Insurance Law – Stranger Oriented Life Insurance

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Civil

7^th Circuit Court of Appeals

Officials: BAUER, POSNER, and EASTERBROOK, Circuit Judges.

Insurance Law – Stranger Oriented Life Insurance

No. 14-3725 Ohio National Life Assurance v. Douglas W. Davis

No. 1403664 Ohio National Life Assurance v. Steven Egbert

Insurance company induced to issue fraudulent death benefits entitled to attorney’s fees and allowed to retain premiums paid by defendants in fraudulent scheme.

“It’s true that Ohio National hasn’t been forced into litigation with those other parties, and that under Illinois law “where an action based on the same wrongful act has been prosecuted by the plaintiff against the defendant to a successful issue, he can not in a subsequent action recover, as damages, his costs and expenses in the former action.” Ritter v. Ritter, supra, 46 N.E.2d at 44. But the exception carved by Ritter in the passage we quoted earlier covers this case. The defendants’ misconduct placed Ohio National in the position of potentially having to litigate with the purchasers of the insurance policies upon the death of the insureds, and the expenses it incurred in the present suit to avoid such litigation by voiding the policies were in lieu of the future litigation that it would otherwise have had to engage in at considerable expense. It paid in advance, as it were, the expenses “in litigation with third parties … necessary to … protect [its] interest,” to quote from the Ritter opinion.”

Affirmed

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.