Hobish v. AXA Equit. Life Ins. Co.

2025 NY Slip Op 30729(U)

• Court: New York Supreme Court, New York County
• Decided: March 3, 2025
• Docket: Index No. 650315/2017
• Status: Unpublished

Opinion

Hobish v AXA Equit. Life Ins. Co. 2025 NY Slip Op 30729(U) March 3, 2025 Supreme Court, New York County Docket Number: Index No. 650315/2017 Judge: Andrea Masley Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. FILED: NEW YORK COUNTY CLERK 03/03/2025 02:45 PM INDEX NO. 650315/2017 NYSCEF DOC. NO. 295 RECEIVED NYSCEF: 03/03/2025

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 48 -----------------------------------------------------------------------------------X RICHARD HOBISH AS TRUSTEE OF THE HOBISH INDEX NO. 650315/2017 TRUST and TOBY HOBISH,

Plaintiffs, MOTION DATE --

-v- MOTION SEQ. NO. 006 AXA EQUITABLE LIFE INSURANCE COMPANY, DECISION + ORDER ON Defendant. MOTION

-----------------------------------------------------------------------------------X

HON. ANDREA MASLEY:

The following e-filed documents, listed by NYSCEF document number (Motion 006) 276, 277, 278, 283, 284, 287, 289 were read on this motion to/for STRIKE PLEADINGS .

Defendant AXA Equitable Life Insurance Company (Equitable) moves for: (1) an

order striking plaintiff Richard Hobish’s as trustee of the Hobish trust and as the

Executor of the Estate of Toby Hobish (Hobish) January 17, 2025 Supplemental

Responses and Objections to Equitable’s Amended First Set of Interrogatories; and (2)

an order confirming that at trial Hobish may only seek nominal damages of $1 on their

breach of contract claim and statutory damages of $50 on their General Business Law

(GBL) §349 claim.

The jury trial in this matter is scheduled to begin on March 24, 2025. (NYSCEF

Doc. No. [NYSCEF] 256, Order.) The issue for trial is whether Equitable breached the

contract and violated GBL §349 by impermissibly raising the Policy’s rates. (NYSCEF

53, Amended Complaint ¶¶32-44.) In March 2016, when Toby Hobish was 90 years of

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age,1 Equitable increased the cost of Hobish’s 2007 Athena Universal Life Insurance

Policy (Policy). (NYSCEF 137, Stipulated Joint Statement of Undisputed Facts ¶20.)

Hobish initiated this action in 2017. On January 17, 2025, following grant of summary

judgment in favor of Equitable on damages, affirmed by the Court of Appeals, Hobish

withdrew his prior responses to Equitable’s interrogatory which requested Hobish’s

damages and calculations. (NYSCEF 277, Larry H. Krantz2 January 28, 2025 aff,

Hobish’s Supplemental Interrogatory Responses at 56/80.)3 Now, Hobish asserts two

new damage theories totaling damages of $917,116.46 which consists of: (1)

$501,116.46, the return of all the premiums paid since 2007 calculated by deducting

from the amount of premiums paid since 2007 ($913,804.47) Equitable’s termination

payment to Hobish ($412,688.01), and (2) “$416,000, which represents the additional

amounts that Plaintiffs would have had to pay for the life insurance coverage for which

they had contracted[4] (discounted to present value as of October 2015), as a result of

AXA’s wrongful conduct.” (Id. at 59/80.) Hobish’s new damage theories rely on In re

AXA Equitable Life Ins. Co. COI Litig., 595 F Supp 3d 196, 229 (SD NY 2022), a class

action5 arising from the same rate increase where the court held that “[o]vercharge

1 Hobish passed away in September 2019. (NYSCEF 137, Stipulated Joint Statement of Undisputed Facts at 6 n 1.) Richard Hobish, as the executor of the Estate of Toby Hobish, was substituted for the deceased. (See NYSCEF 95, Order.) 2 Krantz is Equitable’s counsel. (NYSCEF 277, Krantz January 28, 2025 aff ¶1.)

3 Equitable shall follow the Part 48 Procedures and file exhibits separately with

meaningful labels. Should Equitable fail to follow this procedure again, the court will disregard the affidavit and exhibits. 4 Equitable asserts that the interrogatory is unclear as to whether Hobish is comparing a

hypothetical replacement policy to the difference between the cost of insurance (COI) charges that would have been paid had Hobish obtained such a replacement policy, which Hobish did not do. 5 Hobish allegedly opted out of the class. (NYSCEF 278, Equitable’s MOL at 9.)

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damages . . . are equal to the actual COI charge deducted on [a given] date less the

COI charge that would have been imposed on that date but for the 2016 COI rate

increase (‘but-for COI charge’),” and defendants’ expert Professor Glenn Hubbard.

(Sept. 13, 2019 Glenn Hubbard Report at 7, 32-33.6) Hobish also seeks prejudgment

interest calculated from October 5, 2015, the date of Equitable’s notice of rate increase,

and reasonable attorney’s fees.7 (NYSCEF 137, Stipulated Joint Statement of

Undisputed Facts ¶17.)

Hobish explains that the Supplemental Interrogatory Responses were submitted

under CPLR 3101(h) because the Court of Appeals “clarified the law on damages.”

(NYSCEF 289, Hobish’s MOL at 2.) This court rejects Hobish’s assertion that the Court

of Appeals decision is a new fact. However, the court agrees that the Court of Appeals

invited Hobish to assert any remaining actual, consequential or compensatory damages

available for breach of contract or restitutionary damages available for breach of GBL

§349. Accordingly, the court addresses Hobish’s two new theories and rejects them in

part.

On summary judgment, this court rejected Hobish’s prior damage theory:

“The Trust’s claim for damages fails as a matter of law. As a preliminary matter, the parties conceded that all insurance coverage under the Policy ended as of the date of the Policy surrender in July 2016. The Trust maintains that it . . . is entitled to compensatory . . . damages of at least $1,587,311.99 [representing the $2 million death benefit minus the surrender payment]. . . . Such damages, however, do not relate to any actual harm that resulted from AXA’s alleged breach. Instead, the record shows that the Trust’s beneficiaries ran financial calculations when considering whether to ‘Keep the Policy and Pay the [] Premium’ or ‘Surrender the Policy and Invest the Funds,’ and voluntarily decided

6 Although Hobish quotes from the Hubbard report, the report does not appear to have been filed on the docket. 7 Parties fail to address whether Hobish would be entitled to attorneys’ fees if nominal

damages are awarded. 650315/2017 HOBISH, RICHARD AS TRUSTEE vs. AXA EQUITABLE LIFE INSURANCE Page 3 of 7 Motion No. 006

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to surrender the Policy and forgo the insurance coverage and the $2 million Death Benefit. . . . [T]he record does not support the proposition that AXA wrongfully cancelled the Policy. Instead, the record shows that the Trust voluntarily surrendered it.” (NYSCEF 243, July 15, 2022 Decision and Order at 14-16 [citations omitted] [mot. seq. nos. 003, 004]; Richard Hobish as Trustee of the Hobish Trust v AXA Equitable Life Ins. Co., 2022 NY Slip Op 32321[U], *14- 16 [NY Sup Ct, New York County 2022], affd 225 AD3d 487 [1st Dept 2024], affd 2025 NY Slip Op 00183 [2025].)

This court also rejected Hobish’s claim for restitution damages:

“Plaintiffs’ claim for restitutionary damages fails as a matter of law. Plaintiffs state that they expect the evidence to show that they are entitled to restitutionary damages of $253,295.38 representing the amount of the Policy Account in November 2015 ($502,640) offset by the amount that would have been withdrawn from the Policy Account during the four years of Ms. Hobish’s life expectancy to November 2019 ($249,354.62)” (id. at *17)

and punitive damages under GBL §349. (Id. at *18-19.)

The Appellate Division affirmed and stated that it would not address what

damages may be available, an issue raised by Equitable. (Hobish as Trustee of Hobish

Irrevocable Trust, 225 AD3d at 488.) It rejected Hobish’s claims for compensatory and

consequential damages of $1.6 million and restitutionary damages of $249,354.62. (Id.

at 488-89.)

On January 14, 2025, the Court of Appeals affirmed and specifically delineated

the requirements for Hobish to seek the damages they now seek:

“Upon defendant’s alleged breach, plaintiffs did not terminate the insurance policy. Rather, they enforced it by opting to receive a defined contractual benefit— the surrender payment—and terminate the policy’s coverage. And they did so deliberately, after extensive financial deliberations with various family members . . . . Notably, the decision to take the surrender value allowed for the family to access otherwise unavailable funds that would not have reverted to the Trust upon Ms. Hobish’s death. Had plaintiffs wanted to keep the policy in force and obtain the death benefit, they could have refused to pay any further premiums and allowed for COI charges to be deducted from the amount remaining in the account, or sued defendant for injunctive relief to prevent the draining of the policy account and subsequent acceleration of the COI charges under the new COI Rate Scale . . . . They did not pursue these options.” 650315/2017 HOBISH, RICHARD AS TRUSTEE vs. AXA EQUITABLE LIFE INSURANCE Page 4 of 7 Motion No. 006

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(Richard Hobish as Trustee of the Hobish Trust, 2025 NY Slip Op 00183, *3 [citations omitted].)

The Court of Appeals rejected Hobish’s claim for actual damages of $1.6 million for

breach of contract because Hobish did not follow the requirements above. (Id.) The

Court also rejected Hobish’s claim for $1.6 million under GBL §349 as actual,

compensatory, and consequential damages. (Id. at *4.) The Court agreed with the

Appellate Division that “restitutionary damages may be available on their section 349

cause of action,” but the record before the court did not support the claim. (Id. at *2.)

Finally, the Court rejected punitive damages under GBL §349 because the statute’s

“layered damages” of “actual damages or fifty dollars, whichever is greater,

discretionary treble damages up to a cap of $1,000; and attorneys’ fees” do not mention

punitive damages. (Id. at *4.)

Equitable argues that Hobish’s two new damages theories are wrong. First,

Equitable insists that a refund of $501,116.46 for all premiums paid under the Policy

since 2007 to July 2016, when Hobish surrendered the Policy, is not available because

there was no alleged breach during that time and the Policy was in effect. The court

agrees. Indeed, Equitable’s alleged breach would not have occurred until Equitable

notified Hobish of the rate hike in October 2015.

Second, Equitable attacks Hobish’s damages for $416,000 representing COI

charges that plaintiffs would have paid had they not surrendered the Policy in July 2016

or the cost of replacement insurance as speculative and thus impermissible. The court

agrees based on the Court of Appeals decision. Hobish failed to follow the proper

procedure to recover the cost of replacement insurance since Hobish failed to purchase

such replacement insurance; it terminated the Policy and collected $412,688.01 instead. 650315/2017 HOBISH, RICHARD AS TRUSTEE vs. AXA EQUITABLE LIFE INSURANCE Page 5 of 7 Motion No. 006

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To the extent that Hobish seeks the difference between what it would have paid and

should have paid for the life of the Policy,8 the court agrees that Hobish cannot recover

damages for amounts he did not pay because he terminated the Policy. Hobish’s

reliance on Hubbard’s analysis is misplaced since Hubbard “exclude[]s losses caused

by [Hobish’s] decision to exercise their contractual rights voluntarily surrender the

Hobish Policy.” (NYSCEF 289, Hobish’s MOL at 13, quoting Hubbard Report.)

However, a subset of this theory is “overcharge damages,” the inflated amount that

Hobish briefly paid until he terminated the Policy and collected the surrender value

under to the Policy. Equitable asserts the amount of overcharge damages is

approximately $14,000. (NYSCEF 278, Equitable’ s MOL at 10.) Equitable concedes

that this damages theory is not foreclosed by prior decisions. Therefore, Hobish’s

supplemental interrogatory is struck except as to overcharge damages.

Therefore, Hobish’s damages at trial, if any, will be limited to overcharge

damages for breach of contract and the statutory limit of $200 ($50 plus treble

damages) under GBL §349.

Accordingly, it is

ORDERED that defendant AXA Equitable Life Insurance Company’s motion is

granted in part to the extent that the supplemental interrogatory is struck in part and

8The court rejects Hobish’s reliance on Burnett v Conseco Life Insurance Company, 690 Fed Appx 536, 537 (9th Cir 2017) where the court applied California law which appears to be different than New York. “California generally permits pre-termination breach of contract claims” even after plaintiff accepted the termination value under the contract. (Id. at 537; cf. Richard Hobish as Trustee of the Hobish Trust, 2025 NY Slip Op 00183.) 650315/2017 HOBISH, RICHARD AS TRUSTEE vs. AXA EQUITABLE LIFE INSURANCE Page 6 of 7 Motion No. 006

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damages, if any, will be limited to overcharge damages and $200 under GBL §349; and

it is further

ORDERED that the parties shall appear for a remote pre-trial conference at 2:30

p.m. on March 7, 2025 to review the verdict sheet and jury charges.

3/3/2025 DATE ANDREA MASLEY, J.S.C. CHECK ONE: CASE DISPOSED X NON-FINAL DISPOSITION

□ GRANTED DENIED X GRANTED IN PART OTHER

APPLICATION: SETTLE ORDER SUBMIT ORDER

□ CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE

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