Kotev v. First Colony Life Ins. Co.

• Decision Date: 30 May 1996
• Docket Number: No. CV 96-2044.,CV 96-2044.
• Citation: 927 F. Supp. 1316
• Court: U.S. District Court — Central District of California
• Parties: Itzhak KOTEV, Plaintiff, v. FIRST COLONY LIFE INSURANCE COMPANY, Defendant.

927 F. Supp. 1316

Itzhak KOTEV, Plaintiff, v. FIRST COLONY LIFE INSURANCE COMPANY, Defendant.

No. CV 96-2044.

United States District Court, C.D. California.

May 30, 1996.

Frank Gooch III (argued), Sean T. Prosser, Gilchrist & Rutter Professional Corporation, Santa Monica, CA, for defendant.

Paul Freud Wotman, Gary R. Cloutier (argued), Law Offices of Paul Wotman, San Francisco, CA, for plaintiff.

ORDER AND OPINION

REA, District Judge.

First Colony Life Insurance Company's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) came on regularly for hearing before the Court on April 15, 1996. Having reviewed the papers submitted in support of and in opposition to the foregoing motion, the file in this case, and the applicable authorities, the Court rules as follows.

The motion to dismiss is GRANTED WITHOUT PREJUDICE as to Kotev's seventh cause of action for intentional infliction of emotional distress and eighth cause of action for negligent infliction of emotional distress. The motion to dismiss is DENIED as to the remaining causes of action.

BACKGROUND

Plaintiff Itzhak Kotev alleges that defendant First Colony Life Insurance Company ("First Colony") denied his 1995 application for life insurance solely for discriminatory reasons.

Kotev first applied to First Colony for a life insurance policy in 1991. Because Kotev's wife is infected with HIV, First Colony required that Kotev take an HIV test. Although Kotev's test results were negative, First Colony denied his application for life insurance, stating that his wife's HIV-positive status placed Kotev in a high-risk category.

Kotev applied to First Colony for life insurance again in 1995. Again, he was required to take an HIV test, and the results were negative. First Colony denied his application for a second time. The rejection letter from First Colony stated: "As you know, you and your spouse applied to us for insurance in 1991. On February 11, 1991, we notified you and your spouse that your application was declined due to your spouse's laboratory test results showing abnormalities of potential significance to your health." Complaint ¶ 11.

Kotev alleges that the denial of life insurance was based solely and improperly on the fact that he is married to a woman who is HIV positive. He claims that First Colony summarily rejected his 1995 application rather than assess the risk that Kotev would become infected with HIV. On February 1, 1996, Kotev filed a complaint in state court bringing the following causes of action: (1) violation of the Unruh Civil Rights Act, California Civil Code § 51; (2) negligence; (3) violation of Title III of the Americans with Disabilities Act; (4) violation of the California Insurance Code § 799; (5) violation of the California Insurance Code § 799.02; (6) violation of the California Insurance Code § 799.05; (7) intentional infliction of emotional distress; and (8) negligent infliction of emotional distress.

The complaint was served on First Colony on February 21, 1996. First Colony removed the complaint to federal court on March 22, 1996.

DISCUSSION

I. MOTION TO DISMISS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(b)(6)

A. Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), a federal court cannot dismiss a complaint for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Moore v. City of Costa Mesa, 886 F.2d 260, 262 (9th Cir.1989). The allegations contained in the complaint must be construed in the light most favorable to the plaintiff, and all material allegations in the complaint — as well as any reasonable inferences to be drawn from them — must be accepted as true. Hospital Bldg. Co. v. Trustees of the Rex Hospital, 425 U.S. 738, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976); NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir.1986).

B. Plaintiff's Claims Are Not Barred by the Statutes of Limitations

First Colony argues that Kotev's claims are barred by the applicable statutes of limitations. A cause of action for the denial of insurance coverage accrues on the date of the denial. Frazier v. Metropolitan Life Ins. Co., 169 Cal.App.3d 90, 103, 214 Cal.Rptr. 883 (1985). First Colony argues that Kotev's causes of action accrued at the time of the 1991 rejection. The complaint in this action was filed five years later, and the longest applicable statute of limitations is three years.

First Colony is correct that Kotev cannot recover for the 1991 denial. However, Kotev argues that his claims accrued upon the 1995 rejection, and that he is not attempting to recover for the 1991 denial. Two elements are necessary for an act to restart the statute of limitations period: "(1) it must be a new and independent act that is not merely a reaffirmation of a previous act; and (2) it must inflict new and accumulating injury on the plaintiff." Pace Indus., Inc. v. Three Phoenix Co., 813 F.2d 234, 238 (9th Cir.1987). Repetition of a wrongful act can be a new act supporting a new cause of action. Schneider v. United Airlines, Inc., 208 Cal.App.3d 71, 76-77, 256 Cal.Rptr. 71 (1989) (republication of defamatory material creates an actionable claim even though a claim based on the original publication is time-barred).

Kotev argues that the 1995 denial is a new act by First Colony which created a new injury. The allegations of the complaint, viewed in the light most favorable to plaintiff, support Kotev's argument. The complaint states that upon his 1995 application for life insurance, First Colony again required Kotev to submit to an HIV test. Complaint ¶ 8. The fact that First Colony required Kotev to undergo an HIV test in 1995 supports his claim that the 1995 denial was a new and independent act, i.e., that First Colony did not summarily deny the 1995 application based on solely on the 1991 denial. For this reason, Kotev's action is distinguishable from the following cases, cited by First Colony, in which a mere "reaffirmation of a previous act" was held not to restart the statute of limitations. In David Orgell, Inc. v. Geary's Stores, Inc., 640 F.2d 936 (9th Cir.1981), the Ninth Circuit held an action based on the defendant's subsequent refusals to sell china to the plaintiff to be barred by the statute of limitations because the defendant's initial refusal was "irrevocable, immutable, permanent and final." Id. at 938 (internal quotations omitted). The court found that the "reaffirmations of the original decision not to deal with the plaintiff" were not actionable because "the plaintiff's subsequent requests were forlorn inquiries by one all of whose reasonable hopes had been previously dashed." Id.; see also Pace Indus., 813 F.2d at 238-39 (holding that the initiation of a lawsuit, rather than acts performed in prosecuting the lawsuit, was the "last overt act" which started the statute of limitations). By requiring Kotev to, inter alia, take an HIV test again, First Colony's treatment of Kotev's second application was more than a mere reaffirmation of its previous denial. Viewing the allegations of the complaint in the light most favorable to plaintiff, the Court finds that the 1995 denial was a new and independent act.

Furthermore, the 1995 denial allegedly inflicted a new injury on Kotev. Contrary to First Colony's assertions, the fact that "here, there have only been two parties involved, Kotev and First Colony" is immaterial. See Hennegan v. Pacifico Creative Serv., Inc., 787 F.2d 1299 (9th Cir.1986) (separate antitrust violations by the same defendants against the same plaintiff create separate injuries and are therefore actionable); cf. Schneider, 208 Cal.App.3d at 77, 256 Cal. Rptr. 71 (each republication of defamatory material creates a new injury). When First Colony denied Kotev's application in 1995, First Colony knew that Kotev had twice tested negative for HIV and that Kotev's second negative test came after he had been married at least four years to a woman who is HIV positive. Kotev argues that First Colony's denial at a time it knew that Kotev would not necessarily become HIV positive renders the 1995 refusal even more "inexplicable and egregious," and consequently more injurious, than the 1991 denial. Opp. at 1318. Kotev has alleged facts which support his claim that the 1995 denial creates a new cause of action. Therefore, the Court finds that Kotev's complaint is timely.

Kotev's complaint is based only on the 1995 denial; however, Kotev makes an argument which, if adopted by the Court, would bring the 1991 denial within the limitations period running from the 1995 refusal. Kotev argues that the continuing violation applies to the facts of this action. Under the continuing violation doctrine, "a systematic policy of discrimination is actionable even if some or all of the events evidencing its inception occurred prior to the limitations period." Watson v. Dept. of Rehab., 212 Cal.App.3d 1271, 1291, 261 Cal.Rptr. 204 (1989) (citing Williams v. Owens-Illinois, Inc., 665 F.2d 918, 924 (9th Cir.1982)). Kotev argues that the two denials constitute a continuing practice of discrimination by First Colony.

The continuing violation doctrine, however, is inapplicable here. First Colony refused Kotev's applications on two distinct occasions, four years apart. As the Ninth Circuit stated in Williams, "a continuing violation should be distinguished from the continuing impact of a past, yet discrete and no longer existent discriminatory act." 665 F.2d at 925 n. 3. An example of a continuing violation is the discriminatory denial of a promotion; a discriminatory termination or refusal to hire is not a continuing violation. See id. at 924. The denials in this action are two discrete acts rather than one continuing violation. Because the continuing violation theory is inapplicable, Kotev is barred by the statute of limitations from recovery based on the 1991 denial.

C. Kotev Has Stated a...