Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_17-cv-00738/USCOURTS-casd-3_17-cv-00738-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity Action

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

LAUREL DAVIS,

Plaintiff,

v.

LIBERTY LIFE ASSURANCE 

COMPANY OF BOSTON,

Defendant.

Case No.: 3:17-cv-00738-L-BGS

ORDER GRANTING DEFENDANT’S 

MOTION [Doc. 8] TO DISMISS

Pending before the Court is Defendant Liberty Life Assurance Company of 

Boston’s (“Defendant”) motion to dismiss Plaintiff Laurel Davis’ (“Plaintiff”) first 

amended complaint. The Court decides the matter on the papers submitted and without 

oral argument. See Civ. L. R. 7.1(d.1). For the reasons stated below, the Court 

GRANTS Defendant’s motion. 

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I. BACKGROUND 

This case arises out of the denial of a long-term disability insurance policy. 

Plaintiff started working for the University of California, San Diego (“UCSD”) in 1983. 

At that time, Plaintiff enrolled in a benefits package that included short term (“STD”) and 

long term (“LTD”) disability insurance plans. Defendant is the administrator of both 

disability insurance plans. 

On January 18, 2010, Plaintiff sustained serious knee injuries from a slip and fall at 

work. Because of her injury, Plaintiff has had to undergo multiple surgeries and has been 

unable to return to work. In June of 2011, Plaintiff filed a claim for benefits under the 

STD policy. Defendant accepted Plaintiff’s STD claim and paid on the claim until it 

exhausted on July 29, 2012. Because her injuries persisted, Defendant converted 

Plaintiff’s STD claim into a LTD claim on January 17, 2012. On June 26, 2012, 

Defendant sent Plaintiff a letter informing her that it had denied her LTD claim, but she 

had sixty days to submit a written request for a review of the decision. (Denial Letter 

[Doc. 7 Ex. 3].) 

Plaintiff does not allege to have submitted a timely written request for review. 

Rather, Plaintiff alleges that she called Defendant on July 20, 2012, and informed an 

insurance adjuster that she was undergoing additional surgery in early November, 2012. 

Per Plaintiff, the insurance adjuster told her it was reevaluating her claim and that she 

should keep them appraised of her treatment.1 

At some point prior to March 23, 2012, Plaintiff also submitted a claim for 

disability benefits under a separate plan (“the UCRP Plan”) administered directly by the 

University of California. On August 27, 2012, the University of California accepted her 

 

1 The Court DENIES Defendant’s Request for Judicial Notice of the insurance adjuster’s note 

memorializing this conversation. The note is not a proper subject of judicial notice. It is not properly 

incorporated by reference because the First Amended Complaint makes no mention of the adjuster’s 

note. Further, it directly contradicts Plaintiff’s allegations and the accuracy of the note’s contents is 

subject to reasonable dispute. Fed. R. Evid. 201. In any event, the Court’s grant of Defendant’s motion, 

without consideration of the note, renders this request for judicial notice moot. 

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claim for benefits under the UCRP Plan. The University of California ended up handing 

over administration of the UCRP Plan to Defendant. Defendant notified Plaintiff of this 

transition via letter dated October 2013 and asked Plaintiff to provide any medical 

information she had and execute an authorization for the release of medical records. 

Plaintiff obliged.

Plaintiff alleges she subsequently became confused about the status of her benefits 

and therefore called Defendant in September 2014. During the conversation, she asked 

“[w]hy did [Defendant] approve me for one claim [the UCRP plan] and yet deny [and 

continues to deny] me for the other claim [the LTD plan].” (FAC [Doc. 7] ¶ 27.) 

Defendant replied it was because the plans had different eligibility standards. 

Plaintiff’s confusion allegedly persisted for some time. In June of 2016, she claims 

to have requested all documents relating to her disability claims, but states Defendant 

never fully responded to this request. Eventually, on March 2, 2017, Plaintiff filed a 

complaint with the Superior Court of California, County of San Diego, alleging (1) 

breach of contract; (2) fraud; (3) breach of the implied covenant of good faith and fair 

dealing; and (4) violation of Cal. Bus. & Prof. Code § 12000 et seq. (Compl. [Doc. 1 Ex. 

A].) Defendant timely removed to this Court and moved to dismiss. (Rem Not. [Doc. 1]; 

First MTD [Doc. 2].) Plaintiff did not oppose Defendant’s first motion to dismiss. 

Rather, Plaintiff mooted the first motion to dismiss when she filed a First Amended 

Complaint alleging the same four causes of action. (FAC [Doc. 7].) Defendant now 

moves to dismiss the First Amended Complaint. (MTD [Doc. 8].) Plaintiff opposes. 

(Opp’n.) 

II. LEGAL STANDARD 

The court must dismiss a cause of action for failure to state a claim upon which 

relief can be granted. Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) 

tests the complaint’s sufficiency. See N. Star Int’l v. Ariz. Corp. Comm’n., 720 F.2d 578, 

581 (9th Cir. 1983). The court must assume the truth of all factual allegations and 

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“construe them in the light most favorable to [the nonmoving party].” Gompper v. VISX, 

Inc., 298 F.3d 893, 895 (9th Cir. 2002); see also Walleri v. Fed. Home Loan Bank of 

Seattle, 83 F.2d 1575, 1580 (9th Cir. 1996). 

As the Supreme Court explained, “[w]hile a complaint attacked by a Rule 12(b)(6) 

motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to 

provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and 

conclusions, and a formulaic recitation of the elements of a cause of action will not do.” 

Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1964-65 (2007) (internal citations and

quotation marks omitted). Instead, the allegations in the complaint “must be enough to 

raise a right to relief above the speculative level.” Id. at 1965. A complaint may be 

dismissed as a matter of law either for lack of a cognizable legal theory or for insufficient 

facts under a cognizable theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 

534 (9th Cir. 1984).

III. STATUTE OF LIMITATIONS

Defendant contends that all of Plaintiff’s claims are barred by the statute of 

limitations. The statute of limitations clock starts to run when a cause of action accrues, 

meaning all the elements of the claim are present. Fox v. Ethicon Endo-Surgery, Inc., 35 

Cal. 4th 797, 806–07 (2005). Breach of written contract claims carry a four-year statute 

of limitations. Cal. Code Civ. P. § 337. The elements of a breach of contract claim are 

(1) existence of a contract; (2) plaintiff’s performance; (3) defendant’s breach; and (4) 

resulting damages. Oasis West Realty, LLC v. Goldman, 51 Cal. 4th 811, 821 (2011). 

Construing as true Plaintiff’s allegation that defendant’s denial of LTD benefits 

constituted breach, it follows that her breach of contract claim accrued no later than June 

26, 2012, the date Defendant sent Plaintiff the Denial Letter. The distance between 

accrual (June 2012) and filing (March 2017) is more than four years. Thus, Plaintiff’s 

claim is time barred unless (1) the clock was tolled or (2) Defendant is equitably estopped 

from raising the statute of limitations as a defense. 

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Plaintiff contends that the clock should be tolled pursuant to the discovery rule. 

The discovery rule “postpones accrual of a cause of action until the plaintiff discovers, or 

has reason to discover, the cause of action.” Fox, 35 Cal. 4th at 807. A plaintiff has 

reason to discover a cause of action if they “have reason to at least suspect that a type of 

wrongdoing has injured them.” Id. Thus, the discovery rule can help Plaintiff only if she 

did not have reason to suspect her claim was denied until at least March 2, 2013–four 

years prior to filing. 

Defendant sent Plaintiff a letter on June 26, 2012, stating in unequivocal terms that 

(1) her LTD claim was denied (2) Plaintiff would not receive benefit payments; (3) any 

review of this denial should be requested in writing within 60 days. (Denial Letter.) 

Notwithstanding, Plaintiff argues that she did not have reason to suspect claim denial 

until after March 2, 2013 because of the July 20, 2012 phone call she had with an 

insurance adjuster regarding her LTD plan and subsequent correspondence with 

Defendant regarding her UCRP plan. 

Plaintiff’s argument is unpersuasive. The UCRP Plan is separate and distinct from 

the LTD plan. Further, Defendant did not take over administration of the UCRP plan 

until over a year after Defendant notified her of its denial of the LTD claim. Plaintiff’s 

belief that any correspondence with Defendant regarding the separate UCRP plan should 

be imputed to the LTD plan, which was denied more than a year before any such 

correspondence, is not reasonable. Furthermore, more than seven months passed between 

the July 20, 2012 phone call and March 2, 2013 (the date that marks four years prior to 

filing), and Plaintiff does not allege any correspondence with Defendant regarding her 

LTD plan occurred during this time. Seven months of silence and non-payment of 

benefits, coupled with a letter stating her claim was denied, should have given Plaintiff 

reason to suspect that Defendant may have denied her claim. The discovery rule 

therefore does not save Plaintiff’s breach of contract cause of action.

Plaintiff next argues that, even if the clock on her breach of contract claim has ran, 

Defendant should be equitably estopped from asserting the statute of limitations as a 

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defense. “A defendant may be equitably estopped from asserting a statutory or 

contractual limitations period as a defense if the defendant's act or omission caused the 

plaintiff to refrain from filing a timely suit and the plaintiff's reliance on the defendant's 

conduct was reasonable.” Superior Dispatch, Inc. v. Ins. Corp. of New York, 181 Cal. 

App. 4th 175, 190 (2010). The defense can arise as a result of affirmative conduct or 

silence when there is a duty to speak. Spray, Gould & Bowers v. Associated Int’l Ins. 

Co., 71 Cal. App. 4th 1260, 1268. 

In support of her equitable estoppel theory, Plaintiff rehashes the same arguments 

discussed above regarding equitable tolling: that she did not realize her claim was denied 

because of the June 2012 phone call and subsequent correspondence with Defendant 

regarding a separate claim. This argument is unpersuasive for the same reasons discussed 

above. Additionally, it is worth noting Plaintiff admits that during a phone conversation 

that occurred on September 29, 2014 (within the staturoy limitations period), Defendant 

unequivocally told her that her LTD claim was still denied. (Opp’n 1:15–18.) Armed 

with this clear information, it was not reasonable for Plaintiff to wait until March 2, 2017 

to file her claim. 

Plaintiff also argues that Defendant should be equitably estopped from asserting 

the statute of limitations because it was silent in the face of a duty to speak. Plaintiff’s 

argument relies primarily on two regulations promulgated by the California Department 

of Insurance. The first is 10 C.C.R. § 2695.4(a). In pertinent part, § 2695.4 provides that 

“[e]very insurer shall disclose to a first party claimant or beneficiary, all benefits, 

coverage, time limits or other provisions of any insurance policy issued by that insurer 

that may apply to the claim presented by the claimant.” 10 C.C.R. § 2695.4(a). Because 

Defendant never disclosed the statute of limitations it now relies upon, Plaintiff argues it 

violated § 2695.4(a) and should be equitable estopped from asserting the statutory 

limitations period now. 

Plaintiff’s reliance on § 2695.4(a) is misplaced. This regulation creates a duty to 

disclose, at time of claim presentation, any contractual time provisions that an insurer 

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may assert. Superior Dispatch, Inc. v. Ins. Corp. of New York, 181 Cal. App. 4th 175, 

190 (2010). However, it does not create a duty to disclose any statutory limitations 

periods an insurer may assert. Ray v. Prudential Ins. Co. of America, 488 Fed. Appx. 

234, 235 (9th Cir. 2012). Because defendant is asserting a statutory limitations defense 

rather than a contractual one, § 2695.4(a) does not apply.

The other regulation is 10 C.C.R. § 2695.7(f). In pertinent part, § 2695.7(f) 

provides that “[e]xcept where a claim has been settled by payment, every insurer shall 

provide written notice of any statute of limitation or other time period requirement upon 

which the insurer may rely to deny a claim.” Plaintiff argues that Defendant’s failure to 

disclose the statute of limitations triggers this regulation and therefore estops Defendant 

from asserting the statute of limitations as a defense now. 

Plaintiff’s reliance on § 2695.7(f) is also misplaced. By its plain language, the 

regulation applies only to a statute of limitations upon which an insurer may rely to deny 

a claim. It does not apply to statutes of limitations an insurer may raise to defend against

a later breach of contract claim arising out of the denial of a claim. Monaco v. Liberty 

Life Assur. Co., 2008 WL 1766768 *3 (N.D. Cal. 2008). Because Defendant did not rely 

upon a statutory limitations period to deny Plaintiff’s claim, § 2695.7(f) is inapplicable.

For the foregoing reasons, the Court finds Plaintiff’s breach of contract claim 

barred by the statute of limitations. Because Plaintiff’s breach of the implied covenant of 

good faith and fair dealing, fraud, and UCL claims are based on the same transaction (the 

denial of Plaintiff’s LTD claim) and do not carry longer statutory limitations periods2, 

they too are time barred. 

 

2 Claims for breach of the implied covenant of good faith and fair dealing carry a two year statute of 

limitations. Richardson v. Allstate Ins. Co., 117 Cal. App. 3d 8, 13 (1981). UCL claims carry a four 

year statute of limitations. Cal. Bus. & Prof. Code § 17208. Fraud claims carry a three year statute of 

limitations. Cal. Code Civ. P. § 338(d). 

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IV. FEDERAL RULE OF CIVIL PROCEDURE 9(b)

Defendant contends the Court should dismiss the fraud claim for lack of adequate 

particularity. Under Federal Rule of Civil Procedure 9(b), a plaintiff must “state with 

particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). Fraud 

allegations must be “specific enough to give defendants notice of the particular 

misconduct . . . so that they can defend against the charge and not just deny that they 

have done anything wrong.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th 

Cir. 2003) (internal citations and quotation marks omitted). Thus, to satisfy Rule 9(b), a

plaintiff must state the requisite “who, what, when, where, and how” of the representation 

as well as an explanation of why the representation is false. Id.

The gist of the fraud claim is that Defendant lied to Plaintiff in 1983 when it told 

her that it provided long term disability insurance. Plaintiff does not explain who made 

this representation, where or how it was made, nor does Plaintiff explain with any clarity 

exactly why it is false. Plaintiff’s fraud allegation therefore falls well short of the 

particularity required by Fed. R. Civ. P. 9(b). 

V. LEAVE TO AMEND

It seems unlikely that Plaintiff can overcome the statute of limitations defense 

through amendment. However, given the liberal amendment policy enshrined in Fed. R. 

Civ. P. 15(a) and given that this is the first order of dismissal the Court has issued, the 

Court will grant Plaintiff leave to amend. If Plaintiff chooses to file an amended 

complaint, she is advised to make her allegations with substantially greater clarity and 

particularity. 

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VI. CONCLUSION & ORDER

For the foregoing reasons, the Court GRANTS WITHOUT PREJUDICE

Defendant’s motion to dismiss. If Plaintiff chooses to file an amended complaint, she 

must do so within twenty one days of the entry of this order. 

IT IS SO ORDERED. 

Dated: August 3, 2017

 

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