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Lancaster v. Kordsiemon

United States District Court, D. Idaho

September 29, 2016

RON LANCASTER, an individual, and DONITA LANCASTER, an individual, Plaintiffs,
v.
ROBERT KORDSIEMON, an individual, Defendant.

          MEMORANDUM DECISION AND ORDER

          B. Lynn Winmill Chief Judge United States District Court

         INTRODUCTION

         Pending before the Court is a Motion for Summary Judgment filed by plaintiffs Ron and Donita Lancaster (Dkt. 37) (collectively "the Lancasters") and a Motion for Summary Judgment (Dkt. 45) filed by defendant Robert Kordsiemon ("Kordsiemon").

         BACKGROUND

         This proceeding involves a series of life insurance policies sold by Kordsiemon to the Lancasters. The Lancasters allege that the life insurance policies and financial advice was fraudulent and that the Lancasters relied upon Kordsiemon in purchasing the allegedly fraudulent policies.

         Ron and Donita Lancaster are an elderly married couple, ages 79 and 78 respectively. Statement of Material Facts, at 3, ¶ 1, Dkt. 45-1. Kordsiemon is an independent sales agent who has worked for several insurance and annuity companies through his own business venture, Kordsiemon, LLC. Beginning in 2004, Kordsiemon began making house calls to the Lancaster's home and established a friendly business relationship. Id. at 5, ¶ 4. In approximately June 2007 Kordsiemon sold the Lancasters a "relatively small" annuity contract that was listed in Ron Lancaster's name and had an initial premium of $60, 000. Id. at 7, ¶ 6. This annuity was sold by the company Athene.

         One year later, Kordsiemon sold the Lancasters a second financial package for a $1.5 million life insurance policy on Donita's life, from the insurance company ReliaStar. Based on discussions between the parties, the Lancasters allegedly purchased the ReliaStar policy with the primary intention of selling the policy for profit at a later time. Id. at 7, ¶ 7. The Lancasters allege that they relied upon Kordsiemon's financial advice that purchasing the policy and reselling it was in their financial interest. While Donita's application for the policy expressly denied that they intended to resell the policy, the Lancasters did not fill out the policy themselves. Id.

         The policy application "sat" for over a year because the Lancasters could not afford the premium associated with the life insurance policy. Id. at 9, ¶ 9. At Kordsiemon's suggestion, the Lancasters obtained a reverse-mortgage to help pay for the new life insurance policy through a third party. Id. at 8, ¶ 7. Although the reverse-mortgage was purchased through a separate agent, Kordsiemon helped fill out at least portions of the reverse mortgage application on the Lancaster's behalf. After obtaining the reverse mortgage, the Lancasters continued to work with Kordsiemon to obtain the second life insurance policy. In order to obtain the lowest premium price, Donita Lancaster applied for a "super preferred" health rating. Id. at 11, ¶ 12. Although such a rating secured a lower premium price, Donita Lancaster's good heath ultimately made the policy very difficult to sell, at least for the profit they intended to make. Id. The Lancasters provided an initial payment of $71, 860.64 that ensured the policy would survive the period of contestability. Id. at 12, ¶ 13.

         In June 2010, Kordsiemon sold the Lancasters a second life insurance policy worth approximately $1.3 million-this time on the "borrowed life" of one of the Lancaster's daughters. Id. at 12, ¶ 14. The policy was also purchased from Athene. Id. at 14, ¶ 17. The Lancasters allegedly bought this second policy on the understanding that the value of the policy would grow, and that their daughters would be able to draw from the funds without paying taxes on the investment. Id. at 12, ¶ 13-14. Kordsiemon also sold the Lancasters three additional Athene annuity products into which they diverted many of their remaining liquid assets. Id. at 13, ¶ 16. The Lancasters invested significant funds up front into these policies, including $50, 791.22 on the Athena "borrowed life" policy, $50, 000 on Athene annuity policy 203502, $14, 562.29 on Athene annuity policy 205528, [1] and $16, 654.87 on Athene annuity policy 205529.[2] Id. at 13, ¶ 16.

         During this time, the Lancasters tried to sell the original $1.5 million insurance policy, but could not find a buyer at a desirable price, apparently because of Donita Lancaster's good health. Instead, the Lancasters were paying monthly premiums of approximately $1260 on Donita' Lancaster's policy, and $870 on the "borrowed life" policy, totaling $2, 170 per month in premium payments. Id. at 15, ¶ 20. Over the next two years the premiums continued to rise. Id. at 21, ¶ 21.

         In 2014, the Lancasters claim they began to feel as though they had been "deceived." Id. 16, ¶ 22. The Lancasters were having difficulty paying the rising monthly premium payments, and eventually their insurance policies lapsed. Id. at 17, ¶ 23. The Lancasters claim they were unable to pay the premiums because they had committed "over half of their entire liquid net worth.. .to various indexed and fixed annuities with high-surrender schedules and life insurance." Id. at 17, ¶ 23. The Lancasters estimate they spent approximately $290, 563.78 on the products sold by Kordsiemon. Id.

         The Lancasters filed lawsuit against Kordsiemon and the insurance companies, which was removed to this Court on June 30, 2015. The Lancasters allege claims for fraud, grand theft, and racketeering. See Am. Compl, Dkt. 9. Athene is no longer party to this litigation, pursuant to an out-of-court settlement agreement. Id.

         LEGAL STANDARD

         Summary judgment is appropriate where a party can show that, as to any claim or defense, "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). One of the principal purposes of the summary judgment "is to isolate and dispose of factually unsupported claims Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). It is "not a disfavored procedural shortcut, " but is instead the "principal tool [ ] by which factually insufficient claims or defenses [can] be isolated and prevented from going to trial with the attendant unwarranted consumption of public and private resources." Id. at 327. "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). There must be a genuine dispute as to any material fact - a fact "that may affect the outcome of the case." Id. at 248.

         When cross-motions for summary judgment are filed, the Court must independently search the record for factual disputes. Fair Housing Council of Riverside County, Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001). The filing of cross-motions for summary judgment - where both parties essentially assert that there are no material factual disputes - does not vitiate the court's responsibility to determine whether disputes as to material fact are present. Id.

         The moving party bears the initial burden of demonstrating the absence of a genuine dispute as to material fact. Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001) (en banc). To carry this burden, the moving party need not introduce any affirmative evidence (such as affidavits or deposition excerpts) but may simply point out the absence of evidence to support the nonmoving party's case. Fairbank v. Wunderman Cato Johnson, 212 F.3d 528, 532 (9th Cir.2000).

         This shifts the burden to the non-moving party to produce evidence sufficient to support a jury verdict in her favor. Deveraux, 263 F.3d at 1076. The non-moving party must go beyond the pleadings and show "by her [ ] affidavits, or by the depositions, answers to interrogatories, or admissions on file" that a genuine dispute of material fact exists. Celotex, 477 U.S. at 324.

         However, the Court is "not required to comb through the record to find some reason to deny a motion for summary judgment." Carmen v. San Francisco Unified Sch. Dist, 237 F.3d 1026, 1029 (9th Cir. 2001) (quotation omitted). Instead, the "party opposing summary judgment must direct [the Court's] attention to specific triable facts." Southern California Gas Co. v. City of Santa Ana, 336 F.3d 885, 889 (9th Cir. 2003).

         ANALYSIS

         1. Cross-Motions for ...


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