Key man life insurance policies lapse due to broker's negligence. $1.6 million.
Chief technology officer dies, company tries to collect on life insurance policies but is told they have lapsed.
- Case Name: GroundMetrics v. Lincoln National Corp., et al.
- Court and Case Number: U.S. District Court, Southern District of California / 3:16-cv-01083-H-MDD
- Date of Verdict or Judgment: Friday, August 18, 2017
- Date Action was Filed: Monday, March 14, 2016
- Type of Action: Insurance, Professional Malpractice
- Judge or Arbitrator(s): Hon. Marilyn L. Huff
- Plaintiffs: GroundMetrics, Inc.
- Defendants: Wells Fargo Bank, N.A.Wells Fargo Insurance Services USA, Inc.
- Type of Result: Jury Verdict
- Gross Verdict or Award: $1,652,253
- Net Verdict or Award: $1,239,190
- Settlement Amount: Lincoln National was the carrier of one of the key person life insurance policies, and settled prior to trial for $200,000. ING/Reliastar Insurance, the carrier of the other policy, paid $1,000,000 prior to trial.
- Contributory/Comparative Negligence: 75% to defendant; 25% to plaintiff.
- Economic Damages:
- Trial or Arbitration Time: 5 days.
- Jury Deliberation Time: 5 hours.
- Jury Polls: 8-0
- Attorney for the Plaintiff:
Marc D. Adelman, San Diego.
- Attorney for the Defendant:
Lewis Brisbois Bisgaard & Smith LLP by Joseph C. Campo and David B. Shapiro, Los Angeles.
- Plaintiff's Technical Expert(s):
Brian P. Brinig, JD, CPA/ABV, ASA, forensic accounting, damages, San Diego.
Craig R. Applefield, broker negligence, San Diego.
- Defendant's Technical Expert(s):
Harold Fairman III, broker negligence, San Marcos.
Facts and Background
- Facts and Background:
Plaintiff GroundMetrics, Inc. (GMI) purchased two key person life insurance policies (for $1 million each) on its Chief Technology Officer through Wells Fargo Insurance Services (WFIS). After the policies were placed, GMI moved its headquarters and requested that WFIS update the address on GMI's policies. WFIS did not update the address on GMI's life insurance policies.
As a result of these actions, GMI was never notified about pending payments due on their policies, nor were they notified when these policies lapsed for non-payment. Shortly after the policies lapsed, GMI's Chief Technology Officer passed away. When GMI put in a claim on the insurance proceeds, they were advised that the policies had lapsed.
GMI brought suit against WFIS and Wells Fargo Bank for negligence in the preparation of the policy applications and for failing to update the address as represented.
- Plaintiff's Contentions:
That the agent responsible for placing the policies was negligent in the preparation of both applications. That Wells Fargo was negligent in failing to update plaintiff's new address on the life insurance policies after numerous requests in writing to do so.
- Defendant's Contentions:
That plaintiff was comparatively negligent in monitoring when the premiums were due.
Demands and Offers
- Plaintiff Demand during Trial: $1,150,000
- Defendant Offer during Trial: $300,000