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Pacific Life Insurance has formally requested a federal court to dismiss the $8.5 million lawsuit filed by NASCAR Cup Series champion Kyle Busch and his wife, Samantha. In a legal filing submitted to Judge Matthew E. Orso of the Western District of North Carolina, the insurance giant contends that the Buschs’ claims are "inflammatory and disingenuous rhetoric" and fail to demonstrate any wrongdoing on Pacific Life’s part.
The lawsuit, initially filed in state court on October 14 before being transferred to federal jurisdiction, centers on allegations that Pacific Life and an independent agent, Rodney A. Smith, misrepresented a complex life insurance policy. The Buschs claim they were led to believe the policy, an Indexed Universal Life (IUL) product, was a "tax-free retirement plan" capable of self-funding their retirement.
According to the lawsuit, the IUL policy was presented as offering a death benefit alongside a cash value component. The growth of this cash value was purportedly tied to a stock market index, with assurances of market protections against downturns. The Busch couple asserts that they invested $10.4 million in premiums, structured over five years with an annual payment of approximately $1 million. They now claim to have suffered losses totaling $8.58 million, attributing this deficit to misleading illustrations, undisclosed fees, and outright falsehoods regarding the policy’s projected returns.
Kyle Busch specifically stated in his complaint that he was led to believe that a $1 million annual payment over five years would enable him to withdraw $800,000 annually upon reaching the age of 52. He alleges that he only realized the extent of his financial losses when he received a sixth premium notice, indicating a significant depletion of his invested capital.
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Pacific Life’s defense, as detailed in its motion to dismiss, hinges on several key arguments. The company asserts that the Buschs purchased the policy with the guidance of their own legal counsel and subsequently failed to manage it appropriately. The filing states, "Despite access to a team of their own professional advisors, Plaintiffs failed to manage their Policies and now proffer a series of baseless claims that ignore clear, repeated, and explicit disclosures that illustrated values were ‘not guaranteed’ and that the Policies would not be ‘paid up’ after five annual premium payments."
The insurance provider further highlights the substantial life insurance coverage the Buschs maintained, noting that "Plaintiffs had as much as $90 million of valuable insurance coverage on the life of Kyle Busch while he engaged in an ultra-hazardous activity (plus insurance on Ms. Busch)." Pacific Life argues that there is no legal precedent to justify a complete refund of premiums, deeming the Buschs’ claims an attempt to secure an unwarranted "massive windfall."
A significant aspect of Pacific Life’s motion is its assertion that the current lawsuit bears striking resemblances to a previous case, Stegelin v. Pacific Life, which was also dismissed by the district court and subsequently upheld on appeal by the Fourth Circuit Court in Richmond, Virginia. Notably, the attorney representing the Buschs in the current litigation, Robert Rikard, also represented the plaintiffs in the Stegelin case.
Pacific Life details the parallels between the two cases, explaining that the Stegelin lawsuit also involved the Pacific Discovery Xelerator (PDX) policy, an IUL product purchased in 2018. In Stegelin, a plaintiff alleged that a producer presented a Pacific Life IUL policy as a strategy for "tax-free" retirement income and that they were induced to purchase it based on alleged misrepresentations or omissions in illustrations regarding future policy performance.
The company quotes the Stegelin court’s reasoning for dismissal: "Pacific Life’s conspicuous and repeated disclaimers that all non-guaranteed elements in the illustration were not guaranteed refute [plaintiff’s] theory…" The court also found that the illustrations included written disclosures that negated any claim of justifiable reliance.
Pacific Life refutes the Buschs’ claim that they could not comprehend the "real-world operation of the policies." The company emphasizes that its policy documents explicitly disclose charges against premiums over a 10-year period and illustrate the resulting cash value annually.
Furthermore, Pacific Life contends that the majority of the Buschs’ claims are time-barred under a four-year statute of limitations. The trust for the policy was established on April 3, 2018, following initial contact from agent Rodney A. Smith in 2017. The Buschs’ lawsuit alleges that Smith presented himself as a "wealth management and insurance specialist" and "retirement planner."
The core reasons cited by Pacific Life for the dismissal motion include:
- The Buschs’ claims are substantially similar to those previously rejected by the courts in Stegelin v. Pacific Life.
- The Buschs were provided with clear and repeated disclosures that illustrated values were not guaranteed.
- The Buschs’ reliance on illustrations, which contained explicit disclaimers, was not justifiable as a matter of law.
- The Buschs failed to manage their policies properly, despite having access to professional advisors.
- The allegations of misrepresentation and fraud are time-barred.
The insurance provider also argues that the Buschs explicitly agreed to the terms of the policies through signed applications. These applications reportedly contained acknowledgments stating that the policy would meet their insurance needs and financial objectives, and that the producer was responsible for ensuring this. Crucially, the applications also included specific acknowledgments for policies with indexed features. This section stated: "I ACKNOWLEDGE that: I am applying for a product with an indexed feature, for which the crediting for the indexed account tracks the gains and the losses of an outside financial index, subject to a floor and either a growth cap or a threshold, whichever applies. I further understand that, while the values of the policy may be determined in part, by reference to an external index, the indexed feature does not directly participate in any stock or equity investments and values shown to me, other than the minimum values, are not guarantees, promises, or warranties."
Pacific Life asserts that both Kyle and Samantha Busch signed these documents, which included commitments to pay planned premiums and maintain the policies for over 30 years, extending beyond age 70.
"Instead of keeping the policies long enough to capitalize on their growth potential, Plaintiffs failed to timely pay planned premiums, failed to monitor allocation of their policy values between indexed and fixed accounts and surrendered the policies or allowed them to lapse," Pacific Life wrote in its filing. "Rather than accept responsibility for their own decisions, Plaintiffs now attempt to blame their negative outcome on the IUL product."
Ultimately, Pacific Life’s motion contends that the Buschs, by acknowledging their understanding of the policy and signing the relevant documents, cannot now claim a seven-year-old mistake was a fundamental error when the investment simply did not yield the desired results. The company invoked the legal principle of willful blindness, stating, "A plaintiff cannot avoid the statute of limitations by remaining willfully blind: A man should not be allowed to close his eyes to the facts readily observable by ordinary attention, and maintain for his own advantage the position of ignorance. Such a principle would enable a careless man, and by reason of his carelessness, to extend his right to recover for an indefinite length of time."
Pacific Life also noted that each of the five policies in question was accompanied by a cover letter prominently stating in bold, capitalized letters: "READ YOUR POLICY CAREFULLY." Furthermore, each policy offered a 20-day premium refund window, a provision that the Buschs reportedly never sought to utilize. The company maintains that the case should be dismissed with prejudice, meaning it cannot be refiled.
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