A daughter of a man who sold his interest in a trust that held a $10 million life insurance policy may get to contest the transaction in court.

U.S. District Judge Denny Chin has handed down a ruling that says the daughter, Linda Angel, has enough of a claim for the case, Life Product Clearing L.L.C. vs. Linda Angel vs. Leon Lobel Insurance Trust and Jonathan S. Berck, trustee (No. 07 Civ. 475 (D.C.), to go to trial.

Angel’s father, Leon Lobel, a retired, 77-year-old butcher, established the Leon Lobel Insurance Trust and named himself beneficiary Nov. 15, 2005.

Lobel applied for a $10 million life insurance policy and designated the trust as the sole beneficiary, then, 6 days later, he sold his interest in the trust and any rights to the policy proceeds to Life Product Clearing L.L.C., New York.

Lobel received $300,000 in cash. He died Jan. 6, 2006. About a year later, Lincoln Life & Annuity Company of New York paid $10,712,328.77 to the trust, according to court documents.

A dispute arose when LPC claimed the benefits paid to the trust.

Lobel’s daughter, Linda Angel, filed a counterclaim, and she filed a complaint contending that Lobel could not afford to keep the life insurance policy. She sought a declaration that the trust is void and that Lobel’s estate should receive the death benefits.

Chin writes in his ruling that the issue at hand is whether the facts of the case provide a basis for Angel’s claim that LPC was a stranger to Lobel and that the transaction was essentially a wager on his death.

The law “has long shown a disdain” for such “wager” transactions, Chin writes in the ruling.

New York state law allows an individual to assign the benefits of a life policy to someone else, at any time, but the law also requires that, to be considered in line with insurable interest rules, the policy must be purchased on the insured’s own initiative, Chin writes.

“Only one who obtains a life insurance policy on himself ‘on his own initiative’ and in good faith — that is, with a genuine intent to obtain insurance protection for a family member, loved one, or business partner, rather than an intent to disguise what would otherwise be a gambling transaction by a stranger on his life — may freely assign the policy to one who does not have an insurable interest in him,” Chin writes.

Lobel signed the policy himself and had the option to keep it, but these facts and others cited, “even if true, do not require a different result at this juncture, as they do not contradict Lobel’s alleged intent to sell the policy to LPC before the policy was procured,” Chin writes.

Lawyers for LPC were not immediately available to comment on the ruling.

David Howe, a lawyer in the New York office of Holland and Knight L.L.P. who represents Angel, says the Lobel family is pleased with Chin’s ruling.

The Lobel family “looks forward to pleading [its] case at trial,” Howe says.

Now that Chin has ruled on the motion for judgment, the case will move along the normal routine into the discovery phase before trial, Howe says.