American United Life Insurance v. Martinez

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT
________________________

No. 05-14920 FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
March 7, 2007
D. C. Docket No. 04-61143-CV-FAM THOMAS K. KAHN
CLERK
AMERICAN UNITED LIFE INSURANCE CO.,
AMERUS LIFE INSURANCE COMPANY, ET AL.,

Plaintiffs-Appellants,

versus

ROBERTO MARTINEZ, Court-Appointed Receiver
MUTUAL BENEFITS CORPORATION, ET AL.,

Defendants-Appellees.

________________________

Appeal from the United States District Court
for the Southern District of Florida
_________________________

(March 7, 2007)

Before PRYOR and FAY, Circuit Judges, and STEELE,* District Judge.

FAY, Circuit Judge:

___________________

* Honorable William H. Steele, United States District Judge for the Southern District of
Alabama, sitting by designation.
 The appellants, seventeen insurers that filed an ancillary tort suit in a

Securities and Exchange Commission (“SEC”) action against a group of viatical

settlement companies, challenge the dismissal of their amended complaint. A

viatical contract is an agreement to purchase life insurance benefits from a viator,

a policyholder who is terminally ill or of advanced age. The original policyholder

sells the rights to his policy for a fraction of what the policy would pay upon his

death, realizing an immediate return on an otherwise illiquid asset. The insurers

alleged that the appellees, three viatical settlement companies and their court-

appointed receiver, knowingly purchased and / or serviced life insurance policies

from a number of individuals who submitted fraudulent insurance applications.

Although the viatical settlement companies (“receivership entities”) had acquired

the rights to 1700 of the insurers’ policies before they entered receivership, the

insurers’ complaint focused on just five policies. The insurers asserted twenty-five

claims, ranging from common law conspiracy, aiding and abetting fraud,

violations of the federal Racketeer Influenced and Corrupt Organizations

(“RICO”) Act, and violations of the Florida Viatical Settlement Act (“FVSA”) and

of a Pennsylvania insurance fraud statute. The receiver moved to dismiss all of the

claims except one, which alleged a violation of Pennsylvania insurance law. The

district court granted the motion, but dismissed the complaint in its entirety, giving

2
the insurers leave to file a Second Amended Ancillary Complaint by a certain

deadline. The insurers allowed the deadline to pass without amending the

complaint further, and filed this appeal. For the reasons stated below, we affirm

the dismissal of the entire amended complaint, including the sua sponte dismissal

of the claim concerning Pennsylvania insurance law.

BACKGROUND

The district court dismissed the insurers’ complaint for being short on the

facts, namely, those required to plead fraud under Rule 9(b) of the Federal Rules

of Civil Procedure, but we preface this discussion by noting several important

facts. The insurers’ complaint hinges on a series of statements that four HIV-

positive individuals made when they applied for life insurance in the mid 1980's-

early 1990's. The individuals all made the same allegedly fraudulent statement on

their insurance applications; they said that they had never been diagnosed or

treated for AIDS or any other blood or immune system disorder. The insurers do

not allege that these particular individuals—Wendell Mullins, Jack Johnson,

Gerald Metoyer, and William Buchner—share any association with each other,

apart from the fact they ultimately sold their policies to the receivership entities.

The insurers have not named these individuals or their estates as additional

3
defendants in this suit. Nor have they joined the investors who ultimately

purchased interests in these separate viaticals as parties.

Significantly, none of these individuals resided in Florida, a fact that bars

the insurers’ claims under the FVSA, which only regulates viatical transactions

with in-state viators.1 Moreover, each of these individuals obtained their insurance

policies from different companies at various times over a ten-year period and, in at

least two cases, well before the receivership entities came into existence.2 One fact

that links these separate policies, however, is that they all contain

“incontestability” clauses. These clauses grant the insurers a two-year window of

1
The FVSA provides a cause of action against any person who knowingly enters into a
viatical settlement for a policy that was obtained through material misrepresentations or
omissions. Fla. Stat. § 626.99275(1)(a). However, the Act also contains a conflict of law
provision that applies to settlements transacted with out-of-state viators. Section 626.99245(2)
the Act provides that: “A viatical settlement provider who from this state enters into a viatical
settlement contract with a viator who is a resident of another state that has enacted statutes or
adopted regulations governing viatical settlement contracts shall be governed in the effectuation
of that viatical settlement contract by the statutes and regulations of the viator's state of
residence. If the state in which the viator is a resident has not enacted statutes or regulations
governing viatical settlement agreements, the provider shall give the viator notice that neither
Florida nor his or her state regulates the transaction upon which he or she is entering.” Fla. Stat. §
626.99245(2).
2
Mutual Benefits Corporation (“MBC”) was incorporated under the laws of the State of
Florida in 1994. MBC established Viatical Services, Inc. (“VSI”), an affiliated corporation, to
service its viatical accounts in1996. VSI is likewise, incorporated under the laws of the State of
Florida and operates out of the same offices as MBC. MBC owns Viatical Benefactors, LLC
(“VBLLC”), a Delaware corporation, which it established in 1996 to transact business in states
such as California and Texas, where MBC is not licensed to sell viaticals. William Buchner
obtained his policy in 1986 and Jack Johnson obtained his policy in 1988, at least six years
before MBC came into existence.

4
opportunity in which to contest a policy. Thereafter, the incontestability clauses

prohibit insurers from cancelling or voiding the policy for any reason other than

non-payment of premiums.

Accordingly, we note at the outset that the FVSA does not govern the

viaticals at issue here. They are regulated, if at all, by statutes in the states where

the viators reside(d). We also note that incontestability clauses may apply here to

bar the insurers’ from pursuing their fraud-based claims (request for declaratory

judgment, aiding and abetting fraud, conspiracy to commit fraud, and even RICO

claims). Given the amount of time that elapsed between issuance of the policies

and their conversion into viaticals, which amounts to at least six years in two

instances, statutes of limitations may also apply to bar the insurers from pursuing

common law fraud and conspiracy claims. Statutes of limitations may also apply to

bar the insurers’ statutory claims under the Pennsylvania law, and may provide

alternative grounds for dismissing the insurers’ FVSA claims.

Additionally, only four of the seventeen insurers who joined as plaintiffs in

the ancillary action against the receivership entities allege that the receiver played

a part in underwriting the challenged policies: Valley Forge Life Insurance

Company (“VFL”), Reassure American Life Insurance Company (“Reassure”),

American United Life Insurance Company (“AUL”), and Jefferson Pilot Financial

5
Insurance Company (“Jefferson Pilot”). The remaining insurers have not asserted

particularized claims against the receivership entities or the receiver.

The impetus behind this complaint occurred on May 3, 2004 when the SEC

requested a temporary restraining order (“TRO”) against Mutual Benefits

Corporation (“MBC”), Viatical Benefits, LLC (“VBLLC”) and Viatical Services,

Inc. (“VSI”). The SEC asked the court to appoint a receiver to administer the

companies’ assets while it pursued enforcement proceedings against them for

violating federal securities laws. The court issued a TRO on May 4, 2004 which

prohibited the three companies from engaging in new business and appointed a

receiver, Roberto Martínez, Esquire, to oversee their existing viatical accounts,

which included at least 1700 of the insurers’ policies.

The SEC alleged that the receivership entities had defrauded investors by

misrepresenting the amount of escrow that would be needed to cover future

premium payments on the policies, by using erroneous life expectancy profiles in

solicitations to investors, and by paying premiums on some policies out of the

escrow accounts of others. By this point, MBC, which began purchasing viaticals

in 1994, owned interests in over 9,000 separate life insurance policies, and could

claim assets, in the form of future death benefits, totalling $1.067 billion.

6
 As news of the SEC action broke, the insurers realized that a large number

of their policies might have ended up in the portfolio of viaticals under

receivership. The insurers filed an Ancillary Complaint in the SEC action on

August 31, 2004, asserting that a substantial proportion of their policies, perhaps

as much as 40%, had been procured through fraud. They based this estimate on a

finding in a 2000 Florida grand jury report that noted 40%-50% of the viaticals

brokered by Florida companies had been procured through fraud.

The insurers asserted seven causes of action, five of which were predicated

on allegations of fraud. In their first cause of action, the insurers asked the court

for a declaratory judgment that any of the insurers’ policies which had been

procured through fraud and which were subsequently acquired by the receivership

entities were void ab initio. In their second and third causes of action, the insurers

asked the court to declare that the receiver be estopped from using incontestability

clauses to enforce any fraudulently procured policies. In their fourth and fifth

causes of action, the insurers requested indemnification from MBC for any death

benefits paid on fraudulently procured policies, and for any future payment

obligations. In their sixth cause of action, the insurers alleged damages under the

FVSA, Fla. Stat. § 626.991 et seq., which prohibits anyone from entering into a

viatical settlement if they know that the policy it addresses was procured through

7
fraud. In their final cause of action, the insurers requested a modification of the

receivership order to preclude the receiver from taking any action that would

prejudice their rights.

Although the insurers estimated that as many as 40% of their policies may

have been procured through fraud, they provided particulars on only three policies

for which they had received death claims.3 They alleged that two of the policies

were fraudulently procured by a single individual, Wendell Mullins, but failed to

plead that the receivership entities helped Mullins submit a fraudulent application

for insurance. The other policy that the insurers identified in their ancillary

complaint, a policy for Thomas Durkan, did not suffer from fraudulent

procurement. Rather, the insurers alleged that a Colombian sales agent of MBC

purchased the policy for money-laundering purposes, and that federal agents had

seized all of the proceeds traceable to the viatical. Although the insurers allege

that they received a death claim for the original policyholder, they did not claim to

have paid a death benefit on the policy.

3
The insurers also identified one policy that they believed had all the indicia of a
fraudulently procured policy, but noted that the policyholder, John Doe, was still alive. As a
result, the insurers acknowledged that they had not paid out any death benefits on the policy. In
this instance as well, however, the insurers failed to plead that the receivership entities assisted
the policyholder to submit a fraudulent application.

8
 On December 24, 2004, the receiver moved to dismiss the insurers’

complaint for failure to allege fraud with specificity, for failure to state a claim,

and for failure to join necessary parties (the owners and beneficiaries of the

challenged viaticals) pursuant to Rules 9(b), 12(b)(6), and 12(b)(7) of the Federal

Rules of Civil Procedure, respectively. After oral argument on the motion, the

district court dismissed the insurers’ complaint without prejudice on January 31,

2005, granting them leave to amend their complaint.

When the insurers filed their original ancillary complaint they did not know

how many of their policies might lie within the scope of assets in receivership. In

the interim, however, the receiver supplied the insurers with a list of all the

policies within his control. The insurers determined that they had issued at least

1700 of those policies. Confident that they could review those policies for

evidence of fraud in fairly short order, the insurers asked the court for just thirty

days to file an amended complaint. The court granted the insurers until March 15,

2005 to file an amended complaint, but cautioned them that they would have to

plead fraud for each policy in specific terms.

On March 15, 2005, the insurers filed an Amended Ancillary Complaint.

Although the amended complaint alleged twenty-five separate causes of action,

the insurers continued to focus on only a handful of policies. The policies

9
pertained to Wendell Mullins and Jack Johnson, two individuals who had

succumbed to AIDS, and to William Buchner and Gerald Metoyer, two individuals

who were still suffering with AIDS.4 The insurers alleged twenty-one counts of

fraud, conspiracy, and civil racketeering claims in connection with these policies.

However, only four of the seventeen insurers—VFL, Reassure, AUL and Jefferson

Pilot—asserted damages in connection with these policies. Ten of the remaining

insurers alleged two separate counts of racketeering, and all seventeen insurers

joined in a request for equitable relief, asking the court to modify its receivership

order and to order an accounting.

The counts that addressed specific viaticals—those relating to the Mullins,

Johnson, Buchner and Metoyer policies—clustered around the same series of

claims. The insurers asserted that: 1) the receivership entities violated Florida law

by entering into viatical settlements for fraudulently procured policies; 2) the

receivership entities aided and abetted the original policyholders to commit

common law fraud; 3) the receivership entities conspired to acquire and/or submit

claims on fraudulently procured policies; 4) the receivership entities engaged in a

pattern of racketeering and used the United States mail to further their fraudulent

The insurers dropped two of the policies that they challenged in their original ancillary
4

complaint - the policies pertaining to Durkan and Doe—and added three new policies—the
Metoyer, Buchner, and Johnson policies.

10
enterprise; and 5) the policies that the receivership entities acquired in this manner

were void ab initio.5

More specifically, insurers VFL, Reassure, Jefferson Pilot and AUL

asserted that MBC violated the FVSA, Fla. Stat. § 626.99275(1)(a), when it

entered into viatical settlement agreements with policyholders Mullins, Johnson,

Metoyer and Buchner (counts I, VI, X, and XVI).6 Section 626.99275(1)(a) of the

FVSA makes it unlawful for any person to “enter into, broker, or otherwise deal in

a viatical settlement contract” for a life insurance policy, knowing that the policy

was procured through fraud. According to the insurers’ amended complaint, MBC

knew that these individuals lied about their medical histories when they applied

5
Count II represents an exception. Here, insurer VFL, which is headquartered in
Pennsylvania, alleged that the receivership entities violated a Pennsylvania law, 18 Pa. Cons.
Stat. § 4117, with respect to the Wendell Mullins policies. According to VFL, the receivership
entities knowingly submitted false and misleading information on the Mullins policies, and aided
and abetted Mullins to make false statements as part of his applications, thereby violating 18 Pa.
Cons. Stat. § 4117. None of the other insurers allege violations of this statute. VFL did not
identify specific section(s) of the Pennsylvania insurance fraud statute in its pleading; however, §
4117(a)(2) & (3) appear to apply. Section 4117(a)(2) states that a person commits an offense if
he “[k]nowingly and with the intent to defraud any insurer” presents any statement that forms a
part of a claim or in support of a claim that contains “any false, incomplete or misleading
information concerning any fact or thing material to the claim.” Section 4117(a)(3) makes it
unlawful for a person to “[k]nowingly and with the intent to defraud any insurer” assist, aid, abet,
or conspire “to prepare or make any statement” that is intended to be submitted to an insurer to
support a claim that contains “any false, incomplete or misleading information concerning any
fact or thing material to the claim.”
6
Count X alleges that the “receivership entities,” not MBC, purchased the Metoyer policy
in violation of the FVSA. The entity that took control of the California resident’s policy was
VBLLC, since MBC was not licensed to operate in California.

11
for insurance because MBC reviewed their original applications as part of the

viatical settlement process and had doctors examine the individuals to determine

their life expectancies.

In two instances (the policies pertaining to Mullins and Johnson), the

insurers had already paid out death benefits on the viators. As a result, the insurers

asserted that they were entitled to damages under section 626.9927(3) of the

FVSA, which provides that any person damaged by a violation of the Act may

seek damages, court costs, and attorney’s fees. They also asserted damages for the

costs that they incurred in managing all five of these policies, in paying broker

commissions, and in investigating the extent of the fraud.

VFL, Reassure, Jefferson Pilot and AUL also asserted four counts of fraud

against the receivership entities (counts IV, VIII, XII, and XVIII). They argued

that the receivership entities aided and abetted the original

policyholders—Mullins, Johnson, Metoyer and Buchner—to procure insurance

through fraudulent means. According to the insurers, these policyholders did not

realize a benefit from the policies until MBC offered to purchase them as viaticals.

Thus, the insurers asserted, MBC aided and abetted the original policyholders to

realize the intended goal of their fraud: a payout on the policy.

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 Insurers VFL, Reassure, Jefferson Pilot and AUL alleged further that the

receivership entities not only aided and abetted Mullins, Johnson, Metoyer, and

Buchner in committing insurance fraud, but they also engaged in an “Acquisition

Conspiracy.” According to counts III, VII, XI, and XVII of the amended

complaint, the receivership entities conspired to acquire fraudulently procured

policies and to obtain improper benefits from them. They positioned themselves to

collect on the fraudulent policies by submitting change of ownership / beneficiary

forms, mailing premium payments, and in some cases, submitting death claims.

The receivership entities performed these transactions to further the conspiracy.

Consequently, VFL, Reassure, Jefferson Pilot, and AUL requested a declaratory

judgment that the Mullins, Johnson, Metoyer, and Buchner policies were void ab

initio (counts V, IX, XV, and XXI).

In the remaining counts the insurers alleged violations of RICO, 18 U.S.C. §

1962 (c) & (d), (counts XIII, XIV, XIX, XX, XXII, and XXIII) and requested

modifications of the receivership order and an accounting (counts XXIV and

XXV). Two of the insurers, Jefferson Pilot and AUL, alleged damages from

racketeering acts directed towards specific policies (the Metoyer and Buchner

policies, respectively). Ten other insurers joined together in alleging an additional

13
claim for damages under RICO, but they did not identify any specific acts of

“racketeering” or predicate acts to support their claim.

According to insurers Jefferson Pilot and AUL, the receivership entities

participated in a “Viatical Enterprise” that aimed to acquire fraudulently procured

life insurance policies, such as the ones pertaining to Metoyer and Buchner. The

ultimate goal of this enterprise was to induce insurers to pay benefits on policies

that never should have issued, owing to fraudulent misrepresentations during the

application process. The insurers allege that the receivership entities violated 18

U.S.C. § 1962(c) by engaging in a pattern of acts that positioned them to collect

benefits on the policies and that they used the U.S. mail to accomplish these acts.

Moreover, the insurers alleged that the receivership entities also conspired to

engage in these acts, violating an additional section of RICO, section 1962(d).

The “pattern of acts” entailed seemingly mundane transactions: posting

premium payments and change of ownership / beneficiary notices through the

mail. Jefferson Pilot and AUL asserted, however, that the receivership entities

performed these acts to further their ultimate goal of obtaining a payout on the ill-

gotten policies. The insurers asserted a claim for damages under section 1964(c) of

the Act, which authorizes anyone who has been damaged by a RICO violation to

pursue a civil claim for treble damages, attorney’s fees and costs.

14
 Ten of the remaining insurers also asserted separate causes of action

pursuant to 18 U.S.C. § 1962(c) & (d) in counts XXII and XXIII of the amended

complaint, and requested damages under section 1964(c). However, they provided

no details to support these claims, offering only vague assertions that the

receivership entities furthered their illegal enterprise through “an as yet

undetermined number of telephone conversations and or mailings.” Moreover,

these insurers failed to identify the specific policies at issue in their RICO claims.

Finally, all seventeen insurers joined together in renewing their original request

for a modification of the receivership order and a request for an equitable

accounting (counts XXIV and XXV).

On May 2, 2005, the receiver moved to dismiss all of the claims in the

amended ancillary complaint except for the claim that insurer VFL asserted in

count II, which invoked a Pennsylvania insurance fraud statute. The receiver

argued that the court should dismiss the other claims for a number of reasons, any

one of which provided sufficient grounds to dismiss most of the insurers’ claims.

First and foremost, the receiver argued, statutes of limitations barred the

insurers from pursuing their claims that the receivership entities had aided and

abetted fraud, and violated the FVSA by purchasing the fraudulently procured

policies. As the receiver noted, the insurers did not file their original ancillary

15
complaint until August 31, 2004. However, MBC and/or VBLLC, in the case of

the Metoyer policy, had purchased the challenged policies more than four years

prior to this. Accordingly, the receiver explained, the insurers’ FVSA claims, and

aiding and abetting fraud claims were time-barred.

Moreover, the receiver noted, each of the challenged policies contains a

two-year incontestability clause, which provides that the insurer cannot contest the

policies for any reason after they have been in effect for two years. By the time

that MBC purchased the Johnson and Buchner policies, the policies had already

been in effect for at least seven years. VBLLC purchased the Metoyer policy three

years after the insurer, Jefferson Pilot, issued it, and MBC acquired the Mullins

policies two years after VFL issued them. Thus, the receiver argued, the

incontestability clauses on all of these policies took effect years ago, and the

insurers’ request for a declaratory judgment that these policies were void ab initio

was untimely. Incontestability clauses should also bar the insurers’ other fraud-

based claims, the receiver maintained, providing an alternative ground to dismiss

the aiding and abetting claims, the conspiracy claims, and the RICO claims.

Finally, the receiver argued, the insurers continued to plead their fraud-

based claims in very vague terms, defying the requirements that Rule 9(b) of the

Federal Rules of Civil Procedure imposes on such pleadings. At a minimum, the

16
insurers failed to name the agents involved in the allegedly fraudulent acts and the

dates when the fraud occurred, the receiver contended. They also failed to explain

how the receivership entities helped the viators submit fraudulent insurance

applications or knew that they lied on their applications. Instead, the receiver

noted, they relied upon conclusory statements, asserting that the receivership

entities examined the viators’ policies and medical records “at some point” before

purchasing the policies, and “became aware” of the viators’ misrepresentations.

Accordingly, the receiver argued, the court should dismiss each of the

claims that alleged the receivership entities knowingly dealt in fraudulently

procured policies (the FVSA claims and declaratory judgment claims) for failure

to plead fraud with specificity. And, in a similar vein, the receiver also urged the

court to dismiss the claims that the receivership entities aided other individuals to

commit insurance fraud, or conspired to acquire fraudulently procured policies.

On August 15, 2005, the district court ordered the insurers’ amended

complaint dismissed in its entirety, giving the insurers until August 29, 2005 to

refile any Second Amended Ancillary Complaint. The court cited a number of

different grounds for dismissal; however, it did not address each claim

specifically. One of the claims that the court left unaddressed in this manner was

count II, which the receiver had not asked the court to dismiss.

17
 The court addressed the insurers’ FVSA claims (counts I, count VI, count X,

and count XVI) first. It found that statute of limitations applied to bar three of the

four claims—VFL’s (count I), Reassure’s (count VI) and AUL’s (count XVI).

These claims related to the two Mullins policies, the Johnson policy and the

Buchner policy. The court did not find the remaining FVSA claim—Jefferson

Pilot’s claim regarding the Metoyer policy (count X)—time-barred. Nor did it

provide a reason for dismissing the claim, apart from an oblique reference in a

footnote that discussed the statute of limitations.7 The footnote stated that the

plaintiff[s] had alleged “sufficient facts” to show why the incontestability clause

should not apply in the case of the Metoyer policy, and urged the other insurers to

refile their claims accordingly.

Although the insurers had argued that the statute of limitations for filing

claims under the FVSA would not begin to run until they paid out death benefits

7
The court referred to “other claims asserted by the [p]laintiffs” in a subheading of the
order labeled “[t]he statute of limitations.” However, the examples that it listed dealt with the
insurers’ conspiracy claims and their aiding and abetting fraud claims. The court noted that the
insurers failed to state the dates on which these alleged torts occurred, making it difficult to
determine whether the claims were, in fact, time-barred. Accordingly, it ordered the remaining
claims dismissed without prejudice, allowing the insurers to refile these claims no later than
August 29, 2005. In a footnote to this discussion, the court alluded to the Metoyer claim, stating,
“If the plaintiffs believe that they can properly allege a fraud claim, then in each newly filed
separate complaint each Plaintiff must allege the facts sufficient to show the inapplicability of, or
the exceptions to, the contestability clause, as Plaintiffs did in the Amended Complaint with
respect to the Metoyer policy.” Final Order of Dismissal and Order Denying All Pending
Motions As Moot, August 15, 2005, at 8 n.7.

18
on the fraud, the court found otherwise. It held that the statute of limitations on the

insurers’ FVSA claims began to run when the receivership entities brokered a

settlement agreement with the original policyholders. The court’s decision turned

on a plain reading of the statute, which made it unlawful to “knowingly enter into,

broker or otherwise deal in” a viatical settlement contract for a life insurance

policy that was procured through fraud. Fla. Stat. § 626.99275(1)(a).

The insurers argued that the court should construe the term “otherwise deal

in” to include transactions that occurred after the receivership entities purchased a

given policy. According to the insurers, if the receivership entities continued to

pay premiums on the policies until the viator died, these transactions would toll

the statute of limitations beyond the date when the receivership brokered a viatical

settlement. The court agreed with the receiver, however. It found that the Florida

legislature intended to limit the term “otherwise deal in” to transactions in which a

viatical settlement company or a viator enter into a settlement agreement.

The court analyzed the insurers’ aiding and abetting claims next, ordering

counts IV, VIII, XII and XVIII dismissed for failure to state a claim upon which

relief can be granted. The court acknowledged that the insurers alleged facts

sufficient to show that Mullins, Johnson, Metoyer, and Buchner may have

procured their life insurance policies through fraud. However, the court

19
admonished, the insurers did not allege sufficient facts to show how the

receivership entities aided these individuals to procure their policies.8 Their

allegations did not state specifically when the receivership entities rendered

assistance to the applicants or provide the names of the agents who assisted with

the applications.

Moreover, the court noted, the insurers did not explain how the receivership

entities actually assisted the applicants to secure insurance coverage. The law does

not countenance claims of accessory after the fact in civil fraud claims, the court

pointed out. And, in two instances, the applicants tendered their alleged fraudulent

forms six years before the receivership entities even came into existence.

The court found that the insurers’ conspiracy claims suffered from similar

legal deficiencies and ordered counts III, VII, XI, and XVII dismissed for failure

to state a claim upon which relief can be granted. The court concluded that the

insurers had failed to allege a key element of conspiracy—that there was an

agreement to commit an unlawful act. They alleged that the receivership entities

8
In a footnote to this discussion, the court stated that it would not need to address the
issue of whether incontestability clauses barred the insurers from asserting aiding and abetting
claims, as the receiver argued in his motion to dismiss. Since the insurers had failed to allege
sufficient facts to make out a cause of action for aiding and abetting fraud, the court stated that it
could dispose of these claims on other grounds. (See Fed. R. Civ. Pr. 9(b)). Final Order of
Dismissal and Order Denying All Pending Motions As Moot, August 15, 2005, at 11 n.11.

20
conspired with others such as doctors, agents, and affiliated brokers, to acquire

ownership of the Mullins, Johnson, Metoyer, and Buchner policies and to submit

claims for benefits under these policies. However, the court noted, the insurers did

not allege that these other parties intended to commit an unlawful act. Since a

conspiracy requires that two or more individuals agree to commit an unlawful act,

the court reasoned, failure to allege intent on the part of these other parties

doomed the insurers’ conspiracy claims.

The insurers could not salvage these claims by asserting that the

receivership entities “conspired among themselves,” the court observed, because

they are all controlled or owned by MBC. Additionally, the court cautioned, if the

alleged unlawful act involves fraud, the insurers would have to allege that with

particularity, and they did not do so.

The court addressed the insurers’ RICO claims next. It dismissed two of the

six RICO claims, counts XXII and XXIII, because the insurers failed to allege any

predicate acts and did not allege that the receivership entities’ activities caused

them specific harm. Indeed, none of the ten insurers who joined in filing these

claims could identify a single one of their policies that had been tainted by fraud.

Accordingly, the court found that these insurers could not satisfy the constitutional

requirements for standing since they did not suffer particularized harm as a result

21
of the defendants’ conduct, and that they likewise failed to state a valid claim for

civil damages under RICO.

The other four RICO claims, which insurers Jefferson Pilot and AUL filed,

respectively, as counts XIII, XIV, XIX, and XX, did not suffer from the same

deficiencies, the court noted. These insurers did allege predicate offenses in

connection with two specific policies, the Metoyer and Buchner policies.9

However, the receiver had argued in his motion to dismiss that these particular

claims suffered from another deficiency; namely, they alleged predicate offenses

that were no longer legally actionable because statutes of limitations or

incontestability clauses barred the insurers from asserting them. The court noted

that the receiver had presented persuasive, albeit not controlling, case law in

support of this argument.

Ultimately, however, the court declined to address this issue, stating that it

was unclear from the face of the amended complaint whether some of the predicate

offenses could still be viable. The court remarked that it was difficult to tell from

the face of the complaint when certain causes of action accrued, such as the claims

9
The court refers to the claims as the claims of the “other four Plaintiffs”; however, these
four RICO counts represent the claims of just two insurers, Jefferson Pilot and AUL. The other
two insurers who brought challenges to specific policies, VFL and Reassure, did not file any
RICO claims against the receivership entities. Given that the Amended Ancillary Complaint
reads like a “shotgun pleading,” we are not surprised to find that the district court had trouble
keeping these claims straight.

22
for aiding and abetting fraud, because the insurers simply didn’t plead fraud with

specificity. Thus, the court did not cite specific grounds for dismissing Jefferson

Pilot’s and AUL’s RICO claims, although it seemed to suggest that the claims

suffered from a failure to plead the predicate acts of fraud with specificity.

Nor did the court cite grounds for dismissing count XXV, which requested

an equitable accounting, or counts V, IX, XV and XXI, which sought declaratory

judgment that the five subject policies were void ab initio. The court did order

count XXIV, the other count which requested some form of equitable relief,

dismissed on specific grounds, however. It found that the insurers failed to state a

claim upon which relief could be granted in their request for a modification of the

receivership order. If the insurers wanted to modify the receivership order to

prevent the receiver from taking any actions that might prejudice their claims, the

court advised, they should have asked to intervene in the earlier receivership

proceeding. At this point, however, the insurers’ efforts to modify the receivership

order amounted to an improper collateral attack, the court observed.

In conclusion, the court told the insurers that it would give them until

August 29, 2005 to address these deficiencies in a second amended complaint, but

that each insurer would have to file individually. The court reminded the insurers

that plaintiffs must plead fraud claims with specificity under the Federal Rules,

23
noting that the insurers had failed to heed the court’s earlier instructions on this

same point. The court also cautioned the insurers against weighing a second

amended complaint down with extraneous material that reported on fraud within

the viatical industry as a whole. See Fed. R. Civ. P. 8(e).

In a footnote to the order, the court stated that it preferred to have each

plaintiff file a separate case so that it could “determine the merits of the claims

filed by each Plaintiff.” The footnote also made passing reference to the one count

that had been excluded from the motion to dismiss, but the court referred to it

mistakenly as “the one count related to the Metoyer policy.”10 Speaking of this one

count, the court suggested that the plaintiff might wish to refile the claim under

this same case number for the sake of simplicity, even though the “[r]eceiver has

not moved to dismiss the one count relating to the Metoyer policy.”

None of the insurers chose to file a Second Amended Ancillary Complaint,

allowing the court’s deadline to pass. Instead, all seventeen insurers joined in

10
In the conclusion to his motion to dismiss, the receiver stated, “The Receiver
respectfully requests that this Court dismiss all counts in the Insurance Companies’ Amended
Ancillary Complaint with the exception of count II.” Receiver’s Motion to Dismiss Amended
Ancillary Complaint, May 2, 2005, at 31. Count II, as described in the insurer’s Amended
Ancillary Complaint concerns “Valley Forge Life Insurance Company v. The Receivership
Entities Violations of Pennsylvania Insurance Fraud Statute, 18 Pa. Cons. Stat. § 4117.” Given
that the insurers’ amended complaint reads like a “shotgun pleading,” we are not surprised to
find the district court confused about which count was which.

24
filing a Notice of Appeal on August 30, 2005, bringing their Amended Ancillary

Complaint before this Court.11

STANDARD OF REVIEW

Where an appellant challenges a district court ruling on a Rule 12(b)(6)

motion, we review the district court’s decision de novo. Hill v. White, 321 F.3d

1334, 1335 (11th Cir. 2003); Manuel v. Convergys Corp., 430 F.3d 1132, 1139

(11th Cir. 2005). In doing so, we are guided by the same principles of review as

the district court. Stephens v. Dep’t of Health & Human Servs., 901 F.2d 1571,

1573 (11th Cir. 1990); Spain v. Brown & Williamson Tobacco Corp., 363 F.3d

1183, 1187 (11th Cir. 2004).

Those principles hold that a court should only grant a motion to dismiss

where the defendant demonstrates that the plaintiff cannot prove any set of facts in

support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S.

41, 45-46, 78 S. Ct 99, 102, 2 L. Ed. 2d 80 (1957). Moreover, when ruling on a

motion to dismiss, a court must view the complaint in the light most favorable to

11
Upon joint motion of the appellants and appellees, this Court dismissed the appeal of
one of the seventeen insurers, Cherokee National Life Insurance Company (“Cherokee”), on
March 17, 2006. The parties moved to dismiss Cherokee after the insurer acknowledged,
subsequent to filing the appeal, that it did not have a single policy which was being administered
by the receivership.

25
the plaintiff and accept all of the plaintiff’s well-pleaded facts as true. St. Joseph’s

Hosp., Inc. v. Hosp. Corp. of Am., 795 F.2d 948, 954 (11th Cir. 1986).

If a district court orders a complaint dismissed pursuant to Rule 12(b)(6),

but does so sua sponte, our standard of review is less clear. Danow v. Borack, 197

Fed. Appx. 853, 856 (11th Cir. 2006). A Rule 12(b)(6) motion affords plaintiffs

certain procedural protections such as, notice and the opportunity to amend a

complaint before the court rules on the motion, the U.S. Supreme Court has noted.

Nietzke v. Williams, 490 U.S. 319, 329-330, 109 S. Ct. 1827, 1834, 104 L. Ed. 2d

338, 350 (1989). Yet, the Court has cautioned against misconstruing this as an

endorsement of sua sponte dismissals under Rule 12(b)(6), and has declined to

pass judgment on the permissibility of such dismissals. Id. at 330 n.8, 109 S. Ct. at

1834, 104 L. Ed. 2d at 350.

However, this Court has prohibited sua sponte dismissals under Rule

12(b)(6) where: 1) the defendant had not filed an answer and the plaintiff still had

a right to amend his complaint pursuant to Rule 15(a) of the Federal Rules of Civil

Procedure; 2) the plaintiff brought his claim in good faith; and 3) the district court

failed to provide the plaintiff with notice of its intent to dismiss or an opportunity

to respond. Jefferson Fourteenth Assocs. v. Wometco de P.R., Inc., 695 F.2d 524,

527 (11th Cir. 1983). Jefferson Fourteenth involved a case of sua sponte dismissal

26
with prejudice, id. at 525, but in this case, the district court dismissed the

plaintiff’s claim sua sponte without prejudice, granting the plaintiff leave to

amend the complaint a second time.

Accordingly, we will review the district court’s decision to dismiss the

insurers’ Amended Ancillary Complaint for failure to state a claim pursuant to

Rule 12(b)(6) de novo. Although the court issued its decision in response to a

12(b)(6) motion, it acted sua sponte with respect to one of the insurers’ claims,

which the receiver had specifically excluded from his motion to dismiss.

Nevertheless, the court dismissed this particular claim without prejudice, granting

the insurer leave to amend the complaint a second time, thereby neutralizing one

of our concerns regarding sua sponte dismissals. Since the U.S. Supreme Court

has declined to pass judgment on the permissibility of sua sponte dismissals under

Rule 12(b)(6), and our case law addresses the inapposite situation where the court

dismisses a complaint with prejudice, we have no clear precedent. However, we do

have rather clear guidelines to apply.

Interpreting provisions in insurance contracts, such as the incontestability

clauses which appear here, involves questions of law. See Elan Pharm. Research

Corp. v. Employers Ins., 144 F.3d 1372, 1375 (11th Cir. 1998). We also review

decisions on matters of law de novo. Id.;Vector Prods. v. Hartford Fire Ins. Co.,

27
397 F.3d 1316, 1318 (11th Cir. 2005) (citing LaFarge Corp. v. Travelers Indem.

Co., 118 F.3d 1511, 1515 (11th Cir. 1997)). Finally, we note that interpretations of

statutes, such as the FVSA provisions on appeal here, also present questions of

law that require de novo review. See United States v. Hooshmand, 931 F.2d

725,737 (11th Cir. 1991).

ANALYSIS

I. The FVSA Does Not Govern Transactions with Out-of-State Viators

The FVSA regulates insurance and investments in insurance products within

the State of Florida. Section 626.99275(1)(a) of the Act states that it is unlawful

for any person:

To knowingly enter into, broker, or otherwise deal in a viatical
settlement contract the subject of which is a life insurance policy,
knowing that the policy was obtained by presenting materially false
information concerning any fact material to the policy or by
concealing, for the purpose of misleading another, information
concerning any fact material to the policy, where the viator or the
viator’s agent intended to defraud the policy’s insurer.

Fla. Stat. § 626.99275(1)(a) (2004). Since MBC, the entity that purchased the

viaticals at issue in this case, is a Florida viatical settlement provider, the insurers

assert that it is subject to the FVSA.

However, section 626.99245 of the Act, which addresses “Conflict of

regulation of viaticals,” limits the effect of this provision to in-state viatical

28
settlement companies who contract with in-state residents. According to Fla. Stat.§

626.99245(2):

A viatical settlement provider who from this state enters into a
viatical settlement contract with a viator who is a resident of another
state that has enacted statutes or adopted regulations governing
viatical settlement contracts shall be governed in the effectuation of
that viatical settlement contract by the statutes and regulations of the
viator’s state of residence. If the state in which the viator is a resident
has not enacted statutes or regulations governing viatical settlement
agreements, the provider shall give the viator notice that neither
Florida nor his or her state regulates the transaction upon which he or
she is entering.

None of the viators named in the insurers’ amended complaint resided

within the State of Florida when they sold the interests in their life insurance

policies to MBC. Wendell Mullins, whose policy is the subject of an FVSA claim

by insurer VFL, resided in Arkansas when he first obtained his policy from insurer

VFL and later in West Virginia. Jack Johnson, whose policy is the subject of a

FVSA claim by insurer Reassure, resided in Massachusetts. Gerald Metoyer, the

viator named in the FVSA claim by Jefferson Pilot, resided in California at the

time that he assigned his policy to VBLLC, which is owned by MBC. Lastly,

William Buchner, the viator whose policy is the subject of insurer AUL’s FVSA

claim, was a resident of Illinois.

29
 Thus, a plain reading of this provision of the statute indicates that the FVSA

does not govern MBC’s settlement contracts with any of these viators.

Accordingly, we find that the insurers’ reliance upon section 626.99275(1)(a) of

the statute is misplaced, and they are not entitled to relief under this statute. The

district court dismissed three of the insurers’ four FVSA claims (counts I, VI, and

XVI, or the VFL, Reassure, and AUL claims) as time-barred under Florida’s

statute of limitations for fraud. We find that the dismissal of these three claims was

proper, albeit for a different reason than the one the district court cited.12

Although the receiver did not raise the conflict of law issue before the

district court, we may, nevertheless, affirm a district court’s decision to grant or

deny a motion for any reason, regardless of whether it was raised below. See Lucas

v. W.W. Grainger, Inc., 257 F.3d 1249, 1256 (11th Cir. 2001) (we may affirm "on

any ground that finds support in the record"). Additionally, we note that the

conflict of law provision in the FVSA also bars count X, the claim that Jefferson

Pilot filed in relation to the Metoyer policy. The district court did not provide a

specific reason for dismissing this claim as it did with the other FVSA claims.

12
The district court ordered the insurers’ FVSA claims dismissed because it found that
they were time-barred. The court based this conclusion on the language in Fla. Stat. §
626.99275(1)(a), which makes it unlawful for any person to knowingly “enter into, broker or
otherwise deal in” a viatical for a life insurance policy that was procured through fraud. We need
not reach the question of whether the district court’s interpretation of the “otherwise deal in”
language of the Florida statute was correct.

30
Nonetheless, given that the conflict of law provision applies here as well, we

affirm the court’s decision to dismiss this claim.

II. Fraud Claims Barred Once Contestability Period For Policies Has Passed

Each of the life insurance policies that the insurers challenged in their

amended complaint contain two-year incontestability clauses. As we noted

recently in Allstate Life Insurance Co. v. Miller, 424 F.3d 1113, 1115 (11th Cir.

2005) (citing Prudential Ins. Co. of Am. v. Prescott, 176 So. 875, 878 (Fla. 1937)),

incontestability clauses function much like statutes of limitations. While they

recognize fraud and all other defenses, they provide insurance companies with a

reasonable time in which to assert such defenses, and disallow them thereafter. In

each of the cases at issue here, contestability periods ended years ago. In some

cases they ended only one or two years before the insurers filed their complaint; in

other cases they ended more than fifteen years before the insurers filed a

complaint.

Nevertheless, to determine whether the insurers can challenge these policies

at this late date, we must first determine what law will guide our interpretation of

the contracts. Federal courts adjudicating state law claims apply the substantive

law of the state where they render decisions. See Erie R.R. Co. v. Tompkins, 304

U.S. 64, 78, 58 S. Ct. 817, 822, 82 L. Ed. 1188 (1938). Here, the forum state is

31
Florida, but none of the parties to the challenged contracts are citizens of Florida,

a situation which raises conflict of law concerns. In such cases, we follow the

conflict of law rules of the forum state. See Klaxon Co. v. Stentor Elective Mfg.

Co., 313 U.S. 487, 496, 61 S. Ct. 1020, 1021, 85 L. Ed. 1477, 1480 (1941).

Absent a specific contractual provision to the contrary, Florida conflict of

law rules dictate that courts should apply lex loci contractus, or the law of the state

where the contract was made, to questions of contracts (other than those that deal

with contracts for the performance of services). See Equitable Life Assurance

Soc’y v. McRee, 78 So. 22, 24 (Fla. 1918); Shaps v. Provident Life & Accident Ins.

Co., 244 F.3d 876, 881 (11th Cir. 2001) (relying on Fioretti v. Mass. Gen. Life Ins.

Co., 53 F.3d 1228, 1235 (11th Cir. 1995)). When the contract deals with an

insurance policy, the locus contractus is generally the state where the insured

executed the insurance application. See Fioretti, 53 F.3d at 1236; Shaps, 244 F.3d

at 881. Accordingly, we approach this analysis by examining each of the policies

in turn with respect to the insurers’ claims that the policies were: 1) void ab initio

on account of fraud, 2) that the receivership entities aided and abetted fraud, and

3) that the receivership entities conspired to commit fraud. Since two of the

insurers, Jefferson Pilot and AUL, also asserted RICO claims based on predicate

acts of mail fraud, we will consider those claims under this section as well.

32
 A. The Wendell Mullins Policies Issued by VFL

Wendell Mullins, a resident of Arkansas, applied for two $1 million policies

through insurer VFL on November 17, 1997. Mullins executed the applications at

a VFL broker’s office in Waterville, Ohio. In response to a query on VFL’s

insurance application as to whether he had ever been diagnosed or treated for

AIDS in the past ten years, Mullins checked the answer choice labeled “no.”13

Apparently, he had tested positive for HIV in 1994. Mullins submitted to a blood

test on February 10, 1998 at VFL’s request and passed, showing no signs of HIV

infection. VFL contended that Mullins likely enlisted the aid of an impostor who

took the blood test in his place, but the insurer was unable to provide further

details of how this worked.

After Mullins passed the blood test, VFL issued two $1 million life

insurance policies to him on March 23, 1998. The policies contained identical

incontestability clauses, which read:

13
Clinically speaking, a diagnosis of HIV does not mean the same thing as a diagnosis of
AIDS. HIV infection results in an AIDS diagnosis only after an individual develops a number of
opportunistic infections and his CD4 positive T-cell count falls below a certain number. Some
individuals who have tested positive for exposure to HIV remain asymptomatic for ten years or
more. See National Institutes of Health, HIV Infection and AIDS: An Overview (2005), at
http://www.niaid.nih.gov/factsheets/hivinf.htm.Thus, it is not entirely clear that Mullins intended
to misrepresent his medical history when he answered that he had not been diagnosed with AIDS,
even though many individuals conflate the two conditions.

33
 [Valley Forge] cannot contest this policy, except for non-payment of
premiums, after it has been in force during the Insured’s lifetime for 2
years from the Policy Date or if reinstated the date of reinstatement.

Two years later, Mullins asked to have the policies amended in order to

exercise an option for a Guaranteed Insurance Rider (“GIR”) that VFL had offered

under an earlier policy. The GIR on the earlier policy gave Mullins the right to

purchase additional insurance up to two times the initial face amount of the policy,

without having to answer additional medical questions, present evidence of

insurability or attest to current employment. Mullins executed the amendment to

the policies in Charleston, West Virginia on March 15, 2000. VFL alleged that the

amendment to the policies is fake, and that MBC submitted a doctored version of

Mullins’ original application and other false correspondence in support of the

amendment.

MBC viaticated both of the Mullins policies within a few months of their

amendment, in May and June 2000. By this point in time, the policies had been in

force for at least two years and the contestability period had expired. Mullins died

of AIDS-related complications on September 24, 2003. VSI submitted claims on

both his policies on January 27, 2004. VFL did not allege fraud in connection with

the Mullins policies until August 31, 2004, however, when the insurers filed their

original ancillary complaint. VFL amended the complaint on March 15, 2005 to

34
allege additional claims in connection with the Mullins’ policies such as aiding

and abetting fraud, civil conspiracy, and RICO claims. Thus, VFL did not seek to

challenge the policies until long after the incontestability bar took effect.

To determine whether the incontestability clauses absolutely bar VFL from

asserting fraud-based claims at this point, we must look to the law of the state

where Mullins executed the contracts. The receiver contends that Mullins filed the

last document required to complete the contract in West Virginia because that is

where he signed the amendment to the policies. The insurers argue that the

purported final amendment is a fake, and that Ohio law applies because that it

where Mullins signed his original applications for insurance.

Regardless of whether we apply West Virginia law or the law of Ohio, the

result is the same. Neither state will bar enforcement of an incontestability clause

on the grounds of fraudulent procurement once the two-year contestability period

has lapsed. See e.g., Morris v. Mo. State Life Ins. Co., 114 W. Va. 278, 281, 171

S.E. 740, 741 (1933) (“fraud in the procurement of the policy cannot be made a

defense subsequent to the date fixed by the policy when it shall be deemed

incontestable”); see also Poffenbarger v. N. Y. Life Ins. Co., 277 F. Supp. 726, 729

(D. W. Va. 1967) (affirming Morris).

35
 An Ohio statute plainly dictates that any life insurance policy that is issued

by a company organized under the laws of the state or delivered to an insured

within the state must contain a provision that: “[it] shall be incontestable after it

has been in force during the lifetime of the insured for a period of not more than

two years from its date, except for nonpayment of premiums.” Ohio Rev. Code

Ann. § 3915.05(C) (1998). The statute does not provide for any exceptions on

account of fraud. Although the insurers argue that Ohio case law recognizes an

exception where the insured lacked an insurable interest at the time he applied for

the policy,14 they do not state why that exception should apply. The insurable

interest doctrine holds that a person who procures a life insurance policy on the

life of another person must have an insurable interest in the continuation of that

other person’s life. See Couch on Insurance § 41:17 (3d ed. 1997). Failure to

14
In a parenthetical to a citation to Turek v. Vaughn, 154 Ohio App. 3d 612 (Ct. App.
2003), the insurers state that the court observed that, “as a matter of public policy, the validity of
an insurance contract is dependent upon the insured having an insurable interest in the subject of
the insurance.” Principal Brief of Appellants at 43 n.12. Turek did not deal with a life insurance
policy; it concerned a policy for automobile insurance. The insurers also cite Ryan v. Rothweiler,
50 Ohio St. 595, 601, 35 N.E. 679, 681 (1893), as holding that a “policy is void if there was no
insurable interest at inception of policy.” Appellants’ Brief at 43 n.12. However, to clarify what
this meant with respect to life insurance policies, the court noted that although “a man may cause
his own life to be insured for the benefit of a stranger, and the want of insurable interest in the
stranger will not invalidate the policy, a policy taken out by a man for his own benefit on the life
of a stranger, would be void for want of insurable interest.” Rothweiler, 50 Ohio St. at 601, 35
N.E. at 681.

36
disclose an HIV infection may affect an insured’s premium rates, but that does not

mean he would lack an “insurable interest,” as the term is understood in the law.

Thus, we affirm the district court’s decision to dismiss VFL’s request to

declare the Mullins policies void ab initio and its common law fraud and civil

conspiracy claims (counts V, III, and IV, respectively). Although the court did not

specifically find that these claims were barred under the policies’ incontestability

clauses, we do find this to be the case. And, as we noted previously, we may

affirm the district court’s decision to dismiss on any grounds that finds support in

the record. See, e.g., W.W. Grainger, 257 F.3d at 1256.

B. The Jack Johnson Policies Issued by Reassure

On June 6, 1988, Jack Johnson, a resident of Massachusetts, applied for a

$100,000.00 life insurance policy through Allianz Life Insurance Company of

North America, whose policies are administered by Reassure. Johnson submitted

the application in Massachusetts. In response to a query on the insurance

application as to whether he had ever been treated for or diagnosed with an

immune system disorder or a disorder of the blood, Johnson answered “no.”

Reassure contended that doctors had diagnosed Johnson with HIV in 1986.

Allianz issued a $100,000.00 life insurance policy to Johnson on August 8,

1988. The policy contained an incontestability clause that read:

37
 The application you signed is a legal document. If the information on your
application was false and we relied on that false information and gave you
insurance that you were not entitled to, we may treat your insurance as if we
never issued it to you ... However, we will not question any information that
you gave us on the application if this certificate has been in effect for 2
years during your lifetime.

Allianz reduced Johnson’s coverage to $50,000.00 on March 10, 1993, after

it discovered an error on the Certification Schedule that was used to compute his

premium rates. Johnson assigned the policy to MBC on November 29, 1995. At

that point, the policy had been in effect for more than seven years. Johnson died of

AIDS on June 6, 2004. Reassure did not allege fraud in connection with the

Johnson policy until the insurers filed their amended ancillary complaint on March

15, 2005.

Since Johnson executed his application in Massachusetts, we apply

Massachusetts law to determine whether Reassure can assert any exceptions to the

incontestablity clause. Under the General Laws of the Commonwealth of

Massachusetts, a life insurance policy issued within the Commonwealth must

contain:

A provision that the policy shall be incontestable after it has been in force
during the lifetime of the insured for a period of two years from its date of
issue except for non-payment of premiums or violation of the conditions of
the policy relating to military or naval service in time of war and except, if
the company so elects, for the purpose of contesting claims for total and
permanent disability benefits or additional benefits specifically granted in
case of death by accident.

38
Mass. Gen. Laws ch. 175, § 132(2) (1989). The statute does not contain an

exception for fraud. And the Legislature omitted any mention of fraud

intentionally, the Massachusetts Supreme Judicial Court concluded in Protective

Life Ins. Co. v. Sullivan, 425 Mass. 615, 620, 682 N.E.2d 624, 628-29 (1997). The

facts of Sullivan are similar to those that Reassure alleges here, namely, that an

HIV-positive individual failed to disclose his infection when he applied for a life

insurance policy. The insurer issued a policy in reliance upon the insured’s

fraudulent application and did not discover the fraud until the insured died of

AIDS. By that time, the incontestability period on the policy had expired. The

insurer sought to rescind the policy on the grounds of fraud. Although the court

noted that the insured’s wilful concealment of his medical condition was

“deplorable,” and deserving of “condemnation,” it held that the Massachusetts

legislature did not intend to provide a fraud exception to the state incontestability

statute for sound policy reasons. Id. at 629, 682 N.E.2d at 634.

Accordingly, we find that the incontestability clause in the Johnson policy

bars Reassure from challenging the validity of the policy on the basis of fraud, and

we affirm the district court’s decision to dismiss Reassure’s claim for a declaratory

judgment that the policy was void ab initio (count IX). The incontestability clause

39
also necessarily bars Reassure from pursuing its other fraud-based claims—that

the receivership entities aided and abetted Johnson to commit fraud (count VIII)

and that they conspired to acquire his fraudulently procured policy and to submit a

claim for improper benefits once he died (count VII). Thus, we also affirm the

district court’s decision to dismiss these claims, even though the district court did

not specifically reach the issue of whether these claims were barred by the

incontestability clause in Johnson’s policy.

C. The Gerald Metoyer Policy Issued by Jefferson Pilot

Gerald Metoyer, a California resident, applied for a $1.5 million life

insurance policy from Jefferson Pilot on February 13, 1999. He signed the

application in California. A query on the insurance application asked whether he

had been diagnosed or treated within the past seven years for either AIDS, an

AIDS-related complex, or HIV. Metoyer responded “no.” Metoyer also denied

ever being treated for cancer in response to another query on the application.

According to count X of the insurers’ complaint, doctors had diagnosed

Metoyer with both HIV and cancer in 1993. Metoyer submitted to medical tests

and blood tests as part of the application process, but the tests did not disclose

evidence of either condition. Jefferson Pilot argued that Metoyer most likely

enlisted the aid of an impostor when it came time to take these tests. Jefferson

40
Pilot did not allege further details of how Metoyer managed to accomplish this

fraud or identify the impostor who stood in for him during the medical tests.

On February 25, 1999, Jefferson Pilot issued Metoyer a $1 million policy on

his life. Thereafter, Metoyer asked to raise the policy limits closer to $2 million,

and on April 18, 1999, Jefferson Pilot complied, raising the coverage to $1.5

million. The policy contained a two-year incontestability clause, in keeping with

the California Insurance Code, which requires that:

An individual life insurance policy delivered or issued for delivery in
this state shall contain a provision that it is incontestable after it has
been in force, during the lifetime of the insured, for a period of not
more than two years after its date of issue.

Cal. Ins. Code § 10113.5(a) (1999). Metoyer assigned his policy to VBLLC on

May 6, 2002. VSI began to service the policy shortly thereafter, paying regular

premiums to ensure that it remained in force and submitting change of ownership /

beneficiary notices. The receivership entities did not submit any claims for

benefits under the policy as Metoyer is still alive. Nevertheless, on March 15,

2005, Jefferson Pilot asked the court to declare that the policy was void ab initio

to relieve the company from its future obligations on the policy. At this point in

time, the policy had been in effect for six years and the contestability period had

lapsed four years earlier.

41
 Under California law, once the contestability period has expired on a life

insurance policy, an insurance company can no longer contest the policy for

reasons of fraudulent procurement. Amex Life Assurance Co. v. Superior Court, 14

Cal. 4th 1231, 1233-34, 930 P.2d 1264, 1265 (1997). The contestability period on

the Metoyer claim expired on February 25, 2001. The insurers contended in their

brief that California amended its insurance code in 1998, the year that Jefferson

Pilot issued the Metoyer policy, to allow challenges to policies in cases where the

policies had been procured with the aid of impostors.

The pertinent provision only applies, however, “if photographic

identification is presented during the application process, and if an impostor is

substituted for a named insured in any part of the application process.” Cal. Ins.

Code § 10113.5(b)(1) (1999). In such cases, the California Insurance Code states

that “any purported insurance contract is void from its inception.” Id. The record

does not indicate whether Jefferson Pilot required that Metoyer present

photographic identification during the application process. Jefferson Pilot merely

alleges that Metoyer likely made use of an impostor to obtain the medical results

that he did, which made him appear AIDS and cancer-free at the time he applied

for life insurance.

42
 The district court found that the plaintiffs had alleged “sufficient facts” to

show why the incontestability clause should not apply in the case of the Metoyer

policy. Final Order of Dismissal and Order Denying All Pending Motions As

Moot, August 15, 2005, at 8 n.7. We do not know which facts the court was

alluding to in this footnote. California law on incontestability clauses does provide

a limited exception for fraud in cases where an impostor is used. However, it

simply is not clear whether this exception applies in Jefferson Pilot’s case because

Jefferson Pilot has failed to provide the necessary details of the alleged fraud.

Accordingly, we make no finding as to whether the incontestability clause

applies to bar Jefferson Pilot’s fraud claims. Nevertheless, we do agree with the

district court that Jefferson Pilot’s fraud claims suffer from a more basic

problem—failure to plead fraud with particularity—and this deficiency provides

grounds for dismissal. As we noted in Cooper v. Blue Cross & Blue Shield of Fla.,

Inc., 19 F.3d 562, 568 (11th Cir. 1994), “the plaintiff’s complaint must allege the

details of the defendants’ allegedly fraudulent acts, when they occurred, and who

engaged in them.” Jefferson Pilot’s allegations do not satisfy this requirement

since they fail to allege unequivocally that an impostor stood in for Metoyer when

it came time to submit to medical exams, when this fraud occurred, or what

43
involvement the receivership entities had in perpetrating or perpetuating this fraud

(see infra).

Accordingly, we affirm the district court’s decision to dismiss Jefferson

Pilot’s claim for a declaratory judgment that the Metoyer policy was void ab initio

(count XV). We do so because Jefferson Pilot presented only general conclusory

allegations of fraud and conjecture on the use of an impostor. Such general

conclusory allegations do not conform to the heightened pleading requirements for

fraud claims. See Fed. R. Civ. P. 9(b).

Jefferson Pilot’s remaining fraud claims—the aiding and abetting claim

(count XII) and the conspiracy to commit fraud claim (count XI)—suffer from the

same deficiency. As the district court noted in its dismissal order, Jefferson Pilot

failed to allege any facts that would show how the receivership entities assisted

Metoyer to file a fraudulent insurance application. Thus, Jefferson Pilot’s aiding

and abetting claim also fails to conform to the requirements of Rule 9(b) of the

Federal Rules of Civil Procedure. And, as the district court noted, where a

conspiracy claim alleges that two or more parties agreed to commit fraud, the

plaintiff must also plead this act with specificity. Jefferson Pilot did not do so in

this case and consequently, failed to make out a valid claim for conspiracy to

44
commit fraud. Accordingly, we affirm the district court’s decision to dismiss these

two claims.

Jefferson Pilot also asserted two RICO claims against the receivership

entities pursuant to section 1962(c) and (d) of Title 18 of the U.S. Code. Section

1962(c) makes it unlawful for anyone employed by or associated with an

enterprise affecting interstate or foreign commerce to conduct the enterprise’s

affairs through a “pattern of racketeering activity.” Section 1962(d) makes it

unlawful to conspire to violate section 1962(c).

Section 1961(1)(a) and (b) of the RICO statute provides a list of crimes or

threats that constitute an “act of racketeering” for the purposes of section 1962(c).

The list includes major crimes such as murder, arson, etc. that are chargeable

under State law and punishable by imprisonment of more than a year, and crimes

that are indictable under various sections of the United States Code, such as the

mail fraud statute. To assert a “pattern of racketeering activity,” a plaintiff must

allege that the defendant engaged in at least two discrete acts from the preceding

list of predicate acts. 18 U.S.C. § 1961(5).

Jefferson Pilot based its RICO claims (counts XIII and XIV) on two

predicate acts of mail fraud. The district court did not provide a reason for

dismissing these two claims, but, and as we have noted above, the district court

45
justifiably decried Jefferson Pilot’s other fraud allegations for their lack of

specificity. Thus, the court could have properly concluded that Jefferson Pilot

failed to plead the predicate acts of mail fraud with the particularity required under

Rule 9(b) of the Federal Rules of Civil Procedure. Jefferson Pilot’s mail fraud

allegations suffer from an additional deficiency, however.

Under the mail fraud statute, a plaintiff must allege a scheme to defraud

where “some type of deceptive conduct occurred.” Pelletier v. Zweifel, 921 F.2d

1465, 1500 (11th Cir. 1991). Jefferson Pilot did not allege that the receivership

entities made any affirmative misrepresentations in these mailings. Rather, it

seemed to suggest that the receivership entities engaged in a scheme to defraud the

insurer because they failed to disclose what they learned in the process of

acquiring the Metoyer policy.

We have stated that “nondisclosure of material information can constitute a

violation of the mail and wire fraud statutes where a defendant has a duty to

disclose either by statute or otherwise.” McCulloch v. PNC Bank Inc., 298 F.3d

1217, 1225 (11th Cir. 2002). However, as the district court noted in its order to

dismiss, if the insurers intended to assert a claim for fraudulent concealment, or

nondisclosure, they needed to plead that the receivership entities had a duty to

disclose. Jefferson Pilot did not do so in the amended complaint. Accordingly, it

46
failed to state a claim upon which relief can be granted and we affirm the district

court’s dismissal of Jefferson Pilot’s RICO claims for this reason.

D. The William Buchner Policy Issued by AUL

William Buchner, a resident of Illinois, applied for a $100,000.00 life

insurance policy with AUL on March 5, 1986. AUL asserts that he had been

diagnosed with HIV in 1985. AUL had Buchner complete an interview with a

medical examiner on April 14, 1986 as part of the application process and the

examiner asked Buchner whether he had been diagnosed within the past ten years

with any symptoms of a blood disorder or been affected by any serious illness,

disease, or injury not listed on the application. Buchner did not disclose his HIV

infection.

On April 28, 1986, AUL issued Buchner a $100,000.00 life insurance

policy, which contained the following incontestability clause:

INCONTESTABILITY. This policy will not be contested after it has
been in force during the lifetime of the insured for 2 years from its
date of issue.

Buchner assigned his policy to MBC on July 20, 1995. Thus, Buchner held the

policy for at least nine years before he assigned it, and the contestability period

expired seven years earlier. AUL did not assert that Buchner procured the policy

through fraud or that the receivership aided and abetted his efforts until the

47
insurers filed their amended ancillary complaint on March 15, 2005. Buchner is

still alive, and the receivership entities have not asserted a claim for benefits on

his policy.

Since Buchner executed his insurance application in Illinois, we apply

Illinois law to determine whether AUL can challenge the validity of the Buchner

policy at this point. Illinois, like the other states that we have examined, does not

recognize a fraud exception to incontestability clauses. The Supreme Court of

Illinois held as far back as 1921 that the incontestability clause in a life insurance

policy is “a valid provision, which bars the insurer from making any defense

against the policy, after the expiration of the contestable period, except for

nonpayment of premiums.” Ramsay v. Old Colony Life Ins. Co., 297 Ill. 592, 595,

131 N.E. 108, 109 (1921). The court cautioned that “even fraud in procuring the

policy is not available [as a defense] to avoid [the effect of the incontestability

clause].” Id.

Thus, we find that AUL’s claim for a declaratory judgment that the Buchner

policy was void ab initio on the grounds of fraud (count XXI) is time-barred since

the contestability period on the policy expired nearly twenty years ago.

Additionally, the incontestability clause in the Buchner policy also bars AUL’s

other claims, which all rely upon allegations that the Buchner policy is tainted by

48
fraud. AUL’s other claims include the aiding and abetting fraud (count XVIII), a

conspiracy claim (count XVII), and two RICO claims predicated on mail fraud

(count XIX and XX). Once again, we affirm the district court’s decision to dismiss

these claims even though the court reached its decision for alternative reasons.

III. Alternative Grounds to Dismiss Fraud, Conspiracy and RICO Claims

A. Fraud Claims: Failure to Plead Fraud with Specificity, Rule 9(b).

As we noted previously, a court must view a complaint in the light most

favorable to the plaintiff and accept all of the plaintiff’s well-pleaded facts as true

when it considers a motion to dismiss a complaint under Rule 12(b)(6). St.

Joseph’s Hosp.,795 F.2d at 954 (11th Cir. 1986). Unfortunately, the plaintiffs

simply have not asserted that many “well-pleaded facts” in this case.

The Federal Rules of Civil Procedure advise plaintiffs on the general rules

of pleading in Rule 8, and the special rules for pleading fraud, mistake, or

condition of the mind in Rule 9. Rule 8(a)(2) states that a pleading shall contain “a

short and plain statement of the claim showing that the pleader is entitled to

relief.” Fed. R. Civ. P. 8. If the claim alleges fraud, however, as the majority of the

insurers’ claims do in this case, Rule 9(b) dictates that “the circumstances

constituting fraud or mistake shall be stated with particularity.” Fed. R. Civ. P.

9(b).

49
 When we review the insurers’ amended complaint against this standard, we

find, as the district court did, that many of the claims fail to comport with the

requirements of Rule 9(b). None of the claims which allege that the receivership

entities aided and abetted insurance fraud (counts IV, VIII, XII, and XVIII)

identify the agents or corporate representatives who participated in the alleged

fraud. Nor do they identify the dates when the agents rendered assistance or

explain how their conduct furthered the commission of insurance fraud. This is

particularly problematic since the receivership entities were not even in existence

when William Buchner and Jack Johnson are alleged to have committed the acts of

insurance fraud that underlie two of the four aiding and abetting claims (those

involving AUL and Reassure). See supra note 2.

The district court found that the insurers’ aiding and abetting claims failed

to plead fraud with specificity, and ordered the claims dismissed for failure to state

a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Although we

have found that three of the insurers’ claims fail because of incontestability

clauses in the insurance contracts,15 the district court’s rationale for dismissing

15
We agree with the district court that Jefferson Pilot’s aiding and abetting claim (count
XII) and its civil conspiracy claim (count XI) fail to plead fraud with specificity and should be
dismissed. See supra pp. 44-45. We do not find that Jefferson Pilot’s claim was time-barred by
operation of an incontestability clause, as we did with respect to the other insurers’ claims for
aiding and abetting fraud and civil conspiracy.

50
these claims provides an alternative independent ground upon which to dismiss

counts IV, VIII, and XVIII. We agree with the ruling of the district court on this

ground.

B. Conspiracy Claims: Failure to Allege an “Unlawful Act”& Rule 9(b)

The elements that a plaintiff must allege for a conspiracy claim are that 1)

two or more parties 2) agree 3) to commit an unlawful act. Under Florida law, the

“gist of a civil conspiracy is not the conspiracy itself but the civil wrong which is

done through the conspiracy which results in injury to the Plaintiff.” Czarnecki v.

Roller, 726 F. Supp. 832, 840 (S.D. Fla. 1989) (quoting Buckner v. Lower Florida

Keys Hosp. Dist., 403 So. 2d 1025, 1027 (Fla. Dist. Ct. App. 1981)). Thus, as this

Court has noted, a claim that is found not to be actionable cannot serve as the basis

for a conspiracy claim. See Posner v. Essex Ins. Co., 178 F.3d 1209, 1217 (11th

Cir. 1999) (applying Florida law).

Insurers VFL, Reassure, Jefferson Pilot and AUL allege that the

receivership entities conspired to acquire fraudulently procured policies “in

violation of the FVSA, Fla. Stat. § 626.99275(1)(a).” As we have already noted,

however, the FVSA does not govern the receivership entities’ actions with respect

to the policies named in these claims because they concern out-of-state viators.

51
The insurers cannot invoke the FVSA as the basis for a conspiracy claim in this

case.

The insurers’ civil conspiracy claims also fail to comport with the standards

of Rule 9(b). As the district court noted, where a conspiracy claim alleges that two

or more parties agreed to commit fraud, the plaintiffs must plead this act with

specificity. Here, the insurers provided only conclusory statements. They did not

explain how the receivership entities knew that the policies had been procured by

fraud. The only explanation offered was that the receivership entities extensively

evaluated the health of prospective viators before they tendered settlement offers.

This is not sufficient.

The insurers also failed to state when the receivership entities and their

network of unnamed brokers, agents, investors, and physicians agreed to engage in

this fraudulent purchasing scheme or “Acquisition Conspiracy.” Nor did they

allege that the receivership entities sought to acquire these policies after the

contestability periods had expired. Accordingly, we find, as the district court

suggested, that failure to plead fraud with specificity provides an alternative

ground for dismissing the insurers’ conspiracy claims.

C. AUL’s RICO Claims Fail If The Predicate Acts Are No Longer Actionable

52
 The district court did not provide a reason for dismissing the RICO claims

that AUL filed with respect to the Buchner viatical. Nevertheless, we are affirming

the court’s decision to dismiss all of AUL’s fraud claims, including the two RICO

claims, because we found the claims were time-barred. The district court

dismissed AUL’s other fraud claims because they did not conform to the

heightened pleading requirements for fraud under Rule 9(b) of the Federal Rules

of Civil Procedure. We have said this represents an independent alternative ground

upon which to dismiss these particular claims. See supra pp. 50-51.

Once the district court dismissed these two fraud claims, it could have also

properly dismissed AUL’s RICO claims since such claims cannot be maintained if

the underlying predicate acts lack legal validity. And, absent any valid predicate

acts, the insurers cannot state a claim for RICO violations. See Green Leaf

Nursery v. E.I. Dupont De Nemours & Co., 341 F.3d 1292, 1308 (11th Cir. 2003).

D. Grounds for Dismissal of Remaining RICO Claims: Lack of Standing

Ten other insurers also filed RICO claims as part of the amended ancillary

complaint, but these insurers did not ground their RICO claims in specific

predicate acts, as the law requires. See 18 U.S.C. §§ 1961(1)(a),(b), 1961(5).

Instead, they alleged that the receivership entities engaged in “an as yet

undetermined number of telephone conversations and or mailings” involving an

53
“undetermined number” of fraudulently procured policies. The insurers not only

failed to identify the specific policies addressed in these mailings, they also failed

to allege that they suffered any particularized harm as a result of the defendants’

activities. The district court dismissed these two claims, counts XXII and XXIII,

for failure to state a claim and for lack of standing.16 We affirm the district court’s

decision on these same grounds.

IV. The Pennsylvania Fraud Claim Fails to Satisfy The Requirements of Rule 9(b)

Although the receiver did not move to dismiss count II of the insurers’

amended ancillary complaint, in which VFL alleged a violation of a Pennsylvania

insurance fraud statute, the district court ordered the entire amended complaint

dismissed. As we noted in our previous discussion, the district did not provide a

reason for this sua sponte dismissal. Indeed, it is possible that the court dismissed

the claim inadvertently. It did acknowledge that the receiver had excluded one

16
The standing requirement is derived from Article III of the Constitution, which provides
that federal courts may only hear “cases or controversies.”Lujan v. Defenders of Wildlife, 504
U.S. 555, 560, 112 S. Ct. 2130, 2136, 119 L. Ed. 2d 351 (1992). To establish that a
“controversy”exists, a plaintiff must show that he suffered an “injury in fact”—an invasion of a
legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not
conjectural or hypothetical. Second, there must be a causal connection between the injury and the
conduct complained of—the injury has to be fairly traceable to the challenged action of the
defendant, and not the result of the independent action of some third party not before the court.
Third, it must be likely, as opposed to merely speculative, that the injury will be redressed by a
favorable decision. Id. at 560-61, 112 S. Ct. at 2136. By failing to allege that they suffered a
particularized harm from the activities of the receivership entities, these ten insurers have failed
to show that they meet the constitutional requirements for standing.

54
count from his motion to dismiss, but it mistakenly referred to the count as “the

one count related to the Metoyer policy.”17 Interestingly, neither of the parties

asked the court to clarify its order on this point, although the mistake was fairly

glaring.

We would not be surprised to find that the court confused the counts. The

insurers’ amended complaint presents an extreme example of a “shotgun

pleading.” The district court had to wade through a great deal of extraneous

material that addressed fraud in the viatical settlement industry as a whole. The

insurers disregarded the court’s earlier admonitions to keep this sort of material

out of their amended complaint and to plead each allegation of fraud with

specificity, identifying the agents who participated in the fraud, the dates on which

it occurred, etc.

Regardless of why the court dismissed count II, we may still review the

dismissal to see whether it falls within the parameters that appear in the cases

dealing with sua sponte dismissals. As we noted in Jefferson Fourteenth, 695 F.2d

at 527, a sua sponte dismissal under Rule 12(b)(6) will not stand where: 1) the

17
Speaking of this one count in a footnote to its order of dismissal, the court suggested
that the plaintiff might wish to refile the claim under this same case number for the sake of
simplicity, even though the “[r]eceiver has not moved to dismiss the one count relating to the
Metoyer policy.”

55
defendant has not filed an answer and the plaintiff still had a right to amend his

complaint pursuant to Rule 15(a) of the Federal Rules of Civil Procedure; 2) the

plaintiff has brought his claim in good faith; and 3) the district court has failed to

provide the plaintiff with notice of its intent to dismiss or an opportunity to

respond.

When we evaluate the court’s dismissal here against this standard, we find

that the dismissal should stand. Although the receiver had not yet filed an answer

in this case, the insurers had availed themselves of their right to file an amended

complaint. The court also provided the insurers with ample opportunity to

respond, dismissing the claims in their Amended Complaint without prejudice and

specifically giving them leave to file a Second Amended Ancillary Complaint by

August 29, 2005. The insurers rejected this offer, and filed this appeal. The

insurers did not request clarification of the court’s dismissal order, although the

court’s erroneous reference to claim which dealt with the Mullins’ policies as the

“Metoyer” claim begged for clarification. The insurers did not file a Second

Amended Ancillary Complaint, although the court freely granted them leave to do

so. And, although the court cautioned the insurers when it dismissed their original

Ancillary Complaint that they must plead fraud with particularity, they did not

heed the court’s clear notice on this subject and filed similarly defective pleadings

56
in their Amended Ancillary Complaint. Thus, this case does not fall within the

purview of those cases condemning sua sponte dismissals. See, id.

Finally, we note that the statutory fraud violation which VFL alleged in

count II reads much like its common law fraud claim, which the district court

dismissed for failure to plead fraud with specificity. The statute at issue in count II

is Pennsylvania’s Insurance Fraud Prevention Statute, 18 Pa. Cons. Stat. §

4117(a), which defines a violation as any of the following:

(2) Knowingly and with intent to defraud any insurer or self-insured,
presents or causes to be presented to any insurer or self-insured any
statement forming a part of, or in support of, a claim that contains any
false, incomplete or misleading information concerning any fact or
thing material to the claim.
(3) Knowingly and with the intent to defraud any insurer or self-
insured assists, abets, solicits or conspires with another to prepare or
make any statement that is intended to be presented to any insurer or
self-insured in connection with, or in support of, a claim that contains
any false, incomplete or misleading information concerning any fact
or thing material to the claim.

VFL asserted that the receivership entities violated both of these sections of

the statute. See Appellants’ Amended Ancillary Complaint, Count II, ¶¶ 87-88.

More specifically, VFL contended that the receivership entities submitted

doctored documents which purported to be copies of Mullins’ original insurance

applications when they filed claims for Mullins’ death benefits. VFL alleged that

someone—it did not identify the actual agent—altered the applications so as to

57
make it appear that the insurer had issued them pursuant to a GIR. The GIR would

have given Mullins the option to purchase additional insurance without having to

answer questions on his health, or attest to his insurability. VFL also alleged that

someone used “white-out” to reverse the column headings for “Yes” and “No”

answers in the medical history section of the applications.

As we noted, VFL did not allege which of the receivership entities’ agents

or corporate representatives engaged in this fraud, or the date when the agent

“assisted another to prepare or make” these changes to the insurance application.

VFL did not state whether the receivership entities made these changes before

Mullins’ death on September 24, 2003 and with his assistance, or after his death,

furnishing assistance to some other party. VFL backed the claim up by asserting

that it does not use blue ink on GIR stamps or label its checkboxes “No/Yes” as

the allegedly doctored applications do. Moreover, VFL argued that it never would

have asked Mullins to submit to a medical exam if, in fact, it had issued his

policies pursuant to GIRs.

In broad conclusory language, VFL alleges intent, material

misrepresentation, reliance, and damages. It does not, however, plead any details

as to how the receivership entities accomplished the alleged fraud. It fails to

identify which agents, if any, participated in the scheme to doctor copies of

58
Mullins’ applications. Thus, we find that this claim is properly dismissed for the

same reason that the district court dismissed VFL’s common law fraud claims:

lack of specificity in pleading fraud as required under Federal Rule of Civil

Procedure 9(b).

V. The Court Properly Dismissed the Insurers’ Claims for Equitable Relief

Counts XXIV and XXV of the insurers’ amended complaint presented

claims for a modification of the receivership order and for an accounting. The

district court dismissed both claims, but issued a specific finding solely with

respect to count XXIV. The court found that the request to modify the receiver’s

order through an ancillary complaint represented an improper collateral attack.

Thus, the court dismissed the claim for failure to state a cause of action upon

which relief could be granted, and we affirm the court’s decision for the same

reason.

With respect to count XXV, we find that the request for an accounting is

improper. Under Florida law, a party that seeks an equitable accounting must show

that: 1) the parties share a fiduciary relationship or that the questioned transactions

are complex, and 2) a remedy at law is inadequate. Kee v. Nat’l Res. Ins. Co., 918

F.2d 1538, 1540 (11th Cir. 1990). The insurers have not met any of these

preconditions.

59
 The receivership entities do not share a fiduciary relationship with the

insurers. They are not their brokers. The insurers insist that they do not know how

many of their policies were caught up in the “web of activity” between the

receivership entities and some of its affiliated brokers. That argument merely

highlights the problem with this claim. The receiver provided the insurers with a

list of all the viaticals within the scope of the receivership which pertained to the

insurers’ policies. The insurers obtained this list, which references 1700 policies,

before they filed their Amended Ancillary Complaint. The insurers have the

information regarding broker’s commissions paid, not the receivership entities.

Thus, we affirm the dismissal of this count of the complaint because the insurers

have failed to make out a claim for an equitable accounting under Florida law.

Although the district court did not discuss its reasons for dismissing this

particular claim, that is not an incurable defect. As we noted in Grant v. Seminole

County, Florida, 817 F.2d 731, 732 (11th Cir. 1987), if a district court fails to

discuss the reasons for dismissing a claim, that “does not necessarily preclude

affirmance where appropriate reasons for dismissal are readily apparent.”

CONCLUSION

The insurers’ FVSA claims are properly dismissed because the FVSA does

not govern transactions involving out-of-state viators. VFL, Reassure and AUL’s

60
fraud-based claims are properly dismissed because of incontestability clauses in

the original insurance contracts governing the Mullins, Johnson, and Buchner

policies. Such clauses bar the insurers from challenging the validity of the

contracts on the grounds of fraud after the policies have been in effect for two

years during the lifetime of the insureds. Jefferson Pilot’s fraud-based claims were

properly dismissed because the claims failed to conform to the special pleading

requirements under Rule 9(b) of the Federal Rules of Civil Procedure. The

dismissal of the insurers’ common law fraud, conspiracy and RICO claims is also

affirmed on the alternative grounds set forth herein. The district court did not err

in dismissing these claims.

Although the court dismissed one of the insurers’ statutory fraud claims sua

sponte, we nevertheless find that the Federal Rules of Civil Procedure warrant an

affirmance. This claim simply fails to conform to the requirements of Rule 9(b)

that allegations of fraud be pleaded with specificity. Additionally, we are satisfied

that the court did not foreclose the plaintiffs’ opportunity to address this

deficiency by dismissing the claim sua sponte. The court granted the insurers

leave to amend the original ancillary complaint and leave to file a second amended

complaint. The insurers’ chose a different path and brought this appeal. Finally,

we find the district court properly dismissed the insurers’ claim for modification of

61
the receivership order and that the insurers’ claim for an accounting fails to make

out a claim for equitable relief.

Thus, we AFFIRM the district court’s order dismissing the insurers’

Amended Ancillary Complaint.

62