Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County No. GIC821471, Jeffrey B. Barton, Judge.
HALLER, J.
Jennifer Friedman (Jennifer) appeals from a judgment in favor of Larry Manuel. Manuel, a life insurance agent, accepted an application from Jennifer's husband Andrew Friedman (Andrew) for a life insurance policy from Lincoln National Life Insurance Company (Lincoln). After Andrew submitted his application to Manuel, Andrew cancelled an existing life insurance policy with State Farm Life Insurance Company (State Farm). Before the Lincoln policy issued, Andrew unexpectedly died. Jennifer was denied coverage by both State Farm and Lincoln.
Our reference to Lincoln includes Lincoln National Life Insurance Company and its affiliates.
When Manuel sold the Lincoln policy to Andrew, he failed to comply with Insurance Code section 10509 et seq. (the replacement statute). This statute imposes numerous obligations on insurers when dealing with an applicant who is considering replacing an existing life insurance policy with a new policy from a different company. Based in part on Manuel's failure to comply with the replacement statute, Jennifer sued Manuel for negligence, fraud and negligent misrepresentation. A jury found in Manuel's favor on all causes of action.
All further statutory references are to the Insurance Code unless otherwise specified.
On appeal, Jennifer raises three claims of instructional error. She asserts the trial court: (1) erred by refusing to instruct on negligence per se based on Manuel's violation of the replacement statute; (2) erred by giving a special instruction stating violation of a statute does not necessarily show a violation of the standard of care; and (3) erred by refusing to instruct on a regulation requiring a life insurance agent to obtain a written acknowledgment of receipt of a policy summary from an applicant at the time of application.
Jennifer's first two arguments involve application of the negligence per se doctrine. As we shall explain, we conclude the replacement statute was not designed to prevent a gap in life insurance coverage during a replacement transaction. Accordingly, Manuel's failure to comply with the replacement statute, although relevant to the issue of his negligence, did not trigger application of the negligence per se doctrine, and there was no instructional error on this point.
As to Jennifer's third argument, assuming the trial court should have instructed on the regulation as requested by Jennifer, we conclude the omission was not prejudicial.
FACTUAL AND PROCEDURAL BACKGROUND
Jennifer sued Manuel and Lincoln for negligence, fraud, and negligent misrepresentation. She sought recovery for her loss of $600,000 insurance coverage based on the cancellation of the State Farm policy and the nonissuance of the Lincoln policy before Andrew's death. The case against Lincoln was settled, with an agreement that Lincoln would participate in the trial. At trial, Jennifer presented a variety of theories to support her claims of liability. Relevant to the issues on appeal, she asserted that Manuel failed to comply with two procedural requirements applicable to the transaction with Andrew. These two procedural deficiencies consisted of (1) Manuel's failure to treat the transaction as a replacement transaction under sections 10509 et seq., and (2) Manuel's failure to give Andrew a policy illustration and obtain his signature on the illustration at the time Manuel took the application.
A policy illustration gives general information about the policy, including estimations of policy premiums, expenses, and earnings over the life of the policy.
Creation of the Gap in Coverage
In January 2003, Jennifer's husband, Andrew Friedman, age 32, applied for a $600,000 universal life insurance policy from State Farm. The policy became effective in February 2003. The policy had a 30-day "free look period," which meant the policy owner had 30 days to return the policy and obtain a full refund of the premiums paid.
On February 14, 2003, Andrew met with Manuel, a life insurance agent for Sagemark Consulting, to discuss his life insurance needs. Andrew provided Manuel with information about his State Farm policy and requested that Manual advise him if he could offer a better policy. On March 2, 2003, Andrew emailed Manuel and told him that he believed he had until March 7, 2003, to cancel the State Farm policy and obtain a full refund of premiums.
On March 6, 2003, Andrew met with Manuel to further discuss his life insurance options. Manuel showed Andrew various policy illustrations, and Andrew decided to apply for a $600,000 variable universal life insurance policy from Lincoln. Andrew signed the application for the Lincoln policy at the March 6 meeting. Manuel testified that he told Andrew that the application process typically took four to eight weeks.
Manuel did not give Andrew a copy of a policy illustration or have him sign an illustration at the March 6 meeting because he did not have an illustration with the features selected by Andrew. On March 7, 2003, based on the information he acquired from Andrew as to his wishes, Manuel created a policy illustration for Andrew, and transmitted the illustration to Lincoln along with the application. Andrew's signature on the illustration was required before the policy could issue. However, Manuel did not transmit the illustration to Andrew for his signature on March 7. Manuel claimed that based on his experience, Lincoln did not require the illustration to be signed at the time of application, but only required that the signed illustration be obtained prior to or at the time the policy was issued. Jennifer presented evidence showing that Lincoln's procedures manual required that an agent give the applicant a copy of the illustration and get the applicant's signature on the illustration at the time of application.
Because Andrew intended to replace his State Farm policy with the Lincoln policy, Manuel was obligated under the replacement statute to take a series of measures applicable when an applicant plans to replace an existing life insurance policy with a policy from a different company. These measures included identifying the transaction as a replacement transaction, giving Andrew a statutorily-prescribed notice advising him to take steps to protect his interests, and notifying State Farm of the replacement transaction. At trial, Manuel conceded that he failed to comply with these requirements. Manuel testified that because Andrew's State Farm policy was in the "free look period," he was not certain it was a replacement transaction. After consulting with Sagemark Consulting's new business coordinator (Janet Lee), he decided it was not a replacement transaction. He acknowledged that in hindsight this was an error on his part. However, Manuel testified that he advised Andrew to speak with State Farm about his plans to cancel the State Farm policy. Further, Manuel testified that as part of the application process Andrew was afforded the opportunity to purchase temporary life insurance pending issuance of the Lincoln policy but he did not elect this option.
The Lincoln application included a question stating: "Have you or will you replace, discontinue coverage, stop paying premiums, initiate a reduction in face amount, or borrow or surrender cash value on any Life Insurance or Annuity if this insurance is issued?" When Andrew's application was filled out, the answer to this question was left blank. Later, after Manuel spoke with Lee and decided it was not a replacement transaction, the replacement question on the application was marked "no." Lee and Manuel also made a notation on the application stating that Andrew had "applied for and [been] approved for" the State Farm policy, that it was "still in the 30-day free look period[,]" and that Andrew was "[n]ot taking that [State Farm] coverage."
On March 10 and 12, 2003, Andrew emailed State Farm and requested that his policy be cancelled effective February 7, 2003, and that he be sent a refund check of approximately $1,000. State Farm cancelled the policy, and by letter dated March 18, 2003, advised Andrew that there was no coverage because the policy had been returned to the company.
On March 26, 2003, Andrew underwent a medical examination as required for the Lincoln policy. On April 14, 2003, Manuel advised Andrew that he had been approved for a preferred rate policy. On this same date, Manuel faxed the policy illustration to Andrew and instructed Manuel to sign a section of the illustration indicating he had reviewed the illustration. On April 15, 2003, Andrew signed the policy illustration and faxed it to Manuel. On April 16, 2003, Manuel sent the signed policy illustration to Lincoln. The remaining steps necessary for coverage to become effective were for Andrew to receive the policy and to pay the premium.
On April 18, 2003, prior to issuance of the Lincoln policy, Andrew died unexpectedly. His widow, Jennifer, discovered the State Farm policy had been cancelled and that Andrew had applied for a policy from Lincoln. Lincoln denied coverage because the policy had not yet issued.
Andrew had two other existing life insurance policies through his employment that provided coverage of approximately $638,000 and $500,000.
Jennifer's Lawsuit Against Manuel
At trial, both parties presented expert testimony reaching differing conclusions on the issue of whether Manuel violated the standard of care. In arguments to the jury, Jennifer delineated a variety of theories to support her claim that Manuel's conduct was negligent and fraudulent and resulted in the gap in coverage. She asserted, among other things, that Manuel negligently and intentionally failed to comply with the replacement statute and failed to timely transmit the policy illustration to Andrew for his signature. According to Jennifer, this conduct caused State Farm not to be involved in the transaction; caused Andrew not to be fully informed about his options including conversion to a State Farm variable policy without a gap in coverage; and caused unnecessary delay in issuance of the Lincoln policy.
Manuel argued that although he admittedly committed a technical violation by failing to recognize the transaction was a replacement transaction, his conduct was consistent with that of a reasonable agent under similar circumstances; Lincoln's practice was to allow the signed policy illustration to be submitted after the taking of the application; Andrew was fully informed regarding Lincoln policy options and was advised to contact State Farm; and Andrew himself made the decision to cancel the State Farm policy before issuance of the Lincoln policy and declined to purchase temporary life insurance.
The jury returned a verdict in favor of the defendants on all causes of action. In a special verdict, the jury found defendants did not engage in negligent conduct, and did not commit intentional misrepresentation, concealment, or negligent misrepresentation. Because it found no culpable conduct, the jury did not reach special verdict questions pertaining to causation.
Jennifer appeals from the judgment in favor of Manuel.
Lincoln is not a party on appeal.
DISCUSSION
I. Refusal to Instruct on Negligence Per Se
Jennifer requested that the jury be instructed on the doctrine of negligence per se, contending she was entitled to the instruction based on the evidence that Manuel violated the replacement statute. Manuel conceded he erred in failing to treat the transaction as a replacement transaction, but disagreed that the negligence per se doctrine applied.
The trial court concluded that negligence per se principles did not apply to the facts of this case, and denied Jennifer's request for instruction on this doctrine. However, the court concluded the life insurance replacement statute was relevant to the jury's evaluation of whether Manuel violated the standard of care. Accordingly, the trial court instructed the jury regarding the standard of care generally applicable to professional negligence cases; read the replacement statute to the jury; and, over Jennifer's objection, gave a special instruction stating that a violation of a statute did not necessarily establish a violation of the standard of care.
To evaluate Jennifer's assertion that the negligence per se doctrine applied to this case, we first summarize negligence per se principles, and then summarize the life insurance replacement statutory scheme.
Legal Principles Governing Negligence Per Se
In negligence cases, the standard of care "is usually that of the ordinarily prudent or reasonable person under like circumstances." (Satterlee v. Orange Glenn School Dist. (1947) 29 Cal.2d 581, 587 (Satterlee), overruled on other grounds in Alarid v. Vanier (1958) 50 Cal.2d 617, 622-624.) However, in some cases this standard of care is prescribed by a statute, in which case the negligence per se doctrine applies. (Satterlee, supra, at p. 588; Elsner v. Uveges (2004) 34 Cal.4th 915, 927; Casey v. Russell (1982) 138 Cal.App.3d 379, 383.) The negligence per se doctrine affects the burden of proof, creating a presumption of negligence that shifts the burden to the defendant to show an excuse or justification for violating the statute. (Cade v. Mid-City Hosp. Corp. (1975) 45 Cal.App.3d 589, 596-597 (Cade); Casey v. Russell, supra, 138 Cal.App.3d at p. 383.)
To trigger the presumption of negligence based on a statutory standard of care, the plaintiff must establish four elements: (1) the defendant violated a statute; (2) the violation proximately caused the plaintiff's injury; (3) the injury resulted from the kind of occurrence the statute was designed to prevent; and (4) the plaintiff was one of the class of persons the statute was intended to protect. (Daum v. SpineCare Medical Group, Inc. (1997) 52 Cal.App.4th 1285, 1306 (Daum); Evid. Code, § 669, subd. (a).) The first two elements are normally questions for the trier of fact, and the last two elements are determined by the trial court as a matter of law. (Daum, supra, at p. 1306.)
To determine if the statute defines the standard of care in a particular case, the trial court makes a threshold evaluation of whether the statute was designed to prevent the type of occurrence that caused the injury and was intended to protect the class of persons of which the plaintiff was a member. (Cade, supra, 45 Cal.App.3d at p. 597; Daum, supra, 52 Cal.App.4th at pp. 1307-1309.) If the trial court determines the statute applies as the standard of care and there is substantial evidence to support the first two elements of the negligence per se doctrine, then the jury should be instructed to evaluate the first two elements. (See Huang v. Garner (1984) 157 Cal.App.3d 404, 414, disapproved on other grounds in Aas v. Superior Court (2000) 24 Cal.4th 627, 649; Norman v. Life Care Centers of America, Inc. (2003) 107 Cal.App.4th 1233, 1246-1247 (Norman); Traxler v. Varady (1993) 12 Cal.App.4th 1321, 1328.) More specifically, the jury should be told that if it finds the defendant violated the statute and if it finds the violation proximately caused the injury, the defendant is liable for negligence unless the defendant rebuts the presumption by showing an excuse or justification. (See Satterlee, supra, 29 Cal.2d at p. 588; CACI No. 418.)
A defendant may show excuse or justification based on proof that the defendant "did what might reasonably be expected of a person of ordinary prudence, acting under similar circumstances, who desired to comply with the law . . . ." (Evid. Code, § 669, subd. (b)(1); Alarid v. Vanier, supra, 50 Cal.2d at p. 624; Casey v. Russell, supra, 138 Cal.App.3d at p. 383.) The defendant must make a showing of "special circumstances" that justified violating the statute. (Casey, supra, at p. 385.) The excuse or justification may arise "in emergencies or because of some unusual circumstances" which make it "difficult or impossible to comply with the statute . . . ." (Id. at p. 384.)
Statutory Scheme Governing Replacement of Life Insurance Policies
Section 10509 et seq. is a statutory scheme setting forth requirements that apply to insurers and agents when an insured seeks to replace an existing life insurance policy with a new policy from a different company. Section 10509 delineates the legislative purpose of the replacement statute, stating:
Some of the replacement statute provisions also apply when a policy owner replaces an existing policy with a new policy from the same company. (See § 10509.3, subd. (a)(5).) Because it is not relevant here, we do not explain this component of the replacement statute in our summary.
"The purpose of this article is the following:
"(a) To regulate the activities of insurers and agents with respect to the replacement of existing life insurance and annuities.
"(b) To protect the interests of life insurance and annuity purchasers by establishing minimum standards of conduct to be observed in replacement transactionsby the following:
"(1) Assuring that the purchaser receives information with which a decision can be made in his or her own best interest.
"(2) Reducing the opportunity for misrepresentation and incomplete disclosures.
"(3) Establishing penalties for failure to comply with the requirements of this article."
The statute defines a "replacement" as including "any transaction in which new life insurance or a new annuity is to be purchased, and it is known or should be known to the proposing agent, or to the proposing insurer if there is no agent, that by reason of that transaction, the existing life insurance or annuity has been or is to be . . . [¶] . . . [l]apsed, forfeited, surrendered, or otherwise terminated." (§ 10509.2, subd. (a)(1).) The statute defines an existing life insurance policy as including a policy "that is within an unconditional refund period." (§ 10509.2, subd. (e).)
The replacement statute sets forth the steps that must be taken by an agent and the insurance company he or she represents when an application for life insurance is obtained from an applicant. When taking the application, the agent must obtain a statement signed by the applicant indicating whether replacement of an existing policy is involved in the transaction. (§ 10509.4, subd. (a).) The agent must also sign a statement indicating whether he or she knows "replacement is or may be involved" in the transaction. (Ibid.) When a replacement is involved, the agent must give the applicant, "not later than at the time of taking the application," a " 'Notice Regarding Replacement of Life Insurance,' " which shall be signed by both the agent and the applicant and given to the applicant. (§ 10509.4, subd. (b).) The replacement notice must state as follows:
"NOTICE REGARDING REPLACEMENT REPLACING YOUR LIFE INSURANCE POLICY OR ANNUITY?
"Are you thinking about buying a new life insurance policy or annuity and discontinuing or changing an existing one? If you are, your decision could be a good one—or a mistake. You will not know for sure unless you make a careful comparison of your existing benefits and the proposed benefits.
"Make sure you understand the facts. You should ask the company or agent that sold you your existing policy to give you information about it.
"Hear both sides before you decide. This way you can be sure you are making a decision that is in your best interest.
"We are required by law to notify your existing company that you may be replacing their policy." (§ 10509.4, subd. (d).)
Further, the agent must obtain from the applicant the identifying information for any existing life insurance policies that are to be replaced, and must give the applicant the original or a copy of all printed communications used to present the proposed replacement policy to the applicant. (§ 10509.4, subd. (b)(1), (2).) When the agent transmits the application to the insurance company, the agent must provide the insurance company, along with the application, a copy of the replacement notice provided to the applicant and the list identifying the existing polices that are to be replaced. (§§ 10509.4, subd. (b)(3), 10509.6, subd. (b)(1).)
Correlating with these duties imposed on agents, the replacement statute mandates that life insurance companies inform their agents and other relevant personnel of the statutory requirements, and that they require their agents to comply with the above-delineated statutory requirements when submitting applications to the company. (§§ 10509.5, 10509.6, subds. (a), (b).)
Once the replacing insurer receives the required information, it must "[s]end to each existing life insurer a written communication advising of the replacement or proposed replacement . . . and a policy summary, contract summary, or ledger statement containing policy data on the proposed life insurance or annuity." (§ 10509.6, subd. (b)(2).) This communication must be provided within three working days of the date the application is received by the replacing insurer or the date the proposed policy is issued, whichever is sooner. (Ibid.)
The replacement statute also imposes duties on existing insurers who engage in "conservation." Conservation is defined as "any attempt by the existing insurer or its agent to dissuade a policy owner from the replacement of existing life insurance or annuity." (§ 10509.2, subd. (b).) If undertaking conservation, an existing insurer is required to provide the policy owner a policy summary or ledger statement about the existing policy within 20 days from the date it receives the replacement information from the replacing insurer. (§ 10509.6, subd. (b)(3).) Additionally, the replacing insurer may request that the existing insurer provide it a copy of the policy summary or ledger statement, which request shall be answered within five working days of receipt of the request. (Ibid.) An agent who engages in conservation efforts must give the applicant the originals of any written or printed communications used during the conservation. (§ 10509.4, subd. (c).)
The replacement statute requires both replacing and existing insurers to maintain evidence of compliance with the statutory requirements (i.e., the notice of replacement given to the applicant, policy summaries, ledger statements, etc.) for three years. (§ 10509.6, subd. (c).)
The replacement statute provides that a violation of its provisions occurs "if an agent or an insurer recommends the replacement or conservation of an existing policy by use of a materially inaccurate presentation or comparison of an existing contract's premiums and benefits or dividends and values, if any . . . ." (§ 10509.8, subd. (a).) Further, the statute provides that "[p]atterns of action by policyowners who purchase replacement policies from the same agent after indicating on applications that replacement is not involved" shall create a rebuttable presumption that the agent knew replacement was intended and that the agent intended to violate the statute. (§ 10509.8, subd. (c).) Finally, section 10590.9 sets forth administrative penalties to be imposed on agents or insurers who violate the replacement statute.
Analysis
One of the elements necessary to trigger application of the negligence per se doctrine is that the statute at issue must be designed to prevent the kind of occurrence that caused the plaintiff's injury. (Daum, supra, 52 Cal.App.4th at p. 1306.) This presents a question of statutory interpretation which we evaluate de novo. (See Metropolitan Water Dist. v. Imperial Irrigation Dist. (2000) 80 Cal.App.4th 1403, 1423.)
Jennifer asserts that the replacement statute is intended to prevent the type of event that injured her—i.e., the cancellation of the State Farm policy and the nonissuance of the Lincoln policy prior to Andrew's death which caused her to lose insurance benefits. Although the legislative purpose delineated in section 10509 contains broad language that could encompass a wide variety of potential injuries arising from a replacement transaction, when the replacement statute is read in its entirety it is apparent the statute is not concerned with gaps in coverage during a replacement transaction. Rather, the plain language of the replacement statute reflects that it is designed to ensure that policy owners entering into a replacement transaction have all the information necessary to make a fully informed evaluation of the features of the replacement policy as compared to the existing policy. Contrary to Jennifer's assertion, there is nothing in the replacement statute that suggests an intent to prevent premature cancellation of an existing policy or delayed issuance of a replacement policy.
As noted, the replacement statute requires the replacing insurer to give the policy owner a notice stating that before making a decision, the policy owner should make a careful comparison of the existing benefits and the proposed benefits, make sure he or she understands the facts, communicate with the existing insurer to acquire information, and hear both sides to ensure that the decision is in the policy owner's best interests. Further, the replacing insurer must provide the policy owner with the written materials used to present the proposed replacement policy, notify the existing insurer about the replacement transaction, and provide the existing insurer with a summary of the proposed replacement policy. If the existing insurer wants to try to persuade the policy owner not to make the replacement, the existing insurer must provide the policy owner with a summary of the existing policy and all written materials used during the conservation, and, upon request, must provide the replacing insurer with the policy summary.
Whether considered individually or collectively, these requirements pertain to the merits of the decision to switch policies. They do not pertain to the decision of when an existing policy should be cancelled or a replacement policy should issue.
Jennifer's citation to the legislative history for the replacement statute does not support her argument that the statute was designed to protect policy owners from gaps in coverage during replacement transactions. Consistent with the plain language of the statute, the legislative history materials she cites reflect that the legislation is designed to ensure that the insured is provided all information needed to make an informed choice about whether to replace an existing policy with a new policy; the insured is advised to make a careful comparison of the costs and benefits of the original and replacement policies; and the existing insurer is given notice of a replacement transaction so as to have an opportunity to engage in conservation efforts.
Jennifer filed a motion for judicial notice of the legislative history before us on appeal. Manuel objects to some of the items included in her motion. We grant the motion to the extent it references matters reflective of the Legislature's collective intent. (See Metropolitan Water Dist. v. Imperial Irrigation Dist., supra, 80 Cal.App.4th at pp. 1425-1426.)
Jennifer cites a document in the legislative history that refers to allegations that a particular insurance company presented false and misleading printed material to the public and "misrepresented and induced individuals to take out an insurance policy, or to let it lapse, or forfeit or surrender coverage." (Sen. Com. on Insurance, Claims and Corporations, Rep. on Assem. Bill No. 3239 (1989-1990 Reg. Sess.) as amended May 3, 1990, p. 3.) Read in context, this statement expresses concerns about misleading publications and inducements by insurance companies, and does not suggest an intent to address a problem of gaps in coverage during a replacement transaction. The statement is preceded by a description of the proposed replacement legislation that would ensure that insureds "have all the pertinent information about both the proposed and the existing policies" and that would foster "a more competitive environment" and a "better life insurance . . . market for the consumer" by "allowing the replaced company the opportunity to explain the pros and cons" of the proposed replacement. (Id. at pp. 2-3.)
Jennifer also cites a statement in a brochure prepared by Lincoln (that was not given to Andrew) which warns a consumer against terminating an existing policy before a replacement policy is in force. Although Lincoln may have a practice of distributing the brochure in replacement transactions, there is nothing to indicate this type of warning is expressly or implicitly required by the replacement statute so as to reflect a legislative intent to protect against premature cancellation of an existing policy.
The replacement statute provisions do not require replacing insurers to take any affirmative steps to protect a policy owner from premature cancellation of an existing policy or delayed issuance of a replacement policy. Because the terms of the replacement statute do not indicate it is designed to prevent the type of event that injured Jennifer, the trial court properly declined her request to instruct the jury on the negligence per se doctrine.
II. Special Instruction on Effect of Statutory Violation on Standard of Care
In addition to asserting the trial court should have instructed on negligence per se, Jennifer contends the trial court erred in giving a special instruction stating violation of a statute did not necessarily show a violation of the standard of care.
Although the trial court found the negligence per se doctrine did not apply to the facts of this case, the trial court concluded the replacement statute could be considered when evaluating whether Manuel was negligent. Accordingly, the trial court instructed the jury regarding the standard of care generally applicable to professional negligence cases, stating: "An insurance agent is negligent if he or she fails to use the skill and care that a reasonably careful insurance agent would have used in similar circumstances" and this standard of care should be determined "based only on the testimony of the expert witnesses, including [Manuel], who testified in this case." (See CACI No. 600.) Regarding the replacement statutes, the trial court stated: "You have heard reference during the trial concerning the replacement statutes. I will now read some of them to you." The court then read relevant portions of the replacement statute to the jury which depicted an agent's duties during a replacement transaction. Finally, the court gave a special instruction advising the jury that a violation of a statute did not necessarily establish negligent conduct, stating: "The violation of a statute or regulation does not necessarily mean that an agent's conduct fell below the standard of care. Instead, your finding must be considered in the context of the totality of the evidence in this case, and the testimony of expert witnesses, including [Manuel], in determining whether Defendants['] conduct fell below the standard of care."
Jennifer argues that the special instruction erroneously told the jury that a violation of a statute can be excused by considering the totality of the evidence. She asserts that the instruction was erroneous because it was contrary to the rule that the negligence per se doctrine places the burden on the defendant to show the violation was excused because of special circumstances. This argument assumes the applicability of the negligence per se doctrine, which we have found inapplicable.
Given our conclusion that in this case a violation of the replacement statute did not trigger application of the negligence per se doctrine so as to make the statute the standard of care, the trial court correctly instructed the jury that the violation of a statute did not necessarily establish a violation of the standard of the care. The jury was presented with evidence showing Manuel violated the replacement statute, and it was important for the jury to know the effect of this violation on its evaluation of whether Manuel acted negligently. The special instruction properly informed the jury that the statutory violation did not compel a finding of negligent conduct.
In her reply brief, Jennifer additionally suggests that the special instruction is erroneous because it told the jury that Manuel's conduct should be evaluated based on what a reasonable person, rather than a reasonable professional, would do. This contention is unavailing. When the instructions are read as a whole, the jury was told to determine the standard of care based on the expert testimony, and to consider all the evidence (which included evidence regarding the replacement statute and the expert testimony) when deciding whether Manuel violated the standard of care. The experts testified regarding the standard of care applicable to professionals in the insurance industry, and the jury was properly told to determine the standard of care based on their testimony. (See Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 632 [expert testimony establishes standard of care for professional negligence]; Housley v. Godinez (1992) 4 Cal.App.4th 737, 744-745 [violation of statute may be used to evaluate negligence even though it is not negligence per se].)
III. Trial Court's Refusal to Instruct on Regulation Requiring Written Acknowledgment of Receipt of Policy Summary
Jennifer also argues the trial court erred in rejecting her request to instruct the jury that California law requires an insurance agent to obtain a written acknowledgement of receipt of a policy summary from the applicant at the time of application.
To support her theory that Manuel's untimely transmittal of the policy illustration to Andrew for his signature delayed issuance of the Lincoln policy and caused the coverage gap, Jennifer requested an instruction based on a regulation which states in part as follows:
"An insurer delivering or issuing for delivery in this State any variable life insurance policies shall deliver to the applicant for the policy, and obtain a written acknowledgment of receipt from such applicant coincident with or prior to the execution of the application, the following information. . . . [¶] (a) A summary explanation, in non-technical terms, of the principal features of the policy . . . ." (Cal. Code Regs., tit. 10, § 2534.6, italics added; see also § 10509.958, subd. (a)(1).)
The trial court denied Jennifer's request, reasoning that the issue had been adequately covered by the testimony.
Jennifer does not assert that the regulation establishes the standard of care under the negligence per se doctrine. Rather, she contends the jury should have been apprised of the regulation to properly evaluate whether Manuel was negligent or engaged in intentional wrongdoing and to generally evaluate his credibility.
At trial, the expert witnesses were queried about whether an agent had a duty to obtain a signature on the policy illustration at the time of application. However, Jennifer did not question the experts about the meaning and applicability of the regulation that formed the basis of her instructional request. The regulation is lengthy and does not explicitly indicate that a written acknowledgment of receipt of a policy summary equates with the signing of the policy illustration at issue in this case. If Jennifer wanted the jury to be instructed on the regulation, she should have elicited expert testimony explaining its meaning and applicability to this case. In any event, as we shall explain, assuming arguendo the trial court should have instructed on the regulation, there is no reasonable probability the instructional omission affected the outcome.
Manuel asserts the issue of instruction on the regulation was belatedly and inadequately raised during the proceedings below, whereas Jennifer asserts the matter was timely and fully raised. Given our holding that the failure to give the instruction was not prejudicial, we need not further discuss this issue.
One of the issues in dispute at trial was whether Manuel violated the standard of care by failing to transmit the policy illustration to Andrew for his signature in a timely manner. Manuel testified that he did not obtain the signed illustration at the March 6 meeting because at this meeting Andrew selected features that had not yet been compiled into an illustration, and that Lincoln only required that the signed illustration be obtained before or at the time of policy issuance.
In contrast, Richard Rojeck, Sagemark Consulting's regional chief, testified that Lincoln's compliance manual requires agents to have the policy illustration signed at the same time as the application, and to send the signed illustration with the application to Lincoln's home office. When asked whether in practice Lincoln allows illustrations to be signed after the application has been sent, Rojeck responded that this might occur but it is not Lincoln's policy. The jury was provided a copy of the section of Lincoln's compliance manual which stated an agent must have the illustration signed by the applicant, provide the applicant with a copy of the illustration, and send the signed illustration to the home office along with the application. Jennifer's expert testified that a policy illustration is generally signed when an application is taken, and that when it is not, the agent should have the applicant sign a form stating that he or she has looked at the illustration and that the signed illustration will be sent in a timely manner.
In closing arguments to the jury, Manuel's counsel argued Manuel's failure to have the policy illustration signed at the time of application did not violate the standard of care because Andrew was still evaluating what features he wanted at the March 6 meeting, and regardless of what was stated in Lincoln's compliance manual the evidence showed Lincoln's practice was to accept unsigned illustrations with policy applications. Jennifer's counsel argued that even if the policy illustration was not ready on March 6, it could have been sent to Andrew on March 7; Manuel failed to read the compliance manual; and Manuel disregarded well-established rules by failing to timely transmit the illustration to Andrew for his signature which delayed issuance of the Lincoln policy.
Jennifer argues omission of an instruction on the regulation created prejudicial error because Manuel's counsel was permitted to incorrectly argue that an agent need not obtain the signed policy illustration at the time of application and her counsel was unable to refute this argument by citing to the applicable law.
To prevail on a claim of instructional error, the appellant must show a reasonable probability that the error affected the verdict. (See Soule v. General Motors Corp. (1994) 8 Cal.4th 548, 580-581, & fn. 11; Daum, supra, 52 Cal.App.4th at p. 1313.) The mere possibility of prejudice will not suffice for reversal. (Galvez v. Frields (2001) 88 Cal.App.4th 1410, 1423.) The determination of prejudice " 'depends heavily on the particular nature of the error, and its effect on the appellant's ability to place his or her full case before the jury. Actual prejudice must be assessed in the context of the [entire] trial record[.]' " (Norman, supra, 107 Cal.App.4th at p. 1249, italics omitted, original brackets.) Relevant factors to consider include the state of the evidence, the effect of other instructions, the effect of counsel's arguments, and any indications by the jury that it was misled. (Rutherford v. Owens-Illinois, Inc. (1997) 16 Cal.4th 953, 983.)
Assuming that the trial court should have instructed on the regulation, Jennifer has not carried her burden to show prejudice. The jury was provided with a copy of the portion of Lincoln's compliance manual that stated agents must provide the applicant with a copy of the illustration and obtain the applicant's signature at the time of application, and heard testimony from a Sage Consulting supervisor that this was Lincoln's policy. Thus, the jury knew Manuel had violated Lincoln's written policy when he failed to transmit the illustration to Andrew and obtain his signature at the time of application. Although a regulation would have carried more force than a compliance manual, nevertheless the jury was provided with written evidence, corroborated by a high-ranking company official, as to what the proper procedure was for the provision and signing of the policy illustration. In closing arguments to the jury, Manuel's counsel essentially acknowledged that Lincoln's compliance manual required a signed policy illustration at the time of application, and Jennifer's counsel was able to refer to the compliance manual when delineating Manuel's failure to follow the rules.
The jury was also presented with evidence that Manuel continued to delay sending the policy illustration to Andrew for several weeks after the illustration had been prepared and the application submitted to Lincoln. Further, the jury was instructed on the replacement statute and knew Manuel had failed to comply with its terms. Based on this evidence and instruction, Jennifer was afforded a substantial basis to urge the jury to find negligence or intentional wrongdoing based on Manuel's failure to follow the written rules. Notwithstanding Manuel's violation of various rules, the jury was not persuaded that his conduct fell below the standard of care or constituted fraud or negligent misrepresentation. We are satisfied that even if the jury had been instructed that a California regulation imposed essentially the same requirement as Lincoln's compliance manual, there is no reasonable probability this would have caused the jury to reach a different result.
The jury voted nine to three that there was no negligent conduct, voted 11 to one that there was no intentional misrepresentation, and voted unanimously that there was no concealment or negligent misrepresentation.
To support her claim of prejudice, Jennifer points out that the jury finding of no negligence was based on a vote of nine to three, and that only one juror needed to be persuaded in her favor to upset the required three-quarters majority verdict. (See Norman, supra, 107 Cal.App.4th at pp. 1252-1253.) We are not persuaded that there is a reasonable likelihood that one of the nine jurors who found no negligence would have changed his or her vote had the regulation been read to the jury. As we stated, the jury knew Manuel had violated a written company procedure that imposed the same requirement as the regulation, and knew he had violated the replacement statute. In the context of the entire record, instruction on the regulation would not have been a significant enough addition to create a reasonable probability of altering any juror's view of the case.
DISPOSITION
The judgment is affirmed.
WE CONCUR: NARES, Acting P. J. O'ROURKE, J.