August 20, 2015

Contact:  Eric W. Boyer, Esq.
Managing Partner
305.670.1101 Ext. 1023


Professional Malpractice Defense – Insurance Agent/Broker – Fraud & Omissions – Unlawful Sale of Variable Universal Life Insurance Policy

Michelle M. O'Brien

Michelle M. O’Brien

MIAMILars O. Bodnieks, a partner in the Miami office of Quintairos, Prieto, Wood & Boyer, P.A. (QPWB), and Michelle M. O’Brien, an associate with the firm, successfully defended Nationwide Life & Annuity Insurance Co. (NLAIC), against claims for fraud and rescission arising out of an alleged violation of Fla.Stat.§517.301 in connection with the sale and failure to furnish a prospectus for a variable universal life insurance policy.
After the initial claims against the agent and his broker failed in 3-day FINRA arbitration, and confirmed by the trial court, plaintiff sued NLAIC under the guise of fraud by omission based on a theory that the alleged failure to furnish a current prospectus constitutes per se fraud under Florida securities law.  The trial court rejected defendant’s motion for final summary judgment after a lengthy hearing that included arguments that collateral estoppel and res judicata effects of the arbitral decision exonerated the alleged agent and, therefore, the alleged insurer.  At trial, conflicts in the evidence between plaintiff and the agent on whether a current prospectus was furnished were countered with evidence that the plaintiff acknowledged receipt of the prospectus by his signature on the application under penalty of perjury, and evidence that the prospectus was available through the SEC’s website and other sources.  Evidence from the defendant’s representative on regulatory compliance established that all of the critical information that plaintiff claimed was omitted by the alleged failure to furnish the prospectus was also included in the policy itself, the illustrations, quarterly statements, and subsequent prospectuses that he later received.  Plaintiff on cross-examination acknowledged a 10-day “free look” period, allowing him an opportunity to cancel the policy, was explicitly stated in the front page of his insurance policy, and that he intended the defendant to rely on his signature in issuing the $4M policy, confirmed by testimony that the defendant relied on the plaintiff’s signature and would not have issued the policy without the insured’s signature.
The trial court rejected defense requests for special jury instructions on the elements of fraud under Fla.Stat.§517.211, and the defenses of a Fla.Stat.§95,11(4)(e) 2-year statute of limitation, and ratification.  The trial court also rejected the defendant’s request for a special interrogatory verdict on each of the elements of fraud under the statute, instead, instructing the jury – over defense objections – on the plaintiff’s instructions of fraud by omission without materiality, scienter or intent.
The jury deliberated for approximately 1½ hours and returned a defense verdict on the first question of the plaintiff’s requested verdict form, whether the defendant had failed to furnish a current prospectus to the plaintiff.
A statutory section allowing for attorneys’ fees to the prevailing party appeared to motivate the plaintiff in prosecuting the 4,000+ page document and time intensive case.

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