United States District Court, E.D. California
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
JOHN A. MENDEZ, District Judge.
This matter is before the Court on Defendant United States Life Insurance Company in the City of New York's ("U.S. Life") Motion to Dismiss (Doc. #5) Plaintiff Steven Mark's ("Plaintiff") Complaint (Doc. #1-1). Plaintiff opposed the motion ("Opposition") (Doc. #7), and U.S. Life filed a reply (Doc. #8).
I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND
The Complaint alleges two causes of action: (1) Breach of Contract and (2) Breach of the Duty of Good Faith and Fair Dealing. Plaintiff filed the Complaint in the Sacramento County Superior Court, and U.S. Life removed it to this Court.
In 2011, Plaintiff entered into a "Hospital Accident Indemnity Insurance Policy" ("the Policy") (Comp. Exh. 1) with U.S. Life. In 2012, Plaintiff was hospitalized as the result of two strokes. He submitted a claim to U.S. Life for benefits under the Policy as a result of the hospitalization. U.S. Life denied coverage.
U.S. Life contends the Complaint should be dismissed because the clear language of the Policy demonstrates that Plaintiff's hospitalization was not covered by its terms. MTD at 3-4. Therefore, U.S. Life argues, there was no breach of the agreement or of the duty of good faith and fair dealing.
1. Breach of Contract
The elements of a breach of contract are "(1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff." Oasis W. Realty, LLC v. Goldman , 51 Cal.4th 811, 821 (2011). The issue here is whether U.S. Life's refusal to cover Plaintiff's hospitalization constituted a breach of the Policy. Each party offers their own interpretation of the Policy's coverage provisions.
Interpretation of an insurance policy is a question of law. Waller v. Truck Ins. Exch., Inc. , 11 Cal.4th 1, 18 (1995). "The rules governing policy interpretation require [the Court] to look first to the language of the contract in order to ascertain its plain meaning or the meaning a layperson would ordinarily attach to it." Id . (citing Cal. Civ. Code § 1638).
The Policy states that U.S. Life will pay benefits if "an insured person visits or is confined to a hospital due to an injury caused by an accident." The Policy specifically defines "accident" as a "sudden, unforeseen and unexpected event that occurs without the intent of the Insured Person." It further defines "injury" as "bodily harm or damage due to an accident that is not contributed to by disease, illness, infection, bodily infirmity or any other abnormal physical condition."
U.S. Life contends the strokes that caused Plaintiff to be hospitalized did not constitute "an injury caused by an accident" as understood by the clear language of the Policy. MTD at pp. 4-6. U.S. Life argues a stroke is by definition bodily harm that is contributed to by "disease, illness, infection, bodily infirmity, or any other abnormal physical condition."
In his Opposition, Plaintiff cites a series of cases involving interpretation of the word "accident." Opp. at pp. 5-11. Many courts have dealt with defining "accident" for the purposes of determining the extent of insurance coverage. See Khatchatrian v. Cont'l Cas. Co. , 332 F.3d 1227, 1228-29 (9th Cir. 2003); Sawyer v. Hartford Life & Acc. Ins. Co., 10-CV-1293-MMA BLM, 2012 WL 353775 (S.D. Cal. 2012); Schar v. Hartford Life Ins. Co. , 242 F.Supp.2d 708, 715-16 (N.D. Cal. 2003). The Ninth Circuit has found that, generally, there must be some sort of external event causing injury in order to meet the ...