N.Y. App. Div. 1999)). The only other evidence InzlichtSprei offers in support of his argument is the testimony of the notary public, Nachum Salzman.
(Inzlicht-Sprei 56.1, Dkt. 123-2, ¶ 16.) At deposition, Salzman stated that the signature on the
VSA endorsing his notary stamp “does not look like” his signature. (Salzman Dep., Dkt. 129-9,
at 12:22–15:12; see also id. at 16:18–18:3 (testifying that his signature also does not appear on the
“Beneficiary’s Consent to Transfer of Policy, Waiver of Interest, and Release of Claims” form).)20
This evidence from the notary fails to adequately support Inzlicht-Sprei’s claim of forgery. In
addition to the two documents Salzman asserts do not contain his signature (see The VSA, Dkt.

20

Salzman, who worked at Signature Capital, also testified that he kept his notary stamp
in his unlocked office and that he did not know if Herman Segal had access to it. (Salzman Dep.,
Dkt. 126-8, at 30:18–25; id., Dkt. 124-5, at 48:18–25.)
19

120-11, at 23–24; Beneficiary Consent Form, Dkt. 120-12), Salzman notarized several additional
documents executed in connection with the sale of the Policy during this period (Viatical
Settlement Application, Dkt. 120-19; see also Dkts. 120-20, 120-22, 120-23). There is no evidence
suggesting that these signatures are not his. Furthermore, at deposition, Salzman testified that he
could not remember any single document he had notarized. (Salzman Dep., Dkt. 126-8, at 57:3–
9.) Though Salzman’s testimony that the notary signature on the VSA and Beneficiary Consent
Form are not his is concerning, it is not enough to rebut the strong presumption of authenticity
afforded to notarized signatures. See Phipps, 2009 WL 30263, at *5–6 (“[The notary’s] averment
that it was her usual practice not to witness the execution of documents by the signee prior to
notarization raises doubts as to the authenticity of the signature on the [document], but standing
alone this averment is insufficient to rebut the strong presumption of authenticity of a notarized
signature.”). Inzlicht-Sprei offers no other testimony or evidence, such as expert handwriting
analysis, to support his assertation that the signatures are fake. Cf. Thunder Ridge Energy, 2006
WL 587483, at *17, 20 (finding defendants established material questions of fact as to whether the
presumption was rebutted by providing an affidavit from a handwriting expert that opined that the
signatures of defendants did not match the signatures on the documents at issue); Lombardo v.
United Techs. Corp., No. 95-CV-2353 (WWE), 1997 WL 289669, at *2 (D. Conn. May 7, 1997)
(“[W]hile a notary public’s certificate of acknowledgement, regular on its face, carries a strong
presumption of validity, in light of [the defendant’s] affidavit [that the signature was forged] and
the expert’s opinion that this is not her signature, the issue of the authenticity of plaintiff’s
signature is in dispute.”) (internal citation omitted); Orix Credit Alliance, Inc. v. Khoury, No. 94CV-2083 (HB), 1995 WL 2133, at *1 (S.D.N.Y. Jan. 3, 1995) (finding the presumption sufficiently
rebutted when defendant offered proof that he was abroad at the time he allegedly signed the

20

document). The Court finds that Inzlicht-Sprei has therefore failed to rebut the presumption of
authenticity afforded to his and his mother’s notarized signatures. See Phipps, 2009 WL 30263,
at *5–6 (finding that the presumption of authenticity was not rebutted when the evidence submitted
by defendant was her “own denial that she was the signee,” the existence of signatures on other
documents, admittedly signed by defendant, appeared on their face to be the same, and testimony
from the notary public that “she did not always follow the correct procedures when notarizing
documents”).21
2.

Trustee’s Unauthorized Signature

Inzlicht-Sprei’s second argument as to why the 2010 sale of the Policy was invalid is
similarly ineffective. He argues that even though Rubenstein signed the Trustee Resignation,
clearly stating that his appointment as Trustee was effective August 18, 2010, Rubenstein’s
appointment did not take effect until sometime in October, after Rubenstein signed the VSA
documents on October 4, 2010. (Inzlicht-Sprei Br., Dkt. 123-1, at 13.) Inzlicht-Sprei bases this
argument on the fact that Rosenfeld, who resigned as Trustee in the same document, did not sign
it until September 5, 2010, and that Rubenstein “did not accept the appointment until sometime
between September 5 and 17[—]meaning that his appointment was not effective until 30 days later
in October[,]” i.e., sometime between October 5 and 17, 2010, which was after Rubenstein’s
October 4, 2010 execution of the VSA. (Id.; see also id. at 6 (arguing that the “only clear evidence
of Mr. Rubenstein’s acceptance of the appointment was a fax, showing a September 17, 2010
transmission, from Mr. Rubenstein to Lincoln notifying the insurance company of his

21

At oral argument, Wells Fargo also argued that because Rubenstein had full discretion
and authority, as Trustee, to enter into the VSA, Inzlicht-Sprei’s and his mother’s signatures were
unnecessary and thus their authenticity irrelevant. While this argument has merit, the Court need
not resolve it, given Inzlicht-Sprei’s inability to show that either signature was forged.
21

appointment”); Inzlicht-Sprei 56.1 Response, Dkt. 139-1, ¶ 126(D).) This argument is incorrect
for several reasons.
First, “under New Jersey law[,]22 parties may make a contract effective prior to the date of
its execution.” Zirinsky v. Tomai, No. 99-CV-1037 (NRB), 2001 WL 11073, at *4 (S.D.N.Y. Jan.
4, 2001) (citing State Troopers Fraternal Assoc. of New Jersey, Inc. v. State, 692 A.2d 519, 523–
24 (N.J. 1997)). “In determining the date the parties intended a contract to be effective, if no
subjective intent is apparent or ascertainable, that intent must be based on the objective language
of the contract.’” Id. (quoting State Troopers Fraternal Assoc. of New Jersey, Inc., 692 A.2d at
523–24). Here, the Trustee Resignation clearly states that both Rosenfeld’s resignation and
Rubenstein’s appointment were “effective as of August 18, 2010” (Trustee Resignation, Dkt. 12081), and Inzlicht-Sprei has offered no evidence to suggest that the Rosenfeld and Rubenstein had
subjectively intended a different effective date (cf. Rosenfeld Dep., Dkt. 120-6, at 110:11–22,
179:17–19 (Rosenfeld testifying that “[t]here was a resignation document that was signed. That
resignation document is dated August 18th”); Rosenfeld Dec., Dkt. 120-88, ¶ 16; Rubenstein Dec.,
Dkt. 119-16, ¶ 2; Rubenstein Dep., Dkt. 129-7, at 39:9–25). Thus, as per the Trustee Resignation,
at a minimum,23 Rubenstein’s appointment took effect on August 18, 2010, regardless of the fact

22

The Trust Agreement’s choice-of-law provision specifies New Jersey law. (Trust
Agreement, Dkt. 120-75, at 14.) However, New York law is in accord. See Colello v. Colello,
780 N.Y.S.2d 450, 453 (N.Y. App. Div. 2004) (“It is fundamental that where parties to an
agreement expressly provide that a written contract be entered into ‘as of’ an earlier date than that
on which it was executed, the agreement is effective retroactively ‘as of’ the earlier date and the
parties are bound thereby accordingly.”) (collecting cases).
23

While the specified effective date in the Trust Resignation also supports the conclusion
that Rosenfeld’s resignation was also effective on August 18, 2010, for the reasons discussed infra,
the Court need not resolve that issue.
22

that he and/or Rosenfeld may have signed the agreement on a later date or that Rubenstein did not
notify Lincoln of his appointment as Trustee until later.
Second, even assuming that Inzlicht-Sprei is correct that the thirty-day time period
specified in the Trust Agreement governs when a new Trustee’s appointment takes effect,
Rubenstein’s appointment would have been effective thirty days after August 18, 2010, or
September 18, 2010, which, in turn, means that he was authorized to execute the sale of the Policy
on behalf of the Trust on October 4, 2010 when he signed the VSA. Moreover, the plain language
of the Trust Agreement does not support Inzlicht-Sprei’s argument that the Trust Agreement
governs the effective date of Rubenstein’s appointment as Trustee. Paragraph 5(G) of the Trust
Agreement simply states that “[a]ny Trustee may resign at any time by delivering or mailing a
notice in writing of such resignation . . . to his designated successor[,] . . . and thirty days thereafter
such resignation shall take effect.” (Trust Agreement, Dkt. 120-75, at 6.) It does not impose any
similar requirement on the effective date for the appointment of a trustee. (Cf. id. (noting that a
resigning trustee may resign by delivering notice of his resignation to his successor, “if such
designee has indicated his willingness to act”); id. at 5 (noting that if there is a trustee vacancy
“then the last Trustee serving hereunder may appoint his or her Successor, or in default therefore,
then a majority of the adult beneficiaries . . . shall fill such vacancy”).) Indeed, the Trust
Agreement clearly contemplates that the Trust could be governed by more than one Trustee at a
time. (Id. at 6 (noting that a trustee can resign by delivering his resignation “to the others then
acting”); see also id. at 7 (“All decisions regarding any trust shall be made by a majority of the
Trustees not disqualified to act thereon.”).)

Accordingly, the plain language of the Trust

Agreement indicates that Rubenstein’s appointment as Trustee was effective August 18, 2010,
which means that he was authorized to sell the Policy on behalf of the Trust on October 4, 2010.

23

Third, and relatedly, even accepting arguendo Inzlicht-Sprei’s argument that Rosenfeld’s
resignation did not become effective until October 5, 2010, this fact would not have precluded
execution of the Policy sale. Even if Rubenstein and Rosenfeld were co-Trustees at the time of
the sale, the Trust Agreement provides that the actions of any one trustee is binding on all of the
trustees. (See id. at 7 (“However, insofar as third persons dealing with the Trustees are concerned,
instruments of any kind . . . need be executed by only one Trustee, and when so executed shall be
fully binding as if executed by all of them.”).) Therefore, the Policy sale would still have been
valid even if Rubenstein was a co-Trustee at the time of the sale.
*

*

*

The Court finds that Inzlicht-Sprei’s arguments that various signatures on the VSA and
related sale documents are fake, that Rubenstein was not authorized to act on behalf of the Trust
in selling the Policy, and the evidence he adduces in support of those arguments, are insufficient
to raise a material dispute of fact as to the validity of the Policy sale, much less show, as a matter
of law, that the sale was, in fact, invalid. Accordingly, the Court grants Wells Fargo’s summary
judgment motion and denies Inzlicht-Sprei’s summary judgment motion as to who is entitled to
the Policy proceeds.
B.

Wells Fargo’s Equitable Defenses Entitle It to the Policy Proceeds

Wells Fargo argues that even assuming, arguendo, that valid title of the Policy did not pass
to Wells Fargo in October 2010 because of the forged and/or unauthorized signatures, the Trust is
still not entitled to the Policy proceeds. (See Wells Fargo Br, Dkt. 119-1, at 15–17.) “An action
to set aside a contract for fraud is equitable and thus subject to equitable defenses.” John Hancock
Life Ins. Co. of N.Y. v. Solomon Baum Irrevocable Family Life Ins. Tr. (“Baum”), 357 F. Supp. 3d
209, 217 (E.D.N.Y. 2018) (citing Piedra v. Vanover, 579 N.Y.S.2d 675, 677 (N.Y. App. Div.
1992)), aff’d, 783 F. App’x 89 (2d Cir. 2019). Specifically, Wells Fargo asserts four equitable
24

defenses: ratification, laches, equitable estoppel, and unclean hands. (Wells Fargo Br., Dkt. 1191, at 15–21.)
Wells Fargo relies substantially on Baum, in which the Honorable Nina Gershon found,
under strikingly similar factual circumstances, that Wells Fargo was entitled to a life insurance
policy under the doctrines of ratification and laches. (See id. at 16–19 (discussing Baum).) In
Baum, Signature Capital worked with the Baum family to procure a life insurance policy from the
John Hancock Life Insurance Company of New York on the life of Solomon Baum. 357 F. Supp.
3d at 211–14. The policy application noted that a trust, with Baum’s son listed as the beneficiary,
would own the policy. Id. at 213. The policy premiums were funded through a financing
agreement with H. M. Ruby. Id. at 214. In April 2010, when the policy was at risk of lapsing,
Signature Capital sold the policy. Id. at 215. Though Herman Segal directed the trustee to sign
and fax the sale documents, as well as supporting documents, to the buyer, it was undisputed that
the trustee never signed the documents. Id. However, the trustee testified that he knew that the
policy was “all done” at some point because he stopped receiving mail associated with the policy.
Id. The trustee never took any steps to repudiate the sale. Id. Though the parties disputed whether
the trust ever received $50,000 from the sale, the sale proceeds were also used to pay off the loan
from H.M. Ruby. Id. at 216, 219. In 2015, the trust beneficiary learned about the sale of the
policy, but waited a year, until after his father’s death, to contest the sale of that policy based on
allegations that the insured’s signature on the sale documents was fake.24 Id. at 216–17. The Court
finds the reasoning in Baum, which was recently affirmed by Second Circuit, 783 F. App’x 89 (2d
24

There was factual dispute as to whether the beneficiary had informed the policy’s
servicer about the fraud in 2015, but the Court found that dispute to be immaterial because even if
the beneficiary had initially raised this issue, he “took no steps to determine who owned the Policy
and did not otherwise contact either [the trustee] or [the policy owner] as to the purported forgery.”
Baum, 357 F. Supp. 3d at 220.
25

Cir. 2019) (summary order), applicable to Wells Fargo’s equitable claims of entitlement to the
Policy proceeds in this action.
1.

Ratification

As noted in Baum, “[r]atification is a waiver of existing rights,” 357 F. Supp. 3d at 218
(citing In re Levy, 893 N.Y.S.2d 142, 144 (N.Y. App. Div. 2010)), i.e., “[r]atification is a party’s
affirmance of an earlier act that did not bind it at the time,” Cammeby’s Mgmt. Co., LLC v. Alliant
Ins. Servs., Inc., 720 F. App’x 18, 23 (2d Cir. 2017) (summary order) (emphasis in original); see
also HSBC Bank USA, Nat’l Ass’n v. Adelphia Commc’ns Corp., No. 07-CV-553 (RJA), 2009 WL
385474, at *6 (W.D.N.Y. Feb. 12, 2009) (“The doctrine of ratification applies to transactions
sought to be avoided as fraudulent transfers.”).
When a party with full knowledge, or with sufficient notice of his rights and of all
the material facts, freely does what amounts to a recognition or adoption of a
contract or transaction as existing, or acts in a manner inconsistent with its
repudiation, and so as to affect or interfere with the relations and situation of the
parties, he acquiesces in and assents to it and is equitably estopped from impeaching
it, although it was originally void or voidable.
HSBC Bank USA, Nat’l Ass’n, 2009 WL 385474, at *6 (quoting Rothschild v. Title Guarantee &
Tr. Co., 97 N.E. 879, 881 (N.Y. 1912)). “Under New York law, ‘ratification requires full
knowledge of the material facts relating to the transaction, and the assent must be clearly
established and may not be inferred from doubtful or equivocal acts or language.’” Cammeby’s
Mgmt. Co., LLC, 720 F. App’x at 22 (quoting DiPizio Const. Co. v. Erie Canal Harbor Dev. Corp.,
23 N.Y.S.3d 762, 764 (N.Y. App. Div. 2015)). “[R]atification may be implied when a party fails
to repudiate, or retains the benefit of, an unauthorized transaction when he knows of the material

26

facts concerning the agreement.” Baum, 357 F. Supp. 3d at 218 (citing Hempstead Realty, LLC v.
Sturrup, 57 N.Y.S.3d 675 (Table), 2017 WL 2215747, *6 (N.Y. Sup. Ct. May 15, 2017)).25
In Baum, although the trustee did not sign the sale documents, Judge Gershon nonetheless
found that he had ratified the sale based on the trustee’s drivers license being included in the due
diligence documentation sent to the policy purchaser, the trustee testifying that he “would have
signed” the sale documents, and the trustee doing “nothing to repudiate the sale.” Id. at 219. Here,
the evidence of Rubenstein’s intent to ratify the sale of the Policy is even stronger. First, it is
undisputed that Rubenstein was aware of the sale given that he actually signed the sale documents.
(See Rubenstein Dec., Dkt. 119-6, ¶ 6.) Second, once he was undisputedly Trustee in late October
2010 (cf. Inzlicht-Sprei 56.1 Response, Dkt. 139-1, ¶ 137), Rubenstein not only failed to repudiate
the sale, but thereafter affirmed it, on more than occasion, first by submitting documentation of
the change in the Policy’s ownership to Lincoln on October 25, 2010, and then by transmitting,
via email, all of the relevant sale documents to Signature Capital on November 10, 2010. (Wells
Fargo 56.1, Dkt. 119-2, ¶¶ 168, 171.) Furthermore, as in Baum, the Trust accepted the benefits of
the sale, including the $3,163,363 of the sale proceeds that were sent directly to H.M. Ruby in
satisfaction of its premium financing loan to the Trust and the $1,200,000 that was deposited into
the Trust’s account. (Id. ¶¶ 166, 172.)
Inzlicht-Sprei argues that Rubenstein cannot ratify “his own wrongful transfer.” (InzlichtSprei Opposition Brief, Dkt. 139, at 8–11.) However, Inzlicht-Sprei offers only vague, irrelevant

25

New Jersey law is in accord with New York law. Harrington v. Atl. Sounding Co., 602
F.3d 113, 127 (2d Cir. 2010) (“Ratification requires intent to ratify plus full knowledge of all the
material facts. Ratification may be express or implied, and intent may be inferred . . . from conduct
on the part of the principal which is inconsistent with any other position than intent to adopt the
act.”) (quoting Thermo Contracting Corp. v. Bank of N.J., 354 A.2d 291, 296 (N.J. 1976)).
27

allegations that Rubenstein is untrustworthy and acted “wrongfully” in selling the Policy.
(Inzlicht-Sprei 56.1, Dkt. 123-2, ¶ 79 (asserting that “Rubenstein has been accused of fraud and
other wrongdoing in connection with life insurance trusts in multiple jurisdiction[s] in the United
States”) (collecting cases); id. ¶ 80 (asserting that in one lawsuit Rubenstein was found guilty of a
conspiracy to commit fraud by a jury).). There is nothing to support Inzlicht-Sprei’s assertion that
Rubenstein acted inappropriately in deciding to sell the Policy. There is no evidence that
Rubenstein somehow profited from the Policy’s sale, beyond the few thousand dollars he was paid
in trustee fees, or that he was aware of the Agreement between Inzlicht-Sprei and Signature Capital
and sought to thwart or undermine it.26 Rather, Rubenstein’s undisputed testimony demonstrates
that Rubenstein believed it was better for the Trust to receive some benefit from the sale of the
Policy, that he understood the importance of the Sprei Family receiving their portion of the money
from the sale, and that he knew that the remainder of the money would be distributed to the Segals
and Spiegels as commissions. (Rubenstein Dep., Dkt. 120-7, at 190:17–23; id., Dkt. 129-7, at
69:2–71:23.) Indeed, other undisputed evidence in the record supports Rubenstein’s stated reason
for selling the Policy, namely, that the Policy was on the verge of lapsing in August 2010, when
Rubenstein became a Trustee (Wells Fargo 56.1, Dkt. 119-2, ¶¶ 116, 123)—which would have
resulted in the Trust getting nothing.27
26

With respect to the purported oral agreement between Inzlicht-Sprei and Herman Segal,
pursuant to which Inzlicht-Sprei would have had the first right to buy the Policy before any
subsequent sale of it, there is no evidence, besides Inzlicht-Sprei’s own statements, that such an
agreement ever existed, and, more importantly, absolutely no evidence that Rubenstein was aware
of any such agreement.
27

The Court also notes that Inzlicht-Sprei provides no legal support for his argument that
a trustee with unclean hands cannot ratify the sale, and the Court has found none. However, even
assuming arguendo the correctness of this proposition and that there is genuine dispute of fact as
to Rubenstein having unclean hands, Inzlicht-Sprei would still not be entitled to relief. As the
trust’s beneficiary, Inzlicht-Sprei could ratify the unauthorized acts of a trustee. See In re Levy,
893 N.Y.S.2d at 144 (citing Bogert’s The Law of Trusts and Trustees § 942 (“After a breach of
28

Accordingly, even if the Policy’s sale was invalid at the time of execution, Rubenstein
ratified that sale, entitling Wells Fargo as the successor owner and beneficiary of the Policy to its
proceeds.
2.

Laches

The Court also finds, as in Baum, that Wells Fargo is entitled to the Policy proceeds based
on the doctrine of laches. “Laches is defined as such neglect or omission to assert a right as, taken
in conjunction with the lapse of time, more or less great, and other circumstances causing prejudice
to an adverse party, operates as a bar in a court of equity.” Schulz v. State, 615 N.E.2d 953, 957
(N.Y. 1993) (internal quotation marks and citation omitted). “The essential element of this
equitable defense is delay prejudicial to the opposing party.” Baum, 357 F. Supp. 3d at 220 (citing
Schulz, 615 N.E.2d at 957).
In Baum, the court found that the one-year delay by the Trust’s beneficiary in challenging
the sale of the life insurance policy was sufficient to find laches, because the beneficiary failed to
explain why he did not act on his rights earlier,28 and Wells Fargo had incurred substantial
prejudice during that delay by paying thousands of dollars in premiums and administrative costs

trust has occurred, a beneficiary may expressly or impliedly express satisfaction with the trustee’s
action and thereby prevent himself from claiming thereafter that it was illegal.”)). Though InzlichtSprei argues that he could not have ratified the sale or Rubenstein’s actions because he was
unaware of these acts, Inzlicht-Sprei’s inability to prove his lack of awareness, as discussed infra,
means that he cannot counter the argument that he ratified Rubenstein’s acts through his silence
and inaction regarding the sale. See Cammeby’s Mgmt. Co., LLC, 720 F. App’x at 22
(“Acquiescence or silence, however, can indeed give rise to an inference of ratification.”) (citing
Suncoast Capital Corp. v. Glob. Intellicom, Inc., 719 N.Y.S.2d 652, 653 (N.Y. App. Div. 2001)).
28

As noted infra, in Baum, there was a factual dispute as to whether the beneficiary had
informed the policy’s servicer about the fraud earlier, but the Court found that dispute to be
immaterial. Baum, 357 F. Supp. 3d at 220. Here, there is no dispute that neither Inzlicht-Sprei
nor Sara Sprei never contested the sale to anybody before 2016. (Inzlicht-Sprei 56.1 Response,
Dkt. 139-1, ¶ 213.)
29

to maintain the Policy. Id. The Court also noted that the insured’s death, which had occurred
before the beneficiary began contesting the policy’s sale, “resulted in a loss of substantial evidence
that could have been crucial to Wells Fargo in defending its ownership of the [p]olicy.” Id. at 220–
21.
The same is true here. It is undisputed that in the six years between the sale of the Policy
and Sara Sprei’s death, neither Inzlicht-Sprei nor Sara Sprei ever contested the sale. (InzlichtSprei 56.1 Response, Dkt. 139-1, ¶ 213.) Inzlicht-Sprei argues that he was not aware of the sale,29
and therefore did not know to contest it, because his signature on the sale documents were forged.
However, for the reasons discussed supra at Part I.A.1, the Court finds that Inzlicht-Sprei cannot
demonstrate forgery of any signatures on the sale documents. Likewise, Inzlicht-Sprei argues that
he was not made aware of the sale after the fact because neither he nor his mother received the
various communications from Lincoln and CMG seeking to verify Sara Sprei’s information.
(Inzlicht-Sprei Dec., Dkt. 139-2, ¶¶ 19–21.) However, as the Court has already noted, see supra
at n.14, Inzlicht-Sprei provides no competent evidence to support that self-serving assertion.
Furthermore, Inzlicht-Sprei also does not dispute that his medical office sent Sara Sprei’s updated
medical records to CMG in 2015. (Inzlicht-Sprei 56.1 Response, Dkt. 139-1, ¶ 205.) Therefore,
there is no competent evidence to support Inzlicht-Sprei’s argument that he could not have

29

The Court notes in this context that, as argued by Wells Fargo, Inzlicht-Sprei certainly
had notice that something had happened with the Policy as of November 23, 2010, when he
received a $50,000 “good will” payment from Rubenstein, which was made at Steven Spiegel’s
direction following a conversation in which Spiegel told Inzlicht-Sprei that the Policy could not
be salvaged. (See Wells Fargo 56.1, Dkt. 119-2, ¶¶ 175–77.) Based on this conversation, as well
as the terms of the Agreement, Inzlicht-Sprei, at a minimum, had reason to believe that the Policy
had lapsed; yet, Inzlicht-Sprei did nothing to follow up with the Trustee, Segal, or Spiegel to
inquire about the status of the Policy after receiving the $50,000 payment.
30

contested the Policy’s sale before 2016 because he was unaware of it.30 Moreover, as in Baum,
Wells Fargo, in its role as securities intermediary for LSH CO, has incurred significant prejudice
as a result of Inzlicht-Sprei’s failure to assert his rights given that significant amounts—i.e.,
$5,059,506—have been paid to maintain the Policy while Wells Fargo was listed as the Policy’s
owner. (See Wells Fargo 56.1, Dkt. 119-2, ¶¶ 209–10.) Indeed, in Baum, the trust beneficiary
took action after a year, and not almost six years later as here, to contest the sale of the life
insurance policy. Finally, Sara Sprei’s death in 2016 has likewise deprived Wells Fargo of
significant evidence, such as her testimony as to whether she signed the sale documents or was
made aware of the sale due to Lincoln’s 2010 and CMG’s 2012 letters.
Accordingly, the Court finds that laches bars Inzlicht-Sprei from claiming the Policy’s
proceeds.
C.

Inzlicht-Sprei Is Not Entitled to the Policy on the Basis that it is a STOLI
Policy

Finally, Inzlicht-Sprei argues that he, as executor of Sara Sprei’s estate, is entitled to the
Policy’s proceeds because the Policy is a stranger-originated life insurance (“STOLI”) policy and
therefore void ab initio under New Jersey law. (Inzlicht-Sprei Br., Dkt. 123-1, at 19–20); see also
Sun Life Assurance Co. of Canada v. Wells Fargo Bank, N.A., 208 A.3d 839, 841 (N.J. 2019)
(“[W]e find that STOLI policies are against public policy and are void ab initio, that is, from the
beginning.”). The Court disagrees.

30

Likewise, assuming arguendo that Inzlicht-Sprei, as the Trust’s beneficiary, would have
needed to ratify Rubenstein’s actions in selling the Policy, this lack of evidence would also mean
that Inzlicht-Sprei cannot counter the argument that he, in fact, did ratify Rubenstein’s acts through
silence, as discussed supra. See Cammeby’s Mgmt. Co., LLC, 720 F. App’x at 22 (“Acquiescence
or silence, however, can indeed give rise to an inference of ratification.”) (citing Suncoast Capital
Corp. v. Glob. Intellicom, Inc., 719 N.Y.S.2d 652, 653 (N.Y. App. Div. 2001)).
31

1.

Choice of Law

First, Inzlicht-Sprei’s argument relies on the application of New Jersey law. (See InzlichtSprei Br., Dkt. 123-1, at 18.) “[A] federal court sitting in diversity jurisdiction applies the choice
of law rules of the forum state.” AEI Life LLC v. Lincoln Benefit Life Co., 892 F.3d 126, 132 (2d
Cir. 2018). “Under the law of New York, the forum state, the first step in a choice of law analysis
is to determine whether an actual conflict exists between the laws of the jurisdictions involved.”
Forest Park Pictures v. Universal Television Network, Inc., 683 F.3d 424, 433 (2d Cir. 2012)
(citing In re Allstate Ins. Co. (Stolarz), 613 N.E.2d 936, 937 (N.Y. 1993)). Here, there is such a
conflict. While STOLI policies are void ab initio in New Jersey, they are merely voidable in New
York. Compare Sun Life Assurance Co. of Canada, 208 A.3d at 841 (noting that STOLI policies
are against New Jersey public policy and therefore void ab initio), with AEI Life LLC, 892 F.3d at
137–38 (holding that “under New York law, wagering insurance contracts entered for the benefit
of parties that lack an insurable interest [i.e., STOLI policies] are simply voidable, not void ab
initio”). “New York law looks to the ‘center of gravity’ of a contract to determine choice of law.”
Forest Park Pictures, 683 F.3d at 433 (quoting Stolarz, 613 N.E.2d at 939). “Under this approach,
courts may consider a spectrum of significant contacts, including the place of contracting, the
places of negotiation and performance, the location of the subject matter, and the domicile or place
of business of the contracting parties.” AEI Life LLC, 892 F.3d at 135 (internal quotation marks
and citation omitted).
“The two most important factors under New York law are the place of contracting and the
place of performance.” Id. The place of contracting is where “the policy was negotiated,
contracted, and signed.” Id. Here, the place of contracting was New York. Though the Policy
application states it was signed in New Jersey (The Application, Dkt. 120-69, at 8), none of the
signatories remember signing the Policy in New Jersey (Wells Fargo 56.1, Dkt. 119-2, ¶¶ 69–70,
32

77, 81–82; see also Rosenfeld Dep., Dkt. 120-6, at 127:9–11; William Segal Dep., Dkt. 120-10, at
54:13–19). All of the signatories live and work in New York. (See Wells Fargo 56.1, Dkt. 119-2,
¶¶ 9, 13, 15, 43, 45–46.) Though the Trust, listed as the Policy’s owner and beneficiary on the
Application (see The Application, Dkt. 120-69, at 3), had a New Jersey address, Rosenfeld could
neither recall anything about that address, nor identify whether Signature Capital or Inzlicht-Sprei
had a connection to that address. (Rosenfeld Dep., Dkt. 120-6, at 116:14–117:10; see also Draft
Trust Agreement, Dkt. 120-89, at ECF 9 (noting, in an earlier draft of the Trust Agreement, that
the Trust would be governed by the laws of New York).) Sara Sprei also underwent a medical
examination for the Policy application in New York. (Inzlicht-Sprei Dep., Dkt. 120-8, at 101:3–
24.)
Likewise, the place of performance—“that is, [where] the premiums were billed and a
claim on the policy was made,” Fed. Ins. Co. v. Keybank Nat. Ass’n, 340 F. App’x 5, 8 (2d Cir.
2009) (summary order)—is also New York. Though the premiums were presumably billed to the
Trust, which had a New Jersey address, Rosenfeld received all of the mail for the Trust at a New
York address. (Wells Fargo 56.1 Statement, Dkt. 119-2, ¶¶ 116–17, 123, 133–34.) The premiums
were paid from the Trust’s New York bank account. (Id. ¶ 92.) The premium financing agreement
with H.M. Ruby was executed in New York. (Id. ¶ 100.) Finally, though the claim on the Policy,
had it not been sold in 2010, would have presumably been paid to the Trust, which, although
nominally located in New Jersey, had its bank account in New York. (Id. ¶ 92.) Furthermore,
pursuant to the Agreement, any proceeds from the Policy, if it was still owned by the Trust, would
have been divided between Inzlicht-Sprei and Signature Capital, both of which are located in New
York. (See The Agreement, Dkt. 120-33; Wells Fargo 56.1, Dkt. 119-2, ¶¶ 10, 15.)

33

Inzlicht-Sprei counters that New Jersey law should apply for the following reasons: (1) the
Policy Application states it was signed in New Jersey; (2) William Segal, the insurance agent for
the sale, was licensed in New Jersey; (3) the Trust had a New Jersey address; and (4) Berkshire,
the buyer of the Policy, was licensed to buy life insurance policies in New Jersey and had requested
various documents during the sale process that were required by New Jersey law.31 (Inzlicht-Sprei
56.1, Dkt. 123-2, ¶¶ 155–84.) However, these contacts to New Jersey pale in comparison to the
New York contacts described supra. “The principal contact with New Jersey was the purported
place of signing, but even if [the Court] assumed this fictional place of signing were real for the
choice-of-law analysis, that one contact would not outweigh the significance of New York’s
various relationships with the policy.” AEI Life LLC, 892 F.3d at 136 (footnote omitted).
Likewise, though William Segal had a New Jersey insurance license, he worked for a New York
company, did not work out of a New Jersey office, and did not remember any of the meetings
regarding the Policy occurring in New Jersey. (William Segal Dep., Dkt. 120-10, at 19:2–7,
55:22–56:2.) Also, as noted above, though the Trust had a New Jersey address, the Trust
Agreement was executed in New York and all correspondence and payments between Lincoln and
the Trust occurred in New York. Finally, Berkshire’s contacts with New Jersey while purchasing
the policy do not alter or outweigh the New York contacts relating to the Policy’s actual contracting
and performance.

31

Inzlicht-Sprei also asserts that Lincoln was not authorized to issue life insurance policies
in New York. In support of that contention, he provides an unidentified and undated page that
states “[t]he Lincoln National Life Insurance Company . . . does not solicit business in New York,
nor is it licensed to do so.” (Dkt. 137-1.) However, Lincoln’s 30(b)(6) representative testified at
deposition that it was licensed to sell life insurance policies in New York in 2008. (Deposition of
Lincoln’s Representative, Dkt. 126-5, at 108:13–17.) Thus, the Court gives no weight to the onepage unauthenticated document proffered by Inzlicht-Sprei as evidence on this issue.
34

Accordingly, the Court finds that, considering the totality of the contacts, the Policy’s
“center of gravity” is New York, and that New York law therefore applies.
2.

STOLI Policies are Voidable Under New York Law

As an initial matter, it does not appear that the Policy is a STOLI policy under New York
law. “New York law permits a person to procure an insurance policy on his or her own life and
immediately transfer it to one without an insurable interest in that life, even where the policy was
obtained for just such a purpose.” Kramer v. Phoenix Life Ins. Co., 940 N.E.2d 535, 536–37 (N.Y.
2010) (deciding, on a request for certified question from the Second Circuit, that such policies are
not STOLI policies under New York law).
However, even assuming that the Policy is a STOLI policy, under New York law, it is
merely voidable, and not void ab initio. AEI Life LLC, 892 F.3d at 137–38 (holding that “under
New York law, wagering insurance contracts entered for the benefit of parties that lack an insurable
interest [i.e., STOLI policies] are simply voidable, not void ab initio”). A voidable policy can be
ratified. See Rivera v. Sovereign Bank, 976 F. Supp. 2d 270, 289 (E.D.N.Y. 2013) (“Ratification
is an act by which an otherwise voidable agreement is made valid.”). The Court has already
determined that Wells Fargo would be entitled to the Policy’s proceeds based on the equitable
defense of ratification. See supra at Part I.B.1. Accordingly, Inzlicht-Sprei’s assertion that he is
entitled to the proceeds because the Policy is a STOLI policy fails.32
32

Moreover, the Court is troubled by Inzlicht-Sprei’s assertion that he, as the executor of
Sara Sprei’s estate, would be entitled to the Policy proceeds under New Jersey law. Though
Inzlicht-Sprei correctly notes that
[i]f the beneficiary, assignee, or other payee under any contract made in violation
of this section receives from the insurer any benefits thereunder accruing upon the
death, disablement, or injury of the individual insured, the individual insured, or his
executor or administrator, as the case may be, may maintain an action to recover
those benefits from the person so receiving them,
35

*

*

*

Accordingly, having found that Wells Fargo is entitled to the Policy proceeds because the
sale of the Policy was valid and based on equitable defenses, the Court grants Wells Fargo’s
summary judgment motion and denies Inzlicht-Sprei’s summary judgment motion as to the Policy
proceeds. Given that Wells Fargo is entitled to the Policy’s proceeds, the Court finds that LSH
CO’s breach of contract and indemnification claims against Inzlicht-Sprei, as well as InzlichtSprei’s motion for summary judgment on that claim, are moot.
II.

Aiding and Abetting Breach of Fiduciary Duty Claim
LSH CO seeks summary judgment33 on Inzlicht-Sprei’s claim that it aided and abetted a

breach of fiduciary trust. (LSH CO Brief, Dkt. 122-1, at 21–25.) To state a claim for aiding and

N.J. Stat. Ann. § 17B:24-1.1(c), the New Jersey Supreme Court in Sun Life noted that “it was
difficult to make bright-line rules” about STOLI policies and that “courts should develop a record
and balance the relevant equitable factors” when determining where the proceeds of a STOLI
policy should go, 208 A.3d at 852, 859. In Sun Life, it was the insurer, Sun Life, that sought to
void the policy as a STOLI policy and to be excused from paying the proceeds on the policy after
the insured’s death; the focus of the decision was on whether Wells Fargo, who had bought the
policy on the secondary market and paid premiums to keep the policy current, was entitled to
reimbursement for its premium payments out of the policy proceeds. Id. at 842, 857–59. Here,
Lincoln has already disbursed the Policy proceeds. Therefore, the only considerations are how the
proceeds, based on equitable principles, should be distributed between Inzlicht-Sprei and Wells
Fargo. Given that it was Inzlicht-Sprei’s Agreement with Herman Segal that turned the Policy
into a STOLI policy in the first place, cf. id. at 850, the Court finds it hard to believe that New
Jersey public policy would countenance Inzlicht-Sprei, who has not paid a single cent towards the
Policy, being the beneficiary of New Jersey’s prohibition on STOLI policies.
33

LSH CO filed a motion for judgment on the pleadings, or, in the alternative, a motion
for summary judgment. (See generally Dkt. 122.) The Court finds that the parties had an adequate
opportunity to respond to LSH CO’s potential summary judgment motion and therefore converts
LSH CO’s motion for judgment on the pleadings into one for summary judgment. See Fed. R.
Civ. P. 12(d) (“If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are
presented to and not excluded by the court, the motion must be treated as one for summary
judgment under Rule 56. All parties must be given a reasonable opportunity to present all the
material that is pertinent to the motion.”).
36

abetting a breach of fiduciary duty, Inzlicht-Sprei must show: “(1) breach of fiduciary obligations
to another of which the aider and abettor had actual knowledge; (2) the defendant knowingly
induced or participated in the breach; and (3) plaintiff suffered actual damages as a result of the
breach.” In re Agape Litig., 773 F. Supp. 2d 298, 325 (E.D.N.Y. 2011) (internal quotation marks
and citation omitted); see also In re Sharp Int’l Corp., 403 F.3d 43, 49–50 (2d Cir. 2005) (same)
(citing Kaufman v. Cohen, 760 N.Y.S.2d 157, 169 (N.Y. App. Div. 2003)).34
Although Inzlicht-Sprei initially asserted in his cross-claim against LSH CO and in his
summary judgment motion as to that claim that LSH CO aided and abetted Rubenstein’s alleged
breach of fiduciary duty in several ways (see Inzlicht-Sprei Answer and Cross-Claims, Dkt. 103,
¶ 97), Inzlicht-Sprei’s counsel conceded at the March 10, 2020 oral argument that LSH CO could
only have been involved in a breach of fiduciary duty after the initiation of the instant litigation,
as there is no evidence that LSH CO and Rubenstein had any interaction prior to September 2016,
when this litigation began. Therefore, of the various breaches of fiduciary duty that Inzlicht-Sprei
alleges, the Court will focus on those that allegedly occurred during the course of this litigation,
i.e., the allegations that Rubenstein breached his fiduciary duty by entering into a Settlement
Agreement with LSH CO and Wells Fargo, by filing an Answer and executing a declaration on
behalf of the Trust that disavowed any interest in the Policy proceeds, and by making statements
at his deposition that were manufactured by Wells Fargo and/or LSH CO. (Cf. id.) The Court
finds that, even assuming arguendo that Rubenstein breached his fiduciary duty in one or more of

34

The Court applies New York law to this claim because “[u]nder New York choice of law
rules, tort claims are outside the scope of contractual choice of law provisions,” Burns v. Del.
Charter Guar. & Tr. Co., 805 F. Supp. 2d 12, 22 (S.D.N.Y. 2011) (citation omitted), and “[b]oth
parties predominantly rely upon New York law in their analyses of this claim, indicating their
consent to such application,” Obeid v. La Mack, No. 14-CV-6498 (LTS) (HBP), 2019 WL
1227789, at *4 (S.D.N.Y. Mar. 15, 2019), reconsideration denied sub nom. Obeid ex rel. Gemini
Real Estate Advisors LLC v. La Mack, 2019 WL 2209160 (S.D.N.Y. May 22, 2019).
37

these ways during the course of this lawsuit, Inzlicht-Sprei has failed to show there is a material
dispute of fact as to whether LSH CO knowingly induced or participated in any such breach.
“[A] person knowingly participates in a breach of fiduciary duty only when he or she
provides substantial assistance to the primary violator.” Lerner v. Fleet Bank, N.A., 459 F.3d 273,
294 (2d Cir. 2006) (internal quotation marks and citation omitted). This knowing participation
“requires more than a defendant’s knowledge of the primary violation.” In re Sharp Int’l Corp.,
302 B.R. 760, 774 (E.D.N.Y. 2003), aff’d, 403 F.3d 43 (2d Cir. 2005). Furthermore, “even without
directly assisting in the commission of the underlying wrong, a defendant may still be liable as an
aider and abetter for ‘inducing’ or ‘encouraging’ a fiduciary to breach his duties to another.” Id.
at 774–75 (citing Kaufman, 760 N.Y.S.2d at 169).
Here, there is no evidence that LSH CO assisted, induced, or encouraged any of
Rubenstein’s purported breaches. For example, LSH CO’s role in then-Defendant Rubenstein’s
filing of his December 11, 2017 Answer was minimal. It was Rubenstein’s counsel that reached
out to Wells Fargo’s counsel35 in October 2017, expressing his belief that Rubenstein needed to
file an Answer “given Inzlicht-Sprei’s refusal to let Rubenstein out of the case” and providing a
draft for Wells Fargo’s counsel to review. (Inzlicht-Sprei 56.1, Dkt. 123-2, ¶ 94; Inzlicht-Sprei’s
56.1 Response, Dkt. 140-1, ¶ 121.) Wells Fargo’s counsel responded that it was “fine with the
itemized responses [by Rubenstein].” (LSH CO 56.1, Dkt. 122-2, ¶ 122.) Though LSH CO,

35

LSH CO and Wells Fargo, whose interests were aligned, were represented by the same
counsel. (See Dkts. 49–51, 98–100.) The Court therefore attributes the actions of Wells Fargo’s
counsel to LSH CO as well and refers primarily to their joint counsel as Wells Fargo’s counsel in
this section.
38

through its counsel, played a much more proactive role in Rubenstein’s declaration36 by providing
an initial draft for Rubenstein’s counsel to review and revise (see generally Dkts. 131–33), nothing
in the attorneys’ exchange of the draft suggests that LSH CO was assisting, inducing, or
encouraging Rubenstein to breach his fiduciary duty or make any false claim or statement. (See,
e.g., Dkt. 131, at ECF 4 (stating that “we [counsel for Wells Fargo] are hopeful that we can work
toward a resolution without Rubenstein filing an answer”); id. at ECF 21 (stating that “[w]e
[counsel for Wells Fargo] have incorporated your suggested revisions to the draft declaration”).)
In fact, the first of the emails between the attorneys for Wells Fargo and Rubenstein suggest that
Wells Fargo was merely responding to Rubenstein’s desire to be dismissed from the action. (See
Dkt. 131, at ECF 1 (noting that “[a]fter the Salzman deposition, we [i.e., the attorneys for Wells
Fargo and Rubenstein] briefly discussed Mr. Rubenstein’s role in this litigation and his desire to
seek dismissal from the action”) (emphasis added).) Additionally, though Inzlicht-Sprei notes that
Rubenstein had already executed his declaration stating that the Trust was not entitled to the Policy
proceeds by the time he entered into the Settlement Agreement with Wells Fargo/LSH CO
(Inzlicht-Sprei 56.1 Response, Dkt. 140-1, ¶ 133), Inzlicht-Sprei does not provide any facts
suggesting that Rubenstein’s preemptive execution of this declaration was evidence that LSH CO
had assisted, induced, or encouraged Rubenstein to breach his fiduciary duty by executing it in the
first place. In fact, counsel for Wells Fargo was hoping to have the declaration by July 2017, in
time for their mediation with Inzlicht-Sprei (see Dkt. 131, at ECF 30 (noting, on July 12, 2017,
that “[w]e [counsel for Wells Fargo] are mediating the Sprei matter tomorrow, and would love to,

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As noted supra n.17, it appears that Wells Fargo and LSH CO were hoping to use the
declaration in a mediation with Inzlicht-Sprei as well as to later support their anticipated summary
judgment motion.
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if possible, have the executed declaration”)), yet Rubenstein did not execute the declaration until
November.
Inzlicht-Sprei does not dispute that LSH CO, Wells Fargo, and Rubenstein entered into the
Settlement Agreement after months of negotiations between the parties’ counsel (Inzlicht-Sprei
56.1 Response, Dkt. 140-1, ¶ 125), but he fails to provide any evidence suggesting that Rubenstein
breached his fiduciary duty by entering into that agreement or that LSH CO used those negotiations
to assist, induce, or encourage Rubenstein to breach his fiduciary duty by entering into that
agreement. For example, while the Settlement Agreement states that Wells Fargo and LSH CO
agreed to “a full and final settlement and release of all claims that could have been asserted against
Rubenstein, both individually and as Trustee” (Settlement Agreement, Dkt. 124-46, at 3), InzlichtSprei provides no evidence that the release of claims against Rubenstein individually motivated
him to enter into the Settlement Agreement. Rather, Rubenstein testified at his deposition that he
signed the Settlement Agreement because he “was acting as a fiduciary to the [T]rust . . . in order
to make sure that the [T]rust is not engaging in any fraudulent activities.” (Rubenstein Dep., Dkt.
124-9, at 161:4–16); cf. Obeid, 2019 WL 1227789, at *4 (“Knowing participation may be inferred
where it appears that the defendant may have used knowledge of the breach to gain a bargaining
advantage in the negotiations or where the terms of the transaction are so egregious, or the
magnitude of the side deals is so excessive as to be inherently wrongful.”) (internal quotation
marks and citation omitted). Nor does Inzlicht-Sprei offer any evidence that LSH CO actually
suggested or threatened to bring individual claims against Rubenstein if he refused to settle. (Cf.
Dkt. 131, at ECF 35 (stating that if Rubenstein is not prepared to execute the declaration, Wells
Fargo “will proceed with the prosecution of Well Fargo’s claim” against the Trust); Wells Fargo

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Answer, Dkt. 27, at 8–9 (stating that its claim for indemnification was against “the Trustees,” not
Rubenstein in his personally capacity).)
Finally, while Inzlicht-Sprei seems to rely on the fact that Wells Fargo’s 30(b)(6) witness
stated that Wells Fargo did not have an agreement or understanding with Rubenstein as evidence
that Rubenstein and LSH CO were hiding the Settlement Agreement from Inzlicht-Sprei37
(Inzlicht-Sprei 56.1 Response, Dkt. 140-1, ¶¶ 131–32), the fact that the Wells Fargo representative
witness was unaware of the Settlement Agreement does not, on its own, support the inference that
LSH CO encouraged or induced Rubenstein to keep the agreement a secret from Inzlicht-Sprei.
Likewise, the fact that LSH CO knew about the settlement negotiations and/or that Rubenstein was
potentially breaching his fiduciary duty by engaging in them and did not tell Inzlicht-Sprei is also
insufficient to establish substantial assistance. See In re Sharp Int’l Corp., 302 B.R. at 774 (“In
general, inaction—e.g., a failure to investigate or to alert third parties about another’s
misconduct—does not constitute substantial assistance, unless the defendant owes a special duty
directly to the plaintiff.”). Though initial drafts of the Settlement Agreement stated that it was
confidential (Wells Fargo 56.1 Response, Dkt. 126-1, ¶ 90), the final Settlement Agreement did
not include a confidentiality provision (LSH CO 56.1, Dkt. 122-2, ¶ 139), and Inzlicht-Sprei does
not provide any emails or communications between LSH CO and Rubenstein, or their attorneys,
telling Rubenstein that he should not inform Inzlicht-Sprei of the settlement or any evidence that
Rubenstein was prevented from telling Inzlicht-Sprei about the settlement. Further, Inzlicht-Sprei
was provided a copy of the Settlement Agreement, by Wells Fargo’s counsel, the day after it was

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Though Inzlicht-Sprei refers to the deposition of the Wells Fargo 30(b)(6) witness to
dispute LSH CO’s assertion that the Wells Fargo representative was not asked whether LSH CO
or Wells Fargo was attempting to negotiate an agreement with Rubenstein, he does not provide a
citation to indicate where in the representative’s deposition this testimony occurred. (See InzlichtSprei 56.1 Response, Dkt. 140-1, ¶¶ 131–32.)
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fully executed. (Id. ¶¶ 133, 144.) Thus, there is simply insufficient evidence from which a
reasonable jury could find that Rubenstein, at the behest of LSH CO and Wells Fargo, sought to
conceal the Settlement Agreement from Inzlicht-Sprei.
Therefore, the undisputed facts show that far from assisting, inducing, or encouraging
Rubenstein to breach his fiduciary duties, LSH CO, at most, engaged in the type of common-place
settlement negotiations that the law encourages. Cf. Carson Optical, Inc. v. Hawk Imps., Inc., No.
12-CV-1169 (GRB), 2013 WL 5740452, at *4 (E.D.N.Y. Oct. 10, 2013) (“The law strongly
encourages settlement of disputes. ‘Compromises of disputed claims are favored by the courts.’”)
(quoting Williams v. First Nat. Bank, 216 U.S. 582, 595 (1910)). Having failed to show there is a
material dispute as to one of the elements of his claim, Inzlicht-Sprei’s aiding and abetting claim
fails, and the Court finds that LSH CO is entitled to summary judgment on this claim.
CONCLUSION
For the reasons set forth above, Wells Fargo’s motion for summary judgment declaring
that Wells Fargo is entitled to the Policy proceeds is granted. Inzlicht-Sprei’s motion for summary
judgment declaring that he is entitled to the Policy proceeds is denied. Inzlicht-Sprei’s motion for
summary judgment as to LSH CO’s breach of contract/indemnification claim is denied as moot.
LSH CO’s motion for summary judgment as to Inzlicht-Sprei’s cross-claim for aiding and abetting
a breach of fiduciary duty by the Trustee is granted. The Clerk of Court is respectfully directed to
release and disburse all funds, with interest, to Wells Fargo, enter judgment, and terminate this
case accordingly.

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SO ORDERED.
/s/ Pamela K. Chen
Pamela K. Chen
United States District Judge
Dated: March 31, 2020
Brooklyn, New York

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