On December 3, 2008, the U.S. federal district court for Minnesota affirmed a magistrate's denial of a motion by Sun Life Assurance Company of Canada (“Sun Life”) to amend its complaint seeking to void life insurance policies issued to John R. Paulson that were later acquired by Coventry First, LLC (“Coventry First”), The Atticus Fund, LP ("Atticus") and Orca Finance Trust ("Orca"). Click here for a copy of the decision. Sun Life sought to amend its complaint to plead that a third party intended to acquire the policies at the time they were procured and therefore that no insurable interest existed when the policies were issued. As previously reported here, in February 2008 the court granted Coventry First's motion to dismiss Sun Life's complaint as to Coventry First. The proposed amendment was intended to address the grounds for such dismissal.
In denying the motion to amend the complaint, the magistrate held and the court affirmed that the motion to amend was frivolous because Sun Life had not alleged facts to support an intent of a third party to acquire the policies at the time of issuance.
The court also rejected Sun Life's motion to certify a question of law to the Minnesota Supreme Court as to whether mere intent to transfer a life insurance policy to an unspecified third party at an unspecified date was sufficient to support a claim of lack of insurable interest at the time the policy was issued. The court reaffirmed its earlier view that a mutual intent between the policy owner and a third party at the time of policy issuance was necessary.
Finally, the court also granted motions to dismiss by Atticus and Orca on the same grounds as the February dismissal granted to Coventry First.