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Navarro v. Sears Life Insurance Co.

August 15, 2008

RITA NAVARRO, PLAINTIFF,
v.
SEARS LIFE INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER*fn1

Defendant Sears Life Insurance Company ("Sears") moves to dismiss Plaintiff Rita Navarro's ("Navarro") complaint and to strike her requests for punitive and emotional distress damages. Navarro opposes the motion.

PLAINTIFF'S FACTUAL ALLEGATIONS

Navarro alleges she was contacted by a Sears telemarketer ("Telemarketer") on or about July 28, 2003. (Compl. ¶ 12.) The Telemarketer followed a Spanish script ("Script") and sold Navarro an accidental death life insurance policy ("Policy"). (Id. ¶¶ 4, 11.) During a partly recorded telephonic conversation, the Telemarketer described the Policy as "the plan for cause of accidental death of $1,000,000 which covers yourself, your spouse and your children for a premium of $9.96 that will be billed to your Sears credit card monthly . . . ." (Id. ¶ 7.) After the telemarketing call, Sears delivered the written Policy to Navarro in English only. (Id. ¶¶ 3, 9.)

On April 26, 2005, Navarro's husband was killed in an automobile accident. (Id. ¶¶ 5, 9.) Navarro made a claim for an accidental death benefit under the Policy and Sears paid her $50,000, rather than the $1,000,000 Navarro expected. (Id.) The written Policy provides for payment of less insurance benefits for the death of a spouse of the primary insured than it provides for the death of the primary insured, Navarro. (Id. ¶¶ 6, 7, 9.) The benefits are also less when the death takes place in an automobile accident instead of on a "common carrier." (Id.) Navarro alleges the Telemarketer never disclosed these provisions during the telephone conversation, and Navarro understood from the telephone conversation that she would receive the $1,000,000 benefit if her husband died in an automobile accident. (Id. ¶ 6.)

On March 10, 2008, Navarro filed a complaint against Sears alleging breach of contract, fraud, and violations of 16 C.F.R. § 310.3 (Telemarketing Sales Rule or "TSR"), California Civil Code section 1670.6, and California Business and Professions Code section 17592.

DISCUSSION*fn2

I. Breach of Contract

Sears seeks dismissal of Navarro's breach of contract claim, arguing Navarro "cannot[] claim that under the express terms of her policy[] she is entitled to $1,000,000" because "a simple reference to the 'Coverage' portion of the certificate of insurance discloses that Plaintiff was paid precisely what she was owed: $50,000." (Mot. at 8:9-10.) Navarro's complaint does not identify how Sears breached the contract. (See Compl. ¶¶ 1-13.)

Navarro argues the terms of the Policy, particularly the legal term "common carrier," are not "plainly explained or defined." (Opp'n at 10:23-11:19.) However, Navarro does not explain how this argument supports her breach of contract claim. Navarro cites Clement v. Smith, 16 Cal. App. 4th 39 (1993), and Greenfield v. Ins. Inc., 19 Cal. App. 3d 803 (1971), to support her argument that Sears breached the contract. (Opp'n at 11:20-12:16.) However, neither case discusses breach of contract. (Id. (citing Clement, 16 Cal. App. 4th at 45 (discussing fraud claim), and Greenfield, 19 Cal. App. 3d at 811 (same)).) Navarro also cites Laing v. Occidental Life Ins. Co. of Cal., 244 Cal. App. 2d 811, 817-21 (1996); but that case concerned reformation of a contract, which is not at issue here.

Accordingly, this portion of the motion is granted.

II. Fraud

A. Misrepresentation

Sears argues Navarro's fraud claim fails because the Telemarketer did not misrepresent the terms of the Policy. (Mot. at 11:7-11:15.) Misrepresentation is an essential element of a fraud claim. Hackethal v. Nat'l Cas. Co., 189 Cal. App. 3d 1102, 1111 (1987).

Navarro alleges the Telemarketer's misrepresentation was: "[y]ou selected the plan for cause of accidental death of $1,000,000 which covers yourself, your spouse and your children for a premium of $9.96 that will be billed to your Sears credit card monthly . . . ." (Compl. ¶ 7.) Navarro alleges this statement was a misrepresentation since the Telemarketer never disclosed that the $1,000,000 benefit was payable only upon death of the primary insured on a common carrier. (Compl. ¶ 6.) Sears counters it did not misrepresent the terms of the Policy because "summarizing the plan as one for cause of accidental death of $1,000,000" cannot be reasonably interpreted "to mean that no matter who died or how, $1,000,000 would be the benefit." (Mot. at 11:7-11:15; Reply at 7:19-22.)

Considering Navarro's misrepresentation allegation and the reasonable inferences which can be drawn therefrom in the light most favorable to Navarro, Sears has not shown that the Telemarketer's statements at issue did not misrepresent the terms of the Policy. See Clement v. Smith, 16 Cal. App. 4th 39, 44 (1993) (finding misrepresentation in broad statement that policy covered "any lawsuit" in regard to sale of property without disclosing that coverage was limited to personal injury and property damage).

Sears also argues the Script allegedly followed by the Telemarketer shows no misrepresentation was made as the differing benefit amounts are clearly ...


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