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Petrus v. New York Life Insurance Co.

United States District Court, S.D. California

June 18, 2015

EDMOND PETRUS, individually and as Trustee of the PETRUS FAMILY IRREVOCABLE TRUST DTD 05/01/1991, Plaintiff,
NEW YORK LIFE INSURANCE COMPANY, a New York corporation and TIMOTHY R. CORBETT, an individual, and DOES 1 through 100, inclusive, Defendant.


CYNTHIA BASHANT, District Judge.

Before the Court are Defendants New York Life Insurance Company ("NYL") and Timothy R. Corbett's motions to dismiss Plaintiff Edmond Petrus' First Amended Complaint ("FAC", ECF 13) (ECFs 16-18) and Defendants' motions to dismiss the initial Complaint (ECFs 7-9). As the FAC superseded the initial Complaint, those motions to dismiss the initial Complaint are TERMINATED as MOOT. ECFs 7-9.

The Court decided the motions to dismiss the FAC on the papers and the parties' representations at oral argument on June 15, 2015. For the following reasons, those motions are GRANTED. ECFs 16-19.


In 1991, Mary Jean Petrus and Edmond[1] A. Petrus purchased an Insurance Policy from NYL. FAC ¶ 7. The Policy included a "Survivorship Whole Life Insurance" benefit of one million dollars and a "Dividend Optional Term Life Insurance" ("DOT") benefit also worth one million dollars. Id. The DOT benefit only accrued if Mary died after Edmond. Id. This Policy named the Petrus Family Trust (the "Trust") as its beneficiary. FAC ¶ 8. After Mary Jean's death, her son, Plaintiff Edmond Petrus, was the sole beneficiary of the Trust. Id.

After Edmond died in 2005, but before Mary Jean died in 2012, Corbett, the insurance agent NYL assigned to the Policy, contacted Plaintiff. FAC ¶ 11. He stated that the premium for the Policy was about to double, and that they should discuss Plaintiff's options. Id. During the same call, Plaintiff relayed that he was considering additional insurance on Mary Jean's life. FAC ¶ 12. In 2008, based on Corbett's advice, Plaintiff cancelled the DOT Rider, which would have provided an approximately $700, 000 benefit. FAC ¶¶ 12-18. At that same time, Plaintiff secured $3 million in additional life insurance from another provider. FAC ¶ 17.

Primarily, Plaintiff claims Corbett advised that Plaintiff's premiums would double to over $57, 000 per year, and that if Plaintiff cancelled the DOT, the remaining premiums would drop to "zero." FAC ¶ 13. Plaintiff alleges that the DOT premiums would in fact have not exceeded $15, 000 per year up to the date of Mary Jean's death in 2012. FAC ¶ 19.

Plaintiff admits neither he nor the Trust paid premiums on the DOT after he cancelled it in 2008. FAC ¶ 28. As a result, after Mary Jean's death in 2012, NYL paid $1 million in benefits for the Whole Life Insurance portion of the Policy. FAC ¶ 19.

On September 24, 2014, Plaintiff sued Corbett and NYL for breach of contract, bad faith breach of the covenant of good faith and fair dealing, breach of fiduciary duty, negligence, and intentional misrepresentation and concealment, contending he is entitled to the DOT benefit despite ceasing payment of the premiums in 2008. Defendants now move to dismiss his FAC.


A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed.R.Civ.P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The court must accept all factual allegations pleaded in the complaint as true and must construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations, rather, it must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim has "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). "Where a complaint pleads facts that are merely consistent with' a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557).

"[A] plaintiff's obligation to provide the grounds' of his entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)) (alteration in original). A court need not accept "legal conclusions" as true. Iqbal, 556 U.S. at 678. Despite the deference the court must pay to the plaintiff's allegations, it is not proper for the court to assume that "the [plaintiff] can prove facts that [he or she] has not alleged or that defendants have violated the... laws in ways that have not been alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

As a general rule, a court freely grants leave to amend a dismissed complaint. Fed.R.Civ.P. 15(a). However, leave to amend may be denied when "the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." Schreiber ...

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