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8/3/2019 LPHI Class Action Answer to Motion to Dismiss
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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
SEAN TURNBOW, WILLIAM and MARY
RICE, ROBERT YOSKOWITZ,FREDERICK VIEIRA, and ANTHONYTAYLOR, on behalf of themselves and all others similarly situated ,
Plaintiffs,
vs.
LIFE PARTNERS INC., LIFE PARTNERSHOLDINGS, INC., BRIAN D. PARDO, and
R. SCOTT PEDEN,
Defendants.
§
§§§§§§§§§§§
§§§
CIVIL ACTION NO.: 3:11-CV-1030-M
(Consolidated with Civil Action Nos. 3:11-cv-1093-M, 3:11-cv-1137-M, 3:11-cv-1152-M, 3:11-cv-1225-M, and 3:11-cv-1325-M)
PLAINTIFFS’ RESPONSE TO DEFENDANTS’
MOTION TO DISMISS AND BRIEF IN SUPPORT
Steven G. Sklaver California Bar No. 237612 (Admitted PHV)Amy T. BrantlyCalifornia Bar No. 210893 (Admitted PHV)
SUSMAN GODFREY L.L.P.
1901 Avenue of the Stars, Suite 950Los Angeles, CA 90067-6029Telephone: (310) 789-3100Facsimile: (310) 789-3150Email: [email protected]
Lewis S. KahnLouisiana Bar No. 23805 (Admitted PHV)Craig J. Geraci, Jr.Alabama Bar No. 3847-C62G (Admitted PHV)
KAHN SWICK & FOTI, LLC206 Covington StreetMadisonville, LA 70447Tel: (504) 455-1400Fax: (504) 455-1498Email: [email protected]
Terrell W. OxfordTexas Bar No. 15390500Jonathan BridgesTexas Bar No. 24028835
SUSMAN GODFREY L.L.P.
901 Main Street, Suite 5100Dallas, Texas 75202Telephone: (214) 754-1900Facsimile: (214) 754-1933Email: [email protected]
Kim E. Miller California Bar No. 178370 (Admitted PHV)
KAHN SWICK & FOTI, LLC
500 5th Avenue, Suite 1810 New York, NY 10110Tel: (212) 696-3730Fax: (504) 455-1498Email: [email protected]
INTERIM CO-LEAD CLASS COUNSEL
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TABLE OF CONTENTS
I. INTRODUCTION.......................................................................................................................1
II. STATEMENT OF FACTS ........................................................................................................2
III. LEGAL STANDARDS ............................................................................................................4
IV. ARGUMENT............................................................................................................................6
A. Plaintiffs Have Standing To Assert Their Claims....................................................6
B. Fiduciary Duty Claims.............................................................................................9
1. The Economic Loss Rule Does Not Apply To Plaintiffs’Breach of Fiduciary Duty Claim..................................................................9
2. The Economic Loss Rule, Even If Applied, Does Not ReachThe Remedies That Plaintiffs Are Seeking................................................11
3. Defendants’ Fiduciary Duties Are Not Contractually Limited..................13
4. Defendants’ Argument For Dismissing Count II Is WhollyDependent On Their Prior Arguments.......................................................15
C. Contract Claims .....................................................................................................15
D. California UCL Claims..........................................................................................18
V. CONCLUSION........................................................................................................................21
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TABLE OF AUTHORITIES
Cases
Ackerman v. Coca-Cola,
2010 U.S. Dist. LEXIS 73156 (E.D.N.Y. July 21) ........................................................... 19
Aquila Sw. Pipeline, Inc. v. Harmony Exploration, Inc.,48 S.W.3d 225 (Tex. App.—San Antonio 2001, pet. denied) .......................................... 15
Ashcroft v. Iqbal,
129 S. Ct. 1937 (2009)........................................................................................................ 5
Bell Atlantic Corp. v. Twombly,
550 U.S. 544 (2007)............................................................................................................ 5
Blue Shield of Virginia v. McCready,457 U.S. 465 (1982)............................................................................................................ 8
Burrows v. Arce,997 S.W.2d 229 (Tex. 1999)............................................................................................... 7
CCE, Inc., v. PBS&J Constr. Servs., Inc.,2011 Tex. App. LEXIS 809 (Tex. App.—Houston [1st Dist.] Jan. 28, 2011) ................. 12
Chavez v. Blue Sky Natural Beverage Co.,
340 Fed. Appx. 359 (9th Cir. 2009).................................................................................. 20
Classical Vacations, Inc. v. Air France,2003 Tex. App. LEXIS 3160 (Tex. App.—Houston [1st Dist.] Apr. 10, 2003)............... 12
Cole v. General Motors Corp.,484 F.3d 717 (5th Cir. 2007) .............................................................................................. 6
Conley v. Gibson,355 U.S. 41 (U.S. 1957)...................................................................................................... 4
Daugherty v. American Honda Motor Co., Inc.,144 Cal. App. 4th 82, 51 Cal. Rptr. 3d 118 (2006)........................................................... 19
Doe v. Smithkline Beecham Corp.,855 S.W.2d 248 (Tex. Ct. App.—Austin 1993) ............................................................... 10
Duke Energy Intern., L.L.C. v. Napoli,748 F. Supp. 2d 656 (S.D. Tex. 2010) .............................................................................. 18
ERI Consulting Engineers v. Swinnea,
318 S.W.3d 867 (Tex. 2010)............................................................................................... 8
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Erickson v. Pardus,551 U.S. 89 (2007).............................................................................................................. 5
Fidelity & Deposit Company of Maryland v. Commercial Casualty Consultants, Inc.,976 F.2d 272 (5th Cir. 1992) ............................................................................................ 10
Fort Worth Indep. Sch. Dist. v. City of Fort Worth,22 S.W.3d 831 (Tex. 2000)............................................................................................... 15
General Star Indem. Co. v. Vesta Fire Ins. Corp.,173 F.3d 946 (5th Cir. 1999) .............................................................................................. 4
Harrison v. Bass Enters. Prod. Co.
888 S.W.2d 532 (Tex. App.—Corpus Christi 1994) ........................................................ 12
In re Soporex, Inc.,446 B.R. 750 (Bankr. N.D. Tex. 2011)............................................................................. 12
Kearns v. Ford Motor Co.,567 F.3d 1120 (9th Cir. 2009) .......................................................................................... 18
Koh v. S.C Johnson & Son, Inc.,2010 U.S. Dist. LEXIS 654 (N.D. Cal. Jan. 5, 2010) ....................................................... 20
Lormand v. US Unwired, Inc.,565 F.3d 228 (5th Cir. 2009) .............................................................................................. 4
Lozano v. AT&T Wireless Servs., Inc.,504 F.3d 718 (9th Cir. 2007) ............................................................................................ 18
Lujan v. Defenders of Wildlife,504 U.S. 555 (1992)............................................................................................................ 6
Martin K. Eby Constr. Co. v. LAN/STV ,2011 Tex. App. LEXIS 6910 (Tex. App.—Dallas Aug. 29, 2011) .................................. 12
Maya v. Centex Corp.,2010 U.S. Dist. LEXIS 44829 (C.D. Cal. March 31, 2010) ............................................... 8
Meadows v. Hartford Life Ins. Co.,
2006 WL 2336913 (S.D. Tex. Aug. 10, 2006) ................................................................... 7
Methodist Hospital of Dallas v. Corporate Communicators, Inc.,806 S.W.2d 879 (Tex. App.—Dallas 1991, writ denied) ................................................. 16
Nalle v. Taco Bell Corp.,914 S.W.2d 685 (Tex. App.—Austin 1996, writ denied) ................................................. 16
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National Plan Administrators, Inc. v. National Health Insurance Co.,
235 S.W.3d 695 (Tex. 2007)............................................................................................. 14
Nazareth Int’l, Inc. v. J.C. Penney Corp., Inc.,2005 WL 1704793 (N.D. Tex. July 19, 2005).................................................................. 11
Sanus/New York Life Health Plan, Inc. v. Dube-Seybold-Sutherland Mgmt., Inc .,837 S.W.2d 191 (Tex. App.—Houston [1st Dist.] 1992, no pet.) ................................... 10
Southwestern Bell Tel. Co. v. DeLanney,809 S.W.2d 493 (Tex. 1991)............................................................................................... 9
Swierkiewicz v. Sorema N.A.,534 U.S. 506 (2002)............................................................................................................ 4
United States ex rel. Riley v. St. Luke’s Episcopal Hosp.,355 F.3d 370 (5th Cir. 2004) ............................................................................................ 18
Wilner v. Sunset Life Ins. Co.,78 Cal. App. 4th 952, 93 Cal. Rptr. 2d 413 (Ct. App. 2000)............................................ 19
Xerox Corp. v. Genmoora Corp.,888 F.2d 345 (5th Cir. 1989) .............................................................................................. 7
Yarborough v. Fulton,78 S.W.2d 247 (Tex. Civ. App.—El Paso 1935, writ dism’d) ......................................... 16
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Plaintiffs and putative class representatives Sean T. Turnbow, William Rice, Mary Rice,
Robert Yoskowitz, Frederick Vieira and Anthony Taylor submit this Response to Defendants’
Motion to Dismiss and would show the court as follows:
I. INTRODUCTION
Defendants ask the Court to dismiss this action for a host of reasons, each of which lacks
merit. Importantly, however, Defendants do not deny the most significant allegations in the
Consolidated Class Action Complaint (“Complaint”).1 For instance, they do not deny that
Defendant Life Partners, Inc. (“LPI”) contracted to act as Plaintiffs’ agent. They do not dispute
that, as a result, by operation of law, LPI owed fiduciary duties to Plaintiffs. They do not contest
that LPI has acknowledged these duties. In fact, Defendants attach to their Motion several copies
of the form agency agreements that include this acknowledgement:
PURCHASER has the capacity to understand this transaction and to protect himself with respect thereto. Such representation does not,however, relieve Agent from the responsibility to act at all times in the
interest of PURCHASER and to use its expertise as diligently as
possible.2
Complying with Rule 8’s mandate of a short and plain statement, Plaintiffs allege that LPI
rendered a careless and faithless performance of these duties. Plaintiffs further allege that they
have suffered (and Defendants have unjustly gained) from this careless and faithless
performance.
1 Dkt # 32.2 Appendix In Support Of Defendants’ Motion To Dismiss And Brief In Support [Dkt. #42-1] Ex. 2 at
16 (Vieira agreement), [Dkt. #42-2] Ex. 29 at 24 (Taylor agreement), [Dkt. #42-3] Ex. 54 at 22 (Turnbowagreement), and Ex. 63 at 44 (Yoskowitz agreement) (emphasis added). Although only one of twoversions of the form agency agreements contains the quoted language, the import of the language is itsacknowledgement of the duties that arise by operation of law. The quoted provision does not promisediligence on Plaintiffs’ behalf. Rather, it acknowledges that such a duty exists independently. This duty isnot imposed by a prior contractual provision because no other part of the contract even mentions suchduties. Instead, the quoted provision is precisely what it appears to be—an acknowledgement of the legaleffect of the agency relationship and a clarification that Plaintiffs’ contractual representations do notmodify that legal effect.
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Rather than attack the central premise of the Complaint, Defendants nip around the
edges. They argue that Plaintiffs lack standing, that the economic loss rule prohibits Plaintiffs’
claims, and that Plaintiffs have failed to adequately plead their causes of action under Rule 8.
Not so. Plaintiffs have standing because they have been injured and, independently, because
Defendants have been unjustly enriched. Plaintiffs claims are not barred by the economic loss
rule because they fall within an exception to the rule and, independently, because they concern
disgorgement rather than exclusively an economic loss to the subject of the contract. Moreover,
Plaintiffs have adequately pleaded each of their claims, and Defendants are well-informed of the
basis of the claims asserted against them. The notice requirements of Rule 8 are more than met.
Defendant’s motion should be denied.
II. STATEMENT OF FACTS
LPI is a business engaged in the secondary market for life insurance known as “life
settlements.” Life settlement transactions involve the sale of a previously issued life insurance
policy to a person who is not the insured. By selling the policy, the insured exchanges the right to
any benefits under the policy for an immediate cash payment.3 The insured also avoids any
future responsibility for premiums. The purchaser, on the other hand, takes an ownership interest
in the policy and/or the benefits, assumes the obligation to pay premiums going forward, and
expects to receive payment of the policy’s death benefit when the insured dies. 4
According to its filings made with the Securities and Exchange Commission, LPI plays a
critical role in life settlement transactions between sellers and purchasers.5 LPI and life
settlement purchasers (the proposed class members here) first enter into a standard, written, pre-
3 Complaint ¶¶ 2-3, 7-8.4 Id .5 Id .
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printed, form contract that is entitled “Agency Agreement.” As the title states, pursuant to the
Agency Agreement, LPI agrees to “enter into a relationship of principal and agent” with each of
its customers. As agent, then, LPI agrees to “identify and assist” in the purchase of life insurance
policies. LPI’s public filings with the Securities and Exchange Commission likewise confirms:
“We act as a purchasing agent for life settlement purchasers.”6
After LPI, in its capacity as an agent, identifies and assists purchasers in identifying
supposedly attractively priced life settlements, LPI and its customers enter into a second
standard, written, pre-printed, form contract that is entitled “Policy Funding Agreement.”7 In that
agreement, LPI customers purchase a fractional interest in a specified insurance policy. In
exchange they pay a price set by LPI according to a formula that depends on the life expectancy
of the insured.8
Instead of using an appropriate life-expectancy number, however, LPI has exclusively
used life-expectancy calculations of Dr. Donald Cassidy, a Nevada oncologist who has no
actuarial training or experience.9 LPI has compensated Dr. Cassidy at rates well in excess of
market rates, and did so in a manner that incentivized him to underestimate the life
expectancies.10
Underestimate he did. According to breaking investigative reports published by The Wall
Street Journal and The Life Settlements Report, Dr. Cassidy grossly and systematically
underestimated life expectancies and did so for years.11 Further, LPI knew or should have known
that Dr. Cassidy’s life expectancies were way off the mark and yet continued to use them,
6 Id . (quoting 2010 Form 10-K (filed May 12, 2010) at 4).7 Id .8 Id . ¶¶ 10, 35, 37.9 Id . ¶¶ 3, 13.10 Id .11 Id . ¶¶ 12-15, 28-37.
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continued to use them exclusively, gave Dr. Cassidy a $180,000 per-year pay raise for continuing
to provide them, and did nothing to account for the gross inaccuracy.12 As a result, LPI profited
immensely at the expense of its customers.
III. LEGAL STANDARDS
“[M]otions to dismiss under Rule 12(b)(6) ‘are viewed with disfavor and are rarely
granted.’”13 The Fifth Circuit has stated that “a complaint will be deemed inadequate only if it
fails to (1) provide notice of the circumstances which give rise to the claim, or (2) set forth
sufficient information to outline the elements of the claim or permit inferences to be drawn that
these elements exist.”14 “Given the Federal Rules’ simplified standard for pleading, [a] court
may dismiss a complaint only of it clear that no relief could be granted under any set of facts that
could be proved consistent with the allegations.”15
It is still true that “[t]he Federal Rules reject the approach that pleading is a game of skill
in which one misstep by counsel may be decisive to the outcome and accept the principle that the
purpose of pleading is to facilitate a proper decision on the merits.”16 Thus, on a motion to
dismiss, courts must “accept all factual allegations in the complaint as true” and “draw all
reasonable inferences in the plaintiff’s favor.”17 “When there are well-pleaded factual
allegations, a court should assume their veracity and then determine whether they plausibly give
rise to an entitlement to relief.”18 Accordingly, a claim has “facial plausibility” and, as a result, is
12 Id .; see also id . ¶¶ 61-65.13 Lormand v. US Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009).14 See General Star Indem. Co. v. Vesta Fire Ins. Corp., 173 F.3d 946, 950 (5th Cir. 1999).15 See Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002); cf. Fed. R. Civ. P. 8(a)(2) (requiring only a
“short and plain statement of the claim showing that the pleader is entitled to relief”).16 See Conley v. Gibson, 355 U.S. 41, 48 (U.S. 1957).17 Lormand , 565 F.3d at 232.18 Iqbal , 129 S. Ct. at 1950.
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sufficiently pleaded for purposes of Rule 12(b)(6) when its “factual content . . . allows the court
to draw the reasonable inference that the defendant is liable for the misconduct alleged.”19
The Supreme Court revisited Rule 8(a) and the allegations required to survive a Rule
12(b)(6) motion to dismiss in Bell Atlantic Corp. v. Twombly,20 and again in Ashcroft v. Iqbal .21
But in doing so, the Court did not disturb the directive that a complaint is adequately pleaded
even if it is apparent “that a recovery is very remote and unlikely.”22 The Court instructed that
“detailed factual allegations” are not required, but instead the complaint need only include
“sufficient factual matter . . . to ‘state a claim to relief that is plausible on its face.’” 23 Further,
“[t]he plausibility standard is not akin to a ‘probability requirement.’”
24
And thus, the Court
reaffirmed the strong deference given to a pleading, stating that a claim need only “raise a right
to relief above the speculative level on the assumption that all the allegations in the complaint are
true (even if doubtful in fact).”25 Indeed, a plaintiff even “receives the benefit of imagination, so
long as the hypotheses are consistent with the complaint.”26
Here, the Complaint provides a substantial description of the alleged wrong. It adequately
informs Defendants of the claims brought against them. The
19 Id . at 1949 (citing Twombly, 550 U.S. at 556).20 550 U.S. 544 (2007).21
129 S. Ct. 1937 (2009).22 Twombly, 550 U.S. at 556 (citing Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).23 Iqbal , 129 S. Ct. at 1949 (quoting Twombly, 550 U.S. at 570); Erickson v. Pardus, 551 U.S. 89, 93
(2007) (“Specific facts are not necessary” to satisfy the requisites of Rule 8(a)(2).); Lormand , 565 F. 3d at232 (same).
24 Iqbal , 129 S. Ct. at 1949.25 Twombly, 550 U.S. at 555-56 (citations and footnote omitted); Lormand , 565 F. 3d at 232.26 Twombly, 550 U.S. at 563.
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IV. ARGUMENT ATTEMPT TO FEIGN IGNORANCE RINGS HOLLOW. THIS CASE
SHOULD PROCEED TO THE MERITS.
A. Plaintiffs Have Standing To Assert Their Claims
To defeat a standing challenge at this stage is not an onerous task. Plaintiffs need only
allege (1) that they have suffered an injury in fact—an invasion of a legally protected interest
which is (a) concrete and particularized and (b) actual or imminent, not conjectural or
hypothetical, (2) that there is a causal connection between the injury and the conduct complained
of, and (3) that it is likely the injury will be redressed by a favorable decision.27 Even general
allegations are enough according to the Supreme Court’s decision in Lujan v. Defenders of
Wildlife,(1992) which held that, “at the pleading stage, general factual allegations of injury
resulting from the defendant’s conduct may suffice, for on a motion to dismiss we presume that
general allegations embrace those specific facts that are necessary to support the claim.”28
Moreover, “it is sufficient for standing purposes that the plaintiffs seek recovery for an economic
harm that they allege they have suffered.”29
Here, Plaintiffs allege that, as a result of LPI’s utilization of Dr. Cassidy’s inaccurately
short life expectancies on the life settlements that Plaintiffs invested in, they were overcharged
when they purchased those interests. According to the Complaint, life expectancies are
“[i]ntegral to policy pricing to investors.”30 Thus, “a higher life expectancy means a lower
acquisition cost.”31 Due to its use of Dr. Cassidy, LPI “grossly and systematically underestimated
life expectancies in connection with the life settlement transactions” and “overcharged its
27 Cole v. General Motors Corp., 484 F.3d 717, 722 (5th Cir. 2007).28 504 U.S. 555, 560 (1992) (internal quotation omitted).29
Cole, 484 F.3d at 723 (citing Parker v. District of Columbia, 478 F.3d 370, 377 (D.C. Cir. 2007)(“The Supreme Court has made clear that when considering whether a plaintiff has Article III standing, afederal court must assume arguendo the merits of his or her legal claim.”)).
30 Complaint ¶ 10.31 Id .
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customers for years based on [Dr. Cassidy’s] consistently erroneous assessments.”32 Indeed, Dr.
“Cassidy served as LPI’s one and only ‘independent medical doctor’ who provided LPI with life
expectancies that it, in turn, provided to Purchasers and used to establish the prices it charged
them. 33 “Defendants understood the effect of understating life expectancies,” as is demonstrated
by Life Partners Holding Inc.’s May 15, 2008 Form 10-K, which states, “If we underestimate the
average life expectancies and price our transaction too high”; and “Our purchasers depend on our
ability to predict life expectancies and set appropriate price . . . .”34
These pleadings more than generally allege that Plaintiffs have suffered a concrete,
particularized, actual, traceable, and redressable injury, as each of them purchased life
settlements that were priced based on Dr. Cassidy’s grossly inaccurate life expectancies.35
It is immaterial, for standing purposes, that some Plaintiffs have sold some of their
interests (at a loss) after the news broke concerning the inaccuracy of Dr. Cassidy’s life
expectancies. The injury took place at the time of the purchase. Moreover, because LPI owed
Plaintiffs fiduciary duties, Plaintiffs suffer injury when those duties are breached regardless of
whether they also incur actual damages or only nominal damages.36 Disgorgement is a proper
remedy for breach of fiduciary duty even in the absence of actual damages.37
32 Id . ¶ 12; see also id . ¶ 15 (“Due to the materially improper and inaccurate life expectancy
assessments utilized by LPI, LPI overcharged Class members for their life settlement investments andobligated them to additional post-purchase expenses in the form of premium payments.”).
33 Id . ¶ 29.34 Id . ¶ 35.35
Id . ¶¶ 15, 19-23; cf. Xerox Corp. v. Genmoora Corp., 888 F.2d 345, 351 (5th Cir. 1989) (findinginjury sufficiently alleged where plaintiff alleged trust fund had not been funded, assets had beendepleted, and directors breached fiduciary duties and participated in dissolution of corporate assets andacted against the best interests of the corporation).
36 See Burrows v. Arce, 997 S.W.2d 229, 240 (Tex. 1999) (“The central purpose of the remedy is to protect relationships of trust from an agent’s disloyalty or other misconduct. Appropriate application of the remedy cannot therefore be measured by a principal’s actual damages. An agent’s breach of fiduciaryduty should be deterred even when the principal is not damaged”); Meadows v. Hartford Life Ins. Co.,2006 WL 2336913 at *6 n.9 (S.D. Tex. Aug. 10, 2006) (holding that plaintiff’s claimed injury at the
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In support of their standing argument, Defendants rely almost exclusively on a California
district court case, Maya v. Centex Corporation.38 Maya, however, is neither on point nor
particularly persuasive. First of all, in Maya, because the plaintiffs sought to recover damages
related to the reduction in value of their properties, the Court noted that any loss or gain
measured against the initial purchase price could not be ascertained until the house was sold, and
thus, the plaintiffs’ claims would not mature until they sold their homes. Here, in contrast,
Defendants contend that Plaintiffs have no standing especially with regard to the interests that
Plaintiffs Vieira and Taylor recently sold. This is more than just peculiar. It is telling with regard
to the lengths to which Defendants must go to find even arguably applicable case law.
Second and more to the point, in Maya, the court expressed concern primarily with the
relationship between the plaintiffs’ alleged harm and a depressed housing market. It concluded
that nothing but speculation linked any harm to the defendant’s conduct.39 Here, in contrast, the
link is particularized and palpable—each transaction is tainted by LPI’s use of a Cassidy life
expectancy on that particular policy.
Third, and most significant here, the plaintiffs in Maya, who were customers of the
defendant mortgage company, brought claims based on conduct of the defendants that was
directed at other non-party home buyers. The central complaint was that, as a result of the
pleading stage was sufficient where plaintiff alleged that that he was injured when defendants knowingly participated in corporation’s breach of fiduciary duty to plaintiff in regard to unauthorized distributionand use of plaintiff’s personal identity information and nominal damages were claimed); Blue Shield of Virginia v. McCready, 457 U.S. 465, 473 n. 10 (1982) (holding that plaintiff had standing in antitrust caseunder the Clayton Act where denying standing would allow defendant to retain a profit that would be
subject to disgorgement and would result in denial of compensation for injuries resulting from unlawfulconduct); cf. Complaint. ¶ 57 (“LPI has received fees that it would not have received if it had used proper life expectancy assessments to sell the policies . . . .”).
37See ERI Consulting Engineers v. Swinnea, 318 S.W.3d 867, 872 (Tex. 2010) (holding that courts
may fashion equitable remedies such as profit disgorgement and fee forfeiture to remedy a breach of fiduciary duty).
38 No. 09-cv-01671, 2010 U.S. Dist. LEXIS 44829 (C.D. Cal. March 31, 2010).39 Id . at *19-22.
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defendants wrongful conduct, the non-party home buyers could not afford their homes and thus
defaulted, causing “instability,” among other things, in the plaintiffs’ neighborhood. Here, in
contrast, Plaintiffs complain of Defendants’ conduct directed at Plaintiffs themselves, not at
others or at the general public.
These distinctions undermine whatever comparison might otherwise be drawn between
Maya and the instant case. In short, the issues addressed by the California district court in Maya
have little to do with anything at issue in this action. Plaintiffs have standing here because they
are challenging LPI’s performance of its fiduciary, contractual, and statutory obligations to each
of them, as well as the other Defendants’ aiding and abetting.
B. Fiduciary Duty Claims
Defendants’ challenge to the fiduciary claims, Counts I and II,40 is misguided. Their
reliance on the economic loss rule is misplaced, as that rule has no application here. They are
mistaken in their attempt to construe the agency agreements as imposing limitations on LPI’s
fiduciary duties, as no such limitations are stated in the agreements. And their remaining
argument, which concerns only Count II, is wholly dependent on the prior arguments.
1. The Economic Loss Rule Does Not Apply To Plaintiffs’ Breach
of Fiduciary Duty Claim
Plaintiffs wholeheartedly agree with one premise to Defendants’ argument—that Texas
law governs the fiduciary duty claims here. But Plaintiffs disagree with Defendants’ flawed
interpretation of that law and its application. In short, Defendants are wrong in contending that
the Texas Supreme Court’s decision in Southwestern Bell Tel. Co. v. DeLanney,41 counsels in
favor of applying the economic loss rule to bar Plaintiffs’ fiduciary duty claims. In fact, to make
40 Count II asserts a claim for aiding and abetting breach of fiduciary duties.41 809 S.W.2d 493 (Tex. 1991).
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that argument, Defendants had to selectively quote the court’s opinion in that case. The relevant
passage in DeLanney footnotes an exception to the economic loss rule that applies to contracts
creating special relationships (such as the principal-agent relationship here) that give rise to
duties that are actionable as torts (such as LPI’s fiduciary duties here):
If the defendant’s conduct—such as negligently burning down a house— would give rise to liability independent of the fact that a contract exists between the parties, the plaintiff’s claim may also sound in tort.Conversely, if the defendant’s conduct—such as failing to publish anadvertisement—would give rise to liability only because it breaches the parties’ agreement, the plaintiff’s claim ordinarily sounds only in contract.Of course, some contracts involve special relationships that may give
rise to duties enforceable as torts, such as professional malpractice.42
Texas Courts of Appeal agree.43 As does Professor James E. Wren, who describes the
exception in plain English:
Despite case law applying the economic loss rule to negligence cases, generally,an exception to the economic loss rule exists for those cases in which a fiduciaryrelationship or a special relationship of trust exists between the plaintiff anddefendant . . . . [B]reach of the duties which accompany these specialrelationships can support extra-contractual (i.e. tort) remedies. This is true even
though the relationship and its corresponding duties would not exist but for the
contractual agreement creating the relationship.44
The Fifth Circuit’s 1992 decision in Fidelity & Deposit Company of Maryland v.
Commercial Casualty Consultants, Inc.,45 relied on DeLanney in applying this very rule. The
Court there upheld a jury verdict on Fidelity’s fiduciary claims even though the defendant argued
that the claims sounded exclusively in contract and “flow strictly from the Agency
42 Id . at 494 & n.1 (emphasis added).43 See, e.g., Sanus/New York Life Health Plan, Inc. v. Dube-Seybold-Sutherland Mgmt., Inc., 837
S.W.2d 191, 199 (Tex. App.—Houston [1st Dist.] 1992, no pet.) (“[S]ome contracts do involve specialrelationships that may give rise to duties enforceable as torts.”); Doe v. Smithkline Beecham Corp., 855S.W.2d 248, 257 (Tex. Ct. App.—Austin 1993) (“In order to impose a tort duty upon parties to a contract,the court must find that a special relationship exists between the parties.”).
44 James E. Wren, A Shotgun Wedding and the Economic Loss Rule, Damages in Civil Litigation(2011), http://www.texasbarcle.com/Materials/Events/9796/130317.pdf (emphasis added).
45 976 F.2d 272.
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Agreement.”46 Affirming the relevant part of the judgment below, the Fifth Circuit held that the
defendants were liable in tort for participating in a breach of fiduciary duty (namely,
commingling of funds) even though the agency agreement at issue specifically prohibited
commingling.47 In doing so, the court restated and followed the plaintiffs’ articulation of the rule
from DeLanney: “[A] party to a contract who seeks redress because another party violated a
contractual obligation is relegated to an action for breach of contract. But if the contract creates a
special relationship imposing a duty, breach of that duty may give rise to an independent tort
action.”48
That is precisely the issue before this Court here. The agency agreement here, like the
agency agreement in the Fidelity & Deposit Company of Maryland case, creates a special
relationship—an agency relationship—imposing fiduciary duties by operation of law. These
fiduciary duties give rise to an independent tort action when breached. Thus, under DeLanney
and Fidelity & Deposit Company of Maryland , the economic loss rule has no application.
2. The Economic Loss Rule, Even If Applied, Does Not Reach
The Remedies That Plaintiffs Are Seeking
In addition to the exception to the economic loss rule addressed above, the Texas
Supreme Court’s DeLanney decision provides a wholly independent basis for rejecting
Defendants’ argument for precluding Plaintiffs’ fiduciary claims here. That additional basis
concerns the nature of Plaintiffs’ injury. The economic loss rule, where it does apply, bars tort
claims in which “the injury is only the economic loss to the subject of the contract itself.”49 It
46 Id . at 276.47 Id . at 274 (“The agreement also required Commercial to segregate and hold as a fiduciary Fidelity’s
premiums and remit those sums promptly to Fidelity.”).48 Id . at 276.49 Nazareth Int’l, Inc. v. J.C. Penney Corp., Inc., 2005 WL 1704793 at *7 (N.D. Tex. July 19, 2005)
(Lynn, J.); see also Jim Walter Homes, Inc. v. Reed , 711 S.W. 2d 617, 618 (Tex. 1986) (explaining that a
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does not bar tort claims, such as Plaintiffs’ fiduciary duty claims here, which do not seek
expectation or benefit-of-the-bargain damages but rather seek restitution, disgorgement of fees or
profits, or even out-of pocket damages.50
Defendants’ cases— Classical Vacations, Inc. v. Air France,51 and Harrison v. Bass
Enters. Prod. Co.52 — both involve expectation damages. In Classical Vacations, Air France sued
a ticket consolidator that underpaid Air France under an ARC Agent Reporting Agreement. Air
France sought the payment of amounts due under the ARC Agent Agreement as damages for its
breach of fiduciary duty claim. The Court of Appeals vacated the jury award, holding that Air
France only sought damages related to the subject of the contract (expectation damages), and
therefore, its claim sounded solely in contract.53 Harrison, is similar. In Harrison, the plaintiff
sought the payment of royalties due to him under the contract. The Court of Appeals held that the
plaintiff’s claims applied only to the subject of the contract since the “only damages Harrison
claims are unpaid royalties—the subject matter of the contract.”54 Again, expectation damages.
contractual relationship may create duties under both tort and contract law, and depending upon thecircumstances, a party’s conduct may breach duties in tort, in contract, or in both simultaneously).
50 See In re Soporex, Inc., 446 B.R. 750, 784 (Bankr. N.D. Tex. 2011) (“[I]f a plaintiff seeks only benefit-of-the-bargain damages, a plaintiff cannot establish an independent injury distinct from theeconomic losses that would be recoverable on a contract claim and the economic loss rule bars recoveryof the damages sought on the negligent misrepresentation claim.”); CCE, Inc., v. PBS&J Constr. Servs., Inc., No. 01-09-00040-CV, 2011 Tex. App. LEXIS 809 (Tex. App.—Houston [1st Dist.] Jan. 28, 2011)(holding that claim seeking to recover reliance/out-of-pocket damages is not subject to economic lossrule); Martin K. Eby Constr. Co. v. LAN/STV , No. 05-09-00946-CV, 2011 Tex. App. LEXIS 6910 at *26(Tex. App.—Dallas Aug. 29, 2011) (“If a plaintiff asserts a negligent misrepresentation claim, but seeksonly benefit-of-the-bargain damages as opposed to the permissible out-of-pocket damages, the plaintiff cannot establish an independent injury and the economic loss rule bars recovery.”); cf. Complaint ¶¶ 57-
58 (seeking out-of-pocket damages, disgorgement, and restitution). Plaintiffs concede that the Complaintdoes not specify what brand of damages they seek in paragraph 58, but they respectfully submit that Rule8’s notice requirements do not mandate this level of detail.
51 No. 01-01-01137-CV, 2003 Tex. App. LEXIS 3160 (Tex. App.—Houston [1st Dist.] Apr. 10,2003, no pet.).
52 888 S.W.2d 532 (Tex. App.—Corpus Christi 1994).53 Classical Vacations, 2003 Tex. App. LEXIS 3160, at *4-7.54 Harrison, 888 S.W.2d at 536.
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Here, Plaintiffs are not seeking expectation damages in the guise of a tort claim. Instead,
they seek disgorgement of fees and profits and/or return of the amount that they overpaid as a
result of the inaccurate life-expectancies. Defendants’ attempt to recast the allegations of Count I
in the terminology of expectation damages is unavailing. No where do Plaintiffs ask for damages
equal to the “double-digit” returns that LPI indicated they should expect.
57. LPI has received fees that it would not have received if it had used proper life expectancy assessments to sell the policies, and it has also benefited from any lapsed contracts that it can resell or keep for its ownfinancial gain.
58. Because of LPI’s breaches of fiduciary duty, the Class has beendamaged and is entitled to recover those damages, as well as exemplarydamages, attorney’s fees, prejudgment interest and costs. Further, LPI has been unjustly enriched by its breaches of fiduciary duty, and the Class isentitled to restitution, disgorgement, and other equitable remedies.55
The economic loss rule, even where it applies, does not preclude such claims. Thus, for this
independent reason, Defendants’ motion should be denied.
3. Defendants’ Fiduciary Duties Are Not Contractually Limited
Defendants’ argument that Plaintiffs have failed to plead a breach of fiduciary duties
hinges on a non-sequitur. Just because the duties owed by an agent to a principal “may be altered
by agreement,”56 as Defendants contend, does not mean that in this case, in LPI’s agency
agreements, those duties have been altered. Yet Defendants seem to overlook this obvious error
in logic. Nowhere do they argue or even imply that the agency agreements here state limitations
on LPI’s fiduciary duties. Indeed, the agreements say no such thing. To the contrary, and as
indicated previously, one form agreement says precisely the opposite:
PURCHASER has the capacity to understand this transaction and to protect himself with respect thereto. Such representation does not,
55 Complaint, Count I (breach of fiduciary duties) ¶¶ 57-58. Cf. id . ¶ 9 (not seeking damages butindicating that LPI tells its clients to expect low double-digit returns).
56 Motion at 13 (emphasis added).
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however, relieve Agent from the responsibility to act at all times in theinterest of PURCHASER and to use its expertise as diligently as possible.57
Further, the decision in National Plan Administrators, Inc. v. National Health Insurance
Company,58 provides no support to Defendants here, and Defendants’ reliance on it is misplaced.
In fact, the agreement at issue in National Plan Administrators illustrates the kinds of duty
limitations that may appear in an agency agreement but are absent here. For example, “the
parties expressly agreed that [the defendant] could take actions that would be in violation of [a
general fiduciary duty],”59 for instance, taking on other insurance clients60 and putting the
interests of another client ahead of the plaintiffs’ interests in marketing their insurance products.
The parties also agreed “that [the defendant] would act as [the plaintiff’s] agent only for specific
purposes.”61 Moreover, the court did not hold that the defendant owed no fiduciary duties to the
plaintiff but only that it did not owe general , all-encompassing fiduciary duties because it was
not plaintiff’s agent for all purposes.62
57 Defendants’ Motion To Dismiss And Brief In Support [Dkt # 42] Ex. 2, App. at 11 (Vieira
agreement), Ex. 29, App. at 67 (Taylor agreement), Ex. 54, App. at 113 (Turnbow agreement), Ex. 63,App. at 135 (Yoskowitz agreement). Although there is a second form agency agreement that lacks thequoted language, it likewise contains no language limiting LPI’s fiduciary duties.
58 235 S.W.3d 695 (Tex. 2007).59 Id . at 703.60 Id . at 702 (noting that agreement provides that “[defendant’s] services are not exclusive to
[plaintiff] and [defendant] will provide services to third parties”).61 Id . at 703.62 Id . (“We need not determine the exact fiduciary duties owed to National Health by NPA because
jury question eight inquired only as to a general duty, which NPA did not owe.”). Notably, the defendantconceded that it owed some fiduciary duties. Id . at 702 (“PA does not contest that it owed a fiduciary dutyto act in National Health’s interest when it processed and paid eligible claims, as it was required to dounder the contract.”).
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4. Defendants’ Argument For Dismissing Count II Is Wholly
Dependent On Their Prior Arguments
Because Defendants make no attempt to argue any independent basis for dismissing
Count II—the aiding and abetting claim—Plaintiffs need not respond separately other than to
concede that Count II is indeed dependent upon the viability of Count I.
C. Contract Claims
Defendants’ concede that Plaintiffs have adequately alleged the first two elements of their
contract claim: the existence of a valid contract and plaintiffs’ performance. They contest the
other two elements: breach and damages.63 But in doing so, they misstate both the applicable law
and the terms—express and implied—of the agreements.
First, Defendants mistakenly argue that Plaintiffs have failed to identify any express
contractual terms that LPI has breached. To the contrary, in Count III, Plaintiffs allege that LPI
breached the Policy Funding Agreements, which state that LPI will “review applicants to TIPS
(ie. Transferable Insurance Policies)” and “qualify applicants for TIPS based upon underwriting
criteria and other relevant guidelines pursuant to the above-referenced Agency Agreement, and
provide information to purchaser.”64 The referenced agency agreements provide that LPI “shall
identify and assist in the purchase for Purchaser, such life insurance policies and/or related death
benefits selected by Purchaser which comply with the following criteria: . . . (c) Insured must
have an actuarially or medically determined life expectancy of no more than ten (10) years.”65
63 See Aquila Sw. Pipeline, Inc. v. Harmony Exploration, Inc ., 48 S.W.3d 225, 235 (Tex. App.—San
Antonio 2001, pet. denied) (identifying elements of breach-of-contract claim).64 Complaint ¶ 69. The parties also entered into Policy Funding Agreements as part of the purchase
transactions that reference the obligations contained in the Agency Agreements. Instruments pertaining tothe same transaction should be read together to ascertain the parties’ intent, even if the parties executedthe instruments at different times and the instruments do not expressly refer to each other. See Fort Worth
Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 840 (Tex. 2000).65 See, eg., Appendix In Support Of Defendants’ Motion To Dismiss And Brief In Support [Dkt. #42-
1] Ex. 2 at 15.
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By knowingly and/or carelessly substituting Dr. Cassidy’s unreliable, inaccurately short life
expectancies in place of life expectancies determined by reasonable actuarial or medical
standards, LPI breached these express contractual provisions.
Second, Defendants mistakenly argue that the agreements do not require LPI to perform
its contractual obligations with care, skill, or faithfulness, and that no such terms can be implied
into the agreements. As a matter of law, this is wrong. Although implied covenants may be
disfavored, even the authorities cited by Defendants state that some implied covenants are
necessary to give effect to the parties’ intent and therefore do arise from the contract.66 The
Texas Supreme Court has reaffirmed over the course of many decades that “[a]ccompanying
every contract is a common-law duty to perform with care, skill, reasonable expedience and
faithfulness the thing agreed to be done.”67 This is so because the obligation to use care, skill,
expedience, and faithfulness is “so clearly within the contemplation of the parties that they
deemed it unnecessary to express it.”68
It is frankly unimaginable to think, as Defendants would have it, that the parties here
contemplated that careless, faithless, unskilled, and unreasonable performance would satisfy the
contract. In these and many other circumstances, such performance would be valueless or even
harmful. As a result, consideration would fail and the contract would be deemed illusory and
66A breach of contract occurs when a party fails to perform an act that it has expressly or impliedly promised to perform. Methodist Hospital of Dallas v. Corporate Communicators, Inc., 806 S.W.2d 879(Tex. App.—Dallas 1991, writ denied).
67
DeLanney, 809 S.W.2d at 494 (quoting Montgomery Ward & Co. v. Scharrenbeck , 146 Tex. 153(Tex. 1947); see also Yarborough v. Fulton, 78 S.W.2d 247 (Tex. Civ. App.—El Paso 1935, writ dism’d)(“[O]ne who enters the employ of another impliedly agrees that he has a reasonable amount of skill in thework to be done, and, in case of damage to the employer arising from his unskillfulness or negligence, heis liable. If the facts here are sufficient to show that the bank was the agent of appellant and as such agentfailed to exercise reasonable care, skill, and judgment in arranging the loan of appellants’ money, then the bank would be liable to them for any loss which they may have sustained.”).
68 Methodist Hospital , 806 S.W.2d. at 882 (quoting Nalle v. Taco Bell Corp., 914 S.W.2d 685, 687(Tex. App.—Austin 1996, writ denied)).
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unenforceable. In this respect, the implied duty is not only contemplated but essential. Further,
the implied duty is plainly contemplated by the express language of the previously quoted form
agreement: “Such representation does not, however, relieve Agent from the responsibility to act
at all times in the interest of PURCHASER and to use its expertise as diligently as possible.”69
In this case, LPI has performed carelessly, faithlessly, unskillfully, and unreasonably.
Indeed, its performance was valueless, or worse. LPI breached its implied obligations by
providing life expectancies that were not determined using reasonable medical or actuarial
standards or procedures, by allowing Dr. Cassidy to determine life expectancies using a method
that consistently results in inaccurate determinations, by failing to statistically or even
empirically establish the validity of the method or requiring Dr. Cassidy to do so, by
compensating Dr. Cassidy with incentives for providing low, not accurate, life expectancies, and
by charging excessive, above-market fees for these services. These allegations are all contained
in the Complaint and expressly incorporated into Count III.70
LPI’s attempts to confuse the issue, contending that Plaintiffs have attempted to state a
cause of action for the implied duty of good faith and fair dealing. This is nothing more than a
straw man. The Complaint makes no such claim.
Third, Defendants mistakenly argue that Plaintiffs fail to provide adequate notice of the
damages they are alleging with the allegations of paragraph 71 of the Complaint. The error here
is that Plaintiffs’ damages allegations are not pigeonholed into a single paragraph of the
Complaint. Plaintiffs also allege damages in paragraph 4 (“a marked up selling price which
LPI—in its sole discretion—sets based upon the inaccurate life expectancy estimates from
69 Defendants’ Motion To Dismiss And Brief In Support [Dkt # 42] Ex. 2, App. at 11 (Vieiraagreement), Ex. 29, App. at 67 (Taylor agreement), Ex. 54, App. at 113 (Turnbow agreement), Ex. 63,App. at 135 (Yoskowitz agreement) (emphasis added).
70 Complaint ¶¶ 11-16, 67.
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Cassidy”), paragraph 9 (according to Defendant Pardo, based on what LPI tells them, investors
“are expecting 11, 12% return” and “will not be disappointed”), paragraph 10 (outliving life
expectancy “reduces the return on investment and also requires additional premium payments”),
paragraph 12 (“LPI has overcharged its customers for years based upon those consistently
erroneous assessments”), paragraph 13 (“LPI’s pay structure incentivizes Cassidy to be wrong to
the detriment of the class and to the advantage of LPI”), paragraph 14 (Pardo “admit[s] that
LPI’s life expectancies are probably wrong”), paragraph 15 (“LPI overcharged class members to
purchase and obligated them to pay additional premium payments”), and paragraph 16 (“millions
in fees that LPI overcharged”). Plaintiffs respectfully submit that Defendants have notice.
Further, at this stage in the proceedings, the court should not evaluate the merits of an
allegation. Instead, it need only satisfy itself that the plaintiff has adequately pleaded a legally
cognizable claim.71 Plaintiffs have certainly met this very low bar.
D. California UCL Claims
In their final argument, Defendants contend that the Complaint fails to sufficiently
apprise them of the facts concerning their alleged UCL violation of the California Unfair
Competition Law (“UCL”).72 Not so. The UCL protects parties that have been injured by an
“unlawful, unfair or fraudulent business act,”73 and “is violated where a defendant’s act or
practice is (1) unlawful, (2) unfair, (3) fraudulent, or (4) in violation of section 17500 (false or
misleading advertisements).”74 Defendants cannot seriously contend that the Complaint fails to
71 See United States ex rel. Riley v. St. Luke’s Episcopal Hosp., 355 F.3d 370 (5th Cir. 2004); Duke Energy Intern., L.L.C. v. Napoli, 748 F. Supp. 2d 656 (S.D. Tex. 2010).
72 California Business & Professions Code Sec. 17200, et. seq.73 Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009).74 Lozano v. AT&T Wireless Servs., Inc., 504 F.3d 718, 731 (9th Cir. 2007).
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inform them of what Plaintiffs contend is “unfair” about their conduct. Little wonder that they
have saved this argument for last.
A business practice is “unfair” for the purposes of a claim under the UCL when it
“offends an established public policy or when the practice is immoral, unethical, oppressive,
unscrupulous or substantially injurious to consumers.”75 To prevail, a plaintiff must establish that
“the consumer injury is substantial, is not outweighed by any countervailing benefits to
consumers or to competition, and is not an injury the consumers themselves could reasonably
have avoided.”76 Yet California courts have indicated that a plaintiff may make out a prima facie
case of unfair conduct by merely alleging wrongful conduct on the part of the defendant; the
plaintiff need not speculate at the pleading stage as to the defendant’s countervailing interests.77
The gravamen of the Complaint is that the actions of Defendants are “unfair” within the
meaning of the UCL. In fact, there is little in the 22 pages of pleading that does not complain of
such unfairness. For example, just the first five pages of the Complaint contain these allegations
concerning the unfairness of LPI’s business practices: Plaintiffs “are not informed of any life
expectancy that Defendants may use in determining whether to buy the policy from the Seller.”78
“Instead, LPI only provides what it calls the ‘acquisition price,’ . . . a marked up selling price
which LPI—in its sole discretion—sets based upon the inaccurate life expectancy estimates from
75 Wilner v. Sunset Life Ins. Co., 78 Cal. App. 4th 952, 965, 93 Cal. Rptr. 2d 413 (Ct. App. 2000)(citing State Farm Fire & Cas. Co. v. Superior Court , 45 Cal. App.4th 1093, 1104, 53 Cal. Rptr. 2d 229
(Sup.Ct. 1996)).76 Daugherty v. American Honda Motor Co., Inc., 144 Cal. App. 4th 824, 839, 51 Cal. Rptr. 3d 118
(2006).77 Ackerman v. Coca-Cola, CV-09-0395, 2010 U.S. Dist. LEXIS 73156 (E.D.N.Y. July 21) (“[I]f the
pleading states a prima facie case of harm, . . . the defendant should be made to present its side of thestory.”).
78 Complaint ¶ 4; see also id . ¶ 37 (“Even if LPI had different life expectancy estimates . . . LPI usedonly Cassidy’s assessments for [Plaintiffs].”).
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Cassidy.”79 “Defendants publicly claim to provide reliable life expectancy assessments.”80 LPI
“grossly and systematically underestimated life expectancies” and “overcharged its customers for
years based on those consistently erroneous assessments.”81 “Defendants negligently disregarded
that the life expectancy assessments they obtain and provide to [Plaintiffs] have been
inaccurate—significantly so.”82 Defendants knew of the inaccuracy but failed to adjust their
“practices to account for this fact or use[] an alternative, reliable source of life expectancy
assessments.”83 LPI relied exclusively on Cassidy despite his lack of actuarial training or
experience yet paid him “at a rate that is well-above the market for similar services from
experienced actuarial firms” and “increased his compensation” dramatically “despite the
consistently inaccurate life expectancy assessments that he provides.”84 “LPI’s pay structure
incentivizes Cassidy to be wrong to the detriment of [Plaintiffs] and to the advantage of LPI.85
With regard to unfairness, this is notice enough.
Defendants also argue that Plaintiffs have failed to allege injury for the same reasons
addressed previously. This is untrue for the reasons previously stated and also because California
courts hold that a plaintiff who fails to receive the benefit bargained for because of a
misrepresentation made by a defendant suffers sufficient injury to state a claim under the UCL.86
Plaintiffs have met the minimal burden of pleading a UCL claim.
79 Id .80 Id . ¶ 11.81 Id . ¶ 12.
82 Id . ¶ 1383 Id .84 Id .85 Id .86 See, e.g., Koh v. S.C Johnson & Son, Inc., No. C-09-00927, 2010 U.S. Dist. LEXIS 654, at *4-5
(N.D. Cal. Jan. 5, 2010) (complaint adequately alleged injury under UCL through claims that plaintiff bought the product at a premium price in reliance on misleading suggestion that it was environmentallyfriendly); Chavez v. Blue Sky Natural Beverage Co., 340 Fed. Appx. 359 (9th Cir. 2009) (injury
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V. CONCLUSION
For the foregoing reasons, Plaintiffs respectfully request that the Court deny Defendants’
motion to dismiss, or in the alternative, that the Court allow Plaintiffs the right to restate and cure
any deficiencies in their Consolidated Complaint and for such other relief to which they may be
entitled.
DATE: October 6, 2011
sufficiently pleaded where plaintiff purchased product because of misrepresentation that it was fromanother state); see also, Lozano, 504 F.3d at 734 (plaintiff “has properly stated an injury that he did notreceive the full value of his contract with defendant” due to its alleged failure to disclose certain factsabout its billing practices).
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Steven G. Sklaver California Bar No. 237612 (Admitted PHV)Amy T. BrantlyCalifornia Bar No. 210893 (Admitted PHV)
SUSMAN GODFREY L.L.P.Suite 9501901 Avenue of the StarsLos Angeles, CA 90067-6029Telephone: (310) 789-3100Facsimile: (310) 789-3150Email: [email protected]
Kim E. Miller California Bar No. 178370 (PHV Pending)
KAHN SWICK & FOTI, LLC500 5th Avenue, Suite 1810 New York, NY 10110Tel: (212) 696-3730Fax: (504) 455-1498Email: [email protected]
Bruce K. PackardState Bar No. 15402300W. Craig StokleyState Bar No. 24051392
RINEY PALTER, PLLC5949 Sherry Lane, Suite 1616Dallas, Texas 75225-8009Telephone: 214-461-1200Facsimile: 214-461-1210Email: [email protected]
ADDITIONAL COUNSEL FOR
PLAINTIFFS AND THE CLASS AND
SUBCLASS
Respectfully submitted,
/s/ Jonathan BridgesTerrell W. OxfordTexas State Bar No. 15390500Jonathan BridgesTexas State Bar No. 24028835
SUSMAN GODFREY L.L.P.
901 Main Street, Suite 5100Dallas, Texas 75202Telephone: (214) 754-1900Facsimile: (214) 754-1933Email: [email protected]
Lewis S. KahnLouisiana Bar No. 23805 (PHV Pending)Craig J. Geraci, Jr.Alabama Bar No. 3847-C62G (PHVForthcoming)
KAHN SWICK & FOTI, LLC206 Covington StreetMadisonville, LA 70447Tel: (504) 455-1400Fax: (504) 455-1498Email: [email protected]
INTERIM CO-LEAD CLASS COUNSEL
Stuart H. McCluer
MCCULLEY MCCLUER PLLC
1223 Jackson Avenue East, Suite 200P.O. Box 2294Oxford, Mississippi 38655(662) [email protected]
COUNSEL FOR PLAINTIFF SEAN
TURNBOW
Case 3:11-cv-01030-M Document 44 Filed 10/06/11 Page 27 of 28 PageID 603
8/3/2019 LPHI Class Action Answer to Motion to Dismiss
http://slidepdf.com/reader/full/lphi-class-action-answer-to-motion-to-dismiss 28/28
CERTIFICATE OF SERVICE
I hereby certify that on October 6, 2011, I electronically filed the foregoing document viathe CM/ECF electronic filing system and served all counsel of record pursuant to FED. R . CIV. P.5(b)(2)(E).
/s/ Jonathan BridgesJonathan Bridges
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