# ROSENBERG v. NASSAU LIFE & ANNUITY COMPANY

> District Court, E.D. Pennsylvania · July 13, 2022

URL: https://www.frixlaw.com/law-library/cases/10403646

## Case

- **Court:** District Court, E.D. Pennsylvania
- **Decided:** July 13, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10403646

## How later opinions describe it (automated extraction)

- explaining that “to determine whether an action is barred by the gist of the action doctrine [the court] must examine the factual allegations and ask, ‘What’s the case really about’” (citation omitted)
- explaining that Pennsylvania recognizes “an implied covenant of good faith where, as here, the defendant is expressly given a constrained amount of discretion under the Policy”

## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

SARA ROSENBERG, CIVIL ACTION

Plaintiff,
NO. 21-2673-KSM
v.

NASSAU LIFE & ANNUITY COMPANY, et
al.,

Defendants.

MEMORANDUM
MARSTON, J. July 13, 2022
Plaintiff Sara Rosenberg, acting as trustee for the Douglas Rosenberg 2004 Trust (the
“Trust”), brings claims for breach of contract, unjust enrichment, fraudulent misrepresentation,
negligent misrepresentation, and violation of Pennsylvania’s Unfair Trade Practices & Consumer
Protection Law (the “UTPCPL”) against Defendant PHL Variable Insurance Company (“PHL
Variable”) and Defendants PHL Delaware, LLC, Nassau Insurance Group Holdings, L.P., and
Nassau Financial Group, L.P. (collectively, the “Nassau Defendants,” and together with PHL
Variable, the “Defendants”). Defendants have filed a motion to dismiss. For the reasons
discussed below, the motion is granted in part and denied in part.
BACKGROUND FACTS
Taking the allegations in the Second Amended Complaint (Doc. No. 19) as true,1 the
relevant facts are as follows.

1 When reviewing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court
“must accept the allegations in the complaint as true, but are not compelled to accept unsupported
A. The Initial Policy
On May 7, 2001, Defendant PHL Variable issued a $20 million life insurance policy on
the life of Maury Lane Rosenberg (the “Policy”). (Doc. No. 19 at ¶ 15.) Douglas Rosenberg is
Maury’s son and the named beneficiary for the Trust, which is, in turn, the named owner and
beneficiary on the Policy.2 (Id.) The Policy was set to last for 20 years, giving it an expiration

date of May 7, 2021. (Id. at ¶ 23.) During that 20-year period, the Trust paid the Policy’s annual
premiums, which varied from year to year, but totaled more than $1 million over the lifetime of
the Policy. (Id. at ¶¶ 24, 26–27.)
In addition to paying the Policy’s premiums and being entitled to the death benefit, the
Trust retained certain rights that it could exercise while the Policy was in force, i.e., “lifetime
benefits.” (Id. at ¶ 28.) These lifetime benefits included the right to “convert this policy until”
May 7, 2021. (Id. at ¶ 29 (quoting id. Ex. 2 at Policy Summary).) More specifically, the Trust
could “convert this Policy, without evidence of insurability, to a new Policy on the life of the
same insured under this Policy but on a different plan of insurance.” (Id. at ¶ 30; id., Ex. 2 at
p. 4.) This conversion right extended to “any whole life or universal life insurance plan” that

PHL Variable or its affiliates “offer[ed] at the time of conversion.” (Id. at ¶ 31; id., Ex. 2 at p.
4.)

conclusions and unwarranted inferences, or a legal conclusion couched as a factual allegation.”
Castleberry v. STI Grp., 863 F.3d 259, 263 (3d Cir. 2017) (quotation marks omitted).
2 When the Policy was issued, the named owner and beneficiary was a Trust for the benefit of
Douglas Rosenberg, which was established in August 1989 (the “1989 Trust”). (Id. at ¶ 16.) Douglas’s
wife, Sara Rosenberg, served as trustee of the 1989 Trust. (Id.) In 2004, Douglas Rosenberg assigned the
assets of the 1989 Trust, including the Policy, to the newly established Douglas Rosenberg 2004 Trust,
for which Sara Rosenberg again served as trustee. (Id. at ¶ 18.)
B. The PAUL IV Policy
In 2016, fifteen years after PHL Variable issued the Policy, the Nassau Defendants
acquired PHL Variable and since then have provided “management, customer service, and other
services to PHL Variable and its policyholders.” (Id. at ¶¶ 20–21.)
In November and December of 2019, Sara Rosenberg began investigating the Trust’s

conversion options under the Policy, with the expectation that it would convert the Policy
sometime in 2020 or 2021. (Id. at ¶ 33.) Working with Douglas Rosenberg and a Pennsylvania
insurance agent, Sara Rosenberg reached out to PHL Variable and the Nassau Defendants by
phone and email, requesting the premium calculations and illustrations for any policies available
for conversion. (Id. at ¶ 34.) In response, Defendants provided three options for conversion to a
Phoenix Accumulator Universal Life (“PAUL”) IV policy. (Id. at ¶¶ 37–38.) The first was a
$20 million PAUL IV policy with an annual premium of around $789,000. (Id. at ¶ 37.) The
second was a $5 million PAUL IV policy with an annual premium of around $197,000. (Id. at
¶ 38.) And the third was a $1 million PAUL IV policy with an annual premium of around
$40,000. (Id.) The illustrations for each policy reflected a rate of approximately $39.50 per

$1,000 of coverage. (Id. at ¶ 39.)
The agents also explained that the PAUL IV options would not be available in 2020. (Id.
at ¶ 42.) They would not, however, provide any information on the pricing and structure of
future conversion options, asserting that they did not know or have access to such information.
(Id. at ¶¶ 43–44.) Hedging its bets, the Trust converted $10 million, or half, of the Policy to the
PAUL IV option in December 2019. (Id. at ¶ 46.) Although the Trust wanted to convert the
entire $20 million of the Policy, it reasoned that it would have comparable options in the new
year given the alleged lack of information about any new type of plan and Defendants’ business
model and marketing strategy to date. (Id. at ¶ 47 (“Given that dropping an affordable universal
life policy would represent a major change in strategy and marketing for Defendants and their
affiliates, the Trust relied on the alleged unavailable [sic] of information related to any future
policy options as evidence that an alternative to PAUL IV would be offered, and thus relied on
the absence of such information in deciding against converting the entire policy.”).)

C. The Remembrance Policy
On January 14, 2020, two weeks after Defendants’ agents told Rosenberg that they had
no information about the policies that would be available in 2020, Defendants informed
Rosenberg that the only non-term life insurance product now available for conversion was a
Remembrance whole life policy. (Id. at ¶ 53; see also id. at ¶ 54 (alleging that the Remembrance
policy was the only non-term policy offered to the Trust in 2020 and 2021).) Unlike the PAUL
IV option, which was a traditional life insurance policy (i.e., providing an insured with insurance
coverage that would match an insured’s need to financially support his or her family after death),
the Remembrance policy is a limited purpose whole life product with a guaranteed cash value
that is designed to cover funeral expenses and emergency funds in the case of illness or death.
(Id. at ¶ 56.)

The Trust did not, however, “desire a policy for funeral expenses, illness, or death, and it
did not desire a policy with significant cash value.” (Id. at ¶ 60.) Nor did it wish to pay the
significant annual premiums that came with the Remembrance policy. At a rate of around $90
for every $1,000 of coverage, the premiums for the Remembrance policy were more than double
the annual premiums for the PAUL IV policy. (Id. at ¶ 59.) At that rate, a $5 million
Remembrance policy carried an annual premium of approximately $450,000, and to convert the
remaining $10 million of the Plan would cost around $900,000 a year. (Id.) According to
Rosenberg, this made “conversion economically unfeasible.” (Id.)
When the Trust’s representatives learned about the Remembrance policy, they asked
Defendants to permit the Trust to convert the remaining $10 million of the Policy to the PAUL
IV product. (Id. at ¶ 68.) Defendants refused. (Id. at ¶ 69.) And on May 9, 2021, Defendants
sent the Trust a “Notice to Prevent Lapse,” stating that the non-converted portion of the Policy

would lapse if they did not receive a premium payment of $283,142.06. (Id. at ¶ 71.) This
premium was significantly more than the Trust would have had to pay had it converted the entire
Policy to the PAUL IV option. (Id.)
PROCEDURAL HISTORY
Sara Rosenberg filed this action on June 14, 2021 against PHL Variable and the Nassau
Defendants. (Doc. No. 1.) She alleges that Defendants “knew and withheld from Plaintiff and
its other policyholders its intention to only offer a far more expensive conversion product in
order to induce its policyholders not to convert before December 31, 2020 [sic].” (Doc. No. 19
at ¶ 62; see also id. at ¶ 73 (“Nassau did not inform the 2004 Trust that Nassau would not sell
any universal life policies in 2020, despite having made the decision prior to December 31,
2019.”).) According to Rosenberg, it is not only unlikely, but “impossible,” that Defendants

waited until January 14, 2020 to decide to offer only a whole life Remembrance policy, or to
have established standard policy terms, policy forms, and pricing for the Remembrance product.
(Id. at ¶¶ 63–64 (“Indeed, the Nassau Remembrance life product was already in existence no
later than October 2019.”).)
Rosenberg alleges that Defendants concealed this information from policyholders like the
Trust “as part of a company-wide effort to protect the company at the expense of its
policyholders by driving the owners of beneficiaries of valuable policies away from conversion
or retention and into lapse by making such policies impossibly expensive to maintain.” (Id. at
¶ 74.) She claims that if the Trust had been advised of the Remembrance product before
December 31, 2019, it would have converted the entire Policy to the PAUL IV product, instead
of only $10 million. (Id. at ¶ 61.) Last, Rosenberg alleges that in addition to withholding
information about the Remembrance product until after conversion to PAUL IV was unavailable,
Defendants also failed to tell the Trust about whole life and universal life policies available

through PHL Variable’s affiliates, as required by the Policy. (Id. at ¶ 70.)
Rosenberg brings causes of action for breach of contract (Count I) and in the alternative,
unjust enrichment (Count V), against PHL Variable. She also brings claims for fraudulent
misrepresentation (Count II), negligent misrepresentation (Count III), and violation of
Pennsylvania’s UTPCPL (Count IV) against all Defendants. Defendants have moved to dismiss
the Second Amended Complaint in its entirety. (See Doc. No. 22.) Rosenberg opposes their
motion. (Doc. No. 23.)
STANDARD OF REVIEW
A. Federal Rule of Civil Procedure 8(a)(2)
Under Federal Rule of Civil Procedure 8(a)(2), a complaint must contain a “short and
plain statement of the claim showing that the pleader is entitled to relief.” This Rule does not

require detailed pleading, but instead, demands only that the allegations in the complaint give
“the defendant fair notice of what the claim is and the grounds upon which it rests.” McDermott
v. Clondalkin Grp., Inc., 649 F. App’x 263, 266 (3d Cir. 2016) (quoting Connelly v. Lane Constr.
Corp., 809 F.3d 780, 786 (3d Cir. 2016)) (cleaned up); see also Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (“[A] complaint must contain sufficient factual matter, accepted as true, to state a
claim to relief that is plausible on its face,” meaning the court can “draw the reasonable inference
that the defendant is liable for the misconduct alleged.” (quotation marks omitted)).
As a general matter, a district court ruling on a motion to dismiss may not consider
matters extraneous to the pleadings.” In re Burlington Coat Factory Secs. Litig., 114 F.3d 1410,
1426 (3d Cir. 1997). “However an exception to the general rule is that a document integral to or
explicitly relied upon in the complaint may be considered without converting the motion to
dismiss into one for summary judgment.” Id. (cleaned up).
B. Federal Rule of Civil Procedure 9(b)
When a plaintiff alleges fraud, Rule 9(b), not Rule 8(a), applies. Under Rule 9(b), a party

“alleging fraud . . . must state with particularity the circumstances constituting fraud.” Fed. R.
Civ. P. 9(b). To satisfy this standard, the complaint “must provide all of the essential factual
background that would accompany the first paragraph of any newspaper story—that is, the who,
what, when, where, and how of the events at issue.” United States v. Eastwick Coll., 657 F.
App’x 89, 93 (3d Cir. 2016).
DISCUSSION
Defendants move to dismiss the Second Amended Complaint in its entirety. (See Doc.
No. 22.) We address the breach of contract claim (Count I) before turning to the tort claims
(Counts II, III, and IV), and finally, to Rosenberg’s alternative claim for unjust enrichment
(Count V).

A. Count I: Breach of Contract
Rosenberg brings a breach of contract claim against PHL Variable. “[F]or a plaintiff to
maintain a successful cause of action for breach of contract, the plaintiff must demonstrate the
following: (1) the existence of a contract between the plaintiff and defendant, including its
essential terms; (2) a breach of a duty imposed by the contract; and (3) damages resulting from a
breach of that duty.” Reeves v. Middletown Athletic Ass’n, 866 A.2d 1115, 1125 (Pa. Super. Ct.
2004); see also In re Lincoln Nat’l COI Litig., 269 F. Supp. 3d 622, 632 (E.D. Pa. 2017) (“In
order to state a claim for breach of contract, a plaintiff must allege the existence of a contract,
including its essential terms, a breach of a duty imposed by the contract and resulting
damages.”). PHL Variable focuses on the second element, arguing that Rosenberg failed to
allege that it breached any duty imposed by the Policy. (Doc. No. 22 at p. 13.) Rosenberg
responds that she has “alleged a breach based on both an express contract term and the implied
covenant of good faith and fair dealing.” (Doc. No. 23 at p. 15.)

1. Breach of an Express Term
First, Rosenberg argues that PHL Variable breached the lifetime benefits provisions
outlined in Part 6 of the Policy, including the “right to convert this Policy, without evidence of
insurability, to a new Policy on the life of the same insured under this Policy but on a different
plan of insurance.”3 (Doc. No. 19 at p. 39.) This provision specifies that the new policy must be
“a[ ] whole life or a[ ] universal life insurance plan” that PHL Variable or its “affiliate companies
offer at the time of conversion . . . so long as it provides for a level death benefit and [PHL
Variable or its] affiliate companies issue that plan with the Face Amount requested.” (Id.)
Rosenberg alleges that PHL Variable breached this provision “by not offering every
available term or universal life policy offered by it or its affiliates.” (Id. at ¶ 79.) Although
Rosenberg has not identified a specific alternate policy, she does allege “[o]n information and

belief . . . that some of [PHL Variable’s] affiliates offered other whole life or universal life
policies in 2019, 2020, or 2021, yet Defendants never offered those policies to the Trust.” (Id. at
¶ 70.) And with her response brief, Rosenberg provides a list of 20 companies affiliated with
PHL Variable, 15 of which are operating insurance entities. (Doc. No. 23 at p. 50; see also id. at
p. 16 n.2 (arguing that “in light of both Defendants’ financial incentives and the number of
acknowledged affiliate companies, it is plausible that at least one of those affiliates offered a

3 Because Rosenberg’s breach of contract claim is based on the Policy, we may consider its terms
in deciding this motion to dismiss.
policy between 2019 and 2021 that PHL[ Variable] failed to present” to Rosenberg as a viable
conversion option).)
PHL Variable takes issue with Rosenberg’s allegation because it is based on “information
and belief,” arguing that she “could have specified from publicly-accessible information which

product offerings were available from PHL [Variable’s] affiliates and which it would qualify for,
but she did not.” (Doc. No. 22 at p. 15.) This places too a high a burden on Rosenberg at the
pleading stage. The Third Circuit has found that “pleading upon information and belief is
permissible ‘where it can be shown that the requisite factual information is peculiarly within the
defendant’s knowledge or control’—so long as there are no ‘boilerplate and conclusory
allegations’ and ‘plaintiffs accompany their legal theory with factual allegations that make their
theoretically viable claim plausible.’” McDermott, 649 F. App’x at 268 (quoting In re
Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 216 (3d Cir. 2002)) (cleaned up); see also
Shopman’s Local Union 502 Pension Fund v. Samuel Grossi & Sons, Inc., __ F. Supp. 3d __,
Civil Action No. 20-cv-5776, 2022 WL 63038, at *6 (E.D. Pa. Jan. 6, 2022) (“[U]pon

information and belief’ pleading is appropriate where, as here, the requisite factual information is
peculiarly within the defendant’s knowledge or control.” (quotation marks omitted)); Pontiaki
Spec. Maritime Enters. v. Talveras Grp., Civ. No. 16-247-LPS, 2016 WL 4497058, at * 3 (D.
Del. Aug. 26, 2016) (“The Court finds that, because much of the relevant information is in
Defendants’ control, and because Pontiaki has supported its theory with sufficient factual
allegations and exhibits, the pleadings made on information and belief are appropriate and will
be considered in evaluating the motion to dismiss.”).
The policies offered by PHL Variable’s affiliate companies during the relevant period, if
any, are clearly matters “within the defendant’s knowledge or control.” And Rosenberg’s
allegation is more than mere boilerplate or a conclusory assertion. To the contrary, it explains
how PHL Variable breached the Policy—by withholding viable options for conversion. See
McDermott, 649 F. App’x at 268 (finding that the relevant allegations were not “merely legal
conclusions” or “boilerplate” because they “explain[ed] how Clondalkin allegedly breached the

contract”); see also Doggie Dental, Inc. v. Cdoffice, Civil Action No. 2:21-cv-00271, 2021 WL
5411432, at * 4 (W.D. Pa. Sept. 7, 2021) (“The Court concludes that these allegations provide
more than a conclusory boilerplate statement that defendants were working in concert. Rather,
they explain how the defendants allegedly worked together in a common scheme to profit off the
unauthorized use of Plaintiffs’ intellectual property.”). Therefore, we may consider the “on
information and belief” allegations.
With those allegations in mind, we turn to PHL Variable’s argument that the breach of
contract claim fails because the Policy “only gives the holder of a term policy the option of
converting to any whole life or universal plan that PHL [Variable] is then offering for new
sales,” and the only qualifying plan being offered in 2020 was the Remembrance option. (Doc.

No. 22 at p. 14.) This argument rests on a dispute of fact. At this stage, we must accept as true
the factual allegations in the Second Amended Complaint, including the allegation that PHL
Variable’s affiliates did offer qualifying policies.4 Taking that allegation as true, Rosenberg has
stated a claim for breach of the Policy’s express provisions.

4 PHL Variable references two cases which it asserts “dismissed similar breach of contract claims
where the insurers stopped offering any policies for conversion.” (Doc. No. 22 at p. 14 (emphasis
added).) Because we assume for purposes of this motion that PHL Variable’s affiliates did offer other
qualifying policies, these cases are not controlling on the issue before us—whether PHL Variable
breached the Policy when its affiliates offered qualifying plans at the time of conversion and it failed to
tell the Trust about those options. Contra. Iacono v. ReliaStar Life Ins. Co. of N.Y., 559 F. Supp. 3d 141,
144 (E.D.N.Y. 2021) (finding the insurer did not breach the insurance policy’s exchange provision
because “surrender of the policy, a prerequisite for the exchange provision, may only occur prior to the
Maturity Date,” which was February 17, 2019, but the insured “made no demands . . . concerning the
exercise of a policy exchange until May 2019, several months after the maturity date”); Wiseman v. ING
2. Breach of the Implied Covenant of Good Faith and Fair Dealing
In addition to her claim for breach of the contract’s express provisions, Rosenberg also
alleges that PHL Variable breached the implied covenant of good faith and fair dealing. (Doc.
No. 19 at ¶¶ 80–85.) Section 205 of the Second Restatement of Contracts outlines this covenant,
stating, “Every contract imposes upon each party a duty of good faith and fair dealing in its

performance and its enforcement.” Restatement (Second) of Contracts § 205; see also Baker v.
Lafayette Coll., 504 A.2d 247, 255 (Pa. Super. Ct. 1986) (“We hold that the College had a
limited duty to evaluate Baker in good faith which is defined by the terms of the College’s
contractual undertakings. This is consistent with the general duty of contracting parties to
perform their contractual obligations in good faith set forth in the Restatement (Second) of
Contracts at section 205.”). “Good faith” has been defined as “[h]onesty in fact in the conduct or
transaction concerned.” Creeger Brick & Building Supply Inc. v. Mid-State Bank & Tr. Co.,
SEDA, 560 A.2d 151, 153 (Pa. Super. Ct. 1989).
Although the full meaning of “good faith” varies with context, Baker, 504 A.2d at 255,
courts agree that “the duty of good faith limits the parties’ ability to act unreasonably in

contravention of the other party’s reasonable expectations.” Montanez v. HSBC Mortg. Corp.
(USA), 876 F. Supp. 2d 504, 513 (E.D. Pa. 2012) (quoting 3A Arthur L. Cobin, Corbin on
Contracts § 654A(B), at 89 (Supp. 1994)). For example, a party may breach this duty through
“evasion of the spirit of the bargain, lack of diligence and slacking off, willful rendering of
imperfect performance, abuse of a power to specify terms, and interference with or failure to

Groep, N.V., No. 16-cv-07587 (AJN), 2017 WL 4712417, at *5 (S.D. N.Y. Sept. 28, 2017) (finding “[t]he
exchange term of the policy expressly stated that an exchange could be ‘to any plan of whole life or
endowment that we issue at the time of the exchange,’” but “Plaintiff acknowledges that the Insurers did
not offer a whole life policy covering a woman of Olga Wiseman’s age at any time after Plaintiff first
requested a policy exchange,” and therefore, the insurers “did not breach the terms of the contract”
(emphases added)).
cooperate in the other party’s performance.” Presque Isle Colon & Rectal Surgery v. Highmark
Health, 391 F. Supp. 3d 485, 513 (W.D. Pa. 2019). The covenant also precludes a party from
exercising its discretion under the contract in an unreasonable manner. Montanez, 876 F. Supp.
2d at 513; see also In re Lincoln Nat’l COI Litig., 269 F. Supp. 3d at 638 (explaining that

Pennsylvania recognizes “an implied covenant of good faith where, as here, the defendant is
expressly given a constrained amount of discretion under the Policy”). And in the insurance
context, the covenant requires that the insurer “deal with the insured fairly, honestly, and
objectively,” and that it “act in good faith at all times, giving the interests of the insured the same
consideration it gives its own.” Ironshore Spec. Ins. Co. v. Conemaugh Health Sys. Inc., 423 F.
Supp. 3d 139, 153 (W.D. Pa. 2019); see also Dercoli v. Pa. Nat’l Mut. Ins. Co., 554 A.2d 906,
909 (Pa. 1989) (concluding that insurers were “bound to deal with the [insured] on a fair and
frank basis, and at all times, to act in good faith,” and explaining that the “duty of an insurance
company to deal with an insured fairly and in good faith includes the duty of full and complete
disclosure as to all of the benefits and every coverage that is provided by the applicable policy or

polices along with all requirements, including any time limitations for making a claim”).
The Second Amended Complaint alleges that PHL Variable breached the implied duty of
good faith and fair dealing: (1) in 2019, when it failed to inform the Trust of its intent to no
longer sell any universal life insurance policies, and (2) in 2020, when it refused to allow the
Trust to convert the remaining portion of the Policy to the PAUL IV option.5 (Doc. No. 19 at

5 Rosenberg also alleges that “PHL Variable breached the implied duty of good faith and fair
dealing by refusing to disclose information to Plaintiff which was necessary for Plaintiff to exercise her
right to convert the Policy.” (Doc. No. 19 at ¶ 82.) To the extent Rosenberg is referencing PHL
Variable’s duty to disclose policies offered by its affiliates, it is duplicative of Rosenberg’s claim for
breach of the contract’s express terms and must be dismissed. See ClinMicro Immunology Ctr., LLC v.
PrimeMed, P.C., Civil Action No. 3:11–02213, 2012 WL 3011698, at *9 (M.D. Pa. July 23, 2012)
(“Count XII of the Complaint will be dismissed because it is duplicative of Plaintiff’s breach of contract
claims. In particular, Plaintiff adequately alleged breaches of the LMA and LSA in Counts I and II. And,
¶¶ 84–85.) PHL Variable counters that it was not required to “preview its 2020 product lineup”
or otherwise notify Rosenberg that in 2020 it would not offer a product similar to the PAUL IV
option offered in 2019 and the years prior. (Doc. No. 22 at p. 16.) And, PHL Variable argues, it
was not required to allow the Trust to convert the remainder of the Policy to the PAUL IV

product in 2020 because that product was not offered in 2020. (Id.)
The Southern District of New York’s analysis in a similar case is instructive. See
Wiseman, 2017 WL 4712417, at *8. In Wiseman, an exchange provision in the plaintiff’s life
insurance policy gave her the right to “exchange this Policy for a new Policy” and specified that
“[s]uch exchange may be to any plan of whole life or endowment that we issue at the time of
exchange,” with certain enumerated exceptions. Id. at *2. Twenty-four years after the policy
was issued, and as it reached its maturity date, the plaintiff notified her insurer that she was
exercising her rights under the exchange provision. Id. But the company refused to exchange
the policy, explaining that it did “not have a whole life insurance plan available for issue.” Id. at
*3. “As a result of the Insurers’ refusal to exchange the policy, it lapsed upon its maturity in

October 2016, causing Plaintiff to lose all of the premiums paid into the policy over 25 years and
losing any death benefit.” Id.
The plaintiff filed suit against her insurers, bringing among other claims, claims for
breach of the contract’s express terms and breach of the implied covenant of good faith and fair
dealing. Id. at *4. The insurers moved to dismiss the complaint, and the court granted their
motion in part and denied it in part. Id. at *5. First, the court dismissed the breach of contract
claim, finding that “[b]ecause the unambiguous language of the contract required the Insurers to

as the provisions Plaintiff relies on for the breach of the duty of good faith and fair dealing claim are
encompassed within the breach of contract claims in Counts I and II, Count XII is superfluous and
duplicative of these claims.”).
exchange Plaintiff’s policy only for another policy that was generally offered, and because
Plaintiff concede[d] that no such policy existed . . . at the time of Plaintiff’s multiple requests for
an exchange, the Insurers did not breach the contract by failing to exchange the policy.” Id.
Likewise, “because the terms of the policy contained no language obligating the Insurers to

maintain whole life policies to cover every person insured by a flexible exchange policy or to
inform policyholders if such whole life policies become unavailable, Plaintiff ha[d] not plausibly
alleged a breach of contract claim.” Id. at *7.
The Court declined, however, to dismiss the plaintiff’s claim for breach of the implied
covenant of good faith and fair dealing, finding that the plaintiff plausibly alleged that the
insurers acted in bad faith. Id. at *9. The Court concluded that “[a]lthough no contractual
provision required the Insurers to maintain a generally available policy” for exchange or that
they notify her when such a policy would no longer be available, the plaintiff “plausibly alleged
that a reasonable person purchasing the same insurance policy as Plaintiff would assume based
on the exchange provision and other factors that the Insurers would maintain such a policy or

would notify her and adjust her premiums if such a policy became unavailable.” Id. at *8; see
also id. at *9 (finding that the plaintiff “plausibly alleged that a reasonable customer in Plaintiff’s
position could have presumed that some policy would exist for which the customer could
exchange the original policy”).
Unlike the insurer in Wiseman, PHL Variable gave the Trust a conversion option—the
Remembrance product. Nevertheless, the Court finds Wiseman’s analysis instructive because
Rosenberg alleges that the Remembrance policy was the equivalent of no option. In other words,
Rosenberg alleges that the annual premiums under the Remembrance policy were so much
higher than the premiums under the PAUL IV option that conversion was “economically
unfeasible.” (Doc. No. 19 at ¶ 59.) Rosenberg argues that the implied covenant thus required
PHL Variable to give notice of its decision to offer only the Remembrance policy, and that its
failure to do so was “incompatible” with “any reasonable understanding” of the Trust’s rights
under the Policy. (Doc. No. 23 at p. 19; cf. id. at p. 18 (noting that “PHL[ Variable] had

historically offered” at least one product like the PAUL IV product, that the “life insurance
industry usually did not impose price increases from year-to-year exceeding 10 to 20 percent,”
and that the Policy broadly allowed Rosenberg to select a product offered by any of its affiliate
companies).) According to Rosenberg, the failure to notify was part of a concerted effort by
PHL Variable to “induce lapse or avoid conversion, and that such failure to take action was
designed to benefit PHL Variable and Nassau [Defendants’] finances at the expense of
policyholders.” (Doc. No. 19 at ¶ 51.)
Accepting these allegations as true and considering the Second Amended Complaint in its
entirety, the Court finds that Rosenberg has plausibly alleged a claim for breach of the implied
covenant of good faith and fair dealing as to PHL Variable’s failure to tell the Trust about the

Remembrance policy, or at minimum, to inform the Trust of its intent to no longer sell any
universal life insurance policies.6 See In re Lincoln Nat’l COI Litig., 269 F. Supp. 3d at 638
(“Plaintiffs have therefore adequately alleged that Defendants breached the implied covenant by
exercising their limited discretion under the Policies in an unreasonable and unfair manner with
the bad faith intent of inducing lapses, frustrating policyholders’ expectations and depriving
them of the benefit of the agreement.”); Montanez, 876 F. Supp. 2d at 513 (“[P]laintiffs have
alleged facts sufficient to state a claim for breach of the implied covenant of good faith and fair

6 And, it may be telling that the PHL Variable told the Trust it would no longer be offering the
PAUL IV policy, but failed to disclose that it would offer no universal life insurance option.
dealing. The purpose of a force-placement clause is to protect the lender’s interest in the
property securing the mortgage loan. Plaintiffs allege a scheme whereby [the defendant] used its
power to force-place insurance on the property to gain additional profits at plaintiffs’ expense
rather than using such power simply to protect its interest in the property.”).

However, we cannot find that Rosenberg has stated a claim for breach of the implied
covenant as to PHL Variable’s refusal in 2020 to retroactively convert the remainder of the
Policy to the PAUL IV product. Under the Policy’s express terms, conversion is limited to “any
whole life or any universal life insurance plan [PHL Variable or its] affiliate companies offer at
the time of conversion.” (Doc. No. 19 at p. 39.) The PAUL IV product was not offered in 2020
when the Trust looked to convert the remainder of the Policy, so it was not a viable conversion
option. We will not read a requirement into the Policy that would contradict the contract’s
express terms. See Broederdorf v. Bacheler, 129 F. Supp. 3d 182, 197 (E.D. Pa. 2015)
(explaining that the implied covenant of good faith and fair dealing cannot “be pursued where its
application would contradict the express terms of the agreement”).

* * *
The motion to dismiss is denied in part and granted in part as to Count I.
B. Counts II, III, and IV: The Tort Claims
In addition to her claim for breach of contract, Rosenberg also brings tort claims for
fraudulent misrepresentation (Count II), negligent misrepresentation (Count III), and violation of
Pennsylvania’s UTPCPL (Count IV) against all Defendants. Defendants argue that these claims
are barred by the gist of the action doctrine and/or the economic loss doctrine, that Rosenberg
cannot establish justifiable reliance or proximate causation for any claim, and that as to the
Nassau Defendants, Rosenberg has not satisfied Rule 9(b)’s heightened pleading standard. (Doc.
No. 22 at pp. 18–28.) We address each argument in turn.
1. The Gist of the Action/Economic Loss Doctrine
The gist of the action doctrine “provides that an alleged tort claim against a party to a
contract . . . is barred when the gist, or gravamen of the cause of action stated in the complaint,
although sounding in tort, is, in actuality, a claim against the party for breach of its contractual
obligations.” Bruno v. Erie Ins. Co., 106 A.3d 48, 53 (Pa. 2014). “[T]he critical determinative

factor in determining whether the claim is truly one in tort, or for breach of contract” is “the
nature of the duty alleged to have been breached.” Id. at 68. “If the facts of a particular claim
establish that the duty breached is one created by the parties by the terms of their contract—i.e., a
specific promise to do something that a party would not ordinarily have been obligated to do but
for the existence of the contract—then the claim is to be viewed as one for breach of contract.”
Id.; see also Bohler-Uddeholm Am., Inc. v. Ellwood Grp., Inc., 247 F.3d 79, 104 (3d Cir. 2001)
(“[A] claim should be limited to a contract claim when the parties’ obligations are defined by the
terms of the contracts, and not by the larger social policies embodied in the law of torts.”).
“If, however, the facts establish that the claim involves the defendant’s violation of a
broader social duty owed to all individuals, which is imposed by the law of torts and, hence,

exists regardless of the contract, then it must be regarded as a tort.” Bruno, 106 A.3d at 68; see
also Bohler-Uddeholm Am., Inc., 247 F.3d at 103–04 (“The important difference between
contract and tort actions is that the latter lie from the breach of duties imposed as a matter of
social policy while the former lie for the breach of duties imposed by mutual consensus.”
(quotation marks omitted)). The gist of the action doctrine thus calls for a “fact-intensive
judgment as to the true nature of a claim.” Williams v. Hilton Grp. PLC, 93 F. App’x 384, 386
(3d Cir. 2004); see also Downs v. Andrews, 639 F. App’x 816, 819 (3d Cir. 2016) (explaining
that “to determine whether an action is barred by the gist of the action doctrine [the court] must
examine the factual allegations and ask, ‘What’s the case really about’” (citation omitted)).
Indeed, “[i]n the context of a single case, some [tort claims] may be barred by the gist of the
action doctrine, while others may be deemed to be outside the scope of the contract at issue.”
Brown & Brown Inc. v. Cola, 745 F. Supp. 2d 588, 620 (E.D. Pa. 2010).
Like the gist of the action doctrine, the economic loss doctrine “prohibits plaintiffs from

recovering in tort economic losses to which their entitlement flows only from a contract.”
McGuckin v. Allstate Fire & Cas. Ins. Co., 118 F. Supp. 3d 716, 719 (E.D. Pa. 2015) (quotation
marks omitted); see also Metter v. Capella Univ., LLC, Civil Action No. 20-6405, 2021 WL
1610061, at *4 (E.D. Pa. Apr. 21, 2021) (“[T]he economic loss doctrine prohibits (1) common
law claims (2) that assert economic losses (3) arising solely from contractual duties.”). And its
application similarly “turns on the determination of the source of the duty plaintiff claims the
defendant owed.” Dittman v. UPMC, 196 A.3d 1036, 1054 (Pa. 2018). “[I]f the duty arises
under a contract between the parties, a tort action will not lie from a breach of that duty.” Id.
But if the duty arises independent of the contract, “then breach of that duty may support a tort
action.”7 Id.

Here, Defendants argue that the gist of the action doctrine bars all of Rosenberg’s tort
claims against PHL Variable and that the economic loss doctrine bars her misrepresentation
claims against PHL Variable and the Nassau Defendants. (Doc. No. 22 at pp. 18–28.) We begin
with Rosenberg’s misrepresentation claims before addressing her claims under the UTPCPL.

7 As the case law suggests, the gist of the action doctrines and economic loss doctrines are in
many respects coextensive in Pennsylvania. See Rohrbach v. NVR, Inc., 545 F. Supp. 3d 237, 242 (E.D.
Pa. 2021) (“Both doctrines serve to maintain the conceptual distinction between breach of contract claims
and tort claims, and under Pennsylvania law, the economic loss doctrine has effectively subsumed the gist
of the action doctrine.”); Sheridan v. Roberts Law Firm, Case No. 2:19-cv-00467-JDW, 2019 WL
6726469, at *3 (E.D. Pa. Dec. 11, 2019) (“[Dittman] renders the gist of the action doctrine and the
economic loss doctrine effectively coextensive under Pennsylvania law.”).
a. Misrepresentation Claims
First, we address Defendants argument that Rosenberg’s misrepresentation claims against
all Defendants are barred by the gist of the action doctrine and/or economic loss doctrine.
The Third Circuit’s opinion in Norfolk Southern Railway Co. is instructive. In that case,
the plaintiff entered a long-term lease agreement with the defendant lessor that among other

things, prohibited the defendant from issuing any stock without the plaintiff’s prior written
consent. Norfolk S. Ry. Co., 870 F.3d at 247, 249. About 50 years after the parties initially
entered the agreement, the defendant notified the plaintiff of its intent to “offer existing
shareholders the right to purchase common shares” of the company. Id. at 249. The defendant
did not, however, disclose its intent to use the proceeds from those sales to “restructure into a
privately owned subsidiary or its desire to pursue investments in energy companies, despite”
having discussed both options internally and despite its assurances to the plaintiff that it had
disclosed “all available information of [the defendant’s] plans at this point.” Id. The plaintiff
gave its consent to the stock issuance, and when the defendant restructured and pursued different
investments, the plaintiff filed suit. Id. at 255. The defendant argued that the plaintiff’s fraud

claim was barred by the gist of the action doctrine, but the district court disagreed and after a
bench trial, found in favor of the plaintiff. Id. On appeal, the Third Circuit affirmed, finding that
the plaintiff’s “claim [did] not arise from the contractual relationship between the parties, but
rather from [the defendant’s] fraudulent misrepresentations and omissions in seeking [the
plaintiff’s] consent.” Id. at 256. Because the fraud claim “involve[d] a broader social duty owed
to all individuals,” the district court correctly found it was not barred by the gist of the action
doctrine. Id.
Here, Rosenberg’s claims for fraudulent misrepresentation and negligent
misrepresentation are premised on the same factual allegations—in November and December
2019, Rosenberg asked Defendants about the policies that would be available in 2020 and the
price of those policies, and Defendants’ representatives “falsely stated that they did not know
that information and that such information was not available.” (Doc. No. 19 at ¶¶ 91, 101.) This
allegation is distinct from Rosenberg’s breach of contract claims, which focus on whether PHL

Variable was required under the contract to notify the Trust of its intent to no longer offer any
affordable universal life insurance policy options. In other words, Rosenberg’s fraud claim is
premised not on PHL Variable’s obligations under the conversion provision of the contract, but
on Defendants’ “broader social duty . . . to refrain from defrauding” the Trust during the
conversion process. See Norfolk S. Ry. Co. v. Pittsburgh & W.V. R.R., 153 F. Supp. 3d 778, 815
(W.D. Pa. 2015) (“While the Lease requires [the defendant] to seek the consent of [the plaintiff]
before it issues stock, the substance of [the plaintiff’s fraud] claim against [the defendant] is not
that it failed to abide by that covenant. It is instead predicated on the fraudulent
misrepresentations/omissions of [the defendant’s agent] in seeking the consent. And a broader
social duty requires [the defendant] to refrain from defrauding [the plaintiff] in the process.”).

Defendants argue that “[t]here is no duty . . . under contract or tort, that requires PHL
[Variable] to provide its customers with advance notice of its future business plans” and that
“[a]bsent the terms of the Policy, PHL [Variable] would have no independent duty to provide a
conversion option or any information regarding the products it intended to offer in the future.”
(Doc. No. 22 at p. 18.) But this mischaracterizes Rosenberg’s argument. Her tort claims do not
allege that Defendants had a duty to disclose its future business offerings without prompting.
Instead, she argues that when asked for information about those offerings, Defendants had a duty
to respond honestly. In other words, Defendants could not respond that information on future
offerings was unavailable when such information was in fact available and known to them.8 See
Bruno, 106 A.3d at 71 (“Accordingly, while Erie had contractual obligations under its policy to
investigate whether mold was present, and also to pay for all property damage caused by mold,
the substance of the Brunos’ allegations is not that it failed to meet these obligations; rather, it is

that Erie, during the course of fulfilling these obligations through the actions of its agents, acted
in a negligent manner by making false assurances regarding the toxicity of the mold and
affirmatively recommending to the Brunos that they continue their renovation efforts, which
caused them to suffer physical harm because of their reasonable reliance on those assurances.”);
see also Hemphill v. Nationstar Mortg. LLC, Civil Action No. 18-2451, 2018 WL 4929864, at *9
(E.D. Pa. Oct. 10, 2018) (“Plaintiff’s fraud claim cannot be dismissed under gist of the
action. . . . The mortgage note provided for the collection of some attorney fees and set out
Plaintiff’s payment obligations. But to the extent that Plaintiff’s constructive fraud claim turns
on the false representations by Nationstar that Plaintiff would not incur any fees or costs for
participating in the Diversion Program [during the foreclosure lawsuit], the alleged wrong does

not stem from the failure to comply with the terms of the contract. Rather, as in Norfolk, the
claim arises from Nationstar’s misrepresentations and omissions and therefore is cognizable in
tort.”); Telwell Inc. v. Grandbridge Real Estate Capital, LLC, 143 A.3d 421, 429 (Pa. Super. Ct.
2016) (“[The plaintiff] pled that [the defendant] fraudulently misrepresented the amount of the
monthly payment. According to the complaint, [the defendant] knew that it was overcharging
Telwell, but withheld that information and continued to overcharge Telwell. Such a claim
sounds in tort as it implicates the ‘societal duty not to affirmatively mislead or advise without

8 As further explanation, the Court believes it could be a very different situation—at least with
respect to the tort claims—if Defendants’ representatives had told Rosenberg that information on the new
policy was available, but they were not at liberty to discuss it.
factual basis.’” (quoting Bruno)); cf. Vliet v. Lib. Mut. Personal Ins. Co., Civil Action No. 21-
3766, 2022 WL 2109203, at *3 (E.D. Pa. June 10, 2022) (“The Court finds that the gist of the
action doctrine does not bar Plaintiff’s tort claims. [The plaintiff’s breach of contract and
UTPCPL claims] are not dependent on each other for success; Liberty Mutual may have made

material misrepresentations about a policy that it has adhered to, or it may have accurately
represented a policy that it has failed to adhere to.”).
The Court will not apply the gist of the action doctrine or economic loss doctrine to
preclude Rosenberg’s claims for fraudulent misrepresentation and negligent misrepresentation.
b. UTPCPL Claims
Defendants also move to dismiss Rosenberg’s UTPCPL claim against PHL Variable
under the gist of the action doctrine.9 The Second Amended Complaint paints the UTPCPL
claim in broader strokes than the common law misrepresentation claims. (See generally Doc.
No. 19 at ¶ 111.) In addition to alleging that PHL Variable violated the UTPCPL when its
“representatives stated that they did not know the requested information and that such
information was not available,” (id. at ¶ 111.A.), Rosenberg also alleges that PHL Variable

violated the UTPCPL when it:
• “precluded Plaintiff from exercising its right of conversion”
• “refused to disclose information to Plaintiff which was necessary for Plaintiff to
exercise her right to convert the policy”

9 Defendants have not moved to dismiss Rosenberg’s UTPCPL claims as against the Nassau
Defendants under the gist of the action doctrine. Instead, for the tort claims against the Nassau
Defendants, Defendants limited their arguments to the economic loss doctrine. Unlike the gist of the
action doctrine, the economic loss doctrine cannot bar UTPCPL claims. See Earl v. NVR, Inc., 990 F.3d
310, 315–16 (3d Cir. 2021) (holding that the economic loss doctrine can no longer serve as a bar to the
UTPCPL claims, but analyzing whether the gist of the action doctrine applied); Okulski v. Carvana, LLC,
Civil Action No. 20-1328, 2021 WL 2223834, at *2 (E.D. Pa. June 2, 2021) (“Despite abrogating
Werwinski’s finding that the economic loss doctrine may bar a plaintiff’s cause of action under the
UTPCPL, the Earl court did assume the gist of the action doctrine could preclude a UTPCPL claim.”).
• “refused to provide information requested by Plaintiff regarding the [P]olicy”
• “refused to convert the Policy to policies which were available when Plaintiff
requested the necessary information”
• “breached the implied duty of good faith and fair dealing by refusing to inform
Plaintiff by or before December 31, 2019, that PHL Variable and [the] Nassau
[Defendants] had determined previously that PHL Variable would no longer sell any
universal life insurance policies”
(Id. at ¶ 111.B.–F.). Because the duties implicated by these allegations arise out of the parties’
contract, these actions are properly pursued, if at all, in contract, not in tort. See Hemphill, 2018
WL 4929864, at *9 (“To the extent that the claim is premised on Defendants’ charging fees in
violation of the terms of the contract, Nationstar and Everbank are correct that such an action is
properly pursued in contract rather than tort.”). Therefore, Rosenberg’s UTPCPL claim against
PHL Variable is barred by the gist of the action doctrine to the extent it is based on the
allegations listed above. For the reasons discussed in the previous section, however, we will
allow Rosenberg to pursue her UTPCPL claim against PHL Variable to the extent it is based on
her allegation that Defendants’ representatives “stated that they did not know the requested
information and that such information was not available.”
* * *
In sum, we decline to dismiss Rosenberg’s fraudulent misrepresentation and negligent
misrepresentation claims under the gist of the action doctrine or economic loss doctrine. We also
decline to dismiss Rosenberg’s UTPCPL claim as against PHL Variable to the extent that claim
is based on Defendants’ allegedly false representations about the unavailability of information.
The remainder of Rosenberg’s UTPCPL claim against PHL Variable is dismissed.
2. Justifiable Reliance and Proximate Causation
Next, Defendants argue that Rosenberg’s tort claims should be dismissed because she has
failed to plead the necessary elements of justifiable reliance and proximate cause as to each
claim. (Doc. No. 22 at p. 23.) Justifiable reliance and proximate cause are elements of
fraudulent misrepresentation, negligent misrepresentation, and UTPCPL claims. See Gregg v.
Ameriprise Fin.l, Inc., 245 A.3d 637, 645–46 (Pa. 2021) (outlining elements of fraudulent
misrepresentation and negligent misrepresentation and holding that the UTPCPL similarly

includes “a causation element, which requires a private plaintiff to demonstrate justifiable
reliance”); see also Tran v. Metro Life Ins. Co., 408 F.3d 130, 135 (3d Cir. 2005) (“Justifiable
reliance on an alleged misrepresentation is an element of both fraudulent representation and
negligent misrepresentation causes of action in Pennsylvania.”).
These elements require “the pleading of specific facts establishing a causal nexus
between the misrepresentation/omission and the plaintiff’s injury, as well as specific facts
demonstrating that the plaintiff exercised the due diligence that a reasonable person under all the
circumstances would have exercised to protect his own interests.” Servis One, Inc. v. OKS Grp.,
LLC, Civil Action No. 20-4661, 2021 WL 6069168, at *1 n.1 (E.D. Pa. May 14, 2021); see also
Palek v. State Farm Fire & Cas. Co., 535 F. Supp. 3d 382, 391 (W.D. Pa. Apr. 21, 2021) (“To be

justifiable, reliance on the representation of another must be reasonable.” (quoting Porreco v.
Porreco, 811 A.2d 566, 571 (2002)).
These issues, however, are typically “question[s] of fact for the fact-finder to decide.”
Toy v. Metro. Life Ins. Co., 928 A.2d 186, 208 (Pa. 2007); see also Metter, 2021 WL 1610061, at
*6 (“Capella also argues that, even if its enrollment specialists represented that Metter would
receive twelve full credits, he could not justifiably rely on that representation . . . . This
argument is not appropriate for the motion to dismiss stage.”). The justifiable reliance prong, in
particular, “requires a consideration of the parties, their relationship, and the circumstances
surrounding their transaction,” which makes it particularly unsuited for decision at the motion to
dismiss stage. Toy, 928 A.2d at 208; see also Tran, 408 F.3d 130 at 135 (“Courts must consider
the relationship of the parties involved and the nature of the transaction when determining
whether one party’s reliance on the allegedly fraudulent representations of another is justifiable.
The right to rely upon a representation is generally held to be a question of fact.” (quotation

marks and citations omitted)).
Nevertheless, a court may, in some circumstances, determine, “even at the motion to
dismiss stage, that a plaintiff’s allegations of justifiable reliance fail as a matter of law.” Palek v.
State Farm Fire & Cas. Co., 535 F. Supp. 3d 382, 391 (W.D. Pa. 2021) (quotation marks
omitted); see also id. at 391–92 (finding it “objectively unreasonable for a consumer in
Plaintiffs’ position to rely, without further inquiry,” on the vague “representation that an
insurance policy will provide coverage for ‘foreseeable’ types of harm for the simple reason that
such a representation says nothing about what is or is not ‘foreseeable’”); Josaphs v. Lacy, Civil
Action No. 21-4186, 2022 WL 474715, at *4 (E.D. Pa. Feb. 16, 2022) (dismissing tort claims
based on the home seller’s assertion that she would complete certain repairs because the buyers

“discovered that [the seller] did not complete the repairs during their walkthrough of the property
two days before the scheduled settlement” but nevertheless, “elected to proceed with the
settlement without providing for completion of the repairs post-settlement. In short, they no
longer relied on any promise to complete the repairs at the time they closed on the property”); cf.
ScanSource, Inc. v. Datavision-Prologix, Inc., No. Civ.A. 04-CV-4271, 2005 WL 974933, at *3
(E.D. Pa. Apr. 26, 2005) (dismissing fraud claim where the plaintiff alleged the defendants
“misrepresented the value of Datavision’s accounts receivable and inventory” and that it relied
on those misrepresentations but it offered “no details whatsoever about the contours of this
asserted justifiable reliance” and “aver[red] nothing regarding the decisions that it made as a
result of Defendants’ asserted misrepresentations”). But unlike Palek and Josaphs, this is not a
case where the alleged misrepresentation was vague or contradicted by facts known to
Rosenberg.
Defendants argue that Rosenberg’s tort claims fail because her allegations show she

relied “on her own assumption” that PHL Variable’s 2020 product would include an option
similar to the PAUL IV product offered in 2019. (Doc. No. 22 at p. 24.) Defendants assert that
Rosenberg’s “reliance on her independent guess as to PHL [Variable’s] future product offerings
is unjustifiable and demonstrates her actions . . . was [sic] not the product of Defendants’
conduct.” (Id. at pp. 24–25.10) And according to Defendants, Rosenberg’s tort claims “flow
from PHL [Variable’s] refusal to provide substantive details regarding its planned 2020 product
lineup, not from the affirmative nondisclosure regarding the call center representative’s
knowledge (or lack thereof) regarding that lineup.” (Id. at p. 25.) But again, Defendants are
raising disputes of fact.
Rosenberg does not merely allege that Defendants’ representatives refused to provide

information about the policies that would be offered in 2020. She claims that the representatives
told her that there was no information available on those policies. Having received this
affirmative representation, Rosenberg could have reasonably assumed that it meant Defendants
were not conducting a major overhaul of PHL Variable’s insurance offerings:
Given that dropping an affordable universal life policy would
represent a major strategy and marketing for Defendants and their
affiliates, the Trust relied on the alleged unavailable [sic] of
information related to any future policy options as evidence that an
alternative to PAUL IV would be offered, and thus relied on the

10 As an aside, we note that two of the three cases on which Defendants rely—Blumenstock v.
Gibson, 811 A.2d 1029 (Pa. Super. Ct. 2002) and Cooper v. Sirota, 37 F. App’x 46 (3d Cir. 2002)—
involved summary judgment motions, which reinforces the Court’s conclusion that these issues are rarely
appropriate for decision at the pleadings stage.
absence of such information in deciding against converting the
entire policy.
(Doc. No. 19 at ¶ 47.) In other words, Rosenberg concluded that if Defendants were going to
overhaul PHL Variable’s business model, there would have been some available information on
that front. Taking into consideration PHL Variable’s previous business model and the typical
course of conduct in the insurance industry, we cannot at this time say that Rosenberg’s reliance
on the representatives’ assertions was unjustified or that her ultimate conclusions were
unreasonable. See Servis One, Inc., 2021 WL 6069168, at *1 n.1 (denying motion to dismiss
fraud claim and finding that “Plaintiffs have presented a well-pleaded fraud claim” where the
plaintiffs alleged that the defendants “made repeated material misrepresentations and omissions

as to the Defendants’ agreement not to seek further prosecution of the Defendants’ criminal
complaint in India”; that the plaintiffs “reasonably and justifiably relied upon the [defendants’]
misrepresentations”; and that if the plaintiffs had known about the defendants’ conduct they
“could and would have taken appropriate action in India, including defending themselves”).
Contra Chalal v. Wells Fargo Asset Sec. Corp., Civil Action No. 2:17-cv-00516, 2018 WL
11099082, at *1 n.2 (E.D. Pa. May 7, 2018) (finding the “Plaintiffs’ pleading of justifiable
reliance . . implausible” and dismissing the plaintiffs’ UTPCPL claim where the plaintiffs
provided one conclusory allegation that a “representative of Defendant Wells Fargo
misrepresented the terms of the loan modification program” but that allegation was undermined
by the plaintiffs’ mortgage and the parties’ mortgage loan modification agreement, which

“clearly articulated” the plaintiffs’ responsibilities under the note).
Defendants also argue in passing that Rosenberg cannot show justifiable reliance because
“Plaintiff’s sole basis for contending” the falsity of the call center representatives’ statements is
her allegation that “it would not be likely—or even possible” that PHL Variable waited until
January 2020 to offer an entirely new insurance option. (Doc. No. 22 at p. 26 (referring to this
allegation as a “conclusory res ipsa loquitor truism”).) But that is not Rosenberg’s “sole basis”
for contending the falsity of the representative’s assertions about the availability of future policy
options. To the contrary, in the same paragraph of the Second Amended Complaint, Rosenberg

also alleges that the “Remembrance life product was already in existence no later than October
2019.” (Doc. No. 19 at ¶ 64.)
Last, Defendants argue that Rosenberg cannot demonstrate proximate causation because
“she was still able to convert $10 million of the term Policy into a PAUL IV product at the time
of the alleged nondisclosure.” (Doc. No. 22 at p. 25.) The obvious counter to this is that
Rosenberg, relying at least in part on Defendants’ representatives’ assertions, did not convert the
other $10 million of the Policy. (See Doc. No. 23 at p. 28 (“[H]ad Defendants not made such
misrepresentations and omissions, Plaintiff would have converted the entire Policy rather than
only half.”).)
In short, the Court refuses to find at this early stage that Rosenberg has not alleged

justifiable reliance and proximate causation as a matter of law. If appropriate, Defendants may
raise these issues again at summary judgment.
3. Rule 9(b)’s Pleading Standard
Last, Defendants argue that Rosenberg’s tort claims fail as against the Nassau Defendants
because she has not met Rule 9(b)’s heightened pleading standard as to them. (Doc. No. 22 at p.
27.) Assuming without deciding that Rule 9(b)’s heightened pleading standard applies to
Rosenberg’s negligent misrepresentation and UTPCPL claims as well as her fraudulent
misrepresentation claim, we find that standard satisfied.
Defendants assert that apart from “individual references to each of the three Nassau
Defendants in the ‘Parties’ section of the [Second Amended Complaint], Plaintiff pleads her tort
and UTPCPL allegations generally against PHL [Variable] and the Nassau Defendants . . .
without specifying which entity in particular uttered the alleged misrepresentations to her.” (Id.)
For this proposition, Defendants cite Indianapolis Life Insurance Co. v. Hentz, Civil Action No.
1:06-CV-2152, 2008 WL 4453223 (M.D. Pa. Sept. 30, 2008). In that case, the insured

individuals brought fraudulent misrepresentation claims against their insurance agent, the
company for which he worked, the parent of that company, and a separate subsidiary. Id. at *1.
The complaint referred to the three companies collectively as the “Insurance Company” for all
substantive pleadings, and the defendants moved to dismiss the fraud claims, arguing that this
collective identifier was insufficient under Rule 9(b). Id. at *11. The court agreed, explaining
the applicable law:
In a case involving multiple defendants, each defendant is entitled
to be apprised of the roles they each played in the alleged scheme,
and absent a compelling reason, a plaintiff is not normally entitled
to treat multiple corporate defendants as one entity. . . . One
exception to this general rule is that vicarious liability need not be
plead [sic] with particularity, so the principal can be held liable for
the fraudulent acts of its agents if the agency relationship is
adequately alleged.
Id. (citations omitted).
In Hentz, the plaintiff failed to meet this standard. The complaint contained “no
allegations as to how these grouped together companies relate to each other, noting only that [the
insurance company] is a subsidiary to [the parent company].” Id. In addition, the complaint
lacked “any allegations that explain the connection of [the other subsidiary] to the facts of this
case beyond lumping it together with the other Defendant insurance companies.” Id. The court,
however, did not rest its dismissal on these deficiencies alone, finding that “[e]ven if [it]
assume[d] that these related corporations can sort out their own involvement in the scheme and
prepare a defense,” the plaintiffs allegations were nonetheless deficient because they failed to
include “the date, place, or time that any of the misrepresentations took place.” Id. at *12. And
there was “no mention of the place or method by which the misrepresentations were made to the
[plaintiffs] so there is no way to know whether these misrepresentations were in person, by
phone, or mail.” Id.

Here, by contrast, Rosenberg alleges when and how the alleged misrepresentations
occurred: “In November and December 2019,” Rosenberg requested “by phone and by email”
information about the policies that would be available in 2020, and Defendants’ “representatives
stated that they did not know that information and that such information was not available.”
(Doc. No. 19 at ¶¶ 34, 91, 101, 111.A.) Unlike Hentz, the only deficiency raised by Defendants
is to Rosenberg’s reference to them in the collective. Neither Hentz nor the Seventh Circuit case
on which it relies were willing to dismiss a complaint under Rule 9(b) for this failure alone. See
Hentz, 2008 4 4453223, at *11 (suggesting that the “related corporations can sort out their own
involvement in the scheme and prepare a defense” but that other pleading deficiencies
nonetheless warranted dismissal); see also Jepson, Inc. v. Makita Corp., 34 F.3d 1321, 1328–29

(7th Cir. 1994) (“[D]efendants are entitled to be apprised of the roles they each played in the
alleged scheme, and absent a compelling reason, a plaintiff is normally not entitled to treat
multiple corporate defendants as one entity. We will assume for purposes of our discussion that
this omission can also be overlooked as well, however, given that the three corporate defendants
in this case are related corporations that can most likely sort out their involvement without
significant difficulty.”).
And unlike Hentz, here, Rosenberg outlines the Nassau Defendants’ relationship to each
other and PHL Variable explaining that PHL Delaware “is the parent company of PHL
Variable,” that Nassau Insurance Group Holdings “is the parent company of PHL Delaware,”
and that Nassau Financial Group “is the parent company of NIGH [Nassau Insurance Group
Holdings].” (Doc. No. 19 at ¶¶ 8–10.) She also explains that the three Nassau Defendants
“either together or individually, own and control PHL Variable” and when they acquired PHL
Variable in 2016, they began making decisions for PHL Variable, along with providing

“management, customer service, and other services to PHL Variable and its policyholders.” (Id.
¶¶ 11, 20–21.) Contra Hentz, 2008 WL 4453223, at *11–12 (“[H]ere, the Complaint contains no
allegations as to how these grouped together companies relate to each other, noting only that
Indianapolis Life is a subsidiary to AmerUs Group. Further, the Complaint does not contain any
allegations that explain the connection of AmerUs Life to the facts of this case beyond lumping it
together with the other Defendant companies.”). The lack of specificity in this case seems
related not to the fraud allegations themselves but rather to the division of responsibility and
corporate structure of Defendants, which is presumably within Defendants’ knowledge.
For those reasons, we decline to find Rosenberg’s allegations deficient under Rule 9(b).
C. Count V: Unjust Enrichment
Last, Rosenberg brings a claim for unjust enrichment against PHL Variable, alleging that

if she “must or does convert $10 million of the Policy to a Remembrance policy or policies
providing $10 million in coverage,” the Trust will have “conferred a non-gratuitous benefit on
PHL Variable in the form of excessive premiums.” (Doc. No. 19 at ¶ 120.) She claims that
allowing PHL Variable to “retain the premiums would be inequitable given” Defendants’ “unjust
and improper conduct in handling and responding to Plaintiffs’ requests for information
regarding conversion” and her “efforts to convert the Policy.” (Id. at ¶ 122.) Defendants argue
that this claim should be dismissed because the Policy governs the Trust’s relationship with PHL
Variable. (Doc. No. 22 at pp. 26–27.)
“In Pennsylvania, a litigant cannot maintain an unjust enrichment claim when the parties
have entered into a written agreement.” Sunshine v. Reassure Am. Life Ins. Co., 515 F. App’x
140, 145 (3d Cir. 2013); see also SodexoMAGIC, LLC v. Drexel Univ., 24 F.4th 183, 228 (3d
Cir. 2022) (“[T]he Pennsylvania Supreme Court has left no doubt that unjust enrichment is

inapplicable when the relationship between parties is founded upon a written agreement or
express contract, regardless of how harsh the provisions of contracts may seem in light of
subsequent happenings.” (quotation marks omitted)). “Pennsylvania has long ascribed to the rule
that when the parties’ relationship is based on an express written contract no unjust enrichment
recovery is permitted.” Montanez, 876 F. Supp. 2d at 515 (quotation marks omitted). Where,
however, “there is some dispute as to whether a valid, enforceable written contract exists,” courts
have allowed unjust enrichment claims to stand. Id. at 516 (collecting cases).
Here, there is no real dispute that the Policy is an express written contract governing the
parties’ relationship, including the conversion dispute before us. Because there is no dispute that
the Policy is valid and enforceable, Rosenberg cannot assert an unjust enrichment claim as an

alternative to her claim for breach of contract against PHL Variable.
Rosenberg argues that her claim for unjust enrichment should nevertheless stand as a
companion to her fraud claims. (Doc. No. 23 at p. 31.) We are not convinced. Rosenberg labels
her unjust enrichment claim as an “alternative” count and not as a companion claim. See
SodexoMAGIC, LLC, v. Drexel Univ., 333 F. Supp. 3d 426, 472–73 (E.D. Pa. 2018), aff’d in
relevant part by 24 F.4th at 228 (“[A]n unjust enrichment claim based on a theory of quasi-
contract may be pled as an alternative to the breach of contract claim” or “may be pled as a
companion, not an alternative, to a claim of unlawful or improper conduct as defined by law—
e.g., a tort claim.”). Likewise, she brings the unjust enrichment claim, like the breach of contract
claim, only against PHL Variable, and not, like the fraud claims, against all Defendants. (See
Doc. No. 19 at p. 20.)
For those reasons, the motion to dismiss Count V is granted..
CONCLUSION
Defendants’ motion to dismiss is granted in part and denied in part. An appropriate

Order follows.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10403646. Public record. Not legal advice.