This case was last updated from Los Angeles County Superior Courts on 06/18/2019 at 22:18:33 (UTC).

ROSEMARY PERERA ET AL VS LINCOLN BENEFIT LIFE COMPANY ET AL

Case Summary

On 08/16/2017 ROSEMARY PERERA filed a Property - Other Property Fraud lawsuit against LINCOLN BENEFIT LIFE COMPANY. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are ROBERT L. HESS, GREGORY KEOSIAN, TERESA A. BEAUDET and SUSAN BRYANT-DEASON. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****2524

  • Filing Date:

    08/16/2017

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Property - Other Property Fraud

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

ROBERT L. HESS

GREGORY KEOSIAN

TERESA A. BEAUDET

SUSAN BRYANT-DEASON

 

Party Details

Plaintiffs and Petitioners

PERERA ROSEMARY

PERERA RAMESH

RAM SALES INC

Defendants and Respondents

CONAWAY JAMES O.

CONAWAY LORRAINE A.

INTEGRITY BUSINESS SOLUTINS PROVIDER LLC

LINCOLN BENEFIT LIFE COMPANY

CONAWAY AND CONAWAY INC

ALLIED MARKETING PARTNERS INC

GLOBAL FINANCIAL DISTRIBUTORS INC.

HARRINGTON ALLAN

ZICCARELLI JASON

INTEGRITY BUSINESS SOLUTIONS PROVIDER LLC

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

BLAKEMAN LAW

BLAKEMAN J BENJAMIN

Defendant and Respondent Attorneys

BURGESS ALEXIS N. ESQ.

PETERS THEODORE C. ESQ.

WEAVER CHAD ESQ.

MANNING & KASS ELLROD RAMIREZ TRESTER LLP

BURGESS ALEXANDRA NICOLE ESQ.

PETERS THEODORE CLARKE ESQ.

GIBBONS JAMES EDWIN

 

Court Documents

Answer

10/12/2018: Answer

Opposition

11/9/2018: Opposition

Minute Order

1/23/2019: Minute Order

Motion for Sanctions

1/24/2019: Motion for Sanctions

Minute Order

2/14/2019: Minute Order

Notice

3/25/2019: Notice

CASE MANAGEMENT STATEMENT

2/6/2018: CASE MANAGEMENT STATEMENT

DEFENDANT JAMES CONAWAY'S NOTICE OF MOTION AND MOTION TO QUASH PLAINTIFFS' DEPOSITION SUBPOENA FOR PRODUCTION OF BUSINESS RECORDS TO FINRA

2/23/2018: DEFENDANT JAMES CONAWAY'S NOTICE OF MOTION AND MOTION TO QUASH PLAINTIFFS' DEPOSITION SUBPOENA FOR PRODUCTION OF BUSINESS RECORDS TO FINRA

NOTICE OF POSTING JURY FEES BY DEFENDANT LINCOLN BENEFIT LIFE COMPANY

2/23/2018: NOTICE OF POSTING JURY FEES BY DEFENDANT LINCOLN BENEFIT LIFE COMPANY

Minute Order

5/17/2018: Minute Order

REPLY IN SUPPORT OF SUPPLEMENTAL BRIEF RE: MOTION TO ENFORCE CONTRACTUAL FORUM CLAUSE

5/29/2018: REPLY IN SUPPORT OF SUPPLEMENTAL BRIEF RE: MOTION TO ENFORCE CONTRACTUAL FORUM CLAUSE

PLAINTIFF ROSEMARY PERERA'S SEPARATE STATEMENT IN SUPPORT OF PLAINTIFF'S MOTION TO COMPEL FURTHER RESPONSES TO REQUEST FOR PRODUCTION OF DOCUMENTS

7/3/2018: PLAINTIFF ROSEMARY PERERA'S SEPARATE STATEMENT IN SUPPORT OF PLAINTIFF'S MOTION TO COMPEL FURTHER RESPONSES TO REQUEST FOR PRODUCTION OF DOCUMENTS

ANSWER AND AFFIRMATIVE DEFENSES OF DEFENDANT LINCOLN BENEFIT LIFE COMPANY TO PLAINTIFFS' UNVERIFIED SECOND AMENDED COMPLAINT

7/19/2018: ANSWER AND AFFIRMATIVE DEFENSES OF DEFENDANT LINCOLN BENEFIT LIFE COMPANY TO PLAINTIFFS' UNVERIFIED SECOND AMENDED COMPLAINT

PLAINTIFFS' OPPOSITION TO DEFENDANT JAMES CONAWAY'S MOTION TO QUASH OR, IN THE ALTERNATIVE, MODIFY PLAINTIFFS' DEPOSITION SUBPOENA FOR PRODUCTION OF BUSINESS RECORDS TO USA FINANCIAL CORPORATION; DECL

8/8/2018: PLAINTIFFS' OPPOSITION TO DEFENDANT JAMES CONAWAY'S MOTION TO QUASH OR, IN THE ALTERNATIVE, MODIFY PLAINTIFFS' DEPOSITION SUBPOENA FOR PRODUCTION OF BUSINESS RECORDS TO USA FINANCIAL CORPORATION; DECL

DEFENDANTS JASON ZICCARELLI AND INTEGRITY BUSINESS SOLUTIONS PROVIDER, LLC'S NOTICE OF DEMURRER AND DEMURRER TO PLAINTIFFS' FIRST AMENDED COMPLAINT; ETC

1/16/2018: DEFENDANTS JASON ZICCARELLI AND INTEGRITY BUSINESS SOLUTIONS PROVIDER, LLC'S NOTICE OF DEMURRER AND DEMURRER TO PLAINTIFFS' FIRST AMENDED COMPLAINT; ETC

DEFENDANTS GLOBAL FINANCIAL DISTRIBUTORS, INC., ALLIED MARKETING PARTNERS, AND ALAN HARRINGTON'S DEMURRER TO PLAINTIFFS' COMPLAINT

1/18/2018: DEFENDANTS GLOBAL FINANCIAL DISTRIBUTORS, INC., ALLIED MARKETING PARTNERS, AND ALAN HARRINGTON'S DEMURRER TO PLAINTIFFS' COMPLAINT

DEFENDANTS GLOBAL FINANCIAL DISTRIBUTORS, INC., ALLIED MARKETING PARTNERS, AND ALAN BARRINGTON'S DEMURRER TO PLAINTIFFS' COMPLAINT

10/20/2017: DEFENDANTS GLOBAL FINANCIAL DISTRIBUTORS, INC., ALLIED MARKETING PARTNERS, AND ALAN BARRINGTON'S DEMURRER TO PLAINTIFFS' COMPLAINT

DEFENDANTS JASON ZICCARELLI AND INTEGRITY BUSINESS SOLUTIONS PROVIDER, LLC'S NOTICE OF DEMURRER ETC.

10/25/2017: DEFENDANTS JASON ZICCARELLI AND INTEGRITY BUSINESS SOLUTIONS PROVIDER, LLC'S NOTICE OF DEMURRER ETC.

173 More Documents Available

 

Docket Entries

  • 06/07/2019
  • at 08:30 AM in Department 50, Teresa A. Beaudet, Presiding; Ex-Parte Proceedings

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  • 06/07/2019
  • Response (to ex parte application); Filed by ROSEMARY PERERA (Plaintiff); RAMESH PERERA (Plaintiff); RAM SALES INC (Plaintiff)

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  • 06/07/2019
  • Ex Parte Application (re Shortening Time on Defendants Motion to Enforce Forum Selection Clause); Filed by ALLIED MARKETING PARTNERS, INC (Defendant); ALLAN HARRINGTON (Defendant); GLOBAL FINANCIAL DISTRIBUTORS,INC. (Defendant)

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  • 06/07/2019
  • Minute Order ( (Ex-Parte Proceedings for order shortening time on Defendants ...)); Filed by Clerk

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  • 06/07/2019
  • Order (re Defendants' Ex Parte Application re Motion to Enforce Forum Selection Clause)

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  • 06/06/2019
  • at 08:30 AM in Department 50, Teresa A. Beaudet, Presiding; Hearing on Motion for Summary Judgment

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  • 06/04/2019
  • at 08:30 AM in Department 50, Teresa A. Beaudet, Presiding; Hearing on Motion for Summary Judgment - Not Held - Continued - Ex Parte Motion

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  • 05/29/2019
  • at 08:30 AM in Department 50, Teresa A. Beaudet, Presiding; Status Conference (regarding MSJ/A for Conaway Defendants to be heard on 6/4/19 and MSJ/A for Lincoln Benefit Life Defendants to be heard on 6/6/19) - Not Held - Vacated by Court

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  • 05/23/2019
  • at 08:30 AM in Department 50, Teresa A. Beaudet, Presiding; Hearing on Motion for Summary Judgment - Not Held - Continued - Ex Parte Motion

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  • 05/23/2019
  • at 08:30 AM in Department 50, Teresa A. Beaudet, Presiding; Hearing on Motion for Summary Judgment - Not Held - Continued - Ex Parte Motion

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380 More Docket Entries
  • 08/28/2017
  • at 10:00 AM in Department 24; Unknown Event Type - Held - Motion Granted

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  • 08/28/2017
  • Minute Order

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  • 08/28/2017
  • Minute order entered: 2017-08-28 00:00:00; Filed by Clerk

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  • 08/23/2017
  • Challenge To Judicial Officer - Peremptory (170.6); Filed by ROSEMARY PERERA (Plaintiff); RAMESH PERERA (Plaintiff); RAM SALES INC (Plaintiff)

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  • 08/23/2017
  • PEREMPTORY CHALLENGE TO JUDICIAL OFFICER (CODE CIV. PROC., 170.6)

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  • 08/23/2017
  • Proof-Service/Summons; Filed by ROSEMARY PERERA (Plaintiff); RAMESH PERERA (Plaintiff); RAM SALES INC (Plaintiff)

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  • 08/23/2017
  • PROOF OF SERVICE OF SUMMONS

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  • 08/16/2017
  • COMPLAINT AND DEMAND FOR JURY TRIAL: 1. NEGLIGENT MISREPRESENTATION ;ETC

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  • 08/16/2017
  • SUMMONS

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  • 08/16/2017
  • Complaint; Filed by ROSEMARY PERERA (Plaintiff); RAMESH PERERA (Plaintiff); RAM SALES INC (Plaintiff)

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Tentative Rulings

Case Number: BC672524    Hearing Date: January 07, 2020    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

rosemary perera, et al.,

Plaintiffs,

vs.

lincoln benefit life company, et al.

Defendants.

Case No.:

BC 672524

Hearing Date:

January 7, 2020

Hearing Time:

8:30 a.m.

[TENTATIVE] ORDER RE:

DEFENDANTS GLOBAL FINANCIAL DISTRIBUTORS, INC., ALLIED MARKETING PARTNERS, INC., AND ALAN HARRINGTON’S MOTION FOR SUMMARY JUDGMENT OR, IN THE ALTERNATIVE, SUMMARY ADJUDICATION OF ISSUES;

DEFENDANTS JASON ZICCARELLI AND INTEGRITY BUSINESS SOLUTIONS PROVIDER, LLC’S MOTION FOR SUMMARY JUDGMENT, OR ALTERNATIVELY, SUMMARY ADJUDICATION OF ISSUES

Background

On August 16, 2017, Plaintiffs Rosemary Perera (“Rosemary”), Ramesh Perera (“Ramesh”), and Ram Sales, Inc. (“Ram Sales”) (collectively “Plaintiffs”) filed this action against Defendants Lincoln Benefit Life Company, James O. Conaway, Lorraine A. Conaway, Conaway & Conaway, Inc., Integrity Business Solutions Provider, LLC, Allied Marketing Partners, Inc., Alan Harrington, Jason Ziccarelli, and Global Financial Distributors, Inc.

The operative Second Amended Complaint (“SAC”) asserts causes of action for (1) negligent misrepresentation, (2) professional negligence, (3) breach of fiduciary duty, (4) quasi-contract, and (5) financial elder abuse. Plaintiffs allege that Defendants engaged in a scheme to generate life insurance company profits as well as individual commissions and bonuses by taking advantage of unsuspecting clients and customers through the recommendation of “tax deductible” life insurance funded by an unnecessary, expensive, and risky premium-financed loan without regard to suitability and despite the potential and/or actual harm such arrangements caused Plaintiffs and others.

Defendants Global Financial Distributors, Inc., Allied Marketing Partners, Inc., and Alan Harrington (“Harrington”) (collectively, the “Global Defendants”) now move for summary judgment or, in the alternative, summary adjudication.

Defendants Jason Ziccarelli (“Ziccarelli”) and Integrity Business Solutions Provider, LLC (jointly, the “Integrity Defendants”) also move for summary judgment or, in the alternative, summary adjudication.

Plaintiffs oppose both motions.

The Global Defendants’ MSJ

The Court did not timely receive the required binder/spiral compilation containing courtesy copies of all moving, opposing and reply papers and all supporting or related documents for the Global Defendants’ MSJ/MSA (i.e., the compilation was received at 3:30 p.m. on Friday, January 3rd). The Court also notes that the compilation is either incomplete or confusing. No documents are provided for tab nos. 9, 10 and 11. These tabs refer to the original reply and related documents. It is not clear why these documents are listed in the index since they presumably are now moot. It is equally unclear as to why tab nos. 4 and 5 are included in the index and the referenced documents are attached when Plaintiffs’ original opposition papers arguably also are now moot. The Court assumes that the documents behind tabs 6, 7 and 8 are not moot, but this needs to be confirmed. Finally, the Court notes that the parties were ordered to revise their opposition and reply briefs; instead, the parties have filed what they have identified as supplemental briefs. Because some of the original documents were included in the compilation, it is unclear if the supplemental papers are meant to replace or to somehow merely supplement the original papers. The Court assumes that the intent was to have the Court consider only the supplemental briefs, but the parties need to clarify if this assumption is correct.

The Court continues the hearing on the Global Defendants’ MSJ/MSA to ________________, 8:30 a.m., in Dept. 50.

The Global Defendants are ordered to give notice of this Order.

The Integrity Defendants’ MSJ

“[A] motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c (c).) The moving party bears the initial burden of production to make a prima facie showing that there are no triable issues of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) If the moving party carries this burden, the burden shifts to the opposing party to make a prima facie showing that a triable issue of material fact exists. (Ibid.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

When a defendant seeks summary judgment, he/she must show either (1) that one or more elements of the cause of action cannot be established; or (2) that there is a complete defense to that cause of action. (Code Civ. Proc., § 437c, subd. (p)(2).)

Evidence

The Court grants the Integrity Defendants’ request for judicial notice as to Exhibit A.

The Court grants Plaintiffs’ request for judicial notice as to Exhibit 1.

The Court rules on the Integrity Defendants’ evidentiary objections as set forth in the parties’ Revised Joint Statement re the Integrity Defendants’ Evidentiary Objections as follows:

Objection 1: sustained to the extent that the objection is to the witness’s attempt to authenticate documents unidentified in any specific way other than as documents produced by Lincoln Benefit

Objection 2: sustained

Objection 3: withdrawn

Objection 4: overruled

Objection 5: overruled

Objection 6: overruled

Objection 7: overruled

Objection 8: overruled

Objection 9: sustained as to the first sentence only; otherwise, overruled

Objection 10: sustained

Objection 11: overruled

Objection 12: overruled

Objection 13: overruled

Objection 14: overruled

Objection 15: overruled

Objection 16: overruled

Allegations of the SAC

The allegations in the SAC as to the Integrity Defendants are as follows. In 2008, Ziccarelli introduced Defendants James and Lorraine Conaway (Rosemary’s financial advisors) to a life insurance marketing plan called “Leveraged Planning,” which entails premium financing of life insurance policies. (SAC, ¶ 54.) Per the plan, the loan used to finance the premiums is purportedly tax deductible to the borrower if the borrower is a trust or corporate entity. (SAC, ¶ 55.) Therefore, the only out-of-pocket cost to the borrower is the interest on the loan, and the policy pays for itself through buildup of cash values within the policy through the payment of interest. (SAC, ¶ 55.) In this way, the policy stays in force indefinitely, and the borrower never has to pay any out-of-pocket premiums. (SAC, ¶ 55.)

In or about September 2010, James Conaway approached Rosemary with the idea of purchasing a premium financed life insurance policy (the “LBL Policy”) because the loan used to finance the premiums would be tax deductible to Ram Sales, effectively reducing the cost of the policy by Ram Sales’s tax rate (35%). (SAC, ¶ 61.) James Conaway also told Rosemary that the buildup of cash values within the policy would repay the loan over a period of years, and that the policy would remain in force without the payment of any premiums by Rosemary. (SAC, ¶ 61.) Rosemary agreed to apply for the policy. (SAC, ¶ 62.)

James Conaway partnered with Ziccarelli and Harrington on the sale of the LBL Policy to Rosemary. (SAC, ¶ 65.) Ziccarelli received a 10% commission, and Harrington received a 30% commission for their participation in the sale. (SAC, ¶ 65.) Ziccarelli’s role in the sale was to manage the “platform” for the premium financing arrangement, to consult with James Conaway, to educate James Conaway on the use of the “platform,” to provide the information received from James Conaway to Harrington, to coordinate the life insurance sale with the loan, and to create the closing documents for the loan transaction. (SAC, ¶ 66.) Ziccarelli also had a hand in designing the policy. (SAC, ¶ 68.) Specifically, Ziccarelli approved the sales illustration used by James Conaway that explained the policy. (SAC, ¶ 70.) Per the sales illustration, a total of $1 million in premium payments would be paid in three equal annual installments in the first three policy years, with no further premium payments for the life of the policy. (SAC, ¶ 71.) The illustration projected that no additional premiums would need to be paid, and that after ten years, the cash value of the LBL Policy would be $1,287,921. (SAC, ¶ 71.) According to James Conaway, this would be enough to pay off the $1,000,000 principal balance of the loan and keep the policy in force for the rest of Rosemary’s life. (SAC, ¶ 71.) However, the sales illustration was incomplete because it did not depict the performance of the LBL Policy if cash was withdrawn or borrowed to repay the loan at the end of the tenth year when it was due. (SAC, ¶ 83.) In actuality, based on the design of the LBL Policy, if the loan was repaid out of policy cash values, the policy would no longer exist. (SAC, ¶ 84.)

The loan, which was underwritten by Global One Financial, Inc. (“Global One”), to Ram Sales to finance the LBL Policy premiums was approved on January 11, 2011. (SAC, ¶ 107.) The LBL Policy was issued with a face amount of $3,500,000 in February 2011. (SAC, ¶ 108.) The loan contained a provision that the loan would be in default if the insurance company’s (Lincoln Benefit Life Company) rating with Standard & Poor’s was less than AA-, or its rating with Moody’s Investor Service, Inc. was less than A1. (SAC, ¶ 109c.) On October 17, 2013, both ratings agencies downgraded Lincoln Benefit Life to below AA- and A1. (SAC, ¶ 110.) As a result, Plaintiffs were given the option to either surrender or replace the life insurance policy or to agree to a rate adjustment from 3.525% to 5.49%. (SAC, ¶ 110.) On James Conaway’s advice, Plaintiffs agreed to the rate adjustment. (SAC, ¶ 112.)

In 2016, after settling a lawsuit against the Conaways relating to certain worthless real estate transactions, Plaintiffs hired new financial advisors to investigate other investments sold to them by the Conaways, including the LBL Policy. (SAC, ¶¶ 115-118.) In June 2016, Plaintiffs were provided an in force illustration of the LBL Policy which showed that after ten years, the net surrender value of the policy was only $1,043,056, not enough to pay off the loan and keep the policy in force. (SAC, ¶ 119.) Plaintiffs were advised by their new financial advisors to surrender the LBL Policy. (SAC, ¶ 120.) This resulted in losses of $413,704 in addition to the loss of the benefit of the life insurance. (SAC, ¶ 123.)

Discussion

  1. Negligent Misrepresentation

In support of their first cause of action for negligent misrepresentation, Plaintiffs allege that the Integrity Defendants “participated in the design . . . of the sales illustration which was the blueprint for the LBL Policy.” (SAC, ¶ 132.) The sales illustration implied that the policy would remain viable for the rest of Rosemary’s life, but the Integrity Defendants had no reason to believe that the LBL Policy would last beyond ten years. (SAC, ¶ 132.) The sales illustration also implied that the LBL Policy was suitable for Plaintiffs’ needs even though it was not actually suitable to Plaintiffs’ needs. (SAC, ¶ 133.) The LBL Policy contained the risk that it would not survive beyond ten years, when the loan had to be repaid, without large out-of-pocket premium payments by Rosemary, who had no ability to make such payments. (SAC, ¶ 133a.) The loan for the LBL Policy could be called by the lender prior to maturity for reasons outside the control of Plaintiffs, causing the loss of the policy. (SAC, ¶ 133b.) Finally, the LBL Policy was designed as a “Modified Endowment Policy” or “MEC,” which meant that even if there were sufficient funds within the policy to pay off the loan, Rosemary would have to pay tax on a substantial portion of the funds withdrawn from the policy for that purpose. (SAC, ¶¶ 74, 133c.)

“The elements of negligent misrepresentation are (1) the misrepresentation of a past or existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent to induce another's reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.” (Nat'l Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge Integrated Servs. Grp., Inc. (2009) 171 Cal.App.4th 35, 50 [internal quotations omitted].) “[N]egligent representation must be pleaded with particularity and by facts that show how, when, where, to whom, and by what means the representations were tendered.” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 185, fn. 14 [internal quotations omitted].)

The Integrity Defendants contend that there is no merit to the negligent misrepresentation cause of action because there is no evidence that the Integrity Defendants made any misrepresentation to Plaintiffs. In particular, the Integrity Defendants argue that there is no evidence that the Integrity Defendants made any representations to Plaintiffs regarding the tax deductibility of interest payments on the Global One loan. However, as noted above, the gravamen of the negligent misrepresentation cause of action against the Integrity Defendants is not that Plaintiffs (or specifically, Rosemary) received bad tax advice but that the Integrity Defendants, among others, designed or approved of the use of the incomplete sales illustration to sell the premium financed insurance policy to Plaintiffs. While the Integrity Defendants are correct that implied representations generally cannot support a cause of action for negligent misrepresentation, “misleading half-truths” may constitute positive assertions for the purpose of negligent misrepresentations. (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 854 [“when the defendant purports to convey the whole truth about a subject, misleading half-truths about the subject may constitute positive assertions for the purpose of negligent misrepresentation” (internal quotations omitted)]; see Wilson v. Century 21 Great Western Realty (1993) 15 Cal.App.4th 298, 306 [holding that “[n]egligent misrepresentation is a species of fraud or deceit specifically requiring a ‘positive assertion’ or ‘assertion’ of fact” and that an “implied” assertion is “not enough” (internal citations omitted)].) Here, the incomplete sales illustration may be characterized as a “misleading half-truth” because Plaintiffs allege that the sales illustration did not contain any information about the consequences of withdrawing or borrowing funds from the LBL Policy to pay off the Global One loan, which “was essential to any understanding of how the LBL Policy might perform under the circumstances in which it was sold.” (SAC, ¶ 72.)

In any event, the Integrity Defendants present evidence that the Integrity Defendants had no involvement in designing, marketing, soliciting, or approving of the LBL Policy, the Global One loan, or the sales illustrations used in connection with the transaction. (Integrity Defendants’ Undisputed Material Fact (“UMF”) 37.) In response, Plaintiffs point to evidence that purports to show that Ziccarelli was involved in the design of the sales illustration. (Response to UMF 37; see also Response to UMF 36.) However, the Court notes two problems with Plaintiffs’ proffer. First, Plaintiffs’ Exhibit 59 is not properly authenticated. Second, even if Exhibit 59 were properly authenticated, Exhibit 59 does not show how Ziccarelli designed, marketed, solicited, or approved of the sales illustration. Plaintiffs contend that Ziccarelli was aware of the illustration, that he saw the illustration, and that he discussed the illustration with James Conaway, but being aware of, seeing, and discussing the illustration is not the same as designing, marketing, soliciting, or approving of the illustration. Plaintiffs offer no other evidence that raises a triable issue as to whether the Integrity Defendants had any involvement in the design, marketing, soliciting, or approval of the sales illustration used in connection with the sale of the LBL Policy to Plaintiffs. Accordingly, the Court finds that the Integrity Defendants have met their burden of showing that no triable issue of fact exists as to the cause of action for negligent misrepresentation, and that Plaintiffs have failed to raise a triable issue of fact thereto.

  1. Professional Negligence

In support of their second cause of action for professional negligence, Plaintiffs allege that the Integrity Defendants “participated in the design, underwriting, processing, and sale of premium financed life insurance policies, and in the commissions to be earned from those sales….” (SAC, ¶ 154.) Plaintiffs allege that the Integrity Defendants were “directly involved as partner agents of James Conaway in the design and structure of the LBL Policy and the Global One loan transaction and in the approval of the sales illustration which contained the misrepresentations . . . .” (SAC, ¶ 155.) The Integrity Defendants are also alleged to have “coordinated the insurance underwriting and approval process with the loan application, and directly participated in the sale transaction . . . .” (SAC, ¶ 155.) Plaintiffs allege that the Integrity Defendants owed Plaintiffs a duty to exercise reasonable care and skill that life insurance agents would exercise. (SAC, ¶ 156.) Plaintiffs allege that the Integrity Defendants breached this duty by presenting to Plaintiffs a misleading and incomplete sales illustration (SAC, ¶ 163), by utilizing, approving, and basing the transaction on the illustration (SAC, ¶ 163), by selling an unsuitable product to Plaintiffs (SAC, ¶ 164), and by failing to disclose material facts about the unsuitability of the LBL Policy to Plaintiffs (SAC, ¶ 166).

“The elements of a claim for professional negligence are: (1) the duty of the professional to use such skill, prudence, and diligence as other members of his profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the negligent conduct and the resulting injury; and (4) actual loss or damage resulting from the professional's negligence. (Paul v. Patton (2015) 235 Cal.App.4th 1088, 1095 [internal quotations omitted].) “The threshold element of a cause of action for negligence is the existence of a duty to use due care toward an interest of another that enjoys legal protection against unintentional invasion.” (Giacometti v. Aulla, LLC (2010) 187 Cal.App.4th 1133, 1137 [citation omitted].)

The Integrity Defendants argue that the cause of action for professional negligence must fail because Plaintiffs cannot establish that Ziccarelli’s duty to Plaintiffs included a duty as an insurance agent. While the Integrity Defendants concede that Ziccarelli was a licensed life insurance agent at all material times referenced in the SAC, the Integrity Defendants contend that Ziccarelli’s only role in the LBL Policy transaction was as an insurance “aggregator,” and therefore, his involvement was limited to bringing Plaintiffs together with the Conaways and Global One with the objective of consummating a premium-financed insurance transaction. (Ziccarelli Decl., ¶¶ 3, 6.) Ziccarelli developed a “business consulting program” that included “a strategy under which businesses or high net worth individuals could leverage their purchase of life insurance through the use of borrowed funds.” (Ziccarelli Decl., ¶ 4.) Through this program, the Integrity Defendants “introduced the concept and mechanics of premium financing to licensed advisors who consulted with their clients, established relationships with premium financing lenders, and helped writing agents assist their clients with logistics in purchasing premium-financed insurance policies.” (Ziccarelli Decl., ¶ 4.)

Based on Ziccarelli’s status as an “aggregator,” the Integrity Defendants contend that their only duty to Plaintiffs was a general duty of reasonable care, which does not include the duty to offer advice of any kind concerning the suitability of the LBL Policy or the Global One loan. In support of this assertion, the Integrity Defendants offer the testimony of Gregory Willert, a life insurance premium finance expert. According to Mr. Willert, an “aggregator” is an individual who collects or gathers potential borrowers for premium finance consideration by lenders. (Willert Decl., ¶ 11.) Aggregators have no obligation to evaluate the suitability of a loan for a premium financing transaction for any potential borrower and no obligation to evaluate the suitability of the life insurance policies purchased with the proceeds of a premium financing loan. (Willert Decl., ¶¶ 14-15.) It is Mr. Willert’s opinion that Ziccarelli served as an aggregator for the at-issue transactions, and that Ziccarelli’s conduct fell within the standard of care of an aggregator. (Willert Decl., ¶¶ 19-20.) Additionally, the Integrity Defendants submit evidence that they had no involvement in designing, marketing, soliciting, or approving of the LBL Policy, the Global One loan, or the sales illustration presented to Plaintiffs. (UMF 21, 37.) The Integrity Defendants also assert that they provided no advice of any kind to Rosemary concerning the LBL Policy or the Global One loan. (UMF 26.)

Plaintiffs counter that the Integrity Defendants falsely characterize their involvement in the transaction, and that in actuality, the Integrity Defendants served as a major resource for both the lender and the writing agent on the sale of the policy, took part in the design of the loan funding the policy, participated in the underwriting of the policy, and communicated directly with Plaintiffs. Plaintiffs argue that Ziccarelli was more than just an aggregator, he was a partnering agent who was directly commissioned on the sale of the LBL Policy. (See Ziccarelli Decl., ¶ 20.) In support of this argument, Plaintiffs offer their own competing expert testimony. Art Singer, a life insurance expert, opines that Ziccarelli’s receipt of direct commission on he subject transaction “binds [him] to those contractual and ethical obligations imposed upon him [] by the issuing insurance company, by the Insurance Code of the State of California and by the agents’ duty to exercise professional skill and care.” (Singer Decl., ¶ 4.) An applicable obligation is the expectation that “agents refrain from recommending the purchase of any life insurance policy or annuity policy contract without reasonably believing the product is suitable for the customer.” (Singer Decl., ¶ 8 [emphasis in original].) Along the same lines, Burke Christensen, an insurance industry expert, asserts that “any person receiving a commission for the sale of an insurance policy is recognized in the industry as an agent with respect to that policy and is held to the same standard as the primary (aka writing) agent.” (Christensen Decl., ¶ 49.) The “general standard of practice” for an insurance agent is to “recommend[] products and plans that are consistent with the goals of the client and suitable for the client’s needs and circumstances.” (Christensen Decl., ¶ 59.) It is Mr. Christensen’s opinion that Ziccarelli did not meet this standard. (Christensen Decl., ¶ 59.)

Based on the above evidence, the Court finds that Plaintiffs have met their burden of showing that a triable issue of material fact exists as to whether the Integrity Defendants had a duty to advise Plaintiffs regarding the suitability of the LBL Policy.

  1. Financial Elder Abuse

In support of their fifth cause of action for financial elder abuse, Plaintiffs allege that the Integrity Defendants “assisted the Conaway Defendants in taking, secreting, appropriating, and obtaining personal property of” Rosemary by assisting the Conaways in the sale of the LBL Policy and the Global One loan, by assisting the Conaways in using the incomplete sales illustration as the design of the LBL Policy, assisting the Conaways in structuring and completing the sale of the LBL Policy (along with the Global One loan), and directly coordinating the insurance sale with the loan transaction, arranging the premium financing loan, and underwriting and/or supervising and coordinating the underwriting of the policy and loan. (SAC, ¶ 193.)

Financial elder abuse occurs when a person takes or assists in taking the property of an elder for a wrongful use or with intent to defraud or by undue influence. (See Welf. & Inst. Code, § 15610.30, subd. (a).) A person is deemed to have taken the property when he or she has deprived an elder of any property right. (See Welf. & Inst. Code, § 15610.30, subd. (c).) “A person . . . shall be deemed to have taken . . . property for a wrongful use if . . . the person . . . takes . . . the property and the person . . . knew or should have known that this conduct is likely to be harmful to the elder . . . .” (Welf. & Inst. Code, § 15610.30, subd. (b).)

The Integrity Defendants contend that there is no evidence that they assisted[1] the Conaways in taking any property from Plaintiffs for a wrongful use. As discussed above, the Integrity Defendants assert that they had no involvement in designing, soliciting, marketing, or approving of or underwriting the LBL Policy or the Global One loan. (UMF 21.) The Integrity Defendants also assert that they had no involvement in designing, marketing, soliciting, or approving of the sales illustration used in the subject transaction. (UMF 37.) Nevertheless, Integrity Defendants’ are alleged to have “assisted” the Conaways not by designing or marketing the LBL Policy or the Global One loan, but by structuring, coordinating, and completing the transaction. (SAC, ¶ 193.) Ziccarelli himself states that his “sole and limited role” in the transaction was “to help facilitate the consummation of the Global loan for the premium-financed LBL policy by introducing Rosemary Perera and Conaway (as her insurance agent), to Global and LBL so that Plaintiffs could purchase a premium-financed life insurance policy . . . .” (Ziccarelli Decl., ¶ 16.) Plaintiffs’ position is that the completion of the transaction was harmful to Plaintiffs because of the design of the transaction itself. That Ziccarelli was not involved in designing the transaction does not necessarily insulate him from liability for assisting in completing the transaction if he knew or should have known that the transaction was unsuitable for Plaintiffs. The burden is thus on the Integrity Defendants, as the party moving for summary judgment, to show that there is no evidence that Ziccarelli knew or should have known about the suitability of the transaction to Plaintiffs’ particular needs. The Court finds that the Integrity Defendants have failed to meet that burden. While the Integrity Defendants offer evidence of Rosemary and Ramesh’s lack of knowledge regarding Ziccarelli’s involvement in the transaction, there is no evidence of Ziccarelli’s knowledge (or lack thereof) of the suitability of premium financed life insurance to Plaintiffs’ needs. Therefore, the Court finds that the Integrity Defendants have failed to meet their burden of showing that the financial elder abuse cause of action has no merit.

The Court also notes that the Integrity Defendants include an argument concerning Plaintiffs’ ability to prove damages by either a “preponderance of the evidence” or a “clear and convincing evidence” standard. The Court does not find this issue to be appropriate for summary adjudication, as the standard of proof for damages is not an element of the financial elder abuse cause of action. To the extent that the Integrity Defendants argue that Plaintiffs cannot show entitlement to punitive damages, that issue is not separately set forth in the Integrity Defendants’ notice of motion, and therefore, the Court declines to consider the merits of the argument.

  1. Quasi-Contract

“Unlike an implied-in-fact contract, an implied-in-law contract or quasi-contract is not based on the intention of the parties, but arises from a legal obligation that is imposed on the defendant.” (Unilab Corp. v. Angeles-IPA (2016) 244 Cal.App.4th 622, 639.) “The right to restitution or quasi-contractual recovery is based upon unjust enrichment. Where a person obtains a benefit that he or she may not justly retain, the person is unjustly enriched. The quasi-contract, or contract ‘implied in law,’ is an obligation ... created by the law without regard to the intention of the parties, and is designed to restore the aggrieved party to his or her former position by return of the thing or its equivalent in money.” (Ibid. [italics in original].)

In support of their fourth cause of action for quasi-contract, Plaintiffs allege that the Integrity Defendants “received benefits at the expense of Plaintiffs through the wrongful activities complained of herein.” (SAC, ¶ 184.) The relevant “benefit” is the commission payment to Ziccarelli. The Integrity Defendants contend that the quasi-contract cause of action has no merit because there is no evidence that the Integrity Defendants committed any “wrongful” conduct, namely, conversion, coercion, fraud or mistake. (Civic Partners Stockton, LLC v. Youssefi (2013) 218 Cal.App.4th 1005, 1013 [“Alternatively, restitution may be awarded where the defendant obtained a benefit from the plaintiff by fraud, duress, conversion, or similar conduct.”].)

Based on the reasons and evidence discussed above, the Court finds that Plaintiffs have met their burden of showing that a triable issue of material fact exists as to whether the Integrity Defendants committed wrongful conduct.

Conclusion

Based on the foregoing, the Integrity Defendants’ motion for summary judgment is denied.

The Integrity Defendants’ motion for summary adjudication is granted as to the first cause of action for negligent misrepresentation. The Integrity Defendants’ motion for summary adjudication is otherwise denied.

Plaintiffs are ordered to give notice of this ruling.

DATED: January 7, 2020 _______________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court


[1] The term “assists” is not defined in the Elder Abuse statutes, but the applicable rule for imposing liability for assistance in an act of financial elder abuse is the same as that for aiding and abetting the commission of an intentional tort—“if the person (a) knows the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person’s own conduct, separately considered, constitutes a breach of duty to the third person.” (Das v. Bank of America, N.A. (2010) 186 Cal.App.4th 727, 744.)

Case Number: BC672524    Hearing Date: October 31, 2019    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

rosemary perera, et al.,

Plaintiffs,

vs.

lincoln benefit life company, et al.

Defendants.

Case No.:

BC 672524

Hearing Date:

October 31, 2019

Hearing Time:

8:30 a.m.

[TENTATIVE] ORDER RE:

DEFENDANTS GLOBAL FINANCIAL DISTRIBUTORS, INC., ALLIED MARKETING PARTNERS, INC., AND ALAN HARRINGTON’S MOTION FOR SUMMARY JUDGMENT OR, IN THE ALTERNATIVE, SUMMARY ADJUDICATION OF ISSUES;

DEFENDANTS JASON ZICCARELLI AND INTEGRITY BUSINESS SOLUTIONS PROVIDER, LLC’S MOTION FOR SUMMARY JUDGMENT, OR ALTERNATIVELY, SUMMARY ADJUDICATION OF ISSUES

Background

On August 16, 2017, Plaintiffs Rosemary Perera (“Rosemary”), Ramesh Perera (“Ramesh”), and Ram Sales, Inc. (“Ram Sales”) (collectively “Plaintiffs”) filed this action against Defendants Lincoln Benefit Life Company, James O. Conaway, Lorraine A. Conaway, Conaway & Conaway, Inc., Integrity Business Solutions Provider, LLC, Allied Marketing Partners, Inc., Alan Harrington, Jason Ziccarelli, and Global Financial Distributors, Inc.

The operative Second Amended Complaint (“SAC”) asserts causes of action for (1) negligent misrepresentation, (2) professional negligence, (3) breach of fiduciary duty, (4) quasi-contract, and (5) financial elder abuse. Plaintiffs allege that Defendants engaged in a scheme to generate life insurance company profits as well as individual commissions and bonuses by taking advantage of unsuspecting clients and customers through the recommendation of “tax deductible” life insurance funded by an unnecessary, expensive, and risky premium-financed loan without regard to suitability and despite the potential and/or actual harm such arrangements caused Plaintiffs and others.

Defendants Global Financial Distributors, Inc., Allied Marketing Partners, Inc., and Alan Harrington (the “Global Defendants”) now move for summary judgment or, in the alternative, summary adjudication.

Defendants Jason Ziccarelli and Integrity Business Solutions Provider, LLC (the “Integrity Defendants”) also move for summary judgment or, in the alternative, summary adjudication.

Plaintiffs oppose both motions.

The Integrity Defendants’ MSJ

The Integrity Defendants’ MSJ will be continued as set forth below.

Due to the voluminous evidentiary objections that were filed, the hearing on this motion will be continued to a date that will be set at the Hearing on Objections discussed below.

The Court orders the parties to meet and confer by telephone or in person in a serious and good faith effort to resolve and eliminate the objections. The only objections that should remain are those that pertain to material evidence regarding material issues. Keeping the rules of evidence in mind, the parties should be able to reduce the objections to just a few. If any material objections remain unresolved, the parties are to set them forth in a joint statement with the text, the objection, and the argument of each side in favor of their respective positions regarding the remaining material objections.

The joint statement must be filed and a separate ruling sheet must be lodged directly in Department 50 by noon on _______________. The Court will review any remaining objections with the parties at a hearing on _______________ at 1:30 p.m. (the “Hearing on Objections”). The Court continues the hearing on the Integrity Defendants’ MSJ/MSA to ________________, 8:30 a.m., in Dept. 50.

If necessary, based upon the resolutions reached during the meet and confer process and/or at the Hearing on Objections, the parties may respectively file and serve revised briefing and evidence. The revised evidence may eliminate objectionable material; however, no new evidence or new argument is to be submitted unless it is as a result of compromises reached during the meet and confer process. In the event that revised briefing and evidence is necessary, the Court will discuss with the parties a briefing schedule for the revised briefing at the Hearing on Objections.

The Integrity Defendants are ordered to give notice of this Order.

The Global Defendants’ MSJ

The Court notes that Plaintiffs seek a continuance of the hearing on the Global Defendants’ motion pursuant to Code of Civil Procedure section 437c, subdivision (h), which provides: “If it appears from the affidavits submitted in opposition to a motion for summary judgment or summary adjudication, or both, that facts essential to justify opposition may exist but cannot, for reasons stated, be presented, the court shall deny the motion, order a continuance to permit affidavits to be obtained or discovery to be had, or make any other order as may be just.”

Plaintiffs assert that the Global Defendants produced a document that Plaintiffs had repeatedly requested on the day Plaintiffs’ opposition to this motion was due. Plaintiffs argue that this document, the “case design form” for the premium finance plan marketed to Plaintiffs, is highly relevant to show the Global Defendants’ involvement with the design of the plan and whether the Global Defendants complied with their duties to determine the plan’s suitability for Plaintiffs. First, Plaintiffs offer the affidavit of their counsel, Benjamin Blakeman. Mr. Blakeman states that his office served a subpoena for documents on Global One Financial on October 24, 2018. (Blakeman Decl., ¶ 2.) Mr. Blakeman later agreed to limit the scope of the subpoena to the “loan file,” which according to Mr. Blakeman should have included the case design form. (Blakeman Decl., ¶¶ 3-4.) On December 7, 2018, Mr. Blakeman emailed Global One Financial’s counsel requesting the “Case Design document(s)” but did not receive a response. (Blakeman Decl., ¶ 5.) On August 29, 2019, co-counsel for Plaintiffs served document production requests to Defendant Global Financial Distributors, Inc. (“Global”), which included a specific request for the case design form. (Blakeman Decl., ¶ 6.) Global objected to that request. (Blakeman Decl., ¶ 7.) In September 2019, Plaintiffs served Synovus Bank with a subpoena specifically asking for the case design form, to which Synovus Bank and the Global Defendants objected. (Blakeman Decl., ¶¶ 8-9.) After further meet and confer efforts, the Global Defendants produced the case design form on October 17, 2019. (Blakeman Decl., ¶ 12.) Plaintiffs contend that the timing of the production of the case design form prevented Plaintiffs from being able to analyze the form with their experts or take further discovery related to the form. As set forth by Plaintiffs’ expert, Burke Christensen, the case design form is an important element of a premium finance plan, as it is “fundamental to the creation of a premium finance proposal.” (Christensen Decl., ¶¶ 25-26.) Mr. Christensen also notes that Defendant Alan Harrington himself testified at deposition about the importance of the case design form in determining the sufficiency of a finance plan. (Christensen Decl., ¶ 25.)

The Global Defendants argue against a continuance by contending that Plaintiffs were not diligent in seeking the case design form. However, as set forth by Mr. Blakeman’s declaration, Plaintiffs were asking for the case design form as early as December 2018. The Global Defendants do not dispute that the document was not provided until October 17, 2019, nor do the Global Defendants offer any evidence to contradict Mr. Christensen’s testimony regarding the importance of the document. Thus, the Court finds that Plaintiffs have established that facts essential to justify their opposition exist but could not be presented at the time they filed their opposition. The Court finds that a continuance of the hearing so that Plaintiffs may conduct additional discovery limited to the issue of the case design form would be just.

Based on the foregoing, the Court continues the hearing on the Global Defendants’ MSJ/MSA to ________________, 8:30 a.m., in Dept. 50 to determine a briefing schedule for revised briefing of Plaintiffs’ opposition and the Global Defendants’ reply.

The Court orders Plaintiffs to give notice of this ruling.

DATED: October 31, 2019 _______________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court