                      RECOMMENDED FOR FULL-TEXT PUBLICATION
                           Pursuant to Sixth Circuit Rule 206
                                 File Name: 09a0187p.06

              UNITED STATES COURT OF APPEALS
                              FOR THE SIXTH CIRCUIT
                                _________________


                                               X
                                                -
 WILLIAM WULIGER,
                                                -
                              Plaintiff-Appellee,
                                                -
                                                -
                                                    No. 08-3342
         v.
                                                ,
                                                 >
 MANUFACTURERS LIFE INSURANCE COMPANY -
                                                -
                     Defendant-Appellant. -
 (USA),
                                                -
                                               N
                Appeal from the United States District Court
                 for the Northern District of Ohio at Toledo.
               No. 03-07457—David A. Katz, District Judge.
                               Argued: January 22, 2009
                          Decided and Filed: May 28, 2009
                  Before: GUY, CLAY, and COOK, Circuit Judges.

                                  _________________

                                      COUNSEL
ARGUED: Charles J. Vinicombe, DRINKER, BIDDLE & REATH, Princeton, New Jersey,
for Appellant. William T. Wuliger, WULIGER, FADEL & BEYER, Cleveland, Ohio, for
Appellee. ON BRIEF: Charles J. Vinicombe, DRINKER BIDDLE & REATH LLP,
Princeton, New Jersey, Stephen D. Lerner, Pierre H. Bergeron, SQUIRE SANDERS &
DEMPSEY LLP, Cincinnati, Ohio, for Appellant. William T. Wuliger, WULIGER, FADEL
& BEYER, Cleveland, Ohio, Amy A. Wuliger-Knee, Montgomery Village, Maryland,
Andrew C. Storar, Michael W. Sandner, PICKREL, SCHAEFFER & EBELING, Dayton,
Ohio, for Appellee.
                                  _________________

                                       OPINION
                                  _________________

       CLAY, Circuit Judge. Plaintiff William Wuliger (the “Receiver”) filed this diversity
suit against Defendant Manufacturers Life Insurance Company (USA) (“MLIC”) seeking
rescission of three insurance policies and the return of premiums paid on them after they



                                            1
No. 08-3342         Wuliger v. Manufacturers Life Ins. Co. (USA)                      Page 2


were fraudulently procured for the benefit of a viatical investment company in receivership.
MLIC now appeals the district court’s order granting summary judgment to the Receiver and
denying MLIC’s motion for summary judgment. For the reasons that follow, we REVERSE
the district court’s order and REMAND with instructions to grant summary judgment
dismissing the action against MLIC.

                                     BACKGROUND

I.      The Liberte Fraud

        Liberte Capital Group (“Liberte”), an Ohio-based “viatical investment company,”
purchased life insurance policies from “viators”–policyholders who are terminally ill or who
are elderly and in poor health–in exchange for paying the viators an up-front lump sum.
Liberte persuaded three elderly individuals to purchase life insurance policies from MLIC
and immediately assign the policies to Liberte, which would pay the policies’ premiums.
The viators’ purchases of the insurance policies with the intent to re-sell them to Liberte
immediately constituted insurance fraud, because the viators never intended to insure their
own lives.

        Liberte’s collusion with the three viators was part of a larger scheme in which
Liberte fraudulently procured viators’ insurance policies and sold them to almost three
thousand investors, who collectively invested almost $100 million in Liberte. Liberte
Capital Group, LLC v. Capwill, 148 F. App’x 426, 428 (6th Cir. 2005). Liberte contracted
with Viatical Escrow Services, LLC (“VES”), an entity controlled by James A. Capwill
(“Capwill”), to manage the accounts of the insurance policies it purchased from viators;
Liberte assigned its ownership and beneficiary rights in the policies to escrow accounts
managed by VES. Liberte Capital Group, LLC v. Capwill, 248 F. App’x 650, 651 (6th Cir.
2007). Liberte also entered into contracts with independent brokers to locate investors
interested in purchasing stakes of the insurance policies assigned to Liberte and held by
VES. Once the brokers had identified potential investors and persuaded them to invest,
Liberte then sold stakes in the expected proceeds from the viators’ policies to the investors.
Liberte, through the brokers, promised the investors a share of the payouts upon the viators’
death, in exchange for up-front payments to the VES escrow accounts. Liberte then used the
payments to VES to pay the premiums on the viators’ policies. Liberte’s brokers did not
No. 08-3342            Wuliger v. Manufacturers Life Ins. Co. (USA)                               Page 3


disclose to the third-party investors that the investors would be purchasing stakes in
fraudulently procured insurance policies.

         While Liberte was fraudulently acquiring insurance policies from issuers such as
MLIC and was, through its brokers, fraudulently inducing investors to purchase shares of
the fraudulently procured policies, VES in turn was defrauding Liberte. Capwill, through
an investment vehicle he controlled called Capital Fund Leasing, LLC (“CFL”), diverted the
funds that were supposed to be held in VES’ escrow accounts to various securities brokers,
who ultimately lost the funds. See id.

         In April 1999, Liberte sued VES, CFL and Capwill in the Northern District of Ohio
for defrauding Liberte and losing the money that investors had placed in the escrow accounts
in exchange for their stakes in the viators’ insurance policies. Id. In July 1999, the district
                                                                                     1
court placed VES and CFL in receivership, and authorized the Receiver to “oversee and
to administer the business and assets of VES and CFL . . . to take and maintain exclusive
and complete custody, control and possession of all the assets belonging to VES and
CFL.”2 Id. (internal quotations omitted). At that time, Liberte was considered a creditor
of the received entities, because its own fraud had not yet been discovered, and the
escrow accounts that were fraudulently managed by VES, CFL, and Capwill included
Liberte’s proceeds from sales of the viatical policies to investors.

         Shortly after Liberte filed suit against VES, CFL and Capwill, the Securities and
Exchange Commission (“SEC”) discovered Liberte’s fraud. As a result, the United
States charged Liberte’s chief executive, J. Richard Jamieson (“Jamieson”), with buying
and re-selling fraudulently obtained insurance policies through Liberte. See United
States v. Jamieson, 427 F.3d 394, 399 (6th Cir. 2005). In addition to indicting Jamieson,
the government initiated a separate forfeiture action against Jamieson and Liberte, also
in the Northern District of Ohio, and obtained a court order enjoining Jamieson and


         1
           Victor M. Javitch was the original receiver in this action. The district court appointed William
T. Wuliger to replace him on January 30, 2006. The two receivers in this action are herein collectively
referred to as the “Receiver.”
         2
         The receivership was subsequently expanded to include Capwill’s assets as well. Liberte, 248
F. App’x at 652.
No. 08-3342           Wuliger v. Manufacturers Life Ins. Co. (USA)                               Page 4


Liberte from further defrauding their investors or insurance companies. In October
2000, the district court in the forfeiture action ordered that Liberte’s assets were subject
to control of the court, and that a receiver would be appointed to dispose of Liberte’s
remaining assets. In December 2000, Liberte’s action against VES, CFL and Capwill
was transferred to the district judge in the forfeiture action. With the judge in the
forfeiture action now presiding over all of the proceedings at once, the Receiver was
authorized to administer the assets of Liberte as well as VES and CFL, and to sue
insurance companies to recoup premiums on insurance policies Liberte fraudulently
procured, all for the purpose of gathering as much money as possible for Liberte’s
investors.3

         With the fraudulent schemes of Liberte and VES unraveling, the premium
payments on the three policies that the viators had fraudulently purchased from MLIC
in collusion with Liberte–premiums that Liberte had been paying from the funds it had
channeled from investors into VES–ceased in 2001.

II.      The Receiver’s Suit Against MLIC

         On July 30, 2003, the Receiver initiated this suit against MLIC before the same
district court presiding over the Liberte-related litigation, seeking rescission of the three
fraudulently procured insurance policies and the return of the premiums Liberte had paid
through VES before the premium payments lapsed, plus interest. In the complaint, the
Receiver sought a declaratory judgment that the policies are void ab initio. The
Receiver identified himself in the complaint as “the Receiver for the investors’ interests”
in both the forfeiture action against Liberte and Liberte’s action against the escrow
entities.     The complaint then referred to the previous orders establishing the



         3
           Liberte’s action against VES, CFL and Capwill, and the government’s civil forfeiture action
have already led to numerous appeals before this Court. See Mohnkern v. Prof’l Ins. Co., 542 F.3d 157
(6th Cir. 2008); Liberte Capital Group, LLC v. Capwill, 248 F. App’x 650 (6th Cir. 2007); Liberte Capital
Group, LLC v. Capwill, 462 F.3d 543 (6th Cir. 2006); United States v. Jamieson, 427 F.3d 394 (6th Cir.
2005); Liberte Capital Group, LLC v. Capwill, 421 F.3d 377 (6th Cir. 2005); Liberte Capital Group, LLC
v. Capwill, 148 F. App’x 426 (6th Cir. 2005); Liberte Capital Group, LLC v. Capwill, 148 F. App’x 413
(6th Cir. 2005); Liberte Capital Group, LLC v. Capwill, 126 F. App’x 214 (6th Cir. 2005); Liberte Capital
Group, LLC v. Capwill, 99 F. App’x 627 (6th Cir. 2004); Javitch v. First Union Sec., Inc., 315 F.3d 619
(6th Cir. 2003).
No. 08-3342         Wuliger v. Manufacturers Life Ins. Co. (USA)                     Page 5


receiverships in the United States’ action against Jamieson and Liberte, as well as
Liberte’s action against Capwill, VES and CFL; the complaint “incorporated [the orders]
by reference[.]” (Joint Appendix (“J.A.”) at 45.) The Receiver’s complaint against
MLIC conceded that Liberte “solicited previously uninsured individuals who were
terminally ill and/or senior citizens in poor health to engage in ‘wet ink’ viatical sales,”
and described this conduct as “a fraud perpetrated by Liberte[.]” (J.A. at 46, 48.) The
Receiver claimed that MLIC “has been unjustly enriched through the premium payments
made with funds obtained from the investors because it assumed no risk with regard to
the polic[ies].” (J.A. at 52-53.) The complaint demanded that the insurance premiums
already paid to MLIC “be returned to the Receiver for distribution to the Liberte
investors.” (J.A. at 53-54.)

        On August 23, 2004, MLIC filed a motion for summary judgment seeking to
dismiss the action against it, and on September 10, 2004, the Receiver cross-moved for
summary judgment seeking relief pursuant to its rescission claim. On February 11,
2008, approximately three and one-half years after the parties filed their motions, the
district court granted summary judgment to the Receiver and denied MLIC’s motion; the
court ordered the rescission of the fraudulent policies and the return of the insurance
premiums MLIC had received to date, plus interest. In granting summary judgment to
the Receiver, the district court first found that the Receiver had standing to sue MLIC,
as the representative of “Liberte and the Capwill entities.” (J.A. at 85.) The court noted
that Liberte was paying MLIC the insurance premiums of the three fraudulent policies
after purchasing the policies from the viators, and stated, “[t]o the extent that the
[R]eceiver represents the interests of Liberte and seeks to recover those premiums [from
MLIC’s policies] on its behalf, the Plaintiff has alleged an injury in fact.” (J.A. at 85.)
After finding that the Receiver had standing to sue, the district court then found that the
insurance policies were void ab initio and subject to rescission, because the viators
lacked an insurable interest when they procured the policies. The court also found the
Receiver was entitled to a return of the premiums under a theory of unjust enrichment,
because “[t]he payment of premiums on a void policy and retention of those premiums
by [MLIC] is contrary to the notions of fairness.” (J.A. at 93.) MLIC timely appealed.
No. 08-3342         Wuliger v. Manufacturers Life Ins. Co. (USA)                       Page 6


                                       DISCUSSION

I.      Standard of Review

        This Court reviews a district court’s grant of summary judgment de novo.
Monette v. Elec. Data Sys. Corp., 90 F.3d 1173, 1176 (6th Cir. 1996). Summary
judgment is appropriate if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, “show that there is no genuine
issue as to any material fact and that the movant is entitled to a judgment as a matter of
law.” Fed. R. Civ. P. 56(c). This Court must draw all reasonable inferences in favor of
the non-moving party. See Nat’l Enters., Inc. v. Smith, 114 F.3d 561, 563 (6th Cir.
1997). “The central issue is ‘whether the evidence presents a sufficient disagreement to
require submission to a jury or whether it is so one-sided that one party must prevail as
a matter of law.’” In re Claumet Farm, Inc., 398 F.3d 555, 558-59 (6th Cir. 2005)
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986)).

        Similarly, “[w]hether a claimant has standing is a question of law that we review
de novo.” United Steelworkers of Am. v. Cooper Tire & Rubber Co., 474 F.3d 271, 277
(6th Cir. 2007).

II.     Standing

        Standing includes three constitutional requirements: “a plaintiff must show: (1) it
has suffered an injury in fact that is (a) concrete and particularized and (b) actual or
imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the
challenged action of the defendant; and (3) it is likely, as opposed to merely speculative,
that the injury will be redressed by a favorable decision.” Am. Civil Liberties Union of
Ohio, Inc. v. Taft, 385 F.3d 641, 645 (6th Cir. 2004) (quotations and citations omitted).
In addition to the constitutional requirements, a plaintiff must also satisfy three
“prudential” standing requirements: (1) a plaintiff must assert his own legal rights and
interests, without resting the claim on the rights or interests of third parties; (2) the claim
must not be a “generalized grievance” shared by a large class of citizens; and (3) in
statutory cases, the plaintiff’s claim must fall within the “zone of interests” regulated by
No. 08-3342          Wuliger v. Manufacturers Life Ins. Co. (USA)                   Page 7


the statute in question. Coyne v. Am. Tobacco Co., 183 F.3d 488, 494 (6th Cir. 1999).
“These additional restrictions enforce the principle that, as a prudential matter, the
plaintiff must be a proper proponent, and the action a proper vehicle, to vindicate the
rights asserted.” Id. (quotations and citation omitted). “A plaintiff bears the burden of
demonstrating standing and must plead its components with specificity.” Taft, 385 F.3d
at 645.

          In the course of the litigation spawned by Liberte’s fraud, this Court has
previously addressed the doctrine of standing as it applies to equity receivers. Javitch,
315 F.3d at 625; Liberte, 248 F. App’x at 656. “The general rule is that a receiver
acquires no greater rights in property than the debtor had and that, except as to liens in
existence at the time of the appointment, the receiver holds the property for the benefit
of general creditors under the direction of the court.” Javitch, 315 F.3d at 625.
“Because they stand in the shoes of the entity in receivership, receivers have been found
to lack standing to bring suit unless the receivership entity could have brought the same
action.” Id. “Accordingly, when a receiver is appointed over a corporation, the receiver
may only assert claims that could have been asserted by the corporation, and the receiver
lacks standing to institute action on behalf of investors in the corporation.” Liberte, 248
F. App’x at 656. Thus, the Receiver could only have standing to sue MLIC if one of the
receivership entities–Liberte, VES, or CFL–would have had standing to bring the same
suit.

          MLIC argues that the Receiver lacks standing in this case because he seeks to
assert the rights of Liberte’s investors, who are not receivership entities; MLIC contends
that because this Court held in Javitch and Liberte that the Receiver lacked standing to
sue on behalf of investors of the receivership entities, the Receiver must also lack
standing here. Such an argument misapplies the precise holdings of these precedents.

          In Javitch, the Receiver commenced suits against the securities brokers who had
negligently invested the money that Capwill had diverted from the VES escrow funds
to the securities brokers to invest. 315 F.3d at 622. The Receiver purported to sue the
securities brokers on behalf of VES, CFL and Capwill, claiming, inter alia, that the
No. 08-3342         Wuliger v. Manufacturers Life Ins. Co. (USA)                      Page 8


brokers had breached the fiduciary duties they owed to VES when they negligently
invested the funds. Id. at 622-23. However, when Capwill opened the brokerage
accounts, he had agreed to submit any dispute over the brokerage accounts to arbitration.
Id. at 623. The securities brokers moved the court to compel the Receiver to go to
arbitration; the Receiver argued that he was not bound by the arbitration clauses the way
Capwill, VES and CFL would have been, and therefore was free to sue the brokers in
federal court. Id. at 624. This Court held that because a court-appointed receiver
“stands in the shoes” of the received entity, the Receiver is bound by the arbitration
agreements to the same extent VES and CFL were. Id. at 627.

        Although this Court in Javitch briefly considered a receiver’s standing to bring
suits on behalf of the receivership entity, the main question in that case was whether the
Receiver was bound by the arbitration agreements into which the receivership entities
had entered; this Court did not squarely confront a standing problem then because the
Receiver undeniably had standing to claim on behalf of VES, CFL and Capwill that the
brokers had defrauded these receivership entities. However, in Liberte, this Court
applied the principle set forth in Javitch–that receivers’ legal rights are generally limited
to those of the receivership entities–to address the scope of receivers’ standing to bring
suits. In Liberte, the Receiver claimed that under the district court’s order authorizing
the receivership, he had the exclusive authority to recoup the lost funds belonging to
Liberte’s investors from any entity that may have been liable to them–including the
brokers who had identified the investors for Liberte and persuaded the investors to invest
in the viatical policies. 248 F. App’x at 652-54. Several of the investors intervened,
claiming that the Receiver did not have the right to sue Liberte’s brokers, and that they
had the right to sue the brokers independently. Id. This Court held that regardless of the
scope of the district court’s authorization, the Receiver only had standing to bring claims
belonging to the receivership entities, and not claims belonging to third parties–even if
the third parties were meant to be the ultimate beneficiaries of the receivership’s
recovered property. Id. at 656-57.
No. 08-3342            Wuliger v. Manufacturers Life Ins. Co. (USA)                               Page 9


         The Receiver’s standing problem in Liberte was that none of the receivership
entities–VES, CFL, Capwill or Liberte–would have had standing to sue Liberte’s brokers
for the misrepresentations the brokers made to Liberte’s investors, because none of the
entities would have been able to claim any tangible injury traceable to the brokers’
misrepresentations to the investors. Because the receivership entities all would have
lacked standing, and because of the rule that receivers’ rights are limited to those of the
receivership entities, the Receiver also lacked standing. Id.

         In contrast to the Receiver’s attempt to sue Liberte’s brokers for their
misrepresentations to Liberte’s investors, the Receiver in this case has standing to sue
MLIC because at least one of the receivership entities, Liberte, would have standing to
bring such an action. First, the Receiver alleges that Liberte suffered an injury in fact:
that it paid the premiums on an unenforceable policy, thereby receiving no consideration
for its payments.4 Liberte’s alleged injury is fairly traceable to the actions of MLIC,
which was informed of the fraud and refused to pay the premiums back. The injury can
be redressed by a court order requiring MLIC to return the payments. With respect to
prudential considerations, Liberte would be asserting its own rights to recoup the
insurance premiums it paid to MLIC, and as the owner and assignee of the
policyholders’ rights under the contract, it is the only entity in privity of contract with
MLIC.

         MLIC argues that the Receiver conceded in his complaint that he is not
attempting to assert the rights of a receivership entity, but rather is asserting the rights
of Liberte’s investors. This argument misconstrues the complaint. Although the
Receiver stated in his complaint that he is “the Receiver for the investors’ interests,”
(J.A. at 45), and demanded the return of the premiums “for distribution to the Liberte
investors,” (J.A. at 53-54), the Receiver was only stating that he was taking the action


         4
           The complaint alleges that Liberte had assigned its ownership and beneficiary rights to the
viatical policies to VES. The complaint does not state whether it was Liberte or VES that actually paid
the premiums at issue to MLIC, and the record is devoid of any documentation of the premium payments.
However, the complaint makes clear that Liberte established VES for the sole purpose of disguising its
identity as the assignee of the insurance policies. Any question about whether the proper entity to sue for
rescission would be Liberte or VES is irrelevant for the purposes of standing, since both entities are
receivership entities on behalf of which the Receiver may bring claims.
No. 08-3342        Wuliger v. Manufacturers Life Ins. Co. (USA)                   Page 10


for the ultimate benefit of Liberte’s investors, who had valid claims to the lost assets.
Yet that is precisely the purpose of a receiver: to marshal the receivership entities’
assets, to which several parties assert conflicting claims, so that the assets may be
distributed to the injured parties in a manner the court deems equitable. See Liberte
Capital Group, LLC v. Capwill, 462 F.3d 543, 551 (6th Cir. 2006) (“The receiver’s role,
and the district court’s purpose in the appointment, is to safeguard the disputed assets,
administer the property as suitable, and to assist the district court in achieving a final,
equitable distribution of the assets if necessary.”). This Court has never objected to a
receiver’s stated goal of retrieving assets for the benefit of a receivership entity’s
creditors or customers, so long as the receiver only pursues claims that a receivership
entity itself could have raised. See Liberte, 248 F. App’x at 656 (“[W]hen a receiver is
appointed over a corporation, the receiver may only assert claims that could have been
asserted by the corporation[.]”) (emphasis added); see also Javitch, 315 F.3d at 627
(“[A]lthough the stated objective of a receivership may be to preserve the estate for the
benefit of creditors, that does not equate to a grant of authority to pursue claims
belonging to the creditors.”); Jarrett v. Kassel, 972 F.2d 1415, 1426 (6th Cir. 1992)
(“[The receiver’s] authority was limited to preserving the property of the . . .
receivership for [the receivership entity’s] customers. In this regard, he had authority
to sue on behalf of the receivership itself but had no authority to bring a cause of action
on behalf of the individual customers.”).

       Thus, the district court’s finding of standing was proper because it recognized
that one of the receivership entities would have had standing to raise the same claim.
The district court did not, as MLIC contends, “amend” the receiver’s complaint in order
to find standing; it simply disregarded the Receiver’s statements that his action would
serve to benefit Liberte’s investors, since those statements were not directly relevant to
the standing inquiry. Although the Receiver did not expressly state that his claim was
one that could have been brought by a receivership entity, the Receiver did incorporate
by reference the court’s prior orders establishing the receivership. The court reasonably
inferred from the Receiver’s reference to that order that he was claiming to act on behalf
of one of the receivership entities, albeit for the ultimate benefit of the receivership
No. 08-3342          Wuliger v. Manufacturers Life Ins. Co. (USA)                    Page 11


entities’ investors. Although the complaint also stated that “the investors, through the
Receiver, . . . are entitled to rescission” of MLIC’s policies, (J.A. at 52-53), this inartful
language does not change the fact that the claims of rescission brought by the Receiver
against MLIC are claims that belonged to a receivership entity, and not to the investors.

        Finally, MLIC argues that even if the complaint could be construed as bringing
a claim belonging to Liberte, Liberte would lack standing because any injuries it could
claim were self-inflicted, and therefore not caused in any meaningful way by MLIC. To
demonstrate standing, the plaintiff must show “a fairly traceable connection between the
plaintiff’s injury and the complained-of conduct of the defendant.” Steel Co. v. Citizens
for a Better Env’t, 523 U.S. 83, 103 (1998). However, the causation requirement in
standing is not focused on whether the defendant “caused” the plaintiff’s injury in the
liability sense; the plaintiff need only allege “injury that fairly can be traced to the
challenged action of the defendant, and not injury that results from the independent
action of some third party not before the court.” Simon v. E. Ky. Welfare Rights Org.,
426 U.S. 26, 41-42 (1976). Here, the Receiver essentially claimed that because public
policy so heavily disfavors these fraudulently procured insurance policies, MLIC was
not entitled to collect premiums on the policies, even if it was unaware at the time it
issued the policies that the policyholders had fraudulently procured them. Regardless
of the merits of such a claim, the Receiver asserted an injury traceable to MLIC’s act of
issuing the policies. Accordingly, the Receiver’s complaint meets the causation
requirement.

        Because the district court properly found that the Receiver has standing to sue
MLIC, we proceed to the merits of the Receiver’s claim against MLIC.

III.    Rescission

        A general axiom of insurance law is that a party has no insurable interest in a life
insurance policy if, at the time the policy was issued, the policyholder is “directly
interested in the early death of the [insured].” Warnock v. Davis, 104 U.S. 775, 779
No. 08-3342             Wuliger v. Manufacturers Life Ins. Co. (USA)                  Page 12


(1881). Ohio courts have adopted this principle.5 See Rakestraw v. City of Cincinnati,
44 N.E.2d 278, 280 (Ohio Ct. App. 1942). Policies lacking an insurable interest at their
inception, or where “the insured has interest only in the loss or destruction of the
property” are “wager policies” that are against public policy. Westfall v. Am. States Ins.
Co., 334 N.E.2d 523, 525 (Ohio Ct. App. 1974).

        The Receiver claimed that because the viators knew at the time they purchased
their policies that they were going to assign the policies to an entity that had no direct
interest in their continued life, the policies were void ab initio and subject to rescission.
The district court agreed and granted summary judgment to the Receiver. However,
under Ohio law, it is well settled that “‘a failure by the insured to disclose conditions
affecting the risk, of which he is aware, makes the contract voidable at the insurer’s
option.’” Buemi v. Mutual of Omaha Ins. Co., 524 N.E.2d 183, 186 (Ohio Ct. App.
1987) (quoting Stipoich [Stipcich] v. Metro. Life Ins. Co., 277 U.S. 311 (1928)
(emphasis added); see also Metro. Life Ins. Co. v. Felix, 75 N.E. 941, 943 (Ohio 1905)
(noting insured’s right to rescind policy and demand return of premiums if policy is void
due to lack of insurable interest, but expressly conditioning rescission upon “there being
no fraudulent conduct by the beneficiary”); Keckley v. Coshocton Glass Co., 99 N.E.
299, 301 (Ohio 1912) (“[I]t has been held that the want of insurable interest is available
only to the insurer[.]”); Pierce v. Metro. Life Ins. Co., 187 N.E. 77, 77 (Ohio Ct. App.
1933) (“The force of the opinion in [Keckley] is that the only person entitled to object
on the ground that the beneficiary has no insurable interest is the insurance company
issuing the policy, and not the parties claiming an interest in the fund.”); Endress v. Ins.
Co., 1 Ohio Law Abs. 553 (Ohio Ct. App. June 27, 1923) (because insured plaintiff
knew at time she paid premiums that she had no insurable interest, she cannot recover
paid premiums on void policy); Low v. Union Cent. Life Ins. Co., 6 Ohio Dec. Reprint
1088 (Ohio Dist. Ct. 1881) (“The insured was not in the position to say that his own
misrepresentations should void the policy.”).




        5
            The parties agree that Ohio law should apply to the substantive claims.
No. 08-3342         Wuliger v. Manufacturers Life Ins. Co. (USA)                   Page 13


         The Receiver’s proposed rule–that an insured who commits insurance fraud may
announce the fraud and receive a refund on any premiums paid to date–would have the
perverse effect of reducing the defrauders’ risk relative to honest policyholders; any
defrauder could commit to paying premiums on his fraudulently procured policy
knowing that if the premiums ever became unaffordable, he could declare his fraud and
receive all of the previously paid premiums back. This Court cannot sanction such an
outcome, particularly since Ohio’s courts have already spoken with such clarity on the
issue.

         However, we note that even if the policies were void ab initio due to the policy
purchasers’ fraud and subject to rescission by the purchaser, the defense of unclean
hands would still preclude the Receiver from gaining relief. Rescission is an equitable
remedy, and equitable claims are subject to the defense of unclean hands. See Bell v.
Turner, 874 N.E.2d 820, 828 (Ohio Ct. App. 2007) (rescission is equitable remedy);
Marinaro v. Major Indoor Soccer League, 610 N.E.2d 450, 452 (Ohio Ct. App. 1991)
(“[H]e who comes into equity must come with clean hands.”) (quotations and citation
omitted). Because the Receiver conceded in his complaint that Liberte committed fraud
in its procurement of the insurance policies, the equitable defense of unclean hands bars
the Receiver’s rescission claim.

         The district court found the unclean hands defense inapplicable in this case for
two reasons. First, the court found that the unclean hands doctrine is inapplicable where
the plaintiff’s unclean conduct affected third persons, and not the defendant. The
application of the unclean hands defense “depends upon the connection between the
complainant’s iniquitous acts and the defendant’s conduct which the complainant relies
upon as establishing his cause of action.” McClanahan v. McClanahan, 72 N.E.2d 798,
800 (Ohio Ct. App. 1946) (quotations and citation omitted). Thus, “[r]elief is not to be
denied because of general iniquitous conduct on the part of the complainant or because
of the latter’s wrongdoing in the course of a transaction between him and a third person.”
Id. (quotations and citation omitted). The district court, in applying this exception,
overlooked the fact that Liberte perpetrated a fraud not just against its investors but also
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against MLIC; Liberte induced the three viators to fraudulently procure the insurance
policies from MLIC, which would have been responsible for paying the policies’
proceeds upon the viators’ death unless it uncovered the fraud first. The “connection
between the complainant’s iniquitous acts and the defendant’s conduct which the
complainant relies upon as establishing his cause of action,” id., is thus readily apparent
here: the Receiver’s entire claim is predicated on MLIC’s refusal to return premiums
paid to it because of Liberte’s fraud. That Liberte also defrauded third-party investors
in addition to MLIC is irrelevant. Accordingly, the district court wrongly applied this
exception to MLIC’s clean hands defense.

        The second exception to the unclean hands defense that the district court invoked
was the “removed wrongdoer” exception established in Scholes v. Lehmann, 56 F.3d 750
(7th Cir. 1995). In Scholes, the SEC filed a civil forfeiture action against a defrauder
who created three shell corporations, and then established limited partnerships in the
corporations for the sole purpose of selling the limited partnerships to investors; under
this Ponzi scheme, the defrauder used the proceeds from the sale of new limited
partnerships to pay a return to existing investors. Id. at 752. The district court presiding
over the SEC’s action placed the defendant and the shell corporations into receivership,
and appointed a receiver to recover the investors’ funds, much of which the defendant
had diverted to his family and for personal use. Id. at 752. The receiver brought suit
against several recipients of the defendant’s fraudulent conveyances, who then
challenged the receiver’s standing to sue them on behalf of the corporations, arguing that
the corporations had only been pawns of the defendant and therefore suffered no injury.
Id. at 753-54. The court held that the receiver sufficiently alleged an injury because the
appointment of the receiver “removed the wrongdoer from the scene,” and that the
corporations he used, having been freed from his wrongdoing, were entitled to seek the
recovery of the assets they had fraudulently conveyed. Id. at 754. The court went on to
consider the merits of the receiver’s claims pursuant to a state fraudulent-conveyance
statute. Id. at 755.
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       The district court, citing Scholes, found that because Jamieson had been removed
as Liberte’s chief executive, Liberte had been freed of all wrongdoing and was not
subject to the unclean hands defense. The district court’s application of the Scholes
exception was incorrect. Unlike in Scholes, where the corporation’s culpability could
be foisted onto one individual who appeared to have single-handedly created these shell
corporations and the ensuing Ponzi scheme, there is no evidence in the record that
Liberte’s fraud can be attributed in its entirety to Jamieson. The Receiver’s complaint,
in describing Liberte’s fraud, does not even mention Jamieson, stating instead that “[t]he
causes of action set forth herein arise from the viatical business that Liberte Capital
Group or its agents have transacted in Ohio with various insurance companies including
Defendants[.]” (J.A. at 46.) Without any evidence in the record of Jamieson’s role in
Liberte’s scheme, or of the degree to which Liberte was a shell controlled entirely by
Jamieson, this Court cannot similarly conclude that separating Jamieson from Liberte
wiped Liberte’s slate clean. Moreover, once the court in Scholes found that the receiver
had standing to act on behalf of the corporations, it analyzed the merits of the receiver’s
claims under a state statute, and therefore never considered whether the unclean hands
defense would apply to the merits of the receiver’s claims. Accordingly, the exception
articulated in Scholes is not applicable here.

       Rather, under this Court’s long-recognized “stand-in-the-shoes” doctrine,
Javitch, 315 F.3d at 627, the Receiver’s rights as a plaintiff are subject to the same
claims and defenses as the received entity he represents, and not third-party
beneficiaries. See Jarrett, 972 F.2d at 1426; see also Scholes, 56 F.3d at 753 (“Like a
trustee in bankruptcy or for that matter the plaintiff in a derivative suit, an equity
receiver may sue only to redress injuries to the entity in receivership[.]”). Thus, as
Liberte’s successor-in-interest, the Receiver is precluded by Liberte’s unclean hands
from bringing the rescission claims.

       In sum, the district court should have granted summary judgment to MLIC with
respect to the Receiver’s rescission claim. Liberte’s fraud precluded the Receiver,
whose claims were limited to those of Liberte, from using the fraud to gain rescission
No. 08-3342        Wuliger v. Manufacturers Life Ins. Co. (USA)                  Page 16


of the viators’ policies. Yet even if such a claim could have merit under Ohio law,
Liberte’s unclean hands would preclude any relief.

IV.    Unjust Enrichment

       Although the Receiver did not bring an unjust enrichment claim, the district court
nevertheless concluded that “the Plaintiff is entitled to the return of premiums under the
theory of unjust enrichment.” (J.A. at 93.) While the complaint stated in two different
places that MLIC has been “unjustly enriched,” it did so in the context of its rescission
claim, and did not raise a separate unjust enrichment claim. (J.A. at 52, 53.) In his
motion for summary judgment, the Receiver’s only argument concerning unjust
enrichment was that “[b]ecause the [three viators’] policies were void ab initio, [MLIC]
will be unjustly enriched if it is permitted to keep the premiums paid on those policies.”
(J.A. at 184.) Thus, to the extent that the Receiver even asserted an unjust enrichment
claim, the claim appeared to be predicated on the faulty premise that the policies were
void ab initio as a result of their fraudulent procurement. We therefore believe it was
improper for the district court to treat the Receiver’s unjust enrichment claim as
independent of the rescission claim.

       Regardless, any unjust enrichment claim would fail on its merits. To establish
unjust enrichment, a plaintiff must demonstrate “(1) a benefit conferred by a plaintiff
upon a defendant; (2) knowledge by the defendant of the benefit; and (3) retention of the
benefit by the defendant under circumstances where it would be unjust to do so without
payment[.]” Hambleton v. R.G. Barry Corp., 465 N.E.2d 1298, 1302 (Ohio 1984)
(quotations and citation omitted). “Recovery under unjust enrichment is designed to
compensate the plaintiff for the benefit he has conferred upon another, not to compensate
him for a loss suffered.” Jones v. Jones, No. 13-08-16, 2008 WL 4965164, at *7 (Ohio
Ct. App. Nov. 24, 2008). “Unjust enrichment is an equitable doctrine to justify a quasi-
contractual remedy that operates in the absence of an express contract or a contract
implied in fact to prevent a party from retaining money or benefits that in justice and
equity belong to another.” Beatley v. Beatley, 828 N.E.2d 180, 192-93 (Ohio Ct. App.
2005) (quotations and citations omitted) (emphasis added). Thus, “Ohio law is clear that
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a plaintiff may not recover under the theory of unjust enrichment or quasi-contract when
an express contract covers the same subject.” Lehmkuhl v. ECR Corp., No. 06 CA 039,
2008 WL 5104747, at *5 (Ohio Ct. App. Dec. 2, 2008).

       Because the Receiver’s claim is based upon express contracts–i.e., the insurance
policies issued to the three viators–and the premiums at issue were paid pursuant to the
contracts, the facts of this case cannot support an unjust enrichment claim. The Receiver
has not demonstrated any evidence of a benefit conferred; the payment of premiums to
MLIC was not a “benefit” conferred on MLIC, but was consideration for MLIC’s
commitment to insuring the viators’ lives. Accordingly, even presuming the Receiver
intended to state an unjust enrichment claim, such a claim would be without merit. See
Lehmkuhl, 2008 WL 5104747, at *5; Beatley, 828 N.E.2d at 192-93.

                                   CONCLUSION

       For the foregoing reasons, this Court REVERSES the district court’s order
granting summary judgment to the Receiver, and REMANDS to the district court with
instructions to enter summary judgment dismissing the action against MLIC.
