State of New York OPINION
Court of Appeals This opinion is uncorrected and subject to revision
before publication in the New York Reports.
No. 77
Herman Brettler, &c.,
Appellant,
v.
Allianz Life Insurance Company of
North America,
Respondent.
David Benhaim, for appellant.
Aaron Van Oort, for respondent.
Life Insurance Council of New York, Inc. et al., amici curiae.
HALLIGAN, J.:
The United States Court of Appeals for the Second Circuit has asked us to determine
whether, where a life insurance policy provides that “assignment will be effective upon
Notice” in writing to the insurer, the failure to provide such written notice voids the
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assignment so that the purported assignee does not have contractual standing to bring a
claim under the Policy (57 F4th 57, 65–66 [2d Cir 2022]). To the extent the question could
be understood to present only two mutually exclusive answers—that the assignment is void
in its entirety, including as between the assignee and assignor, or else the assignment is
valid as between the assignee and assignor and the assignee has authority under the contract
to sue the insurer—we reformulate the question as follows:
Where a life insurance policy provides that ‘assignment will be effective
upon notice’ in writing to the insurer, does the failure to provide such written
notice deprive the purported assignee of contractual standing to bring a claim
under the Policy against the insurer?
We answer the reformulated question in the affirmative.
I.
In 2008, Allianz issued an $8,000,000 life insurance policy (“Zupnick Policy”) on
the life of Dora Zupnick to the Zupnick Family Trust (“Trust”). Under the policy, the
owner is “solely entitled to exercise all rights of this policy until the death of the insured.”
The policy also contains a provision (“Notice Provision”) specifying that an owner may
assign the policy, subject to one condition:
“You may assign or transfer all or specific ownership rights of this policy.
An assignment will be effective upon Notice. We will record your
assignment. We will not be responsible for its validity or effect, nor will we
be liable for actions taken on payments made before we receive and record
the assignment” (emphasis added).
The contract defines “Notice” as “[o]ur receipt of a satisfactory written request.”
In 2012, the Trust sold the Zupnick Policy to Miryem Muschel and notified Allianz
in writing of the assignment. In 2013, Allianz put the Zupnick Policy in lapse for
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nonpayment; the Trust had attempted to pay but was unsuccessful due to bank error, which
the bank acknowledged to both the Trust and Allianz. Three years later, Muschel
transferred the Zupnick Policy back to the Trust, as memorialized in an agreement between
Muschel and the Trust (“Purchase Agreement”). Neither Muschel nor the Trust notified
Allianz of the Zupnick Policy’s second assignment. Brettler, as Trustee, then sued Allianz
seeking a declaratory judgment that the Zupnick Policy remained “in full force and effect.”
The complaint alleged that there were no premium payments outstanding when Allianz
declared the Zupnick Policy lapsed, that Allianz had failed in its obligation to “give notice
to the Trust when the Policy was in danger of lapsing” and to do so in a timely manner,
and that Allianz’s final pre-lapse notification demanded a miscalculated premium and
identified an incorrect due date. Accordingly, the Trust contended, Allianz had not met its
obligations under the Zupnick Policy or applicable law, and therefore the lapse notice was
void and the Zupnick Policy remained in effect. The complaint identified the Trust as the
owner of the policy and did not mention Muschel, who is not a party to this case.1
The district court granted Allianz’s motion to dismiss on the grounds that the Trust
lacked contractual standing to sue because Allianz did not receive notice of Muschel’s
assignment of the Zupnick Policy back to the Trust. On appeal, the Second Circuit
remanded the case back to the district court. After the district court rejected Allianz’s
1
The Trust’s counsel stated at argument that Muschel could have given notice prior to
the Trust’s commencement of the suit, or herself sued to enforce the terms of the policy
in the event of any breach by Allianz. Alternatively, the Trust could have dismissed the
case and refiled the action after notice of the transfer was provided to Allianz.
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alternative arguments for dismissal, the Second Circuit certified the following question to
this Court:
“Where a life insurance policy provides that ‘assignment will be effective
upon Notice’ in writing to the insurer, does the failure to provide such written
notice void the assignment so that the purported assignee does not have
contractual standing to bring a claim under the Policy?” (57 F4th at 65–66).
II.
We must first determine whether the Notice Provision is an anti-assignment clause.
Under New York law, such clauses are subject to a special interpretative rule: If an anti-
assignment clause includes “clear language” and the “plainest words” stating that an
assignment made in contravention of the original contract is void, then the clause operates
to destroy any purported assignments (Allhusen v Caristo Const. Corp., 303 NY 446, 452
[1952], citing State Bank v Cent. Mercantile Bank of New York, 248 NY 428, 435 [1928]).
If an anti-assignment clause does not include such language, the assignment is valid, and
the clause is read instead as a personal covenant not to assign that “justifies only an award
of damages” against the assignor for breach (Citibank, N.A. v Tele/Res., Inc., 724 F2d 266,
268 [2d Cir 1983]; see also Allhusen, 303 NY at 450).
We conclude that the Notice Provision is not an anti-assignment clause but rather a
notice requirement. As noted by the Second Circuit, the Notice Provision does not restrict
the policy owner’s power to assign, Allianz does not take any position on the validity of
assignments between third parties, and Allianz does not retain any discretion to impede or
refuse assignments (see 57 F4th at 63). The assignment process is unilateral: The owner
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of the Zupnick Policy may single-handedly bind Allianz to an assignment by providing
notice at any time.
In contrast, an anti-assignment clause prohibits unilateral assignments either by
voiding the assignment entirely or by encumbering it by requiring the non-assigning party
to approve or consent to any assignment of the contract (see Allhusen, 303 NY at 449
[contract providing assignments “without the written consent of the first party . . . shall be
void” could void assignments]; Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395,
400 [1957] [contract requiring prior written consent before assignment and stating that the
paying party “shall not be required to recognize any assignments” could void assignments];
Citibank, 724 F2d at 268 [assignment valid but gave rise to damages where contract “could
not be waived or altered without the written consent of the bank”]; Belge v Aetna Cas. &
Sur. Co., 39 AD2d 295, 296, 297–298 [1972] [same where contract required “written
consent of the Seller” for assignments]; University Mews Assocs. v Jeanmarie, 122 Misc
2d 434, 436–437 [Sup Ct 1983] [same where assignment dependent on lessor “approval”];
see also 29 Williston on Contracts § 74:22: Effect of contract provision prohibiting
assignment [4th ed] [surveying anti-assignment cases]).
The Trust points to Reliable Loan & Inv. Co. v Delgus Co., 223 App Div 94 (1st
Dept 1928), but there are several key differences between this case and Reliable Loan: The
notice requirement there covered only the first assignment of the contract, not the
subsequent assignment at issue in the litigation, and the court held that the buyer had
waived its right to complain of unnoticed assignments by acquiescing to two prior
unnoticed assignments. Moreover, Reliable Loan appears to assume the plaintiff had
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authority under the terms of the contract to bring a lawsuit without directly addressing the
point.
Given that the Notice Provision imposes a requirement that the policy owner can
satisfy unilaterally, we conclude it is simply a condition that must be met before an
assignment binds Allianz, not an anti-assignment provision (accord Jakobovits v Allianz
Life Ins. Co. of N. Am., No. 15 Civ. 9977, 2017 WL 3049538, at *4 [SDNY July 18, 2017]
[hereinafter Jakobovits I]) (considering an identical clause and concluding that it is “not an
anti-assignment provision at all”).2 That result is consistent with the policy rationale
behind New York’s anti-assignment canon. Clauses that require consent for assignment
give one party to a contract significant control over whether the other party may dispose of
any rights under the contract and therefore implicate concerns regarding alienation of
property (see Allhusen, 303 NY at 451–452 [anti-assignment rules balance the freedom of
contract with prevention of the inadvertent alienation of property rights]; State Bank, 248
NY at 435). But Allianz retains no control over whether or to whom the Zupnick Policy is
assigned by the owner; nor does the owner of the trust require any action from Allianz to
effectuate an assignment that binds Allianz.
2
Jakobovits v PHL Variable Ins. Co., No. 17 Civ. 3527, 2018 WL 2291311, at *4
(EDNY May 18, 2018), analyzed the same clause and concluded it was an anti-
assignment clause, explicitly disagreeing with the Southern District in Jakobovits I. In
our view, that decision conflated contractual standing with Article III standing in
concluding that if the assignment was not void, the assignee’s “ownership interest”
nonetheless conferred standing (id. at *4). Even if the assignment was valid, it could still
be insufficient to give rise to a cause of action under the contract as against Allianz (see
Fortunato v Patten, 147 NY 277, 281 [1895]).
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Turning to the meaning of the Notice Provision, the most natural reading is that
Muschel cannot transfer any rights as against Allianz—which she holds solely by virtue of
her contract with Allianz—without notice but may do so unilaterally with notice. An
examination of the Provision’s language explains why (see J.P. Morgan Sec. Inc. v Vigilant
Ins. Co., 37 NY3d 552, 561 [2021], rearg denied 37 NY3d 1228 [2022] [insurance
contracts are “subject to the general rules of contract interpretation” and “enforced as
written” absent a public policy violation]). First, the Provision states that the owner “may
assign or transfer all or specific ownership rights of this policy,” which renders ownership
rights freely assignable in whole or in part. Second, it provides that “[a]n assignment will
be effective upon Notice,” which makes notice a prerequisite to transfer of ownership rights
as against Allianz and shields Allianz from owing contractual obligations to a party of
which it is unaware. Third, the Provision states that “[w]e will record your assignment,”
which confirms Allianz has no discretion to refuse an assignment. Fourth, the Provision
notes that “[w]e will not be responsible for its validity or effect,” which indicates Allianz
takes no position on the legal effect of any agreement between the policy owner and a third-
party assignee. Finally, the Provision states “nor will we be liable for actions taken on
payments made before we receive and record the assignment,” which confirms Allianz will
not be bound by unnoticed assignments or liable for actions inconsistent with third-party
agreements of which Allianz is unaware, such as payment to the record owner even after
they assigned the policy. Thus, absent notice, Allianz is not bound by Muschel’s
assignment to the Trust, and therefore the Trust cannot enforce any of the contractual rights
of the policyholder against Allianz (see Fortunato v Patten, 147 NY 277, 281, 283 [1895]
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[with respect to assignment of rights under a contract with New York City that required
consent for assignments to bind the city, noting that while unconsented assignments were
not void, an assignee could not assert a claim against the city without obtaining the city’s
consent]).
The Trust’s complaint illustrates the practical import of this clause: It sued Allianz
for alleged breaches in Allianz’s purported obligation to send the Trust notice of a potential
lapse that was timely, included an accurate calculation of the premium due, and correctly
identified the due date for payment. Under the policy’s terms, these rights relevant to a
policy’s lapse are held by the policy owner, and the Notice Provision stipulates that all
ownership rights may be transferred only upon notice. It would make little sense to read
the Notice Provision as nonetheless permitting the Trust to enforce any of the substantive
rights under the policy against Allianz. Indeed, reading the provision as the Trust proposes
would transform a provision intended to protect the insurer into a backdoor that effectively
confers third party standing to sue the insurer. The Second Circuit noted that this case
presents no issue of third party standing (see 57 F4th at 62), and neither party has suggested
otherwise.
Finally, we note that it does not follow from this analysis that the Purchase
Agreement between Muschel and the Trust is void, or that the Trust has no rights against
Muschel (see Fortunato, 147 NY at 281, 283–284 [unnoticed assignment itself not void,
but assignee without enforcement rights against original contracting party]). Although our
reformulation of the certified question focuses on whether the Notice Provision deprives
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the Trust of contractual standing to sue Allianz, the Notice Provision does not affect the
validity of the Purchase Agreement between Muschel and the Trust.
Accordingly, we conclude that the Trust lacks authority under the contract to sue
Allianz in this case. The certified question, as reformulated, should be answered in the
affirmative.
Following certification of a question by the United States Court of Appeals for the Second
Circuit and acceptance of the question by this Court pursuant to section 500.27 of this
Court's Rules of Practice, and after hearing argument by counsel for the parties and
consideration of the briefs and record submitted, certified question, as reformulated,
answered in the affirmative. Opinion by Judge Halligan. Chief Judge Wilson and Judges
Rivera, Garcia, Singas, Cannataro and Troutman concur.
Decided November 20, 2023
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