People v. Coventry First LLC

In People v. Coventry First LLC (13 NY3d 108, 915 N.E.2d 616, 886 N.Y.S.2d 671 [2009]), New York's then attorney general brought suit against Coventry First LLC (a life settlement provider) and its various affiliates ("Coventry") on behalf of life insurance policy owners who had sold their policies to Coventry through their brokers (known as life settlement brokers). The Attorney General alleged that Coventry had engaged in bid rigging by paying substantial concealed commissions to the life settlement brokers to get them to convince their clients to accept defendants' offers of purchase rather than higher offers from rival settlement providers. The Attorney General sued Coventry based on claims of, inter alia, fraud, unjust enrichment and inducement of breach of fiduciary duty. On appeal, the Court of Appeals affirmed the Appellate Division's affirmance of the trial court's denial of the branch of Coventry's motion to dismiss the inducement of breach of fiduciary duty claim, finding that there were sufficient facts alleged to support a theory that the settlement brokers were in a fiduciary-type arrangement with their clients since they had held themselves out as working to obtain the highest price for their client's policies (i.e., that they were highly skilled experts whose advice was specifically relied on by the clients in this relatively new and largely unregulated industry). Further, the Court found that the Complaint sufficiently alleged Coventry's knowledge of such fiduciary duties based on, inter alia, emails from Coventry executives annexed to the Complaint evidencing that the executives referred to the fiduciary duties of the settlement brokers.