Cousens v. Transamerica Life Insurance Company

• Court: Court of Appeals for the Ninth Circuit
• Decided: March 11, 2025
• Docket: 24-889
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS MAR 11 2025 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

KRISTENE COUSENS, as Administrator of No. 24-889 the ESTATE OF JOHN L. WITHERS, JR., D.C. No. 2:20-cv-10003-SPG-JPR Plaintiff-Appellant,

v. MEMORANDUM*

TRANSAMERICA LIFE INSURANCE COMPANY; TRANSAMERICA CORPORATION,

Defendants-Appellees.

Appeal from the United States District Court for the Central District of California Sherilyn Peace Garnett, District Judge, Presiding

Submitted March 7, 2025** Pasadena, California

Before: SANCHEZ and H.A. THOMAS, Circuit Judges, and DONATO,*** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). *** The Honorable James Donato, United States District Judge for the Northern District of California, sitting by designation. Plaintiff Kristene Cousens, as administrator of the estate of John L. Withers,

Jr., appeals the district court’s grant of summary judgment to defendant

Transamerica Life Insurance Company (Transamerica).1 We have jurisdiction

pursuant to 28 U.S.C. § 1291. The parties’ familiarity with the facts is assumed,

and we affirm.

We review de novo a district court’s grant of summary judgment. See

Oswalt v. Resolute Indus., Inc., 642 F.3d 856, 859 (9th Cir. 2011) (citation

omitted). “We may affirm a grant of summary judgment on any ground supported

by the record.” Nat’l Ass’n of Optometrists & Opticians v. Harris, 682 F.3d 1144,

1147 (9th Cir. 2012) (citation omitted).

Plaintiff’s claims of error in the first summary judgment order are not well

taken. Plaintiff’s main argument is that Transamerica mailed the grace period

notice to Withers “on July 16 [and] not July 15.” Plaintiff does not dispute that the

notice was mailed on one of those two days or that “30-days’ notice was given” to

Withers. It is nevertheless Plaintiff’s contention that this 1-day delay meant that

Transamerica failed to give to Withers “adequate 31-day and 62-day contract

required notice of payments required prior to any lapse.”

The problem for Plaintiff is that, even assuming this argument had been

1 Summary judgment was granted for Transamerica Corporation with Plaintiff’s consent. Plaintiff does not challenge this aspect of the district court’s summary judgment orders.

2 adequately presented to the district court and that Plaintiff’s evidence of the

customer service call is admissible, there is no genuine dispute of material fact for

the good faith and fair dealing claim. “The substantive law determines which facts

are material; only disputes over facts that might affect the outcome of the suit

under the governing law properly preclude the entry of summary judgment.” Nat’l

Ass’n of Optometrists, 682 F.3d at 1147 (citing Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248 (1986)). Here, under California law, “the ultimate test of bad

faith liability in first party cases is whether the refusal to pay policy benefits was

unreasonable.” Morris v. Paul Revere Life Ins. Co., 109 Cal. App. 4th 966, 973

(2003) (cleaned up) (quoting Austero v. Nat'l Cas. Co., 84 Cal. App. 3d 1, 32

(1978)).

To put a finer point on it, allegations which assert that an insurer violated its

duty to act fairly and in good faith

must show that the conduct of the defendant, whether or not it also constitutes a breach of a consensual contract term, demonstrates a failure or refusal to discharge contractual responsibilities, prompted not by an honest mistake, bad judgment or negligence but rather by a conscious and deliberate act, which unfairly frustrates the agreed common purposes and disappoints the reasonable expectations of the other party thereby depriving that party of the benefits of the agreement.

Chateau Chamberay Homeowners Ass’n v. Associated Int’l Ins. Co., 90 Cal. App.

4th 335, 346 (2001) (quoting Careau & Co. v. Sec. Pac. Bus. Credit, Inc., 222 Cal.

App. 3d 1371, 1395 (1990)).

3 Even if Transamerica were one day late in mailing the grace period notice

such that Withers received one day less than the “required notice of 31-days and

62-days under the policy,” the 1-day delay does not give rise to a reasonable

inference of a “conscious and deliberate act” on Transamerica’s part, rather than an

“honest mistake, bad judgment or negligence.” Id. A factual dispute over whether

Transamerica mailed the notice on July 15 or July 16 has no bearing on the

question of whether Transamerica acted unreasonably in lapsing Withers’ life

insurance policy for non-payment.

The district court also did not err in concluding that Transamerica’s

interpretation of the policy term “pay” to mean “received” was reasonable.

Plaintiff argues that Transamerica breached the implied covenant of good faith and

fair dealing by interpreting the ambiguities in the policy “in ways to benefit it and

undermine the rights of Withers.” But under governing California law, “[w]hile an

insurer must give as much consideration to the interests of its insured as it does to

its own . . . it is not required to disregard the interests of its shareholders and other

policyholders when evaluating claims.” Id. at 347 (cleaned up). “In other words,

an insurer is entitled to give its own interests consideration when evaluating the

merits of an insured’s claim.” Id. (citation omitted). That is what Transamerica

did here.

Because summary judgment on the bad faith claim was proper, Plaintiff’s

4 other challenges are foreclosed. The elder abuse claim was entirely dependent on

the predicate finding of bad faith, and the district court properly found that

Transamerica did not act unreasonably in seeking medical information for a

potential insured who was advanced in age. So too for Plaintiff’s request for

punitive damages. See American Cas. Co. of Reading, Pa. v. Krieger, 181 F.3d

1113, 1123 (9th Cir. 1999) (“If the insurer did not act in bad faith, punitive

damages are unavailable . . . ”); Cal. Civil Code § 3294 (punitive damages

permissible “[i]n an action for the breach of an obligation not arising from

contract, where it is proven by clear and convincing evidence that the defendant

has been guilty of oppression, fraud, or malice”).

After the first summary judgment order, which left in play only the breach of

contract claim, Transamerica paid Plaintiff the full death benefit and interest due

under Withers’ policy. On the basis of this payment, the district court issued a

second order granting summary judgment to Transamerica on the breach of

contract claim as well. Plaintiff gestures at an error here but does not actually

argue one, and instead expressly acknowledges the district court’s reasoning that

“an insurer’s payment of a death benefit and all contractually required interest

defeats a claim for breach of contract.” Plaintiff also concedes that she has been

paid all sums Withers was entitled to under the policy, including interest.

AFFIRMED.