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Fidelity & Guaranty Life Insurance Co. v. Albertson

November 10, 2008

FIDELITY & GUARANTY LIFE INSURANCE COMPANY, A MARYLAND INSURANCE COMPANY, PLAINTIFF,
v.
JAMES O. ALBERTSON, AN INDIVIDUAL, DEFENDANT.
JAMES O. ALBERTSON COUNTER-CLAIMANT
v.
OLD MUTUAL FINANCIAL NETWORK F/K/A FIDELITY AND GUARANTY LIFE INSURANCE CO., MARK HUNTON AND DOES 1-10, COUNTER-DEFENDANTS



The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS AND DENYING AS MOOT MOTION TO STRIKE

Mark Hunton ("Hunton") has filed a motion to dismiss James Albertson's First Amended Counterclaim pursuant to Fed. R. Civ. P. 12(b)(6). Fidelity & Guaranty Life Insurance Company ("F&G") has filed a motion to strike. For the reasons discussed below, Hunton's motion to dismiss is GRANTED IN PART and DENIED IN PART, and F&G's motion to strike is DENIED AS MOOT.

I. BACKGROUND

This action arises out of a dispute between Albertson and F&G over life insurance proceeds. Albertson was the named beneficiary on a life insurance policy between F&G and Luis Plascencia ("Plascencia"), who is now deceased. (Albertson also obtained a life insurance policy from F&G and named Plascencia as the beneficiary. Albertson's life insurance policy is not in dispute.) According to F&G, Plascencia made material misrepresentations regarding his medical history and criminal record on his application for the policy. F&G contends that it would not have issued the life insurance policy had Plascencia been truthful on the application. In its Complaint, F&G seeks declaratory relief and rescission of the insurance contract under a two-year contestability clause.

In his First Amended Counterclaim ("FAC"), Albertson alleges, inter alia, that Plascencia was non-fluent in English and was functionally illiterate and, therefore, was incapable of making any material misrepresentations. According to Albertson, Hunton, an agent for F&G as well as an insurance agent for Plascencia and Albertson, fraudulently represented to Albertson that he was fluent in Spanish and could translate the policy application and Plascencia's responses thereto. Albertson alleges that Hunton filled out the application for Plascencia even though he could not speak Spanish and knew that Plascencia did not understand the application, causing a substantial likelihood that the recorded responses would be inaccurate.

The FAC asserts the following causes of action: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) negligence; (4) negligence per se; and (5) fraud (against Hunton only).

II. DISCUSSION

Hunton moves to dismiss all of Albertson's claims against him for failure to state a claim. F&G moves to strike portions of the negligence per se claim. The Court grants the motion to dismiss as to the breach of contract and breach of the implied covenant of good faith and fair dealing claims against Hunton and the negligence per se claim against Hunton and F&G, but denies the motion as to the negligence and fraud claims. The Court denies F&G's motion to strike as moot in light of the dismissal of the negligence per se claim.

A. Breach of Contract and Breach of the Implied Covenant of Good Faith and Fair Dealing

Hunton argues that the breach of contract claims fail to state a claim against him because he was not a party to the insurance contract. The Court agrees. According to the FAC, Hunton was an insurance agent. An insurance agent is not a party to an insurance contract and cannot be held liable for breach of contract or breach of the covenant of good faith and fair dealing as a matter of law. Minnesota Mutual Life Ins. Co. v. Ensley, 174 F.3d 977, 981 (9th Cir. 1999). Therefore, the Court grants the motion to dismiss the breach of contract and breach of the implied covenant of good faith and fair dealing claims against Hunton.

B. Negligence

Hunton moves to dismiss the negligence claim against him on the ground that he cannot be held personally liable for acts he performed as an agent for F&G. Under California law, an agent for an insurance company is not personally liable for acts he performed within the scope of his agency, provided there was full disclosure of the principal. Lippert v. Bailey, 241 Cal. App. 2d 376, 382 (1966).

However, when a defendant is a dual agent--i.e., an agent for the insurance company and the insured--the defendant may be held liable for breaching the duty of reasonable care owed to the insured. Kurtz, Richards, Wilson & Co, Inc. v. Ins. Communicators Marketing Corp., 12 Cal. App. 4th 1249, 1258 (1993). Where a dual agency is alleged, the existence of a dual agency is a question for the trier of fact. Id.

Albertson alleges that Hunton was a dual agent who acted as an agent for F&G as well as Albertson and Plascencia. (FAC, ΒΆ 18.) Hunton argues that the FAC does not set forth facts establishing that Hunton was a dual agent. However, detailed facts proving dual agency are not required at the pleading stage. By alleging dual agency, Albertson has established a basis for ...


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