On 11th August 2026, Judge Thomas J. Lo of the Superior Court of California, Orange County ruled in U.S. Bank National Association v. Pacific Life Insurance Company (Case No. 30-2023-01330408-CU-IC-CJC), denying Pacific Life Insurance Company’s motion for summary judgment and also denying U.S. Bank National Association’s cross-motion for summary judgment. The court held that a $20m life insurance policy procured using nonrecourse premium financing was not automatically void ab initio under Delaware’s insurable interest statute.
The legal dispute centred on whether the policy lacked a lawful insurable interest at the time it was issued. U.S. Bank National Association acted as the plaintiff in its capacity as securities intermediary for the policy’s entitlement holder, FCI III (an affiliate of Apollo), while Pacific Life Insurance Company served as the issuing insurer.
The policy in question insured the life of Judith Weiser, a Florida resident, for a $20m death benefit. It was procured through a Delaware statutory trust using a 30-month nonrecourse loan, a financing arrangement in which the lender’s sole recourse upon default was the policy itself, rather than the borrower’s personal assets.
Approximately one week before the loan matured, the policy was relinquished to Coventry, which provided the original financing, in satisfaction of the debt. The policy was acquired by FCI III in late 2017, with U.S. Bank acting as securities intermediary. Following Weiser’s death, U.S. Bank sought to collect the death benefit. Pacific Life refused payment, contending the policy was void for lack of insurable interest because the premiums were funded by nonrecourse financing.
Both parties moved for summary judgment in the Superior Court of California, Orange County. Pacific Life argued that, under Delaware law, a policy funded entirely by nonrecourse financing lacks an insurable interest and is void. U.S. Bank countered that Weiser procured the policy to address financial liquidity issues in her estate plan, which is a lawful insurance purpose recognised by Delaware’s courts.
The court determined that Delaware law governed the insurable interest question.
Applying the framework from Lavastone Capital LLC v. Estate of Berland, 266 A.3d 964 (Del. 2021) (Berland), a leading Delaware Supreme Court decision on insurable interest, the court held that the analysis involves two considerations: (1) whether the insured obtained the policy in good faith for a lawful insurance purpose, and not as a cover for a wager; and (2) the source of funding for the premiums. While nonrecourse financing can serve as evidence that insurable interest is not present at the time a policy is taken out, the court observed that Berland expressly states that premium financing “is a recognized and permissible tool” if used for a legitimate insurance purpose such as estate planning.
The court rejected Pacific Life’s argument that Estate of Barotz v. Vida Longevity Fund, L.P., 2022 WL 16833545 (Del. Super. Ct. 2022), aff’d, 320 A.3d 212 (Del. 2024) (Barotz), stood for the proposition that a court need not address lawful insurance purpose to find a nonrecourse-funded policy void. Finding that U.S. Bank presented admissible evidence of Weiser’s estate planning purpose, the court determined that disputed issues of fact remained.
The court denied both Pacific Life’s motion and U.S. Bank’s cross-motion for summary judgment, holding that the question of whether the policy is void requires a trial on the disputed facts.
