United States District Court, C.D. California
GARY RAND; GARY RAND AS TRUSTEE OF THE RAND 1992 IRREVOCABLE TRUST; SUZANNE E. RAND-LEWIS; SUZANNE E. RAND-LEWIS AS TRUSTEE OF THE SUZANNE E. RAND-LEWIS FAMILY TRUST DATED AUGUST 17, 1993; LESLIE B. RAND-LUBY; LESLIE B. RAND-LUBY AS TRUSTEE OF THE LESLIE B. RAND-LUBY LIVING TRUST DATED NOVEMBER 10, 1995, Plaintiffs,
MIDLAND NATIONAL LIFE INSURANCE; MICHAEL L. KELLY; and DOES 1 through 100, Defendants.
ORDER RE: DEFENDANTS' MOTION TO DISMISS
PLAINTIFFS' FAC [45, 46]
HONORABLE RONALD S.W. LEW SENIOR U.S. DISTRICT JUDGE.
before the Court is Defendants Midland National Life
Insurance (“MNLI”) and Michael L. Kelly's
“Defendants”) Motion to Dismiss
(“Motion”) [45, 46] Plaintiffs Gary Rand; Gary
Rand as Trustee of the Rand 1992 Irrevocable Trust; Suzanne
E. Rand-Lewis; Suzanne E. Rand-Lewis as Trustee of the
Suzanne E. Rand-Lewis Family Trust; Leslie B. Rand-Luby; and
Leslie B. Rand-Luby as Trustee of the Leslie B. Rand-Luby
Living Trust's (collectively, “Plaintiffs”)
First Amended Complaint . Having reviewed all papers
submitted pertaining to the Motion, the Court NOW
FINDS AND RULES AS FOLLOWS: GRANTS Defendants'
Motion to Dismiss WITHOUT LEAVE TO AMEND.
are all residents of Los Angeles, California, and insureds,
owners, and beneficiaries of the Policy. FAC. ¶ 1,
ECF No. 41. Rand purchased the Policy in the early 1980s.
Id. ¶ 35. Defendant MNLI was Plaintiffs'
insurer and Defendant Kelly was the former Regional Sales
Director at MNLI. Pls.' Mot. to Remand at 3:18-19, ECF
No. 27; see also Defs.' Notice of Removal at
3:7-8, ECF No. 1.
assert that the Policy had set premium costs, with costs to
be calculated monthly by a set formula. FAC. ¶ 42.
Plaintiffs allege that rather than using the set formula,
Defendant MNLI increased costs based on an undisclosed
formula to get Plaintiffs to relinquish the Policy.
Id. ¶¶ 42, 44.
in April 2012, Rand began asking Defendant MLNI for an
accounting and other information concerning the increasing
premium costs. See Declaration of Nick Nelson in
Support of Removal (“Nelson Decl.”), ECF No. 6;
FAC ¶¶ 11-12. In his May 1, 2012 letter to
Defendant MLNI, Rand indicated that there was “a major
question as to how you have determined premium which is being
paid under protest, expenses, interest earned, and policy
value.” Nelson Decl., Ex. 7. Then, in a letter to
Defendant MLNI on June 6, 2012, Rand noted, among other
things, that the “premium paid is excessive and has
been.” Id. In his letter to Defendant MLNI on
August 22, 2102, Rand demanded that MLNI “immediately
rectify the situation by abiding by the terms and
conditions” of the Policy, “refund[ing] any and
all over-payments, ” and restoring the “cash
value to the proper amount.” Id., Ex. 10.
years later, beginning in February 2016, Rand again sent
letters to Defendant MLNI, this time eventually threatening
litigation. See id., Exs. 12 - 31 (Rand letters from
February 26, 2016-December 5, 2016);; id., Ex. 12
(“In fact, the continued policy increases are
improper.”); id., Ex. 16, May 24, 2016 Letter
(“We will be filing an action for declaratory relief
and damages, as I have received no response to numerous
MNLI provided vague responses to all of Rand's requests.
FAC ¶¶ 11-12. Rand was allegedly referred to
Defendant Kelly, who was also unhelpful. Id. ¶
48. Plaintiffs claim Defendant Kelly was their insurance
broker. Pls.' Mot. to Remand at 3:18-19. Meanwhile,
Defendants assert that Defendant Kelly was never associated
with the Policy. Defs.' Notice of Removal ¶ 24;
see generally Declaration of Michael L. Kelly in
Support of Removal (“Kelly Decl.”), ECF No. 3;
Declaration of Kristina Seekings in Support of Removal
(“Seekings Decl.”), ECF No. 5; Declaration of
Holly Johnson in Support of Removal (“Johnson
Decl.”), ECF No. 4; Nelson Decl.
in 2017, Defendant MNLI charged Rand a premium payment of
$28, 708.19 to continue the Policy. See FAC. ¶
44. Rand contested the amount, as he had already allegedly
paid over one million dollars in premiums over the life of
the Policy. Id. Further, Plaintiffs contend that
when Rand offered a different premium payment, Defendant MNLI
improperly refused. Id. ¶ 45. Consequently,
Defendant MNLI claimed the Policy lapsed. Id. ¶
April 15, 2017, Defendant MNLI terminated the Policy and
notified Rand of the termination by letter. Id.
Plaintiffs allege that such termination was improper,
contending that all owners of the Policy should have been
notified. Id. ¶ 24. As a result,
Plaintiffs assert that the Policy remains in full effect.
Id. ¶ 2.
further allege that to reinstate the Policy, Defendants
claimed $28, 708.19 and required Rand to provide full medical
underwriting, documentation, and release of health
information. Id. ¶ 44. Plaintiffs assert that
Defendants knew such requirements would prevent Rand from
reinstating the Policy. Id. Plaintiffs now bring
this Action requesting damages, an accounting, reinstatement
of the Policy, and disgorgement of funds. FAC at 43-44.
filed the Complaint [1-1] in the Superior Court of the State
of California, County of Los Angeles, on March 13, 2019,
alleging breach of contract amongst other related
claims. Defendants removed this Action to this
Court on April 22, 2019 .
August 6, 2019, the Court denied Plaintiffs' Motion to
Remand . Also on August 6, 2019, the Court granted
Defendants' Motion to Dismiss.Plaintiffs filed their First
Amended Complaint (“FAC”) on August 28, 2019
. On September 20, 2019, Defendant Kelly  and
Defendant MNLI  filed the instant Motion. Plaintiffs
opposed on October 22, 2019 . Defendant MNLI timely
replied , which Defendant Kelly joined .
Rule of Civil Procedure 12(b)(6) allows a party to move for
dismissal of one or more claims if the pleading fails to
state a claim upon which relief can be granted. A complaint
must “contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quotation omitted). Dismissal is warranted for a
“lack of a cognizable legal theory or the absence of
sufficient facts alleged under a cognizable legal
theory.” Balistreri v. Pacifica Police
Dep't, 901 F.2d 696, 699 (9th Cir. 1988) (citation
ruling on a 12(b)(6) motion, a court may generally consider
only allegations contained in the pleadings, exhibits
attached to the complaint, and matters properly subject to
judicial notice. Swartz v. KPMG LLP, 476 F.3d 756,
763 (9th Cir. 2007). A court must presume all factual
allegations of the complaint to be true and draw all
reasonable inferences in favor of the non-moving party.
Klarfeld v. United States, 944 F.2d 583, 585 (9th
Cir. 1991). The question is not whether the plaintiff will
ultimately prevail, but whether the plaintiff is entitled to
present evidence to support the claims. Jackson v.
Birmingham Bd. of Educ., 544 U.S. 167, 184 (2005)
(quoting Scheuer v. Rhodes, 416 U.S. 232, 236
(1974)). While a complaint need not contain detailed factual
allegations, a plaintiff must provide more than “labels
and conclusions” or “a formulaic recitation of
the elements of a cause of action.” Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007). However, a
complaint “should not be dismissed under Rule 12(b)(6)
‘unless it appears beyond doubt that the plaintiff can
prove no set of facts in support of his claim which would
entitle him to relief.'” Balistreri, 901
F.2d at 699 (citing Conley v. Gibson, 355 U.S. 41,