Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-akd-3_22-cv-00010/USCOURTS-akd-3_22-cv-00010-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal- Insurance Contract

---

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ALASKA

LILA SYCKS, ESTATE OF VERNON 

SYCKS,

Plaintiffs,

vs.

TRANSAMERICA LIFE 

INSURANCE COMPANY, 

BANKERS UNITED LIFE 

INSURANCE COMPANY,

Defendants.

Case No. 3:22-cv-00010-JMK

ORDER GRANTING IN PART 

DEFENDANT’S MOTION TO 

DISMISS FIRST AMENDED 

COMPLAINT WITH PREJUDICE

Pending before the Court at Docket 28 is Defendant Transamerica Life 

Insurance Company’s1 Motion to Dismiss Plaintiffs’ First Amended Complaint with 

Prejudice. Plaintiffs Lila Sycks and Vernon Sycks2 filed a response in opposition at 

Docket 29. Defendant filed a reply at Docket 34. For the following reasons, Defendant’s

 1 The other named defendant, Bankers United Life Assurance Company (“Bankers 

United”), merged into Life Investors Insurance Company of America in 2001, which then merged 

in Transamerica Life Insurance Company (“Transamerica”) in 2008. Docket 23 at 3 n.1. Bankers 

United issued Plaintiffs’ life insurance policy, and Transamerica is the successor-in-interest to 

Bankers United. Id. at 3. All references to Transamerica or Defendant in this Order shall be read 

to include Bankers United unless otherwise stated.

 2

 Plaintiff Lila Sycks notified the Court that co-plaintiff Vernon Sycks died on July 5, 

2022. Docket 29 at 12 n.31. The Court granted Lila Sycks’ Motion for Substitution of Party 

pursuant to Fed. R. Civ. P. 25(a)(1) to substitute the Estate of Vernon D. Sycks in the place of 

Plaintiff Vernon D. Sycks. Docket 46.

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motion is GRANTED IN PART, and Plaintiff’s claim for fraudulent or intentional 

misrepresentation is DISMISSED WITHOUT PREJUDICE and with LEAVE TO 

AMEND.

I. PROCEDURAL BACKGROUND

This lawsuit arises from the lapse of Plaintiffs’ Last Survivor Flexible 

Premium Interest Indexed Universal Life Insurance Policy Number B119812 (the 

“Policy”).3

 Plaintiffs filed suit on December 6, 2021, bringing claims for a declaration that 

Defendant must continue the Policy in force without payment of additional premium, 

breach of contract, and breach of the covenant of good faith and fair dealing.4

 Defendant 

subsequently removed the action to this Court on January 13, 2022.

5

 On March 3, 2022, 

Defendant filed a motion to dismiss the Complaint for failure to state a claim.6

 Shortly 

after that motion became ripe for a decision, Plaintiffs filed a motion for leave to file an 

amended complaint.7

 The Court granted Plaintiffs leave to amend, and Plaintiffs filed their 

amended complaint on June 17, 2022.

8

 Plaintiffs’ amended complaint adds a new claim 

for fraud, negligent, or intentional misrepresentation.9

 Defendant filed a motion to dismiss 

the amended complaint with prejudice for failure to state a claim pursuant to Federal Rule 

of Civil Procedure 12(b)(6).

10 This motion is ripe for a decision.11

 3 Docket 1-1.

 4 Id.

 5 Docket 1.

 6 Docket 15.

 7 Docket 22. 8 Docket 25; Docket 26.

 9 Docket 26 at 7. 10 Docket 28. 11 See id.; Docket 29 (Plaintiffs’ response in opposition); Docket 34 (Defendant’s reply).

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II. FACTUAL BACKGROUND

Although Defendant has not yet submitted its answer to Plaintiffs’ original 

complaint or the amended complaint, the parties for the most part do not appear to dispute 

this case’s basic facts, which the Court generally accepts as articulated in Plaintiffs’

amended complaint for the purposes of deciding this motion.12 As relevant here, Defendant 

issued the Policy to Plaintiffs in Alaska on June 25, 1993.13 Around that time, Plaintiffs 

made one premium payment of $50,000.

14

In 2021, Defendant notified Plaintiffs that the Policy would lapse without

payment of additional premiums of $21,683.12 by August 2, 2021.15 After receiving this 

notice, Plaintiffs—aged 91 (Vernon) and 86 (Lila) at the time—requested that Defendant 

withdraw the lapse notification and continue their coverage without the payment of 

additional premiums.16 By letter dated October 1, 2021, Defendant responded to Plaintiffs’

request, stating, “Based on our research and the terms of the contract, we did not find a 

way for the policy to remain in force until the maturity date without payment of additional 

premium.”17 Defendant’s letter explained its interpretation of the operative provisions of 

the “flexible” Policy which, according to Defendant, does not require minimum premium 

payments at set intervals in order for the insured to secure coverage:

12 Unless otherwise indicated, the underlying facts are taken from Plaintiffs’ amended 

complaint and are presumed true for purposes of reviewing the Rule 12(b)(6) motion to dismiss. 

See, e.g., Cavinass v. Horizon Cmty. Learning Ctr., Inc., 590 F.3d 806, 810 n.4 (9th Cir. 2010). 13 Docket 26 at 2. 14 Id. at 3. 15 Id.

16 Id.

17 Docket 26-1 at 2.

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This type of policy requires premium payments to 

create an accumulation value, from which a sum is deducted 

each month to pay for the cost of the insurance. Premiums for 

this type of policy are flexible, and can vary in amount and 

frequency, subject to requirements and limitations. The 

Maximum Initial Premium of $50,000.00 was paid at issue, an 

amount that is equal to the Maximum Total Premiums as 

reflected on the policy specifications page. Should the policy 

owner wish to contribute premiums, the Maximum Annual 

Premium allowed is $5,184.93. Enclosed for your review is a 

duplicate copy of the policy, including the application for 

insurance.

According to the original illustration, “The policy will 

terminate without further value, based on guaranteed interest 

and Cost of Insurance rates, if additional premiums are not paid 

before the end of the 24th policy year.”.[sic] The initial 

premium amount of $50,000.00 was sufficient for the policy to

remain in force until the end of the 24th policy year. Although 

payments are flexible, the policy must always have sufficient

accumulation value to cover the monthly deduction amount. If 

at any time the accumulation value is not sufficient to cover the 

monthly deduction, the policy will enter the grace period, as it 

did on June 3, 2021.

The policy has a 61-day grace period following the date 

a premium payment is required to keep the policy in force. The 

Grace Period Provision states that “A premium will be required 

if, on the last day of a policy month, the Policy Value is less 

than the Monthly Deduction schedule [sic] to be made.” A 

notification letter was sent to request a payment of $21,683.12 

by August 2, 2021 to maintain the coverage. As stated in our 

response dated August 20, 2021, an extension for submitting 

the premium was granted until October 2, 2021.

When the policy was issued, the single premium of 

$50,000.00 was sufficient to carry the policy until the 24th

policy year (2017), at a minimum. However, an interest rate 

that has declined since issue and an increase in the monthly 

deduction amount has caused a decline in the accumulation 

value. It has also caused the policy to enter the grace period 

and require additional premiums to maintain the coverage.

Based on our review of the policy values and the terms of the 

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contract, the policy will not remain in force until the maturity 

date unless changes are made to the premium contribution 

amount.18

Defendant’s letter referenced and, according to Plaintiffs, contained a 

“duplicate copy of the insurance policy,” which included Plaintiffs’ original application for 

the Policy.

19 Not long after receiving this letter, Plaintiffs filed suit against Defendant, 

seeking “speedy” judicial review of their claim for insurance coverage under Alaska law 

in light “of their age and the place life insurance holds in their financial and insurance 

planning . . . .”20

Although the parties do not appear to dispute these basic facts, Plaintiffs’

amended complaint raises some factual concerns that Plaintiffs seek to address through this 

litigation, namely identification of “a true and correct copy of the Policy.”21 In essence, 

Plaintiffs allege that Defendant’s October 1, 2021, letter provided an incorrect copy of the 

Policy (the “October 1, 2021, Copy”) because it differed from a copy of the Policy 

Defendant submitted as an exhibit with its since-stricken March 3, 2022, motion to dismiss 

Plaintiffs’ original complaint (the “March 3, 2022, Copy”) at Docket 15.

22 The parties do 

not identify any contractual provisions or application materials that differ between these 

copies of the Policy. However, Plaintiffs have noted that the two copies of the Policy

contain slightly different footers and other differing components, such as a table of contents

18 Id. at 2–3; Docket 1-1 at 63–71. 19 Docket 26-1 at 2. 20 Docket 26 at 5. 21 Id. at 4. 22 Id.

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that appears in the October 1, 2021, Copy but not the March 3, 2022, Copy.

23 Another 

difference between the two copies is what Defendant describes as an “illustration” that 

appears in the March 3, 2022, Copy but does not appear in the October 1, 2021, Copy.24 

The illustration provides an example of the “projected policy value” over time as 

adjustments are made to the cost of insurance, interest rates, and premium payments.25 

This illustration generally purports to contextualize the degree to which premium payments 

impact the value, and, in turn, coverage, of the Policy over time.26 Notwithstanding the 

differences Plaintiffs point out between the two copies of the Policy provided in the parties’

filings and the fact that Plaintiff points to some provisions of the Policy in its amended 

complaint, Plaintiffs’ amended complaint and its briefing in response to Defendant’s 

motion suggest that the certified, operative copy of the Policy has yet to be produced 

through this litigation.27

III. LEGAL STANDARD

The Federal Rules of Civil Procedure require pleadings to include “a short 

and plain statement of the claim showing that the pleader is entitled to relief . . . .”28 If a 

claim “fail[s] to state a claim upon which relief can be granted,” a defendant may move to 

dismiss the claim under Rule 12(b)(6).29 A Rule 12(b)(6) motion challenges the legal 

23 Docket 29 at 4–5. 24 Id. at 5–6; Docket 26-1 at 2, 28. 25 Docket 15 at 7. 26 Docket 26-1 at 28. 27 See generally Docket 26; see also Docket 29 at 6 (“Before the court can begin to 

interpret and enforce the contract, discovery is necessary in order to clarify the content and express 

terms of the contract.”).

28 Fed. R. Civ. P. 8(a)(2). 29 Fed. R. Civ. P. 12(b)(6).

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sufficiency of the claims alleged.30 To survive a motion to dismiss under Rule 12(b)(6), 

“a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to

relief that is plausible on its face.’”31 This test requires a complaint to provide “wellpleaded facts, not legal conclusions, that ‘plausibly give rise to an entitlement to relief.’”32 

The determination of whether a complaint meets this standard is “a context-specific task 

that requires the reviewing court to draw on its judicial experience and common sense.”33 

When a heightened pleading standard, such as that required of Federal Rule of Civil 

Procedure 9 for fraud claims, does not apply, the complaint “need only satisfy the [Federal 

Rule of Civil Procedure] 8(a) notice pleading standard . . . to survive a Rule 12(b)(6)

dismissal.”34 Under Rule 8(a), a plaintiff must “give the defendant fair notice of what the 

. . . claim is and the grounds upon which it rests.”35

In deciding Rule 12(b)(6) motions to dismiss, district courts “accept as true 

all well-pleaded allegations of material fact, and construe them in the light most favorable 

to the non-moving party.”36 Courts need not accept as true “allegations that contradict 

exhibits attached to the [c]omplaint or matters properly subject to judicial notice, or 

allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable 

30 Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). 31 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 

U.S. 544, 570 (2007)).

32 Whitaker v. Tesla Motors, Inc., 985 F.3d 1173, 1176 (9th Cir. 2021) (quoting Iqbal, 

556 U.S. at 679) (citing Twombly, 550 U.S. at 570).

33 Iqbal, 556 U.S. at 679 (citation omitted).

34 Edwards v. Marin Parkcitation Inc., 356 F.3d 1058, 1062 (9th Cir. 2004). 35 Twombly, 550 U.S. at 555 (citation and internal quotation marks omitted).

36 Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010) (citing Manzarek 

v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031–32 (9th Cir. 2008)).

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inferences.”37 Normally, courts limit the scope of their review to the complaint alone.38 

But if a complaint “necessarily relies” on an external document, courts may consider the 

document if: “1) the complaint refers to the document; 2) the document is central to the 

plaintiff’s claim; and 3) no party questions the authenticity of the copy attached to the 

12(b)(6) motion.”39

When a plaintiff alleges fraud, as here, it faces a heightened pleading 

standard under Rule 9 pursuant to which the complaint “must state with particularity the 

circumstances constituting fraud.”40 To meet this heighted standard, “a pleading must 

identify the who, what, when, where, and how of the misconduct charged, as well as what 

is false or misleading about the purportedly fraudulent statement, and why it is false.”41

Because Plaintiffs brought state-law claims against Defendant in this 

diversity action, the Court looks to Alaska law when evaluating whether the amended 

complaint pleads claims upon which relief can be granted.42 Plaintiffs bring claims against 

Defendant for: (1) a declaration that Defendant must continue the Policy in force without 

payment of additional premium; (2) breach of contract; (3) breach of the covenant of good 

faith and fair dealing; and (4) fraud, negligent, or intentional misrepresentation. Alaska 

37 Id. (citing Manzarek, 519 F.2d at 1031).

38 Id. (citations omitted).

39 Id. (quoting Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006)).

40 Fed. R. Civ. P. 9(b). 41 Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 964 (9th Cir. 2018) (quoting Cafasso, 

United States ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011)) (citing 

Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003)).

42 See Freund v. Nycomed Amersham, 347 F.3d 752, 761 (9th Cir. 2003) (“Under the rule 

of Erie R.R. v. Tompkins, ‘federal courts sitting in diversity jurisdiction apply state substantive law 

and federal procedural law.’”) (quoting Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427 

(1996)).

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law sets the legal standards for each of these claims, which the Court discusses as relevant 

below.

IV. DISCUSSION

Defendant argues that the law supports dismissal of Plaintiffs’ claims 

because “the allegations do not plausibly support Plaintiffs’ claims.”43 Defendant’s 

argument relies on the premise that the Court must interpret the Policy’s provisions, which 

it maintains are not in dispute and clearly require Plaintiffs to make additional premium 

payments to remain in force.44 Accordingly, because Plaintiffs have implied that they have 

not paid any additional premiums since the initial $50,000 payment in 1993, Defendant 

argues that coverage no longer exists.45 Defendant also characterizes Plaintiffs’ allegations 

as conclusory and nature and “without specificity or supporting factual allegations.”46

In response, Plaintiffs argue that the Court cannot at this point in the litigation

interpret the Policy because the contents of the Policy are in dispute.47 According to 

Plaintiffs, the Court cannot interpret the Policy until a “complete record” is established 

following discovery and the presentation of extrinsic evidence.48 To demonstrate this 

alleged dispute over the Policy’s contents, Plaintiffs point to the aforementioned 

differences between the two dueling copies of the Policy that Defendant presented to them 

43 Docket 28 at 4. 44 See id. at 5 (“The Policy provides the obligations of the parties in regards to payment 

and nonpayment of premium. Therefore, this motion tasks the Court with interpreting these 

provisions.”).

45 Id.

46 Id.

47 Docket 29 at 3–6. 48 Id. at 3.

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and to the Court in earlier filings.49 In its amended complaint, Plaintiffs have provided 

only the March 3, 2022, Copy, having removed the October 1, 2021, Copy that Plaintiffs 

provided in their original complaint filed in state court (and which removed to this Court 

by Defendant).

50 In doing so, Plaintiffs appear to have attached the March 3, 2022, Copy 

not for the purpose of providing evidence of its terms but instead to demonstrate that 

Defendant has provided a false copy of the Policy to Plaintiffs and the Court. Despite 

making allegations as to the contents of the Policy in its amended complaint, Plaintiffs do 

not appear to support these allegations with any evidence.51

The Court begins its analysis by taking Plaintiffs’ well-pleaded allegations 

as true and construing them in the light most favorable to Plaintiffs to determine whether 

they present “facial plausibility” to support their claims.52 The crux of Plaintiffs’ factual 

allegations relevant to Defendant’s Rule 12(b)(6) motion are: (1) Defendant has not yet 

provided Plaintiffs the certified, operable copy of the Policy, and (2) the true and correct 

copy of the Policy would support Plaintiffs’ substantive interpretation of the Policy.53 

Assuming these allegations are true, the Court cannot at this stage delve into the disputed 

contractual language to dismiss Plaintiffs’ claims that rely on their interpretation of the 

Policy. Doing so would require the Court to interpret the provisions of the copy of the 

49 Id. at 4–6. 50 Docket 26-1. 51 See, e.g., Docket 26 at 5 (“In light of the terms and conditions of the Policy, as 

interpreted and construed in accord with Alaska law, the Defendants are obligated to provide the 

assurance, protection, and benefits described in the Policy Specifications . . .”).

52 Carey v. Bardana, No. 1:10-cv-0001 JWS, 2010 WL 11619238, at *2 (D. Alaska 

Sept. 9, 2010) (citing Iqbal, 556 U.S. at 663).

53 See generally Docket 26; Docket 29.

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Policy provided as an exhibit to Plaintiffs’ complaint, which is what Defendant argues the 

Court can and should do to resolve its motion.54

Defendant suggests that the Court may interpret the terms of the Policy 

because Plaintiff attached a copy of the Policy to its complaint, whereas Plaintiff argues 

that the Policy’s terms are in question because the certified copy of the Policy has not yet 

been provided.

55 Defendant insists that the two copies of the Policy presented up to this 

point—the October 1, 2021, Copy, and the March 3, 2022, Copy—are identical as to the 

Policy’s material terms.56 Defendant’s observation about the Policy’s terms may be

correct, but Defendant misses the point of Plaintiff’s argument: Plaintiff essentially argues 

that the certified, operative copy of the Policy has not yet been produced or verified as 

such.

The Court might well doubt Plaintiffs’ suggestion that the contents of the 

certified, operative copy of the Policy are different from those contained in the parties’

filings, but the Court is compelled to accept Plaintiffs’ factual allegations as true at this 

stage of the litigation because they are plainly and clearly stated in the complaint and not 

clearly contradicted by the limited evidence presented to the Court thus far. The Court 

finds that Plaintiffs have sufficiently articulated their allegation that the copies of the Policy 

Defendant provided to them are false (see paragraph 6 of the amended complaint) and 

54 Docket 28 at 7 (contending that “a review of the terms of the Policy demonstrate[s] that 

Plaintiffs’ allegations do not plausibly support a contractual duty for Transamerica to maintain the 

Policy in force without payment of the required premium.”).

55 Docket 34 at 4 (characterizing Plaintiffs’ argument as asserting that “Defendant’s copy 

of the policy is not identical to their copy of the Policy . . .”); Docket 29 at 3. 56 Docket 34 at 4.

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explained why they believe that to be the case (see paragraphs 16-17).57 There is no 

indication from the face of the complaint that these are “conclusory,” “make unwarranted

deductions,” or “draw unreasonable inferences.”58 If Defendant disagrees, it is free to 

prove otherwise. In the interim, the Court accepts these facts and construes them in the 

light most favorable to Plaintiffs.59

As for Defendant’s assertion that Plaintiffs failed to allege their claims with 

sufficient specificity, the Court notes that Plaintiffs need not plead the terms of a contract 

with unusual specificity to meet Rule 8’s requirements.60 As other courts in this Circuit 

have recognized, “it is not necessary for a plaintiff to allege the terms of an alleged contract 

with precision if the Court is able generally to discern at least what material obligation of 

the contract the defendant allegedly breached.”61 Plaintiffs’ allegations provide sufficient 

notice of what they deem to be the material terms of the Policy that entitle them to relief. 

Indeed, it is clear that the “maximum total premium” provision within the Policy’s “Policy 

Specifications” section pulls the laboring oar of Plaintiffs’ argument.62 As it has done in 

its motion to dismiss, Defendant is free to argue why it believes that contractual provision 

57 Docket 26 at 2, 4. 58 Daniels-Hall, 629 F.3d at 998. 59 See Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 975 n.2 (9th Cir. 2010)

(observing that “factually based arguments” that support the parties’ “respective interpretations of 

the contract . . . are appropriate on remand at a later stage of litigation, not on the pleadings”).

60 See Soil Retention Prods. v. Brentwood Indus., 582 F. Supp. 3d 725, 731 (S.D. Cal. 

2022) (“In other words, it is not necessary for a plaintiff to allege the terms of an alleged contract 

with precision if the Court is able generally to discern at least what material obligation of the 

contract the defendant allegedly breached.”) (citations omitted).

61 Id. (citing Langan v. United Servs. Auto. Ass’n, 69 F. Supp. 3d 965, 2014 WL 4744790, 

*7 (N.D. Cal. 2014). 62 Docket 26 at 3.

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is not dispositive at the appropriate stage of the litigation. Regardless, Plaintiffs’ amended 

complaint provides ample notice of the basis for its claims and why they believe the Policy 

entitles them to relief.

Having determined that it will accept Plaintiffs’ allegations as true and 

refrain from interpreting the contents of a disputed document for the purposes of evaluating 

Defendant’s Rule 12(b)(c) motion, the Court now considers whether the allegations 

“show[] that the pleader[s are] entitled to relief” under the Alaska law governing Plaintiffs’

claims.63 

A. Count I: Declaration that Defendant Must Continue the Policy Without 

Payment of Additional Premium

Plaintiffs first seek a declaration that Defendant must continue to provide life 

insurance coverage pursuant to the terms of the Policy.64 Alaska Statute § 22.10.020(g), 

the State’s analog to the federal Declaratory Judgment Act, “grants to [Alaska] superior 

courts the power to issue declaratory judgments in cases of actual controversy.”65 In such 

cases, the Alaska Declaratory Judgment Act authorizes a trial court to “declare the rights 

and legal relations of an interested party seeking the declaration, whether or not further 

relief is or could be sought.”66 Under this statute, a complaint seeking declaratory relief 

simply must allege facts demonstrating that it is entitled to a declaratory judgment.67 The 

63 Fed. R. Civ. P. 8(a)(2). 64 Docket 26 at 4. 65 Brause v. Dep’t of Health & Soc. Servs., 21 P.3d 357, 358 (Alaska 2001). 66 Alaska Stat. § 22.10.020(g). 67 Jefferson v. Asplund, 458 P.2d 995, 1000 (Alaska 1969) (“[T]he requirements of 

pleadings in actions seeking declaratory relief do not differ from those standards of pleadings 

governing other types of civil actions.”) (citing Gomillion v. Lightfoot, 364 U.S. 339 (1960)).

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Alaska Supreme Court has explained that Alaska courts issue declaratory judgments to 

clarify and settle legal relations and to “terminate and afford relief from the uncertainty, 

insecurity, and controversy giving rise to the proceeding.”68 Alaska courts generally

decline to award declaratory relief when a declaration would further neither of these 

goals.

69

Although the Alaska Declaratory Judgment Act requires an “actual 

controversy,” Alaska courts may grant declaratory relief to settle controversies that have 

not yet “ripen[ed] into violations of law” or “to afford one threatened with liability an early 

adjudication without waiting until an adversary should see fit to begin an action after the 

damage has accrued.”70 The Alaska Supreme Court has characterized its standing rules in 

a Declaratory Judgment Act case as “liberal,” requiring only that a plaintiff show it has an 

“interest adversely affected by the conduct complained of.”71 “The degree of injury to the 

interest need not be great; ‘the basic idea . . . is that an identifiable trifle is enough for 

standing to fight out a question of principle; the trifle is the basis for standing and the 

principle supplies the motivation.’”72

Assuming an “actual controversy” is presented, an Alaska court deciding 

Plaintiffs’ claim for a declaratory judgment in an insurance case would proceed to interpret 

68 Id. at 997–98 (citing Borchard, Declaratory Judgments at 299 (2d ed. 1941)).

69 Id. at 998. 70 Lowell v. Hayes, 117 P.3d 745, 756 (Alaska 2005) (quoting Charles Alan Wright, 

Arthur B. Miller & Mary Kay Kane, Federal Practice and Procedure: Civil § 2751 at 456 (3d ed. 

1998)).

71 Bowers Office Prods. v. Univ. of Alaska, 755 P.2d 1095, 1097–98 (Alaska 1988)

(quoting Trs. for Alaska v. Dep’t of Nat. Res., 736 P.2d 324, 327 (Alaska 1987)).

72 Trs. for Alaska, 736 P.2d at 327 (citations omitted).

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the insurance contract according to the principle of “reasonable expectations.”73 This 

principle requires courts to construe insurance contracts “so as to provide that coverage 

which a layperson would have reasonably expected from a lay interpretation of the policy 

terms.”74 Even so, an insured’s expectation of coverage must be “objectively 

reasonable.”75 

To determine an insured’s reasonable expectations, Alaska law directs courts

to look to: (1) the language of the disputed provisions in the policy, (2) other provisions 

in the policy, (3) extrinsic evidence, and (4) case law interpreting similar provisions.76 

“[B]ecause of inequities in bargaining power, [Alaska courts] construe coverage broadly 

and exclusions narrowly, in favor of insureds.”77 Alaska courts will, however, recognize 

a coverage restriction “if . . . plain language limits the coverage of [the] policy.”78 In the 

absence of plain language, such as when an insurance policy provision is ambiguous, 

73 Bering Strait Sch. Dist. v. RLI Ins. Co., 873 P.2d 1292, 1294 (Alaska 1994) (quoting 

State v. Underwriters at Lloyds, London, 755 P.2d 396, 400 (Alaska 1988)). 

74 Downing v. Country Life Ins. Co., 473 P.3d 699, 704 (Alaska 2020) (quoting U.S. Fire 

Ins. Co. v. Colver, 600 P.2d 1, 3 (Alaska 1979)) (other citation omitted); see also Bering Strait, 

873 P.2d at 1294 (quoting Lloyds, 755 P.2d at 400) (defining the reasonable expectations principle 

as the concept that “[t]he objectively reasonable expectations of applicants and intended 

beneficiaries regarding the terms of insurance contracts will be honored even though painstaking 

study of the policy provisions would have negated those expectations”). 

75 West v. Umialik Ins. Co., 8 P.3d 1135, 1138 (Alaska 2000) (quoting Lloyds, 755 P.2d 

at 400); see also State Farm Fire & Cas. Co. v. Bongen, 925 P.2d 1042, 1047 (Alaska 1996)

(quoting Millar v. State Farm Fire & Cas. Co., 804 P.2d 822, 826–27 (Ariz. Ct. App. 1990))

(“[S]ince most insureds develop an expectation that every loss will be covered, the reasonable 

expectation doctrine ‘must be limited by something more than the fervent hope usually engendered 

by loss.’”).

76 Allstate Ins. Co. v. Teel, 100 P.3d 2, 4 (Alaska 2004). 77 Devine v. Great Divide Ins. Co., 350 P.3d 782, 786 (Alaska 2015) (first alteration in 

original) (quoting Whittier Props., Inc. v. Alaska Nat’l Ins. Co., 185 P.3d 84, 88 (Alaska 2008)).

78 Whittier Props., 185 P.3d at 88 (citation omitted).

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Alaska courts “must accept the interpretation that most favors the insured.”79 Still, “the 

mere fact that two parties to an insurance contract have different subjective interpretations 

of that contract does not make it ambiguous. Rather, ambiguity exists only when the 

contract, taken as a whole, is reasonably subject to differing interpretations.”80

Against this backdrop, the Court must determine whether Plaintiffs’

amended complaint contains non-conclusory statements from which a court could make 

reasonable inferences that they are entitled to relief (i.e., a declaration that Defendant must 

continue to provide coverage under the Policy).

81 Although Plaintiffs’ amended complaint 

is not rich with factual allegations regarding the Policy’s terms, it does include a number 

of factual allegations meeting this plausibility standard. The amended complaint points to 

the “maximum total premium” language it alleges to exist in the Policy, as well as 

Plaintiffs’ alleged payment of the premium and Defendant’s refusal to acknowledge the 

continuation of coverage under the Policy.82 This language is not only non-conclusory, 

but it also meets the Alaska Supreme Court’s liberal “interest-injury” approach to 

establishing existence of a “case of actual controversy.”83 By describing Defendant’s 

refusal to provide continued life insurance coverage without the payment of additional 

premiums, Plaintiffs have articulated a “genuine adversarial relationship exists regarding 

an interest-injury.”84 Plaintiffs and Defendant’s dispute over whether the Policy’s 

79 Id. at 90 (citations omitted).

80 Downing, 473 P.3d at 704 (footnote, citations, and internal quotation marks omitted). 81 Iqbal, 556 U.S. at 678 (citation omitted).

82 Docket 26 at 3. 83 Bowers Office Prods., 755 P.2d at 1097–98. 84 Id. at 1098.

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coverage can continue without payment of additional premiums provides evidence of such 

an adversarial relationship, and Plaintiffs have a clear economic interest in the outcome of 

this dispute: the payout of life insurance proceeds upon their death.

Plaintiffs also allege through paragraphs 6–19 of the amended complaint the 

following key facts that, if true, would warrant a declaration that coverage exists under the 

terms of the Policy: (1) the Policy, an enforceable contract, exists; (2) Plaintiffs paid the 

“maximum total premium” required under the Policy to secure coverage; and (3) Defendant 

failed to uphold its obligation thereunder to provide coverage by sending and refusing to 

withdraw the lapse notice.85 Plaintiffs’ amended complaint goes further by connecting the 

dots between these facts and Plaintiffs’ legal claims. In Count I, for instance, Plaintiffs 

contend that they performed their obligations under the Policy by paying the $50,000 

premium in 1993, triggering Defendant’s obligation to provide coverage.86 Taken together, 

these assertions, if true, would entitle Plaintiff to its requested declaration. Because 

Plaintiff neither has offered nor referenced the terms of an undisputed copy of the Policy—

and instead alleges that the terms of the Policy that Defendant would direct the Court 

toward are in dispute—the Court will not delve into the interpretative analysis Defendant 

requests in its motion.

B. Count II: Breach of Contract

To prevail on their breach-of-contract claim, Plaintiffs must establish the 

existence of an enforceable insurance contract, a breach of that contract, and damages 

85 Docket 26 at 2–4. 86 Id. at 5.

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resulting from the breach.87 Similar to their Count I arguments, Plaintiffs argue that their

purchase of the Policy established a contract pursuant to which Defendants agreed to 

provide life insurance and that Defendant breached this contract by declaring its lapse, 

resulting in “damages . . . including damages for emotional distress and other noneconomic damages.”88 The Court finds that Plaintiffs have alleged facts establishing the 

existence of an enforceable insurance contract and a breach through Defendant’s 

repudiation thereof via communication of the lapse notice. As for damages, Plaintiffs do 

not plead in detail the damages they claim to have suffered from Defendant’s breach, but 

they need not do so. Having alleged that they paid Defendant for the Policy and were 

damaged by Defendant’s failure to meet its contractual commitment to provide coverage, 

Plaintiffs have met the requirements of Rule 8(a) needed to survive a 12(b)(6) motion to 

dismiss.89

87 See Great W. Sav. Bank v. George W. Easley Co., 778 P.2d 569, 577–78 (Alaska 1989)

(finding a complaint for breach of contract sufficiently stated a claim for which relief could be 

granted because it alleged that a contractual obligation existed, the defendant breached the 

contract, and the plaintiff suffered damages).

88 Docket 26 at 5–6. 89 See Lexington Ins. Co. v. Energetic Lath & Plaster, Inc., No. 2:15-cv-00861-KJM-EFB, 

2015 U.S. Dist. LEXIS 123123, 2015 WL 5436784, at *8 (E.D. Cal. Sept. 15, 2015) (denying a 

motion to dismiss and finding that a party adequately alleged damages because they “allege[d] 

they have suffered damages as a result of [the non-moving party’s] failure to provide to them the 

coverage and benefits that were due under the policy.”); Soil Retention Prods., 582 F. Supp. 2d at 

737 (“In federal court, a plaintiff need not plead contract damages with unusual specificity.”); 

Grouse River Outfitters Ltd v. NetSuite, Inc., No. 16-cv-02954-LB, 2016 U.S. Dist. LEXIS 

141478, at *34 (N.D. Cal. Oct. 12, 2016) (footnote and citation omitted) (“Grouse River alleges 

that it paid NetSuites. And it alleges that it was damaged by NetSuite’s failure to meet its 

contractual obligations. . . . All this taken together sufficiently pleads breach of contract.”).

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C. Count III: Breach of the Covenant of Good Faith and Fair Dealing

Under Alaska contract law, “the covenant of good faith and fair dealing . . . 

is implied in all contracts.”90 In the context of insurance contracts, an insurer’s breach of 

this covenant gives the insured a cause of action sounding in tort due to “[t]he special 

relationship between the insured and insurer in the insurance context” and because tort law 

“provide[s] needed incentive to insurers to honor their implied covenant to their 

insureds.”91 Absent “such a cause of action[,] insurers can arbitrarily deny coverage and 

delay payment of a claim with no more penalty than interest on the amount owed.”92

In bringing a bad faith action, Alaska Supreme Court precedent requires the 

insured to show that the insurer’s actions were objectively unreasonable under the 

circumstances.93 To prevail on their bad-faith claim, Plaintiffs will have to show that 

Defendant’s lapse notices and demand for additional premium breached the covenant of 

good faith and fair dealing because those actions lacked a “reasonable basis.”94

As with Counts I and II, Plaintiffs’ bad-faith claim contains enough 

specificity to establish that Plaintiffs plausibly could be entitled to relief. Plaintiffs point 

to Defendant’s alleged breach of the contract, discussed above, and argue that Defendant 

lacked a reasonable basis in repudiating its obligations under the Policy by failing to 

90 State Farm Mut. Auto. Ins. Co. v. Weiford, 831 P.2d 1264, 1266 (Alaska 1992) (citing 

Alaska Pac. Assur. Co. v. Collins, 794 P.2d 936, 947 (Alaska 1990)).

91 State Farm Fire & Cas. Co. v. Nicholson, 777 P.2d 1152, 1156–57 (Alaska 1989). 92 Ennen v. Integon Indem. Corp., 268 P.3d 277, 291 (Alaska 2012) (quoting Nicholson, 

777 P.2d at 1156)).

93 See Hillman v. Nationwide Mut. Fire Ins. Co., 855 P.2d 1321, 1323–24 (Alaska 1993)

(“[T]he tort of bad faith in first-party insurance cases . . . necessarily requires that the insurance 

company’s refusal to honor a claim be made without a reasonable basis.”).

94 Id. at 1324.

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undertake a “full and complete investigation by Defendant[] into the facts and the law” and 

through its alleged “fraudulent misrepresentation of the terms and conditions and content 

of the Policy.”95 Plaintiffs have done more than allege bad faith based on Defendant’s 

reliance on the insurance contract, which by itself would not rise to the level needed to 

sufficiently plead a bad faith claim.96 Plaintiffs also allege facts establishing why they feel 

they satisfied their obligation under the Policy and Defendant must honor its commitment 

to provide insurance coverage. Although Plaintiffs do not allege in great detail the damages 

they have suffered as a result of this breach, their damages allegations meet Rule 8’s 

requirements because they connect the breach of the covenant of good faith and fair dealing 

with Defendant’s alleged breach of the insurance contract, a contract into which Plaintiffs 

paid to enter and expect to receive from Defendant the good-faith financial assurance that 

comes with a life insurance policy.

D. Count IV: Fraud, Negligent, or Intentional Misrepresentation

To prevail on their fraudulent or intentional misrepresentation claim, 

Plaintiffs face the heightened pleading standard articulated in supra Section II of this 

Order. To obtain relief under Alaska law on either the fraudulent/intentional 

misrepresentation claim (which functionally are the same under Alaska law) or the 

negligent misrepresentation claim, Plaintiffs also must establish: (1) a misrepresentation 

of fact or intention, (2) made fraudulently, (3) for the purpose or with the expectation of 

95 Docket 26 at 3–4. 96 See Hillman, 855 P.2d at 1329 (“It is objectively reasonable to rely on contractual 

rights.”).

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inducing another to act in reliance; and (4) justifiable reliance by the recipient, (5) causing 

loss.97 A fraudulent misrepresentation occurs when the maker knows the misrepresentation 

is untrue, although a plaintiff “generally” may allege knowledge and other conditions of 

the mind.

98 A statement can be both literally true and a fraudulent misrepresentation if the 

maker knows the statement is materially misleading.99 Meanwhile, the elements of 

negligent misrepresentation under Alaska law are: (1) a misrepresentation made “in the 

course of [one’s] business, profession or employment, or in any other transaction in which 

she has a pecuniary interest;” (2) the misrepresentation must supply “false information;” 

(3) there must be “justifiable reliance” on the false information supplied; and (4) the 

accused party must have failed “to exercise reasonable care or competence in obtaining or 

communicating the information.”100

Plaintiffs have alleged with specificity all of the above elements except for 

the existence of a fraudulent misrepresentation. Plaintiffs’ misrepresentation claim is not 

very well written, but it appears that Plaintiffs claim that Defendant made two 

misrepresentations: (1) it provided a false copy of the Policy, and (2) it misrepresented the 

terms and conditions of the Policy and its coverage.101 The allegations, if true, establish 

the presence of misrepresentations, Plaintiffs’ reliance thereon, a failure to exercise 

97 Asher v. Alkan Shelter, LLC, 212 P.3d 772, 782 (Alaska 2009) (citing Lightle v. Real 

Estate Comm’n, 146 P.3d 980, 983 (Alaska 2006)).

98 Lightle, 146 P.3d at 983 (citations omitted); see also Fed. R. Civ. P. 9(b) (“Malice, 

intent, knowledge, and other conditions of a person’s mind may be alleged generally.”).

99 Id. at 986 (citations omitted).

100 Valdez Fisheries Dev. Ass’n v. Alyeska Pipeline Serv. Co., 45 P.3d 657, 671 (Alaska 

2002) (citing Bubbel v. Wien Air Alaska, Inc., 682 P. 2d 374, 380 (Alaska 1984)).

101 Docket 26 at 2–4.

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reasonable care in communicating the misrepresentations, and losses resulting from 

Plaintiffs’ reliance. However, Plaintiffs have failed to allege with specificity the existence 

of fraud. There is no indication from the complaint that Defendant knew that its submission 

of the October 1, 2021, Copy was false, even if it differed from the March 2, 2022, Copy 

in what appear to be immaterial respects. The same applies to the alleged misrepresentation 

of the Policy coverage. Instead, the complaint asserts in a conclusory manner that 

Defendant knew or should have known that its representations were false.

To be clear, the Court is aware that Rule 9(b) allows Plaintiffs to “generally” 

allege a fraudulent state of mind, but in this case the evidence submitted with Plaintiff’s 

complaint contradicts that allegation. The October 1, 2021, letter Defendant provided 

Plaintiffs explaining its reasoning behind its position that the Policy’s coverage had lapsed 

reflects a thoughtful analysis of the Policy’s provisions and coverages.

102 The letter 

explains Defendant’s view of the “flexible” Policy at issue here and points to actual 

language in the Policy to justify Defendant’s interpretation of the Policy.103 It may be the 

case that the letter’s analysis is based on an incorrect copy of the Policy or that Defendant’s 

interpretation of this contract of adhesion is vulnerable under Alaska law, but there is no 

indication from either the letter or Plaintiff’s complaint that Defendant knew that to be the 

case at the time or had knowledge that it was misleading Plaintiffs. This letter seemingly 

demonstrates that Defendant rooted its reasoning in the facts before it and not on a 

purposeful misrepresentation to Plaintiffs. Similarly, Defendant’s filing at Docket 15, 

102 Docket 26-1. 103 Id.

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which Plaintiff suggests if further evidence of fraudulent behavior, contradicts any 

allegation of fraudulent behavior. The affidavit of Defendant’s custodian of records 

acknowledges some of the differences between the October 1, 2021, Copy and the March 3, 

2022, Copy.104 Although the custodian failed to identify other relatively minor differences 

between the copies or provided an incorrect copy of a Policy dating back to the early 1990s, 

it appears more likely than not in the Court’s experience that this oversight was 

unintentional rather than part of a blatant scheme to defraud Plaintiffs through a direct 

submission to the Court. Although Plaintiffs need not make more specific allegations of 

Defendant’s knowledge or its employees’ conditions of mind for their fraud claim to 

survive, Plaintiffs must overcome the presumption of an innocent mistake that the evidence 

they submitted to the Court establishes.

105 Otherwise, Plaintiffs have only sufficiently 

pleaded a claim for negligent misrepresentation.

The Court dismisses Plaintiffs’ claim for fraudulent or intentional 

misrepresentation, but will grant Plaintiffs leave to amend the complaint pursuant to 

Federal Rule of Civil Procedure 15(a)(2), which provides that a court “should freely give 

leave [to amend a pleading] when justice so requires.” Although Plaintiffs already have 

amended their complaint once, they have not had an opportunity to amend the claim they 

added in their first amendment, which is the same and only claim the Court dismisses here. 

104 Docket 15-1 at 2. 105 See Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th 

Cir. 1990) (citation omitted) (“[M]aterial which is properly submitted as part of the complaint may 

be considered on a motion to dismiss.”); cf. McKinnon v. Hartford Ins. Co., No. 2:12-cv-1809-

RCJ-CWH, 2013 U.S. Dist. LEXIS 35404, at *19 (D. Nev. Mar. 11, 2013) (finding that a plaintiff’s 

claim that a defendant “never at any time intended to comply” with its representations was 

insufficient to sufficiently allege a fraudulent misrepresentation claim).

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Because Plaintiffs may be able to cure this defective claim if they can point to other indicia 

of fraudulent behavior, or explain why the documents provided show that Defendant knew 

it misrepresented the Policy and its coverage when it provided Defendant the lapse notice

or provided purportedly true copies of the Policy to Plaintiffs, the Court finds leave to 

amend proper.

106 If Plaintiffs cannot overcome what the evidence before the Court appears 

to establish, they should refrain from further amending the complaint, particularly since 

their claim for negligent misrepresentation survives. Additionally, if Plaintiffs choose to 

amend but Defendant feels that the amended claim for fraudulent or intentional 

misrepresentation continues to exhibit this or a different defect, it may file a renewed 

motion to dismiss that claim.

V. CONCLUSION 

 In light of the above, Defendant’s Motion to Dismiss First Amended 

Complaint with Prejudice at Docket 28 is GRANTED IN PART. Plaintiffs’ claim for 

fraudulent or intentional misrepresentation is DISMISSED WITHOUT PREJUDICE

and with LEAVE TO AMEND. Plaintiffs shall have until December 19, 2022, to correct 

the pleading deficiency identified herein and file a Second Amended Complaint. 

 IT IS SO ORDERED this 2nd day of December, 2022, at Anchorage, Alaska.

 /s/ Joshua M. Kindred 

JOSHUA M. KINDRED

United States District Judge

106 See Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (quoting Doe v. United States, 

58 F.3d 494, 497 (9th Cir. 1995)) (“[A] district court should grant leave to amend even if no request 

to amend the pleading was made, unless it determines that the pleading could not possibly be cured 

by the allegation of other facts.”).

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