Lincoln Benefit Life Company v. AEI Life, LLC

Lincoln Benefit Life Company (Lincoln) (plaintiff) filed a federal action seeking a declaratory judgment voiding two life-insurance policies. Lincoln alleged that the policies were procured for the benefit of third-party investors with no prior relationship to the individuals whose life was the subject of the policies, in violation of state law and public policy. Defendants included Innovative Brokers, a corporation involved in procuring the policies, and two LLCs—AEI Life, LLC (AEI) and ALS Capital Ventures, LLC (ALS)—which were the policy record owners and beneficiaries (collectively, the policyholders) (defendants). Federal jurisdiction was premised on diversity of citizenship. In its complaint, Lincoln alleged it was a Nebraska citizen and, based upon its information and belief, neither AEI nor ALS shared that citizenship. The policyholders moved to dismiss, arguing that Lincoln failed to adequately plead diversity. Lincoln countered that no defendant claimed Nebraska citizenship and that specific information concerning the citizenship of the LLCs’ members was not available despite searching public records. The district court dismissed Lincoln’s complaint, holding that Lincoln was required to plead the citizenship of each LLC member and allege that those citizenships differed from Lincoln’s. Lincoln appealed, arguing the court erroneously applied a heightened pleading standard.