Wishnev v. Nw. Mut. Life Ins. Co.

• Decision Date: 09 February 2016
• Docket Number: Case No. 15–cv–03797–EMC
• Citation: 162 F.Supp.3d 930
• Parties: Sanford J. Wishnev, Plaintiff, v. The Northwestern Mutual Life Insurance Company, Defendant.
• Court: U.S. District Court — Northern District of California

162 F.Supp.3d 930

Sanford J. Wishnev, Plaintiff,

v.The Northwestern Mutual Life Insurance Company, Defendant.

Case No. 15–cv–03797–EMC

United States District Court, N.D. California.

Signed February 9, 2016

Robert M. Bramson, Jennifer Susan Rosenberg, Bramson, Plutzik, Mahler & Birkhaeuser, Walnut Creek, CA, for Plaintiff.

Michael James Stortz, Marshall Lee Benjamin Baker, Drinker Biddle Reath LLP, San Francisco, CA, Stephen C. Baker, Timothy J. O'Driscoll, Drinker Biddle Reath LLP, Philadelphia, PA, for Defendant.

ORDER DENYING DEFENDANT'S MOTION TO DISMISS FIRST AMENDED COMPLAINT

Docket No. 20

EDWARD M. CHEN, United States District Judge

I. INTRODUCTION

Plaintiff Sanford Wishnev (“Wishnev”) filed this lawsuit against Defendant the Northwestern Mutual Life Insurance Company (“Northwestern Mutual”), asserting that Defendant violated California's usury law by charging him compound interest on life insurance policy loans, without Plaintiff's written agreement that interest would be compounded. Compl. ¶ 1. Pending before the Court is Northwestern Mutual's motion to dismiss Plaintiff's First Amended Complaint (“Compl.”) on the grounds that (1) Plaintiff lacks standing because he did not allege that he paid compound interest; (2) insurers such as Northwestern Mutual have been exempted from the usury law pursuant to article XV of the California Constitution and California Insurance Code section 1100.1. Cal. Const., art. XV, § 1 ; Cal. Ins. Code § 1100.1 ; and (3) Plaintiff signed an agreement with Northwestern Mutual stating that interest on policy and premium loans would be compounded. Docket No. 20 at 1 (“MTD”). For reasons stated below, the motion is DENIED .

II. FACTUAL & PROCEDURAL BACKGROUND

Plaintiff Sanford Wishnev is a California resident who purchased four life insurance policies from Defendant The Northwestern Mutual Life Insurance Company. Compl. ¶¶ 3, 4, 12. Life insurance policies were issued in 1967 (No. 5904999, “Policy 1”), 1969 (No. 6170006, “Policy 2”), 1973 (No. 6728272, “ Policy 3”), and 1976 (No. 7234484, “Policy 4”). Id . ¶12; D's RJN, Exs. A-D. Plaintiff completed and signed an application for each policy. Id . ¶ 12. Each policy, also known as a “permanent” life insurance policy, pays a benefit on the death of the insured and accumulates a cash value. Id . ¶ 5. According to the Complaint, Northwestern Mutual's “permanent” life insurance allows the policyholder to borrow amounts from Northwestern Mutual, up to the amount of the accumulated cash value of the policy. Id . ¶ 6. Because Northwestern Mutual uses the “direct recognition” method for distributing dividends, if any loan balance exists for a given policy, the amount of the loan balance, including all accrued interest charges, reduces the amount of the annual dividend paid by Northwestern Mutual on that policy. Id . According to the Complaint, “[o]n a date after 1980,” Plaintiff took out four separate loans against each of the four policies, “secured by the cash value and death benefit value” of the policy. Id . ¶¶ 14-17. Plaintiff alleges that he has never signed an agreement authorizing Northwestern Mutual to charge him compound interest, but Northwestern Mutual has added compound interest to each of the loans. Id . ¶18.

The core of the Plaintiff's Complaint concerns Defendant's practice of charging compound interest on policy loans, without a Plaintiff's signed written agreement that interest would be compounded. Id . ¶ 1. Based on this practice, Wishnev asserts the following causes of action: (1) declaratory relief; (2) violation of UCL section 17200 et seq .; (3) violation of usury law under California Civil Code §§ 1916–2, 1916–3 ; and (4) unjust enrichment and money had and received. Plaintiff filed this lawsuit in state courts as a putative class action on behalf of “[a]ll California persons as to whom Northwestern Mutual's records show that they have been charged compound interest by Northwestern Mutual on a life insurance policy and/or premium loan balances within the last four years.” Docket No. 1 (Not. of Removal, Ex. A); Compl. ¶ 22. Northwestern Mutual removed the state court action to federal court pursuant to the Class Action Fairness Act, 28 U.S.C. §§ 1332(d). Not. of Removal. ¶1.

III. REQUESTS FOR JUDICIAL NOTICE AND REQUEST TO FILE SUPPLEMENTAL AUTHORITY

A. Legal Standard

On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), evidence beyond the pleading should not be considered unless: 1) the document is attached to or incorporated by reference into the complaint; or 2) the fact is subject to judicial notice pursuant to Federal Rule of Evidence 201. United States v. Corinthian Colleges , 655 F.3d 984, 999 (9th Cir.2011).

Under Federal Rule of Evidence 201, “[a] judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201. Courts may take judicial notice of “undisputed matters of public record,” but generally may not take judicial notice of “disputed facts stated in public records.” Lee v. City of Los Angeles , 250 F.3d 668, 690 (9th Cir.2001) (emphasis in original). Facts subject to judicial notice may be considered on a motion to dismiss. Mullis v. U.S. Bankr. Ct. , 828 F.2d 1385, 1388 (9th Cir.1987).

The doctrine of incorporation by reference is distinct from judicial notice. The doctrine “permits a district court to consider documents ‘whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the... pleadings.’ ” In re Silicon Graphics Sec. Litig. , 183 F.3d 970, 986 (9th Cir.1999) (quoting Branch v. Tunnell , 14 F.3d 449, 454 (9th Cir.1994) ). A court “may consider evidence on which the complaint ‘necessarily relies' if: (1) the complaint refers to the document; (2) the document is central to the plaintiff's claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion. The court may treat such a document as ‘part of the complaint, and thus may assume that its contents are true for purposes of a motion to dismiss under Rule 12(b)(6).’ ” Marder v. Lopez , 450 F.3d 445, 448 (9th Cir.2006) (internal citations omitted). The Ninth Circuit states that “judicial notice is inappropriate where the facts to be noticed are irrelevant.” Meador v. Pleasant Valley State Prison , 312 Fed.Appx. 954, 956 (9th Cir.2009).

B. Defendant's Request

Without opposition from Plaintiff, Defendant requests judicial notice of five exhibits or to consider them under the doctrine of incorporation by reference: (A) A copy of Northwestern Mutual Life insurance policy no. 5904999; (B) A copy of Northwestern Mutual Life insurance policy no. 6170006; (C) A copy of Northwestern Mutual Life insurance policy no. 6728272; (D) A copy of Northwestern Mutual Life insurance policy no. 7234484; (E) A copy of a “Request for Direct Recognition” for Northwestern Mutual life insurance policy no. 5904999. Defendant's Request For Judicial Notice (“D's RJN”), Docket No. 21. The Court GRANTS Defendant's request for judicial notice of the Exhibits A-E. See Enger v. Allstate Ins. Co. , 682 F.Supp.2d 1094, 1096 (E.D.Cal.2009) aff'd , 407 Fed.Appx. 191 (9th Cir.2010) (taking judicial notice of an insurance policy referenced in plaintiff's complaint).

Defendant has also filed motion for leave to file statement of a recent decision in Washburn v. Prudential Ins. Co. of Am. , No. 15–CV–04009–SI, 158 F.Supp.3d 888, 2015 WL 7454039 (N.D.Cal. Nov. 24, 2015). Docket No. 30. Good cause exists for consideration of this decision, as it addresses the issue of whether Defendant is exempt from the compound interest provision of Cal. Civ. Code § 1916–2. The Court GRANTS Defendant's administrative request to submit the supplemental authority, but finds it unpersuasive.

C. Plaintiff's Request

Without opposition from Defendant, Plaintiff asks the Court to take judicial notice of two exhibits: (1) Loan Interest Rates California Proposition 2 (1979) and (2) INTEREST RATES California Proposition 12 (1934). The ballot materials are available online at htttp://repository.uchastings.edu/ca_ballot_ props. UC Hastings Scholarship Repository. Plaintiff's Request for Judicial Notice (“P's RJN”), Docket No. 23. The Court GRANTS Plaintiff's request for judicial notice of the Exhibits 1-2. In this case, the documents are judicially noticeable because the Exhibits are matters of public record. Under Federal Rule of Evidence 201, the Court may take judicial notice “of the records of state agencies and other undisputed matters of public record” without transforming a motion to dismiss into a motion for summary judgment. Disabled Rights Action Comm. v. Las Vegas Events, Inc. , 375 F.3d 861, 866 n. 1 (9th Cir.2004). Ballot materials are a proper subject of judicial notice. See Safari Club Int'l v. Harris , No. 2:14–CV–01856–GEB–AC, 2015 WL 1956869, at *2 (E.D.Cal. Apr. 29, 2015) (taking judicial notice of the California Ballot Pamphlet because it was publicly available to voters); People v. Snyder, 22 Cal.4th 304, 309 n. 5, 92 Cal.Rptr.2d 734, 992 P.2d 1102 (2000) (taking judicial notice of ballot arguments regarding statewide proposition as legislative history and aid for interpretation).

IV. DISCUSSION

A. Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss based on the failure to state a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). A motion to dismiss based on Rule 12(b)(6) challenges the legal sufficiency of the claims alleged. See Parks Sch. of Bus. v. Symington , 51 F.3d 1480, 1484 (9th Cir.1995). In considering such a motion, a court must take all allegations of material fact as true and construe them in the light most favorable to the nonmoving party, although “conclusory allegations of law and...