Salopek v. Zurich Am. Life Ins. Co., 18-CV-00339 JAP/CG

• Citation: 428 F.Supp.3d 609
• Decision Date: 11 December 2019
• Docket Number: NO. 18-CV-00339 JAP/CG,18-CV-00339 JAP/CG
• Parties: Marcie SALOPEK, TRUSTEE FOR the SALOPEK FAMILY HERITAGE TRUST, Plaintiff, v. ZURICH AMERICAN LIFE INSURANCE COMPANY, Defendant
• Court: U.S. District Court — District of New Mexico

428 F.Supp.3d 609

Marcie SALOPEK, TRUSTEE FOR the SALOPEK FAMILY HERITAGE TRUST, Plaintiff,

v.ZURICH AMERICAN LIFE INSURANCE COMPANY, Defendant

NO. 18-CV-00339 JAP/CG

United States District Court, D. New Mexico.

Filed December 11, 2019

Randi McGinn, Jamison R. Shekter, McGinn Montoya Love & Curry PA, Albuquerque, NM, Kenneth J. MacArthur, Pro Hac Vice, Matthew L. Venezia, Pro Hac Vice, Peter S. Selvin,Troy Gould, PC, Los Angeles, CA, Pooja S. Nair, Ervin Cohen & Jessup LLP, Beverly Hills, CA, for Plaintiff.

Daniel J. O'Brien, O'Brien & Padilla, P.C., Albuquerque, NM, John Kavanagh, Pro Hac Vice, Johanna Dennehy, Pro Hac Vice, John L. Jacobus, Pro Hac Vice, Steptoe & Johnson LLP, Washington, DC, Jon Thomas Neumann, Steptoe & Johnson, Phoenix, AZ, for Defendant.

MEMORANDUM OPINION AND ORDER

JAMES A. PARKER, SENIOR UNITED STATES DISTRICT JUDGE

On June 24, 2019, Defendant Zurich American Life Insurance Company (Defendant) filed a motion seeking judgment on the pleadings as to Counts III, IV, and V¹ of the Complaint filed by Plaintiff Marcie Salopek, Trustee for the Salopek Family Heritage Trust (Plaintiff).² On July 29, 2019, Plaintiff responded to Defendant's Motion,³ and on August 23, 2019, Defendant replied.⁴ The Motion is fully briefed. After considering the pleadings and the arguments of counsel, the Court will grant Defendant's Motion.

I. FACTS & PROCEDURAL HISTORY

The Complaint asserts the following uncontroverted facts:

In southern New Mexico, the Salopek family runs one of the largest pecan farms in the southwest. At some point, the founder of the business, Tony Salopek (Tony), put the pecan farm in a trust which provides that only his male descendants could inherit and control the farm. Complaint (Doc. No. 1-1), ¶ 24. Tony's three sons, who have both sons and daughters, wanted to correct the unfairness to their daughters. Id. ¶¶ 25, 26, 27. To make their children's inheritance fairer, in 2015, the three sons created the Salopek Family Heritage Trust (SFHT), an entity from which their daughters could inherit in amounts equal to the males' inheritance in the pecan farm. Id. ¶ 28. Insurance policies funded SFHT, including two policies acquired by one of Tony's sons, Mark Salopek (Mr. Salopek). Id.

In 2015, Mr. Salopek, age 68, had two fully vested life insurance policies with the John Hancock Life Insurance Company for 15 million dollars. Id. ¶ 31. For a reason unexplained in the pleadings, Mr. Salopek decided to get new life insurance policies. He filled out applications with other insurance carriers to replace his two vested policies with a new life insurance policy valued in the same amount. Id. In each application, he included the information that any policy issued would replace his vested John Hancock policies. Id. ¶ 35.

On August 14, 2015, Mr. Salopek applied to Minnesota Life for life insurance. Id. ¶ 36. He used insurance agent Ahmed Hashemian (Hashemian). Id. His application included information that his father, Tony Salopek, died at 64 of cirrhosis

and his mother died at 72 of pancreatic cancer. Id. ¶ 37. Mr. Salopek said he drank beer daily and, in the past, had used smokeless tobacco. Id.

After conducting a physical examination and an evaluation of Mr. Salopek's medical records, on November 3, 2015, Minnesota Life rejected Mr. Salopek's application. Id. ¶ 38. Minnesota Life said it would reconsider the application if Mr. Salopek obtained a complete medical examination that included a prostate screening test and a colonoscopy

. Id.

The record shows that another insurance company, Ameritas, also denied Mr. Salopek's application at some time during this period. However, the record does not say when Ameritas denied Mr. Salopek's application or why. Id. ¶ 41.

According to the pleadings, a Medical Information Bureau (MIB) records information provided by life insurance companies about rejections of applications and the reasons for the rejections. All life insurance companies may access that MIB information. Minnesota Life recorded its rejection of Mr. Salopek's application in MIB. Id. ¶ 39.

The day after the rejection by Minnesota life, Hashemian, through his agent or employee, Luis Miguel Sisniega (Sisniega), filled out an application to Defendant for life insurance (Application). Id. ¶ 40. The Application disclosed that Mr. Salopek had been rejected for life insurance by Minnesota Life and by Ameritas. Id. ¶ 41. The Application had some inconsistencies. Id. ¶ 45. On one question in the Application, Mr. Salopek told Defendant that he was a former smoker but still used chewing tobacco occasionally, while in an answer to another question, he denied any tobacco use. Both Mr. Salopek and his wife signed the Application. See Response (Doc. No. 123-2), Exhibit 2 at 2. Mr. Salopek also signed a release allowing Defendant to obtain all of his insurance and medical information. Complaint (Doc. No. 1-1) ¶ 46. Defendant did not require Mr. Salopek to undergo a new examination or blood testing but relied on the August 14, 2015 medical examination conducted for Mr. Salopek's application with Minnesota Life. Id. ¶ 48.

On December 28, 2015,⁵ Defendant issued a life insurance policy on Mr. Salopek's life for 15 million dollars payable on his death to SFHT. Id. ¶ 49. The annual premium for this policy was $405,915, which Mr. Salopek paid. Id. Subsequently, Mr. Salopek cancelled his policies with John Hancock. Id. ¶ 50.

In January 2016, Mr. Salopek had severe stomach pains and went to the hospital. Id. ¶ 51. On January 15, 2016, he had exploratory surgery, which resulted in a diagnosis of metastatic colon cancer

. Id. He died on August 21, 2016. Id. ¶ 52.

The family submitted a claim to Defendant on the life insurance policy. Id. ¶ 54. Defendant interviewed Mr. Salopek's widow, Marcie Salopek, on December 20, 2016. Id. ¶ 55. The Defendant's interviewer read Ms. Salopek some information from Mr. Salopek's files and then asked for more information about Mr. Salopek. Id. ¶ 56.

Ms. Salopek said that the medical records were incorrect that Mr. Salopek used snuff; he used chewing tobacco. At times he did not use chewing tobacco at all. Id. ¶ 58. Ms. Salopek said that during their marriage, Mr. Salopek drank beer daily. Sometimes he drank 5–6 beers a day, other times he drank 12 or more. Id. ¶ 59.

On January 13, 2017, Defendant denied the request for payment of benefits under the life insurance policy, which was within the two-year contestability period. Id. ¶¶ 61-62. In its denial letter, Defendant named three inconsistencies in Mr. Salopek's Application:

1. An inconsistency between Mr. Salopek's saying that he used chewing tobacco and "dip now and then" and the "No" that was checked on another page denying other tobacco use.

2. Mr. Salopek's claim in his Application that he drank one or two beers a day at the time of the Application was inconsistent with representations of his previous alcohol use.

3. Mr. Salopek's failure to disclose the removal of a nonrecurrent skin cancer

in July 2013, which Defendant stated should have been disclosed in response to a question about "Cancer, tumor, polyp or disorder of the skin or breast."

Complaint (Doc. 1-1) ¶ 62. Defendant indicated that points one and two would have made it decline the risk and did not cite the skin cancer

as a reason supporting rescission. Id. ¶¶ 63, 64.

On March 6, 2018, Plaintiff filed a Complaint in New Mexico state court against Defendant, alleging the following counts: Count I, Breach of Contract; Count II, Bad Faith Insurance Conduct; Count III, Violation of Unfair Insurance Practices Act; Count IV, Violation of Unfair Trade Practices Act; Count V, Negligence. On April 11, 2018, Defendant removed the case to federal court based on diversity of jurisdiction under 28 U.S.C. § 1332.⁶ On April 11, 2018, Defendant answered the Complaint.⁷

On July 7, 2018, Plaintiff filed a motion seeking to amend the Complaint to add an additional count of civil conspiracy and to join three additional Defendants, Ahmed Hashemian, Capital Aspects, LLC, and Luis Miguel Sisniega.⁸ A second motion, filed on September 17, 2018, requested joinder of another Defendant, BGA Insurance.⁹

On March 28, 2019, the Court denied both of Plaintiff's motions.¹⁰ The Court concluded that Plaintiff's second motion was untimely. See Moo (Doc. No. 109) at 9. With respect to Plaintiff's first motion to amend, the Court held that it was improper because "all essential facts that would have supported Plaintiff's claim of civil conspiracy were known to Plaintiff when she filed the Complaint," and therefore, Plaintiff had not shown the joinder was proper. Id. at 13-14.

II. LEGAL STANDARD

At any time after the pleadings are closed, but before trial begins, a party may move for judgment on the pleadings under Federal Rule Civil Procedure (Rule) 12(c). A motion for judgment on the pleadings is evaluated under the same standard used in deciding Rule 12(b)(6) motions to dismiss. See Atlantic Richfield Co. v. Farm Credit Bank of Wichita , 226 F.3d 1138, 1160 (10th Cir. 2000).

A Rule 12(b)(6) motion "tests the sufficiency of the allegations within the four corners of the complaint." Mobley v. McCormick , 40 F.3d 337, 340 (10th Cir. 1994). When considering a Rule 12(b)(6) motion, the court must accept as true all well-pleaded factual allegations in the complaint, view those allegations in the light most favorable to the non-moving party, and draw all reasonable inferences in the plaintiff's favor. Smith v. United States , 561 F.3d 1090, 1098 (10th Cir. 2009). The allegations must " ‘state a claim to relief that is plausible on its face.’ " Id. (quoting Ridge at Red Hawk L.L.C. v. Schneider , 493 F.3d 1174, 1177 (10th Cir. 2007) (further citation omitted). "The claim is plausible only if it contains sufficient factual allegations to allow the court to reasonably infer liability." Moya v. Garcia , 895 F.3d 1229, 1232 (10th Cir. 2018) (citing Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). The term "plausi...