Sun Life Assurance Co. of Canada v. Imperial Premium Finance, LLC

United States Court of Appeals for the Eleventh Circuit · 2018 · Contracts

Contractsincontestability clausebreach of contractFlorida litigation privilegedeclaratory judgmentinsurance contractscontract damagescontest of policy

Facts

IPF alleged that Sun Life undertook efforts to obstruct Imperial's ownership rights under certain life insurance policies. As relevant here, IPF claimed that Sun Life filed a declaratory judgment action seeking a determination that the policies were void ab initio more than two years after the policies were issued. The policies contained an incontestability clause, and IPF alleged that this late-filed declaratory action breached that clause. Sun Life argued that such a filing could not support a breach claim, that the litigation privilege barred suit, and that breach of an incontestability clause is not actionable for damages under Florida law.

Issue

Whether, under Florida law, an insurer's filing of a declaratory judgment action to void life insurance policies after the contestability period can constitute a breach of an incontestability clause giving rise to a damages action, and whether Florida's litigation privilege immunizes that conduct from a breach-of-contract claim.

Rule

Under Florida law, a declaratory judgment action seeking to void a life insurance policy is a 'contest' of the policy. If filed after the period set by an incontestability clause, that filing can plausibly breach the policy contract, and Florida's litigation privilege does not automatically immunize a party from a breach-of-contract claim when the allegedly breaching act is the filing of the lawsuit itself. An incontestability clause, like other contractual prohibitions, may support a damages action upon breach.

🔒

See the holding & full analysis

Create a free KwikCourt account to unlock the rest of this brief — and practice the case.

The court's holding and reasoning
Doctrine tests, pitfalls & exam hypotheticals
10 practice questions + 4 AI-graded essays on this case

Free sample · practice this case

Test yourself

One of 10 multiple-choice questions for this case. Pick an answer to see why.

Lakeshore Life issued a policy in Miami to a trust controlled by Nora Patel. The policy stated that after two years the insurer "cannot contest this policy," and in the fourth year Lakeshore Life filed a Florida declaratory judgment action alleging the policy was void from inception because of defects in the application.

If Nora's assignee sues Lakeshore Life for breach of contract under Florida law based on the filing of that declaratory action, what is the strongest answer?

Explanation. The majority held that, under controlling Florida law, a declaratory judgment action seeking to declare a policy void ab initio plainly contests the policy. Where the policy says the insurer cannot contest after a stated period, filing such an action after that period plausibly breaches the contract and may support a damages claim. The court specifically rejected the argument that an incontestability clause may be used only defensively. (Derived from Sun Life Assurance Co. of Canada v. Imperial Premium Finance, LLC (n.d.).)