morning may please the court my name is andy friedman and i represent the plaintiff in the poem in this case every burton prior to nine hundred seventy five there was no requirement in california that insurance company paid any interest on death proceeds that were unpaid the california legislature in one nine hundred seventy five adopted california insurance code section zero one seven two point five to address that situation because some felt that insurance companies were delaying payments to simply pocket the interest after considering several different alternatives the california legislature settles upon a solution and they made a legislative determination that when an insurance company fails to pay death proceeds within thirty days after the date of death it must pay interest at a rate not less and then in the current interest rate paid on death proceeds left on the positive we think that is an unambiguous legislative command that resort legislative history is there are unnecessary but the legislative history confirms that in adopting that statute the california legislature adopted a fixed interest rate requirement and when with that kick then current interest rate of funds left on deposit with insurance company as of the date of death calculated from the date of death so that the then current rate would be the rate that the insurance company pays on deposits as of that point in time your honor if that rate is low doesn't that not achieve the point of the legislative history because at that point the company has an incentive to keep the money and earn a higher interest rate as rates go up and pay it hypothetical concern is number one not within the legislative mandate and secondly it's simply what do you mean it's not within the legislative mandate i thought you were arguing that was the purpose of the legislature to avoid this kind of incentive it is the purpose of legislation the purpose of the time legislation was adopted there was no interest paid so insurance company by definition was earning interest there's no discussion anywhere of a need for a variable rate the hypothetical situation that you posit your honor is not only in inconsistent with the legislative history and language but it really is something that is speculative and not rational if you think about it if an insurance company was going to keep money making a bet that the interest rates may rise in the future that require several things to happen one insurance company would be betting on interest rates which nobody can predict no insurance companies can't predict number t interest rates don't move quickly they don't change in a matter of days weeks or even months so that hypothetical concern would require a conclusion that an insurance company is going to make a systematic decision to withhold benefits for a protracted period of time on the hope or expectation insurance that interest rates may rise there's no need to read into the statute a additional disincentive because there are other much more direct disincentives prohibiting in preventing that scenario from occurring specifically the insurance code section seven zero three five  five specifically requires that insurance companies must promptly pay proceeds upon determining that the claim is due so there is a separate independent statutory obligation on the insurance company to promptly pay their other subdivisions of the same statute imposing requirement to properly educate claims so there is that already existant statutory secondly if that's true then what does that leave us with the legislative history about what the legislature was trying to do does that leave us with it meaning nothing basically because if they have to pay promptly they have to pay promptly it really doesn't matter what the interest rate is right now it doesn't matter because prior to the statute they were paying no interest rate but we show it some interest rate so i mean it we know that the legislature wanted them to pay an interest rate so we have that but are you saying the legislative rates may rise and insurance company that would engage in that sort of conduct would also expose itself to massive liability for bad faith because the case law settles in california is that intentional delay in payment results in liability for bad faith i submit that there is no rational expectation that an insurance company would bet on interest rates delayed payments for months and months expose itself to liability both statut faith solely on the hope that they may arbitrage a couple of extra interest points going back to your last question which is how do we know that that's the date when it was fixed that statutory language is and therefore critical words that it's the then current interest rate driven why couldn't the then current interest rate mean the rate that applies as time passes so whether if it accrues every month then every month that the insurance company still has the money the interest their interest then is defined as a point in time the only point in time referenced in one zero one seven two point five is the date of day if the state court below recognized that  interpretation which provides for a future series of floating interest rates rather than a single rate results in weeding out of the statute is near sure placid the then current language it's not from time to time venn current breonia why then current couldn't mean the rate then applying at the time when you're accruing the interest now at seems like the insurance company sometimes did it monthly sometimes did it yearly we could talk about whether that makes sense but whatever the rate of accru about a policy loan provision provides for a variable rate when you're talking about other variable rates it's very specific here the statutory language uses the definitive then the then current rate but then counseling goes on to say of interest on death proceeds left on deposit right here the term left on deposit that's not a snapshot that means it's been left for some period i think you can read it and stop it on death talk about death proceeds left on deposit so harmonised left on deposit which implies to me you're leaving it somewhere for a certain period of time with this idea that it's the snapshot that you proposing because the insurance company has a rate as of the date of death which is a current rate and that rate is the rate it's applied to funds that are on deposit at that point in time record in this case because there was no discovery so we don't know with certainty he said there's no discovery but there's there was some discovery aren't you the one trying to get us to take usual notice of a discovery response there was a one in answer to one in iraq a tory t about how this particular interest rate was applied it was contrary to what the insurance company told the beneficiary when nuclear was made there's been that is the limited discovery one answer to one in there's been no other discovery the case was dismissed at the pleading look let me ask about that council let's say hypothetically the other side persuades us is this record got the interpretation correct that the fluctuating rate not a while called the snapshot rate my  word it seems to me your case could still survive because even if the theory is this fluctuating rate legal theory i'm not sure they paid that in this case or at least there's some indication that they didn't pay a fluctuating rate because first they said it was the two percent rate and then they and their brief now they said it was a five percent rate you haven't learned anything about what the rate actually they were paying during the time period do you that's true we were given leave to him and we a allege that even if we believed to be incorrect interpretation were to apply that we were entitled to go forward and explore whether that occurred right court then dismissed the amended complaint glee we didn't come forward specific facts demonstrating with the company actually done we had no discovery we don't know other than the answer in iraq to or with the company claims to have done and so we've courses  alternative ground ask to go back to the court below and prove the case in the event the court were to accept or notice interpret and if we agree with the insurance companies interpretation but did agree with you that you should be entitled to more discovery would you be pursuing an individual claim at that point or would it still be a class action it would depend on what discovery reveals your honor it would depend upon whether there were this is a one off situation ultimately if they did not apply  counts it's not supported by the language of the statute it's not supported by the legislative history in fact it is directly contrary to what the purpose of the statute is and what plaintiffs conceded as they did had to with the purpose of the statute taking a step back unusual in that courts have rejected the argument advanced by the plaintiffs on two separate grounds one is in a case decided just a couple of weeks ago by judge houston in the southern district of california which dismissed a similar case very similar theory  on the ground that the statute doesn't even trigger an interest obligation until thirty days after a claim for benefits is made so in this case the plaintiff's son died in one thousand nine hundred one there's no allegation that plaintiff made any claim for benefits prior to twenty thirteen so i mean that's one thing i was curious in this case i mean we have virtually no discovery in this case how did this happen how did it come to be thirty two years later this claim was filed or can you tell us why we're here now yes sure i'd be happy to address it i mean there's established law in all fifty states that there's no obligation to pay a claim until a claim is made to pay pay any benefits until a claim is made under policy  you know potential like many companies goes beyond what the law requires and for many years has taken steps affirmatively to seek out whether a policy holder may have died and then to try to contact the beneficiary in this case the policy file was open and so the way that companies are able to search and try to identify death is to check their records against something called the social security administration's death master file and you can do social security number matches so it never came up  time elapsed that the company didn't know of the death and no claim was made because apparently maybe the family didn't know the policy is the company just being nice to do that or is there some reason why it's actually harmful to the company to have an unpaid claim  mean potential has done this for a long time just believing it's a best practice there's no legal requirement to undertake to do that but just that it's in the company's in the business of paying claims so but to get back to your first point though i understand be and i have no reason to doubt your representation but they have not had a chance to come back and maybe they could produce just hypothetically they could produce a letter that was sent to the insurance company in one thousand eight hundred one saying that they did make a claim and that it was ignored by the insurance company has been that any claim was made before two thousand and thirteen that's sufficient for a motion to dismiss the plaintiff has been given an opportunity to mandan did not add a single fact to the complaint single factual allegation having said that i think the final judgment was entered without prejudice the plaintiff can try to amend again but but the plaintiff is not going to do that because there's not going to be an ability to make that type of allegation entered without prejudice how are we here then are you sure about that  i thought it was with prejudice but i could be wrong i believe i just read that the other night in the i don't have that record right in front of me  concerned about whether we have jurisdiction i didn't realize that there was leave to amend in the second ruling on the second motion to dismiss ruling why are we here if there was leave to amend your honor i think that is  that is a fair question and the plaintiff asked for the judgment to be entered without prejudice so that the plaintiffs could seek appeal we didn't just record has been interpreting the statute is the correct way and that the language of the statute provides far greater support for that interpretation than for the plaintiffs and think this whole theory of course is that you lock in the interest rate that's in effect on the date of death  the statute plainly does not say that it would be easy to say the interest rate in effect on the date of death is what applies and it just doesn't use that language to be first to the date of death at the best the point at which the interest computation  begins to run and that's not surprising because as we point out in our papers under plaintiff's theory the statute is akin to a lottery and if your loved one dies in a high interest rate year you are golden if your loved one dies in a low interest rate year even if the company is paying a higher rate of interest and other funds that hold on deposit in that period you're not going to get it profiting from holding funds for a lower interest rate and using them to gain a profit that was the driving concern of the legislation and that is the kind of core issue underlying the purpose of this statute so everything it's not limited to  confused by your brief about whether your position is that then a couple rate is the rate as the interest accrues whatever the accrual time is or the rate at the time of the request for payment when it's finally made our position is that then current essentially means the rate that's in effect during the time you hold my money and what and so what do you mean by that like every month that accrues and so it's the date it's the rate on that date of a cruel that's right it's then current throughout the period in which the money is held and actually i think and who decides if that's daily monthly yearly how does that get determined that is not addressed in the statute that's left to the discretion of the insurance company there are market factors that issue i think a beneficiary who would claim their funds wouldn't leave it on deposit with the insurance company if it were something of a reasonable rate but there's nothing in this statute that purports to dictate how that rate should be set whether that rate can move it look from the response like the company has switched its frequency of accrual so it went from monthly to yearly or yearly the monthly at some point do you know why that occurred i don't know why that was done but that's just the way it was done and it am i correct that the company never explained to plaintiff how that was decided or what the rate was at any particular time during period that when it was monthly what day of the month or when it was your earlier what day of the year has never explained i mean there hasn't been discovery at that level of that's correct so is there any argument against allowing further discovery and an amendment at least on that issue even if we agree with your interpretation of why should there not be discovery to try to figure out whether she got paid the amount that she was supposed to be paid because  i guess i would say that that's not the way the pleading standards work but she has pled that the company said we paid two point five percent which we know is plainly not true so she says seems like they didn't pay me the amount they're saying or the right amount why isn't that enough if we know that they told her an amount that was wrong and that's the only thing she knows is the amount that they told her which was wrong it's not enough because there are no well seated facts suggesting that the company failed to apply the statute correctly there are there is this notion that the company paid two point five percent in the first communication which is plainly mathematically not accurate the second communication actually paraphrases i think fairly accurately what the statute is and it says the rate is currently two point five percent so i don't actually agree with the pla s that there are two two misstatements at issue and then the amount of money received is mathematically over five percent compounded annually it's plainly it's plainly not correct so plaintiffs only fact that has been alleged in support of the notion that that you know she didn't get the correct amount of money is friendship a two point five percent that is not a wealthy defection allegation plaintive had a chance to amend to do that and simply put in a sentence potential failed to abide by the higher i'm familiar with interest rates when i when i was a child and they were about nineteen twenty twenty one percent and so i can imagine the blended rate would only be five percent well this is the rate that the insurance company pays on funds held internally on deposit this is not necessarily the highest rate one could get in the market i think it's probably a fairly competitive rate over time i think there were years where the rate would have been higher in the years where the rate would have been lower but but you only facts you know fact pleaded it's not a wealthy to fact i mean this is what you know it's one thing if all require it they have to plausibility i don't think they get supplies ability by not pleading facts at all that support it i don't think they get to plausibility may be market rates could have been higher this is an internal rate set by the company but so how could they possibly put it without more discovery if it's an internal rate that's not published how do they how could they plead it more specifically well frankly in this case i don't know what else is she supposed to do other than try to get discovery and as i don't understand how she could do better well i guess i would i would come back to the pleading standards it's the plain just burden to plead her claim and to plead a plausible claim which she alleges facts that clear that the legislature was not envisioning a situation of inequity in which different people whose funds were held at the same time were getting different amounts of money the original number considered was seven percent seven percent would have applied equally across the board to everyone whose money was held a certain time they backed away from that they went to this deposit rate which is also a rate of reference rate that applies equally to everyone whose funds are held at a certain point in time there's just no basis in anything to do with the statute to get from there to this inequitable situation where people whose money is being held at the same time by the company may be receiving completely different rates of interest depending on where their loved one died thank you very much ok there's no formula there's no discussion of legislative history of a variable rate and you have credentials saying well it's discretionary we don't publish it we change it when let's slater's allow variable rate stays that was formalised there's none of that here there's no inequity these are people who had their loved ones perished who for one reason or another did not know there was a policy and had they wanted their money had they made a claim they would have received payment at the  prevailing interest rate at the time of death there's no equity in saying that people will be paid the proceeds of their interest at the rate that they would have received the in that rate interest environment had they've received the proceeds as  visioned by the legislature the these subsection c of the statute specifically requires the notice be given of the specified rate when the insurance company determines its do it again that's totally inconsistent with some fluctuating rate in the legislative history cited the rate is in that notice to be eight the particular specified rate it would be impossible for insurance company to provide that notice with the particularized specified interest rate that you will receive if the statute is to be interpreted to say the insurance company gets to apply a fluctuating rate over time is unfathomable at the time if that notice is provided you come back to the then current rate and the only way to square all of that language is that the rate in effect and initially the statute provider for a seven percent ra to be without prejudice we want to make sure that there was no argument that we cannot raise issues on appeal and we look to ninth circuit precedent as the court noted i think below it could be with or without prejudice it's it's at the discretion of the court and she elected to do it without prejudice the standard that she was that the judge below was imposing on us was to basically say you had to come forward with facts showing with particular prudential actually calculated the rate at which your facts that are unknown and unknowable to us without the benefit discovering one we does not require that you the following facts that you couldn't possibly know without it's not you could have gotten a final judgment and argued that to us anyway and we could have remained and said you have a chance that dismissal should not have been with prejudice and you could have a chance for discovery but usually we don't have appeals when it's dismissal without prejudice so this is a little unusual what you asked for were i mean were you trying to kick amanda again at that point in the district court no we're not we want to review by the ninth circuit of the decision below because we are convinced that the two occasions how much interest was being paid what the basis for it was and so that was the reason your honor we are seeking