Spinnato v. Unity of Omaha Life Ins. Co.

322 F.Supp.3d 377

Dr. Thomas SPINNATO, Arlene Spinnato, Dr. Tracey Spinnato, and Kristen Spinnato, Plaintiffs,

v.UNITY OF OMAHA LIFE INSURANCE COMPANY, Mutual of Omaha Insurance Company, Taverna Associates, Inc., "XYZ Corp." (the name of which is fictitious and currently unknown to Plaintiffs), and Juliet Taverna, Defendants.

2:17–cv–04268 (ADS)(AKT)

United States District Court, E.D. New York.

Signed June 19, 2018

John E. Lawlor, Esq., Counsel for the Plaintiffs, 129 Third Street, Mineola, NY 11501

Gerber Ciano Brady Kelly LLP, By: Fallyn B. Cavalieri, Esq., Of Counsel, Counsel for Defendants Unity of Omaha Life Insurance Company and Mutual of Omaha Insurance Company, 228 Park Avenue South, Suite 97572, New York, NY 10003

Kaufman Dolowixh Voluck & Gonzo LLP, By: Brett A. Scher, Esq., Adam M. Marshall, Esq., Of Counsel, Counsel for Defendant Taverna Associates, Inc., and Juliet Taverna, 135 Crossways Park Drive, Suite 201, Woodbury, NY 11797

MEMORANDUM OF DECISION & ORDER

SPATT, District Judge:

On July 18, 2017, Dr. Thomas Spinnato ("Thomas"), Arlene Spinnato ("Arlene"), Dr. Tracey Spinnato ("Tracey"), and Kristen Spinnato ("Kristen") (together, the "Spinnatos" or the "Plaintiffs"), commenced this action against Unity of Omaha Life Insurance Company, Mutual of Omaha Insurance Company (together, the "Omaha Defendants"), Taverna Associates, Inc. ("Taverna Associates"), and Juliet Taverna ("Juliet") (together, the "Taverna Defendants") (all together, the "Defendants"). The Plaintiffs allege fifteen New York State causes of action stemming from a series of life insurance policies purchased by the Plaintiffs from 2010 through 2012.

Presently before the Court is a motion filed by the Taverna Defendants pursuant to Federal Rule of Civil Procedure (" FED. R. CIV. P. " or "Rule") 12(b)(6), seeking to dismiss the complaint as it pertains to the Taverna Defendants for failure to state a claim upon which relief may be granted. For the following reasons, the Taverna Defendants' motion is granted.

I. BACKGROUND

A. THE FACTUAL BACKGROUND

Unless otherwise noted, the following facts are drawn from the Plaintiffs' complaint, and for the purposes of the instant motion, they are construed in favor of the Plaintiffs.

Thomas and Arlene are married retirees that are currently residing in Smithtown, New York. Thomas is a retired physician. Their daughters, Tracey and Kristen, both live in East Moriches, New York. Like her father, Tracey is a physician. Compl. ¶¶ 3–5.

Juliet is an insurance agent, registered with the New York State Department of Financial Services, who is employed by or owns Taverna Associates, a corporation based in Greenwich, Connecticut. Juliet managed a portion of the Plaintiffs' wealth for an indeterminate period of time. Compl. ¶¶ 12–17.

In November 2009, Juliet advised Arlene to consider purchasing $3,800,000 in life insurance. On January 18, 2010, Transamerica Policy No. 42629921 was issued. Arlene was listed as the insured and Kristen and Tracey as the owners of the policy. Thomas and Arlene also purchased two MetLife life insurance policies prior to January 2012. Policy No. 7402938 was a $1,667,884 policy and Policy No. 7403224 was a $3,000,000 policy. The Plaintiffs also purchased a second Transamerica Policy, No. 92526800, with a death benefit of $600,000. Compl. ¶¶ 18–19.

In January 2012, Juliet advised Arlene to surrender the Plaintiffs' four current life insurance policies, which had a combined death benefit of $9,067,884 and purchase a new set of policies. The Plaintiffs surrendered their four life insurance policies and began transferring the surrender values of them using like-kind exchanges into new insurance policies issued by United of Omaha Life Insurance Company. At that time, Thomas and Arlene purchased Unity of Omaha Joint and Last Survivor Life Insurance Policy No. BU1375075 with a $3,600,000 death benefit. Kristen and Tracey were responsible for all premium payments and the policy was executed by all the Plaintiffs. Compl. ¶ 20.

Three months later, based on Juliet's advice, Arlene purchased Unity of Omaha Universal Life Insurance Policy No. BU1375078 with a $2,600,000 death benefit. Arlene is listed as the insured on the policy and Tracey is responsible for all premium payments. Compl. ¶ 21. The following month, on the advice of Juliet, Thomas purchased Unity of Omaha Universal Life Insurance Policy No. BU1375080 with a $1,667,884 death benefit. Thomas is the insured under the policy and Tracey is responsible for all premium payments. Compl. ¶ 22. These three Unity of Omaha life insurance policies ("Unity of Omaha Policies") have a combined death benefit of $7,867,884.

In February 2017, the Plaintiffs terminated their relationship with Juliet and Taverna Associates. The Unity of Omaha Policies remained in effect for five years prior to the initiation of this action. The Plaintiffs fully paid the annual premiums; however, fortunately, no death benefit needed to be paid. According to the Plaintiffs, the Unity of Omaha Policies were in excess of the Plaintiffs' coverage needs, were not justified by their assets, and were in excess of their ability to pay the premiums. Compl. ¶¶ 23–33.

B. THE RELEVANT PROCEDURAL HISTORY

On July 18, 2017, the Plaintiffs filed the above-mentioned complaint in this Court.

The Omaha Defendants filed their answer on September 18, 2017, whereby they asserted a series of crossclaims against the Taverna Defendants and a counterclaim against the Plaintiffs.

On December 4, 2017, the Taverna Defendants moved under Rule 12(b)(6) to dismiss the complaint, contending that the Plaintiffs' allegations, even if taken as true, fail to plausibly state claims upon which relief can be granted.

II. DISCUSSION

A. STANDARD OF REVIEW: FED. R. CIV. P. 12(B)(6)

In considering a motion to dismiss pursuant to Rule 12(b)(6), the Court must accept the factual allegations set forth in the complaint as true and draw all reasonable inferences in favor of the Plaintiffs. See, e.g., Trs. of Upstate N.Y. Eng'rs Pension Fund v. Ivy Asset Mgmt. , 843 F.3d 561, 566 (2d Cir. 2016) ; Walker v. Schult , 717 F.3d 119, 124 (2d Cir. 2013) ; Cleveland v. Caplaw Enters. , 448 F.3d 518, 521 (2d Cir. 2006) ; Bolt Elec., Inc. v. City of N.Y. , 53 F.3d 465, 469 (2d Cir. 1995) ; Reed v. Garden City Union Free Sch. Dist. , 987 F.Supp.2d 260, 263 (E.D.N.Y. 2013).

Under the Twombly standard, the Court may only dismiss a complaint if it does not contain enough allegations of fact to state a claim for relief that is "plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007). The Second Circuit has expounded that, after Twombly, the Court's inquiry under Rule 12(b)(6) is guided by two principles:

First, although a court must accept as true all of the allegations contained in a complaint, that tenet is inapplicable to legal conclusions, and [t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss and [d]etermining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.

Harris v. Mills , 572 F.3d 66, 72 (2d Cir. 2009) (quoting Ashcroft v. Iqbal , 556 U.S. 662, 664, 129 S.Ct. 1937, 1940, 173 L.Ed.2d 868 (2009) ).

A complaint must include "a short and plain statement of the claim showing that the pleader is entitled to relief," in order to survive a motion to dismiss. FED. R. CIV. P. 8(a)(2). Under Rule 8, a complaint is not required to allege "detailed factual allegations." Kendall v. Caliber Home Loans, Inc. , 198 F.Supp.3d 168, 170 (E.D.N.Y. 2016) (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). "In ruling on a motion pursuant to FED. R. CIV. P. 12(b)(6), the duty of a court ‘is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof.’ " DiFolco v. MSNBC Cable L.L.C. , 622 F.3d 104, 113 (2d Cir. 2010) (quoting Cooper v. Parsky , 140 F.3d 433, 440 (2d Cir. 1998) ). The Court "[is] not bound to accept as true a legal conclusion couched as a factual allegation." Twombly , 550 U.S. at 555, 127 S.Ct. 1955.

For the Plaintiffs' fraud based claims, those portions of the complaint are subject to Rule 9(b)'s heightened pleading standard. To meet Rule 9(b)'s heightened pleading standard, these elements must be alleged with specificity. Namely, the Plaintiffs must "(1) detail the statements (or omissions) that the plaintiff[s] contends are fraudulent, (2) identify the speaker, (3) state where and when the statements (or omissions) were made, and (4) explain why the statements (or omissions) are fraudulent." Harsco Corp. v. Segui , 91 F.3d 337, 347 (2d Cir. 1996) ; accord Lerner v. Fleet Bank, N.A. , 459 F.3d 273, 290 (2d Cir. 2006) ; Shields v. Citytrust Bancorp, Inc. , 25 F.3d 1124, 1128 (2d Cir. 1994) ; Mills v. Polar Molecular Corp. , 12 F.3d 1170, 1175 (2d Cir. 1993). "In short, a plaintiff must set forth the who, what, when, where and how of the alleged fraud." Telenor E. Invest AS v. Altimo Holdings & Invs. Ltd. , 567 F.Supp.2d 432, 441–42 (S.D.N.Y. 2008) (internal citations and quotation marks omitted). "Fraud must be pleaded with particularity while ‘malice, intent, knowledge, and other conditions of a person's mind may be alleged generally.’ " Houraney v. Burton & Assoc., P.C. , 701 F.Supp.2d 258, 260 (E.D.N.Y. 2010) (citing FED. R. CIV. P. 9(b) ; Iqbal , 556 U.S. at 662, 129 S.Ct. 1937 ).

B. STATUTE OF LIMITATIONS

1. Negligence, Gross Negligence, Negligent Breach of Regulatory Obligations and Violation of Insurance Law § 2123.

The Taverna Defendants assert that the Plaintiffs' claims based on negligence, gross negligence and violations of Insurance Law § 2123 are time-barred. To state a negligence claim in New York, a...