## Facts

- Policyholders brought a putative nationwide class action against life insurers and affiliates that marketed and sold life-insurance products nationwide.
- Plaintiffs alleged three related deceptive sales practices used to sell “investment-oriented” life insurance:
  - “Vanishing premium” representations that premiums would stop after a stated period because policy values would cover future costs, despite reliance on non-guaranteed assumptions.
  - “Churning” inducements to surrender or borrow against existing policies to buy new policies, allegedly reducing existing value and generating commissions and charges.
  - Marketing policies as retirement or investment plans superior to traditional investments while allegedly minimizing insurance costs and risks.
- Plaintiffs alleged the insurer trained agents to present policy illustrations and projections as effectively guaranteed, even though performance depended on non-guaranteed elements (e.g., interest rates, dividends, and mortality assumptions).
- Plaintiffs asserted common-law claims (including fraud, contract, negligent misrepresentation, negligence, unjust enrichment) and Minnesota statutory claims (consumer fraud, false advertising, deceptive trade practices), and sought declaratory/injunctive relief and reformation.
- Defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), including challenges under Rule 9(b) for fraud pleading.

## Issues

1. Whether the fraud-based claims were pleaded with sufficient particularity under Rule 9(b) to survive dismissal.
2. Whether the insurer or its agents owed a fiduciary duty to policyholders based on the alleged sales relationship and conduct.
3. Whether Minnesota consumer-protection statutes apply to deceptive marketing of life-insurance products and were adequately pleaded (including reliance/causation).
4. Whether the economic-loss doctrine barred negligence and negligent-misrepresentation claims seeking recovery for purely economic losses tied to product performance.
5. Whether contract and implied-covenant theories could be based on pre-contract sales representations rather than policy terms, and whether unjust enrichment and equitable remedies could be pleaded alongside contract claims.

## Decision

- The court granted the motion to dismiss in part and denied it in part.
- The court held the complaint sufficiently described a company-wide pattern of misrepresentations to satisfy Rule 9(b) at the pleading stage; core fraud-based claims were not dismissed for lack of particularity.
- The court dismissed the breach of fiduciary duty/constructive fraud claim for failure to allege facts establishing a fiduciary relationship beyond an ordinary arm’s-length insurer-policyholder relationship.
- The court dismissed negligence-based claims to the extent they sought purely economic damages for disappointed expectations about policy performance under the economic-loss doctrine.
- The court allowed breach of contract claims to proceed insofar as they were tied to obligations in the written policies, while limiting implied-covenant theories that attempted to convert sales projections into independent contractual duties.
- The court permitted Minnesota Consumer Fraud Act, False Advertising, and related statutory claims to proceed, rejecting a categorical exemption for insurance marketing.
- The court allowed unjust enrichment to be pleaded in the alternative at the motion-to-dismiss stage and treated declaratory/injunctive relief and reformation as remedies dependent on surviving substantive claims.

## Legal Principles

- Fraud must be pleaded with particularity under Rule 9(b), but a detailed description of alleged schemes, actors, methods, and time frame can provide sufficient notice at the dismissal stage.
- Under Minnesota law, an insurer-policyholder relationship is generally contractual and arm’s-length; a fiduciary duty requires specific allegations of special circumstances showing an assumed advisory role or heightened trust.
- The economic-loss doctrine can bar negligence and negligent-misrepresentation claims seeking purely economic damages arising from product performance when contract law supplies the principal remedy, while intentional fraud may proceed as an independent tort.
- Minnesota consumer-protection statutes may reach deceptive marketing of life-insurance products; insurance is not categorically exempt where the claim targets deceptive sales practices.
- Contract claims must be grounded in policy terms; implied-covenant theories cannot be used to create new obligations based solely on pre-contract sales projections.
- Unjust enrichment may be pleaded in the alternative where the availability of an adequate contract remedy is uncertain at the pleading stage; equitable remedies are generally dependent on viable underlying causes of action.

## Conclusion

The court permitted policyholders to proceed on fraud, contract, and Minnesota consumer-protection theories challenging alleged deceptive life-insurance marketing practices, while dismissing the fiduciary-duty claim and negligence-based claims barred by the economic-loss doctrine and limiting implied-contract theories based on sales projections.


Force v. ITT Hartford Life & Annuity Ins. Co., 4 F. Supp. 2d 843 (D. Minn. 1998)