United States District Court, D. New Jersey
For LINCOLN BENEFIT LIFE COMPANY, Plaintiff: JASON P. GOSSELIN, KATHERINE LEIGH VILLANUEVA, LEAD ATTORNEYS, DRINKER BIDDLE & REATH LLP, PHILADELPHIA, PA.
For AEI LIFE, LLC, Defendant: ERIC ADAM BIDERMAN, LEAD ATTORNEY, ARENT FOX LLP, NEW YORK, NY.
For ALS CAPITAL VENTURES, LLC, Defendant: MICHAEL PANETH, LEAD ATTORNEY, TREFF & LOWY PLLC, BROOKLYN, NY.
For JOEL JACOB, JRJ SERVICES, INC., Defendants: AVI ROSENGARTEN, LEAD ATTORNEY, BROOKLYN, NY.
For INNOVATIVE BROKERS, Defendant: DAVID BENHAIM, LEAD ATTORNEY, LIPSIUS-BENHAIM LAW, LLP, KEW GARDENS, NY.
The Honorable Freda L. Wolfson, United States District Judge
Before the Court are 1) the Motion of ALS Capital Ventures, LLC (" ALS" ), to dismiss the Complaint against it by Lincoln Benefit Life Company (" Plaintiff" ) for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2); 2) the Motion of Defendant Innovative Brokers (" Innovative" ) to dismiss the Complaint against all Defendants for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1); and 3) the Motion of Defendant AEI Life, LLC (" AEI" ), to dismiss the Complaint against all Defendants for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1) and, in the alternative, to dismiss the Complaint as against AEI for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). Also before the Court is the request of Plaintiff, in briefing, for jurisdictional discovery to cure any defects in the pleadings to establish personal or subject matter jurisdiction.
For the reasons that follow, this Court finds that Plaintiff's Complaint does not on its face allege the necessary basis for subject matter jurisdiction over claims against ALS and AEI (" ALS and AEI" or " the LLC Defendants" ). Specifically, Plaintiff has not adequately pled the citizenship of the LLC Defendants and thus has failed to assert the complete diversity of the parties required for jurisdiction under 28 U.S.C. § 1332. This Court also finds Plaintiff's arguments concerning jurisdictional discovery to be unavailing and denies Plaintiff's request. Accordingly, Plaintiff has not met its burden and the Complaint is dismissed without prejudice.
I. Background and Procedural History
On July 3, 2013, Plaintiff filed a Complaint in this Court against all Defendants seeking a declaratory judgment under 28 U.S.C. § 2201 that two life insurance policies issued on the life of Ms. Gabrielle Fischer are void or voidable due to material misrepresentations made in the insurance applications and/or due to the lack of an insurable interest at the time of the policy's inception. Specifically, the Complaint alleges that Defendants Joel Jacob, Innovative Brokers, and JRJ Services, Inc., engaged in a stranger originated life insurance or " STOLI" scheme in which they submitted false or deceptive applications for two $6.65 million life insurance policies on the life of Ms. Fischer. Generally, STOLI schemes conflict with state insurance laws, which require that policy owners have a legally cognizable interest in the life of the insured at the time that policies are issued ( e.g. a family relationship). The Complaint alleges that these
Defendants falsely represented in their applications that the policies were for the purpose of estate planning for Ms. Fischer's family and that Ms. Fischer had a net worth of $87 million, when in fact the Defendants intended from the outset to sell the policies on the secondary market and Ms. Fischer never had the assets to justify such a high valuation. Plaintiff further alleges that the LLC Defendants, ALS and AEI, purchased the ownership interest in the two policies on the secondary market: interests which are alleged to have been voided by the procuring parties' lack of a legitimate insurable interest in Ms. Fischer's life at the time of policy origination.
The Complaint invokes the jurisdiction of this court based upon the complete diversity of citizenship between Plaintiff and Defendants. 28 U.S.C. § 1332(a). Plaintiff Lincoln Benefit, a life insurance company organized under the laws of Nebraska with its principal place of business in Lincoln, Nebraska, is identified as a citizen of the State of Nebraska. [Complaint, ¶ 7]. Defendant Innovative Brokers, a corporation organized under the laws of New York with its principal place of business in Brooklyn, New York, is identified as a citizen of the State of New York. [Complaint, ¶ 11]. Defendant AEI Life, a limited liability company with its principal address in Brooklyn, New York, is identified as a citizen of the State of New York. [Complaint, ¶ 8]. Lastly, for the purpose of the present Motions, Defendant ALS Capital Ventures, a limited liability company " domiciled in the State of Delaware," is identified as a citizen of the State of Delaware. [Complaint, ¶ 9].
On September 16, 2013, Defendant ALS Capital Ventures, LLC, moved to dismiss the Complaint for lack of personal jurisdiction, arguing that ALS lacks the requisite contacts with the forum state of New Jersey. Defendant Innovative followed on October 1, 2013, with a Motion to dismiss the Complaint for lack of subject matter jurisdiction, arguing that the Complaint on its face does not properly allege the citizenship of the LLC Defendants and that, accordingly, complete diversity has not been alleged. Finally, Defendant AEI Life, LLC, on December 20, 2013, moved to dismiss the Complaint both for lack of subject matter jurisdiction for failure to properly allege the citizenship of the LLC Defendants and for lack of personal jurisdiction over AEI by reason of the absence of contacts with the forum state.
In its responses to all three motions, Plaintiff argues that complete diversity of the parties had been sufficiently alleged, or, in the alternative, that jurisdictional discovery should be granted to determine the existence of subject matter and personal jurisdiction because Plaintiff has been unable to do so from publicly available information. Because the Court finds the inquiry into subject matter jurisdiction in this case to be dispositive, it will not
address the arguments of the parties concerning personal jurisdiction. Accordingly, the Court now proceeds to consider Defendants' challenges to the Court's subject ...