A local businessman gave a national insurance company $100,000.00 to be invested in a tax deferred retirement plan. The plan included both a life insurance policy and an annuity policy. The businessman and the insurance company agreed that he would make substantial annual contributions to the retirement plan during his working life in order to fully fund a comfortable life when he retired.
Within six months of the $100,000.00 payment it was discovered that the retirement plan did not meet the IRS’s requirements for deferring income. This occurred in spite of the fact that the insurance company and its agents had assured the businessman that this plan would be fully qualified. The businessman was required to unwind the plan and to pay the tax on the money that he thought had been deferred. The insurance company refused to refund the $100,000.00, arguing that the plan “might” work and the businessman had received a significant benefit in the form of a life insurance policy.
David sued on behalf of the businessman and the defendant insurance company hired out of state counsel who engaged in numerous dilatory tactics in order to try to wear out the businessman and his family.
Davidwas happy to engage the out of state firm and force the matter down the litigation trail. Immediately after the Court held a conference to set the matter for trial, the insurance company capitulated. It agreed to refund the entire amount paid and stipulated to pay the attorney’s fees and costs which the businessman had incurred.