PHL Variable Insurance v. Lucille E. Morello 2007 Irrevocable Trust Ex Rel. BNC National Bank

SMITH, Circuit Judge.

New Stream Insurance, LLC (“New Stream”) indirectly loaned an insured money to purchase a high-dollar life insurance policy from PHL Variable Insurance, Co. (“Phoenix”), a member of the Phoenix Companies, Inc. After the insured’s death, it came to light that the insured had fraudulently procured the policy, prompting Phoenix to deny the death benefit, sue the beneficiaries for rescission of the insurance contract, and retain all premiums paid. In response, New Stream intervened as a third-party plaintiff, seeking a declaratory judgment that Phoenix is not entitled to…