John Laschkewitsch as Administrator for the Estate of Ben Lachkewitsch v. The Lincoln National Life Insurance Company
ORDER GRANTING 83 Defendant's Motion for Summary Judgment; GRANTING 86 Defendant's Motion to Seal; DENYING 87 Plaintiff's Motion for Summary Judgment; GRANTING 96 Defendant's Motion to Exclude; GRANTING 100 Plaintiff 039;s Motion to Seal Document; DENYING 108 Plaintiff's Motion to Exclude; and GRANTING IN PART AND DENYING IN PART 109 Plaintiff's Motion to Seal. Signed by US District Judge Terrence W. Boyle on 9/15/2014. Copy mailed to pro se plaintiff via US Mail to the address of record. (Fisher, M.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
JOHN B. LASCHKEWITSCH as administrator
for the Estate of Ben Laschkewitsch,
LINCOLN LIFE AND ANNUITY
DISTRIBUTORS, INC., d/b/a! LINCOLN
FINANCIAL GROUP, INC.,
This matter is before the Court on parties' cross motions for summary judgment [DE 83
and 87], various motions to seal [DE 86, 100, 109], defendant's motion to exclude evidence [DE
96], and plaintiffs motion to exclude [DE 108].
All of the motions are now ripe for
adjudication. For the following reasons, defendant's motions to seal are GRANTED, plaintiffs
motion to seal is GRANTED IN PART and DENIED IN PART, defendant's motion to exclude
is GRANTED, plaintiffs motion to exclude is DENIED, defendant's motion for summary
judgment is GRANTED and plaintiffs motion for summary judgment is DENIED.
This case arises from an insurance dispute involving multiple insurance companies,
("Lincoln"). The dispute here is over a life insurance policy issued by Lincoln covering the life
of Ben Laschkewitsch, plaintiff-counterdefendant's brother. The undisputed facts before this
Court on the motions for summary judgment reveal defendant's scheme to profit off of the
illness and death of his brother, for his sole personal gain, to the tune of $3.9 million. The facts
reveal that defendant contrived to acquire $3.9 million in potential life insurance payouts on the
life of his brother who was terminally ill with Amyotrophic Lateral Sclerosis ("ALS"). It is clear
that defendant was aware that his brother was suffering from ALS at the time he helped his
brother to apply for life insurance and that he went to great lengths to falsify the information
provided to various life insurance companies, including Lincoln. In the Lincoln application, Mr.
Laschkewitsch lied about his brother's family medical history as well as his brother's medical
condition and healthcare providers; he grossly misstated the amount of "in force" insurance on
his brother's life; he misstated the status of pending life insurance applications; he lied to
Lincoln in emails about withdrawing his pending applications; and he provided false information
about his brother's employment and contact information. Further, Mr. Laschkewitsch submitted
fraudulently altered medical records in which his brother's family history of ALS was carefully
erased and replaced with an innocuous medical condition.
Based on Mr. Laschkewitsch's fraud, Lincoln issued an $800,000 life insurance policy on
the life of his brother (the "Insured"). Within the two-year contestability period, the Insured died.
John Laschkewitsch, as policy owner, agent, and beneficiary, made a claim for benefits. During
the course of the investigation into the claim for benefits, Lincoln learned for the first time about
the Insured's illness and John Laschkewitsch's moneymaking scheme. Lincoln then denied the
claim for benefits and rescinded the policy.
Mr. Laschkewitsch then filed this action, suing Lincoln for denying his fraudulent claim.
In response, Lincoln brought counterclaims seeking a remedy for the fraud perpetrated by Mr.
Laschkewitsch. Mr. Laschkewitsch was also sued by another one of the insurance companies
caught up in his scheme, the ReliaStar Life Insurance Company. See Reliastar Life Ins. Co. v.
Laschkewitsch, No. 5: 13-CV-210 (hereinafter the "ReliaStar Litigation").
MOTIONS TO SEAL.
Local Rule 26.1(a)(l) requires that medical records not be open to inspection or copying
by any persons except the parties and their attorneys. It further requires the filing of any such
records to be accompanied by a motion to seal. Accordingly, defendant's motion to seal [DE 86]
is granted. DE 84 and DE 85 are hereby sealed as they contain medical records or discuss
medical records. Defendant's motion to seal [DE 100] is also granted. DE 97, DE 98, and DE 99
are hereby sealed as they contain medical records or discuss medical records. Plaintiffs motion
to seal [DE 109] is granted in part and denied in part. The documents plaintiff seeks to seal are
properly sealed as they contain medical records or discuss medical records. However, a motion
to seal is not a vehicle to submit new evidence to the Court. Unlike defendant's motions to seal
which refer to exhibits already submitted to the Court, plaintiff attempts to include additional
exhibits as an attachment to his motion to seal. This will not be allowed and the Court will not
consider the exhibits to DE 109. However, as they contain medical records or discuss medical
records, the Court orders that they be permanently sealed. In addition, Exhibits B, C, D, E, and H
ofDE 89, DE 101, exhibits E and F of DE 101, DE 89-1, DE 89-2, DE 89-3, DE 89-4, and DE
89-5 are hereby sealed.
MOTIONS TO EXCLUDE EVIDENCE.
Both defendant and plaintiff have filed motions to exclude evidence and unsupported
allegations that they allege were present in supporting memorandums, responses and replies to
the parties' motions for summary judgment. Additionally plaintiff seeks to exclude defendants'
expert witness, John Carreira.
A. Defendant's Motion.
Lincoln objects to and requests that this Court disregard the following documents: (1) the
"Affidavit of Trust" of Imelda Laschkewitsch [DE 89-2]; (2) the "Affidavit of John M.
Laschkewitsch" [DE 89-4]; (3) the "Affidavit of ALS Facts & Figures" of Jerry Dawson [DE 895]; and several unsubstantiated statements made in plaintiffs memorandum of law in support of
plaintiffs motion for summary judgment [DE 88].
Lincoln asks the Court to exclude the affidavit of Imelda Laschkewitsch, Ben
Laschkewitsch's widow because she essentially recanted the portions of her affidavit that
defendant relies on. Plaintiff attempts to explain away Imelda's recantation, but her deposition
testimony is clearly in conflict with her affidavit. As the deposition testimony occurred after the
affidavit was signed, the inconsistencies should be read in favor of the deposition testimony.
Accordingly, the Court excludes Imelda's affidavit from consideration.
Lincoln also asks the Court to exclude the affidavit of John M. Laschkewitsch because it
was not produced in response Lincoln's January 3, 2014 request for "[a]ll statements or
affidavits taken or received by you or your representative from any person containing
information or knowledge relating to the factual allegations raised in your Complaint." [DE 9614]. Plaintiff responded on February 6, 2014 stating that he did not have any undisclosed
materials in his possession. [DE 96-15]. However, based on the filings in the ReliaStar case, it is
known that plaintiff had in his possession an "Affidavit of John M. Laschkewitsch" signed and
dated January 5, 2011. [DE 99-6]. Plaintiff never produced this affidavit to Lincoln and therefore
cannot introduce it now. FED. R. Civ. P. 37(b)(2)(A)(ii). Accordingly the Court excludes John M.
Laschkewitsch' s affidavit.
Lincoln asks the Court to exclude the "Affidavit of ALS Facts & figures" of Jerry
Dawson from consideration because Dawson is not a fact witness in the case and defendant is
improperly attempting to use the affidavit as expert evidence when Dawson was not designated
as an expert witness. 1 Plaintiff's reasoning for Dawson not being a designated expert - that
Dawson did not want to be an expert - is of no consequence here. Further the fact that Dawson's
affidavit contains restatements from the National ALS Association's website and not personal
opinions is of no consequence. There are rules of evidence that guide parties in submitting
evidence to the Court and those rules must be complied with. If defendant wanted the
information in Dawson's affidavit to be considered by the Court, defendant should have
designated Dawson an expert. This was not done, so the Court excludes the Dawson affidavit
Finally, Lincoln asks the Court to exclude all of defendant's unsupported allegations
concerning what the insured believed or was told by doctors as well as various other allegations
that are likewise unsupported by any proper summary judgment evidence. The Court will not
consider any statements or arguments that are not supported by proper summary judgment
B. Plaintiff's Motion.
Plaintiff's motion to exclude is not his first meritless motion before the Court. [See
ReliaStar Litigation DE 100; 130; 136]. However, plaintiff persists in lodging meritless
allegations and complaints at every tum in this litigation. Here, plaintiff takes particular
Plaintiff actually did designate Jerry Dawson as an expert witness on March 6, 2014 [DE 61], but when defendant
sought dates from plaintiff when the expert witnesses could be made available, plaintiff responded by indicating that
he did not intend to designate Mr. Dawson as an expert witness. See [DE 96-16].
objection to defendant's arguments contained in its supporting memoranda surrounding the
pending motions for summary judgment. None of defendant's objections have any merit at all.
Therefore, the Court denies plaintiff's motion in its entirety here. The Court is able to
separate defendant's arguments and conclusions from the supporting documents and facts.
Plaintiff offers no meritorious challenge to the summary judgment evidence relied upon by
defendant. Where plaintiff attacks the evidence, his attacks have no merit. Accordingly,
plaintiff's motion is denied in its entirety.
MOTIONS FOR SUMMARY JUDGMENT.
A motion for summary judgment cannot be granted unless there are no genuine issues of
material fact for trial.
R. CIV. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
The moving party must demonstrate the lack of genuine issue of fact for trial and if that burden is
met, the party opposing the motion must "go beyond the pleadings" and come forward with
evidence of a genuine factual dispute. Celotex, 477 U.S. at 324. The Court must view the facts
and the inferences drawn from the facts in the light most favorable to the non-moving party.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986). Conclusory
allegations are insufficient to defeat a motion for summary judgment. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 249 (1986) ("[T]he mere existence of some alleged factual dispute between
the parties will not defeat an otherwise properly supported motion for summary judgment.")
(emphasis in original). )."[T]here must be evidence on which the jury could reasonably find for
the plaintiff." Id at 252. Therefore the inquiry asks whether reasonable jurors could find for the
plaintiff by the preponderance of the evidence. Id In order to defeat summary judgment, parties
must provide "specific facts showing there is a genuine issue for trial." Id at 249-50. The Court
will not consider "unsupported assertions," or "self-serving opmwns without objective
corroboration." Evans v. Techs. Apps. & Serv. Co., 80 F.3d 954, 962 (4th Cir. 1996).
Defendant's Motion for Summary Judgment.
Defendant seeks summary judgment in its favor on all claims in this case including its
counterclaims for fraud, violations ofN.C. Gen. Stat. Chapter 75, misrepresentation, and breach
of the producer agreement, and plaintiff's claims for breach of contract and for unfair settlement
practices. Defendant also seeks treble damages and attorney's fees.
The facts in this case are lengthy and complicated and a recitation of them here is
unnecessary as defendant's statement of the facts in its supporting memorandum is wellsupported by evidence in the record and is wholly convincing as the true and correct version of
events that lay the foundation for this case. [DE 85 at 3-21]. Accordingly the Court adopts this
recitation ofthe facts as a general delineation of what occurred in this matter.
Plaintiff's fraud is beyond dispute in this case. The evidence before the Court
demonstrates that plaintiff knew about his brother's ALS, knew that he was unemployed, and
knew that he already had millions of dollars in life insurance coverage, with millions more
pending, but intentionally failed to disclose, and affirmatively misrepresented, each of these
material facts to Lincoln in his application for $800,000 more in coverage on his terminally ill
brother. Plaintiff admits that the Lincoln application was "wrong," that he made several "honest
mistakes" in it, and that "someone" committed insurance fraud when plaintiff submitted altered
medical records as a part of Insured's application.
Plaintiff's own admissions defeat his claims against Lincoln, because they leave "no
genuine issue of any material fact," and Lincoln "is entitled to judgment as a matter of law." See
FED. R. CIV. P. 56(c); Celotex, 477 U.S. at 322. The record also leaves no genuine issue of
material fact as to Lincoln's entitlement to judgment on its counterclaims, as "[a]n issue is
genuine only if a reasonable jury, based on the evidence, could find in favor of the non-moving
party." Anderson, 477 U.S. at 248. Here, no reasonable jury could view the evidence of
plaintiffs widespread fraud and find it to be just a big "honest mistake."
Plaintiff is liable for fraud.
In North Carolina, civil fraud consists of' "(1) False representation or concealment of a
material fact, (2) reasonably calculated to deceive, (3) made with intent to deceive, (4) which
does in fact deceive, (5) resulting in damage to the injured party. Additionally any reliance on the
allegedly false representations must be reasonable." Forbis v. Neal, 649 S.E.2d 382, 387 (N.C.
Here it is undisputed that plaintiffs application contained numerous material
misrepresentations and omissions, including plaintiffs statements that: (a) prior applications had
been declined because of Insured's knee injury; (b) Insured was employed; (c) Insured had
§40,000 per year in income; (d) Insured's phone number was plaintiffs cell phone number; (e)
Dr. VanTran examined Insured and not someone else; (f) Insured told MedEx he had a family
history of "Lumbar Strain and Prostatism" instead of "Lou Gehrig's and Parkinson's"; (g)
Insured's mother had an "unknown" cause of death; (h) Insured had only $100,000 in life
insurance coverage; (i) Insured had no pending applications for more coverage; G) Insured had
never been diagnosed with ALS; (k) Insured had never had a medical diagnostic test performed
related to his neurological condition; and (I) Insured had only seen Dr. Meltzer and Dr. Van Tran
in the last five years. In inducing Lincoln to increase the face amount of coverage, plaintiff then
repeated many of these misrepresentations in February and March 2010, and also stated that (m)
plaintiff would immediately withdraw the other pending applications.
Lincoln was clearly deceived by plaintiffs fraud and reasonably relied on plaintiffs
affirmative explanations in the application, his cover letters, and his subsequent e-mails
explaining away the issues that may otherwise have caused concern. Lincoln suffered damages
as a direct result, including the payment of commissions on the policy in the amount of
$3,072.44 (consisting of $1,904.92 to plaintiff, and the balance to other entities in the
distribution hierarchy) and the payment of costs and attorney's fees in defending against this
lawsuit. The Court also grants defendant's request of special damages in the amount of
$5,183.89, the amount of premiums paid and interest which Lincoln attempted to refund to
plaintiff upon denial of the policy. See PHL Variable Ins. Co. v. P. Bowie 2008 Irrevocable Trust
ex rel. Baldi, 718 F.3d 1, 7 (1st Cir. 2013) ("[T]he law would not allow [the Trust] to commit an
intentional and calculated fraud upon [PHL] and walk away unscathed while the innocent party
bears the financial burden of the fraud.").
Plaintiff is liable for unfair and deceptive practices.
"In order to establish a prima facie claim for unfair trade practices, a plaintiff must show:
(1) defendant committed an unfair or deceptive act or practice, (2) the action in question was in
or affecting commerce, and (3) the act proximately caused injury to the plaintiff." Dalton v.
Camp, 548 S.E.2d 704, 711 (N.C. 2001); see also N.C. Gen. Stat.§ 75-1.1-75-1.16. "A practice
is unfair if it is unethical or unscrupulous, and it is deceptive if it has a tendency to deceive. The
determination as to whether an act is unfair or deceptive is a question of law for the court."
Dalton, 548 S.E.2d at 711 (citations omitted). "Proof of fraud would necessarily constitute a
violation of the prohibition against unfair and deceptive acts." Bhatti v. Buckland, 400 S.E.2d
440, 442 (N.C. 1991); see also Joy v. MERSCORP, Inc., 935 F. Supp. 2d 848, 863 (E.D.N.C.
The Court has already found that Lincoln is entitled to summary judgment on its claim
for fraud, and therefore it is established that plaintiffs actions constitute an "unfair or deceptive
act or practice." Bhatti, 400 S.E.2d at 442. Further, plaintiff admits that his actions were "in or
affecting commerce." See [DE 12 at 16; DE 6 at 17] (admitting that plaintiff was engaged in the
business of acting as an independent insurance agent, which is subject to Chapter 75 and is in or
affecting commerce). Finally, as discussed supra Part III.A.i, plaintiffs deceptive acts caused
Lincoln's damages. Therefore Lincoln is entitled to summary judgment on its Chapter 75 claim.
Plaintiff is liable for misrepresentation.
In North Carolina, the "tort of negligent misrepresentation occurs when (1) a party
justifiably relies, (2) to his detriment, (3) on information prepared without reasonable care, (4) by
one who owed the relying party a duty of care." Brinkmann v. Barrett Kays & Assocs., P.A., 575
S.E.2d 40, 43-44 (N.C. App. 2003) (quotations omitted). A life insurance company relies on its
independent agents' "knowledge of the facts" material to the application. See Daughtridge v. At!.
Coast LineR. Co., 80 S.E. 1080, 1084 (N.C. 1914). As an independent life insurance agent for
Lincoln, plaintiff owed Lincoln a duty of uberrimae fidei, or "utmost good faith," in preparing
the application. See id.; Estate of Graham v. Morrison, 607 S.E.2d 295, 303 (N.C. App. 2005)
("[T]he agent ... is bound to the exercise of the utmost good faith, loyalty, and honesty toward
his principal or employer.").
Here, plaintiff repeatedly submitted "information prepared without reasonable care" to
Lincoln during the application process, as he has admitted. Therefore, plaintiff is liable for
misrepresentation in his submission of the application to Lincoln.
Plaintiff is liable for breaching his producer agreement.
Here, it is not disputed that plaintiff and Lincoln entered into the "Producer Agreement"
on or about February 22, 2010, which is governed by Indiana law and defined the scope of
plaintiff's actions as an independent agent for Lincoln. [DE 83-16]. Under Indiana law, "the
essential elements of a breach of contract claim are the existence of a contract, the defendant's
breach thereof, and damages." Auto-Owners Ins. Co. v. C&J Real Estate, Inc., 996 N.E.2d 803,
805 (Ind. App. 2013) (quotations omitted).
The Producer Agreement makes plaintiff liable for damages and attorney's fees resulting
from "any negligent, fraudulent or unauthorized acts or omissions by" plaintiff. [DE 83-16 at
The agreement also prohibits an agent from "chang[ing] any . . . answers on . . . any
application for the Policies." !d. at ,-r4(a). Likewise, an agent may not "deliver the Policies unless
the health of the Insured(s) or Annuitant(s) is substantially unchanged from the date of the
application." !d. at ,-r4(c). An agent also "agrees to abide by the terms and conditions of this
Agreement, The Producer's Compensation Plan, the Market Conduct Manual, and any rules
relating to the Company's business as may be published, or contained on the Company's Web
site, from time to time." !d. at ,-r7.
As discussed earlier, plaintiff engaged in numerous negligent and fraudulent acts m
preparing and pursuing the Lincoln application, many of which he has admitted. Further, the
policy in suit was issued on or about March 29, 201 0. By that time, plaintiff knew that the
Insured had been diagnosed with ALS again, by Dr. Bedlack at Duke University. By delivering
the policy to Insured, when plaintiff knew that the application underlying the policy contained no
mention of Insured's ALS, plaintiff breached the Producer Agreement. These breaches caused
Lincoln damages in the amount of plaintiff's commissions on the policy and Lincoln's costs and
attorney's fees incurred in defending this lawsuit. Accordingly, summary judgment is granted in
favor of Lincoln on their breach of contract claim.
Plaintiff's death benefits claim.
Plaintiff's complaint contains a single cause of action- for death benefits- couched as a
breach of contract claim. [DE 1-1 at 3--4]. However, "[m]aterial misrepresentations in an
application for an insurance policy may prevent recovery on the policy. Luther v. Seawell, 662
S.E.2d 1, 4 (N.C. App. 2008) (citing N.C. Gen. Stat. § 58-3-10). "[A] representation in an
application for an insurance policy is deemed material if the knowledge or ignorance of it would
naturally influence the judgment of the insurer in making the contract. ... " Goodwin v. Invests.
Life Ins. Co. of N Am., 419 S.E.2d 766, 769 (N.C. 1992) (quotation omitted). "[I]n an
application for a life insurance policy, written questions and answers relating to health are
deemed material as a matter of law." Ward v. Durham Life Ins. Co., 381 S.E.2d 698, 702 (N.C.
1989); see also Fountain & Herrington, Inc. v. Mut. Life Ins. Co. of NY, 55 F.2d 120, 123 (4th
Cir. 1932) ("Answers made in response to questions in the application as to prior illness,
consultation with physicians and applications for other insurance, where the applicant, as here,
declares that they are true and offers them as an inducement to the issuance of the policy, are
deemed material as a matter of law.") (citing George Wash. Life Ins. Co. v. Am. Collapsible Box
Co., 117 S.E. 785 (N.C. 1923)). "[I]t is well settled that a misrepresentation of a material fact, or
the suppression thereof, in an application for insurance, will avoid the policy even though the
assured be innocent of fraud or an intention to deceive or to wrongfully induce the assurer to act,
or whether the statement be made in ignorance or good faith, or unintentionally." Tharrington v.
Sturdivant Life Ins. Co., 443 S.E.2d 797, 801 (N.C. App. 1994) (quotation omitted).
As previously discussed, plaintiffs application contained numerous misrepresentations,
many of which plaintiff admitted. Those relating to Insured's health and ALS are material as a
matter of law, rendering the policy voidable by Lincoln. The other misrepresentation, especially
those related to the other coverage already in force and applications pending, are material
because Lincoln would not have issued the policy, in the amount issued, if it had known of the
other coverage and applications. Indeed, when plaintiff requested an increase in the face amount
from $500,000 to $800,000, Lincoln offered the increase on the express condition that plaintiff
withdraw all other pending applications and that the total coverage in force not exceed $900,000,
or 20 times the state (but false) income of the Insured. [DE 84-36 at LINCOLN 3243, 3249-52];
see also [DE 84-43 at ~11].
Plaintiffs Chapter 58 claim.
"[N]o violation of[§ 58-63-15(11)] shall of itself create any cause of action in favor of
any person other than the Commissioner" of Insurance. N.C. Gen. Stat. § 58-63-15(11). Plaintiff
might have properly pursued this claim by claiming a violation of Chapter 75, but he failed to do
so. See Nelson v. Harford Underwriters Ins. Co., 630 S.E.2d 221, 231 (N.C. App. 2006) ("[A]
plaintiffs remedy for violation of the unfair claim settlement practices statute is the filing of a
claim pursuant to N.C.G.S. § 75-1.1, the unfair or deceptive practices statute.").
Even if plaintiff had properly pled a Chapter 58 violation, his claims would still fail.
Plaintiffs claim is based on a contention that Lincoln has a general business practice of: (1)
attempting to settle claims on the basis of an application which was altered without notice to, or
knowledge or consent of, the insured; (2) failing to promptly provide a reasonable explanation of
the basis in the insurance policy in relation to the facts or applicable law for denial of a claim;
and (3) refusing to pay claims without conducting a reasonable investigation based upon all
available information. The evidence before the Court reveals that Lincoln did not alter plaintiffs
application, that it investigated and responded to plaintiffs claim for death benefits within
approximately three months, and that Lincoln sent plaintiff a letter summarizing some of the
misrepresentations it identified in plaintiffs application. All of Lincoln's actions were lawful
and did not violate Chapter 58.
Lincoln is entitled to treble damages and attorney's fees.
Chapter 75 provides for an automatic trebling of damages upon the finding of a violation
of the Chapter, i.e., the finding of an unfair or deceptive trade or practice. N.C. Gen. Stat. § 7516. In addition:
[T]he presiding judge may, in his discretion, allow a reasonable attorney fee to the
duly licensed attorney representing the prevailing party, such attorney fee to be
taxed as a part of the court costs and payable by the losing party, upon a finding
by the presiding judge that: ( 1) The party charged with the violation has willfully
engaged in the act or practice, and there was an unwarranted refusal by such party
to fully resolve the matter which constitutes the basis of such suit; or (2) The
party instituting the action knew, or should have known, the action was frivolous
N.C. Gen. Stat.§ 75-16.1.
Here, an award of attorney's fees is warranted under both statutory prongs. Plaintiff
willfully engaged in a multi-state scheme of insurance fraud, victimizing Lincoln and others.
Moreover, after Lincoln denied plaintiffs claim for death benefits, it did not initiate litigation.
Having secured nearly a million dollars in life insurance payments after the death of Insured,
plaintiff sought more, and initiated this suit against Lincoln. This suit as initiated by plaintiff is
clearly frivolous as plaintiff sought to have this Court sanction his fraud and award him ill-gotten
gains. Further, the suit compelled Lincoln to file its compulsory counterclaims for fraud and
Chapter 75 violations. Despite this, Lincoln repeatedly asked plaintiff to drop his lawsuit. See
e.g., [DE 84-3 at 139-40]. This constitutes an "unwarranted refusal ... to fully resolve the matter
which constitutes the basis of such suit" by plaintiff. N.C. Gen. Stat. § 75-16.1. Additionally,
plaintiff instituted his own action under Chapter 58 for unfair claims process. Plaintiff should
have known that a suit to enforce his fraud was frivolous and malicious and therefore an award
of attorney's fees is justified.
Accordingly, the Court awards Lincoln $9,217.32, treble the amount of Lincoln's
compensatory damages of 3,072.44, in addition to the $5,183.89 in special damages found by the
Court supra Part III.A.i, plus Lincoln's reasonable attorney's fees spent in defending this action
which Lincoln will prove by affidavit.
Plaintiffs Motion for Summary Judgment.
As the Court has granted defendant's motion for summary judgment in its entirety,
plaintiffs motion must be denied. However, the Court will now briefly address several of
First, the "Incontestability" statute does not bar Lincoln from denying plaintiffs claim
for death benefits. The contestability clause in the disputed policy reads as follows:
We will not contest this policy after it has been in force during the Insured's
lifetime for two (2) years from the Date of Issue.
[DE 96-2]. Here, it is undisputed that the "Insured's lifetime" did not extend for two years from
the Date of Issue. The "Date of Issue" of the Lincoln policy was on or after February 18, 2010
and Insured died on January 15, 2012. Such contestability clauses based on the Insured's lifetime
are allowed in this jurisdiction. Taylor v. Am. Heritage Life Ins. Co., 448 F.2d 1375, 1377 (4th
Cir. 1971). The policy's issue date was February 22, 2010, and the Insured died on January 15,
2012. Because the Insured died within two years of the issue date of the policy, the policy was
not in force for two years during the lifetime of the Insured and thus ReliaStar has the right to
Second, Lincoln did not waive its right to contest the policy. In addition to the reasoning
provided by the Court in the ReliaStar Litigation at *7, plaintiff cannot avail himself of the
equitable defense of waiver due to his widespread fraud. Worldcom, Inc. v. Boyne, 68 F. App'x
447,451 (4th Cir. 2003) (explaining the doctrine of unclean hands).
Finally, Lincoln is not quasi estopped from contesting the policy due to plaintiffs attempt
to make a premium payment after the death of the Insured. "Quasi-estoppel only applies where a
party having the right to accept or reject a transaction 'takes and retains benefits thereunder,' in
which case he 'ratifies it, and cannot avoid its obligation or effect by taking a position
inconsistent with it."' ReliaStar Litigation at *9 (quoting Carolina Medicorp, Inc. v. Bd. of
Trustees of the State of N C. Teachers' and State Employees' Comprehensive Major Me d. Plan,
456 S.E.2d 116, 120 (1995)). Here, Lincoln sent quartly premium notices to plaintiff per his
request. Lincoln sent a quarterly premium notice for the policy on March 1, 2012. [DE 96-3]
(identifying "Last-Bill" date of"03-01-12" as of March 14, 2012). The premium notice indicated
that the payment was due by March 21, 2012. [DE 96-4]. Plaintiff notified Linocln of the death
of Insured on or about March 8, 2012. [DE 83-8]. Lincoln then promptly suspended any further
billing or issuance of premium notices on the policy. [DE 96-5 at 59-61]. This establishes that
Lincoln has not taken and retained any benefit under the policy and has, in fact, attempted to
return the premiums to plaintiff. Therefore it is not barred by quasi-estoppel from contesting the
policy. See Carolina Medicorp, Inc., 456 S.E.2d at 120.
For the foregoing reasons, defendant's motions to seal are GRANTED, plaintiffs motion
to seal is GRANTED IN PART and DENIED IN PART, defendant's motion to exclude is
GRANTED, plaintiffs motion to exclude is DENIED, defendant's motion for summary
judgment is GRANTED and plaintiffs motion for summary judgment is DENIED. Further the
Court AWARDS Lincoln $9,217.32, treble the amount of Lincoln's compensatory damages of
3,072.44, in addition to the $5,183.89 in special damages found by the Court supra Part III.A.i,
plus Lincoln's reasonable attorney's fees spent in defending this action which Lincoln will prove
by affidavit. The Clerk is DIRECTED to enter judgment accordingly and to close the file.
This the ~ay of September, 2014.
RRENCE W. BOYLE
UNITED STATES DISTRICT JUDGE
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