Submitted: May 18, 2018
Defendant Wilmington Trust, N.A.'s Motion to Dismiss or
Stay the Action, GRANTED in part and DENIED in part.
C. Schoell, Esquire, Drinker Biddle & Reath LLP,
Wilmington, Delaware; Jason P. Gosselin, Esquire, Drinker
Biddle & Reath LLP, Philadelphia, Pennsylvania, Attorneys
for Plaintiff Lincoln Benefit Life Company
L. Caponi, Esquire, K & L Gates LLP, Wilmington,
Delaware; Jesus E. Cuza, Esquire, Monica V. Castro, Esquire,
Holland & Knight LLP, Miami, Florida, Monica V. Castro,
Esquire, Attorneys for Defendant Wilmington Trust, N.A.
M. Davis, Judge cc: File&ServeXpress
a declaratory judgment action assigned to the Complex
Commercial Litigation Division of the Court. The action
arises out of a life insurance policy ("the
Policy") issued by Plaintiff Lincoln Benefit Life
Company ("Lincoln Benefit") to Ruben Matz in 2007.
Through a series of transactions that followed the initial
purchase, Defendant Wilmington Trust, N.A. as Securities
Intermediary ("Wilmington Trust"), became the owner
and beneficiary of the Policy. When Mr. Matz passed away in
2017, Wilmington Trust submitted proof of his death to
Lincoln Benefit. Wilmington Trust then filed a declaratory
judgment action in a federal district court in Florida (the
"Florida Action"), seeking a determination that
Lincoln Benefit must pay the death benefits to Wilmington
Trust under the Policy. Three months later, Lincoln Benefit
filed an action in the Superior Court of Delaware (the
"Delaware Action") seeking declaratory judgment
that the Policy was void at the time of signing.
before the Court is Wilmington Trust's Motion to Dismiss
or Stay the Delaware Action (the "Motion") for
forum non conveniens. Lincoln Benefit opposes the
Motion. Applying the McWane analysis, this Court
finds, in its discretion, that the factors support a stay of
the Delaware Action in favor of the Florida Action.
Therefore, Wilmington Trust's Motion to Dismiss or Stay
is GRANTED IN PART AND DENIED IN PART.
Benefit, is a life insurance company incorporated in
Nebraska, with its principal place of business in Nebraska.
Wilmington Trust is a national banking association
incorporated under the laws of the United States, with its
principal place of business in Delaware. In March 2007,
Lincoln Benefit received an application for a $10 million
insurance policy on the life of Mr. Matz. Mr. Matz was
resident of Florida. According to the application, the Ruben
Matz Insurance Trust (the "Matz Trust"), located in
Delaware, was the proposed owner and intended beneficiary of
the Policy. Three people signed the application: Mr.
Matz (the insured); Alan Halpern (trustee of the Matz Trust);
and Ernest Madera (the producer). The application contained a
representation that it was signed in Wilmington, Delaware,
but Ernest Madera testified by affidavit that he and Ruben
Matz signed the application in Florida, where they both
of the Policy application, the signatories also signed a
Premium Funding Intent Form, attesting that:
There was no intent to transfer ownership of the policy to a
third party, such as a settlement company or an investor
There was no intent that the policy would be owned by an
entity for investment purposes.
There would be no funds other than the insured's own
funds used to pay the premium of the policy.
The purpose of the policy was financial planning and estate
April 13, 2007, Lincoln Benefit issued the
Policy. The application was attached to the Policy
and became part of the insurance contract. The Policy
contained a provision titled, "Conformity with State
Law." This provision states that the Policy
"is subject to the laws of the state where the
application was signed." The Policy
subsequently changed ownership multiple times. In December
2012, Wilmington Trust, as securities intermediary, became
the owner and beneficiary of the Policy.
Matz died on September 22, 2017. Wilmington Trust
submitted the death certificate to Lincoln Benefit on October
5, 2017, requesting that Lincoln Benefit pay the Policy
proceeds. The next day, October 6, Wilmington
Trust filed a declaratory judgment action in the United
States District Court for the Southern District of Florida
(the "Florida Court"), seeking a declaration that
Wilmington Trust is entitled to the proceeds of the
on January 9, 2018, Lincoln Benefit filed its own complaint
against Wilmington Trust in this Court, seeking: (1) a
declaration that the Policy is void ab initio
because it was part of a stranger originated life insurance
("STOLI") scheme, and STOLI policies are contrary
to Delaware law; and (2) a determination that "it would
be unjust to permit [the ultimate beneficiary] to recoup any
premiums paid on the policy." On March 8, 2018,
Wilmington Trust filed the Motion to Dismiss or Stay the
Delaware Action that is now before this Court. Lincoln
Benefit opposes the Motion.
Benefit moved to dismiss the Florida Action for lack of
personal jurisdiction (the "Florida
Motion"). The Florida Court heard the Florida
Motion on June 15, 2018, ruling from the bench and denying
the Florida Motion. Wilmington Trust filed a motion for
summary judgment and that motion remains pending before the
Wilmington Trust's Motion
Trust argues that the Court should dismiss or stay the
Delaware Action for forum non conveniens, applying
the well-settled factors set forth in
McWane. Wilmington Trust claims that the
McWane factors weigh in favor of dismissal or a stay
because: (1) the Florida Action was filed first in time; (2)
this case involves the same parties and issues as the Florida
Action; and (3) the Federal District Court in Florida is
capable of prompt and complete justice. Wilmington Trust also
contends that even if the Court were to analyze the Motion
under Cryo-Maid,  the factors weigh
overwhelmingly in favor of the Florida Action.
Lincoln Benefit's Opposition
Benefit opposes the Motion, arguing that the Court should
summarily strike or deny Wilmington Trust's Motion as
untimely because it was filed twenty-one days past the
deadline. Alternatively, Lincoln Benefit claims that the
Court should deny Wilmington Trust's Motion because
neither a McWane or Cryo-Maid analysis
warrants dismissal or a stay of the Delaware action.
The Motion Will Not Be Summarily Denied.
Benefit argues that the Court should strike or summarily deny
Wilmington Trust's Motion because it was untimely.
Delaware Superior Court Civil Rule 107(f) provides that the
Court may, in its discretion, summarily deny a motion for
untimeliness. However, Delaware courts recognize that
public policy favors determining legal issues on their
Wilmington Trust filed the Motion twenty-one days after the
deadline to respond to the Complaint. Although this may have
delayed the proceeding by a matter of days, Lincoln Benefit
was not prejudiced. Indeed, Lincoln Benefit does not even
argue that it suffered prejudice. Lincoln Benefit concedes
that Wilmington Trust's late response to the Complaint
was due to confusion over which law firm was supposed to
represent Wilmington Trust in this matter. While this is not
good cause for the delay, in context, it shows that
Wilmington Trust was not grossly inadvertent or engaging in
delay tactics. Because Lincoln Benefit was ...