Pacific Life seeks dismissal of Kyle Bush’s $8.5M lawsuit over insurance policies

Pacific Life Insurance Co. asked a federal court Thursday to dismiss an $8.5 million lawsuit filed by NASCAR champion Kyle Busch and his wife over policies sold to them under false and negligent representations as tax-free retirement income.

The filing in the Western District of North Carolina — the same court that recently heard an antitrust lawsuit against NASCAR led by Michael Jordan — alleges that the Bushes purchased five separate indexed universal life policies between 2018 and 2022 to provide more than $90 million in insurance coverage for the two-time NASCAR champion.

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IUL policies were intended to provide immediate death benefit protection and “an opportunity to accumulate cash values ​​when policies are held for longer periods.”

Pacific Life claims Bush failed to fully fund policies, allowing some to lapse and surrendering others. Bush claims he was out $10.4 million and filed a lawsuit in October alleging Pacific Life failed to disclose the true risks of the policies.

Pacific Life countered in its request to dismiss the case that both Bushes signed several documents saying they understood the policies, indicating the couple would pay the plan premiums and keep the policies for 30 years from age 70 and up.

“Instead of holding the policies long enough to take advantage of their growth potential, plaintiffs failed to pay planned premiums on time, failed to monitor the allocation of their policy values ​​between indexed and fixed accounts and surrendered the policies or allowed them to lapse,” Pacific Life wrote in the filing. “Instead of accepting responsibility for their own decisions, plaintiffs now attempt to blame their negative results on the IUL product.”

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An IUL is a combination life insurance policy that provides a death benefit with a cash value component. Cash price increases are linked to stock market indexes, supposedly with built-in protection against market declines.

When he filed the lawsuit last year, Bush said that if he paid $1 million for five years, he would be able to take home $800,000 a year after he turned 52. Bush claimed that when he received the sixth premium notice he started asking questions and discovered that almost all of his money was gone.

Pacific Life countered that the Bushes admitted they understood the policies, but also that his claims for breach of trust and negligent misrepresentation come seven years after he began purchasing the policies and are therefore outside the three-year statute of limitations.

“A plaintiff cannot avoid the statute of limitations by being ‘willfully blind’: a person should not be permitted to turn a blind eye to facts readily apparent to ordinary attention and maintain a position of ignorance for his own benefit,” Pacific Life wrote. “Such a doctrine enables a negligent man, and by reason of his negligence, to extend the right of recovery for an indefinite time.”

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Pacific Life also maintains that all of Bush’s claims of misrepresentation are false due to the “express, repeated disclosures” they signed. Additionally, all five policies come with a cover letter that reads “Read Your Policy Carefully” in bold capital letters and offers a 20-day cancellation window during which premiums will be refunded.

Both Bushes signed a form certifying that they had received the policies and understood they should review them carefully, Pacific Life said.

The Bushes named agent Rodney A. Smith in their case to steer the Bushes into an unsustainable, high-risk product, charging them a 35% commission that they didn’t know about.

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