The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge
ORDER GRANTING AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS*fn1
Defendants Aviva Life and Annuity Company ("Aviva") and Indianapolis Life Insurance Company ("Indianapolis")(collectively, "Movants") request dismissal of five of Plaintiffs' six claims without leave to amend under Federal Rule of Civil Procedure 12(b)(6) ("Rule 12(b)(6)"), arguing Plaintiffs have failed to state a cognizable claim for relief. For the reasons stated below, the motion is granted and denied in part.
A Rule 12(b)(6) dismissal motion tests the legal sufficiency of the claims alleged in the complaint. Novarro v. Black, 250 F.3d 729, 732 (9th Cir. 2001). A pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief . . . ." Fed. R. Civ. P. 8(a)(2). The complaint must "give the defendant fair notice of what the [plaintiff's] claim is and the grounds upon which relief rests . . . ." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
Dismissal of a claim under Rule 12(b)(6) is appropriate only where the complaint either 1) lacks a cognizable legal theory, or 2) lacks factual allegations sufficient to support a cognizable legal theory. Balistreri v. Pacific Police Dept., 901 F.2d 696, 699 (9th Cir. 1988). To avoid dismissal, a plaintiff must allege "only enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 547.
In deciding a Rule 12(b)(6) motion, the material allegations of the complaint are accepted as true and all reasonable inferences are drawn in favor of the plaintiff. See al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009). However, conclusory statements and legal conclusions are not entitled to a presumption of truth. See Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009); Twombly, 550 U.S. at 555. "In sum, for a complaint to survive a motion to dismiss, the nonconclusory 'factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. United States Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009).
If a Rule 12(b)(6) motion is granted, the "district court should grant leave to amend . . . , unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000)(quoting Doe v. U.S., 58 F.3d 484, 497 (9th Cir. 1995)).
II. FACTUAL ALLEGATIONS AND PLAINTIFFS' CLAIMS
Plaintiffs Donald Fischer, Dorothy Fischer, Darren Fischer, and Daniel Fischer (collectively, "Plaintiffs") allege Defendants Aviva, Indianapolis, and Legacy Marketing Group, Inc. d/b/a Legacy Marketing Insurance Services ("Legacy")(collectively, "Defendants") terminated Plaintiffs' life insurance policies and failed to offer replacement policies that were comparable to the original ones. (Def.'s Mot. Dismiss ("Mot.") 1:3-8.) Movants contend that five of Plaintiffs' six claims fail to state a legally sustainable claim and should be dismissed.*fn2 (Id. 1:9-10.)
Plaintiffs each obtained a Flexible Premium Adjustable Life Insurance policy from Indianapolis in 2001 (collectively, the "Policies"). (Compl. ¶¶ 12-16.) The Policies were rolled over from previous Prudential Life Insurance Company policies. (Id. ¶¶ 12-15.) The Policies were marketed as having the flexibility for the policyholder to determine later whether to cash out the policy or retain the death benefit of the policy. (Id. ¶ 16.) Each of the Policies contained the following provision:
Within 31 days after coverage ceases because of termination of employment or of membership in any class eligible for coverage under this Certificate, the Owner may convert the benefits described in the Certificate by submitting to the Company a written request to such effect, together with this Certificate. The policy which the Owner will receive in such conversion may be any policy or rider issued by the Company at the time of such conversion which is comparable to this Certificate. The company will not issue a policy or rider which has a provision which puts the Company at any greater risk than a similar provision in the converted Certificate. In connection with a conversion, evidence of insurability will not be required.
Further, if the group master policy terminates or is amended so as to terminate the insurance of any class of insured persons, every person insured thereunder at the date of such termination whose insurance terminates, shall be entitled to have issued by the Company an individual policy of life insurance, subject to the same conditions and limitations shown above. (Id. ¶ 19.)
In a letter dated March 15, 2007, Aviva advised Plaintiffs that Indianapolis had been acquired by Aviva. (Id. ¶ 17.) Plaintiffs were informed that there would be no changes to their life insurance policy. (Id.) In or around June 2008, Aviva terminated Plaintiffs' policies and offered comparable policies. (Id. ¶ 18.) Plaintiffs allege that Defendants offered substitute policies that were not comparable to their original ones and that Aviva's representation that they were comparable was materially false. (Id. ¶¶ 11, 21-24.) In particular, Plaintiffs state the substitute policies were riskier, had a lower guaranteed rate of return, and required substantially higher premiums. (Id. ¶¶ 21-24.) Accordingly, Plaintiffs ...