U.S. Judge May Toss N.Y. Settlement Case

February 04, 2011 at 07:00 PM

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U.S. District Judge Deborah Batts could throw out a New York case in which an insurer has challenged the sale of a policy to a party with no insurable interest in the life of the policyholder.

Batts, who serves on the U.S. District Court in New York, is hearing In re Arthur Kramer Insurance Trust Litigation (1:08-cv-02429-DAB), a case related to the Kramer vs. Phoenix New York state Scales of justice court insurable interest case.

The 2nd U.S. Circuit Court of Appeals had asked the New York Court of Appeals to determine if the state's insurable interest law forbids an insured from buying a policy on his own life with the intent to resell it to a third party with no insurable interest.

The wife of the deceased insured had also challenged the sale of the policy.

The state court ruled Nov. 17, 2010, that the insured could buy a policy "and immediately transfer it to one without an insurable interest in that life," even if the policy was purchased with the intent of selling it.

"In light of the New York Court of Appeals decision, by March 1, 2011, all remaining parties in this action are to show cause why this case should not be dismissed, with prejudice," Batts says in an order issued earlier this week.

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