Gomez-Silva v. Jackson National Life Insurance Company et al

Filing 65

ORDER, Defendant Jackson National's Motion to Strike 57 is granted; Defendant Jackson National's Motion for Summary Disposition 62 is granted; Plaintiff's Motion for Summary Judgment 53 is denied; Defendant Jackson National' s Motion for Summary Judgment 48 is denied; Plaintiff's Motion to Withdraw the Deemed Admission 50 is denied; the Court will set a final pretrial conference by separate order; the Court will also, by separate order, require the parties to participate in a settlement conference in June with visiting Ninth Circuit Mediators. Signed by Judge David G Campbell on 5/3/11.(REW)

1

WO

2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7

FOR THE DISTRICT OF ARIZONA

8
9

Karla Gomez-Silva,

10

Plaintiff,

11

vs.

12

Jackson National Life Insurance
Company, a foreign corporation,

13
Defendants.
14
15

I.

)
)
)
)
)
)
)
)
)
)
)

No. CV09-2120 PHX DGC

ORDER

Plaintiff’s Motion for Summary Judgment.

16

Plaintiff moved for summary judgment on January 3, 2011, as part of its response to

17

Defendant Jackson National Life Insurance Company’s motion for summary judgment.

18

Doc. 53. The case management order established October 22, 2010 as the dispositive motion

19

deadline (Doc. 22), and the Court later extended the deadline by 60 days (Doc. 41). Jackson

20

National moves to strike Plaintiff’s motion as untimely (Doc. 57), and also moves for

21

summary disposition of the motion under Local Rule 7.2(i) (Doc. 62). Plaintiff has not

22

responded to either motion. The Court finds that Plaintiff’s motion for summary judgment

23

is untimely because it was filed beyond the dispositive motion deadline and Plaintiff has not

24

shown good cause for extending the deadline. Fed. R. Civ. P. 16(b)(4). Accordingly,

25

Plaintiff’s motion will be stricken. LRCiv. 7.2(m)(1).

26

II.

Jackson National’s Motion for Summary Judgment.

27

Jackson National moves for summary judgment on the ground that California law

28

governs the life insurance contract and, under that law, Jackson National is entitled to rescind

1

the contract. Doc. 48. Plaintiff responds that Arizona law controls the contract and, under

2

Arizona law, Jackson National is not entitled to rescind. Doc. 51. Jackson National’s reply

3

does not address the argument that Arizona law would preclude rescission. Doc. 59. The

4

dispositive issue before the Court, therefore, is whether California law applies to the

5

insurance contract. The motion has been fully briefed (Docs. 48, 51, 59) and the parties have

6

not requested oral argument. For the reasons stated below, the Court will deny the motion

7

for summary judgment.

8

A.

Legal Standards.

9

When a conflict of law exists “in a diversity case, the district court must apply the

10

choice-of-law rules of the state in which it sits.” Abogados v. AT&T, Inc., 223 F.3d 932, 934

11

(9th Cir. 2000) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941)); see also

12

Jorgensen v. Cassiday, 320 F.3d 906, 913 (9th Cir. 2003). “Arizona courts apply the

13

Restatement [(Second) of Conflict of Laws (‘Restatement’)] to determine the applicable law

14

in a contract action.” Swanson v. Image Bank, Inc., 77 P.3d 439, 441 (Ariz. 2003) (citing

15

Cardon v. Cotton Lane Holdings, Inc., 841 P.2d 198, 202 (Ariz. 1992)). The parties agree

16

that the Restatement applies in this case. Docs. 48, 51.

17

The parties focus most of their attention on § 187 of the Restatement, but the Court

18

concludes that another provision controls the choice-of-law issue in this case. Section 192

19

states that rights created by “a life insurance contract” are determined, “in the absence of an

20

effective choice of law by the insured in his application, by the local law of the state where

21

the insured was domiciled at the time the policy was applied for, unless, with respect to the

22

particular issue, some other state has a more significant relationship under the principles

23

stated in § 6 to the transaction and the parties.” Restatement § 192 (emphasis added). This

24

section clearly applies to the issue presented in this case of “whether a false statement made

25

by the insured to the insurance company bars recovery upon the policy.” Id. at cmt. a.

26

Because § 192 is more specific to life insurance contracts and to the precise issue in this

27

lawsuit, § 187 does not control. See Giezl v. Town of Gilbert, 529 P.2d 255, 258 (Ariz. App.

28

1974) (noting that a specific statute controls over a general statute).
-2-

1

Applying § 192, the Court must decide three issues: (1) Did the Decedent choose a

2

particular state’s law in his application? (2) If not, where was Decedent domiciled when he

3

applied for the policy? (3) Does some other state have a more significant relationship than

4

the domicile state under the factors addressed in § 6 of the Restatement?

5

B.

Discussion.

6

It is undisputed that Decedent purchased a $1,000,000 Jackson National life insurance

7

policy, the policy called for payment of $300,000 to each of Decedent’s two sons

8

(represented by Plaintiff), Decedent died in an automobile accident in January of 2008,

9

Jackson National rescinded the policy on account of an allegedly material misstatement by

10

Decedent on the application, the misstatement – even if material – was not related to

11

Decedent’s death, and Jackson National returned the premiums paid to date but did not pay

12

the sons’ claim. Docs. 49, 52. With these basic facts in mind, the Court will address the

13

three issues required by § 192.

14

1.

Did Decedent make a choice of law in his application?

15

Jackson National has provided no evidence that Decedent chose California law, or any

16

other state’s law, in his application. Jackson National argues strenuously that the insurance

17

policy chose California law, but such a choice is not controlling under § 192, which asks only

18

if “the insured” made an effective choice of law “in his application.” Restatement § 192.1
2.

19

Decedent’s Domicile.

20

“In order to establish domicile in Arizona a party must show ‘(1) physical presence

21

and (2) an intent to abandon the former domicile and remain here for an indefinite period of

22

time.’” Lake v. Bonham, 716 P.2d 56, 58 (Ariz. App. 1986) (quoting DeWitt v. McFarland,

23

537 P.2d 20, 21 (Ariz. 1975)). Each case should be “decided on the basis of its own peculiar

24

facts, using as indicia the habits of the person, his business and domestic relations,

25
26
27
28

1

The Court has found no Arizona case applying a choice-of-law provision in an insurance
policy, as opposed to an insurance application, and Jackson National has cited none. As
Arizona generally follows the Restatement, the Court will apply the application-choice
requirement of § 192.
-3-

1

declarations, exercise of political rights, community activities, payment of taxes, ownership

2

of property and other pertinent objective facts ordinarily arising out of the existence of the

3

requisite intent.” Jizmejian v. Jizmejian, 492 P.2d 1208, 1212 (Ariz. App. 1972). “Domicile

4

is presumed to follow residence, and, as actual residence is merely one circumstance, the

5

presumption raised thereby is not conclusive, but is rebuttable and the burden of proof to

6

rebut this presumption is on the person contending to the contrary.” Id. at 1211. The

7

evidentiary standard is a preponderance of the evidence. Id. at 1212.

8

It is undisputed that Decedent had resided in California at some time prior to an

9

application for insurance being discussed by Decedent and Jackson National’s agent.

10

Plaintiff asserts, however, that Decedent was a resident of Arizona at the time of application,

11

had been living in Arizona full time for more than one year, had an Arizona driver license,

12

and listed an Arizona address on his life insurance application. Doc. 51 at 3; Doc. 52 at 6.

13

Jackson National argues that it asked Plaintiff to admit Decedent resided in California on the

14

day the application was signed (Doc. 49 at 6:1-2), that Plaintiff failed to respond within 30

15

days of service, and that Plaintiff thereby admitted Decedent resided in California on that day

16

(Doc. 48 at 7 n.30). Jackson National also asserts, however, that Decedent “traveled to

17

California to obtain insurance” (Doc. 48 at 7) and does not dispute that Decedent had an

18

Arizona driver license and listed an Arizona address on his application (Doc. 48). Jackson

19

National’s Exhibit 4 shows that Decedent listed an Arizona address in the application and

20

held a current Arizona driver’s license. Doc. 49-3 at 19-21. The medical examination

21

related to the insurance application lists a Tucson, Arizona address for the medical examiner

22

(Doc. 49-3 at 24), and Jackson National does not deny that the medical exam took place in

23

Arizona. Moreover, Decedent’s girlfriend testified that she lived in Yuma, Arizona with

24

Decedent from November 2005 until his death in January 2008. Doc. 52-1 at 41. Jackson

25

National asserts in a separate filing that Decedent and his girlfriend “were making a

26

transition to Arizona.” Doc. 56 at 3.

27

Because of Plaintiff’s failure to timely respond to the request for admission and

28

because Plaintiff’s motion to withdraw the admission was not made until more than 30 days
-4-

1

after Jackson National filed its motion for summary judgment, the Court will assume for

2

purposes of this motion that Decedent resided in California on November 20, 2006 and

3

January 16, 2007. Fed. R. Civ. P. 36(b). The Court will not assume Decedent resided in

4

California immediately before or after these dates, however, because the admission request

5

was narrowly phrased as to two specific days, not time periods (Doc. 49-9 at 6:8-13).

6

As noted above, Arizona’s presumption that domicile follows residence may be

7

rebutted by a preponderance of the evidence. Jizmejian, 492 P.2d at 1211. The Court finds

8

that Plaintiff has rebutted the presumption created by the deemed admission of Decedent’s

9

California residence. This finding is based on the following undisputed facts: Decedent

10

listed his address in the insurance application as Arizona; Decedent held a current Arizona

11

driver’s license; Decedent was living with his girlfriend in Yuma, Arizona; Decedent

12

received his insurance medical exam in Arizona; Decedent, in Jackson National’s words, was

13

“making a transition to Arizona”; and Decedent traveled from Arizona to California to obtain

14

insurance. These “pertinent objective facts” show by a preponderance of the evidence that

15

Decedent generally was residing in Arizona and intended to remain here. Id. at 1212.

16

Domicile exists in Arizona when a person is physically present in the state and has an intent

17

to abandon his former domicile and remain here for an indefinite period of time. Lake, 716

18

P.2d at 58. The Court finds that Decedent’s domicile was Arizona notwithstanding

19

Plaintiff’s deemed admission that he was a resident of California on two days, November 20,

20

2006 and January 16, 2007.2

21

Decedent’s domicile in Arizona controls the choice-of-law issue unless California has

22

a more significant relationship to the parties or the transaction under the principles stated in

23

§ 6 of the Restatement. Restatement § 192.

24
25
2

26
27
28

The Court is permitted to resolve this factual issues by a preponderance of the evidence.
“A federal court sitting in diversity must apply the forum state’s choice of law rules.”
Jorgensen, 320 F.3d at 913. Under Arizona law, “[c]hoice-of-law issues are questions of
law” to be decided by the Court. See, e.g., Swanson v. Image Bank, Inc., 77 P.3d 439, 441
(Ariz. 2003); Baroldy v. Ortho Pharmaceutical Corp., 760 P.2d 574, 578 (Ariz. App. 1988).
-5-

1

3.

Restatement § 6.3

2

Part 1 of Section 6 of the Restatement directs the Court to consider any forum state

3

statute that specifies the law to be chosen. Restatement § 6(1). Arizona has such a statute.

4

A.R.S. § 20-1101 provides that Arizona statutes governing insurance contracts, including the

5

rescission provision cited by Plaintiff (A.R.S. § 20-1109), do not apply to “[p]olicies or

6

contracts not issued for delivery in this state nor delivered in this state[.]” § 20-1101. The

7

statute does not specify what law applies to policies issued for delivery and delivered in a

8

state other than Arizona.

9

In this case, the parties dispute where the policy was issued for delivery and delivered.

10

If the policy was issued for delivery or delivered in Arizona, A.R.S. § 20-1101 specifies that

11

Arizona insurance statutes would apply, the principles of § 6 therefore would not override

12

the place of Decedent’s domicile (Arizona) and, under § 192, Arizona law would apply,

13

including the rescission statute at A.R.S. § 20-1109. If the policy was issued for delivery and

14

delivered in California, however, § 20-1101 would not direct that California law apply – it

15

is silent on the subject. Because an Arizona statute in that instance would not specify the law

16

to be chosen, the Court would be required to turn to Part 2 of § 6 to see if the considerations

17

of that part suggest California has a more significant relationship than the place of domicile

18

(Arizona). As explained below, Part 2 of § 6 does not lead to the conclusion that California

19

has a more significant relationship to this case than Arizona. Thus, even if the insurance

20

policy was issued for delivery and delivered in California, Arizona law would apply.
Part 2 of § 6 identifies the following factors to be considered in determining which

21
22

state had the more substantial relationship:
(a) the needs of the interstate and international systems, (b) the
relevant policies of the forum, (c) the relevant policies of other

23
24
25
3

26
27
28

The parties’ briefing focuses primarily on Restatement §§ 187 and 188 in addressing which
state has the most substantial relationship, but Restatement § 192 directs the Court to apply
the principles of § 6 when determining whether another state has a more substantial
relationship to the parties and the transaction than Decedent’s domicile. The Court therefore
applies § 6, but notes that applying §§ 187 and 188 would result in the same outcome.
-6-

1
2
3

interested states and the relative interests of those states in the
determination of the particular issue, (d) the protection of
justified expectations, (e) the basic policies underlying the
particular field of law, (f) certainty, predictability and
uniformity of result, and (g) ease in the determination and
application of the law to be applied.

4
5

Restatement § 6(2). The Court will address these factors individually.

6

a.

Needs of the interstate system.

7

This factor considers the choice-of-law rules adopted by the various states,

8

emphasizing that uniformity in choice-of-law principles will serve the purposes of an

9

interstate system of commerce. Restatement § 6, cmt. d. Arizona follows the Restatement

10

and thereby furthers the interests of uniformity in choice-of-law principles. This factor

11

therefore does not suggest that California has a more significant relationship to the parties

12

or transaction.

13

b.

Policies of the forum and other states.

14

The parties seem to agree that Arizona law creates a higher threshold for rescission

15

of the life insurance policy than California law. Assuming California would allow rescission

16

more readily, its policy could be viewed as favoring insurers. And yet California does not

17

have any particular interest in favoring Jackson National in this case because Jackson

18

National is not based in California – it is a Michigan company. Arizona’s law, by creating

19

a higher threshold for rescission, could be viewed as favoring insureds. And Arizona does

20

have an interest in promoting this policy in this case because at least one of the beneficiaries

21

of the life insurance policy resides in Arizona. Thus, when considering the relative policies

22

of the two states at issue, Arizona has a more direct interest in this case.

23

c.

Protection of justified expectations.

24

Jackson National seems to argue that it had a justified expectation that California law

25

would apply. The Court does not agree. Given the Restatement’s clear requirement that any

26

life-insurance choice-of-law provision be included in the insured’s application (§ 192), and

27

the apparent absence of any such choice in this case, the Court cannot conclude that any

28

California-law expectation on the part of Jackson National was justified.
-7-

1

Jackson National argues that the policy was issued for delivery in California, a fact

2

Plaintiff disputes, but this assertion is not supported with legal arguments. Doc. 48 at 12-15.

3

Jackson National does cite to Bates pages JNLIC.00166-168 of Exhibit 4 (Doc. 49 at 3 n.10),

4

which correspond to Doc. 49-3 at 28-30, but the cited pages cannot support a justified

5

expectation. In addition to the fact that pages in the insurance policy cannot provide a choice

6

of law under § 192, the cited pages of the policy include a section excluding from coverage

7

by the California Life and Health Insurance Guarantee Association those persons who are

8

“eligible for protection under the laws of another state,” suggesting that the pages do not

9

unambiguously anticipate that the insured would be protected by California law. Doc. 49-3

10

at 29. The cited pages also state that Jackson National’s service center is located in Lansing,

11

Michigan. Id. at 30.

12

Jackson National notes that the policy designated the “Issue State” as California, and

13

elsewhere provided that “[t]his Policy will be governed by the law of the state in which it is

14

issued for delivery.” See Doc. 48, Ex. 4 at 3, 7. But the Court cannot conclude from this

15

language either that the policy unambiguously chose California law or that Jackson National

16

justifiably thought it did. As already noted several times, the policy cannot choose the

17

applicable law under § 192. In addition, “issue state” and “state in which it is issued for

18

delivery” are not necessarily synonymous. One could mean the state of policy issuance, the

19

other the state of policy delivery. Neither phrase is defined in the Jackson National policy.

20

Even if Jackson National incorrectly looked to the policy in forming its expectations,

21

the policy refers to several states. The data page lists Michigan as the location of Jackson

22

National’s service center (Doc. 49-3 at 6), and another page lists Jackson National’s

23

headquarters as “Lansing, Michigan” (id. at 2). The policy purports to be signed by both the

24

President and the Secretary of Jackson National, presumably in Michigan. The policy shows

25

the insured’s address as Yuma, Arizona. Id. at 26; see also id. at 19.

26

d.

Policies underlying life insurance law.

27

The parties do not address this factor, and the Court cannot conclude that it favors a

28

choice of California law. The public policy of insurance law certainly includes protecting
-8-

1

the rights of beneficiaries, as Plaintiff would emphasize, and protecting insurers from

2

misrepresentations in applications, as Jackson National would emphasize. These policies do

3

not tip the balance in either state’s favor. As noted above, however, Arizona’s apparent

4

policy of creating a higher threshold for rescission would most clearly be given effect by

5

choosing Arizona law.

6

f.

7
8

The parties do not address these factors. The Court has found no basis for concluding
that choosing Arizona law would undermine these considerations.

9

g.

10
11

Certainty, predictability, and uniformity of result.

Ease in determining and applying the law.

The parties do not address this factor. The Court cannot conclude that California law
is more easily determined or applied than Arizona law.

12

C.

Conclusion.

13

Because Decedent was domiciled in Arizona at the time of his application, and

14

California does not have a more substantial relationship than Arizona when § 6 factors are

15

considered, the Court concludes that Arizona law governs the life insurance contract under

16

Restatement § 192. Because Jackson National seeks summary judgment only under

17

California law, its motion for summary judgment will be denied.

18

The Court notes a legal issue still to be resolved in this case. If the evidence presented

19

at trial shows that the policy was issued for delivery or delivered in Arizona, the Arizona

20

rescission statute will apply for reasons described above. If the evidence at trial shows that

21

the policy was issued for delivery and delivered in California, the Arizona rescission statute

22

will not apply given the clear language in A.R.S. § 20-1101, and yet for reasons described

23

above, Decedent still will have been domiciled in Arizona and the factors in § 6 still will not

24

show that California has a more substantial relationship than Arizona. As a result, § 192 still

25

will choose Arizona law. But what Arizona law will apply if the rescission statute does not?

26

The parties should address this issue in their proposed final pretrial order.

27

III.

28

Plaintiff’s Motion to Withdraw Admission.
Plaintiff moves to withdraw the deemed admission that Decedent was a resident of
-9-

1

California on November 20, 2006 and January 16, 2007. Doc. 50. The Court may grant

2

relief from such an admission where (1) it would “promote the presentation of the merits of

3

the action” and (2) it would not “prejudice the [nonmoving] party in maintaining the action

4

or defense on the merits .” Fed. R. Civ. P. 36(b). The Court concludes that Jackson National

5

would be prejudiced if Plaintiff were permitted to withdraw its admission. Discovery has

6

long since closed. The case will now move forward to trial. Jackson National would be

7

prejudiced at trial by having lost the opportunity to conduct discovery into Decedent’s

8

residence on the days in question in reliance on Plaintiff’s admission.

9

IT IS ORDERED:

10

1.

Defendant Jackson National’s motion to strike (Doc. 57) is granted.

11

2.

Defendant Jackson National’s motion for summary disposition (Doc. 62) is

12

granted.

13

3.

Plaintiff’s motion for summary judgment (Doc. 53) is denied.

14

4.

Defendant Jackson National’s motion for summary judgment (Doc. 48) is

15

denied.

16

5.

Plaintiff’s motion to withdraw the deemed admission (Doc. 50) is denied.

17

6.

The Court will set a final pretrial conference by separate order.

18

7.

The Court will also, by separate order, require the parties to participate in a

19
20

settlement conference in June with visiting Ninth Circuit mediators.
DATED this 3rd day of May, 2011.

21
22
23
24
25
26
27
28
- 10 -