Steen v. Am. Nat'l Ins. Co.
| Citation | 609 F.Supp.3d 1066 |
| Decision Date | 30 June 2022 |
| Docket Number | Case No: 2:20-cv-11226-ODW (SKx) |
| Parties | Myra STEEN, et al., Plaintiffs, v. AMERICAN NATIONAL INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Central District of California |
Alex Tomasevic, Craig M. Nicholas, Nicholas and Tomasevic LLP, San Diego, CA, Georg Capielo, Jack B. Winters, Jr., Sarah Ball, Winters and Associates, La Mesa, CA, for Plaintiffs.
Joseph R. Russo, Jr., Pro Hac Vice, Victoria Rutherford, Pro Hac Vice, Greer Herz and Adams LLP, Galveston, TX, Katherine L. Villanueva, Pro Hac Vice, Faegre Drinker Biddle and Reath LLP, Philadelphia, PA, Kristen Reilly, Pro Hac Vice, Faegre Drinker Biddle and Reath LLP, Washington, DC, Tarifa Belle Laddon, Faegre Drinker Biddle and Reath LLP, Los Angeles, CA, for Defendant.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO PARTIALLY DISMISS PLAINTIFFS' FIRST AMENDED COMPLAINT [36]
Plaintiffs Myra Steen and Janet Williams bring this putative class action against Defendant American National Insurance Company, filing the operative First Amended Complaint ("FAC") on November 24, 2021. (FAC, ECF No. 30.) American National moves, pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6), to dismiss certain claims in Plaintiffs' FAC. (Mot. Dismiss ("Mot."), ECF No. 36.) After carefully considering the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78 ; C.D. Cal. L.R. 7-15. For the reasons that follow, Defendant's Motion is GRANTED IN PART and DENIED IN PART.
For purposes of this Rule 12(b)(6) motion, the Court accepts Plaintiffs' well-pleaded allegations as true. Lee v. City of Los Angeles , 250 F.3d 668, 688 (9th Cir. 2001).
American National sells life insurance policies. (FAC ¶ 12.) Plaintiff Steen owns five life insurance policies purchased from American National. (FAC ¶ 24.) Steen is also the beneficiary and successor-in-interest to a policy insuring the life of her daughter Janice Williams, who died on June 20, 2020. (FAC ¶¶ 24, 30.) The total value of Steen's policies is approximately $90,000. (FAC ¶ 26.)
Plaintiff Janet Williams is also Steen's daughter. She owns four life insurance policies purchased from American National. (FAC ¶ 25.) The value of her policies is between $95,000 to $145,000.1 (FAC ¶¶ 25, 26.)
Plaintiffs paid their monthly premiums to American National's agent, Khalid Ibrahim, who traveled to Plaintiffs' homes and places of work to collect cash payments. (FAC ¶¶ 24, 28.) At an unspecified time, Plaintiffs heard rumors that American National had terminated Ibrahim's employment but that he was continuing to collect money from Plaintiffs under the false pretense of collecting insurance premiums. (FAC ¶ 28.) Thereafter, also at an unspecified time, Plaintiffs contacted American National and discovered for the first time that the Policies had lapsed for nonpayment. (Id. )
After Steen's daughter Janice died, Steen submitted a claim to American National for the policy insuring Janice's life, which American National denied for nonpayment of the premium.2 (FAC ¶ 30.)
The Policies provide for a grace period of thirty-one days during which the insurance policy will remain in force despite defaulting on a premium payment.3 (FAC ¶ 27.) However, Plaintiffs contend they are entitled under California Insurance Code sections 10113.71 and 10113.72 to greater procedural safeguards, including a sixty-day grace period after a missed payment, a thirty-day written notice of pending lapse, and the annual right to designate a third party to receive such notice. (FAC ¶¶ 3, 16–17.) These statutory requirements were enacted January 1, 2013. American National took the position that the requirements did not apply to policies executed before January 1, 2013 (as opposed to applying more broadly to all policies in effect as of January 1, 2013). Plaintiffs' Policies in this case were executed before January 1, 2013, and American National accordingly did not adjust its practices to provide a longer grace period and otherwise comply with the requirements of sections 10113.71 and 10113.72 with respect to Plaintiffs' Policies. (FAC ¶¶ 5, 17.)
Plaintiffs' Policies lapsed sometime in 2017, but American National failed to provide Plaintiffs with the required grace period and notice prior to lapse. (FAC ¶¶ 29, 31, 32.) Plaintiffs assert that because American National failed to provide the requisite safeguards, "the termination of [t]he Policies was ineffective[,] and [t]he Policies remain in force." (FAC ¶ 34.)
Plaintiffs now seek relief for themselves and for a proposed class of "[a]ll past, present, and future owners or vested beneficiaries of Defendant's life insurance policies in force on or after January 1, 2013 and governed by [California Insurance Code] [s]ections 10113.71 and/or 10113.72, where Defendant lapsed, terminated, or forced the reinstatement of the policy on the basis of nonpayment of premium[s]." (FAC ¶ 37.) Previously, the Court stayed this case pursuant to the parties' stipulation to await the California Supreme Court's decision in McHugh v. Protective Life Ins. Co. , 12 Cal. 5th 213, 283 Cal.Rptr.3d 323, 494 P.3d 24 (2021) to resolve the question of the applicability of California Insurance Code sections 10113.71 and 10113.72 to policies executed before the enactment of those statutes. After the McHugh decision issued, the parties stipulated to lift the stay on the case, and Plaintiffs proceeded to file their FAC, taking into account the decision in McHugh.
In the operative FAC, Plaintiffs assert claims for (1) declaratory relief under California law, (2) declaratory relief under federal law, (3) breach of contract, (4) violation of California's unfair competition law ("UCL"), and (5) conversion. (See FAC ¶¶ 50–96.) American National moves to dismiss claims one, two, four, and five. After fully briefing the Motion, (Opp'n, ECF No. 40; Reply, ECF No. 43), Plaintiffs filed a Notice of Supplemental Authority, (ECF No. 54), and American National filed three additional Notices of Supplemental Authority, (ECF Nos. 53, 55, 56).
A court may dismiss a complaint under Rule 12(b)(6) for lack of a cognizable legal theory or insufficient facts pleaded to support an otherwise cognizable legal theory. Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1988). To survive a motion to dismiss, Porter v. Jones , 319 F.3d 483, 494 (9th Cir. 2003) (quoting Fed. R. Civ. P. 8(a)(2) ). Under this standard, the plaintiff's "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The "complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted).
Determining whether a complaint satisfies the plausibility standard is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679, 129 S.Ct. 1937. A court is generally limited to the pleadings and must construe all "factual allegations set forth in the complaint ... as true and ... in the light most favorable" to the plaintiff. Lee v. City of Los Angeles , 250 F.3d 668, 679 (9th Cir. 2001). However, a court need not blindly accept conclusory allegations, unwarranted deductions of fact, and unreasonable inferences. Sprewell v. Golden State Warriors , 266 F.3d 979, 988 (9th Cir. 2001). Ultimately, there must be "sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively," and the "factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation." Starr v. Baca , 652 F.3d 1202, 1216 (9th Cir. 2011).
When a district court grants a motion to dismiss, it should generally provide leave to amend unless it is clear the complaint could not be saved by any amendment. See Fed. R. Civ. P. 15(a) ; Manzarek v. St. Paul Fire & Marine Ins. Co. , 519 F.3d 1025, 1034 (9th Cir. 2008). Leave to amend may be denied when "the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." Schreiber Distrib. Co. v. Serv-Well Furniture Co. , 806 F.2d 1393, 1401 (9th Cir. 1986) ; Carrico v. City & County of San Francisco , 656 F.3d 1002, 1008 (9th Cir. 2011) ().
Plaintiffs' claims in this case are grounded in the California Supreme Court's recent decision in McHugh. There, the court concluded that the protections afforded under Insurance Code sections 10113.71 and 10113.72 extend to policies in effect as of January 1, 2013, even if executed and issued before that date. 12 Cal. 5th at 246, 283 Cal.Rptr.3d 323, 494 P.3d 24. More recently, in an unpublished opinion, the Ninth Circuit, relying on McHugh , affirmed a trial court's decision granting a beneficiary's motion for summary judgment for breach of contract against an insurer, finding the policies at issue had not lapsed because the insurer failed to comply with sections 10113.71 and 10113.72. Thomas v. State Farm Life Ins. Co. , No. 20-55231, 2021 WL 4596286, at *1 (9th Cir. Oct. 6, 2021).
American National's Motion is not based on the law embodied in McHugh —and unsurprisingly so, given that the McHugh decision...
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