Cantrell v. Great Republic Insurance

873 F.2d 1249
CourtCourt of Appeals for the Ninth Circuit
DecidedApril 24, 1989
DocketNo. 88-6025
StatusPublished
Cited by1 cases

This text of 873 F.2d 1249 (Cantrell v. Great Republic Insurance) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cantrell v. Great Republic Insurance, 873 F.2d 1249 (9th Cir. 1989).

Opinion

PREGERSON, Circuit Judge:

I. BACKGROUND

On October 8, 1985, appellant Anne Cantrell filed an action in state court for [1250]*1250wrongful rescission of an insurance contract. She alleged that defendant Great Republic Insurance Company (GRIC), a California corporation, had breached the implied covenant of good faith and fair dealing and wrongfully denied the existence of a contract when it rescinded the policy she had obtained in 1981. The complaint charged that GRIC had rescinded Cantrell’s insurance policy in bad faith to avoid paying the medical expenses arising from illnesses suffered by Cantrell’s husband and daughter. Clerk’s Record (C.R.) 1, Exhibit No. A-83.

Cantrell’s complaint alleged that in June of 1981, Cantrell was interviewed at her place of employment by an agent of GRIC for the purpose of determining her eligibility for health insurance with GRIC. Cantrell obtained an insurance policy from GRIC which was to become effective August 1, 1981. The policy covered Cantrell, her husband, and her son. GRIC’s representative told Cantrell that the child she was then pregnant with would be added to the policy as a dependent upon birth.

On August 27, 1981, Cantrell’s husband was admitted to a hospital suffering from acute myocardial infarction. On October 14, 1981, Cantrell’s recently-born daughter was hospitalized and subsequently diagnosed as suffering from cystic fibrosis. (Cantrell’s daughter died from cystic fibrosis on May 9, 1987 at the age of five.)

During the fall of 1981, Cantrell submitted claims to GRIC for the medical expenses incurred as the result of her husband’s and daughter’s illnesses. On December 24, 1981, GRIC rescinded Cantrell’s insurance policy, citing “unadmitted medical history.”

Although Cantrell named GRIC as the defendant in her complaint, the complaint was answered by Great Republic Life Insurance Company (GRLIC), a Washington corporation, in January of 1986. C.R. 1, Exhibit No. A-73.1 GRLIC also cross-complained against Cantrell,2 alleging breach of the duty of good faith and fair dealing.3 C.R. 1, Exhibit No. A-49.

On May 9, 1986, Cantrell propounded a request for admission to GRIC. C.R. 9, Exhibit A. Request for Admission Number four stated:

On or about August 1, 1981, Great Republic issued a certificate of insurance, number 01-036-04407-1 for group medical expense insurance coverage to plaintiff.

Id. at 2.

On June 13, 1986, GRLIC responded to Request for Admission Number four as follows:

Objection: Great Republic objects to this request for admission on the ground said request is vague, ambiguous, and unintelligible. Great Republic further objects to this request for admission on the ground that said request is compound in nature, making a response by this Defendant impossible. However, in the interest of good faith discovery, but without in any way waiving the above-stated objections, Great Republic offers the following response to Plaintiff’s Request for Admission No. 4:
Great Republic admits that on or about August 1, 1981, certificate of insurance no. 01-036-04407-1 was issued with cov[1251]*1251erage for Plaintiff. Except as specifically admitted, Great Republic denies Request for admission No. 4.

C.R. 9, Exhibit B at 2.

On September 18, 1987, counsel for Cantrell mailed to counsel for GRIC (which was, at that stage in the litigation, apparently also counsel for GRLIC) a copy of a proposed First Amended Complaint. The First Amended Complaint amended Cantrell’s original complaint to add GRLIC as a defendant and to add as a plaintiff Cantrell in her capacity as administrator of the estate of her daughter. C.R. 9, Exhibit C; C.R. 1, Exhibit No. A-17. After counsel for appellees declined to stipulate to the filing of the First Amended Complaint, Cantrell filed a motion for leave to file the First Amended Complaint, which was granted on October 21, 1987.

On November 20, 1987, GRIC and GRLIC jointly removed the state court action to federal district court. C.R. 1. Ap-pellees argued in their petition for removal that the action was one over which the district court had original jurisdiction under the Employee Retirement Income Security Act of 1974 (“ERISA”), and that removal was therefore justified under the removal statute, 28 U.S.C. section 1446(b). They also asserted that the removal was timely because of the addition of new parties in the First Amended Complaint. C.R. 1.

On December 18, 1987, Cantrell filed a motion to remand the action to state court, a motion to strike an affidavit offered by appellees in support of their removal petition, and a motion for expenses incurred by Cantrell in opposing appellees’ allegedly wrongful removal of the action. The district court denied these motions on March 1, 1988. C.R. 17.

On April 21, 1988, the district court granted appellees’ motion to dismiss the action, holding that dismissal was required under Fed.R.Civ.P. 12(b)(6) because Cantrell’s action was time-barred under the terms of the rescinded insurance contract. C.R. 20.

Cantrell brought this appeal, which was timely filed. C.R. 22.

II. STANDARDS OF REVIEW

This court reviews de novo a district court’s denial of a motion to remand. See Lewis v. Time, Inc., 710 F.2d 549, 551-52 (9th Cir.1983).

A dismissal under Fed.R.Civ.P. 12(b)(6) is subject to de novo review. See Kelson v. City of Springfield, 767 F.2d 651, 653 (9th Cir.1985).

III. DISCUSSION

A. The Remand Motion

1. Cantrell’s Complaint “Arises Under” Federal Law

In her motion to remand the action to state court, Cantrell argued that the case had been removed improvidently and without jurisdiction because, first, the action was not one “arising under” federal law within the meaning of 28 U.S.C. section 1331. C.R. 9 at 5. According to Cantrell, neither the original nor the amended complaint provided any indication that Cantrell had asserted a claim created by federal law. The “well-pleaded complaint rule,” according to Cantrell, therefore precluded the district court from asserting jurisdiction because a federal question did not appear on the face of Cantrell’s complaint. Id. at 6 (citing Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983)).

The district court rejected this argument, pointing out that “ ‘[a] suit may ... be removed where the real nature of the claim asserted in the complaint is federal....’” C.R.

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Related

Cantrell v. Great Republic Insurance Company
873 F.2d 1249 (Ninth Circuit, 1989)

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873 F.2d 1249, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cantrell-v-great-republic-insurance-ca9-1989.