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Sun Life Assurance Co. of Canada v. U.S. Bank National Association

United States District Court, D. Delaware

December 30, 2019

SUN LIFE ASSURANCE COMPANY OF CANADA, Plaintiff,
v.
U.S. BANK NATIONAL ASSOCIATION, as Securities Intermediary, LINDSAY SPALDING-JAGOLINZER Defendants. U.S. BANK NATIONAL ASSOCIATION, as Securities Intermediary, Counterclaim-Plaintiff,
v.
SUN LIFE ASSURANCE COMPANY OF CANADA Counterclaim-Defendant.

          MEMORANDUM ORDER

          HONORABLE LEONARD P. STARK UNITED STATES DISTRICT JUDGE

         At Wilmington this 30th day of December, 2019:

         Having reviewed the parties' briefing (D.I. 281-82, 291-94) and related materials, and having conducted a six-day jury trial that resulted in a verdict in favor of U.S. Bank National Association ("U.S. Bank") on its promissory estoppel counterclaim (see D.I. 283-90), IT IS HEREBY ORDERED that:

         1. U.S. Bank's request for oral argument (D.I. 295) is DENIED. The Court has heard at great length from the parties, including during pretrial motions hearings and at trial, on the issues now briefed.

         2. Sun Life Assurance Company of Canada's ("Sun Life") renewed motion for judgment as a matter of law or, in the alternative, for a new trial (D.I. 280) is DENIED.[1]

         Sun Life presents three bases on which it contends the Court should grant judgment as a matter of law or, in the alternative, a new trial: (1) U.S. Bank provided no evidence that it (as opposed to Financial Credit Investment II, Ltd. ("FCI")) relied on any promise made by Sun Life; (2) no reasonable juror could have found that (i) Sun Life made a promise or (ii) FCI reasonably relied on a Sun Life promise; and (3) the verdict form did not include the elements of promissory estoppel, which led to jury confusion. (D.I. 281 at 1-2) The Court is unpersuaded by Sun Life's contentions.

         First, U.S. Bank did not need to prove reliance by any entity other than FCI. See Restatement (Second) of Contracts § 90 (describing element of "[a] promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person") (emphasis added); see also Harmon v. Delaware, 2010 WL 8250827, at *2 n.6 (Del. Super. Ct. Dec. 21, 2010) ("The Second Restatement of Contracts provides the seminal formulation of promissory estoppel."); see generally Chrysler Corp. v. Quimby, 144 A.2d 123, 128-29 (Del. 1958) (citing Second Restatement). Sun Life knew since at least 2009 that U.S. Bank was serving as intermediary for a third-party owner of the Sol Policy, and (relatedly) that U.S. Bank in its individual capacity was not involved in any relationship with Sun Life. (D.I. 1; Wilkosky Tr. at 555-57)[2] As the jury (not unreasonably) found, it was neither unreasonable nor unforeseeable that the actual policyowner (i.e., FCI) would rely on any statements Sun Life made to FCI's intermediary, U.S. Bank, regarding the Sol Policy.

         Second, the Court continues to reject Sun Life's contentions that no reasonable juror could find (by clear and convincing evidence) that Sun Life made a promise or that FCI reasonably relied on that promise. (D.I. 251 at 11-13) Sun Life, in effect, asks the Court to reweigh the evidence (D.I. 281 at 6-9), which the Court is not permitted (on Sun Life's motion) to do.

         Sun Life's repeated reference to U.S. Bank's insurance expert, William Hager, who testified (among other things) that Sun Life's statements regarding the Sol Policy being "in good standing" were accurate and that Sun Life's statements "did not establish any absolute promise to pay the death benefit upon the insured's death" (id. at 7-8), do not alter the Court's conclusion as to the reasonableness of the jury's verdict. The jury heard this testimony, and much more (see, e.g., D.I. 292 at 15-17 (citing additional Hager testimony and other evidence)), and was free to give it whatever weight it thought it merited. It is simply incorrect to insist, as Sun Life does, that a reasonable jury could only have found that Hager's testimony "completely debunked" U.S. Bank's contention. (D.I. 293 at 5)

         For purposes of promissory estoppel, a promise need only be "reasonably certain and definite." Boulden v. Albiorix, Inc., 2013 WL 396254, at *13 (Del. Ch. Jan. 31, 2013) (emphasis added), as revised (Feb. 7, 2013); see also James Cable, LLC v. Millennium Dig. Media Sys., L.L.C., 2009 WL 1638634, at *5 (Del. Ch. June 11, 2009) (same); Cont'llns. Co. v. Rutledge & Co., Inc., 750 A.2d 1219, 1233 n.27 (Del. Ch. 2000) (citing authority for proposition that promise need be "reasonably definite and certain so that the intentions of the parties can be ascertained"). The jury had ample evidence from which it could have reasonably found that Sun Life's promise to pay, if premiums continued to be paid, to have been reasonably certain and definite. Sun Life points to no binding nor even persuasive authority that allows a promisor to evade the consequences of a promisee's reasonable reliance based on the simple expedient of a perfunctory reservation of unidentified (e.g., the May 12 letter) and unasserted (e.g., fraud in incontestable policies) rights or conditions. (See D.I. 155-1 Ex. 25; Hager Tr. at 697; see also Chaplake Holdings, Ltd. v. Chrysler Corp., 1999 WL 167834, at *31 (Del. Super. Jan. 13, 1999) (finding that promise purportedly conditioned on "one party's business, the general economic conditions and 'other conditions'" did not preclude finding of estoppel when promise was clear, definite, and intended to induce action))

         Third, Sun Life's argument for a new trial based on purported juror confusion, because "the Jury Verdict form did not include the required elements of proof (D.I. 281 at 10), is unavailing. Sun Life concedes that "the Court's jury instructions included the elements of promissory estoppel," and Sun Life takes no issue with those instructions. (Id.; see also D.I. 267 at 24 (instructing on elements of promissory estoppel)) The jury is presumed to have understood and followed the Court's instructions. See Graboff v. Colleran Firm, 744 F.3d 128, 135 n.5 (3d Cir. 2014) ("We presume that the jury followed the District Court's instructions when arriving at its verdict"). Further, Sun Life cites no authority for its suggestion that jury instructions must always (or at least here) require specific findings on each element of a claim. Indeed, the law vests these decisions in the sound discretion of the trial judge. See Fed. R. Civ. P. 49; McNally v. Nationwide Ins. Co., 815 F.2d 254, 266 (3d Cir. 1987) (holding district judge was not obliged under Rule 49 to "spell out the proximate causation issue" in special interrogatories); Sprinkle v. AMZ Mtg. Corp., 567 Fed.Appx. 163, 164-65 (3d Cir. 2014) (holding that lack of itemized damages on special verdict form was not confusing and misleading); see also Armstrong v. Dwyer, 155 F.3d 211, 216 (3d Cir. 1998) ("[T]he formation of jury instructions is entrusted to the discretion of the trial judge .... [T]he only limitation on this discretion is that the questions asked of the jury be adequate to determine the factual issues essential to the judgment.") (internal alterations and citation omitted). In the Court's view, the combination of the detailed jury instructions and the straightforward verdict form did not leave the jury confused.[3]

         3. U.S. Bank will be awarded restitution damages totaling $1, 923, 068 (the total amount of premiums paid to Sun Life on the Sol Policy), plus prejudgment interest (to be determined based on additional input from the parties).

         U.S. Bank argues that it should be awarded expectation damages - that is, the full $10 million death benefit - it was promised it would receive for owning the Sol Policy. (D.I. 282 at 10-16; see also Id. at 2 ("U.S. Bank is entitled to its expectancy interest - enforcement of the promises that Sun Life repeatedly made - to pay $10 million.")) Sun Life responds that U.S. Bank should not recover anything on its promissory estoppel claim, as the Court should leave the parties where it found them, since damages cannot be awarded on an illegal, void ab initio contract. (D.I. 291 at 3-4) Both parties also propose alternative damages figures should their principal positions be rejected. (See, e.g., D.I. 282 at 16-20 (U.S. Bank arguing for at least reliance damages or restitution); D.I. 291 at 4-10 (Sun Life arguing for at most a small fraction of reliance damages))

         "While Delaware courts have recognized some instances when expectation damages may be appropriate in the promissory estoppel context, this is clearly the exception rather than the rule." Olson v. Halvorsen, 2009 WL 1317148, at * 12 (Del. Ch. May 13, 2009), aff'd, 986 A.2d 1150 (Del. 2009). "[T]he more routine role of promissory estoppel should be to assure that those who are reasonably induced to take injurious action in reliance upon non-contractual promises received recompense for that harm." Ramone v. Lang, 2006 WL 905347, at * 14-15 (Del. Ch. Apr. 3, 2006) (declining to award expectation damages where plaintiff had failed to demonstrate bad faith by defendant). It is the Court's role, sitting in equity, to use its discretion to fashion an appropriate and case-specific award - a principle all parties ...


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