Jennifer Bentley v. United of Omaha Life Insurance Company et Al.NOTICE OF MOTION AND MOTION to Dismiss Plaintiff's Third Amended Complaint Pursuant to F.R.C.P. 12C.D. Cal.February 9, 20171 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 36248480v1 0977380 HINSHAW & CULBERTSON LLP 4675 MacArthur Court Suite 545 Newport Beach, CA 92660 949-757-2800 Martin E. Rosen (SBN 108998) mrosen@mail.hinshawlaw.com Larry M. Golub (SBN 110545) lgolub@mail.hinshawlaw.com HINSHAW & CULBERTSON LLP 633 West Fifth Street, 47th Floor Los Angeles, CA 90071 Telephone: 213-680-2800 Facsimile: 213-614-7399 Jenny H. Wang (SBN 191643) jwang@mail.hinshawlaw.com HINSHAW & CULBERTSON LLP 4675 MacArthur Court, Suite 545 Newport Beach, CA 92660 Telephone: 949-757-2800 Facsimile: 949-752-6313 Attorneys for Defendant United of Omaha Life Insurance Company UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA JENNIFER BENTLEY, as trustee of the 2001 Bentley Family Trust, Plaintiff, vs. UNITED OF OMAHA LIFE INSURANCE COMPANY, Defendant. Case No. 2:15-cv-07870-DMG-AJW (Honorable Dolly M. Gee) DEFENDANT’S NOTICE OF MOTION TO DISMISS PLAINTIFF’S THIRD AMENDED COMPLAINT PURSUANT TO F.R.C.P. 12(B)(6) OR IN THE ALTERNATIVE, MOTION TO STRIKE PURSUANT TO F.R.C.P. 12(F) [Filed Concurrently With: - Memorandum of Points and Authorities; - Declaration of Jenny H. Wang; - Request for Judicial Notice; and - [Proposed] Order] Hearing Date: March 17, 2017 Hearing Time: 9:30 a.m. Courtroom: 8C Complaint Filed: August 27, 2015 Case 2:15-cv-07870-DMG-AJW Document 89 Filed 02/09/17 Page 1 of 3 Page ID #:1191 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 36248480v1 0977380 HINSHAW & CULBERTSON LLP 4675 MacArthur Court Suite 545 Newport Beach, CA 92660 949-757-2800 PLEASE TAKE NOTICE that on March 17, 2017, at 9:30 a.m., or as soon thereafter as this matter may be heard in the Courtroom of the Honorable Dolly M. Gee of the United States District Court for the Central District of California, located at 350 West 1st Street, Los Angeles, California 90012, Defendant United of Omaha Life Insurance Company (“United”) will and hereby does move the Court to dismiss Plaintiff Jennifer Bentley’s (“Plaintiff”) Third Amended Complaint (“TAC”) pursuant to F.R.C.P. 12(b)(6), or in the alternative, to strike the TAC pursuant to F.R.C.P. 12(f) as follows: 1. For an order pursuant to Federal Rule of Civil Procedure 12(b)(6) dismissing the TAC in its entirety for failure to state a claim upon which relief can be granted because all of the claims for relief therein are based upon United’s alleged violation of California Insurance Code sections 10113.71 and 10113.72 (the “Statutes”), which Statutes did not and do not as a matter of law apply to the life insurance policy that is the subject of this action. Accordingly, United can have no liability to Plaintiff under any theory for the alleged violation of the Statutes. 2. If the Court does not dismiss the TAC in its entirety, then in the alternative: A. an order dismissing Plaintiff’s second claim for relief (breach of the implied covenant of good faith and fair dealing) due to the fact that United acted reasonably in its interpretation of the Statutes and because there exists a genuine dispute over coverage, i.e., the existence of a genuine dispute over whether the Statutes apply to the life insurance policy that is the subject of this action; B. an order dismissing Plaintiff’s prayer for punitive damages as the claims alleged fail to meet the requirements of California Civil Code section 3294; and C. an order dismissing Plaintiff’s individual third claim for relief (for breach of contract) because the life insurance policy under which Plaintiff Case 2:15-cv-07870-DMG-AJW Document 89 Filed 02/09/17 Page 2 of 3 Page ID #:1192 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 36248480v1 0977380 HINSHAW & CULBERTSON LLP 4675 MacArthur Court Suite 545 Newport Beach, CA 92660 949-757-2800 seeks benefits could not have remained in force without the payment of premiums, the insured failed to make premium payments necessary to keep the policy in force, and the policy had lapsed for non-payment of premiums at the time of the insured’s death. 3. If the Court does not dismiss the first two class claims in their entirety, then in the alternative, an order dismissing or striking the class definition in that the putative class members cannot include beneficiaries of life insurance policies that were issued or delivered outside of California, let alone policies that were “renewed” in California at any time (even before the Statutes took effect), based upon the plain language of the Statutes. This motion is based on this Notice of Motion, the accompanying Memorandum of Points and Authorities, the Request for Judicial Notice, the Declaration of Jenny H. Wang, all documents on file with the Court in this matter, and such oral argument as the Court may hear on this motion. This Motion is made following the conference of counsel pursuant to L.R. 7-3 which took place between counsel for United (Larry Golub and Jenny Wang) and Plaintiff’s counsel John Bjork on January 11 and 12, 2017. DATED: February 9, 2017 By: HINSHAW & CULBERTSON LLP /s/ Jenny H. Wang Martin E. Rosen Larry M. Golub Jenny H. Wang Attorneys for Defendant United of Omaha Life Insurance Company Case 2:15-cv-07870-DMG-AJW Document 89 Filed 02/09/17 Page 3 of 3 Page ID #:1193 1 Martin E. Rosen (SBN 1 08998) mrosen@mail.hinshawlaw.com 2 Larry :J\..1. Golub (SBN 11 0545) lgolub@mail.hinshawlaw.com 3 HINSBA w & CULBERISON LLP 633 West Fifth Street, 47 Floor 4 Los Angeles, CA 90071 Telephone: 213-680-2800 5 Facsimile: 213-614-7399 6 Jenny H. Wang (SBN 191643) bvang@mail.hmshawlaw.com 7 HINSBA W & CULBERTSON LLP 4675 MacArthur Court, Suite 545 8 Newport Beach, CA 92660 Telephone: 949-757-2800 9 Facsimile: 949-752-6313 10 Attorneys for Defendant United of Omaha Life Insurance Company 11 12 13 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA 14 JENNIFER BENTLEY, as trustee of the 15 2001 Bentley Family Trust, 16 Plaintiff, 17 vs. 18 UNITED OF OMAHA LIFE INSURANCE COMPANY, Defendant. Case No. 2:15-cv-07870-DMG-AJW (Honorable Dolly M. Gee) MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT'S MOTION TO DISMISS PLAINTIFFS' THIRD AMENDED CLASS ACTION COMPLAINT PURSUANT TO F.R.C.P. 12(B)(6) OR IN THE ALTERNAtiV:E, MOTION TO STRIKE PURSUANT TO 19 20 21 22 23 24 25 26 27 28 ____________ _____J F.R.C.P. 12(F) HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor Irvine, CA 92612-2427 949-757-2800 [Filed Concurrently With: -Notice ofMotion; - Declaration of Jenny H. Wang; - Request for Judicial Notice; and - [Proposed] Order] Hearing Date: March 17, 2017 Hearing Time: 9:30 a.m. Courtroom: 8C Complaint Filed: August 27, 2015 36248755vl 0977380 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 1 of 31 Page ID #:1194 1 TABLE OF CONTENTS 2 3 I. INTRODUCTION ............................................................................................. 1 4 II. SUMMARY OF ARGUMENT ........................................................................ 2 5 III.. ·· PROCSEDURAL HISTORY ........................................... ~ .... ::::~! .. ~ ...... J:i~::'.:.:t:;:;:::. 3 ·. · 6 IV. ALLEGATIONS OF THE THIRD AMENDED COMPLAINT .................... .4 7 V. PLAINTIFF'S ASSERTIONS OF ALLEGED WRONGDOING ................... 6 8 VI. TilE STATUTES .............................................................................................. 7 9 VII. TilE STANDARD FOR A MOTION TO DISMISS ....................................... 8 10 VIII. PLAINTIFF'S CLAIMS FOR RELIEF FAIL BECAUSE THE STATUTES DO NOT APPLY TO POLICIES ISSUED OR 11 12 13 14 15 IX. 16 17 X. 18 19 20 XI. DELIVERED BEFORE THE STATUTES' ENACTMENT IN 2013 ............. 9 A. B. The Wording of the Statutes Makes Clear The_y Were Intended to Apply to Policies Issued After the Statutes' Etlective Date ................... 9 The California DeQartment of Insurance's Position is That the Statutes Only Apply to Policies Issued After Their Effective Date ....................................................................................................... 10 PLAINTIFF'S CLASS DEFINITION IMPROPERLY INCLUDES POLICIES ISSUED OR DELIVERED OUTSIDE CALIFORNIA ............... 16 PLAINTIFF'S INDIVIDUAL CLAIM FOR BREACH OF CONTRACT FAILS BECAUSE UNITED WAS NOT LEGALLY OBLIGATED TO PROVIDE THE INSURED A YEAR'S WORTH OF INSURANCE IN EXCHANGE FOR PAYMENT OF ONLY SIX MONTHS' PREMIUM ................................................................................... 19 PLAINTIFF'S BAD FAITH CLAIM FAILS AS A MATTER OF LAW ................................................................................................................ 20 21 XII. TilE CLAIM FOR PUNITIVE DAMAGES SHOULD BE 22 DISMISSED .................................................................................................... 24 23 XIII. CONCLUSION ............................................................................................... 25 24 25 26 27 28 HINSHAW & CULBERTSON 19800 MacArthur Boulevard 1 8th Floor Irvine, CA 92612-2427 949-757-2800 36248755vl 0977380 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 2 of 31 Page ID #:1195 1 2 3 4 Federal Cases TABLE OF AUTHORITIES Page(s) 5 Aceve's v~- Allstate Ins. Co., . ..;. ;, 68 F.3d 1160 (9th Cir. 1995) .............................................................................. 22 6 American Casualty Co. v. Krieger, 7 181 F.3d 1113 (9th Cir. 1999) ............................................................................ 23 8 Ashcroft v. Iqbal, 9 556 U.S. 662 (2009) ............................................................................................. 8 10 Bell At!. Corp. v. Twombly, 11 550 U.S. 544 (2007) ............................................................................................. 8 12 Brinderson-Newberg Joint Venture v. Pacific Erectors, Inc., 13 971 F.2d 272 (9th Cir. 1992) .............................................................................. 23 14 Briseno v. ConAgra Foods, Inc., 15 2017 WL 24618 (9th Cir. Jan. 3, 2017) .............................................................. 15 16 Casey v. Metropolitan Life Ins. Co., 688 F. Supp. 2d 1086 (E.D. Cal. 2010) .............................................................. 23 17 E*Trade Financial Corp. v. Deutsche Bank AG, 18 2008 WL 2428225 (S.D.N.Y. 2008) ............................................................ 19, 20 Franceschi v. American Motorists Ins. Co., 19 20 852 F.2d 1217 (9th Cir. 1988) ............................................................................ 23 21 In re Gilead Scis. Sec. Litig., 22 536 F.3d 1049 (9th Cir. 2008) .............................................................................. 8 23 Guebara v. Allstate Ins. Co., 24 237 F. 3d 987 (9th Cir. 2000) ............................................................................. 23 25 Hanson v. Prudential Ins. Co. of America, 26 783 F.2d 262 (9th Cir. 1985) .............................................................................. 23 27 Navarro v. Block, 28 HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor Irvine, CA 92612-2427 949-757-2800 250 F .3d 729 (9th Cir. 2001) ................................................................................ 8 11 36248755vl 0977380 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 3 of 31 Page ID #:1196 1 California Cases 2 Aetna Casualty & Surety Co. v. Industrial Ace. Com., 3 30 Cal. 2d 388 (1947) ......................................................................................... 23 4 California Shoppers Inc. v. Royal Globe Ins. Co., . 5 - .. 175 c·al App. 3d 1 (1985) ........... : .............................................. :~: .............. :.: .... 21 6 Chateau Chamberay Homeowners Ass 'n. v. Associated Int'l. Ins. Co., 7 90 Cal. App. 4th 335 (2001) ............................................................................... 21 8 College Hospital Inc. v. Superior Court, 9 8 Cal. 4th 704 (1994) .......................................................................................... 25 10 Congleton v. National Union Fire Ins. Co., 189 Cal. App. 3d 51 (1987) ................................................................................ 21 11 Corning Hospital Dist. v. Superior Court, 12 57 Cal. 2d 488 (1962) ................................................................................... 16, 24 13 14 Cruz v. HomeBase, 83 Cal. App. 4th 160 (2000) ............................................................................... 24 15 Dalrymple v. United Services Auto. Assn., 16 40 Cal. App. 4th 497 (1995) ............................................................................... 22 17 Diamond Multimedia Systems, Inc. v. Superior Court, 18 19 Cal. 4th 1036 (1999) ...................................................................................... 19 19 In reDo Kyung K., 20 88 Cal. App. 4th 583 (2001) ............................................................................... 12 21 IBM v. State Bd. of Equal., 26 Cal. 3d 923 (1980) ......................................................................................... 12 22 Interinsurance Exch. of Auto. Club v. Ohio Casualty Ins. Co., 23 58 Cal. 2d 142 (1962) ......................................................................................... 13 24 Kelly-Zurian v. Wohl Shoe Co., 25 22 Cal. App. 4th 397 (1994) ............................................................................... 24 26 Love v. Fire Ins. Exch., 27 221 Cal. App. 3d 1136 (1990) ............................................................................ 21 28 HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor Irvine, CA 92612-2427 949-757-2800 111 36248755vl 0977380 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 4 of 31 Page ID #:1197 1 Merlo v. Standard Life & Accident Co. of California, 2 59 Cal. App. 3d 5 (1976) .................................................................................... 22 3 Miranda v. National Emergency Services, Inc., 4 35 Cal. App. 4th 894 (1995) ............................................................................... 14 5 Mock v. Michigan Millers Mutual Ins. Co., 6 4 Cal. App. 4th 306 (1992) ................................................................................. 25 7 Morris v. Paul Revere Life Ins. Co., 109 Cal. App. 4th 966 (2003) ............................................................................. 22 8 Myers v. Phillip Morris Cos., Inc., 9 28 Cal. 4th 828 (2002) ........................................................................................ 23 10 People v. Standish, 11 38 Cal. 4th 858 (2006) ........................................................................................ 14 12 R&B Auto Center, Inc. v. Farmers Group, Inc., 13 140 Cal. App. 4th 327 (2006) ............................................................................. 22 14 15 Tomaselli v. Transamerica Ins. Co., 25 Cal. App. 4th 1269 (1994) ....................................................................... 24, 25 16 Torrance v. Workers' Comp. Appeals Bd., 17 18 19 20 21 32 Cal. 3d 371 (1982) ......................................................................................... 13 Waller v. Truck Ins. Exchange, Inc., 11 Cal. 4th 1 (1995) ...................................................................................... 20, 21 Waters v. United Services Auto Ass 'n., 41 Cal. App. 4th 1063 (1996) ............................................................................. 21 Yamaha Corp. of America v. State Bd. of Equal., 22 19 Cal. 4th 1 (1998) ............................................................................................ 12 23 Federal Statutes 24 25 Federal Rule of Civil Procedure 12(b )( 6) .................................................................. 8 26 Federal Rule of Civil Procedure 23 ......................................................................... 15 27 28 HINSHAW & CUlBERTSON 19800 MacArthur Boulevard 8th Floor lV 36248755vl 0977380 Irvine, CA 92612-2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 5 of 31 Page ID #:1198 1 Federal Rule of Civil Procedure 23(a) ....................................................................... 3 2 3 4 5 California Statutes Cal. Business and Professions Code, § 17200 et seq. ·············:~·:···························································;;························3 _ Cal. Civil Code, 6 § 3294(b ) ............................................................................................................. 24 7 Cal. Civil Code, 8 § 3294(c)(1)(2) ................................................................................................... 24 9 Cal. Ins. Code, 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 § 396(a)(1) .......................................................................................................... 13 § 396(g) ............................................................................................................... 22 §570 ................................................................................................................... 12 § 790.02(d) ............................................................................................................ 9 § 4064 ................................................................................................................. 12 § 10089.2 ............................................................................................................ 12 § 10112.1 ............................................................................................................ 12 § 10112.7 ............................................................................................................ 12 § 10112.9 ............................................................................................................ 12 § 10113.71 ................................................................................................... passim § 10113.72 ................................................................................................... passim § 10113.95 .......................................................................................................... 12 § 10123.91 .......................................................................................................... 12 § 10128.4 ............................................................................................................ 12 § 10144.3 ............................................................................................................ 12 §10717 ............................................................................................................... 12 § 11588 ............................................................................................................... 12 § 12921 ............................................................................................................... 10 § 12921.1 ............................................................................................................ 10 HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor v 36248755vl 0977380 Irvine, CA 92612·2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 6 of 31 Page ID #:1199 1 I. INTRODUCTION 2 Plaintiff Jennifer Bentley's ("Plaintiff') latest version of her complaint- her 3 Third Amended Complaint ("TAC'') - completely revamps the pleading that this 4 Court considered when ruling on her First Amended Complaint· ("F AC") (Docket -- ,._' 5 #16). The most prominent new feature is an ever-broadening class definition. The 6 TAC seeks to bring within the ambit of the subject California Insurance Code 7 statutes life insurance policies that were not even "issued or delivered in this state," 8 in contravention of the statutes' plain language. Further, the new class definition, 9 while now explicitly embracing those policies that have "renewal" language, does 10 not limit the proposed class to such policies; it effectively seeks to create a class 11 composed of any policy issued by Defendant United of Omaha Life Insurance 12 Company ("United") at any time and any place, so long as there is some 13 conceivable, remote link to California. 1 Plaintiffs new class definition is therefore 14 the main subject of this present Motion to Dismiss. 15 In addition, United has recently obtained and for the first time brings to the 16 Court's attention judicially-noticeable evidence that the California Department of 17 Insurance ("DOl") fully agrees with United's interpretation of the statutes -that is, 18 that the statutes only apply to policies issued or delivered in California after January 19 1, 2013, and not to existing policies that merely renewed after that date. 20 Finally, United moves to dismiss (i) Plaintiffs putative class claim for bad 21 faith, (ii) Plaintiffs putative class claim for punitive damages; and (iii) Plaintiff's 22 "alternative" individual claim for breach of contract - none of which claims were 23 previously challenged. 24 25 26 27 28 1 This exceptionally broad proposed expansion of the class definition is the result of United revealing in its discovery responses that the prior proposed class would consist of only eight class members. HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor 1 36248755vl 0977380 Irvine, CA 92612-2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 7 of 31 Page ID #:1200 1 II. SUMMARY OF ARGUMENT 2 Plaintiff's claims for relief: Having previously ruled upon United's motion 3 to dismiss the F AC and subsequent motion for certification for an interlocutory 4 appeal ("Motion for Certification"), the Court is undoubtedly familiar with 5 Plaintiff's theory of liability against United: that United failed to comply with two 6 statutes that took effect on January 1, 2013, over 12 years after the Insured 7 purchased his policy - California Insurance Code sections 10113.71 and 10113.72 8 (the "Statutes"). The Statutes require insurers to provide a grace period of at least 9 60 days with respect to life insurance policies and give notice of any impending 10 lapse to the policy owner as well as any third person the owner may designate. 11 Plaintiff's allegations raise a purely legal and case-dispositive question about 12 the applicability of the Statutes to the subject insurance policy insofar as United 13 admits that (1) it did not send Eric Bentley (the "Insured") a notice inviting him to 14 designate a third person to receive pending lapse notices prior to the termination of 15 his policy, and (2) it did not send a third-party designee of the Insured notice of an 16 impending lapse of the policy for non-payment of premiums. See United's Answer 17 to the F AC at Docket # 28, ,-r,-r 22-23. United did not do so under a good faith belief 18 that the Statutes do not apply to life insurance policies issued or delivered prior to 19 those Statutes' January 1, 2013 effective date, including but not limited to the policy 20 that is the subject of this action, which issued in 2001. Id. at p. 9:6-9. 21 Plaintiff alleges that because United did not comply with the Statutes, the 22 subject policy did not lapse prior to the Insured's death, and the death benefit was 23 therefore payable. Plaintiff's breach of contract and bad faith claims (Counts I and 24 II) fail primarily because, although those claims for relief depend upon the alleged 25 violation of the Statutes, the Statutes do not apply retroactively. Plaintiff also sues 26 on behalf of a putative class for bad faith and punitive damages. 27 Plaintiff's alternative theory against United asserted in her individual capacity 28 (Count III) is also a purely legal one. She asserts that the Insured's payment of six HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor 2 36248755vl 0977380 Irvine, CA 92612·2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 8 of 31 Page ID #:1201 1 months' worth of premium afforded the Insured one year's worth of coverage, so 2 that the Policy remained in force at the time of the Insured's death. There is no legal 3 support for Plaintiff's new theory. 4 Plaintiff's newly-formulated and broadened class definition: Plaintiff 5 brings her first and second claims for breach of contract and bad faith on behalf of 6 herself and the following putative class members: 7 All beneficiaries who made a claim, or would have been eligible to 8 make a claim, for the payment of benefits on life insurance policies 9 renewed, issued or delivered by Omaha in the State of California that 10 lapsed or were terminated by Omaha for the non-payment of premium 11 after January 1, 2013, and as to which policies one or more of the 12 notices described by Sections 10113.71 and 10113.72 of the California 13 Insurance Code were not sent by Omaha. (TAC, Docket #87 ~ 37)2 14 The new class definition fails because - among other things - it improperly 15 seeks to bring policies issued and delivered outside California within the ambit of 16 the Statutes, and in derogation o:J;' the clear statutory language. In fact, it is so overly 17 broad that it does not even require any "renewal" after the Statutes' effective date. 18 III. PROCEDURAL HISTORY 19 On December 4, 2015, Plaintiff filed her FAC against United, which 20 contained three claims for relief: ( 1) breach of contractual duty to pay a covered 21 claim, (2) bad faith and (3) violation of California Business and Profession Code 22 Section 17200 et seq. (the "UCL"). (Docket #16.) United moved to dismiss the 23 F AC, or, in the alternative, to strike the class allegations contained therein as having 24 been inadequately pled under F.R.C.P. 23(a). (Docket #24.) By Order dated June 25 2 The definition excludes: (a) United, (b) any entity in which United has a 26 controlling interest; (c) its officers, directors, and employees, (d) its legal 27 representatives successors, and assigns; (e) governmental entities; and (f) this Court. TAC, ~ 38. The prior definition in the FAC was brought on behalfof"all California 28 residents" (Docket #16, at~ 29), a critical California link now missing in the TAC. HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor 3 36248755vl0977380 Irvine, CA92612-2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 9 of 31 Page ID #:1202 1 22, 2016, the Court granted United's motion in part and dismissed Plaintiffs UCL 2 claim on behalf of herself and the putative class members. (Docket #27, p. 11.) The 3 Court otherwise denied the motion and directed United to answer the F AC within 21 4 days. (Id. at pp. 11-12.) United thereafter timely answered the FAC .. (Docket #28.) ' J 5 United also brought a Motion for Certification with respect to the Court's Order 6 (Docket #30), which the Court denied on September 14,2016. (Docket #46.) 7 On October 20, 2016, Plaintiffs then-counsel applied to formally withdraw 8 from this action and substitute in new counsel. (Docket #60.) The Court granted 9 the request. (Docket #61.) Since October 2016, seven new, out-of-state counsel 10 have been admitted on a pro hac vice basis to collectively represent Plaintiff and the 11 putative class. (Docket #55-58, 72-74.) Plaintiff sought a stipulation to file a 12 Second Amended Complaint ("SAC"), and United so stipulated (Docket #75), 13 which the Court approved (Docket #76). Plaintiff filed her SAC on November 24, 14 2016. (Docket #77, 77-1, 77-2.) United moved to dismiss the SAC. (Docket #76.) 15 Plaintiff then sought a stipulation to file a TAC, seeking to further expand the 16 definition of the proposed class. (Docket #87, ,-r 37.) The Court approved the 17 stipulation, permitting Plaintiff to file her TAC/ and denied United's motion to 18 dismiss the now-inoperative SAC without prejudice. (Docket #86.) The Court 19 ordered that United may challenge the TAC by February 10, 2017 (id.), which 20 United is now doing. Given the similarities between the SAC and TAC, in that only 21 the class definition has changed, this motion tracks the previously-filed motion. 22 IV. ALLEGATIONS OF THE THIRD AMENDED COMPLAINT4 23 The Insured purchased a term life insurance policy from United on February 24 28, 2001. TAC, ,-r 27 and Ex. A thereto (Docket #77-1), which is a copy of the 25 3 As with the prior versions of the complaint, the TAC has two exhibits: the life 26 insurance policy issued to the Insured (the "Policy" or "Bentley Policy") (Docket 27 #87-1) and the Policy termination notice sent to the Insured (Docket #87-2). 4 United is required to accept the TAC's factual allegations as true for purposes of 28 this motion. Thus, United recites them here as though those facts are established. HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Aoor 4 36248755vl 0977380 Irvine, CA 92612-2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 10 of 31 Page ID #:1203 1 Policy. The Policy has level and guaranteed premiums for twenty years, but was 2 also annually renewable to age 95 so long as the Insured paid the required 3 premiums, which would drastically increase after the 20th year. TAC, ~ 27; Docket 4 #87-1, pp. 1, 2, 6-10 of 18. The anniversary date is set at one year intervals on each 5 successive February 28. !d. 6 The Insured named The 2001 Bentley Family Trust as sole beneficiary of the 7 Policy. TAC, p. 1:1-2; ~26. Plaintiff is the trustee ofthe trust. Id. The Policy 8 remained in force so long as premiums were paid. TAC, Ex. A, Docket #87-1, pp. 9 13 of 18, 14 of 18.5 The Insured paid the premiums in full for thirteen years. TAC, 10 ~ 29; First Amended Complaint ("FAC"), ~ 18.6 Pursuant to the premium schedule 11 in the Policy, the full annual premium was $1,270 for those thirteen years. Docket 12 #87-1, pp. 6-10 of 18. However, on February 28, 2014, the Insured only paid 13 $670.80. TAC, ~ 63. This amount corresponded to the semiannual (i.e., six months) 14 premium amount set forth in the Policy. There is no contention that the Insured paid 15 any amount after February 28, 2014, let alone the next semiannual payment that 16 would have been due in six months, i.e., by August 28, 2014. 17 United notified the Insured that the Policy had terminated for non-payment of 18 premium 61 days later, in a letter dated October 28, 2014. TAC, ~30; id. at Ex. B, 19 Docket #87-2. As the United termination letter advised, "[w]e have not received 20 your premium payment due August 28, 2014." Ex. B, Docket #77-2. After the 21 Policy terminated, the Insured died. TAC, ~ 31. When Plaintiff made a claim for 22 the Policy benefits, United refused to pay the claim because the Policy had 23 terminated before the Insured's death. TAC, ~~ 34-35. While the TAC is silent on 24 25 5 "The policy will remain in force if the premiums are paid as shown on page 3 ." (Policy, p. 13 of 18.) "If any premium is not paid by the end of the grace period, 26 this policy will terminate as of the due date." (Policy, p. 14 of 18.) 27 6 The TAC seeks to camouflage prior allegations in its wholesale amendment of the complaint, and accordingly, United will also refer to prior allegations presented to 28 this Court in the FAC, Docket #16. HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Aoor 5 36248755vl 0977380 Irvine, CA 92612-2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 11 of 31 Page ID #:1204 1 the issue, the F AC alleged that the Insured and Plaintiff were going through a 2 divorce at the time of the Insured's death. FAC (Docket #16), ~ 25. 3 v. PLAINTIFF'S ASSERTIONS OF ALLEGED WRONGDOING 4 In connection with Plaintiffs first claim for relief (breach of a contractual I . • :'. 5 duty to pay a covered claim), she alleges on behalf of herself and the putative class 6 members that United breached the Bentley Policy and other life insurance policies in 7 the following ways, all arising out of United's alleged violation of the Statutes: (1) 8 failing to provide policyholders with the opportunity to designate a third party to 9 receive notification of a pending policy lapse, (2) failing to send policyholders a 10 written notification that their policy would lapse within 30 days for non-payment of 11 premium, (3) failing to notify a third party designee about a pending policy lapse for 12 non-payment of premium. TAC, ~ 49. 13 In connection with Plaintiffs second claim for relief (bad faith), she alleges 14 that United's violation of the Statutes described in the breach of contract claim was 15 unreasonable and despicable, such that she is entitled to extra-contractual damages, 16 including punitive damages. TAC, ~~52-59. 17 Plaintiffs third and final claim for relief is pled as an "alternative" to her first 18 count for breach of contract. TAC, ~ 73 ("Plaintiff pleads this Count III as an 19 alternative to Count I of the Complaint and will only seek recovery under this Count 20 III in the event Plaintiff is unsuccessful in seeking recovery under Count I."). Here, 21 Plaintiff alleges that the Insured made a premium payment of $670.80 on February 22 28, 2014 and that the payment obligated United to provide coverage under the 23 Bentley Policy for an entire year, to February 28, 2015. TAC, ~~ 63-65, 69. Yet, as 24 is evident from the Policy (attached as Exhibit A to the TAC), and as discussed 25 above, the amount of premium that the Insured paid in February 20 14 represented 26 only one-half of the annual premium due for the Policy. TAC, Ex. A, Docket #87-1, 27 pp. 6-10 of 18. Thus, even though the Insured only paid six months' worth of 28 premium, Plaintiff asserts that the Insured was entitled to coverage for one year, HINSHAW & CULBERTSON 19800 MacArthur Boulevard 6 8th Floor ITVine, CA 92612-2427 949-757-2800 36248755vl 0977380 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 12 of 31 Page ID #:1205 1 theorizing that to provide coverage for six months, rather than one year, the Bentley 2 Policy would have to have been amended in writing "to a six-month term" and that 3 no such written amendment was made. TAC, ~~ 67-68. 4 Plaintiff alleges that United's refusal to pay benefits under the Bentley Policy ; 5 on the grounds that it terminated for non-payment of premium after expiration of the 6 six-month period for which the Insured paid premium in 2014 constitutes a breach 7 of the Bentley Policy. TAC, ~ 71. 8 VI. THE STATUTES 9 California Assembly Bill1747, enacted in 2012 and thus effective on January 10 1, 2013, created Insurance Code sections 10113.71 and 10113.72 - the Statutes. 11 Together, they set forth four obligations with respect to life insurance policies 12 "issued or delivered" in California as follows: [Obligation 1:] individual life 13 insurance policies must contain a provision for a 60-day grace period 14 (§ 10113.71(a)); [Obligation 2:] an insurer may not issue or deliver a life insurance 15 policy until the applicant for the policy is provided a form by the insurer to 16 designate a third person to receive notice of a potential lapse for nonpayment of 17 premium (§ 10113.72(a)); [Obligation 3:] an insurer must notify the policy owner 18 annually of the right to change the designation or to designate additional third 19 parties (§ 10113.72(b)); and [Obligation 4:] the insurer must give notice of a 20 potential lapse at least 30 days before it occurs, and within 30 days after a premium 21 is due and unpaid(§ 10113.72(c) and 10113.71(b)(3)), which to be effective must be 22 mailed to the policy owner and a third party designated by the policy owner 23 pursuant to section 10113.72(a) (§§ 10113.71(b)(l) and (b)(3) and 10113.72(c)). 24 With respect to Obligation 1, above, United cannot be liable for failing to 25 include a 60-day grace provision in the Policy it issued to the Insured in 2001, and 26 the TAC does not so allege. Rather, the TAC alleges a violation of Obligation 2, 27 above- failing to notify policyholders of a potential lapse at least 30 days before it 28 occurs, and within 30 days after a premium is due, which the TAC refers to as the HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor 7 36248755vl 0977380 Irvine, CA 92612-2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 13 of 31 Page ID #:1206 1 "30 Day Notice Requirement." TAC, ~~ 49(b), 2. The TAC also alleges a violation 2 of Obligations 3 and 4, above - the "third party designation" obligations, which the 3 TAC refers to as the "Designation Requirement" and the "Third Party Notice 4 Requirement." TAC, ~~ 49(a), (c), 2. The TAC alleges that United failed to give 5 the Insured the opportunity to designate a third party to receive notice of a lapse, and 6 having failed to do so, then necessarily violated the Statutes by failing to give notice 7 of the lapse to a third party that the Insured might have wished to designate. I d. 8 The Statutes themselves provide the "consequence" for the failure to comply 9 only with Obligation 4: no policy shall lapse unless the insurer mails the lapse notice 10 to both the policyholder and any third person he or she has designated 11 ( § 10 113. 72( c)), and no notice of pending lapse shall be effective unless so mailed 12 (§ 10113.71(b)(1)). The Statutes are silent with respect to the effect of a failure to 13 provide an initial or annual notice of the right to designate a third party. 14 VII. THE STANDARD FOR A MOTION TO DISMISS 15 A motion to dismiss under F.R.C.P. 12(b)(6) "tests the legal sufficiency of a 16 claim." Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Although the court 17 generally accepts factual allegations as true, it need not accept as true "allegations 18 that are merely conclusory, unwarranted deductions of fact, or unreasonable 19 inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). 20 Plaintiffs obligation to provide the grounds for entitlement to relief "requires more 21 than labels and conclusions, and a formulaic recitation of the elements of a cause of 22 action will not do." Bell At!. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations 23 and quotations omitted). "[W]here the well-pleaded facts do not permit the court to 24 infer more than the mere possibility of misconduct, the complaint has alleged - but 25 it has not 'show[n]'- 'that the pleader is entitled to relief.'" Ashcroft v. Iqbal, 556 26 U.S. 662, 679 (2009) (quoting Twombly, 550 U.S. at 558-59). 27 28 HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor 8 36248755vl 0977380 Irvine, CA 92612·2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 14 of 31 Page ID #:1207 1 VIII. PLAINTIFF'S CLAIMS FOR RELIEF FAIL BECAUSE THE 2 STATUTES DO NOT APPLY TO POLICIES ISSUED OR 3 DELIVERED BEFORE THE STATUTES' ENACTMENT IN 2013 4 A. The Wording of the Statutes Makes Clear They Were Intended to 5 Apply to Policies Issued After the Statutes' Effective Date 6 Plaintiff cannot maintain her first and second claims for relief for breach of 7 contract and bad faith because they are premised entirely upon the Statutes' asserted 8 application to life insurance policies issued before January 1, 2013, the effective 9 date of the Statutes. Yet, as a matter of law, the Statutes cannot and do not apply to 10 any such policies. United detailed the reasons in its motion to dismiss the F AC and 11 in its Motion for Certification. See Docket # 22-1, 30-1. Those reasons have equal 12 application to the newly formulated allegations in the TAC. 13 In short, the language of Section 10113.72(a) - pertaining to third party 14 designee obligations - makes clear that it is the applicant who must be given the 15 opportunity to designate a third person to receive notice. (That statute provides that 16 no policy shall issue "until the applicant has been given the right to designate .... " 17 (Emphasis added.)) An applicant is "any person who seeks to contract for insurance 18 coverage .... " Ins. Code § 790.02( d) (emphasis added). Since an applicant does 19 not yet own the policy at issue, and since the statute says a policy "shall not be 20 issued or delivered . . . until the applicant has been given the right to designate" a 21 third party, the Statutes can only logically pertain to policies issued after the 22 Statutes' effective date. If the statute applied to policies issued prior to the Statutes' 23 effective date, then as of the effective date, consistent with the terms used elsewhere 24 in the Statutes, those persons would be "owners," not "applicants." 25 Section 10113. 72( c) then provides that a policy may not lapse if notice is not 26 given both to the owner "and to the person or persons designated pursuant to 27 subdivision (a) .... " (Emphasis added.) Read consistently, this means a policy 28 will not lapse if notice is not given to a person who is designated by the policy HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor 9 36248755vl 0977380 Irvine, CA 92612-2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 15 of 31 Page ID #:1208 1 applicant. But no applicant could possibly list such a statutorily permitted third 2 person designee pursuant to the Statutes unless his policy was delivered to him after 3 the effective date of the Statutes. Thus, the only consistent reading of the Statutes is 4 that they apply only to policies issued after the Statutes' effective date. 5 B. The California Department of Insurance's Position is That the 6 Statutes Only Apply to Policies Issued After Their Effective Date 7 Significantly, public records recently received from the agency charged with 8 enforcing the Statutes -the California DOl- conclusively establish that agency's 9 assessment that the Statutes do not apply to policies, such as the Policy at issue here, 10 which were already in existence at the time the Statutes went into effect. 11 The DOl has interpreted the Statutes to apply only to those policies that 12 issued after the Statutes' enactment: The DOl is charged with enforcing the 13 Insurance Code statutes that are the subject of this action. See Cal. Ins. Code §§ 14 12921 and 12921.1. On November 15, 2016, in response to a Public Records Act 15 request by United, the DOl produced documents reflecting the agency's assessment 16 that the Statutes only apply to new policies issued on or after their January 1, 2013 17 effective date, and not existing policies that were renewed after that date. See the 18 Request for Judicial Notice ("RJN") of Documents Produced by the DOl in response 19 to United's Public Records Act Request, Ex. B, pp. 14-15. For example, in response 20 to an inquiry made as to whether the Statutes applied retroactively to policies that 21 were in existence at the time they took effect, Assistant Chief Counsel of the DOl's 22 Policy Approval Bureau, Leslie Tick, wrote on March 6, 20 13: 23 In general, new laws take effect ort a going forward basis so that 24 everyone knows what the law is when they enter in to an agreement, 25 such as an insurance policy. If the statutes had retroactive effect they 26 would effect [sic] actions which have already occurred, and which were 27 lawful at the time, making them retroactively unlawful. Parties to a 28 contract would have no certainty as to the terms of their agreement if HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor 10 36248755vl 0977380 I Nine, CA 92612-2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 16 of 31 Page ID #:1209 1 the Legislature could change those terms retroactively. [~] Generally a 2 policy is "issued or delivered" just once - when it is new. A statute[] 3 would have to say "and renewed" in order to apply to renewals, 4 because presumably those renewed policies were issued or delivered 5 before the Jan. 1, 2013 effective date. [~] For these reasons the 6 statutory changes brought by AB 1747, eff. 1.1.2013, apply on a going 7 forward basis - that is, the changes apply to policies issued or 8 delivered on or after 11112013. AB1747 does not require insurers to 9 extend the grace period when policies that were issued prior to 111/13, 10 are renewed. RJN, Ex. B, p. 14 (emphasis added). 11 The above analysis is wholly consistent with the SERFF documents filed with 12 United's prior Motion for Certification, of which the Court took judicial notice.7 13 See Docket #30-2 and 30-3 (Declaration of Helen Curry and Request for Judicial 14 Notice of same); see also Docket #46 p. 2 of 5 (Court's Order dated September 14, 15 2016 denying motion for certification and taking judicial notice of the SERFF 16 documents). Those documents further reflect the DOl assessment that the 17 provisions of the Statutes only apply to life insurance policies issued or delivered in 18 California on or after January 1, 2013- and there is no exception for "renewals" of 19 such policies. 20 21 22 23 24 25 26 27 28 HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor Irvine, CA 92612-2427 949-757-2800 7 The System for Electronic Rate and Form Filing - referred to in the insurance regulatory industry by its acronym, SERFF - is an Internet-based repository of insurance regulatory information, as well as a platform by which insurance companies request regulatory approval from state insurance regulatory agencies for new insurance policy forms. According to the SERFF website, "[t]he original concept for SERFF was developed in the early 1990s by the NAIC [National Association of Insurance Commissioners]. The intent was to provide a cost- effective method for facilitating the submission, review and approval of product filings between regulators and insurance companies." The DOl mandates the use of SERFF for all insurers when insurers seek approval of new insurance policy forms. See generally http:/ /www.serff.com/index.htm. 11 36248755vl 0977380 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 17 of 31 Page ID #:1210 1 The Court's brief ruling on United's Motion for Certification stated that the 2 SERFF documents are irrelevant because they do not specifically address section 3 10113.72(c), which this Court relied upon to conclude that subsections (a) and (b) of 4 that statute apply to insurance policies issued prior to the Statutes. Docket #46, p. 4 5 of 5. However, the Court's prior June 22, 2016 Order denying United's motion to 6 dismiss the F AC in part concluded that the Statutes as a whole apply to the Policy. 7 Order (Docket# 27), pp. 7, 9. The SERFF documents, as well as other publicly 8 available documents described above and in the accompanying Request for Judicial 9 Notice, reflect that the agency charged with enforcing the Statutes reached a directly 10 contrary conclusion, consistent with other similar statutes it enforces. 11 Although the DOl's interpretation of the Statutes is not controlling (Yamaha 12 Corp. of America v. State Bd. of Equal., 19 Cal. 4th 1, 12 (1998)), the judiciary 13 should accord "great weight and respect to the administrative construction." !d., 14 citing IBM v. State Bd. of Equal., 26 Cal. 3d 923, 931, n.7 (1980). The DOl's 15 unambiguous conclusion that the Statutes do not apply to policies issued before their 16 enactment demonstrates the propriety of United's interpretation of the Statutes. 17 The DOl's and United's interpretation of the Statutes is consistent with 18 the fact that when the Legislature intends for a statute to apply to existing 19 insurance policies renewed after the statute's effective date, it expressly says so 20 in the statute: When the Legislature wants a statute to apply to a contract or policy 21 after its renewal, it says so explicitly in the statute. See, e.g., Ins. Code §§ 570, 22 4064, 10089.2, 10112.1, 10112.27, 10112.9, 10113.95, 10123.91, 10128.4, 10144.3, 23 10717, 11588 -each of which specifically refer to a policy that is renewed. As 24 stated in In reDo Kyung K, 88 Cal. App. 4th 583, 589 (2001): "To understand the 25 intended meaning of a statutory phrase, we may consider use of the same or similar 26 language in other statutes, because similar words or phrases in statutes in pari 27 materia [that is, dealing with the same subject matter] ordinarily will be given the 28 same interpretation." (Citations omitted). HINSHAW & CULBERTSON 19800 MacArthur Boulevard 3th Floor 12 36248755vl0977380 Irvine, CA 92612-2427 949-757·2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 18 of 31 Page ID #:1211 1 Indeed, the Legislature recently enacted another statute containing the very 2 same third-party designation/notice requirements with respect to policy types other 3 than life insurance. See Ins. Code § 396(a)(l). In its 2014 enactment, the 4 Legislature specifically stated in Section 396 that the statute "applies to policies that 5 are issued and take effect or that are renewed on or after January 1, 2016." !d. at § 6 396(g) (emphasis added). 8 Significantly, the emphasized language is not found 7 anywhere in the Statutes.9 Given the juxtaposition of these two statutes dealing with 8 the same notice of impending lapse issue, the Legislature's intent could not be 9 clearer. Because life insurance policies are long term contracts, and don't "renew" 10 in the sense that other types of insurance do, and to avoid the very dispute about 11 renewal presented in this lawsuit, the Legislature intended for the Statutes to apply 12 only to policies issued after their effective date. That is precisely why the DOl 13 concluded that, for the Statutes to apply to existing policies that were renewed after 14 their effective date, they would "have to say 'and renewed."' RJN, Ex. B, p. 14. 15 The DOl's interpretation is also consistent with the established principle that 16 insurance policies are governed by the law that is in effect at the time the policies 17 are issued. See Interinsurance Exch. of Auto. Club v. Ohio Casualty Ins. Co., 58 18 Cal. 2d 142, 149 (1962) ("It is well settled that insurance policies are governed by 19 the statutory and decisional law in force at the time the policy is issued") (emphasis 20 added); Torrance v. Workers' Camp. Appeals Bd., 32 Cal. 3d 371, 378-79 (1982) 21 ('"[Laws] enacted subsequent to the execution of an agreement,' . . . 'are not 22 ordinarily deemed to become part of the agreement unless its language clearly 23 24 25 26 27 28 HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor Irvine, CA 92612-2427 949-757-2800 8 This conclusively demonstrates that when the Legislature intends for third-party notice requirements of the type at issue here to apply to insurance policies that are not only issued and delivered, but also renewed after the statute's effective date, the Legislature specifically says so in the statute. It did not do so in the Statutes. 9 Interestingly, Section 10113.71(b)(2) specifically advises that '[t]his subdivision shall not apply to nonrenewal." Accordingly, if the Legislature had wished to address the topic of renewal- as it did in Section 396 -it could have easily done so. 13 36248755vl 0977380 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 19 of 31 Page ID #:1212 1 indicates this to have been the intention of the parties.'" [Citations omitted.]). The 2 Statutes were not in effect when the Policy issued and do not apply retroactively. 3 In its prior Orders on the Motion to Dismiss and the Motion for Certification, 4 the Court did not address this principle, nor did it address the plethora of Insurance 5 Code statutes United cited above where the Legislature specifically used the phrase 6 "and renewed" when it intended the statute to apply to policies renewed after the 7 statute's effective date. United respectfully urges the Court to consider the 8 numerous "parallel" Insurance Code statutes in which such "and renewed" language 9 was expressly utilized, and contrast it with the language of the Statutes at issue here, 10 in which that same language was not inserted by the Legislature. United contends 11 only one logical inference can be drawn from the fact that, in the Statutes, the "and 12 renewed" language is missing: the Statutes at issue here do not apply to policies 13 issued prior to the Statutes' effective date, even if they were later renewed after that 14 date. This difference warrants dismissal of the claims in the TAC. 15 The DOl's interpretation of the Statutes is consistent with the statutory 16 language demonstrating that they apply prospectively to only those policies 17 issued after the Statutes' enactment: The DOl's interpretation is further consistent 18 with the Statutes' express language that reflects that the Legislature intended them 19 to apply only to those policies "issued. or delivered" after their January 1, 2013 20 effective date. See § 10113.71(a) (a "policy issued or delivered in this state" must 21 contain a 60-day grace period); id. at §10113.72(a) (a "policy shall not be issued or 22 delivered in this state" until the applicant is permitted to designate a third person to 23 receive notice). 24 Both Statutes refer to policies "issued or delivered in this state." For the 25 Statutes to be read consistently, the third party notice provision in Section 26 10113.71 (b) can only be applied to policies issued after the Statutes' effective date. 27 See People v. Standish, 38 Cal. 4th 858, 870 (2006) (Within a statute, "[t]erms 28 ordinarily possess a consistent meaning throughout a statute."); see also Miranda v. HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor 14 36248755vl 0977380 Irvine, CA 92612-2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 20 of 31 Page ID #:1213 1 National Emergency Services, Inc., 35 Cal. App. 4th 894, 905 (1995) ("A word or 2 phrase, or its derivatives, accorded a particular meaning in one part or portion of a 3 law, should be accorded the same meaning in other parts or portions of the law, 4 especially if the word is used more than once in the same section of the law."). 5 Importantly, after this Court's prior ruling on United's motion to dismiss, the 6 Ninth Circuit issued its decision in Briseno v. ConAgra Foods, Inc., 2017 WL 24618 7 (9th Cir. Jan. 3, 2017). Briseno held that Federal Rule of Civil Procedure 23 does 8 not contain a requirement of administrative feasibility in determining the members 9 of a putative class action. In interpreting Rule 23, the Ninth Circuit applied a 10 traditional canon of statutory construction: that where the Legislature includes 11 particular language in one section of a statute but omits it in another section of the 12 same statute, it is presumed that the legislature intentionally and purposely omitted 13 the language. !d. at * 4 ("Traditional canons of statutory construction suggest that 14 this omission [of the words "administrative feasibility" from ·Rule 23] was 15 meaningful."). That principle, as applied to the interpretation of the Statutes here, 16 must mean that their reference to policies "issued or delivered in this state" (set forth 1 7 in section (a) of both Statutes) and the omission of the word "renewed" renders the 18 Statutes applicable as a whole to only those policies issued or delivered after the 19 effective date. 20 Briseno demonstrates that the Ninth Circuit would apply the same traditional 21 canon of statutory interpretation to this case to adopt United's interpretation of the 22 Statutes. Consistent with Briseno, it must be presumed that the California 23 Legislature intended (1) for the Statutes to apply in their entirety to only those 24 policies "issued or delivered in this state" after their effective date given the use of 25 that language in both Section 10113.71(a) and 1011371.72(a) and (2) for the 26 Statutes not to apply to any policies only "renewed" after their effective date, given 27 the absence of the word "renewed" in both Statutes. 28 HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor 15 36248755vl 0977380 Irvine, CA 92612-2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 21 of 31 Page ID #:1214 1 The foregoing is consistent with the text of the Statutes. For example, Section 2 10113.72(b) presumes a designation has already been made under subsection (a), at 3 policy inception. Because notice of a right to change designees would be 4 unnecessary unless an at-policy-issuance designation was already made, the 5 Legislature could not have intended subsection (b) to exist independent of the rest of 6 the Statutes and apply to policies issued before the Statutes became effective. 10 Of 7 course, had the Legislature wanted the annual notice provision in Section 8 10113.72(b) to apply to policies already existing as of the effective date, it could 9 have simply added the words "or renewed" (like it did two years later when it 10 enacted Section 396). Or it could have done something similar to the qualification it 11 made in Section 10113.71(b)(2), and provided there that "this subdivision shall 12 apply to policies issued at any time." The Legislature did neither. 13 United's interpretation of the Statutes is most consistent with the legal 14 principle of statutory construction that "a statute should be given the least 15 retroactive effect that its language reasonably permits." (Emphasis added.) See 16 Corning Hospital Dist. v. Superior Court, 57 Cal. 2d 488, 494 (1962). 17 IX. PLAINTIFF'S CLASS DEFINITION IMPROPERLY INCLUDES 18 POLICIES ISSUED OR DELIVERED OUTSIDE CALIFORNIA 19 The TAC completely redefined the putative class and asserted entirely new 20 class allegations. While United reserves the right to challenge the class allegation 21 elements at a later point in the litigation, if required, the new class definition poses a 22 much more serious problem - it seeks to apply the Statutes to policies issued or 23 delivered outside of California. If one thing is undisputable by the Legislature's 24 10 Nothing in the Statutes' legislative history suggests, let alone states, that they apply to policies issued before the Statutes' effective date. See Request for Judicial 26 Notice of the Statutes' legislative history (Docket# 23), filed with United's Motion 27 to Dismiss the FAC. Thus, United understood the Statutes' requirements did not apply to the Policy (which issued in 2001) and that United was not obligated to 25 28 provide notice of an impending lapse to a third person designated by the Insured. HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor 16 36248755vl 0977380 I !Vine, CA 92612~2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 22 of 31 Page ID #:1215 1 language - even if the text could be interpreted to apply to policy renewals - it is 2 that the policies within the scope of the Statutes must have been issued or delivered 3 in California. Because the class definition seeks to expand the Statutes' application 4 to non-California policies, the class claim must be dismissed or stricken. 11 5 Specifically, in paragraph 37 of the TAC, Plaintiff utilized a new proposed 6 definition of the class that would include beneficiaries of life insurance policies 7 "renewed, issued or delivered by Omaha in [California] that lapsed or were 8 terminated by Omaha for the non-payment of premium after January 1, 2013 .... " 9 (Emphasis added.) This definition is not limited to policies issued or delivered in 10 California, and it is directly contrary to the plain language of the Statutes, which 11 does not mention "renewed" policies, but rather refers solely to policies "issued or 12 delivered in this state." See § 10113.71(a) (a "policy issued or delivered in this 13 state" must contain a 60-day grace period); id. at §10113.72(a) (a "policy shall not 14 be issued or delivered in this state" until the applicant is permitted to designate a 15 third person to receive notice). Indeed, this new definition purports to include 16 policies renewed "in California" even before the effective date of the Statutes. 17 This Court itself recognized this express feature of the Statutes, explaining, 18 when considering the third party notice requirement in its June 22, 2016 Order, that 19 it "presumes that the Legislature meant what it said and therefore subsection (b) of 20 Section 10113.72, by its plain language, applies to every individual life insurance 21 policy issued and delivered in California." (Docket #27, p. 6 (emphasis added).) 22 23 24 25 26 27 28 To the same effect, the DOl repeatedly and publicly announced that the Statutes only apply to policies issued or delivered in California. In response to an inquiry asking for clarification as to whether the third party notice requirement 11 Plaintiff may argue this issue should be reserved for the class certification stage, but the issue is critical because it impacts the scope of discovery (Plaintiff is already seeking discovery regarding policies issued outside California). And because the issue is purely legal, there is no reason to delay a ruling on the issue that could improperly expand the scope, and thus the expense, of discovery. HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor 17 36248755vl 0977380 Irvine, CA 92612-2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 23 of 31 Page ID #:1216 1 "applies to any policy owned by a California resident, including those issued or 2 delivered in another state," the DOl advised: 3 The provisions of AB1747, codified at CIC 10113.71 and .72 apply to 4 all policies issued and delivered in California. [,-r] Generally, ' 5 therefore, these statutes apply only if the master policy has been issued 6 in California. CIC 10113.71 applies to both individual and group (60 7 day grace period), but contains some requirements that apply to 8 individual policies only (notice of lapse must also be sent to additional 9 designee). [,-r] CIC 10113.72 applies to individual policies only - 10 Individual policies issued [or] delivered in California must give the 11 insured an opportunity to name a designee to receive lapse notice, 12 insurer must re-notifY once a year, insured may re-designate whenever 13 s/he wants, etc. [,-r] .... Regarding group policies, CIC 10113.71 14 applies to only those policies issued or delivered to a California 15 master policy holder. If a group master policy is issued in another 16 state, with a certificate issued to a California resident, that policy 17 does not need to comply wl the statute. RJN, Ex. B, pp. 17-18 18 19 20 21 22 23 24 25 26 27 28 (emphasis added). The Statutes cannot reasonably be construed to apply to policies that were issued or delivered outside of California. But Plaintiff's claim is based on a class definition that applies to all policies, regardless of where they were issued. This disingenuous attempt to expand the class is contrary to the Statutes' plain language. The California Supreme Court has held that California statutes do not have extraterritorial application in the absence of statutory language to the contrary: "Although a state may have the power to legislate concerning the rights and obligations of its citizens with regard to transactions occurring beyond its boundaries, the presumption is that it did not intend to give its statutes any extraterritorial effect. The intention to make the act HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor 18 36248755vl 0977380 Irvine, CA 92612·2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 24 of 31 Page ID #:1217 1 operative, with respect to occurrences outside the state, will not be 2 declared to exist unless such intention is clearly expressed or 3 reasonably to be inferred from the language of the act or from its 4 purpose, subject matter or history." 5 Diamond Multimedia Systems, Inc. v. Superior Court, 19 Cal. 4th 1036, 1059 (1999) 6 (citations omitted); see also E*Trade Financial Corp. v. Deutsche Bank AG, 2008 7 WL 2428225, at *25 (S.D.N.Y. 2008) ("California law embodies a presumption 8 against the extraterritorial application of its statutes"). Plaintiffs attempt to include 9 non-California policies in the definition of the putative class should be rejected. The 10 Court should either dismiss or strike the class claims due to the failure, as a matter 11 of law, to define a legally cognizable putative class. 12 X. PLAINTIFF'S INDIVIDUAL CLAIM FOR BREACH OF CONTRACT 13 FAILS BECAUSE UNITED WAS NOT LEGALLY OBLIGATED TO 14 PROVIDE THE INSURED A YEAR'S WORTH OF INSURANCE IN 15 EXCHANGE FOR PAYMENT OF ONLY SIX MONTHS' PREMIUM 16 As a newly-alleged alternative to her class claim for breach of contract, 17 Plaintiff seeks to hold United liable for Policy benefits allegedly owing to her under 18 a theory unique to her. 12 It is undisputed the Insured paid only six months' worth of 19 premium- a semiannual payment- on February 28, 2014. But the Insured died on 20 November 7, 2014, more than six months thereafter, i.e., after the Policy lapsed for 21 non-payment of premium by August 28, 2014. TAC, ,, 31, 63; id. at Ex A, Docket 22 #87-1, pp. 6-7, 13 of 18; Ex. B, Docket #87-2. Plaintiffs allegation that United had 23 a contractual obligation to provide coverage for the entire year (from February 28, 24 2014 to February 28, 2015), when he decided to pay the semiannual premium for the 25 first time in 13 years, finds no support in the law. 26 27 28 12 While listed as a separate count, this is simply an alternative theory to support the claim that the failure to pay death benefits was a breach of the insurance contract. HINSHAW & CUlBERTSON 19800 MacArthur Boulevard 8th Aoor 19 36248755vl0977380 Irvine, CA 92612-2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 25 of 31 Page ID #:1218 1 Moreover, the allegation is belied by the very terms of the Policy (attached to 2 the TAC). The Policy states that the "premiums may be paid" annually, 3 semiannually, quarterly or at other intervals, and that it will remain in force so long 4 as the premiums are paid "as shown on page 3." TAC, Ex. A, Docket #87-1, p. 13 5 of 18. Page 3 of the Policy contains a listing of the different premium amounts 6 payable annually, semiannually, quarterly and monthly by bank service plan 7 (automatic withdrawal). Id. at pp. 7-8 of 18. Thus, while the Insured initially chose 8 to pay his premium annually, the Policy expressly allowed him to choose a different 9 payment interval at any time, and he did so, in accordance with the express terms of 10 the Policy, in February 2014. However, nothing in the Policy suggests that the 11 Policy will remain in force beyond the time period for which premiums are paid. 12 Indeed, the Policy expressly states it will terminate for nonpayment of premiums if 13 any premium is not paid by the end of the grace period. Id. at p. 14 of 18. 14 Plaintiffs assertion that United "contends the policy converted to a six-month 15 term" and, to convert the Policy, it had to be amended (TAC, ,-r,-r 66-68), is 16 nonsensical and merely shows the desperate lengths to which Plaintiff resorts to 17 seek to state a claim. United does not contend that the Policy was "amended" or 18 "converted." The premium frequency has no effect on the "term" of the Policy. 19 Although described as annually renewable, the premium due for each annual term 20 may be paid in any number of ways, and the policy owner is not entitled to receive 21 coverage for a year when coverage for less than a year was paid for. Accordingly, 22 the claim for breach of contract based on the theory that the Insured's semiannual 23 premium payment provided coverage for an entire year must be dismissed. 24 XI. PLAINTIFF'S BAD FAITH CLAIM FAILS AS A MATTER OF LAW 25 If Plaintiff's Breach of Contract Claim Fails, Then So Must Her Bad 26 Faith Claim. The viability of Plaintiffs bad faith claim depends upon the existence 27 of a breach of contract. See, e.g., Waller v. Truck Ins. Exchange, Inc., 11 Cal. 4th 1, 28 36 (1995) (there can be no action for bad faith in the absence of a breach of HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor 20 36248755vl 0977380 Irvine, CA 92612-2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 26 of 31 Page ID #:1219 1 contract). Accordingly, if the Statutes are deemed not to apply to the Policy, and 2 Plaintiffs breach of contract claim for policy is thereby dismissed, then Plaintiffs 3 bad faith claim must also fail. See Waller, supra at 36. 4 Plaintiff's Bad Faith Claim Must Be Dismissed Because (1) United's 5 Actions Were Reasonable and (2) a Genuine Dispute Over Coverage Exists as a 6 Matter of Law. Whether or not the Court disagrees with United's interpretation of 7 the Statutes, it is indisputable that United's interpretation is, as a matter of law, 8 reasonable. This Court acknowledged that whether the Statutes apply to existing 9 policies is "an issue of first impression." See Docket #46, p. 4 of 5. And, as 10 demonstrated above, United's interpretation of the Statutes is consistent with the 11 interpretation of the governmental body whose function it is to administer the 12 statutes, the DOL If ever a case presented reasonable conduct by an insurer and a 13 genuine dispute over coverage precluding bad faith as a matter of law, this is it. 14 Whatever this Court determines regarding the underlying breach of contract 15 claim, the TAC demonstrates that Plaintiff cannot establish that United acted in bad 16 faith. Under California law, a breach of the implied covenant of good faith and fair 17 dealing requires more than a mere breach of the contract. Congleton v. National 18 Union Fire Ins. Co., 189 Cal. App. 3d 51, 59 (1987) .. An insurer is not liable for bad 19 faith unless its refusal to pay policy benefits was unreasonable. Waters v. United 20 Services Auto Ass 'n., 41 Cal. App. 4th 1063, 1070 (1996); Love v. Fire Ins. Exch., 21 221 Cal. App. 3d 1136, 1151 (1990). More than simple negligence- some true 22 impropriety- is required. See, e.g., Chateau Chamberay Homeowners Ass 'n. v. 23 Associated Int'l. Ins. Co., 90 Cal. App. 4th 335, 346 (2001). If an insurer has some 24 "proper cause" for withholding or delaying benefits, it has not breached the implied 25 covenant of good faith even if it is later determined that benefits were in fact owed. 26 California Shoppers Inc. v. Royal Globe Ins. Co., 175 Cal. App. 3d 1, 54 (1985). 27 There are numerous cases in which an insurer denied the payment of a claim, was 28 found to have been in error by doing so, but was found not to have acted in bad HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor 21 36248755vl 0977380 Irvine, CA 92612-2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 27 of 31 Page ID #:1220 1 faith. For example, insurers that make a mistake in judgment (e.g., Merlo v. 2 Standard Life & Accident Co. of California, 59 Cal. App. 3d 5, 13 (1976)), or act 3 negligently (e.g., Aceves v. Allstate Ins. Co., 68 F.3d 1160, 1166 (9th Cir. 1995)), 4 will not be deemed to have acted in bad faith in connection with a claim decision. 5 Right or wrong, United's interpretation that the Statutes do not apply to 6 policies issued and delivered after the Statutes' effective date was unquestionably 7 reasonable. Its conclusion is supported by the case law discussed above that statutes 8 are not retroactive unless so declared by the Legislature, as well as the long list of 9 statutes that shows that the Legislature clearly knows how to make an insurance 10 statute apply to renewals of policies issued prior to their effective date. 13 It is also 11 consistent with how the DOl interprets the Statutes. Accordingly, since United's 12 conduct cannot be considered unreasonable, the bad faith claim fails as a matter of 13 law. R&B Auto Center, Inc. v. Farmers Group, Inc., 140 Cal. App. 4th 327, 354 14 (2006); Morris v. Paul Revere Life Ins. Co., 109 Cal. App. 4th 966, 973-74 (2003). 15 Hand in hand with the determination as to whether United acted reasonably in 16 its interpretation of the Statutes, there is the well-established principle that there is 17 no bad faith if the court finds a "genuine dispute" as to coverage. The Ninth Circuit 18 has consistently applied the genuine dispute doctrine to dismiss bad faith claims as a 19 matter of law for claim determinations based upon the interpretation of ambiguous 20 policy language. The doctrine should apply even more forcefully to the situation 21 here - a claim determination based upon the interpretation of statutory language, a 22 purely legal issue. Dalrymple v. United Services Auto. Assn., 40 Cal. App. 4th 497, 23 522-23 (1995) (Since the "insurance law ... was still developing," "where there is a 24 genuine issue as to the insurer's liability under the policy under California law, e.g., 25 26 27 28 HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor I Nine, CA 92612-2427 949-757-2800 13 This includes Insurance Code section 396(g), the similar notice statute in which the Legislature expressly stated it "applies to policies that are issued and take effect or that are renewed on or after January 1, 2016." (Emphasis added.) 22 36248755vl0977380 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 28 of 31 Page ID #:1221 1 created by uncertainties in controlling case law, bad faith liability cannot be 2 imposed."). 3 Similar to the issue of the proper construction of statutory language, courts 4 have found no bad faith as a matter of law where the construction of policy ! 5 language has been at issue. See, e.g., Casey v. Metropolitan Life Ins. Co., 688 F. 6 Supp. 2d 1086, 1101 (E.D. Cal. 2010) (court dismisses bad faith claim where "there 7 is a legitimate, genuine dispute" as to interpretation of a policy provision); Guebara 8 v. Allstate Ins. Co., 237 F. 3d 987, 993-94 (9th Cir. 2000), citing to American 9 Casualty Co. v. Krieger, 181 F.3d 1113, 1123 (9th Cir. 1999) (applying California 10 law and finding a genuine dispute whether "sport or athletic contest/event" language 11 included bungee jumping); Brinderson-Newberg Joint Venture v. Pacific Erectors, 12 Inc., 971 F.2d 272, 282-83 (9th Cir. 1992) (finding no duty to investigate under 13 California law if there is a genuine dispute over policy language); Franceschi v. 14 American Motorists Ins. Co., 852 F.2d 1217, 1220 (9th Cir. 1988) (applying 15 California law and finding a genuine dispute about the meaning of "medical 16 treatment" in policy's pre-existing condition clause); Hanson v. Prudential Ins. Co. 17 of America 783 F.2d at 762,766 (9th Cir. 1985) (finding genuine dispute whether 18 preadolescent residential treatment facility constituted a "hospital" under the policy 19 as construed pursuant to California law). 20 Again, United's decision that the Policy lapsed for non-payment of premiums 21 by the Insured, even if found to have run afoul of the Statutes because they apply to 22 policies issued or delivered prior to the effective date but "renewed" after the 23 effective date, was based on a reasonable interpretation of the Statutes and the ample 24 case law giving statutes solely a prospective effect. See Aetna Casualty & Surety 25 Co. v. Industrial Ace. Com., 30 Cal. 2d 388, 393 (1947) ("It is an established canon 26 of interpretation that statutes are not to be given a retrospective operation unless it is 27 clearly made to appear that such was the legislative intent."); Myers v. Phillip 28 Morris Cos., Inc., 28 Cal. 4th 828, 844 (2002) ("[A] statute may be applied HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor 23 36248755vl 0977380 Irvine, CA 92612-2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 29 of 31 Page ID #:1222 1 retroactively only if it contains express language of retroactivity or if other sources 2 provide a clear and unavoidable implication that the Legislature intended retroactive 3 application."); Corning Hospital Dist, supra, 57 Cal. 2d at 494 ("a statute should be 4 given the least retroactive effect that its language reasonably permits."). Thus, ' 5 regardless of how this Court rules on the application of the Statutes to the Policy, 6 United's interpretation of the Statutes to be prospective only finds ample support in 7 the law. 8 Note, too, that to hold that United acted unreasonably would require an 9 implicit finding that the DOl - the governmental body charged with enforcing the 10 insurance laws of this state - not only "got it wrong" with its interpretation of the 11 application of the Statutes, but itself acted in bad faith in doing so. This action 12 presents the quintessential "genuine dispute" or "genuine issue" as to liability and 13 merits dismissal of the bad faith claim. 14 XII. THE CLAIM FOR PUNITIVE DAMAGES SHOULD BE DISMISSED 15 Under California law, a company may be held liable for punitive damages 16 only under the circumstances set forth in Civil Code section 3294(b). See Cruz v. 17 HomeBase, 83 Cal. App. 4th 160, 167 (2000); Kelly-Zurian v. Wohl Shoe Co., 22 18 Cal. App. 4th 397,419-21 (1994). Plaintiff must demonstrate that United's conduct 19 exhibited either "fraud," "oppression" or "malice." There are no allegations of 20 fraud. To prove oppression or malice, a plaintiff must demonstrate the conduct was 21 "despicable." Cal. Civil Code, §3294( c )(1 )(2). 22 Despicable conduct is "conduct which is so vile, base, contemptible, 23 miserable, wretched or loathsome that it would be looked down upon and despised 24 by ordinary decent people. Such conduct has been described as having the character 25 of outrage frequently associated with crime." (Citations and internal quotations 26 omitted.) Tomaselli v. Transamerica Ins. Co., 25 Cal. App. 4th 1269, 1287 (1994). 27 Thus, the prior standard of "willful and conscious disregard of a plaintiff's interests" 28 is no longer sufficient, by itself, to justify the imposition of punitive damages. HINSHAW & CULBERTSON 19800 MacArthur Boulevard 8th Floor 24 36248755vl 0977380 Irvine, CA 92612-2427 949-757-2800 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 30 of 31 Page ID #:1223 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 HINSHAW & CULBERTSON 19800 MacAr1hur Boulevard 8th Floor Irvine, CA 92612-2427 949-757-2800 r College Hospital Inc. v. Superior Court, 8 Cal. 4th 704, 725 (1994). Significantly, the reference in section 3294(a) to despicable conduct "represent[s] a new substantive limitation on punitive damage awards." I d. It imposes a "substantially heavier" burden on the plaintiff. Mock v. Michigan Millers Mutual Ins. Co., 4 Cal. '1 App. 4th 306, 331 (1992). The level of reprehensible conduct necessary to award punitive damages is greater than that necessary to find bad faith. See Tomaselli, supra at 1286 ("The conduct required to award punitive damages for the tortious breach of contract, however, is of a different [higher] dimension"). Here, the TAC utterly fails to allege any facts that would support a finding of "despicable" conduct. As noted above, even the bad faith claim alleges nothing more than that the contract was breached, with conclusory allegations of wrongdoing. Not a single fact is alleged that would plausibly support a finding that United's interpretation of the applicability of the Statutes, which was consistent with that of the Department of Insurance, was despicable. The claim for punitive damages should be dismissed. XIII. CONCLUSION For the reasons set forth above, United respectfully requests that the Court dismiss Plaintiffs Third Amended Complaint in its entirety. Because no set of facts could be alleged to support any claim, the dismissal should be with prejudice. DATED: February 9, 2017 HINSHAW & CULBERTSON LLP By: /s/ Jenny H Wang Martin E. Rosen Larry M. Golub JennyH. Wang Attorneys for Defendant United of Omaha Life Insurance Company 25 36248755vl 0977380 Case 2:15-cv-07870-DMG-AJW Document 89-1 Filed 02/09/17 Page 31 of 31 Page ID #:1224 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 36248530v1 0977380 HINSHAW & CULBERTSON LLP 633 West 5th Street, 47th Floor Los Angeles, CA 90071-2043 213-680-2800 Martin E. Rosen (SBN 108998) mrosen@mail.hinshawlaw.com Larry M. Golub (SBN 110545) lgolub@mail.hinshawlaw.com HINSHAW & CULBERTSON LLP 633 West Fifth Street, 47th Floor Los Angeles, CA 90071 Telephone: 213-680-2800 Facsimile: 213-614-7399 Jenny H. Wang (SBN 191643) jwang@mail.hinshawlaw.com HINSHAW & CULBERTSON LLP 4675 MacArthur Court, Suite 545 Newport Beach, CA 92660 Telephone: 949-757-2800 Facsimile: 949-752-6313 Attorneys for Defendant United of Omaha Life Insurance Company UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA JENNIFER BENTLEY, as trustee of the 2001 Bentley Family Trust, Plaintiff, vs. UNITED OF OMAHA LIFE INSURANCE COMPANY, Defendant. Case No. 2:15-cv-07870-DMG-AJW (Honorable Dolly M. Gee) DEFENDANT’S REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF MOTION TO DISMISS PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT PURSUANT TO F.R.C.P. 12(B)(6) OR IN THE ALTERNATIVE, MOTION TO STRIKE PURSUANT TO F.R.C.P. 12(F) [Filed Concurrently With: - Notice of Motion; - Declaration of Jenny H. Wang; - Memorandum of Points and Authorities; and - [Proposed] Order] Hearing Date: March 17, 2017 Hearing Time: 9:30 a.m. Courtroom: 8C Complaint Filed: August 27, 2015 Case 2:15-cv-07870-DMG-AJW Document 89-2 Filed 02/09/17 Page 1 of 3 Page ID #:1225 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 36248530v1 0977380 HINSHAW & CULBERTSON LLP 633 West 5th Street, 47th Floor Los Angeles, CA 90071-2043 213-680-2800 REQUEST FOR JUDICIAL NOTICE Pursuant to Federal Rules of Evidence 201(b)(1) and (2), Defendant United of Omaha Life Insurance Company respectfully requests that the Court take judicial notice of the documents attached to the accompanying Declaration of Jenny H. Wang (the “Wang Declaration”), to wit, documents produced by the California Department of Insurance pursuant to United’s Public Records Act request for documents relating to the prospective application of Insurance Code statutes enacted pursuant to California Assembly Bill 1747 of 2012. As set forth in the Wang Declaration, the aforementioned documents are matters of public record. “[A] court may take judicial notice of ‘records and reports of administrative bodies.’” Mack v. South Bay Beer Distribs., 798 F.2d 1279, 1282 (9th Cir. 1986) (judicial notice taken of the records of a state administrative agency, the Unemployment Insurance Appeals Board), citing Interstate Natural Gas Co. v. Southern California Gas Co., 209 F.2d 380, 385 (9th Cir. 1953); Abdullah v. U.S. Sec. Assocs., Inc., 731 F.3d 952, 959 (9th Cir. 2013); Johnson v. Sunrise Senior Living Mgmt., 2016 U.S. Dist. LEXIS 29631, *21 (C.D. Cal. 2016); Wible v. Aetna Life Ins. Co., 375 F. Supp. 2d 956, 965-66 (C.D. Cal. 2005); Faragi v. Provident Life & Accident Ins. Co., 161 Fed. Appx. 649, 2005 U.S. App. LEXIS 28607, *2 (9th Cir. 2005). California federal district courts have taken judicial notice of matters on the California DOI’s web site (Quigley v. Am. Claims Servs., 2015 U.S. Dist. LEXIS 33801, *15-16 (E.D. Cal. 2015), of the content of its licensing database (Star Ins. Co. v. Sunwest Metals, Inc., 2014 U.S. Dist. LEXIS 178814, * 41 (C.D. Cal. 2014), of its publicly filed orders (Perryman v. Litton Loan Servicing, LP, 2014 U.S. Dist. LEXIS 140479, *10 (N.D. Cal. 2014)), of the content of its pamphlets (Abbit v. ING United States Annuity & Life Ins. Co., 999 F. Supp. 2d 1189, 1195 (S.D. Cal. 2014), of its schedule of fees and charges, from its website (Friedman v. Torchmark Corp., 2013 U.S. Dist. LEXIS 114321, *7 (S.D. Cal. 2103). See also Gerritsen v. Warner Case 2:15-cv-07870-DMG-AJW Document 89-2 Filed 02/09/17 Page 2 of 3 Page ID #:1226 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 36248530v1 0977380 HINSHAW & CULBERTSON LLP 633 West 5th Street, 47th Floor Los Angeles, CA 90071-2043 213-680-2800 Bros. Entertainment Inc., 112 F.Supp.3d 1011, 1033 (C.D. Cal. 2015) (“[T]he court can take judicial notice of public records and government documents available from reliable sources on the Internet, such as websites run by governmental agencies.”). Because the documents are subject to judicial notice, they may be considered by the Court when deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. See Intri-Plex Technologies, Inc. v. Crest Group, Inc., 499 F.3d 1048, 1052 (9th Cir. 2007) (“a court may take judicial notice of matters of public record without converting a motion to dismiss into a motion for summary judgment, as long as the facts noticed are not subject to reasonable dispute.”) (citations omitted). United is offering the subject documents as persuasive evidence that United correctly, or at a minimum, reasonably, interpreted the Statutes as only applying to life insurance policies issued or delivered after January 1, 2013. DATED: February 9, 2017 By: HINSHAW & CULBERTSON LLP /s/ Jenny H. Wang Martin E. Rosen Larry M. Golub Jenny H. Wang Attorneys for Defendant United of Omaha Life Insurance Company Case 2:15-cv-07870-DMG-AJW Document 89-2 Filed 02/09/17 Page 3 of 3 Page ID #:1227 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 36248540v1 0977380 HINSHAW & CULBERTSON LLP 4675 MacArthur Court Suite 545 Newport Beach, CA 92660 949-757-2800 Martin E. Rosen (SBN CA 108998) mrosen@mail.hinshawlaw.com Larry M. Golub (SBN CA 110545) lgolub@mail.hinshawlaw.com HINSHAW & CULBERTSON LLP 633 West 5th Street, 47th Floor Los Angeles, CA 90071-2043 Telephone: 213-680-2800 Facsimile: 213-614-7399 JENNY H. WANG (SBN 191643) jwang@mail.hinshawlaw.com HINSHAW & CULBERTSON LLP 4675 MacArthur Court, Suite 545 Newport Beach, CA 92660 Telephone: 949-757-2800 Facsimile: 949-752-6313 Attorneys for Defendant United of Omaha Life Insurance Company UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA JENNIFER BENTLEY, as trustee of the 2001 Bentley Family Trust, Plaintiff, vs. UNITED OF OMAHA LIFE INSURANCE COMPANY, Defendant. Case No. 2:15-cv-07870-DMG-AJW (Honorable Dolly M. Gee) DECLARATION OF JENNY H. WANG IN SUPPORT OF MOTION TO DISMISS PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT PURSUANT TO F.R.C.P. 12(B)(6) OR IN THE ALTERNATIVE, MOTION TO STRIKE PURSUANT TO F.R.C.P. 12(F) Hearing Date: March 17, 2017 Hearing Time: 9:30 a.m. Courtroom: 8C [Filed Concurrently With: - Notice of Motion; - Memorandum of Points and Authorities; - Request for Judicial Notice; and - [Proposed] Order] Complaint Filed: August 27, 2015 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 1 of 65 Page ID #:1228 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 36248540v1 0977380 HINSHAW & CULBERTSON LLP 4675 MacArthur Court Suite 545 Newport Beach, CA 92660 949-757-2800 DECLARATION OF JENNY H. WANG I, Jenny H. Wang hereby declare as follows: 1. I am an attorney licensed to practice in all the courts in the State of California and a member of Hinshaw & Culbertson LLP, attorneys for Defendant United of Omaha Life Insurance Company (“United”). I am one of the attorneys primarily responsible for the handling of this matter. I make this declaration in support of United’s Motion to Dismiss Plaintiff’s Third Amended Class Action Complaint pursuant to FRCP 12(b)(6), or in the alternative, Motion to Strike Pursuant to FRCP 12(f). I have personal knowledge of the facts declared herein and if called upon to testify can and will testify competently thereto. 2. Attached hereto as Exhibit “A” is a true and correct copy of my November 11, 2016 letter to the California Department of Insurance (“DOI”) requesting records pursuant to the Public Records Act for documents relating to the DOI’s position whether Insurance Code Sections 10113.71 and 10113.72 apply retroactively to insurance policies issued and/or delivered before January 1, 2013 and renewed after that date. 3. On November 15, 2016, I received an email from Belinda M. Charters of the DOI in response to my request. Attached hereto collectively as Exhibit “B” are true and correct copies of Ms. Charters’ email, along with all of the documents produced to me by Ms. Charters on behalf of the DOI in response to my Public Records Act request. I declare under penalty of perjury under the laws of the United States that the foregoing statements are true and correct. Executed on February 9, 2017, in Newport Beach, California. _______________________ JENNY H. WANG Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 2 of 65 Page ID #:1229 EXHIBIT A 002 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 3 of 65 Page ID #:1230 Building on the Barger Tradition Arizona California Florida Illinois Indiana Massachusetts Minnesota Missouri New York Rhode Island Wisconsin ♦ London 36218552v1 0977380 ATTORNEYS AT LAW 19800 MacArthur Boulevard Suite 800 Irvine, CA 92612-2427 949-757-2800 949-752-6313 (fax) www.hinshawlaw.com Jenny H. Wang jwang@mail.hinshawlaw.com November 11, 2016 Via Email and Regular Mail Attention: Chao Lor, Esq. California Department of Insurance Custodian of Records 300 Capitol Mall, Ste. 1700 Sacramento, CA 95814 Email: CustodianOfRecords@insurance.ca.gov Re: Public Records Request Dear Counsel: Per the California Public Records Act (Govt. Code sections 6250-6270), we are writing to request copies of the following documents: • Documents reflecting, evidencing or referring to the Department of Insurance and/or the Commissioner’s position on whether Insurance Code §§ 10113.71 and 10113.72 (the “Statutes”) apply retroactively to life insurance policies issued and/or delivered before January 1, 2013 (the effective date of the Statutes); • Documents reflecting, evidencing or referring to the Department of Insurance and/or the Commissioner’s position on whether the Statutes apply to life insurance policies issued and/or delivered before January 1, 2013 but renewed after January 1, 2013; • Documents reflecting, evidencing or referring to the Department of Insurance and/or the Commissioner’s position on whether the Statutes apply prospectively to life insurance policies issued and/or delivered on or after January 1, 2013; • Communications between the Department of Insurance and trade organizations or insurers as to whether the Statutes apply prospectively to life insurance policies issued and/or delivered on or after January 1, 2013; • Documents reflecting, evidencing or referring to the Department of Insurance and/or the Commissioner’s position on whether the Statutes apply to policies that were not issued or delivered in California. 003 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 4 of 65 Page ID #:1231 Chao Lor November 11, 2016 Page 2 36218552v1 0977380 Our office, of course, will cover the statutory costs incurred in providing these documents to us. If you have any questions regarding this request, as always, do not hesitate to contact me directly at the number above. Thank you for your attention to this request. Very truly yours, HINSHAW & CULBERTSON LLP Jenny H. Wang JHW:ah 004 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 5 of 65 Page ID #:1232 EXHIBIT B 005 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 6 of 65 Page ID #:1233 006 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 7 of 65 Page ID #:1234 007 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 8 of 65 Page ID #:1235 008 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 9 of 65 Page ID #:1236 009 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 10 of 65 Page ID #:1237 010 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 11 of 65 Page ID #:1238 011 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 12 of 65 Page ID #:1239 012 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 13 of 65 Page ID #:1240 013 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 14 of 65 Page ID #:1241 014 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 15 of 65 Page ID #:1242 015 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 16 of 65 Page ID #:1243 016 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 17 of 65 Page ID #:1244 017 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 18 of 65 Page ID #:1245 018 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 19 of 65 Page ID #:1246 019 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 20 of 65 Page ID #:1247 020 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 21 of 65 Page ID #:1248 021 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 22 of 65 Page ID #:1249 022 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 23 of 65 Page ID #:1250 023 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 24 of 65 Page ID #:1251 024 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 25 of 65 Page ID #:1252 025 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 26 of 65 Page ID #:1253 026 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 27 of 65 Page ID #:1254 027 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 28 of 65 Page ID #:1255 028 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 29 of 65 Page ID #:1256 029 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 30 of 65 Page ID #:1257 030 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 31 of 65 Page ID #:1258 031 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 32 of 65 Page ID #:1259 032 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 33 of 65 Page ID #:1260 033 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 34 of 65 Page ID #:1261 034 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 35 of 65 Page ID #:1262 035 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 36 of 65 Page ID #:1263 036 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 37 of 65 Page ID #:1264 037 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 38 of 65 Page ID #:1265 038 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 39 of 65 Page ID #:1266 039 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 40 of 65 Page ID #:1267 040 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 41 of 65 Page ID #:1268 041 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 42 of 65 Page ID #:1269 042 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 43 of 65 Page ID #:1270 043 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 44 of 65 Page ID #:1271 044 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 45 of 65 Page ID #:1272 045 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 46 of 65 Page ID #:1273 046 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 47 of 65 Page ID #:1274 047 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 48 of 65 Page ID #:1275 048 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 49 of 65 Page ID #:1276 049 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 50 of 65 Page ID #:1277 050 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 51 of 65 Page ID #:1278 051 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 52 of 65 Page ID #:1279 052 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 53 of 65 Page ID #:1280 053 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 54 of 65 Page ID #:1281 054 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 55 of 65 Page ID #:1282 055 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 56 of 65 Page ID #:1283 056 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 57 of 65 Page ID #:1284 057 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 58 of 65 Page ID #:1285 058 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 59 of 65 Page ID #:1286 059 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 60 of 65 Page ID #:1287 060 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 61 of 65 Page ID #:1288 061 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 62 of 65 Page ID #:1289 062 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 63 of 65 Page ID #:1290 063 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 64 of 65 Page ID #:1291 064 Case 2:15-cv-07870-DMG-AJW Document 89-3 Filed 02/09/17 Page 65 of 65 Page ID #:1292 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA JENNIFER BENTLEY, as trustee of the 2001 Bentley Family Trust, Plaintiff, vs. UNITED OF OMAHA LIFE INSURANCE COMPANY, Defendant. Case No. 2:15-cv-07870-DMG-AJW (Honorable Dolly M. Gee) [PROPOSED] ORDER GRANTING MOTION TO DISMISS PLAINTIFF’S THIRD AMENDED CLASS ACTION COMPLAINT PURSUANT TO F.R.C.P. 12(B)(6) OR IN THE ALTERNATIVE, MOTION TO STRIKE PURSUANT TO F.R.C.P. 12(F) Hearing Date: March 17, 2017 Hearing Time: 9:30 a.m. Courtroom: 8C Complaint Filed: August 27, 2015 Case 2:15-cv-07870-DMG-AJW Document 89-4 Filed 02/09/17 Page 1 of 3 Page ID #:1293 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 ORDER Defendant United of Omaha Life Insurance Company’s (“United”) Motion to Dismiss Plaintiff Jennifer Bentley’s (“Plaintiff”) Third Amended Complaint came on regularly for hearing before this Court. Appearances of counsel were noted in the record. After considering the moving, opposition and reply briefs, and the arguments of counsel, it is hereby ordered that United’s motion is granted. Plaintiff’s Third Amended Complaint shall be dismissed in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. All of the claims for relief asserted in the Third Amended Complaint are based upon United’s alleged violation of California Insurance Code sections 10113.71 and 10113.72 (the “Statutes”), which did not and do not as a matter of law apply to the life insurance policy that is the subject of this action. Accordingly, United has no liability to Plaintiff under any theory for the alleged violation of the Statutes. In the alternative, Plaintiff’s second claim for relief (breach of the implied covenant of good faith and fair dealing) fails due to the fact that United acted reasonably as a matter of law in its interpretation of the Statutes and because there exists a genuine dispute over whether the Statutes apply to the life insurance policy that is the subject of this action (the “Policy”). Plaintiff’s prayer for punitive damages fails as a matter of law for the same reason. Finally, Plaintiff’s individual, third claim for relief (for breach of contract) fails as a matter of law because the Insured under the Policy failed to make adequate premium payments to keep the Policy from lapsing according to its terms. In the alternative, Plaintiff’s class allegations are dismissed and/or stricken because, based upon the plain language of the Statutes, the putative class members set forth in the class definition cannot include beneficiaries of life insurance policies that were issued or delivered outside of California, let alone policies that were Case 2:15-cv-07870-DMG-AJW Document 89-4 Filed 02/09/17 Page 2 of 3 Page ID #:1294 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 “renewed” in California at any time (even before the Statutes went into effect on January 1, 2013). IT IS SO ORDERED. DATED: ___________________ _____________________________ HON. DOLLY M. GEE UNITED STATES DISTRICT JUDGE Case 2:15-cv-07870-DMG-AJW Document 89-4 Filed 02/09/17 Page 3 of 3 Page ID #:1295
