Gary Rand v. Midland National Life Insurance

Opinion

1 O 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 GARY RAND; GARY RAND AS ) CV 19-3104-RSWL-JEM TRUSTEE OF THE RAND 1992 ) 13 IRREVOCABLE TRUST; SUZANNE ) E. RAND-LEWIS; SUZANNE E. ) ORDER re: Defendants’ 14 RAND-LEWIS AS TRUSTEE OF ) Motion to Dismiss THE SUZANNE E. RAND-LEWIS ) Plaintiffs’ FAC [45, 46] 15 FAMILY TRUST DATED AUGUST ) 17, 1993; LESLIE B. RAND- ) 16 LUBY; LESLIE B. RAND-LUBY ) AS TRUSTEE OF THE LESLIE B. ) 17 RAND-LUBY LIVING TRUST ) DATED NOVEMBER 10, 1995, ) 18 ) Plaintiffs, ) 19 ) ) 20 v. ) ) 21 ) MIDLAND NATIONAL LIFE ) 22 INSURANCE; MICHAEL L. ) KELLY; and DOES 1 through ) 23 100, ) ) 24 ) Defendants. ) 25 Currently before the Court is Defendants Midland 26 National Life Insurance (“MNLI”) and Michael L. Kelly’s 27 (“Kelly”) (collectively, “Defendants”) Motion to 28 1 Dismiss (“Motion”) [45,46] Plaintiffs Gary Rand; Gary 2 Rand as Trustee of the Rand 1992 Irrevocable Trust; 3 Suzanne E. Rand-Lewis; Suzanne E. Rand-Lewis as Trustee 4 of the Suzanne E. Rand-Lewis Family Trust; Leslie B. 5 Rand-Luby; and Leslie B. Rand-Luby as Trustee of the 6 Leslie B. Rand-Luby Living Trust’s (collectively, 7 “Plaintiffs”) First Amended Complaint [41]. Having 8 reviewed all papers submitted pertaining to the Motion, 9 the Court NOW FINDS AND RULES AS FOLLOWS: GRANTS 10 Defendants’ Motion to Dismiss WITHOUT LEAVE TO AMEND. 11 I. BACKGROUND 12 A. Factual Background 13 Plaintiffs are all residents of Los Angeles, 14 California, and insureds, owners, and beneficiaries of 15 the Policy.1 FAC. ¶ 1, ECF No. 41. Rand purchased the 16 Policy in the early 1980s. Id. ¶ 35. Defendant MNLI 17 was Plaintiffs’ insurer and Defendant Kelly was the 18 former Regional Sales Director at MNLI. Pls.’ Mot. to 19 Remand at 3:18-19, ECF No. 27; see also Defs.’ Notice 20 of Removal at 3:7-8, ECF No. 1. 21 Plaintiffs assert that the Policy had set premium 22 costs, with costs to be calculated monthly by a set 23 formula. FAC. ¶ 42. Plaintiffs allege that rather 24 25 1 There are six Plaintiffs in this Action: (1) Gary Rand; (2) Gary Rand, as Trustee of the Rand 1992 Irrevocable Trust; (3) 26 Suzanne E. Rand-Lewis; (4) Suzanne E. Rand-Lewis, as Trustee of 27 the Suzanne E. Rand-Lewis Family Trust Dated August 17, 1993; (5) Leslie B. Rand-Luby; and (6) Leslie B. Rand-Luby, as Trustee of 28 the Leslie B. Rand-Luby Living Trust Dated November 10, 1995. FAC ¶ 1. 1 than using the set formula, Defendant MNLI increased 2 costs based on an undisclosed formula to get Plaintiffs 3 to relinquish the Policy. Id. ¶¶ 42, 44. 4 Beginning in April 2012, Rand began asking 5 Defendant MLNI for an accounting and other information 6 concerning the increasing premium costs.2 See 7 Declaration of Nick Nelson in Support of Removal 8 (“Nelson Decl.”), ECF No. 6; FAC ¶¶ 11-12. In his May 9 1, 2012 letter to Defendant MLNI, Rand indicated that 10 there was “a major question as to how you have 11 determined premium which is being paid under protest, 12 expenses, interest earned, and policy value.” Nelson 13 Decl., Ex. 7. Then, in a letter to Defendant MLNI on 14 June 6, 2012, Rand noted, among other things, that the 15 “premium paid is excessive and has been.” Id. In his 16 letter to Defendant MLNI on August 22, 2102, Rand 17 demanded that MLNI “immediately rectify the situation 18 by abiding by the terms and conditions” of the Policy, 19 “refund[ing] any and all over-payments,” and restoring 20 the “cash value to the proper amount.” Id., Ex. 10. 21 Three years later, beginning in February 2016, Rand 22 again sent letters to Defendant MLNI, this time 23 eventually threatening litigation. See id., Exs. 12 - 24 25 2 Rand asked why charges were taken from the Policy value, what the charges were, for an accounting, for Defendants to state 26 how the charges were calculated, what Defendants’ basis for the 27 Policy value was, for the amount of premiums Defendants were owed, for an accounting of the premiums paid, and for specific 28 facts as to the charges with reference to the Policy provisions. Compl. ¶ 11, ECF No. 1-1. 1 31 (Rand letters from February 26, 2016-December 5, 2 2016); ; id., Ex. 12 (“In fact, the continued policy 3 increases are improper.”); id., Ex. 16, May 24, 2016 4 Letter (“We will be filing an action for declaratory 5 relief and damages, as I have received no response to 6 numerous requests.”). 7 Defendant MNLI provided vague responses to all of 8 Rand’s requests. FAC ¶¶ 11-12. Rand was allegedly 9 referred to Defendant Kelly, who was also unhelpful. 10 Id. ¶ 48. Plaintiffs claim Defendant Kelly was their 11 insurance broker. Pls.’ Mot. to Remand at 3:18-19. 12 Meanwhile, Defendants assert that Defendant Kelly was 13 never associated with the Policy. Defs.’ Notice of 14 Removal ¶ 24; see generally Declaration of Michael L. 15 Kelly in Support of Removal (“Kelly Decl.”), ECF No. 3; 16 Declaration of Kristina Seekings in Support of Removal 17 (“Seekings Decl.”), ECF No. 5; Declaration of Holly 18 Johnson in Support of Removal (“Johnson Decl.”), ECF 19 No. 4; Nelson Decl. 20 Subsequently in 2017, Defendant MNLI charged Rand a 21 premium payment of $28,708.19 to continue the Policy. 22 See FAC. ¶ 44. Rand contested the amount, as he had 23 already allegedly paid over one million dollars in 24 premiums over the life of the Policy. Id. Further, 25 Plaintiffs contend that when Rand offered a different 26 premium payment, Defendant MNLI improperly refused. 27 Id. ¶ 45. Consequently, Defendant MNLI claimed the 28 Policy lapsed. Id. ¶ 53. 1 On April 15, 2017, Defendant MNLI terminated the 2 Policy and notified Rand of the termination by letter. 3 Id. Plaintiffs allege that such termination was 4 improper, contending that all owners of the Policy 5 should have been notified.3 Id. ¶ 24. As a result, 6 Plaintiffs assert that the Policy remains in full 7 effect. Id. ¶ 2. 8 Plaintiffs further allege that to reinstate the 9 Policy, Defendants claimed $28,708.19 and required Rand 10 to provide full medical underwriting, documentation, 11 and release of health information. Id. ¶ 44. 12 Plaintiffs assert that Defendants knew such 13 requirements would prevent Rand from reinstating the 14 Policy. Id. Plaintiffs now bring this Action 15 requesting damages, an accounting, reinstatement of the 16 Policy, and disgorgement of funds. FAC at 43-44. 17 B. Procedural Background 18 Plaintiffs filed the Complaint [1-1] in the 19 Superior Court of the State of California, County of 20 Los Angeles, on March 13, 2019, alleging breach of 21 contract amongst other related claims.4 Defendants 22 23 3 The Policy states that MNLI will “mail the Owner notice, at his last known address, of the amount of premium that will be 24 sufficient to continue [the] policy . . . .” Policy at 5, ECF No. 1-2. Plaintiffs contend that termination was not proper 25 under this provision because Plaintiffs Rand 1992 Trust 26 Irrevocable Trust, Trustee Suzanne E. Rand-Lewis, and Trustee Leslie B. Rand-Luby are owners of the Policy who were not 27 notified of its termination. FAC. ¶ 24. 28 4 Plaintiffs brought thirteen claims in total. Compl. at 1, ECF No. 1-1. Against Defendant MNLI, Plaintiffs claim: 1) breach 1 removed this Action to this Court on April 22, 2019 2 [1]. 3 On August 6, 2019, the Court denied Plaintiffs’ 4 Motion to Remand [39].5 Also on August 6, 2019, the 5 Court granted Defendants’ Motion to Dismiss.6 6 Plaintiffs filed their First Amended Complaint (“FAC”) 7 on August 28, 2019 [41]. On September 20, 2019, 8 Defendant Kelly [45] and Defendant MNLI [46] filed the 9 instant Motion. Plaintiffs opposed on October 22, 2019 10 [47]. Defendant MNLI timely replied [49], which 11 Defendant Kelly joined [48]. 12 II. DISCUSSION 13 A. Legal Standard 14 Federal Rule of Civil Procedure 12(b)(6) allows a 15 16 of contract, 2) breach of the implied covenant of good faith and fair dealing, 3) violation of California Administrative 17 Regulations Section 2695.7, and 4) unjust enrichment; violation 18 of constructive trust; and an accounting. Id. Against Defendant Kelly, Plaintiffs claim: 5) breach of contract, 6) breach of 19 fiduciary duties, and 7) violation of the Consumer Legal Remedies Act. Id. Against Defendants jointly, Plaintiffs assert: 8) 20 violation of Business & Professions Code Section 17200, 9) intentional infliction of emotional distress, 10) fraud, 11) 21 negligent misrepresentation, 12) concealment, and 13) elder abuse. Id. 22 5 The Court denied Plaintiffs’ Motion to Remand on the basis 23 that the Court found that Defendant Kelly was a sham defendant. 24 See Order re Plaintiff’s Motion to Remand; Motion to Dismiss (“Order”), ECF No. 39. 25 6 The Court granted Defendants’ Motion to Dismiss after 26 finding that all of Plaintiffs’ claims were barred by the relevant limitations periods. See Order 27:13-19. The Court 27 granted Plaintiffs leave to amend to include allegations of further investigation that justified delay in bringing suit, or 28 allegations as to equitable estoppel. Id. 31:1-4. 1 party to move for dismissal of one or more claims if 2 the pleading fails to state a claim upon which relief 3 can be granted. A complaint must “contain sufficient 4 factual matter, accepted as true, to state a claim to 5 relief that is plausible on its face.” Ashcroft v. 6 Iqbal, 556 U.S. 662, 678 (2009) (quotation omitted). 7 Dismissal is warranted for a “lack of a cognizable 8 legal theory or the absence of sufficient facts alleged 9 under a cognizable legal theory.” Balistreri v. 10 Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 11 1988) (citation omitted). 12 In ruling on a 12(b)(6) motion, a court may 13 generally consider only allegations contained in the 14 pleadings, exhibits attached to the complaint, and 15 matters properly subject to judicial notice. Swartz v. 16 KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007). A court 17 must presume all factual allegations of the complaint 18 to be true and draw all reasonable inferences in favor 19 of the non-moving party. Klarfeld v. United States, 20 944 F.2d 583, 585 (9th Cir. 1991). The question is not 21 whether the plaintiff will ultimately prevail, but 22 whether the plaintiff is entitled to present evidence 23 to support the claims. Jackson v. Birmingham Bd. of 24 Educ., 544 U.S. 167, 184 (2005) (quoting Scheuer v. 25 Rhodes, 416 U.S. 232, 236 (1974)). While a complaint 26 need not contain detailed factual allegations, a 27 plaintiff must provide more than “labels and 28 conclusions” or “a formulaic recitation of the elements 1 of a cause of action.” Bell Atl. Corp. v. Twombly, 550 2 U.S. 544, 555 (2007). However, a complaint “should not 3 be dismissed under Rule 12(b)(6) ‘unless it appears 4 beyond doubt that the plaintiff can prove no set of 5 facts in support of his claim which would entitle him 6 to relief.’” Balistreri, 901 F.2d at 699 (citing 7 Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). 8 B. Discussion 9 1. Defendant Kelly is a Sham Defendant 10 Federal Rule of Civil Procedure 21 permits “[o]n 11 motion or on its own, the court may at any time, on 12 just terms, add or drop a party.” This Court 13 previously ruled that Defendant Kelly is a fraudulently 14 joined “sham defendant.” See Order 12:12-16:28. The 15 Court finds that nothing alleged in the FAC changes the 16 status of Defendant Kelly. Accordingly, because he 17 “cannot be liable to [] [P]laintiff[s] on any theory 18 alleged in the [Amended] [C]omplaint,” Defendants’ 19 Motion is GRANTED WITHOUT LEAVE TO AMEND as to all 20 claims against Defendant Kelly. 21 2. Standing 22 A plaintiff invoking federal jurisdiction bears the 23 burden of establishing that he has suffered the 24 “invasion of a legally protected interest.” Scott v. 25 Pasadena Unified Sch. Dist., 306 F.3d 646, 654 (9th 26 Cir. 2002). That interest may be protected by law or 27 by contract. See, e.g., Hatchwell v. Blue Shield of 28 Calif., 244 Cal. Rptr. 249, 253 (Cal. Ct. App. 1988). 1 A plaintiff’s standing to bring a claim is a threshold 2 issue that must be resolved prior to reaching the 3 merits of the party's claim. See Scott, 306 F.3d at 4 654. 5 Only a real party in interest has the right to file 6 a suit under any substantive law. See Saks et al. v. 7 Damon Raike and Company, et al., 8 Cal. Rptr. 2d 869, 8 874 (Cal. Ct. App. 1992). For claims arising from the 9 ownership and purchase of an insurance policy, only the 10 owner, insured, parties to the contract, and intended 11 beneficiaries have standing to sue.7 GIC Real Estate, 12 Inc. v. ACE Am. Ins. Co., No. 17-CV-03143-SK, 2017 WL 13 10442699, at *3 (N.D. Cal. Sept. 21, 2017) (citing 14 Mohamed v. AMCO Ins. Co., 2013 WL 1739477, at *3 (N.D. 15 Cal. Apr. 22, 2013)) (“In the context of an insurance 16 action, a non-party to the insurance contract has 17 standing to bring a claim as an insured or express 18 beneficiary under the contract, but only if the 19 non-party is asserting its own rights under the 20 contract.”). 21 Plaintiffs seek to avoid a limitations defense by 22 arguing in their FAC that the accrual of the 23 limitations period varies from Plaintiff to Plaintiff. 24 25 7 “The policy terms as interpreted by the court determine 26 who is an insured and who is an intended beneficiary.” Rosenberg v. Truck Ins. Exch., No. B158128, 2003 WL 1950384, at *3 (Cal. 27 Ct. App. Apr. 25, 2003) (citing Hess v. Ford Motor Co., 117 Cal. Rptr. 2d 220 (2002)). 28 1 However, this argument need not be addressed, as most 2 of the Plaintiffs in this Action lack standing. Here, 3 the only parties to this Action with standing to bring 4 the claims set forth in the FAC are Plaintiff Gary Rand 5 and Plaintiff Gary Rand, as Trustee of the Rand 1992 6 Irrevocable Trust. 7 The life insurance policy was initially taken out 8 with Gary Rand named as both the owner and the insured.8 9 See Summit National Life Insurance Request for Service 10 in Supp. of FAC (“Request for Service”). In 1992, Gary 11 Rand changed the beneficiary on the policy, naming the 12 Rand 1992 Irrevocable Trust as the beneficiary. See 13 id. The ownership of the policy was also transferred 14 to the Rand 1992 Irrevocable Trust. See id. 15 Therefore, any claims arising out of this insurance 16 policy could only be brought on behalf of the 17 owner/beneficiary of the policy, the Rand 1992 18 19 8 This Court previously determined that “[a] court may consider evidence on which the complaint ‘necessarily relies’ if: 20 (1) the complaint refers to the document; (2) the document is central to the plaintiff's claim; and (3) no party questions the 21 authenticity of the copy attached to the 12(b)(6) motion.” See Order re Plaintiffs’ Motion to Remand; Defendants’ Motion to 22 Dismiss (“Order re Motion to Dismiss”) 22:16-23, ECF No. 39 23 (citing Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006) (internal citations omitted). The court may treat such a 24 document as “part of the complaint, and thus may assume that its contents are true for purposes of a motion to dismiss under Rule 25 12(b)(6).” Id. Here, Plaintiffs do not contest—and even attach themselves—the authenticity of the Request for Service included 26 in the insurance policy documents. The FAC does “necessarily rely” on this document, as it is the contract giving rise to the 27 protected interest at stake in this Action. Thus, the Court may appropriately consider and assume to be true the insurance policy 28 documents attached to the FAC. 1 Irrevocable Trust, or the insured on the policy, Gary 2 Rand. Claims brought on behalf of the trust must be 3 brought by the trustees of a trust. See Morris v. 4 Choicepoint Servs., Inc., No. C061224SC, 2006 WL 5 2479122, at *3 (N.D. Cal. Aug. 28, 2006) (“The trustee 6 of a trust, not the beneficiary, has legal title to the 7 assets of a trust and is therefore the real party in 8 interest-not the beneficiary-and may sue in the name of 9 the trust.”). 10 The Request for Service lists Suzanne E. Rand-Lewis 11 and Leslie B. Rand-Luby as trustees of the Rand 1992 12 Irrevocable Trust.9 However, Rand-Lewis and Rand-Luby 13 do not sue in their capacities as trustees of the Rand 14 1992 Irrevocable Trust in this Action; they have only 15 sued as individuals and as trustees of their own 16 trusts. The only Plaintiff in this Action suing in his 17 or her capacity as a trustee of the Rand 1992 18 Irrevocable Trust is Gary Rand. Accordingly, only Gary 19 20 9 The Request for Service, under “Change of Beneficiary,” states: 21 Rand 1992 Irrevocable Trust dated August 7, 1992 Trustee: Suzanne E. Rand-Lewis 22 Trustee: Leslie B. Rand-Luby 23 This Court interprets this document to be indicating that the Rand 1992 Irrevocable Trust is the new beneficiary, and noting 24 that Suzanne E. Rand-Lewis and Leslie B. Rand-Luby are trustees of this trust. Another possible interpretation is that the 25 document is purporting to designate three beneficiaries: the trust and each of the two trustees. Regardless, interpretation 26 of the document does not affect the standing analysis; even if the document intended Trustee: Suzanne E. Rand-Lewis and Trustee: 27 Leslie B. Rand-Luby to be beneficiaries of the life insurance policy, they did not sue in their capacity as trustees of the 28 Rand 1992 Irrevocable Trust. 1 Rand and Gary Rand, as Trustee of the 1992 Irrevocable 2 Trust have standing to bring claims arising from the 3 ownership of the life insurance policy.10 As such, 4 claims on behalf of all other Plaintiffs are DISMISSED 5 from this Action WITH PREJUDICE. 6 3. Statute of Limitations 7 “A claim may be dismissed as untimely pursuant to a 8 12(b)(6) motion ‘only when the running of the statute 9 [of limitations] is apparent on the face of the 10 complaint.’” United States ex rel. Air Control Techs. 11 v. Pre Con Indus., 720 F.3d 1174, 1178 (9th Cir. 2013) 12 (quotation omitted). “In fact, a complaint cannot be 13 dismissed unless it appears beyond doubt that the 14 plaintiff can prove no set of facts that would 15 establish the timeliness of the claim.” Supermail 16 Cargo, Inc. v. United States, 68 F.3d 1204, 1207 (9th 17 Cir. 1995). 18 This Court dismissed Plaintiffs’ original Complaint 19 because the relevant limitations periods barred all of 20 Plaintiffs’ claims and the Complaint failed to allege 21 facts supporting any of the four elements of estoppel.11 22 23 10 Although the Rand 1992 Irrevocable Trust is the current owner of the Policy, it had appointed Gary Rand as its agent and 24 instructed Defendant MNLI to direct Policy communications to Rand’s mailing address, thus imputing any knowledge by Rand to 25 the Trust. See Nelson Decl., Ex. 2, Policy at 17 (designating address “same as insured” in reference to Rand and instructing 26 billing notices, including premium notices, to be sent to Rand), ECF No. 6. 27 11 Of all claims asserted, the longest applicable statute of 28 limitations is four years. 1 See Order 27:16-19; 29:7-9. In granting leave to 2 amend, the Court recognized that “[i]t is possible that 3 Plaintiffs could plead additional facts justifying 4 their delay in filing suit or explaining further 5 investigation conducted” so as not to be barred by the 6 relevant limitations periods. Id. 30:26-31:4. 7 a. Discovery Rule 8 A federal court sitting in diversity applies the 9 substantive law of the state, including the state's 10 statute of limitations.” Albano v. Shea Homes Ltd. 11 P'ship, 634 F.3d 524, 530 (9th Cir. 2011) (citation 12 omitted). “[O]rdinarily, the statute of limitations 13 runs from ‘the occurrence of the last element essential 14 to the cause of action.’” Aryeh v. Canon Bus. 15 Solutions, Inc., 55 Cal. 4th 1185, 1191 (2013) 16 (citation omitted). “An important exception to the 17 general rule of accrual is the ‘discovery rule,’ which 18 postpones accrual of a cause of action until the 19 plaintiff discovers, or has reason to discover, the 20 cause of action.” Fox v. Ethicon Endo-Surgery, Inc., 21 35 Cal. 4th 797, 806 (2005). 22 “A plaintiff has reason to discover a cause of 23 action when he or she ‘has reason at least to suspect a 24 factual basis for its elements.’” Fox, 35 Cal. 4th at 25 807 (citation omitted). “[T]o rely on the discovery 26 rule for delayed accrual of a cause of action, ‘[a] 27 plaintiff whose complaint shows on its face that his 28 claim would be barred without the benefit of the 1 discovery rule must specifically plead facts to show 2 (1) the time and manner of discovery and (2) the 3 inability to have made earlier discovery despite 4 reasonable diligence.’” Id. at 808 (second alteration 5 and emphasis in original) (citation omitted). 6 Here, the crux of Plaintiffs’ claims rest on 7 Defendant MLNI’s alleged practice of raising premiums 8 from as early as 2012 to “try to force a policy lapse.” 9 FAC ¶ 51. Accordingly, the focus of the analysis in 10 determining whether the relevant limitations periods 11 bar Plaintiffs’ claims is on when Plaintiffs first 12 suspected the wrongdoing—that is, when they first 13 suspected improper premium increases. See Fox, 35 Cal. 14 4th at 807 (“Rather than examining whether [a] 15 plaintiff[ ] suspect[s] facts supporting each specific 16 legal element of a particular cause of action, [courts] 17 look to whether [a] plaintiff[ ] [has] reason to at 18 least suspect that a type of wrongdoing has injured 19 [him].”). This Court determined in its previous Order 20 that “the allegations in the Complaint lend towards the 21 conclusion that Plaintiffs seemingly knew of the raised 22 premiums and suspected wrongdoing since as early as 23 2012,” and that conclusion holds true in assessing the 24 FAC. See Order 26:19-22. 25 Plaintiffs argue that regardless of Gary Rand's 26 communications with MLNI in as early as 2012, 27 Plaintiffs were not on notice of their ability to file 28 suit until 2018, when they became aware of a public 1 news release about proposed legislation in California 2 designed to provide consumers with more information 3 about insurer cost increases. FAC ¶ 56. Additionally, 4 Plaintiffs argue that their claims against Defendant 5 MLNI include Defendant MLNI's failure to notify the 6 policy owners of the premiums due and eventual policy 7 termination in 2017, so the limitations period has not 8 begun to run. FAC ¶ 67. Further, the FAC repeatedly 9 asserts that since Plaintiffs did not and still do not 10 know the "complex formula" MLNI allegedly used to 11 charge Plaintiffs, and "[n]o investigation by 12 Plaintiffs could have resulted in the discovery of the 13 actual formula . . . because Defendant [MLNI] refuses 14 to disclose it," the limitations period does not bar 15 their claims. 16 The Court is again unpersuaded by Plaintiffs’ 17 allegations. While Plaintiffs argue that Gary Rand’s 18 2012 communications with Defendant MLNI reflect his 19 confusion about what Defendant was doing, and that he 20 did not know or suspect that Defendant’s alleged 21 conduct was illegal or contrary to the terms of the 22 policy, see FAC ¶ 12, the FAC and contents of the 23 letters say otherwise. Indeed, the FAC plainly states 24 that “Plaintiff Gary Rand thought premiums were not 25 properly calculated . . . .” FAC ¶ 13. Further, Gary 26 Rand’s May 1, 2012 letter to Defendant MLNI indicates, 27 “premium being paid is excessive and has been,” 28 Declaration of Nick Nelson re Removal (“Nelson Decl.”) 1 ¶ 12, Ex. 7, May 1, 2012 Letter, ECF No. 6-7 (emphasis 2 added). 3 As this Court noted in its previous Order, once 4 Plaintiffs had reason to at least suspect Defendant 5 MNLI’s allegedly wrongful conduct of increasing the 6 premiums, Plaintiffs were “required to conduct a 7 reasonable investigation” and are “charged with 8 knowledge of the information that would have been 9 revealed by such an investigation.” Fox, 35 Cal. 4th 10 at 808. The fact that the exact formula allegedly used 11 by Defendant MLNI is not known is of no consequence to 12 the running of the limitations periods; Plaintiffs need 13 not know how the breach occurred, they must at a 14 minimum suspect wrongdoing for the limitations periods 15 to begin to run. See Fox, 35 Cal. 4th at 807. 16 The FAC suffers from the same deficiencies as 17 Plaintiff’s original Complaint, as it fails to allege 18 facts indicating that a “reasonable investigation” by 19 Rand or the other Plaintiffs took place during the 20 three years between Rand’s initial letters to MLNI in 21 2012 and the follow up letters in 2016. Further, the 22 FAC repeatedly notes that “Defendants’ wrongful conduct 23 continues to the present date” in an attempt to 24 demonstrate that Plaintiffs’ claims did not accrue 25 starting in 2012. See FAC ¶ 48. However, it is the 26 origin of the allegedly wrongful conduct—raising the 27 premiums—and not the ill effects from such conduct that 28 controls. See Rae v. Bank of Am., N.A., No. CV 16-8932 1 PA (Ssx), 2017 WL 447306, at *3 (C.D. Cal. Feb. 1, 2 2017) (“That [p]laintiff may continue to suffer the ill 3 effects from [defendant’s] allegedly tortious conduct 4 does not toll or extend the applicable statutes of 5 limitations.”); see also Davis v. Krasna, 121 Cal. 6 Rptr. 705, 713 (Cal. Ct. App. 1975) (“To delay the 7 running of the period of limitation only until 8 defendant's acts furnished plaintiff with a more 9 certain proof of damages would contravene the principle 10 that victims of legal wrong should make reasonable 11 efforts to avoid incurring further damages.”). 12 The Court finds that Plaintiffs’ claims began to 13 accrue in 2012. Plaintiffs failed to allege anything 14 more as to any reasonable investigation conducted after 15 Plaintiff Gary Rand’s 2012 letter to MLNI. Further, 16 the Court is unpersuaded by Plaintiffs’ argument that 17 they were not aware of the alleged breach until 2018 18 when they learned of the news release. A 2018 news 19 release could not affect the knowledge Plaintiffs had 20 in 2012, nor did the release speak directly to 21 Plaintiffs’ individual claims; the release concerned 22 proposed legislation and provided Plaintiffs with no 23 more information as to their claims against Defendants 24 than they had in 2012. Consequently, the relevant 25 limitations periods bar all of Plaintiffs’ claims. 26 b. Estoppel Against Limitations 27 Plaintiffs, in their FAC, argue that Defendants are 28 estopped from raising a limitations period defense. 1 “An estoppel against limitations defense usually 2 ‘arises as a result of some conduct by the defendant, 3 relied on by the plaintiff, which induces the belated 4 filing of the action.” Spray, Gould & Bowers v. 5 Associated Int’l Ins. Co., 84 Cal. Rptr. 2d 552, 556 6 (Cal. Ct. App. 1999) (citation omitted). “Four 7 elements must ordinarily be proved to establish an 8 equitable estoppel: (1) The party to be estopped must 9 know the facts; (2) he must intend that his conduct 10 shall be acted upon, or must so act that the party 11 asserting the estoppel had the right to believe that it 12 was so intended; (3) the party asserting the estoppel 13 must be ignorant of the true state of facts; and, (4) 14 he must rely upon the conduct to his injury.” Id. 15 “Application of equitable estoppel against the 16 assertion of a limitations defense typically arises 17 through some misleading affirmative conduct on the part 18 of a defendant.” Id. 19 Here, the Court again finds that Plaintiffs have 20 not sufficiently pled the elements of equitable 21 estoppel. The FAC argues that because Defendant MLNI 22 withheld the complex formula it allegedly used to 23 charge Plaintiffs, “misled Plaintiffs by providing what 24 it called an accounting,” and failed to respond to Gary 25 Rand’s questions, Defendant MLNI prevented Plaintiffs 26 from filing suit. 27 However, “[n]othing in these allegations suggest 28 that Defendant MNLI induced Rand to belatedly file 1 suit, but rather, that Rand was on further notice of 2 the alleged wrongdoing with no promise or 3 misrepresentation from Defendant MNLI.” Order 29:19- 4 23. The Court again notes that Plaintiffs need not 5 know the alleged formula in order to file suit. 6 Further, the FAC fails to address that Gary Rand 7 threatened litigation as a result of the lack 8 information Defendants provided in response to his 9 requests for an accounting, but still waited to bring 10 suit without any indication that Defendant MNLI induced 11 him to do so. 12 In short, Plaintiffs have failed to allege any 13 misrepresentations by Defendants since first raising 14 premiums in 2012 that would induce Plaintiffs’ waiting 15 to file suit.12 Accordingly, Plaintiffs’ estoppel 16 argument fails. 17 Because the Court finds that Plaintiffs’ claims are 18 time-barred, and that Plaintiffs have not alleged 19 sufficient facts justifying estoppel, the Court GRANTS 20 Defendants’ Motion to Dismiss WITHOUT LEAVE TO AMEND. 21 4. Leave to Amend 22 A party may amend the complaint once “as a matter 23 of course” before a responsive pleading is served. 24 25 12 In the FAC, Plaintiffs allege that Defendants “misled Plaintiff by providing what it called an accounting upon which 26 Plaintiffs relied.” FAC ¶ 9. However, no further facts are provided as to what was allegedly misleading or why it was not a 27 proper accounting. Accordingly, the Court does not find that this simple allegation is sufficient to constitute an affirmative 28 misrepresentation by Defendants. 1 Fed. R. Civ. P. 15(a). After that, the “party may 2 amend the party's pleading only by leave of court or by 3 written consent of the adverse party and leave shall be 4 freely given when justice so requires.” Id. Leave to 5 amend lies “within the sound discretion of the trial 6 court.” United States v. Webb, 655 F.2d 977, 979 (9th 7 Cir. 1981). Here, Plaintiffs have already had an 8 opportunity to cure the pleading deficiencies in their 9 Complaint. This Court even instructed Plaintiffs as to 10 exactly the types of allegations that would need to be 11 included in their FAC to survive a limitations defense. 12 Because Plaintiffs have failed again to plead 13 sufficiently, the Court finds that any further 14 amendment would be futile. Accordingly, the Court 15 DENIES leave to amend. 16 17 III. CONCLUSION 18 Based on the foregoing, the Court GRANTS 19 Defendants’ Motion to Dismiss WITHOUT LEAVE TO AMEND. 20 21 IT IS SO ORDERED. 22 23 DATED: December 26, 2019 /s / Ro n a ld S .W . L ew 24 HONORABLE RONALD S.W. LEW Senior U.S. District Judge 25 26 27 28