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Wenokur v. AXA Equitable Life Insurance Co.

United States District Court, D. Arizona

October 2, 2017

Jeremy Wenokur, et al., Plaintiffs,
v.
AXA Equitable Life Insurance Company, Defendant.

          ORDER

          DOUGLAS L. RAYES UNITED STATES DISTRICT JUDGE

         Plaintiffs are Jeremy Wenokur and Secondary Life Three, LLC (SLT). Defendant is AXA Equitable Life Insurance Company (AXA). At issue is AXA's Motion to Transfer Venue or, in the Alternative, to dismiss Plaintiffs' First Amended Class Action Complaint to the extent Plaintiffs claim an alleged breach of the implied covenant of good faith and fair dealing. (Doc. 31.) The motion is fully briefed.[1] For the following reasons, AXA's Motion to Transfer Venue is granted and this matter is transferred to the Southern District of New York.[2]

         BACKGROUND

         This case presents a dispute over the propriety of an increase in cost of insurance (COI) rates. The COI rates at issue also are implicated in a separate case brought by Brach Family Foundation, Inc. (Brach) against AXA in the Southern District of New York, Brach Family Foundation, Inc. v. AXA Equitable Life Insurance Co., No. 16-cv-00740-JMF (New York Litigation). For context, the Court will discuss each case before reaching the merits of AXA's motion.

         I. Allegations in the Amended Complaint[3]

         The policies at issue derive from an AXA product line called Athena Universal Life II (AUL II). Unlike other whole life insurance policies that require fixed monthly premium payments, the AUL II policies allow policyholders to pay only the minimum amount of premiums necessary to keep the policies in force. AXA markets the AUL II policies as a “flexible premium universal life insurance policy, ” where the policyholder can, within limits, “make premium payments at any time and in any amount.”

         All AXA policies in the AUL II product line contain the same common language about how the COI rates will be determined: “We will determine cost of insurance rates from time to time. Any change in the cost of insurance rates we use will be as described in the ‘Changes in Policy Cost Factors' provision.” The “Changes in Policy Cost Factors” provision states:

Changes in policy cost factors (interest rates we credit, cost of insurance deductions and expense charges) will be on a basis that is equitable to all policyholders of a given class, and will be determined based on reasonable assumptions as to expenses, mortality, policy and contract claims, taxes, investment income, and lapse. . . . Any change in policy cost factors will be determined in accordance with procedures and standards on file, if required, with the insurance supervisory official of the jurisdiction in which the policy is delivered.

         Wenokur, a resident of Utah, is the owner of an AUL II life insurance policy (Wenokur Policy). The Wenokur Policy was issued by AXA in Arizona in July 2006, and currently has a face value of $5 million. At issuance, the insured was age 75. SLT, a Delaware limited liability company with a principal place of business in Rockville, Maryland, also is the owner and beneficiary of an AUL II life insurance policy (SLT Policy). The SLT Policy was issued by AXA in Florida in April 2006, with a current face value of $5 million. At issuance, the insured was age 79. AXA is incorporated and headquartered in New York.

         Plaintiffs allege that AXA unlawfully increased their COI rates. Specifically, on or about October 1, 2015, AXA announced that, beginning in 2016, it would increase the COI rates from AUL II policies with issue ages of 70 or older and with current face amounts of $1 million and higher (COI Increase). AXA attributed the COI Increase to less favorable “future mortality and investment experience” over the past few years.

         In January 2017, Plaintiffs initiated this action asserting two causes of action. Count I alleges that AXA materially breached the AUL II policies by increasing COI rates inequitably and based on factors not listed in the policies. Count II alleges that, by increasing the COI rates based on an unreasonable interpretation of the AUL II policies, AXA violated the implied covenant of good faith and fair dealing.

         II. The New York Litigation

         In February 2016, almost a year before Plaintiffs initiated this lawsuit, Brach brought suit against AXA in the Southern District of New York, asserting breach of contract and misrepresentation in violation of New York Insurance Law, Section 4226. According to its Second Amended Complaint (Doc. 35-3), Brach is the owner of an AUL II policy that was subject to the COI Increase and seeks to represent all similarly situated owners of life insurance policies issued by AXA. Two separate actions arising out of the COI Increase-originally filed against AXA in the Central District of California-have since been transferred to the Southern District of New York. (Doc. 41.)

         III. ...


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