Kyle Busch, PacLife reach confidential settlement, seek to dismiss lawsuit

Update: Robert Rikard, attorney for the Busches, and a spokesman for PacLife both released the following statement: “The Busch family and Pacific Life are pleased to have reached an amicable resolution of their dispute. Both sides worked constructively to achieve a confidential result that is mutually acceptable and avoids further legal proceedings.”

NASCAR driver Kyle Busch and his wife, Samantha Busch, have reached a confidential settlement with Pacific Life Insurance Co. and two other defendants in a civil lawsuit over indexed universal life sales, according to a court filing.

The Busches, PacLife and defendants Rodney Smith and Red River LLC notified the court Thursday that they have resolved the dispute and are in the process of finalizing settlement documents.

The parties said they expect to file a stipulation or motion to dismiss the case within 30 days. Under the agreement, each side will bear its own attorneys’ fees and costs.

The parties asked the court to stay all pending deadlines while they complete the settlement paperwork and formally move to dismiss the action.

The Busches' lawsuit began in state court in October and was quickly moved to federal court in the Western District of North Carolina.

According to the complaint, the defendants used misleading illustrations, undisclosed costs, and false promises of guaranteed multipliers and controllable charges to induce Kyle and Samantha to pay more than $10.4 million in premiums, resulting in net out-of-pocket losses exceeding $8.58 million.

The complaint accuses PacLife and its appointed agent, Rodney Smith, of designing and promoting a series of complex IUL policies as "tax-free retirement plans" that were misrepresented as safe, self-funding investment vehicles.

Big retirement plan

Kyle Busch was assured that by contributing a million dollars annually for five years, he could withdraw $800,000 per year starting at age 52, he said in a news release. Instead, Busch discovered that his funds were being directed to the insurance company's account rather than being invested in the market, preventing his investment from growing as the market rose.

PacLife filed a motion to dismiss in late January, noting that the Busches signed policy illustrations indicating they intended to pay planned premiums and hold the policies over 30 years, the insurer said. Instead, the couple bailed out on the plan and surrendered the policies before their growth potential could be realized, a memorandum accompanying the motion reads.

“Rather than accept responsibility for their own decisions, Plaintiffs now attempt to blame their negative outcome on the IUL product – a product approved by insurance regulators in every state – and purported oral promises that are directly contradicted by express written disclosures they acknowledged and signed,” the memo states.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.