Estate of Martha Barotz v. Wilmington Savings Fund Society, FSB

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE ESTATE OF MARTHA BAROTZ, by its Executor Nathan Barotz, Plaintiff, v. C.A. No. 2024-0447-JTL WILMINGTON SAVINGS FUND SOCIETY, FSB; WELLS FARGO DELAWARE TRUST COMPANY, N.A.; WELLS FARGO BANK, N.A.; APOLLO GLOBAL MANAGEMENT, INC.; APOLLO ASSET MANAGEMENT, INC.; APOLLO CAPITAL MANAGEMENT, L.P.; and FINANCIAL CREDIT INVESTMENT I MANAGER, LLC, Defendants. OPINION GRANTING MOTIONS TO DISMISS IN PART Date Submitted: March 20, 2026 Date Decided: June 29, 2026 Kaan Ekiner, Nathan D. Barillo, COZEN O’CONNOR, Wilmington, Delaware; Gregory J. Star, Michael J. Miller, Victoria G. Mazzola, Carlynne A. Wagner, COZEN O’CONNOR, Philadelphia, Pennsylvania; Attorneys for Plaintiff. Steven L. Caponi, Michael J. Vail, K&L GATES LLP, Wilmington, Delaware; Attorneys for Defendant Wilmington Savings Fund Society, FSB. Kevin J. Mangan, Stephanie S. Riley, WOMBLE BOND DICKINSON (US) LLP, Wilmington, Delaware; Mahesh Venkatakrishnan Parlikad, Kelly A. Carrero, JONES DAY, New York, New York; Attorneys for Defendants Wells Fargo Delaware Trust Company, N.A. and Wells Fargo Bank, N.A. Matthew D. Stachel, PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP, Wilmington, Delaware; Gregory F. Laufer, Jacobus J. Schutte, PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP, New York, New York; Attorneys for Defendants Apollo Global Management, Inc., Apollo Asset Management, Inc., Apollo Capital Management, L.P., and Financial Credit Investment I Manager, LLC. LASTER, V.C.  Nearly twenty years ago, a life settlement company affiliated with a major financial institution paid a senior citizen to engage in a stranger-originated life insurance (“STOLI”) transaction. The senior citizen procured a multi-million-dollar policy on her own life in exchange for a payment equal to three percent of the stated death benefit. As instructed by the life settlement company, she formed an insurance trust with a corporate trustee and made the life settlement company the sole owner of the beneficiary interest (the “Insurance Trust”). The Insurance Trust was a directed trust, meaning its corporate trustee was entitled to follow the instructions of the life settlement company as sole owner of the beneficiary interest. The life settlement company instructed the corporate trustee to apply for and secure the policy. The life settlement company paid the premiums to maintain the policy. Five years later, a private equity firm acquired the beneficiary interest in the Insurance Trust when it bought a portfolio of life insurance investments from the financial institution affiliated with the life settlement company. The private equity firm controlled the beneficiary interest in the Insurance Trust through a three entity stack. At the top was an Irish entity managed by an affiliate of the private equity firm. That entity held the beneficiary interest in a Delaware statutory trust, which in turn held the beneficiary interest in another statutory trust, which in turn held the beneficiary interest in the Insurance Trust. The two Delaware trusts sitting between the Insurance Trust and the Irish entity were directed trusts, meaning each trustee followed the instructions of the sole owner of the beneficiary interest. The private equity firm thus controlled the structure all the way down.  Twelve years after the insurance policy was issued, the senior citizen died. The private equity firm caused the trustee of the Insurance Trust to apply for the death benefit, which the insurance company paid to the Insurance Trust. As directed by the private equity firm, each trustee in the stack distributed the death benefit proceeds to the next entity in line. The trustee of the third trust transferred the proceeds to a bank account controlled by the private equity firm. The three intervening entities between the insurance trust and the private equity firm subsequently dissolved. STOLI transactions violate Delaware law and are void ab initio. Delaware’s insurance code gives the estate of the insured a right to recover the death benefit from a person who received it (the “Disgorgement Statute”). When the senior citizen’s estate began to investigate the scheme at the center of this case, the Insurance Trust sued the estate in New York state court to obtain a declaratory judgment of non- ownership. The estate sued the Insurance Trust in Delaware Superior Court. The New York court dismissed its action in favor of the Delaware proceeding. The Superior Court ultimately granted summary judgment for the estate and against the Insurance Trust. But when the estate sought to enforce the judgment, the Insurance Trust claimed to be insolvent. Through discovery in aid of execution, the estate learned more about the flow of the insurance proceeds. In 2024, the estate filed this action. The estate has sued the trustee of the Insurance Trust, the trustees of the first two intervening trusts, and the private equity firm and three of its affiliates. The estate contends each of the defendants is liable for the death benefit under the Disgorgement Statute. The estate also asserts 2 that the defendants engaged in fraudulent transfers, improperly dissolved the first two intervening entities by failing to make provision for known claims, and committed fraud. The defendants moved to dismiss. They argue that the complaint fails to state any claims on which relief can be granted. They also argue that the estate improperly split its claims, lacks standing, and sued too late. This decision grants defendants’ motions to dismiss in part. Three claims fail on timeliness grounds: • The estate’s claims under the Disgorgement Statute are subject to a three-year statute of limitations. The estate was on inquiry notice of its claims by February 2021, but did not sue until April 2024. • The estate’s claim for constructive fraudulent transfer is untimely because the challenged transfers occurred in 2019 and the statute of limitations is not subject to tolling. The estate did not sue until April 2024. • The estate’s claim for actual fraudulent transfer is untimely because the challenged transfers were or could reasonably have been discovered by the estate in 2021. Again, the estate did not sue until April 2024. The estate’s fraud claim fails because that claim is really an effort to plead fraudulent concealment to defeat the defendants’ timeliness defenses. On the alleged facts, the estate cannot transform allegations about fraudulent concealment into a timely fraud claim. That leaves the estate’s claim for improper dissolution of the first two intervening entities. That claim survives. So does a veil-piercing claim that none of the defendants challenged. 3  I. FACTUAL BACKGROUND The facts are drawn from the operative complaint (the “Complaint”), documents integral to the Complaint or that the Complaint incorporates by reference, and documents subject to judicial notice.1 At this procedural stage, the court must credit the Complaint’s well-pled allegations and draw all reasonable inferences in the plaintiff’s favor. A. The STOLI Transaction In 2006, Martha Barotz entered into a STOLI transaction with an entity called Life Accumulation Trust III (the “Life Settlement Company”). Deutsche Bank, the multinational financial firm, beneficially owned and controlled the Life Settlement 1 Citations in the form “Compl. ¶ ___” refer to the paragraphs of the operative complaint. Dkt. 104. Citations in the form “Compl. Ex. ___ at ___” refer to the exhibits to the Complaint. Id. Citations in the form “WSFS OB Ex. ___ at ___” refer to the exhibits to Defendant Wilmington Savings Fund Society, FSB’s Opening Brief in Support of its Motion to Dismiss the Verified Amended Complaint. Dkt. 115. Citations in the form “Wells Fargo OB Ex. ___ at ___” refer to the exhibits submitted by Defendants Wells Fargo Bank, N.A. and Wells Fargo Delaware Trust Company, N.A. in support of their Opening Brief in Support of Their Motion to Dismiss the Verified Amended Complaint. Dkt. 118. Citations in the form “AB at ___” refer to Plaintiff’s Answering Brief in Opposition to Defendants’ Motions to Dismiss Plaintiff’s First Amended Complaint. Dkt. 146. Citations in the form “Wells Fargo RB at ___” refer to Defendants Wells Fargo Bank, N.A.’s and Wells Fargo Delaware Trust Company, N.A.’s Reply Brief in Support of Their Motion to Dismiss the Verified Amended Complaint. Dkt. 151. Citations in the form “Plaintiff’s Supp. OB at ___” refer to Plaintiff’s Supplemental Brief in Opposition to Defendants’ Motions to Dismiss Plaintiff’s First Amended Complaint. Dkt. 168. Citations in the form “Plaintiff’s Supp. RB at ___” refer to Plaintiff’s Reply to Defendants’ Supplemental Brief in Support of Their Motions to Dismiss Plaintiff’s First Amended Complaint. Dkt. 172. Page references cite internal pagination whenever possible. 4 Company. The transaction employed a well-known template frequently used in the STOLI industry. Acting on instructions from the Life Settlement Company, Barotz set up the Insurance Trust, formally known as the Martha Barotz 2006-1 Insurance Trust, under a trust agreement dated August 18, 2006. The Life Settlement Company became the sole owner of the Insurance Trust’s beneficiary interest in exchange for a nominal capital investment in the Insurance Trust. The Life Settlement Company thus became the sole beneficiary of the Insurance Trust, but because the beneficiary interest was transferrable, the Life Settlement Company could transfer the interest to a new owner. The Insurance Trust was originally a Delaware statutory trust formed under the Delaware Statutory Trust Act. Effective March 18, 2021, the Insurance Trust converted to a common-law trust. The initial trustee of the Insurance Trust was Christiana Bank & Trust Company. Wilmington Savings Fund Society, FSB (“WSFS”) took over as the successor trustee after acquiring the original trustee. The trust agreement for the Insurance Trust established a directed trustee structure, meaning that the trustee had to follow the instructions given by the owner of the beneficiary interest. On August 23, 2006, the Life Settlement Company caused the Insurance Trust to apply for a $5 million insurance policy on Barotz’s life. On September 3, an insurance company issued a policy to the Insurance Trust with a stated death benefit of $5 million (the “Policy”). Except for the nominal investment that the Life 5 Settlement Company made in the Insurance Trust in return for the beneficiary interest, the Insurance Trust had no assets other than the Policy. The Life Settlement Company paid Barotz $150,000 for her role in the STOLI transaction. That amount represented 3% of the death benefit. Barotz did not pay any premiums on the Policy. Going forward, the Life Settlement Company funded the premiums. B. The First Sale Deutsche Bank included the beneficiary interest in the Insurance Trust in a portfolio of life insurance investments that it sold to an affiliate of Apollo Global Management, Inc. (“Apollo Global”) for $200 million in February 2011. Apollo Global is a publicly traded Delaware corporation and private equity firm. Apollo Global owned the beneficiary interest in the Insurance Trust through a series of subsidiaries. One level down from Apollo Global was Apollo Asset Management, Inc. (“Apollo Asset”), a Delaware corporation and wholly owned subsidiary of Apollo Global. One level down from Apollo Asset were three subsidiaries: (i) Apollo Capital Management, L.P. (“Apollo Capital”), a Delaware limited partnership, (ii) Financial Credit Investment I, L.P., a Cayman entity (the “Cayman Fund”), and (iii) Financial Credit Investment I Manager, LLC (the “Fund Manager”), a Delaware limited liability company. Apollo Capital was the sole member of the Fund Manager. One level down from the three subsidiaries was Financial Credit Investment I Limited, an Irish entity (the “Investment Fund”). Apollo Capital, the Cayman Fund, and the Fund Manager owned 100% of the equity interest in the Investment Fund. 6 Through the Fund Manager, Apollo Capital managed the Investment Fund. This decision refers to Apollo Global, Apollo Asset, Apollo Capital, and the Fund Manager collectively as the Apollo Defendants. The Apollo Defendants established three Delaware statutory trusts to hold and manage the portfolio of life insurance investments they acquired from Deutsche Bank. They were Financial Credit Investment I Trust C-2 (“Trust C-2”), Financial Credit Investment I Trust C-3 (“Trust C-3”), and Financial Credit Investment I Trust C-4 (“Trust C-4”). The Investment Fund owned the beneficiary interest in Trust C-2. Wells Fargo Delaware Trust Company, N.A. (“Wells Fargo Delaware”) served as the trustee for Trust C-2. Trust C-2 owned the beneficiary interest in Trust C-3. Wells Fargo Delaware served as the trustee for Trust C-3. Wells Fargo Bank, N.A. (“Wells Fargo Bank”), the parent company of Wells Fargo Delaware, served as a secondary trustee and securities intermediary for Trust C-3. This decision refers to Wells Fargo Delaware and Wells Fargo Bank together as the Wells Fargo Defendants. In April 2011, as part of the portfolio sale, the Life Settlement Company transferred the beneficiary interest in the Insurance Trust to Trust C-3. Because the Insurance Trust continued to own the Policy, that transfer made the Apollo Defendants the economic beneficiaries of the Policy. After acquiring the beneficiary interest in the Insurance Trust, Trust C-3 paid the premiums on the Policy until Barotz’s death. 7  Both Trust C-2 and Trust C-3 were directed trusts, meaning that their trust instruments required that the trustee follow the instructions of the owner of the beneficiary interest. Recall that the Insurance Trust was also a directed trust. The trustee of the Insurance Trust (WSFS) therefore had to follow the instructions of Trust C-3, whose trustee (Wells Fargo Delaware) had to follow the instructions of Trust C-2, whose trustee (Wells Fargo Delaware) had to follow the instructions of the Investment Fund, which was managed, through the Fund Manager, by Apollo Capital. Through this structure, the Apollo Defendants controlled all of the entities in the ownership chain. C. The Death Benefit Distribution Barotz died on December 22, 2018. The Apollo Defendants learned of her death on December 26. As early as January 2, 2019, the Apollo Defendants had started the process for securing the death benefit, which included authorizing and assisting in preparing the paperwork necessary to file a claim. By February 2019, Trust C-3 had directed WSFS in its capacity as trustee of the Insurance Trust to submit a death benefit claim to the insurer. On April 4, 2019, the insurer sent a check for $5,042,328.77 to WSFS (the “Death Benefit”). WSFS deposited the check in an account WSFS maintained in the name of the Insurance Trust. On April 12, 2019, Trust C-3 instructed WSFS to transfer the Death Benefit to a Wells Fargo Bank account titled “Wells Fargo Longevity Clearing Account” for 8 “further credit” to an account titled “FCI I Trust C-3 Proceeds Account.”2 Apollo Capital received consolidated statements that included this account. On April 18, WSFS complied. On April 22, 2019, representatives of the Apollo Defendants engaged in internal discussions about obtaining the Death Benefit. On April 24, Wells Fargo Bank transferred the Death Benefit to a JPMorgan account in the name of the Investment Fund. The Apollo Defendants intended to use some of the proceeds to pay expenses. Soon thereafter, several multi-million dollar withdrawals were made from the JPMorgan account. The funds were deposited into another JPMorgan account in the name of the Cayman Fund. D. The Second Sale Soon after the distribution of the Death Benefit, the Apollo Defendants caused the Investment Fund to sell a portfolio of beneficiary interests in around 530 active life insurance policies—comprising death benefits totaling $1.46 billion—to Berkshire Hathaway and a different Apollo Global affiliate called Financial Credit Investment III DAC. As part of that transaction, the Apollo Defendants directed the trustees of Trust C-2 and Trust C-3 to dissolve those entities. The Apollo Defendants documented the instruction to dissolve Trust C-2 and Trust C-3 in an Omnibus Termination Agreement and Direction, dated December 2, 2 Compl. ¶ 77. 9 2019 (the “Termination Agreement”). As part of that agreement, the Investment Fund certifie[d] and agree[d] that (a) all claims and obligations of the Trusts, if any, have been paid in full as of the date hereof or reasonable provision has been made by the Beneficial Owner for the payment of such claims and obligations as required by Section 3808(e) of the Act, and (b) as of the date hereof and aside from any Tax Filings, the winding up of the affairs of the Trusts under the Trust Agreements will have been completed and accordingly all conditions to the dissolution and termination of the Trusts under the Trust Agreements will have been satisfied.3 That provision was a contractual stipulation intended to protect the trustees. If it turned out not to be true, then the trustees could sue. It did not establish the truth of the stipulation as a real-world fact. By late January 2020, the dissolutions of Trust C-2 and Trust C-3 were complete. The Apollo Defendants later dissolved the Investment Fund, and its liquidation and winding up were complete by June 6, 2021. Those steps left the Insurance Trust as the only active entity in the chain of ownership linking the original Policy to the Apollo Defendants that received the Death Benefit. E. The Estate’s Investigation Barotz’s spouse was the executor of her estate (the “Estate”). He had been part of the original STOLI transaction, where he signed documents for the Insurance Trust as the settlor’s spouse. Their son later succeeded his father as the executor of the Estate. He notarized the documents for the original STOLI transaction. Nor was 3 Id. ¶ 148; see Compl. Ex. N § 1(b). 10 the STOLI transaction Barotz’s only venture of that sort. She participated in at least one other STOLI scheme, which was the subject of a separate litigation in the Delaware Superior Court.4 Because he had been part of the original STOLI transaction, the executor knew about the Insurance Trust, but little more. He suspected that the Life Settlement Company had transferred the beneficiary interest in the Insurance Trust, but did not know where it ended up. He also did not know the fate of the Policy or the Death Benefit. As part of an investigation into whether the Estate had claims under Delaware law, the Estate’s counsel sent letters in January 2020 to a number of known STOLI players, including Wells Fargo Bank. The letters asked about the “final recipient of the death benefit” and suggested that the Estate intended to commence litigation to recover the Death Benefit, if necessary.5 On January 28, 2020, Wells Fargo Bank forwarded the Estate’s letter to the Apollo Defendants. Wells Fargo Bank reminded the Apollo Defendants that Trust C- 3 held the beneficiary interest in the Policy. Wells Fargo Bank did not respond to the Estate’s letter. 4 See Est. of Martha Barotz v. Vida Longevity Fund, L.P., C.A. No. N20C-05- 144 EMD (CCLD) (Del. Super. Ct.). 5 Compl. ¶ 64. 11 F. The New York Action On March 10, 2020, the Insurance Trust sued the Estate in New York state court using a procedural device known as a non-detailed summons (the “New York Action”). The summons alleged that the Insurance Trust remained the owner of the Policy at the time of Barotz’s death and that the Insurance Trust “received” the Death Benefit.6 The Insurance Trust sought a declaration that the Estate could not “maintain an action to recover … the proceeds of the Policy” from the Insurance Trust.7 Strikingly, the Insurance Trust also sought damages for harm the Estate somehow caused the Insurance Trust. The summons was the first time that the Estate learned that the Insurance Trust had in fact received the Death Benefit. The summons did not reveal that the Insurance Trust no longer held the Death Benefit or where the proceeds had gone. The summons also did not identify the owner of the beneficiary interest in the Insurance Trust or any of the entities further up the chain. G. The Superior Court Action On April 15, 2020, the Estate sued the Insurance Trust in Delaware Superior Court (the “Superior Court Action”). The Estate invoked the Disgorgement Statute and sought to recover the Death Benefit from the Insurance Trust on the grounds that the Policy was an illegal STOLI transaction. 6 Id. ¶ 56. 7 Id. 12  On June 22, 2020, the Insurance Trust filed a formal complaint against the Estate in the New York Action. The complaint continued to seek a declaratory judgment addressing whether the Estate could “recover the Policy proceeds” from the Insurance Trust.8 The complaint added detail about the original STOLI transaction but did not identify the owner of the Insurance Trust’s beneficiary interest or explain what happened to the Death Benefit. On July 22, 2020, the Insurance Trust moved to dismiss or stay in the Superior Court Action in deference to the New York Action. The motion explained that the Insurance Trust paid the premiums on the Policy and received the Death Benefit, but did not identify the owner of the beneficiary interest in the Insurance Trust or address whether the Insurance Trust had transferred the Death Benefit. On the same day, the Estate moved to dismiss the complaint in the New York Action. The Insurance Trust opposed the motion. Its papers acknowledged that the Estate had tried to identify the owner of the Insurance Trust’s beneficiary interest through the Estate’s January 2020 letter. The New York Court eventually dismissed the New York Action in favor of the Superior Court Action. Two days later, the Delaware Superior Court denied the Insurance Trust’s motion to dismiss the Superior Court Action. 8 Id. ¶ 61. 13 H. Discovery In The Superior Court Action The Estate served requests for the production of documents, requests for admission, and interrogatories in the Superior Court Action. When the Insurance Trust responded to the requests for production of documents in August 2020, the Insurance Trust objected to the relevance of the Estate’s request for “documents sufficient to identify any and all of the persons or entities that were, at any time, the ultimate beneficiary(ies) of the Policy and/or of the [Insurance] Trust.”9 When the Insurance Trust produced documents in September 2020, the production included a Beneficial Interest Transfer Agreement dated April 14, 2011. That agreement evidenced the Life Settlement Company’s sale of the beneficiary interest in the Insurance Trust to Trust C-3. Through this document, the Estate learned that Trust C-3 owned the beneficiary interest when the Death Benefit was paid. On October 30, 2020, the Estate issued a subpoena to Trust C-3. Also in October 2020, the Insurance Trust responded to the Estate’s requests for admission. The Insurance Trust admitted knowing that the Policy was part of a STOLI transaction and that the Insurance Trust was created in furtherance of a STOLI scheme. In December 2020, the Insurance Trust responded to the Estate’s interrogatories. One interrogatory asked the Insurance Trust to identify “any person 9 Id. ¶ 66. 14 or entity who received all or part of the death benefit of the $5 million dollar policy.”10 The response only identified the Insurance Trust. Despite the limited information that the Estate had obtained, the Estate “suspected that the [Insurance] Trust had transferred the Policy’s death benefit to Trust C-3.”11 The Estate also suspected “that Trust C-3, as the beneficiary of the [Insurance] Trust, was in possession of the proceeds and would be the entity that would ultimately satisfy any judgment in favor of the Estate.”12 On January 25, 2021, in a filing in the Superior Court Action, the Estate stated that “[i]f the [Insurance] Trust ever, in fact, possessed the life insurance proceeds at issue in this action, it was only fleetingly as the funds flowed through it to the real party in interest.”13 On January 27, 2021, the Estate proposed to add Trust C-3 as a defendant in the Superior Court Action. Counsel for the Insurance Trust responded that Trust C- 3 dissolved in late January 2020. On January 29, 2021, the Insurance Trust produced more documents, including a wire transfer form indicating that the Insurance Trust transferred the Death Benefit to a bank account associated with Trust C-3 on April 18, 2019. 10 Id. ¶ 70. 11 Id. ¶ 71. 12 Id. 13 WSFS OB Ex. J at 2–3. 15  On February 2, 2021, the Estate issued subpoenas to the Fund Manager and Apollo Management, L.P. (“Apollo Management”). The subpoenas sought documents related to the Death Benefit and the dissolution of Trust C-3. The Fund Manager and Apollo Management objected to the subpoenas on the basis of relevance and burden, claiming that the information sought was irrelevant to the Superior Court Action. The Estate did not move to enforce the subpoenas or engage with the subpoenaed parties. Instead, the Estate moved to compel the Insurance Trust to produce discovery identifying the recipients of the Death Benefit after Trust C-3’s dissolution. The Insurance Trust claimed not to know who received the proceeds. On April 27, 2021, the Insurance Trust produced a Removal, Appointment and Succession Agreement between WSFS, the Investment Fund, and an entity called 66 LLC. That agreement recited that the Investment Fund was in the “final stage” of a “voluntary liquidation” and that the Investment Fund was removing WSFS as trustee of the Insurance Trust, appointing 66 LLC as the new trustee, and converting the Insurance Trust to a common-law trust.14 During a deposition two days later, a WSFS representative could provide no information beyond what was in the agreement. I. Summary Judgment In The Superior Court Action On May 4, 2021, the Estate moved for summary judgment against the Insurance Trust. The Superior Court granted the Estate’s motion on December 18, 2023. On January 8, 2024, the Superior Court entered a final judgment awarding the 14 Compl. ¶ 87. 16 Estate $6,922,036.86 in damages and prejudgment interest. The Insurance Trust did not appeal. The Insurance Trust failed to satisfy the judgment, prompting the Estate to seek discovery in aid of execution. The Estate issued subpoenas to at least seventeen non-parties, including the Fund Manager, Trust C-4, other Apollo Global-affiliated entities, Wells Fargo Delaware, Wells Fargo Bank, WSFS, 66 LLC, and counsel for the Insurance Trust. The Estate also served requests for production and interrogatories on the Insurance Trust. The Estate subsequently moved to compel production and enforce the subpoenas. On March 22, 2024, the Estate received a small production of documents from a few of the subpoenaed parties. According to the Estate, the discovery showed that the Investment Fund and the various trusts “were, in reality, a conglomerate of shell entities and empty statutory trusts that served as puppets for the ultimate director and financial beneficiary who sits behind the curtain pulling the strings: Apollo.” 15 The production included a Management Agreement showing that as of January 5, 2011, the Fund Manager managed the Investment Fund “to the fullest extent permitted by law.”16 The Management Agreement identified Apollo Capital as the sole member of the Fund Manager and a Co-President of Apollo Asset as the “Control 15 Id. ¶ 114. 16 Id. ¶ 116. 17 Person” of the Fund Manager.17 The production also included an Amended Management Agreement, dated February 15, 2011, that expanded the Fund Manager’s control over the Investment Fund. That Amended Management Agreement described the Fund Manager as an affiliate of Apollo Capital. On March 25, 2024, counsel for the Insurance Trust moved to withdraw, representing that there had been no communication “with the Trustee or any authorized representative” of the Insurance Trust “concerning the Trust’s response to any document or motion, any potential appeal in this Action, or any other legal services on behalf of the Trust.”18 The Estate opposed the motion. On April 15, 2024, the Superior Court ordered the Insurance Trust to serve meaningful responses to the Estate’s post-judgment discovery. The Superior Court also ordered counsel for the Insurance Trust to identify the addressee of their legal bills. The Superior Court also granted the motions to enforce the subpoenas that the Estate had served, ordering the respondents to produce “any documents” relating to the formation and dissolution of the trusts involved with the Policy and the disposition of the Death Benefit.19 In response, the Estate received a single document. 17 Id. ¶ 117. 18 Id. ¶ 101. 19 Id. ¶ 103. 18 According to the Estate, “it was so heavily redacted that the Estate could not comprehend it.”20 J. This Action The Estate filed this action on April 26, 2024. The operative complaint contains seven counts: • Count I asserts a claim against WSFS under the Disgorgement Statute. • Count II asserts a claim against the Wells Fargo Defendants under the Disgorgement Statute. • Count III asserts a claim against the Apollo Defendants under the Disgorgement Statute. • Count IV asserts a claim against the Wells Fargo Defendants for improperly dissolving Trust C-2 and Trust C-3. • Count V asserts a claim to enforce the Superior Court judgment against the Apollo Defendants under an alter ego or veil piercing theory. • Count VI asserts a claim against all defendants for fraudulent transfer. • Count VII asserts a claim against all defendants for fraud. WSFS and the Wells Fargo Defendants (the “Trustees”) moved to dismiss all claims against them. The Apollo Defendants moved to dismiss Counts III, VI, and VII. The Apollo Defendants did not move to dismiss Count V. II. LEGAL ANALYSIS When considering a motion to dismiss under Rule 12(b)(6), “a trial court should accept all well-pleaded factual allegations in the Complaint as true, accept even vague allegations in the Complaint as ‘well-pleaded’ if they provide the defendant 20 Id. ¶ 104. 19 notice of the claim, [and] draw all reasonable inferences in favor of the plaintiff.”21 The court should “deny the motion unless the plaintiff could not recover under any reasonably conceivable set of circumstances susceptible of proof.”22 Delaware’s “governing ‘conceivability’ standard is more akin to ‘possibility,’ while the federal ‘plausibility’ standard falls somewhere beyond mere ‘possibility’ but short of ‘probability.’”23 “For a court to grant a Rule 12(b)(6) motion on timeliness grounds, the complaint’s allegations must show that the claim was filed too late.”24 When evaluating whether the factual allegations in a complaint support a timeliness defense, a court “must draw the same plaintiff-friendly inferences required in a 12(b)(6) analysis.”25 When reviewing a timeliness defense, the “court effectively assumes the validity of the claims, then applies timeliness principles.”26 A. Counts I, II, and III: The Disgorgement Statute Claims Counts I, II, and III of the Complaint assert claims under the Disgorgement Statute. The Trustees seek dismissal for lack of standing. All the defendants seek 21 Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Hldgs. LLC, 27 A.3d 531, 536 (Del. 2011). 22 Id. 23 Id. at 537 n.13. 24 Lebanon Cty. Emps.’ Ret. Fund v. Collis, 287 A.3d 1160, 1193 (Del. Ch. 2022) (citing Kahn v. Seaboard Corp., 625 A.2d 269, 277 (Del. Ch. 1993)). 25 State ex rel. Brady v. Pettinaro Enters., 870 A.2d 513, 524–25 (Del. Ch. 2005). 26 Collis, 287 A.3d at 1193. 20 dismissal on the theory that the claims are untimely. Assessing the defendants’ arguments for dismissal requires a baseline understanding of the law on those claims. Wagering on human life has long been illegal, regardless of the means. “Since the initial creation of life insurance during the sixteenth century, speculators have sought to use insurance to wager on the lives of strangers.” 27 In 1881, the Supreme Court of the United States recognized the insurable interest doctrine, under which the person procuring a life insurance policy must have a sufficient interest in the ongoing life of the insured to prevent the policy from operating as a death wager.28 As the Court acknowledged, it is hard to define an insurable interest “with precision,” but explained that the doctrine required an interest “founded upon the relations of the parties to each other, either pecuniary or of blood or affinity,” that made it reasonable for the person procuring the policy “to expect some benefit or advantage from the continuance of the life of the assured.”29 In other words, the person securing the policy had to have some connection to the insured that would give the person securing the policy a reason to want the insured to continue living. In that setting, the person securing the policy can legitimately secure a death benefit as compensation for the loss—emotional, pecuniary, or otherwise—that the insured’s death will cause. 27 PHL Variable Ins. Co. v. Price Dawe 2006 Ins. Tr., 28 A.3d 1059, 1069 (Del. 2011). 28 See Warnock v. Davis, 104 U.S. 775, 779 (1881). 29 Id. 21  The Delaware Supreme Court adopted the insurable interest doctrine in 1915.30 In 1968, the Delaware General Assembly codified the doctrine in Section 2704(a) of the Insurance Code (the “Insurable Interest Statute”).”31 The pertinent language states: Any individual of competent legal capacity may procure or effect an insurance contract upon that individual’s own life or body for the benefit of any person, but no person shall procure or cause to be procured any insurance contract upon the life or body of another individual unless the benefits under such contract are payable to the individual insured or that individual’s personal representatives or to a person having, at the time when such contract was made, an insurable interest in the individual insured.32 The provision has two parts. By its terms, a person may procure insurance on his own life for anyone’s benefit. But a person procuring insurance on the life of another must have an insurable interest in the life of the insured.33 One common structure in the life insurance industry involves the creation of a life insurance trust to own a policy, receive the proceeds, and then distribute them in accordance with the trust agreement. A trust is a separate jural entity, so questions could arise as to whether the trust was procuring a policy on the life of another. Delaware law first addressed this issue by statute in 1994 (the “Trust Exception”). Today, the pertinent language states: 30 See Baltimore Life Ins. Co. v. Floyd, 94 A. 515, 520 (Del. 1915). 31 18 Del. C. § 2704(a). 32 Id. 33 See Price Dawe, 28 A.3d at 1073–74. 22  The trustee of a trust created and initially funded by an individual has an insurable interest in the life of that individual and the same insurable interest in the life of any other individual as does any person who is treated as the owner of such trust for federal income tax purposes without regard to: a. The identity of the trust beneficiaries; b. Whether the identity of the trust beneficiaries changes from time to time; and c. The means by which any trust beneficiary acquires a beneficial interest in the trust.34 Under the Trust Exception, if a person with an insurable interest validly creates and initially funds a trust to own the policy, then the trustee has an insurable interest in the life of the insured sufficient to support the policy Today, the Disgorgement Statute appears in Section 2704(b) of the Insurance Code. It states: If the beneficiary, assignee or other payee under any contract made in violation of this section receives from the insurer any benefits thereunder accruing upon the death, disablement or injury of the individual insured, the individual insured or the individual’s executor or administrator, as the case may be, may maintain an action to recover such benefits from the person so receiving them.35 The Disgorgement Statute thus provides that if the person procuring a policy lacks an insurable interest in the life of the insured, then the insured or their personal representative can recover the death benefit from a person who received it. 34 18 Del. C. § 2704(c)(5). 35 18 Del. C. § 2704(b). 23  A STOLI transaction violates the Insurable Interest Statute. By definition, a stranger to the insured lacks an insurable interest in the insured’s life and cannot procure a life insurance policy. But what about more subtle fact patterns? In Price Dawe, the Delaware Supreme Court addressed a situation where—as here—a person procured an insurance policy on his own life. As here, the insured designated a family trust as the policy beneficiary, and he owned the beneficiary interest in the trust. Shortly after procuring the policy, the insured sold it to an investor. When his estate sought to recover the policy, the party who received the death benefit argued that the structure complied with the Insurance Code. The justices disagreed, explaining the statute “requires more than just techn