BGI Life, Inc. v. American Gen. Life Ins. Co.

• Decision Date: 19 August 2011
• Docket Number: Case No. CV 09-6822 ODW (AJWx)
• Court: U.S. District Court — Central District of California
• Parties: BGI LIFE, INC., a Florida corporation Plaintiff, v. AMERICAN GENERAL LIFE INSURANCE COMPANY, et al., Defendants.

BGI LIFE, INC., a Florida corporation Plaintiff, v. AMERICAN GENERAL LIFE INSURANCE COMPANY, et al., Defendants.

Case No. CV 09-6822 ODW (AJWx)

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION

August 19, 2011

Order GRANTING Defendant's Motion for Summary Judgment

I. INTRODUCTION

Pending before the Court is Defendant American General Life Insurance Company ("Defendant") Motion for Summary Judgment against Plaintiff BGI, Inc. ("Plaintiff"). The Court deems the matter appropriate for decision without oral argument, and for the reasons discussed below, hereby GRANTS Defendant's Motion for Summary Judgment. FED. R. CIV. P. 78. L.R. 7- 15.

II. FACTUAL BACKGROUND

A. THE LIFE INSURANCE POLICY

Plaintiff in this case is the owner of a $5 million life insurance policy (the "Policy") for Ms. Sameha Rajab ("Insured"). Defendant sold and issued a term life insurance policy to Insured for $5 million through one of its independent agents in California. In March 2007, Insured converted to a Flexible Premium Adjustable Life Insurance Policy. At the time the Policy was issued to Insured she was 70 years old and was diagnosed with Type II diabetes ("DM") and an enlarged left ventricle in her heart. (SUF at 2.) Because of this, Defendant classified her as "Special", rated her health in "Table 3"¹, and required additional charges when the policy was executed.

B. LAPSE AND TERMINATION OF THE POLICY

Defendant claims it issued a notice of premium payment due on December 8, 2008, informing Plaintiff that "[e]ven though you may have been making regular payments on your policy, the current values are insufficient to cover the monthly charges. . . . This policy is in its grace period and will terminate without value unless a payment of $48,750.00 is received prior to February 8, 2009." (Def.'s Mem. of Points and Authorities at 3.) Plaintiff claims it never received this letter. (Compl. at 5.)

In February 2009, Plaintiff claims it spoke with a phone representative of Defendant regarding the past due premium. (Compl. at 5.) The agent allegedly stated the Policy could be reinstated if a $97,500 payment was received with the reinstatement application. (Compl. at 5.) On February 19, 2009, Plaintiff wired $97,500 to Defendant. (Compl. at 6.) On or about February 19, 2009, Plaintiff mailed in the reinstatement application. (SUF at 4.) On February 20, 2009, Plaintiff claims another phone representative of Defendant's promised Plaintiff that the Policy would be "auto-reinstated", meaning that no additional medical information would be required. (Compl. at 6.)

C. THE REINSTATEMENT APPLICATION

On February 24, 2009, Defendant instructed Plaintiff by letter to resubmit an Application for Reinstatement with "Notice-Info","Medical Statements" and $48,750 to "pay the contract". (SUF at 4.) Although Plaintiff notes in the Complaint that the letter was contrary to the discussions with phone representatives, Plaintiff complied with the requests in the letter. (Compl. at 6.) Plaintiff received a second letter dated February 24, 2009, that acknowledged Plaintiff's $97,500 premium payment, but requested Insured's notarized signature for processing, and stated that their Underwriter "may need updated Attending Physician Statements and/or other requirements." (SUF at 4.) On March 3, 2009, Plaintiff faxed a reinstatement application with Insured's notarized signature, and on March 9, 2009 wired the requested $48,750. (Compl. at 7.) On March 13, 2009, Plaintiff faxed Defendant a physician statement from Dr. Wahab who had examined insured on March 14, 2008. (SUF at 6.)

On March 20, 2009, Plaintiff spoke with Mr. Gregory Thornton, AG's Vice President-Underwriting. (SUF at 5.) Mr. Thornton advised Plaintiff that Defendant had received a "trial application"² for life insurance for Insured in July 2008 through an independent agent. The "trial application" included a report from Dr. Sam Anabi that made him concerned about Insured's blood pressure and chest pain. (SUF at 6.) Mr. Thorton told Plaintiff's representative that more medical information would be needed to approve the reinstatement application. (SUF at 6.) No additional medical information was provided. (SUF at 6.)

On March 24, 2009 Plaintiff received a letter from Defendant denying reinstatement of the Policy. (SUF at 6.) Defendant refunded premium payments not applied to the Policy in March 2009. (SUF at 7.)

D. THE INSTANT ACTION

On or about September 18, 2009, Plaintiff filed its Complaint alleging breach of contract and the covenant of good faith and fair dealing as well as a claim seeking Injunctive Relief. (SUF at 7;Compl.at 2.) Defendant contends Plaintiff is entitled to no relief. (Def. Mem. of Points and Auth. at 17 - 25.)

III. LEGAL STANDARD

Summary judgment is appropriate when the evidence, viewed in the light most favorable to the nonmoving party, shows that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). Evidence the court may consider includes the pleadings, discovery and disclosure materials, and any affidavits on file. Fed. R. Civ. P. 56(c)(2).

The moving party bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex Corp v. Catrett, 477 U.S. 317, 323-24 (1986). That burden may be met by "'showing' - that is, pointing out to the district court - that there is an absence of evidence to support the nonmoving party's case." Id. at 325. Once the moving party has met this burden, the nonmoving party must go beyond the pleadings and identify specific facts that show a genuine issue for trial. Id. at 323-34; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1968). Summary judgment is appropriate if a party, after adequate time for discovery, "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp v. Catrett, 477 U.S. at 322.

Only genuine disputes over facts that might affect the outcome of the suit will properly preclude the entry of summary judgment. Anderson, 477 U.S. at 248; see also Aprin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 919 (9th Cir. 2001) (the nonmoving party must present specific evidence from which a reasonable jury could return a verdict in its favor). "A scintilla of evidence or evidence that is merely colorable or not significantly probative does not present a genuine issue of material fact." Addisu v. Fred Meyer, 198 F.3d 1130, 1134 (9th Cir. 2000).

It is not the task of the district court "to scour the record in search of a genuine issue of triable fact. [Courts] rely on the nonmoving party to identify with reasonable particularity the evidence that precludes summary judgment." Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996); see also Carmen v. S.F. Unified Sch. Dist., 237 F.3d 1026, 1031 (9th Cir. 2001) ("The district court need not examine theentire file for evidence establishing a genuine issue of fact, where the evidence is not set forth in the opposing papers with adequate references so that it could conveniently be found.").

The evidence presented by the parties must be admissible. Fed. R. Civ. P. 56(e). Conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment. Thornhill Publ'g Co., Inc. v. GTE Corp., 594 F. 2d 730, 738 (9th Cir. 1979). Conversely, a genuine dispute over a material fact exists if there is sufficient evidence supporting the claimed factual dispute, requiring a judge or jury to resolve the differing versions of the truth. Anderson, 477 U.S. at 253.

IV. DISCUSSION

A. AMERICAN GENERAL’S MOTION FOR SUMMARY JUDGMENT

Defendant asserts that it is entitled to Summary Judgment on the ground that there are no genuine issue of material fact as to (1) plaintiff's claim for breach of contract; (2) plaintiff's claim for breach of the duty of good faith and fair dealing and (3) plaintiff's claim for injunctive relief.³ (Def.'s Mot. for Summary Judgment at 2.)

1. Breach of Contract

Defendant moves for summary judgment on a breach of contract claim that arises from Defendant's denial of Insured's Policy reinstatement. In California, the elements of a breach of contract claim are: (1) the existence of a contract; (2) plaintiff's performance thereof or excuse for non-performance; (3) defendant's breach; and (4) the resulting damages. Rambus Inv. C. Hynix Semiconductor Inc. 629 F.Supp.2d 979, 1013 (N.D. Cal. 2009); citing Reichert v. Gen. Ins. Co. Of Am., 447 P.2d 377, 381 (1968). Defendants assert that Plaintiff failed to produce sufficient evidence of insurability satisfactory to them, that therefore there was no obligation to reinstate the Policy, and thus there can be no breach of contract claim.

We then turn to the language of the contract. The Policy contains a 61-day Grace Period which allows the premium for the Policy to be paid at any within this time. (Pl. Mot. to Compel, Exh. A at 44.) If the premium is not paid within this Grace Period, the Policy will terminate without value, as happened here. (SUF 10.) The contract, however, provides a procedure for reinstatement. The Policy Application does not allow for verbal modification of the contract by any agent of the company⁴. The Reinstatement provision reads:

Reinstatement. "Reinstating" means placing your policy in force after it has terminated at the end of the grace period. We will reinstate this policy if We receive:

1. Your written request of reinstatement within 5 years after the end of the grace period and before the maturity date;

2. Evidence of insurability satisfactory to Us; and

3. Payment of enough premium to keep the Policy in force for two months, or if less, an amount equal to all past due Monthly Guarantee Premiums; and

4. Payment of any indebtedness.

(SUF No. 5; Def. Mem. of Points and Auth. at 18.) Because Plaintiff...