Law firm Cozen O’Connor has multiple conflicts in a Delaware life insurance trust case and can’t continue to represent its client due to a risk that its lawyers will need to testify, the Delaware Superior Court ruled.
Even though Cozen screened off the attorneys from one another and “demonstrated the vigilance appropriate to the profession,” it can’t continue to represent Sun Life Assurance Co. of Canada, Judge Paul R. Wallace said.
The Wilmington Savings Fund Society demanded payment from Sun Life on a life insurance policy. Sun Life sued WSFS, alleging the policy was void from the start as an illegal wager on a life.
Cozen represented Sun Life in the suit, but it had a longstanding outside counsel relationship with WSFS, according to the court. And it previously represented a company called Ocean Gate Life Settlement Program LP, which purchased the life insurance policy from the original insured and beneficiary, the court said.
WSFS asked the court to disqualify Cozen.
Wallace said Sun Life and Ocean Gate were materially adverse to each other in a December ruling, and Sun Life asked him to reconsider.
But Sun Life conceded Ocean Gate was a prior Cozen client, he said. The two are materially adverse, even though Ocean Gate used the policy as collateral for loans from the California Public Employees’ Retirement System, he said. CalPERS could sue Ocean Gate if the policy is found void, he said.
And “Cozen’s work constitutes evidence of business practice and habit prevailing at the time the Policy was acquired, admissible to determine how Ocean Gate acted in that acquisition,” Wallace said. Its work “goes to the very heart of the case,” he said.
Cozen O’Connor represented Sun Life. K&L Gates LLP represented WSFS.
The case is Sun Life Assurance Co. of Canada v. Wilmington Sav. Fund Soc’y, FSB, 2020 BL 132874, Del. Super. Ct., No. N18C-08-074 PRW CCLD, 4/9/20.