1 2 3 4 5 UNITED STATES DISTRICT COURT 6 SOUTHERN DISTRICT OF CALIFORNIA 7 8 MICHELLE L. MORIARTY, as Case No.: 3:17-cv-1709-JO-WVG Successor-In-Interest to Heron D. 9 Moriarty, Decedent, on Behalf of the ORDER (1) GRANTING 10 Estate of Heron D. Moriarty, and on MOTION FOR LEAVE TO FILE Behalf of the Class, FOR CLASS CERTIFICATION; 11 (2) GRANTING MOTION TO Plaintiff, 12 CERTIFY ORDER FOR v. INTERLOCUTORY APPEAL; 13 AND (3) STAYING CASE AMERICAN GENERAL LIFE 14 INSURANCE COMPANY, et al., [Dkts. 310 & 311] 15 Defendants. 16 17 18 Plaintiff Michelle Moriarty sued Defendant American General Life Insurance 19 Company for breach of contract after Defendant refused to pay the life insurance benefits 20 on her husband’s policy. Following the Court’s order granting Plaintiff summary judgment 21 on her breach-of-contract claim, Plaintiff requested leave to file another class-certification 22 motion after her previous motions were denied. Dkt. 310. Defendant American General 23 Life Insurance Company opposes this request. Dkt. 315. In the event, however, that the 24 Court permits Plaintiff to file another class certification motion and thereby prolongs this 25 litigation, Defendant requests that the Court certify its summary judgment order for 26 interlocutory appeal. Dkt. 311. For the reasons discussed below, the Court will grant both 27 motions and stay the case pending the resolution of Defendant’s appeal of its summary 28 judgment order. 1 A. Motion for Leave to File an Additional Class Certification Motion 2 As Defendant’s request to certify the summary judgment order for interlocutory 3 appeal depends on whether the Court permits Plaintiff to file a new class certification 4 motion, the Court will first examine the latter issue. The trial court has discretion over the 5 filing of class certification motions. Davidson v. O’Reilly Auto Enters., LLC, 968 F.3d 6 955, 962–64 (9th Cir. 2020). When assessing whether a party can move for class 7 certification, district courts should not be “inflexible” and should not deny “a party a 8 reasonable opportunity to obtain a ruling on the merits of a motion for class certification.” 9 Id. at 963–64. Because the deadline for filing class certification motions has passed, 10 Plaintiff must also establish that she had good cause not to file this motion before the 11 deadline. Johnson v. Mammoth Recreations, 975 F.2d 604, 608 (9th Cir. 1992) (“Orders 12 entered before the final pretrial conference may be modified upon a showing of ‘good 13 cause.’”). 14 To determine whether Plaintiff’s request to file another class certification motion at 15 this late date is reasonable, the Court reviews the procedural history of this case. Plaintiff’s 16 first class-certification motion was deferred for non-substantive reasons. On November 17 25, 2020, the Court denied Plaintiff’s first class-certification motion without a ruling on 18 the merits because the Court wanted to wait for the California Supreme Court to decide 19 whether Insurance Code Sections 10113.71 and 10113.72 apply to policies issued before 20 the sections went into effect. Dkt. 190. Because Mr. Moriarty purchased the life insurance 21 policy at issue here before the sections went into effect, that question needed to be resolved 22 for the case to proceed. After the California Supreme Court decided in McHugh v. 23 Protective Life Ins. Co., 494 P.3d 24, 45 (Cal. 2021), that these Insurance Code provisions 24 apply to all policies in force when the provisions went into effect, Plaintiff filed a second 25 motion for class certification on February 7, 2022. Dkt. 222. 26 The Court denied this second motion without prejudice based primarily on the fact 27 that Plaintiff proposed an overbroad class. Dkt. 253. The Court found that Plaintiff failed 28 to satisfy the requirements for class certification because many members of the proposed 1 class were still alive and thus would not be seeking the same damages Plaintiff was 2 seeking—that is, the policy amount. Id. On September 7, 2022, the Court also denied 3 summary judgment on Plaintiff’s breach-of-contract claim.1 Dkt. 252. The Court ruled 4 that while Defendant failed to terminate Mr. Moriarty’s policy in accordance with Sections 5 10113.71(b) and 10113.72(c), triable issues of fact regarding causation precluded summary 6 judgment. Id. Specifically, the Court ruled that a jury needed to determine “whether 7 certain of [Defendant]’s violations of the [sections] ‘actually caused damage to Plaintiff,’ 8 ‘whether Plaintiff had actual notice of a lapsed policy payment,’ and ‘whether Plaintiff 9 would have been Mr. Moriarty’s § 10113.72 designee.’” Id. at 4. While not the basis of 10 the Court’s holding when denying class certification, the Court noted that those causation 11 issues would likely also present individualized issues for all class members precluding 12 class certification. Dkt. 253 at 8. 13 Plaintiff now seeks to bring another class certification motion proposing a narrowed 14 class—beneficiaries of deceased policy holders—with the same kind of damages: the 15 policy amount. Dkt. 310. Based on the procedural history of this case, the Court finds that 16 Plaintiff had good cause to delay seeking certification of this narrowed class until after the 17 Court’s ruling reconsidering the previous denials of summary judgment on Plaintiff’s 18 breach-of-contract claim. Based on the Court’s decisions denying Plaintiff’s summary 19 judgment motions on the grounds that factual issues on causation precluded summary 20 judgment, there was little reason for Plaintiff to believe the Court would grant another 21 motion for class certification, even with a narrowed class. Even if Plaintiff could remedy 22 the lack of common damages by narrowing the proposed class, the individual issues on 23 causation, as noted by the Court, would present another hurdle to meeting the commonality 24 and superiority requirements of class certification. 25 The Court’s subsequent decision granting Plaintiff summary judgment on her 26 27 28 1 breach-of-contract claim changed this analysis. The Court’s ruling that an insurance 2 company’s failure to terminate a policy in accordance with Insurance Code Sections 3 10113.71(b) and 10113.72(c) precludes a policy from lapsing obviated the need for an 4 inquiry (either on an individual or class-wide basis) into what exactly caused the insured’s 5 failure to pay and the resulting lapse in the policy. See Dkt. 306. In other words, because 6 individualized issues on causation are now unlikely to bar class certification, Plaintiff now 7 seeks an opportunity to propose a narrowed class addressing the infirmities that previously 8 precluded certification. 9 Because Plaintiff has not had a meaningful opportunity to propose this revised, 10 narrowed class—consisting of the beneficiaries of deceased policy holders all seeking the 11 policy amount—for class certification, the Court exercises its direction to allow her to do 12 so now. To proceed otherwise would be “inflexible” and deny Plaintiff a ruling on the 13 merits for this modified class. See Davidson, 968 F.3d at 963–64. Thus, Plaintiff’s motion 14 for leave to file a class certification motion is granted.2 15 B. Motion to Certify Summary Judgment Order for Interlocutory Appeal 16 Because the Court granted Plaintiff’s motion for leave to file for class certification, 17 the Court will now turn to Defendant’s motion to certify for interlocutory appeal the 18 Court’s order granting Plaintiff summary judgment on her breach-of-contract claim.
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1 2 3 4 5 UNITED STATES DISTRICT COURT 6 SOUTHERN DISTRICT OF CALIFORNIA 7 8 MICHELLE L. MORIARTY, as Case No.: 3:17-cv-1709-JO-WVG Successor-In-Interest to Heron D. 9 Moriarty, Decedent, on Behalf of the ORDER (1) GRANTING 10 Estate of Heron D. Moriarty, and on MOTION FOR LEAVE TO FILE Behalf of the Class, FOR CLASS CERTIFICATION; 11 (2) GRANTING MOTION TO Plaintiff, 12 CERTIFY ORDER FOR v. INTERLOCUTORY APPEAL; 13 AND (3) STAYING CASE AMERICAN GENERAL LIFE 14 INSURANCE COMPANY, et al., [Dkts. 310 & 311] 15 Defendants. 16 17 18 Plaintiff Michelle Moriarty sued Defendant American General Life Insurance 19 Company for breach of contract after Defendant refused to pay the life insurance benefits 20 on her husband’s policy. Following the Court’s order granting Plaintiff summary judgment 21 on her breach-of-contract claim, Plaintiff requested leave to file another class-certification 22 motion after her previous motions were denied. Dkt. 310. Defendant American General 23 Life Insurance Company opposes this request. Dkt. 315. In the event, however, that the 24 Court permits Plaintiff to file another class certification motion and thereby prolongs this 25 litigation, Defendant requests that the Court certify its summary judgment order for 26 interlocutory appeal. Dkt. 311. For the reasons discussed below, the Court will grant both 27 motions and stay the case pending the resolution of Defendant’s appeal of its summary 28 judgment order. 1 A. Motion for Leave to File an Additional Class Certification Motion 2 As Defendant’s request to certify the summary judgment order for interlocutory 3 appeal depends on whether the Court permits Plaintiff to file a new class certification 4 motion, the Court will first examine the latter issue. The trial court has discretion over the 5 filing of class certification motions. Davidson v. O’Reilly Auto Enters., LLC, 968 F.3d 6 955, 962–64 (9th Cir. 2020). When assessing whether a party can move for class 7 certification, district courts should not be “inflexible” and should not deny “a party a 8 reasonable opportunity to obtain a ruling on the merits of a motion for class certification.” 9 Id. at 963–64. Because the deadline for filing class certification motions has passed, 10 Plaintiff must also establish that she had good cause not to file this motion before the 11 deadline. Johnson v. Mammoth Recreations, 975 F.2d 604, 608 (9th Cir. 1992) (“Orders 12 entered before the final pretrial conference may be modified upon a showing of ‘good 13 cause.’”). 14 To determine whether Plaintiff’s request to file another class certification motion at 15 this late date is reasonable, the Court reviews the procedural history of this case. Plaintiff’s 16 first class-certification motion was deferred for non-substantive reasons. On November 17 25, 2020, the Court denied Plaintiff’s first class-certification motion without a ruling on 18 the merits because the Court wanted to wait for the California Supreme Court to decide 19 whether Insurance Code Sections 10113.71 and 10113.72 apply to policies issued before 20 the sections went into effect. Dkt. 190. Because Mr. Moriarty purchased the life insurance 21 policy at issue here before the sections went into effect, that question needed to be resolved 22 for the case to proceed. After the California Supreme Court decided in McHugh v. 23 Protective Life Ins. Co., 494 P.3d 24, 45 (Cal. 2021), that these Insurance Code provisions 24 apply to all policies in force when the provisions went into effect, Plaintiff filed a second 25 motion for class certification on February 7, 2022. Dkt. 222. 26 The Court denied this second motion without prejudice based primarily on the fact 27 that Plaintiff proposed an overbroad class. Dkt. 253. The Court found that Plaintiff failed 28 to satisfy the requirements for class certification because many members of the proposed 1 class were still alive and thus would not be seeking the same damages Plaintiff was 2 seeking—that is, the policy amount. Id. On September 7, 2022, the Court also denied 3 summary judgment on Plaintiff’s breach-of-contract claim.1 Dkt. 252. The Court ruled 4 that while Defendant failed to terminate Mr. Moriarty’s policy in accordance with Sections 5 10113.71(b) and 10113.72(c), triable issues of fact regarding causation precluded summary 6 judgment. Id. Specifically, the Court ruled that a jury needed to determine “whether 7 certain of [Defendant]’s violations of the [sections] ‘actually caused damage to Plaintiff,’ 8 ‘whether Plaintiff had actual notice of a lapsed policy payment,’ and ‘whether Plaintiff 9 would have been Mr. Moriarty’s § 10113.72 designee.’” Id. at 4. While not the basis of 10 the Court’s holding when denying class certification, the Court noted that those causation 11 issues would likely also present individualized issues for all class members precluding 12 class certification. Dkt. 253 at 8. 13 Plaintiff now seeks to bring another class certification motion proposing a narrowed 14 class—beneficiaries of deceased policy holders—with the same kind of damages: the 15 policy amount. Dkt. 310. Based on the procedural history of this case, the Court finds that 16 Plaintiff had good cause to delay seeking certification of this narrowed class until after the 17 Court’s ruling reconsidering the previous denials of summary judgment on Plaintiff’s 18 breach-of-contract claim. Based on the Court’s decisions denying Plaintiff’s summary 19 judgment motions on the grounds that factual issues on causation precluded summary 20 judgment, there was little reason for Plaintiff to believe the Court would grant another 21 motion for class certification, even with a narrowed class. Even if Plaintiff could remedy 22 the lack of common damages by narrowing the proposed class, the individual issues on 23 causation, as noted by the Court, would present another hurdle to meeting the commonality 24 and superiority requirements of class certification. 25 The Court’s subsequent decision granting Plaintiff summary judgment on her 26 27 28 1 breach-of-contract claim changed this analysis. The Court’s ruling that an insurance 2 company’s failure to terminate a policy in accordance with Insurance Code Sections 3 10113.71(b) and 10113.72(c) precludes a policy from lapsing obviated the need for an 4 inquiry (either on an individual or class-wide basis) into what exactly caused the insured’s 5 failure to pay and the resulting lapse in the policy. See Dkt. 306. In other words, because 6 individualized issues on causation are now unlikely to bar class certification, Plaintiff now 7 seeks an opportunity to propose a narrowed class addressing the infirmities that previously 8 precluded certification. 9 Because Plaintiff has not had a meaningful opportunity to propose this revised, 10 narrowed class—consisting of the beneficiaries of deceased policy holders all seeking the 11 policy amount—for class certification, the Court exercises its direction to allow her to do 12 so now. To proceed otherwise would be “inflexible” and deny Plaintiff a ruling on the 13 merits for this modified class. See Davidson, 968 F.3d at 963–64. Thus, Plaintiff’s motion 14 for leave to file a class certification motion is granted.2 15 B. Motion to Certify Summary Judgment Order for Interlocutory Appeal 16 Because the Court granted Plaintiff’s motion for leave to file for class certification, 17 the Court will now turn to Defendant’s motion to certify for interlocutory appeal the 18 Court’s order granting Plaintiff summary judgment on her breach-of-contract claim. A 19 district court may certify an order for interlocutory appeal if (1) the order “involves a 20 controlling question of law,” (2) “there is substantial ground for difference of opinion” on 21 that question, and (3) “an immediate appeal from the order may materially advance the 22 ultimate termination of the litigation.” 28 U.S.C. § 1292(b). 23 The Court’s order granting Plaintiff summary judgment satisfies all three conditions 24 for an interlocutory appeal. The Court’s holding that an insurance company’s failure to 25 26 27 2 The Court takes no position at this time on whether a motion for class certification would be barred by the one-way intervention rule. Defendant will have the opportunity to invoke that rule in 28 1 terminate an insurance policy in accordance with Sections 10113.71(b) and 10113.72(c) 2 precludes a policy from lapsing was a legal conclusion that determined the outcome of the 3 summary judgment decision (ECF No. 306); thus, it is a “controlling question of law.” See 4 In re Cement Antitrust Litigation, 673 F.2d 1020, 1026 (9th Cir. 1982) (defining a 5 “controlling question of law” as one that “could materially affect the outcome of litigation 6 in the district court”). Other judges, including the judge who previously presided over this 7 case, have disagreed with this Court’s analysis—demonstrating that “fair-minded jurists 8 might reach contradictory conclusions.” See Dkts. 184, 190, 253; see also Reese v. BP 9 Exploration (Alaska) Inc., 643 F.3d 681, 688 (9th Cir. 2011) (“A substantial ground for 10 difference of opinion exists where reasonable jurists might disagree on an issue's 11 resolution . . . .”); Steen v. Am. Nat’l Ins. Co., 2023 U.S. Dist. LEXIS 105592, *37 (C.D. 12 Cal. June 14, 2023) (determining that even if an insurance company failed to give an 13 insured the opportunity to designate a third party to receive termination notices, there 14 should be a counterfactual inquiry into whether the insured would have designated a third 15 party).3 16 Finally, an appeal of the order will “materially advance the ultimate termination of 17 the litigation.” See 28 U.S.C. § 1292(b). By allowing immediate appellate review of the 18 Court’s order, “protracted and expensive litigation” on Plaintiff’s motion for class 19 certification can be avoided. See Robbins Co. v. Lawrence Mfg. Co., 482 F.2d 426, 429 20 (9th Cir. 1973) (“The Court of Appeals will grant such interlocutory review . . . where 21 decision might avoid protracted and expensive litigation.”); see also Sterk v. Redbox 22 Automated Retail, LLC, 672 F.3d 535, 536 (7th Cir. 2012) (ruling that uncertainty 23 regarding a class action claim can delay settlement and protract litigation, which is “enough 24 25 3 Defendant asks this Court to take judicial notice of a state court decision also requiring such 26 counterfactual inquiries, Clemons v. Transamerica Premier Life Ins., No. CIVDS 1702068 (Cal. Super. Ct., San Bernardino Cnty., Aug. 9, 2023). Dkt. 311. The request for judicial notice is granted. In response 27 to Plaintiff’s motion for leave to file for class certification, Defendant asks this Court to take judicial notice of filings in other matters. Dkt. 315. That request for judicial notice is also granted. 28 1 satisfy the ‘may materially advance’ clause of section 1292(b)”). Because all three 2 ||conditions of 1292(b) are met, the Court will grant Defendant’s motion to certify for 3 ||interlocutory appeal the order granting Plaintiff summary judgment.‘ 4 The Court will also stay the case pending the resolution of the appeal to facilitate the 5 efficient, accurate resolution of this matter and further the best interests of the Court and 6 ||parties. See Landis v. N. Am. Co., 299 U.S. 248, 254 (1936) (“[T]he power to stay 7 || proceedings 1s incidental to the power inherent in every court to control the disposition of 8 ||the causes on its docket with economy of time and effort for itself, for counsel, and for 9 || litigants.”). 10 For the reasons stated, (1) Plaintiff's motion for leave to file a class certification 11 || motion is GRANTED, Dkt. 310; (2) Defendant’s motion to certify for interlocutory appeal 12 || the order granting Plaintiff summary judgment is GRANTED, Dkt. 311; and (3) this matter 13 |}is STAYED pending the resolution of Defendant’s appeal. If the Ninth Circuit accepts the 14 || appeal and reverses, then Plaintiff will not be permitted to file for class certification and 15 case will proceed to trial. Defendant must file an appeal within ten (10) days of the 16 |/entry of this order. The parties must file a joint status report, with a proposed scheduling 17 || plan, within three (3) days of the resolution of the appeal. 18 19 IT IS SO ORDERED. 20 || Dated: September 26, 2023 Qe 21 22 Honorable Jinsook Ohta” 53 United States District Judge 24 25 26 4 While 1292(b) requires appeals “within ten days after the entry of the order,” a district court, as 27 || here, “may certify the order for interlocutory appeal . .. in a separate order,” and then the ten-day period from the date that order is entered. JCTSI Or., Inc. v. Int’l Longshore & Warehouse Union, 22 F Ath 1125, 1131 (th Cir. 2022).