This column reports on several significant, representative decisions handed down recently in the U.S. District Court for the Eastern District of New York. Judge Jack B. Weinstein enforced the incontestability provision of a life insurance policy though the policy was procured by fraud. In separate cases, Judge Denis R. Hurley, relying on the preemption doctrine, denied a motion to remand to state Supreme Court; and Judge Eric N. Vitaliano, finding no diversity jurisdiction, granted a motion to remand. And Judge William F. Kuntz II set forth reasons for sentencing defendant to a four-year jail term with a large restitution payment.
Incontestability Enforced
In AEI Life v. Lincoln Benefit Life, 14 CV 6449 (EDNY, Dec. 22, 2016), Judge Weinstein rejected an insurer’s effort to get around a life insurance policy’s incontestability provision by arguing that the policy was procured by fraud. The result turned on the court’s decision to apply New York rather than New Jersey law as specified in the insurance contract. New York law, unlike New Jersey law, bars an insurer from challenging the validity of a life insurance policy on grounds of fraud in the inducement after expiration of the two-year period specified in the incontestability clause.
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