Lincoln Benefit Life Co. v. Dallal

• Decision Date: 01 March 2022
• Docket Number: 21-55152
• Parties: LINCOLN BENEFIT LIFE COMPANY, Plaintiff-Appellee, v. ALEXANDER DALLAL, an individual; CLAIRE DALLAL, an individual, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

LINCOLN BENEFIT LIFE COMPANY, Plaintiff-Appellee,
v.
ALEXANDER DALLAL, an individual; CLAIRE DALLAL, an individual, Defendants-Appellants.

No. 21-55152

United States Court of Appeals, Ninth Circuit

March 1, 2022

NOT FOR PUBLICATION

Argued and Submitted February 16, 2022 Pasadena, California

Appeal from the United States District Court for the Central District of California Michael W. Fitzgerald, District Judge, Presiding D.C. No. 2:16-cv-09307-MWF-E

Before: OWENS and MILLER, Circuit Judges, and CHRISTENSEN, ^[**] District Judge.

MEMORANDUM ^[*]

Defendants-Appellants Alexander Dallal and Claire Dallal ("the Dallals") bring this appeal following an adverse jury verdict. The jury awarded Plaintiff-Appellee Lincoln Benefit Life Company ("Lincoln") $619, 290.49 in compensatory

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damages and $300, 000 in punitive damages. The district court subsequently resolved several outstanding equitable claims in favor of Lincoln. The Dallals moved for a new trial, which the district court denied. The Dallals now appeal. We have jurisdiction pursuant to 28 U.S.C § 1291, and, for the reasons stated herein, affirm.

1. We review the district court's exclusion of Dr. Chow as an expert witness for an abuse of discretion. Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 152 (1999). The Dallals' expert witness disclosure as to Dr. Chow was untimely and was never accompanied with a report satisfying the requirements of Federal Rule of Civil Procedure 26(a)(2)(B). On appeal, the Dallals fail to establish these defects were substantially justified or harmless. See Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001) (citing Fed.R.Civ.P. 37(c)(1)). Accordingly, exclusion was well within the district court's discretion.

2. Because the Dallals did not object to the challenged jury instruction, we review for plain error. Bearchild v. Cobban, 947 F.3d 1130, 1139 (9th Cir. 2020). To prevail, the Dallals must show: (1) an error; (2) that was plain; (3) which affected their substantial rights; and (4) "seriously affected the fairness, integrity, or public reputation of judicial proceedings." Id. They have not done so here.

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The parties agree that the three-year statute of limitations found in California Code of Civil Procedure § 338(d) applies to Lincoln's claims. This statute incorporates the "discovery rule" to "fraud actions by statute," Cansino v. Bank of Am., 169 Cal.Rptr.3d 619, 628 (Cal.Ct.App. 2014), providing that any "cause of action . . . is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake," California Civil Code § 338(d).

The discovery rule is an "important exception to the general rule of accrual . . . [and] postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action." Fox v. Ethicon Endo-Surgery, Inc., 110 P.3d 914, 920 (Cal. 2005). Under the discovery rule, the statute of limitations does not begin to run when the last element occurs, but instead at the time the plaintiff "at least suspects that someone has done something wrong to him." Norgart v. Upjohn Co., 981 P.2d 79, 88 (Cal. 1999) (alterations and citation omitted).

As to the discovery rule, the district court offered the following instruction

Lincoln seeks damages for harm that Lincoln claims occurred before December 16, 2013, the date that California law recognizes as significant under the statute of limitations in this action

To recover all of its damages, Lincoln must prove that, before December 16, 2013, Lincoln did not know of facts that would have caused a reasonable insurance company to suspect that it had suffered harm that was caused by someone's wrongful conduct.

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The Dallals challenge this instruction on two grounds, arguing: (1) that December 16, 2013 is the incorrect accrual date; and (2) the instruction insufficiently instructed the jury on Lincoln's obligation to act with reasonable diligence. Neither contention rises to the level of plain error.

Lincoln filed suit on December 16, 2016. This means that under the three-year statute of limitations established by California Code of Civil Procedure section 338(d), it could only recover for fraudulent claims accruing on or after December 16, 2013, unless the discovery rule applies. December 16, 2013 is the controlling date for any statute of limitations defense raised in this case and the Dallals offer no persuasive argument to the contrary.

As to the second point, to be sure, California's discovery rule obligates injured parties to act reasonably in uncovering injuries and diligently once they suspect them. Fox, 110 P.3d at 920. The...