Opinion
Case No.: 20-CV-694-RSH-DEB
2023-06-05
Susan A. PITT, Plaintiff, v. METROPOLITAN TOWER LIFE INSURANCE COMPANY, Defendant.
Alex M. Tomasevic, Craig McKenzie Nicholas, Nicholas and Tomasevic LLP, San Diego, CA, Georg Capielo, La Mesa, CA, Jack B. Winters, Jr., Sarah D. Ball, Law Offices of Winters and Associates, La Mesa, CA, for Plaintiff. Jeffrey A. Zachman, Pro Hac Vice, Dentons U.S. LLP, Atlanta, GA, Laura L. Geist, Willkie Farr & Gallagher LLP, San Francisco, CA, Sandra D. Hauser, Pro Hac Vice, Dentons U.S. LLP, New York, NY, Spencer Dennis Hamilton, Pro Hac Vice, Dentons U.S. LLP, Dallas, TX, Peter Zlomke Stockburger, Dentons U.S. LLP, San Diego, CA, for Defendant.
Alex M. Tomasevic, Craig McKenzie Nicholas, Nicholas and Tomasevic LLP, San Diego, CA, Georg Capielo, La Mesa, CA, Jack B. Winters, Jr., Sarah D. Ball, Law Offices of Winters and Associates, La Mesa, CA, for Plaintiff. Jeffrey A. Zachman, Pro Hac Vice, Dentons U.S. LLP, Atlanta, GA, Laura L. Geist, Willkie Farr & Gallagher LLP, San Francisco, CA, Sandra D. Hauser, Pro Hac Vice, Dentons U.S. LLP, New York, NY, Spencer Dennis Hamilton, Pro Hac Vice, Dentons U.S. LLP, Dallas, TX, Peter Zlomke Stockburger, Dentons U.S. LLP, San Diego, CA, for Defendant. ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT
[ECF Nos. 53, 77]
Robert S. Huie, United States District Judge
This Order addresses: (i) Defendant Metropolitan Tower Life Insurance Company's ("Tower's") motion for summary judgment, ECF No. 53, and (ii) Plaintiff's motion for partial summary judgment, ECF No. 77. The Court grants summary judgment in favor of Tower and denies Plaintiff's motion for partial summary judgment.
I. FACTUAL BACKGROUND
In October 2003, while living in Illinois, Michael A. Pitt purchased a $2 million term life insurance policy (the "Policy") from Tower. ECF No. 1 ¶ 35. The Policy required Mr. Pitt to pay a fixed annual premium of $7,290 during a "Guaranteed Level Premium Period" of 20 years, after which time the premiums rose dramatically. ECF No. 1-2 at 3-4.
This Order cites pleadings and declarations by paragraph number, the parties' briefs by the page numbers contained in the briefs, and other exhibits with reference to the court-stamped (i.e., ECF) page number at the top of each page.
In 2014, Mr. Pitt and his wife, Plaintiff Susan Pitt, moved from Illinois to California. ECF No. 76-2 at 14. They notified Tower of their change of address and continued to pay premiums. Id.
On December 16, 2015, Tower sent Mr. Pitt a reminder that his quarterly premium payment was due on January 6, 2016. ECF Nos. 53-2 at 4 ¶ 14; 56-59. The notice indicated that the premium was due "on or before [January 6, 2016] (or within the 31 day grace period)." Id. at 56. Mr. Pitt failed to timely pay the premium. ECF No. 76-2 ¶ 6.
On February 8, 2016, after the premium due date had passed, Tower sent Mr. Pitt a notice characterized as a "Special Courtesy Offer" informing Mr. Pitt: "Your Grace Period Has Expired." ECF No. 53-2 at 4 ¶ 15; 61. The notice warned that "[n]on-payment can result in a loss of coverage," and communicated to Mr. Pitt that "[y]our policy will remain in force if you pay the overdue amount shown on the front of this notice. If payment is made on or before the offer expires, you will not be required to apply for reinstatement." Id. at 61. The "Special Courtesy Offer" expired on February 27, 2016. Id. Mr. Pitt did not pay the premium amount on or before that date.
On March 15, 2016, Tower sent Mr. Pitt a letter informing him that "[y]our policy lapsed because the premium due on January 6, 2016 has not been paid." Id. at 66. The letter claimed that "the policy expired at the end of its grace period and is now without value." Id. It also provided Mr. Pitt with instructions to apply for reinstatement of the Policy. Id.
In September 2016, Mr. Pitt applied for reinstatement and tendered the full annual premium amount of $7,290. ECF No. 76-2 at 15. In February 2017, Tower rejected Mr. Pitt's reinstatement application. Id.
Mr. Pitt passed away in May 2018 from amyotrophic lateral sclerosis. ECF No. 76-2 ¶ 9. In August 2018, Plaintiff - the named beneficiary under the Policy - filed a claim with Tower for death benefits. ECF No. 53-2 at 81-82. Tower denied her claim. Id. at 4-5 ¶ 21; 85.
Plaintiff's central contention is that Tower's conduct violated California Insurance Code Sections 10113.71 and 10113.72 (the "Statutes"). See, e.g., ECF No. 1 ¶¶ 2, 20-34.
II. PROCEDURAL BACKGROUND
On October 30, 2018, Plaintiff filed an action against Tower and other insurance companies in the U.S. District Court for the Northern District of California, bringing claims for declaratory judgment, breach of contract, bad faith, and unfair competition. Pitt v. Gen. Am. Life Ins. Co., et al., No. 18-cv-6609-YGR, at ECF No. 1 (C.D. Cal.). Plaintiff amended her complaint to include claims for financial elder abuse. Id. at ECF No. 32. On April 1, 2020, the district court granted defense motions to dismiss for lack of personal jurisdiction and improper venue and dismissed the action with prejudice. Id. at ECF No. 115.
Shortly after dismissal of her case, on April 10, 2020, Plaintiff filed the Complaint in this action, which is the operative pleading. ECF No. 1. Tower answered the Complaint. ECF No. 11. The Complaint brings six causes of action: (i) declaratory relief under California Civil Code §§ 1060, et seq.; (ii) declaratory relief under 28 U.S.C. § 2201, et seq.; (iii) breach of contract; (iv) bad faith; (v) unfair competition under California Business and Professions Code §§ 17200, et seq.; and (vi) financial elder abuse. ECF No. 1 ¶¶ 84-148. In her prayer for relief, Plaintiff also seeks an "injunction to issue against Defendant stopping and remedying the ongoing violation of the Statutes, including public injunctive relief." Id. at 40 § XIV ¶ 3. She also seeks treble damages with respect to her financial elder abuse claim, id. ¶ 71, along with punitive damages, id. § XIV ¶ 7.
On October 21, 2021, Plaintiff filed a motion for class certification. ECF No. 46. On December 10, 2022, the Court denied the motion. ECF No. 110.
On December 3, 2021, Defendant filed a motion for summary judgment, seeking dismissal of all of Plaintiff's claims. ECF No. 53. The motion is fully briefed. ECF Nos. 53-1 (Defendant's opening brief); 76 (Plaintiff's opposition); 80 (Defendant's reply).
On February 18, 2022, Plaintiff filed a motion for partial summary judgment on her breach of contract and declaratory judgment claims. ECF No. 77. That motion is also fully briefed. ECF Nos. 77-1 (Plaintiff's opening brief); 88 (Defendant's opposition); 90 (Plaintiff's reply).
On January 5, 2023, the Court granted the Parties' joint motion for a temporary stay of the case in light of the potentially dispositive issues pending before the Ninth Circuit in Elmore v. Hartford Life & Acc. Ins. Co., No. 20-55118. ECF No. 113. On May 9, 2023, the Court lifted the stay after the Ninth Circuit issued a decision in Elmore. ECF No. 115. The Court directed the Parties to submit simultaneous briefing concerning the impact of Elmore on the pending summary judgment motions. Id. On May 23, 2023, the Parties submitted supplemental briefing on the issue. ECF Nos. 116 (Plaintiff's brief); 117 (Defendant's brief).
III. LEGAL STANDARD
The Court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute about a material fact is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.
The movant always bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The moving party can satisfy this burden by: (1) presenting evidence that negates an essential element of the nonmoving party's case; or (2) demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. Id. at 322-23, 106 S.Ct. 2548. "Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987).
If the movant fails to discharge this initial burden, summary judgment must be denied, and the court need not consider the nonmoving party's evidence. Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). If the moving party meets this initial burden, however, the nonmoving party cannot defeat summary judgment merely by demonstrating "that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); see also Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir. 1995) ("The mere existence of a scintilla of evidence in support of the non-moving party's position is not sufficient." (citing Anderson, 477 U.S. at 242, 252, 106 S.Ct. 2505)). Rather, the nonmoving party must "go beyond the pleadings" and by "the depositions, answers to interrogatories, and admissions on file," designate "specific facts showing that there is a genuine issue for trial." Celotex, 477 U.S. at 324, 106 S.Ct. 2548 (quoting Fed. R. Civ. P. 56(e)).
When making this determination, the court must view all inferences drawn from the underlying facts in the light most favorable to the nonmoving party. See Matsushita, 475 U.S. at 587, 106 S.Ct. 1348. "Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge, [when] he is ruling on a motion for summary judgment." Anderson, 477 U.S. at 255, 106 S.Ct. 2505.
IV. DISCUSSION
A. The Statutes Do Not Apply To The Policy
The Statutes at issue here - California Insurance Code Sections 10113.71 and 10113.72 - create a "single, unified pretermination notice scheme." McHugh v. Protective Life Ins. Co., 12 Cal. 5th 213, 240, 283 Cal.Rptr.3d 323, 494 P.3d 24 (2021). The Court previously summarized the requirements of the Statutes in its Order denying Plaintiff's motion for class certification. See ECF No. 110 at 1-3. In brief, the Statutes mandate that: (i) California insurance policies must contain a 60-day grace period provision; (ii) insurers must give notice of lapse or termination "within 30 days after a premium is due and unpaid" and "at least 30 days prior to the effective date of the lapse or termination"; (iii) insurers must provide applicants an opportunity to designate third parties to receive notice of lapse or termination for nonpayment of premium; and (iv) insurers must notify the policyholder annually of the right to change or add designees. Cal. Ins. Code §§ 11013.71, 10113.72. The Statutes are applicable to life insurance policies "issued or delivered" in California. See Cal. Ins. Code §§ 11013.71(a), 10113.72(a).
In two recent decisions, the Ninth Circuit held that the Statutes did not apply to life policies issued or delivered outside of California—in each case, as here, the policies were issued and delivered in Illinois. Clark v. Transamerica Life Ins. Co., No. 20-16756, 2023 WL 3143689 (9th Cir. Apr. 28, 2023); Elmore v. Hartford Life & Accident Ins. Co., No. 20-55118, 2023 WL 3299990 (9th Cir. May 8, 2023). Although those two dispositions are unpublished and therefore non-precedential, the Court reaches the same conclusion as to the Policy here.
Plaintiff's counsel agreed at oral argument that the Policy here was issued and delivered in Illinois, and that there was never a different or additional Policy document issued. Plaintiff contends that the Statutes nonetheless apply here because after Mr. Pitt moved to California, he continued to pay premiums on his Policy, resulting in a "renewal" of the Policy within California that caused the Policy to be "issued or delivered" in California. ECF No. 76 at 16-17. The Court disagrees.
Plaintiff also admitted in response to a request for admission that the Policy was delivered to Mr. Pitt in Illinois. See ECF No. 53-2 at 114.
The policyholders in Clark and Elmore, represented by the same counsel representing Plaintiff in this case, made the same "renewal" argument in each case. Although the Ninth Circuit's written dispositions did not explicitly analyze the renewal argument, in both cases the Court of Appeals concluded that the Illinois policies were not subject to the Statutes. See Clark, 2023 WL 3143689, at *1 n.1 ("[Policyholder's] remaining statutory and policy arguments fail to persuade because there is no indication that the California Legislature intended for notice and grace period requirements to apply to insurance policies not issued or delivered in California."); Elmore, 2023 WL 3299990, at *1 ("The California Lapse Statute applies only to life insurance policies 'issued or delivered' in California.").
Plaintiff endeavors to persuade the Court that the term "issued or delivered" in California, as used in the Statutes, in fact means "issued, delivered, or renewed" in California. The only case cited by Plaintiff that squarely addresses the issue is Bentley v. United of Omaha Life Ins. Co., No. CV 15-7870-DMG, 2018 WL 3357458 (C.D. Cal. May 1, 2018). There, the court certified a class of beneficiaries of policies that lapsed or terminated for non-payment of premiums, where the insurance company had failed to deliver third-party notices required by the Statutes. Id. at *12. The court rejected the insurer's request to remove from the class those beneficiaries of policies issued or delivered outside California, holding that "the renewal principle applies the Statutes to policies renewed in the State, even if they were not purchased in California." Id. at *3-4. Bentley pre-dated the Ninth Circuit decisions in Clark and Elmore. Additionally, it relied heavily on another California decision, Modglin v. State Farm Mut. Auto. Ins. Co., 273 Cal. App. 2d 693, 78 Cal.Rptr. 355 (Ct. App. 1969), which in the Court's view does not provide support for the application of the renewal theory as Plaintiff argues.
At oral argument, Plaintiff's counsel argued that the Court should follow Bentley because McHugh cited that decision approvingly. But McHugh did not cite the district court's May 1, 2018 order. It instead cited an earlier June 22, 2016 order that did not address the issue of out-of-state policies. See McHugh, 12 Cal. 5th at 237, 242, 283 Cal.Rptr.3d 323, 494 P.3d 24; Bentley v. United of Omaha Life Ins. Co., 2016 WL 7443189, at *4-5 (C.D. Cal. June 22, 2016) (applying renewal principle, but not discussing out-of-state policies and relying heavily on Modglin). McHugh itself never discussed the application of the Statutes to policies issued in another state. Plaintiff also cites another order from the Bentley case, which also did not address the relevant issue. See Bentley v. United of Omaha Life Ins. Co., 371 F. Supp. 3d 723, 734-35 (C.D. Cal. 2019) (finding question of whether the renewal principle caused Statutes to apply to out-of-state policy irrelevant because there was "no indication that the premium renewal occurred in California").
In Modglin, the California Court of Appeal determined that an auto liability policy issued and delivered in Arizona was subject to a California statute requiring such policies to include uninsured motorist coverage "where a policy is issued or delivered by any insurer licensed in this state upon any motor vehicle then principally used or principally garaged in this state." Id. at 699-700, 78 Cal.Rptr. 355 (internal quotation marks omitted). The insurer argued that the policy had been issued or delivered in Arizona, had only been renewed in California, and therefore had not been "issued or delivered" within California. Id. at 700, 78 Cal.Rptr. 355. The appellate court rejected that contention, not because renewal constituted issuance or delivery within California, but because the state of issuance or delivery was irrelevant. The court found that the uninsured motorist provision "applies irrespective of where the policy is issued or delivered," and instead applies where the vehicle in question was "principally used or principally garaged in this state." Id. Because the trial court found that the covered vehicle "was only used and garaged in California," the policyholder was entitled to coverage under the uninsured motorist provisions. Modglin predated the Statutes by decades, addressed a different statute relating to uninsured motorist coverage, did not rule on that statute's language of "issued or delivered in California," and did not explicitly address the validity or application of a "renewal principle."
Modglin did note public policy concerns if the uninsured motorist statute were construed as proposed by the insurer. 273 Cal. App. 2d. at 701, 78 Cal.Rptr. 355 ("[I]f we were to render the construction to the statute which the defendant submits and formulate a rule that the statute only applies to new policies, as distinguished from renewals of existing policies, the purpose of the Uninsured Motorist Law could be circumvented by the mere expedient of insurance of insurance carriers renewing their policies instead of issuing new ones. The Legislature never intended such a result."). But this language is dicta and does not address the California legislature's intent with respect to the Statutes at issue here. See also Clark, 2023 WL 3143689, at *1 n.1 ("[T]here is no indication that the California Legislature intended for notice and grace period requirements to apply to insurance policies not issued or delivered in California."). Additionally, it is not clear how that public policy concern would apply in the context of a life insurance policy like Mr. Pitt's, where the Policy contemplates "renewal" through the annual payment of premiums that were fixed at the outset. As Plaintiff's counsel agreed at oral argument, the term life Policy here - unlike a typical auto insurance policy, for example - does not allow the insurer the option to cancel coverage or to change rates from the schedule provided, but instead leaves the insured the option to continue paying premiums and thereby renew the policy for successive years. In such a situation, there may be a diminished concern of strategic circumvention on the part of the insurer.
Accordingly, the Court concludes that Modglin does not support Plaintiff's argument here. The other cases cited by Plaintiff do not address the renewal principle's applicability to policies issued outside of California. See Thomas v. State Farm Life Ins. Co., No. 20-55231, 2021 WL 4596286 (9th Cir. Oct. 6, 2021); Siino v. Foresters Life Ins. & Annuity Co., No. 20-CV-02904-JST, 2020 WL 8410449 (N.D. Cal. Sept. 1, 2020); Moriarty v. Am. Gen. Life Ins. Co., No. 17-CV-01709 BTM-BGS, 2018 WL 4331999 (S.D. Cal. Sept. 11, 2018).
In contrast, in Ball v. Cal. State Auto. Ass'n Inter-Ins. Bureau, 201 Cal. App. 2d 85, 20 Cal.Rptr. 31 (Ct. App. 1962), the California Court of Appeal found that an auto liability policy was not subject to a subsequently enacted California statute requiring auto liability policies "issued and delivered" in California to contain uninsured motorist coverage. The court reasoned that "[t]he specific act of issuance and delivery [of the policy] predated the legislative provision and cannot conceivably operate to bring within its meaning later legislation which was enacted after such issuance and delivery." Id. at 88, 20 Cal.Rptr. 31. It further noted that "[t]he terms 'issued' and 'delivered' [in the statute] must refer to the original issuance and delivery of the policy; they are fixed as to time and do not stretch into infinity." Id. at 87, 20 Cal.Rptr. 31. The foregoing language in Ball suggests that the payment of premiums do not effect a continual "re-issuance" of a policy.
In Elmore, the district court clearly determined that the Statutes did not apply to a policy issued and delivered in Illinois, and reasoned that the fact "[t]hat Plaintiff may have moved to California at some point after purchasing the policy has no bearing on the original location of issuance and delivery." No. CV 18-08903-CJC (JCX), 2020 WL 1276106, at *4 (C.D. Cal. Jan. 6, 2020); see also Clark v. Transamerica Life Ins. Co., 2020 WL 5110295, at *3-4 (E.D.Cal. 2020) (finding that group policy was not issued or delivered in California even though plaintiff had argued that she had paid renewal premiums in California). The same reasoning applies here.
Finally, Plaintiff argues that "choice of law principles support application of California law." ECF No. 76 at 17. This precise argument was considered and rejected by the Ninth Circuit in Elmore, 2023 WL 3299990, at *1 ("[C]hoice of law principles cannot trump or alter the statutory requirement in the California Lapse Statute that says that it applies only to policies delivered or issued within the state. Choice of law dictates which state law applies; it does not rewrite state law."). The Court agrees with the analysis in Elmore. The Court also rejects Plaintiff's argument from the Policy's "Conformity with Statutes Clause," which provides that "[i]f any provision in this policy is in conflict with the laws of the state which govern this policy, the provision will be deemed to be amended to conform with such laws." ECF No. 53-2 at 16. As discussed above, the Statutes by their own terms do not govern the Policy, and therefore there is no conflict.
B. Plaintiff's Breach Of Contract Action
Both Plaintiff and Tower move for summary judgment on Plaintiff's breach of contract claim. To prevail on a breach of contract claim, a plaintiff must show: "(1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiffs." Orcilla v. Big Sur, Inc., 244 Cal. App. 4th 982, 1004, 198 Cal.Rptr.3d 715 (Ct. App. 2016) (citing Careau & Co. v. Sec. Pac. Bus. Credit, Inc., 222 Cal. App. 3d 1371, 1388, 272 Cal.Rptr. 387 (Ct. App. 1990)). When a plaintiff's "failure to perform a contractual obligation constitutes a material breach of the contract, the other party may be discharged from its duty to perform under the contract." Brown v. Grimes, 192 Cal. App. 4th 265, 277, 120 Cal.Rptr.3d 893 (Ct. App. 2011).
The Policy incorporates any applicable state law. ECF No. 1-2 at 7 ("If any provision in this policy is in conflict with the laws of the state which govern this policy, the provision will be deemed to be amended to conform with such laws."). Plaintiff argues that Tower breached the contract by failing to comply with the Statutes. Because the Court finds that the Statutes do not apply to the Policy, Plaintiff's breach of contract action cannot be based on a violation of the Statutes.
Plaintiff argues in the alternative that if Illinois law applies, Defendant breached the contract by violating Illinois law as well. Illinois law prohibits insurers from declaring a policy forfeiture or lapse within six months after default in premium payments, unless a "written or printed notice" containing certain language is timely delivered to the policyholder or assignee. 215 Ill. Comp. Stat. Ann. 5/234(1). But even "though an insurance company fails to provide the premium-due notice required by section 234(1), when the policy has remained in default for six months plus any period of extended coverage made possible by the policy's provisions . . . the policy is subject to forfeiture." First Nat. Bank of Decatur v. Mut. Tr. Life Ins. Co., 122 Ill. 2d 116, 122, 118 Ill.Dec. 615, 522 N.E.2d 70 (1988); see also Clarin Corp. v. Mass. Gen. Life Ins. Co., 44 F.3d 471, 477 (7th Cir. 1994) ("Since § 234(1) notice is not mandatory, the insurer must only comply with the statute if it desires to terminate a policy within six months after default of payment.").
Defendant contends that "Plaintiff's new Illinois law claim fails because she raised it for the first time in response to summary judgment." ECF No. 117 at 4. Although Plaintiff does not bring an Illinois law claim, she nonetheless raised a theory of breach of contract based on a violation of Illinois law in her Complaint. See ECF No. 1 ¶ 102 ("Under the terms of this Policy and consistent with laws of both California and Illinois, Plaintiff was entitled to sufficient written notice prior to the effectuation of any lapse or termination for non-payment.").
Here, Mr. Pitt failed to pay his premium within six months of his payment due date on January 6, 2016. Under Illinois law, the Policy was therefore subject to forfeiture, regardless of any defects in the notice Tower sent to Mr. Pitt. See also First Nat. Bank of Decatur, 122 Ill. 2d at 122, 118 Ill.Dec. 615, 522 N.E.2d 70 (finding that policy was subject to forfeiture even though insurer failed to provide Section 234(1) notice because more than six months had passed since premium due date); Nieder v. Jackson Nat. Life Ins. Co., No. 10 C 6766, 2011 WL 3798224, at *3 (N.D. Ill. Aug. 22, 2011) (dismissing complaint where plaintiff alleged that policyholder died eight days after expiration of six-month period following premium due date and noting that insurer "was free to terminate the policy at the time it did so, with or without notice").
Plaintiff cites two Illinois cases, but they are inapposite because the policyholder died within six months of the premium due date and the policies were therefore not subject to forfeiture at the time that benefits were due. See Harwick v. AXA Equitable Life Ins. Co., No. 19 C 8305, 2020 WL 7698367, at *1 (N.D. Ill. Dec. 27, 2020) (policyholder died approximately one month prior to premium due date and two months after defective notice); Wegrzyn v. Jackson Nat. Life Ins. Co., No. 10 C 2140, 2011 WL 2672510, at *1 (N.D. Ill. July 8, 2011) (policyholder died within two months of extended premium due date). Here, Mr. Pitt passed away over two years after the premium due date.
Plaintiff also contends that Tower breached the Policy's "Grace Period" provision, which provides: "We will allow a grace period of 31 days after the premium due date for payment of each premium except the first. A notice will be sent to you, at your last known address, and any assignee of record." ECF No. 53-2 at 11. Here, the evidence reflects that Tower provided such notice to Mr. Pitt. Tower sent Mr. Pitt a Notice of Payment Due, reflecting premiums due on January 6, 2016, advising him that "[t]he premium shown is payable on or before the due date shown (or within the 31 day grace period) to the Company or its authorized representative." ECF No. 53-2 at 56; ECF No. 76-4 at No. 65. After the 31-day grace period had elapsed, Tower sent Mr. Pitt a "Special Courtesy Offer," advising him that if he paid the premiums due by February 27, 2016, "the policy will remain in force . . . [and] you will not be required to apply for reinstatement." ECF No. 53-2 at 63-64; ECF No. 46-4 at No. 66. Plaintiff has offered no evidence that Tower in fact cancelled his Policy during the 31-day grace period following the January 6, 2016 due date or otherwise violated the Policy's "Grace Period" provision, which did not specify a time for when "notice will be sent to you" or specify what that notice was required to contain.
Because there is no breach, the Court grants summary judgment in favor of Defendant on Plaintiff's breach of contract claim.
C. Plaintiff's Unfair Competition Claim
Under California Business and Professions Code § 17200, "unfair competition" includes "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising . . . ." The statute "establishes three varieties of unfair competition—acts or practices which are unlawful, or unfair, or fraudulent." Cel-Tech Commc'ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 180, 83 Cal.Rptr.2d 548, 973 P.2d 527 (1999). In response to Tower's motion, Plaintiff argues that its UCL claim survives summary judgment because it has established a breach of contract. ECF No. 76 at 28. But, as discussed above, there is no triable issue as to Plaintiff's breach of contract claim. The Court therefore grants Tower's motion for summary judgment on Plaintiff's unfair competition claim.
Plaintiff's UCL claim as alleged in the Complaint is premised on the assumption that the Statutes apply to the Policy. See ECF No. 1 ¶¶ 122-139.
D. Plaintiff's Bad Faith Claim
To find an insurer liable for bad faith in its delay or denial of payment of policy benefits, "it must be shown that the insurer acted unreasonably or without proper cause." Chateau Chamberay Homeowners Ass'n v. Associated Int'l Ins. Co., 90 Cal. App. 4th 335, 347, 108 Cal.Rptr.2d 776 (Ct. App. 2001) (emphasis in original). "The key to a bad faith claim is whether or not the insurer's denial of coverage was reasonable." Guebara v. Allstate Ins. Co., 237 F.3d 987, 992 (9th Cir. 2001). "[T]he reasonableness of the insurer's decisions and actions must be evaluated as of the time that they were made; the evaluation cannot fairly be made in the light of subsequent events which may provide evidence of the insurer's errors." Id. "The mistaken withholding of policy benefits, if reasonable or if based on a legitimate dispute as to the insurer's liability under California law, does not expose the insurer to bad faith liability." Tomaselli v. Transamerica Ins. Co., 25 Cal. App. 4th 1269, 1280-1281, 31 Cal.Rptr.2d 433 (Ct. App. 1994). "[A] bad faith claim can be dismissed on summary judgment if the defendant can show that there was a genuine dispute as to coverage." Guebara, 237 F.3d at 992.
In her briefing, Plaintiff first argues that Tower acted in bad faith by violating Illinois and California law. ECF No. 76 at 26-28. As discussed above, the Court concludes that Tower did not violate either California or Illinois law, and that Tower did not breach the Policy. Plaintiff also contends that "Tower concealed the true standards for reinstatement from Mr. Pitt." ECF No. 76 at 26. Plaintiff does not support this contention with evidence. Finally, Plaintiff argues that Tower acted in bad faith by failing to satisfy its duty to reasonably investigate possible bases for coverage, and that such duty continues after the start of litigation. ECF No. 76 at 26-27. But Plaintiff does not point to any evidence raising a genuine dispute of material fact as to the thoroughness of Tower's investigation.
The Court therefore grants Tower's motion for summary judgment on Plaintiff's bad faith claim.
E. Plaintiff's Financial Elder Abuse Claim
Under California Welfare and Institutions Code Section 15610.30, "[f]inancial abuse" of an elder or dependent person occurs when an entity "[t]akes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both," or "by undue influence." Financial elder abuse may occur "by means of an agreement." § 15610.30(c). Misappropriation of property "for a wrongful use" occurs if "among other things, the person or entity takes, secretes, appropriates, obtains, or retains the property and the person or entity knew or should have known that this conduct is likely to be harmful to the elder or dependent adult." § 15610.30(b). Where an elder person is being deprived of property under a contract, a mere breach of the contract is insufficient to establish wrongful use. Paslay v. State Farm Gen. Ins. Co., 248 Cal. App. 4th 639, 658, 203 Cal.Rptr.3d 785 (Ct. App. 2016). Instead, "wrongful conduct occurs only when the party who violates the contract actually knows that it is engaging in a harmful breach, or reasonably should be aware of the harmful breach." Id.
As discussed above, there was no breach. Additionally, Plaintiff offers no evidence that Tower actually knew or reasonably should have known that it was engaging in a harmful breach. Mr. Pitt had failed to pay his quarterly premium due on January 6, 2016, ECF No. 77-2 ¶¶ 6, 8, and there was substantial California authority at the time indicating that the Statutes did not apply to the Policy. Nor does Plaintiff reference any evidence indicating that Tower acted with the intent to defraud. Her financial elder abuse claim therefore fails. See, e.g., Paslay, 248 Cal. App. 4th at 658, 203 Cal.Rptr.3d 785 (affirming summary judgment in favor of insurer on elder abuse claim where there was "no evidence that [insurer] acted in subjective bad faith or unreasonably in denying additional benefits").
Plaintiff argues that Tower admits to defrauding Plaintiff by "touting the use of its secret and concealed administrative lapse procedures and underwriting standards for reinstatement." ECF No. 76 at 29-10. This argument again relies on the contention that Tower concealed its "true standards for reinstatement" from Mr. Pitt. But, as discussed above, there is no supporting evidence creating a triable issue of material fact.
Plaintiff cites Crawford v. Cont'l Cas. Ins. Co., No. SACV 14-00968-CJC (JCGX), 2014 WL 10988334 (C.D. Cal. July 24, 2014) for the proposition that the denial of policy coverage benefits to an elderly person can violate the Elder Abuse Act. But Crawford only decided the sufficiency of allegations at the pleading phase, finding that dismissal was inappropriate where plaintiff also made an allegation of bad faith which, "if proven," could show that the insurer wrongfully withheld benefits. Id. at *2. Here, Plaintiff fails to meet her burden of offering evidence raising a genuine dispute of fact with respect to her bad faith claim. For the same reason, the other authorities cited by Plaintiff, Rosove v. Cont'l Cas. Co., No. 2:14-CV-01118-CAS, 2014 WL 2766161, at *5 (C.D. Cal. June 2, 2014); Am. Gen. Life Ins. Co. v. Valentine, No. LA CV16-08097 JAK (JCx), 2017 WL 5635014 (C.D. Cal. Apr. 13, 2017), are distinguishable.
F. Plaintiff's Claims for Declaratory Relief
Plaintiff seeks a declaratory judgment that "Sections 10113.71 and 10113.72 applied as of January 1, 2013, to Defendant's California policies in force as of or at any time after January 1, 2013, including [Plaintiff's] Policy." ECF No. 1 ¶¶ 92, 98. Both Plaintiff and Tower move for summary judgment on this claim.
Pursuant to 28 U.S.C. § 2201, "any court of the United States, upon the filing of the appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." Declaratory relief is appropriate "(1) when the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and (2) when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding." Guerra v. Sutton, 783 F.2d 1371, 1376 (9th Cir. 1986) (internal quotation marks omitted).
Plaintiff's claim seeking a declaratory judgment pursuant to California Code of Civil Procedure § 1060 is invalid, because that provision only authorizes a plaintiff to bring a declaratory relief action "in the superior court," not federal court.
Here, Plaintiff's request for declaratory relief is moot in light of McHugh. McHugh decided that the Statutes apply to all California policies in effect as of January 1, 2013, regardless of when they were originally issued. 12 Cal. 5th at 220, 283 Cal.Rptr.3d 323, 494 P.3d 24. The requested declaratory judgment would therefore serve no useful purpose in further clarifying the legal relations in issue. See, e.g., Moriarty v. Am. Gen. Life Ins. Co., No. 3:17-CV-1709-BTM-WVG, 2022 WL 2959560, at *4 (S.D. Cal. July 26, 2022) (rejecting virtually identical declaratory judgment request as moot in light of McHugh); Antoninetti v. Chipotle Mexican Grill, Inc., No. 06-CV-2671-BTM-WMC, 2012 WL 3762440, at *2-4 (S.D. Cal. Aug. 28, 2012) (finding claim for declaratory relief moot after issuance of binding Ninth Circuit precedent); see also Stormans, Inc. v. Selecky, 586 F.3d 1109, 1124 (9th Cir. 2009) (quoting Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed. 826 (1941)) (stating that declaratory judgment action is ripe for adjudication if "there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment").
Additionally, Plaintiff's request for declaratory relief is duplicative of her breach of contract claim. "[W]here determinations of a breach of contract claim will resolve any question regarding interpretation of the contract, there is no need for declaratory relief, and dismissal of a companion declaratory relief claim is appropriate." Vascular Imaging Pros., Inc. v. Digirad Corp., 401 F. Supp. 3d 1005, 1010 (S.D. Cal. 2019). Here, Plaintiff's breach of contract claim necessarily implicates and resolves the same legal question, and the Court has found that the Statutes do not apply to the Policy. See, e.g., Madrid v. Concho Elementary Sch. Dist. No. 6 of Apache Cnty., 439 F. App'x 566, 567 (9th Cir. 2011) (finding no abuse of discretion when district court construed claim for declaratory relief as part of breach of contract claim, noting that Declaratory Judgment Act "authorizes, but does not mandate, relief," and courts should "avoid duplicative litigation").
The Court therefore grants Tower's motion for summary judgment on Plaintiff's declaratory relief claims.
Plaintiff seeks for the first time on summary judgment a declaration that goes beyond merely finding that the Statutes applied to Tower's California policies in effect on or after January 1, 2013. Plaintiff now seeks an expansive declaration concerning all the policies in her proposed class, stating that: "a. The Statutes apply to all Class policies regardless of original date of issuance; b. Class policies Defendant terminated without strictly complying with the Statutes were not properly terminated, and remained in force despite the nonpayment of premium; and c. In turn, any beneficiaries of Class policies where the insured died while the policies were in force, are entitled to payment of the policy benefits." ECF Nos. 77 at 1; 77-1 at 2, 17. The Court does not entertain this request, because it has denied Plaintiff's request for class certification.
G. Injunctive Relief
The Complaint seeks "an injunction . . . against Defendant stopping and remedying the ongoing violation of the Statutes, including public injunctive relief." ECF No. 1 § XIV ¶ 3. In order to obtain a permanent injunction, Plaintiff must prove: "(1) that [she] has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction." eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006). Additionally, a "plaintiff must demonstrate a likelihood of irreparable harm as a prerequisite for injunctive relief, whether preliminary or permanent." Flexible Lifeline Sys., Inc. v. Precision Lift, Inc., 654 F.3d 989, 998 (9th Cir. 2011); Quiksilver, Inc. v. Kymsta Corp., 360 F. App'x 886, 889 (9th Cir. 2009) (holding district court adequately assessed irreparable injury by identifying "likelihood of future harm").
There is no ongoing violation of the Statutes to remedy because the Statutes do not apply to the Policy. Plaintiff nowhere provides any further details about the nature of the injunction she proposes or any evidence in her summary judgment briefing to support her entitlement to such relief. There is likewise no basis to infer that Plaintiff is likely to suffer future harm. Her request for injunctive relief is therefore denied.
Because the Court finds summary judgment in favor of Defendant is appropriate on all of Plaintiff's claims, it need not address Defendant's affirmative defense of statute of limitations.
V. CONCLUSION
For the foregoing reasons, the Court ORDERS that:
1. Tower's motion for summary judgment, ECF No. 53, is GRANTED; and
2. Plaintiff's motion for partial summary judgment, ECF No. 77, is DENIED.
IT IS SO ORDERED.