Lincoln Nat'l Life Ins. Co. v. Cowboy Athletics, Inc.

934 F.Supp.2d 884

The LINCOLN NATIONAL LIFE INSURANCE COMPANY, Plaintiff,

v.COWBOY ATHLETICS, INC. and T. Boone Pickens, Defendants,Cowboy Athletics, Inc. and T. Boone Pickens, Counterclaimants,

v.The Lincoln National Life Insurance Company, Counterdefendant,Cowboy Athletics, Inc. and T. Boone Pickens, Third–Party Plaintiffs,

v.Management Compensation Group Lee Inc.; John Ridings Lee; John Ridings Lee Company, Inc.; James Glenn Turner, Jr.; Larry Anders; Summit Alliance Financial, LLP., Third–Party Defendants.

Case No. 3–10–CV–173–P.

United States District Court,

N.D. Texas,

Dallas Division.

March 9, 2012.

Andrew G. Jubinsky, Raymond Earl Walker, Figari & Davenport, Dallas, TX, Andrew J. Lorin, Drinker, Biddle & Reath, LLP, New York, NY, Charles J. Vinicombe, David W. Brown, Grant E. Nichols, Gregory J. Star, James S. Bainbridge, Robert J. Mancuso, Stephen C. Baker, Drinker, Biddle & Reath, LLP, Philadelphia, PA, Plaintiff and Counterdefendant.

Mary T. Rahmes, Joann E. Victor, Jully C. Pae, Richard R. Fruto, Robert S. Gianelli, Timothy J. Morris, Gianelli & Morris, Rene J. Kern, Jr., Kern Law Group, Los Angeles, CA, Charles David Strecker, J. Kemp Sawers, Baker Botts, LLP, James C. Ho, Prerak Shah, Gibson, Dunn & Crutcher, LLP, Dallas, TX, for Defendant, Counter claimants and Third–Party Plaintiffs.

Joel W. Reese, Bradley M. Gordon, Reese Gordon Marketos, LLP, Roy L. Stacy, Clinton D. Howie, Stacy & Conder, LLP, Mark J. Zimmermann, Tom C. Clark, Dealey, Zimmermann, Clark, Malouf & MacFarlane, William A. Brewer, III, James S. Renard, Jeremy D. Camp, Bickel & Brewer, Dallas, TX, for Third–Party Defendant.

ORDER

JORGE A. SOLIS, District Judge.

Now before the Court are: (a) Plaintiff Lincoln National Life Insurance Company's (“Lincoln”) Motion for Summary Judgment [doc. 160]; (b) Third Party Defendants Management Compensation Group Lee, Inc., John Ridings Lee, John Ridings Lee Company, Inc.'s (collectively “Lee”) Motion for Partial Summary Judgment [doc. 162]; (c) Third Party Defendant James Glenn Turner, Jr.'s (“Turner”) Motion for Summary Judgment [doc. 164]; (d) Defendants Cowboy Athletics, Inc.'s (“Cowboy”) and T. Boone Pickens (“Pickens”) Motion for Partial Summary Judgment [doc. 166]; and (e) Third Party Defendants Larry Anders and Summit Alliance Financial, LLP's (collectively “Anders”) Motion for Summary Judgment [doc. 170], all filed on January 27, 2012. Responses were filed on February 17, 2012. (Docs. 189, 191, 194, 180, 195 respectively.) Replies were filed on March 3, 2012. (Docs. 204, 205, 207, 206, 209 respectively.) After reviewing the parties' briefing, the evidence, and the applicable law, the Court:

(a) GRANTS Lincoln's Motion [doc. 160];

(b) GRANTS Lee's Motion [doc. 162];

(c) GRANTS Turner's Motion [doc. 164];

(d) GRANTS in part and DENIES in part Cowboy's Motion [doc. 166];

(e) GRANTS Ander's Motion [doc. 170]; and

(f) GRANTS sua sponte Lincoln's declaratory judgment claim.

I. Background¹

Ostensibly, this case revolves around a single question: did Cowboy receive twenty-seven life insurance policies (the “Policies”) issued by Lincoln in February 2007? However, as one delves deeper into the factual allegations in this case, the intrigues become much more apparent. The Court begins with a concise version of the facts.

During several meetings from 2005 to 2007, combinations of Cowboy representatives, Pickens, Lee, Turner, and Anders ² developed a program they called The Gift of a Lifetime (the “Program”) designed to raise funds to finance Oklahoma State University's (“OSU”) athletic department. The Program was based on the purchase of life insurance policies (the “Policies”) whereby OSU solicited alumni donors aged 65 to 85 to allow Cowboy to purchase $10 million life insurance policies on their lives with Cowboy as the beneficiary. Under the Program, an annual $16 million premium payment for the Policies would be covered by a premium finance loan, which in turn would be repaid using the death benefits from the Policies with the excess of any such benefits becoming a stream of future income to Cowboy of somewhere between $100 million and $350 million. This projected stream of income was supported by actuarial analysis including mortality rates and illustrations provided by the Brokers. The Brokers arranged and completed Cowboy's applications for the Program and acted as a liaison between Cowboy and the insurance company Lincoln.

Sometime in February of 2007, Lincoln issued the Policies on the lives of twenty-seven OSU donors to Cowboy as part of the Program. Each of the Policies contained a free look provision which allowed Cowboy ten days to return the Policies to Lincoln for any reason. Lincoln required physical delivery of the Policies by the Brokers to the insured to ensure that Lincoln complied with Oklahoma law. Lincoln delivered the Policies to Lee with the intention that either Lee or Turner would make delivery to Cowboy,³ however, Lee never physically delivered the Policies to Cowboy. On February 9, 2007, Lee faxed the President of Cowboy and OSU Athletic Director J. Mike Holder (“Holder”) Policy Delivery Receipts indicating that Cowboy had physically received the Policies. Lee allegedly instructed Holder to sign the forms and fax them back to Lee. Holder, without reading the Policy Delivery Receipts, signed and faxed all twenty-seven of the forms back to Lee. After receipt of the executed Policy Delivery Receipts, Lee returned them to Lincoln via Anders. Both Cowboy and the Brokers concede that the Policies were never physically delivered to Cowboy in 2007.

During the time period of February 9, 2007 until January 2009, Cowboy paid approximately $33 million in premium payments under the Policies and was facing an additional annual $16 million premium payment in February of 2009. Because none of the insureds had died, Cowboy was facing continued premium payments without any offsetting death benefits. In January 2009, OSU President Burns Hargis (“Hargis”) asked an alumnus in the insurance industry to look into the Policies and their underlying financial structure. After several requests for the Policies were made to the Brokers, the Policies were provided to Cowboy around March 24, 2009. On April 3, 2009, within ten days of physically receiving the Policies, Cowboy requested that Lincoln cancel the Policies under the free look provision and return all premium payments. As of that point, Cowboy has not made any subsequent premium payments.

II. Legal Standard & Analysis

A. Summary Judgment Standard

Summary judgment shall be rendered when the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party bears the burden of informing the district court of the basis for its belief that there is an absence of a genuine issue for trial and of identifying those portions of the record that demonstrate such absence. See Celotex, 477 U.S. at 323, 106 S.Ct. 2548. However, all evidence and reasonable inferences to be drawn there from must be viewed in the light most favorable to the party opposing the motion. See United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962).

Once the moving party has made an initial showing, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Fed.R.Civ.P. 56(e); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The party defending against the motion for summary judgment cannot defeat the motion, unless he provides specific facts demonstrating a genuine issue of material fact, such that a reasonable jury might return a verdict in his favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Mere assertions of a factual dispute unsupported by probative evidence will not prevent summary judgment. See id. at 249–50, 106 S.Ct. 2505. In other words, conclusory statements, speculation, and unsubstantiated assertions will not suffice to defeat a motion for summary judgment. See Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1429 (5th Cir.1996) (en banc); see also Abbott v. Equity Grp., Inc., 2 F.3d 613, 619 (5th Cir.1993) (“[U]nsubstantiated assertions are not competent summary judgment evidence.” (citing Celotex, 477 U.S. at 324, 106 S.Ct. 2548)). Further, a court has no duty to search the record for evidence of genuine issues. See Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir.1998). It is the role of the fact finder, however, to weigh conflicting evidence and make credibility determinations. Liberty Lobby, 477 U.S. at 255, 106 S.Ct. 2505.

B. Analysis

Cowboy, Lincoln, Lee, Anders, and Turner filed cross-motions for summary judgment that cover the same legal issues and factual allegations. The Court notes that the parties did not follow Local Rules 56.5–6 in regard to briefing length or summary judgment appendices. A reply is intended to allow the movant to respond to the non-movant's arguments not as a platform for new arguments. Additionally, because the parties did not follow the local rules regarding appendices, the Court was required to decipher individualized formats and citations to several thousand pages of appendices within hundreds of documents. The Court strongly recommends that the parties re-read and comply with the local rules before submitting any further motions or briefing. Any briefing not in compliance with the Local Rules is subject to being stricken.

1. Cowboy's Claim of Breach of Contract by Lincoln

In order to prove breach of contract, a plaintiff must show: “(1) the formation of a contract; (2) a breach thereof; and ...