United States District Court, E.D. California
insurance coverage case, defendant moves to dismiss
plaintiff's complaint based on the language of the policy
at issue. For the reasons set out below, the court GRANTS
2011, plaintiff Joy Wiseblood purchased a “Long-Term
Disability Income Insurance Policy” (the
“Policy”) from defendant Mutual of Omaha
Insurance Company. Opp'n, ECF No. 14, at 7. Plaintiff's
policy has a “Benefit Period” of 67, meaning that
the policy provides total disability benefits to the insured
until she turns 67 years old. See Mot., ECF No. II,
at 11; Compl. Ex. A, ECF No. 1-1, at 39; Opp'n, Ex. 1
(“Policy) at 28 (“Benefit Period To Age
67”). The policy also includes a “Mental
or Nervous Disorder Limitation, ” which states:
“Benefits payable for Mental or Nervous Disorders are
limited to a lifetime maximum of 24 months.” Policy at
2015, defendant sent plaintiff an addendum to her existing
policy, entitled Rider ONV1M (the “Rider”).
Opp'n at 7-8; Id., Ex. 3 at 32. According to
defendant, this Rider was sent in an effort to comply with
California Insurance Code section 10144.55, enacted through
Assembly Bill 402, Chapter 550, which required short-term
disability income insurance, that is policies with a duration
of two years or less, to provide coverage for disability
caused by severe mental illness for the same duration as all
other disabilities. See Mot. at 14 (citing Cal. Ins.
Code § 10144.55). The Rider included a cover letter
stating: “[i]n compliance with AB 402 Chapter 550, we
have added Rider ONV1M to your coverage ID #890416-89. The
rider . . . [i]s a state required rider and may not affect
you . . . . Please read the enclosed rider carefully and
attach it to your coverage.” Id. at 15; Ex. 3
at 32. The Rider was entitled “Severe Mental Illness
Benefits Rider” and stated:
This rider is made a part of your policy or certificate to
which it is attached. It is subject to all parts of your
policy or certificate not in conflict with this rider. In the
event of a conflict between this rider and any other
provisions of your policy or certificate, this rider will
control. If your disability income insurance policy or
certificate and/or any rider attached to it: (a) has a
benefit period of 24 months or less; and (b) limits benefits
payable for mental or nervous disorders to a lifetime maximum
of 24 months or less; the following changes are made:
1. Any such mental or nervous disorder lifetime maximum
benefit limitation will not be applied to benefits payable
for a severe mental illness.
2. We will pay benefits for disability caused by a severe
mental illness on the same basis as any other covered
Opp'n, Ex. 2 (“Rider”) at 30.
2016, plaintiff filed a claim for disability benefits with
defendant, based on a diagnosis of major depressive disorder
and anxiety, which prevented her from performing her job.
Opp'n at 9. Defendant paid the claim for two years but
stopped in May 2018, based on the 24-month limitation on
claims for mental or nervous disorders. Id. at 10.
Plaintiff contacted defendant and explained she believed the
Rider overrode the 24-month limitation in the policy.
Id. Defendant refused to continue paying her
benefits, arguing the Rider only applied to policies with
benefit periods of 24 months or less, whereas plaintiff's
policy has a benefit period of 67 years. See id.;
Mot. at 12. On October 12, 2018, plaintiff filed a complaint
against defendant in Sacramento County Superior Court in
which she pleaded claims for declaratory relief, breach of
contract, breach of the insurers' duty of good faith and
fair dealing, and violation of California Business &
Professions Code section 17200. Compl. at 6-9. Defendant
removed the action to federal court on the basis of diversity
jurisdiction. Notice of Removal, ECF No.1, at 3. Defendant
now moves to dismiss plaintiff's complaint for failure to
state a claim on which relief may be granted, arguing all of
plaintiff's claims fail as a matter of law. See
generally Mot. Plaintiff opposes, ECF No. 14, and
defendant has responded, ECF No. 18. The court held a hearing
on March 8, 2019, and resolves the motion here.
may move to dismiss for “failure to state a claim upon
which relief can be granted.” Fed.R.Civ.P. 12(b)(6).
The court may grant the motion only if the complaint lacks a
“cognizable legal theory” or if its factual
allegations do not support a cognizable legal theory.
Hartmann v. Cal. Dep't of Corr. & Rehab.,
707 F.3d 1114, 1122 (9th Cir. 2013). A complaint 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), though it need not include “detailed factual
allegations, ” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007). But “sufficient factual
matter” must make the claim at least plausible.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Conclusory or formulaic recitations of elements do not alone
suffice. Id. (citing Twombly, 550 U.S. at
555). In a Rule 12(b)(6) analysis, the court must accept
well-pled factual allegations as true and construe the
complaint in plaintiff's favor. Id. (citing
Twombly, 550 U.S. at 555); Erickson v.
Pardus, 551 U.S. 89, 93-94 (2007) (citations omitted).
plaintiff requests leave to amend a claim subject to
dismissal, the federal rules mandate that the court
“freely give leave when justice so requires.”
Fed.R.Civ.P. 15(a)(2). Before granting leave, a court
considers any potential bad faith, delay, or futility
regarding the proposed amendment, and the potential prejudice
to the opposing party. Foman v. Davis, 371 U.S. 178,
182 (1962); see also Smith v. Pac. Prop. Dev. Co.,
358 F.3d 1097, 1101 (9th Cir. 2004) (citation omitted).
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