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Zweiback Family Limited Partnership v. Lincoln Benefit Llfe Co.

Supreme Court of Nebraska

March 2, 2018

Zweiback Family Limited Partnership et al., appellees,
v.
Lincoln Benefit Llfe Company And Brian Schuster, Appellees, And Dennis Tubbergen, appellant.

          1. Arbitration and Award: Judgments: Appeal and Error. Arbitrability presents a question of law. On a question of law, an appellate court reaches a conclusion independent of the court below.

         2. Arbitration and Award. A party cannot be required to submit a dispute to arbitration unless he or she has agreed to do so.

         3. Contracts: Arbitration and Award. Arbitration is purely a matter of contract.

         Appeal from the District Court for Douglas County: Horacio J. Wheelock, Judge. Affirmed.

          Gerald L. Friedrichsen, of Fitzgerald, Schorr, Barmettler & Brennan, P.C., L.L.O., for appellant.

          Edward D. Hotz, of Pansing, Hogan, Ernst & Bachman, L.L.P., for appellees.

          Heavican, C.J., Cassel, Stacy, and Kelch, JJ., and Bishop, Judge.

          Stacy, J.

         The district court denied a motion to compel arbitration, reasoning the agreement to arbitrate "concern[ed] or relat[ed] to an insurance policy" and thus was unenforceable [299 Neb. 181] under Nebraska law.[1] We affirm, although for different reasons.

         FACTS

         Eugene M. Zweiback is the named insured under two variable life insurance policies issued by Lincoln Benefit Life Company (LBL). Zweiback is also the general partner of two partnerships named as plaintiffs in this lawsuit. Zweiback alleges that in 2004, he consulted two authorized agents or brokers of LBL, Dennis Tubbergen and Brian Schuster, and told them he wanted to purchase a life insurance policy. Zweiback wanted a policy with a one-time premium of approximately $1 million that would continue to finance the ongoing cost of insurance during his lifetime and then pay a large benefit upon his death, regardless of his age.

         In 2005, Zweiback applied for and was issued two LBL life insurance policies; the death benefit of each was $10 million. Zweiback alleges both Tubbergen and Schuster advised him on multiple occasions that the LBL policies satisfied Zweiback's conditions. Zweiback paid premiums of approximately $1 million for the policies, and he alleges Tubbergen and Schuster received substantial commissions on the sale of the policies. He also alleges he did not know the policies were variable life insurance policies or that the ability of the policies to pay future insurance costs without additional premiums depended on the performance of underlying investments.

         Approximately 1 year later, in October 2006, the face values of both LBL policies were lowered from $10 million to $3.5 million. Zweiback alleges this was done after the date upon which Tubbergen and Schuster would have to return earned commissions. In June 2012, Zweiback was informed by LBL that additional premiums were due to keep the policies in force. Instead of paying additional premiums, Zweiback chose to reduce the face value of both policies to $2 million.

         [299 Neb. 182] In August 2014, Zweiback and the partnerships (collectively Zweiback) filed an action against LBL, Tubbergen, and Schuster in the Douglas County District Court. Zweiback alleges Tubbergen and Schuster fraudulently induced him into purchasing the LBL life insurance policies by misrepresenting the nature and terms thereof. The operative amended complaint alleges claims of fraudulent misrepresentation and fraudulent concealment against Tubbergen and Schuster and seeks to have LBL reform or replace the existing policies with ones more suitable to Zweiback.

         In December 2014, all defendants answered, generally denying the allegations of fraud and misrepresentation and raising a variety of affirmative defenses. Tubbergen alone raised the affirmative defense that the action against him was subject to binding arbitration.

         More than 1½ years after filing his answer, Tubbergen filed a motion to compel arbitration. A hearing on the motion was held in February 2017. The only evidence offered and received at the hearing was an affidavit authored by Tubbergen. Attached to the affidavit were two "Investor Profile" agreements executed by Zweiback, both of which contained ...


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