Do not under any circumstances purchase a phone with a bad ESN. There is too much risk associated with a Bad ESN.
Bad ESN's usually mean;
1. They haven't paid their bills (collections)
2. They broke their contract and/or terminated early
3. It's stolen
You might run into an issue with these specifically since you'll only be able to reactivate them if the back balance is paid off. I'm sure you can speak with a VZ rep and let them know the deal but this issue has come up before with phones with bad ESN's.
Yes, Verizon can and will turn your phone into a brick if it was reported as lost or stolen and replaced under insurance.What the heck? They'll turn your phone into a brick if you terminate the contract?
I assume you mean terminate the contract by paying the ETF.