Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_05-cv-00632/USCOURTS-caed-1_05-cv-00632-0/pdf.json

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

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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

JEFF M. DELUCA

Plaintiff,

v.

MASSACHUSETTS MUTUAL LIFE

INSURANCE COMPANY, CONNECTICUT

MUTUAL LIFE INSURANCE COMPANY

and DOES 1-50, inclusive,

Defendants.

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1:05-cv-00632 OWW DLB

MEMORANDUM DECISION AND

ORDER ON DEFENDANT’S MOTION

TO DISMISS [FED. R. CIV. P.

12(b)(6)] PLAINTIFF’S

ENTIRE COMPLAINT

I. INTRODUCTION

Defendant Massachusetts Mutual Life Insurance Co.

(“MassMutual”) moves to dismiss the Complaint of Plaintiff Jeff

Deluca (“Deluca”) for failure to state a claim pursuant to Fed.

R. Civ. P. 12(b)(6). Plaintiff alleges claims for Breach of

Contract and Fraud against Defendant. Plaintiff also requests to

remand this action to Fresno County Superior Court because

Defendant has not proven that the amount in controversy more

likely than not exceeds $75,000.00. 

//

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II. SUMMARY OF ARGUMENTS

1. Diversity Jurisdiction

Plaintiff asserts in his Opposition that this Court lacks

diversity jurisdiction over this action because MassMutual has

not proven that the amount in controversy more likely than not

exceeds $75,000. (Doc. 7, Plaintiff’s Opposition at 2:11-15). 

Defendant contends that “raising the issue in his Opposition is

inappropriate and that it should be made through a properly

noticed motion to remand in order to give MassMutual sufficient

time and opportunity to fully brief and obtain and submit

supporting evidence on the issue.” (Doc. 8, Defendant’s Reply at

2:16-20). Nonetheless, Defendant argues that the amount in

controversy in this matter clearly exceeds $75,000.00 and that

Plaintiff’s request should be dismissed. (Id. at 3:13-16).

2. Breach of Contract

Plaintiff alleges that on or around November, 2003,

MassMutual breached its life insurance contract with Plaintiff

regarding premiums. (Doc. 1, Notice of Removal at Ex. A, 10, ¶

BC-2). Plaintiff alleges that his agreement with MassMutual was

that after twenty years of paying Policy premiums, “he would not

be required to make any out of pocket premium payments to keep

the policy in force - any and all premium payments required after

20 years would be paid out of the dividends earned by the

policy.” (Doc. 7, Plaintiff’s Opp. at 6:24-28). Defendant

responds that the document cited by Plaintiff to show breach of

contract was extrinsic to the Policy contract and was not part of

their agreement with Plaintiff. (Doc. 8, Defendant’s Reply at 6-

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3

8). Rather, Defendant argues that the document was simply part

of the sales material to help explain the Policy. (Id. at 7:9-

24). 

3. Fraud

Plaintiff alleges that MassMutual fraudulently

misrepresented material terms of the Policy through false

representations and concealment. Plaintiff alleges that

MassMutual represented that “if he purchased a policy of

insurance for the amount of $100,000, he would only pay premiums

of $565.00 per [year] for 20 years and it would be paid up.” 

(Doc. 1, Notice of Removal at Ex. A, 11, ¶ FR-2a). Plaintiff

alleges that “these representations were in fact false.” (Id. at

Ex. A, 11, ¶ FR-2b). Defendant responds that there were no false

representations, and that its projections for Policy premium

payments were accurate. (Doc. 8, Defendant’s Reply at 9-10). 

Further, Defendant maintains that it made no concealments of

material fact whatsoever. (Id.).

III. PROCEDURAL HISTORY

Plaintiff Deluca filed a Complaint against Defendant

MassMutual in the Superior Court of the State of California,

County of Fresno for (1) breach of contract, and (2) fraud. 

(Doc. 1, Notice of Removal at Ex. A, 7-12) (filed March 18,

2005). Plaintiff attached a copy of the insurance Policy and

three related documents to his Complaint. (Doc. 1, Notice of

Removal at Ex. A, 14-33). The Complaint was removed to the

United States District Court for the Eastern District of

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California based on diversity jurisdiction pursuant to 28 U.S.C.

§ 1441(a), in accordance with the removal procedure proscribed by

28 U.S.C. § 1446(a). (See Doc. 1, Notice of Removal.)

Defendant moved to dismiss Plaintiff’s entire Complaint for

failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). 

(Doc. 5, Defendant’s Motion) (filed May 19, 2005). Defendant

also filed a request for judicial notice of the insurance Policy

issued to Plaintiff. (Doc. 6, Request for Judicial Notice). 

Plaintiff filed an Opposition, further alleging his claims and

also seeking a remand back to the state Superior Court. (Doc. 7,

Plaintiff’s Opposition) (filed June 10, 2005). Defendant then

filed a Reply (Doc. 8, Defendant’s Reply) (filed June 20, 2005).

IV. FACTUAL BACKGROUND

On November 17, 1987, Plaintiff Jeff Deluca and Defendant

MassMutual entered into a life insurance policy agreement. (Doc.

1, Notice of Removal at Ex. A, 18). Plaintiff alleges that in or

around November 2003, Defendant breached the agreement by not

honoring the Policy premium payments plan. (Id. at Ex. A, 10). 

The complaint contains little or no factual information. As a

result, the court is left to fill in the blanks as best as

possible. Although it is not clearly stated in the Complaint,

the court assumes that Plaintiff’s cause of action arises from

Plaintiff being charged incremental premium payments, as opposed

to the alleged agreed upon flat rate of $565.00 per year, and

from the fact that Plaintiff will have to continue paying out-ofpocket Policy premiums for life, as opposed to the alleged

agreement that after twenty years, premiums would be paid from

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money earned from dividends. (Doc. 7, Plaintiff’s Opp. at 6:24-

28). 

Plaintiff alleges two claims against Defendant: breach of

contract and fraud. Plaintiff bases his claims on a document

(hereafter “Ledger Statement”) that Plaintiff alleges was part of

the agreement between himself and Defendant. (Doc. 7,

Plaintiff’s Opp. at 7:21-25). Plaintiff alleges that Defendant

breached the agreement set forth in the Ledger Statement. (Id.

at 7:24-25). He further alleges that Defendant made fraudulent

material misrepresentations in the Ledger Statement. (Doc. 1,

Notice of Removal at Ex. A, 12, ¶ FR-4). 

V. STANDARD OF REVIEW

Fed. R. Civ. P. 12(b)(6) allows a defendant to move to

dismiss a complaint for failure to state a claim upon which

relief can be granted. However, a motion to dismiss under Fed.

R. Civ. P. 12(b)(6) is disfavored and rarely granted. “A

complaint should not be dismissed unless it appears beyond doubt

that plaintiff can prove no set of facts in support of his claim

which would entitle him to relief.” Van Buskirk v. CNN, Inc.,

284 F.3d 977, 980 (9th Cir. 2002) (citations omitted). In

deciding whether to grant a motion to dismiss, the court

“accept[s] all factual allegations of the complaint as true and

draw[s] all reasonable inferences” in the light most favorable to

the nonmoving party. TwoRivers v. Lewis, 174 F.3d 987, 991 (9th

Cir. 1999); see also Rodriguez v. Panayiotou, 314 F.3d 979, 983

(9th Cir. 2002). Dismissal of the complaint is proper if,

assuming the allegations to be true, it “fail[s] to state a claim

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on its face.” Lucas v. Bechtel Corp., 633 F.2d 757, 759 (9th

Cir. 1980).

“The court need not, however, accept as true allegations

that contradict matters properly subject to judicial notice or by

exhibit. Nor is the court required to accept as true allegations

that are merely conclusory, unwarranted deductions of fact, or

unreasonable inferences.” Sprewell v. Golden State Warriors, 266

F.3d 979, 988 (9th Cir. 2001) (citations omitted). For example,

matters of public record may be considered, including pleadings,

orders, and other papers filed with the court. See Lee v. City

of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001). Conclusions

of law, conclusory allegations, unreasonable inferences, or

unwarranted deductions of fact need not be accepted. See Western

Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981).

VI. LEGAL ANALYSIS

1. Threshold Issues

A. Diversity Jurisdiction

Defendant removed this action on the ground that diversity

jurisdiction exists. “The district courts shall have original

jurisdiction of all civil actions where the matter in controversy

exceeds the sum or value of $75,000, exclusive of interest and

costs, and is between...citizens of different states....” (28

U.S.C. § 1332(a)). When the jurisdictional amount is challenged,

the party invoking the jurisdiction of the federal court has the

burden of proving by a preponderance of the evidence that the

amount in controversy more likely than not exceeds the

jurisdictional limit. McNutt v. General Motors Acceptance Corp,

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1 Defendant cites to an unreported class action suit for

fraudulent sales practices, in which the insurance company

settled for $95,500,000.00. This case is inapplicable to the

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298 U.S. 178, 190 (1936). “[R]emoval statutes are construed

restrictively, and any doubts about removability are resolved in

favor of remanding the case to state court.” McCaa v.

Massachusetts Mut. Life Ins. Co., 330 F. Supp. 2d 1143, 1146 (D.

Nev. 2004). 

Plaintiff claims that this Court lacks diversity

jurisdiction over this action because MassMutual has not proven

that the amount in controversy more likely than not exceeds

$75,000.00. (Doc. 7, Plaintiff’s Opposition at 2:11-15). 

Defendant objects that Plaintiff raises this argument for the

first time in his opposition. Although Defendant’s procedural

objection is well-founded, the court has the power and is

required to remand a case sua sponte where it becomes apparent

that a case has been improperly removed. McCaa, 330 F. Supp. 2d

at 1146; S & H Grossinger, Inc. v. Hotel & Restaurant Employees,

272 F. Supp. 25, 27 (D.C.N.Y. 1967).

Defendant cites to compensatory damages, estimated punitive

damages, and the potential for recovery of attorneys’ fees to

support his claim that the minimum amount in controversy has been

met. Defendant argues that compensatory damages amount to at

least $35,568.00, after factoring in annual premium payments that

Plaintiff will have to pay for the rest of his life. (Doc. 1,

Notice of Removal at 5, ¶ 14). Defendant submits that punitive

damages alone could easily exceed $75,000.00. (Doc. 8,

Defendant’s Reply at 4:22-26).1 Defendant argues that it

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case at bar because the allegations and the amount in claimed

damages are distinguishable. 

2 Defendant also submits that Plaintiff has conceded by

virtue of originally filing his Complaint with the Fresno County

Superior Court as an unlimited civil action that the amount in

controversy is at least $50,000.00. (Doc. 8, Defendant’s Reply

at 3:19-22). However, the amount in controversy in unlimited

civil lawsuits in the Fresno County Superior Court must exceed

only $25,000.00, not $50,000.00. Therefore, using the same line

of reasoning as Defendant, Plaintiff has conceded that his action

exceeds only $25,000.00.

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received information from Plaintiff’s lawyer that Plaintiff had

incurred $50,000.00 in attorneys’ fees twenty-four days before

the time of removal, and that it is not unreasonable to conclude

that these fees will exceed $75,000.00 by the time the trial is

over. (Doc. 8, Defendant’s Reply at 4:2-10). Defendant argues

that, “[t]aken in conjunction...the amount in controversy in this

matter” more likely than not exceeds $75,000.00. (Doc. 8,

Defendant’s Reply at 3:13-16).2 

 Defendant has satisfied its burden of showing that the

jurisdictional amount in controversy more likely than not exceeds

$75,000.00. In the oral argument, Plaintiff conceded that the

jurisdictional amount in controversy has been met. Plaintiff’s

request to remand this action to Fresno County Superior Court is

DENIED.

B. Evidentiary Issue

The terms of the Policy contract and the actual agreement

between Plaintiff and Defendant are in dispute. Plaintiff

submits one version of the contract as Exhibit A. Defendant

submits a slightly different version of the contract as its

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3 Contrary to Defendant’s argument, The Policy proffered by

Defendant is inadmissible in this context. Evidence outside the

complaint is generally not considered in ruling on a motion to

dismiss for failure to state a claim. Arpin v. Santa Clara

Valley Transp. Agency, 261 F.3d 912 (9th Cir. 2001). Defendant

argues that “the court may consider the full text of a document

the complaint quotes only in part.” (Doc. 6, Req. for Judicial

Notice at 3:1-3). However, when evidence submitted by a

defendant is different in substance from that submitted by

Plaintiff, and the authenticity of the discrepancy is challenged

by Plaintiff, it is not admissible. “[D]ocuments whose contents

are alleged in a complaint and whose authenticity no party

questions,...may be considered in ruling on a Rule 12(b)(6)

motion to dismiss.” Branch v. Tunnell, 14 F.3d 449, 454 (9th

Cir. 1994). “A document is not ‘outside’ the complaint if the

complaint specifically refers to the document and if its

authenticity is not questioned.” Id. at 453 (emphasis added). 

Here, however, Plaintiff “vigorously contests” the authenticity

of the document proffered by Defendant as the Policy. (Doc. 7,

Plaintiff’s Opposition at 5:9-10). At this stage of the

proceedings, any ambiguity in the documents are resolved in

plaintiff’s favor. International Audiotext Network, Inc. v. AT&T

Co., 62 F.3d 69, 72 (2nd Cir. 1995). Only the Policy submitted

by Plaintiff, therefore, will be considered.

4 Under certain circumstances, the court can convert a

12(b)(6) motion to dismiss to a Rule 56 motion for summary

judgment. On a 12(b)(6) motion to dismiss, where matters outside

the pleading are presented to and not excluded by the court, “the

motion shall be treated as one for summary judgment and disposed

of as provided in Rule 56.” Equal Employment Opportunity Comm’n

v. American Home Prods. Corp., 199 F.R.D. 620, 626 (N.D. Iowa

2001). Here, the court will rule only on the motion to dismiss,

and, as stated above, will exclude from evidence Defendant’s

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Exhibit 1. According to Defendant, Exhibit 1 is a “true,

correct, and complete duplicate copy of the Policy” issued to

Plaintiff (Doc. 6, Req. for Judicial Notice, at 2:4-5).3

However, because of the discrepancies between the two versions,

only Plaintiff’s version of the Policy contract is used to

determine whether Defendant’s 12(b)(6) motion to dismiss will be

granted.4

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Additionally, Plaintiff attempts to introduce documents

extrinsic to the Policy contract. Plaintiff claims that these

extrinsic documents were in fact part of the written agreement

between himself and MassMutual, and as such, are part of the

contract. Plaintiff alleges that it was the terms of one of

these extrinsic documents, the Ledger Statement, that were

breached. (Doc. 7, Plaintiff’s Opposition at 7:24-25). 

Defendant argues that the extrinsic documents were “simply part

of the sales materials provided...to help explain how the Policy

could perform when using current, non-guaranteed values.” (Doc.

8, Defendant’s Reply at 7:18-21). The operative effect of the

ledger statement will be discussed below. 

2. Breach of Contract

Defendant moves to dismiss Plaintiff’s claim for breach of

contract for failure to state a claim. To state a claim for

breach of contract, a plaintiff must plead the following

elements: (1) formation of the contract, (2) plaintiff's

performance or excuse for nonperformance, (3) defendant's breach,

and (4) resulting damages to plaintiff. Careau & Co. v. Security

Pac. Bus. Credit, Inc., 222 Cal. App. 3d 1371, 1388 (1990)

(citing Reichert v. General Ins. Co., 68 Cal. 2d 822, 830

(1968)); see also Binder v. Aetna Life Ins., Co., 75 Cal. App.

4th 832, 840 (1999). “Conclusory allegations of law and

unwarranted inferences are insufficient to defeat a motion to

dismiss for failure to state a claim.” In re Verifone Securities

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5 The second and fourth elements are not contested, and are

in fact sufficiently plead. Plaintiff pleads the second element,

performance or excuse for nonperformance of the terms of the

contract, by claiming that he has performed all of his

obligations to Defendant under the terms of the contract except

those obligations he was prevented or excused from performing. 

(Doc. 1, Notice of Removal at Ex. A, BC-3). Plaintiff pleads the

fourth element, resulting damages to plaintiff, by claiming that

he has suffered damages from Defendant’s breach in the amount of

approximately $5,000 in additional premiums paid.

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Litigation, 11 F.3d 865, 868 (9th Cir. 1993). 

Defendant argues that Plaintiff has failed to state a claim

for breach of contract because Plaintiff has not sufficiently

pleaded the first and third elements: formation of the contract,

and Defendant’s breach.5

A. Formation of Contract and Breach.

Defendant argues that Plaintiff has failed to state a claim

for breach of contract because Plaintiff has not sufficiently

pled that the alleged contract was formed and that there was a

breach. (Doc. 8, Defendant’s Reply at 6-8). Plaintiff claims

that the Ledger Statement is part of the contract, and can

therefore be enforced. (Doc. 7, Plaintiff’s Opp. at 7:21-25). 

Plaintiff alleges that his agreement with MassMutual, as

evidenced in the Ledger Statement, was that: 

...after 20 years he would not be required to make any

out of pocket premium payments to keep the policy in

force - any and all premium payments required after 20

years would be paid out of the dividends earned by the

policy.

(Id. at 6:24-28). 

Defendant maintains that the Ledger Statement is not part of

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the contract, but rather, was “simply part of the sales material

provided...to help explain how the Policy could perform when

using current, non-guaranteed values.” (Doc. 8, Defendant’s

Reply at 7:18-21). Defendant argues that the Policy contract

provides on its first page that “Premiums [are] Payable For

Life,” and that “[n]owhere does the Policy provide that

Plaintiff’s premiums would only be $565.00...for [twenty] years

as alleged in the Complaint.” (Doc. 5, Defendant’s Motion at

6:4-16; id. at 7:26-28; Doc. 1, Notice of Removal at Ex. A, 18). 

Defendant argues that there was no breach of the “written

insurance contract” as alleged by Plaintiff....” (Id. at 8:1-2).

The admissibility of the Ledger Statement, as an extrinsic

document, as evidence of a different or additional agreement

between Plaintiff and Defendant depends on whether the Policy

contract is integrated. If the contract is not integrated,

extrinsic documents may be considered by the court. If the

contract is integrated, the parol evidence rule comes into

operation, which excludes prior and contemporaneous negotiations,

whether oral or written, from evidence. Id.

i. Was the Policy Contract Integrated?

In ruling on the matter of parol evidence and the 

preliminary issue of integration: 

a court must consider such factors as the language and

completeness of the written agreement and whether it

contains an integration clause, the terms of the alleged

oral agreement and whether they contradict those in the

writing, [and] whether the oral agreement might naturally

be made as a separate agreement....

Mobil Oil Corp. v. Rossi, 138 Cal. App. 3d 256, 266 (1982). 

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6 If and when the district court is able to consider

Defendant’s version of the contract (e.g., in a subsequent motion

for summary judgment), this analysis might turn out differently.

13

The Policy contract submitted by Plaintiff is not integrated

because it lacks an integration clause and lacks the requisite

completeness of an integrated contract.6 In the Policy contract

submitted by Plaintiff, there is no explicit or implicit clause

that integrates the contract. Furthermore, the Policy contract

does not explain the payment of premiums, an essential part of an

insurance contract. Rather, the “Payment of Premiums” section of

the Policy refers the reader to the Policy Specifications section

to explain the “[a]nnual premiums and the period for which they

are payable.” (Id. at Ex. A, 21). However, neither the Policy

Specifications section, nor any other portion of the Policy,

gives any specifics about the payment of premiums. From this, it

is reasonable for Plaintiff to assume that this contract is not

the complete agreement, and that there are other documents to

explain the payment schedule and the dollar amount due. Because

the Policy contract is silent on these important issues, it is

impossible for extrinsic documents to contradict it on these

issues. 

Furthermore, Defendant has failed to show any words or

phrases in Plaintiff’s version of the contract that integrates

the contract, bars the consideration of extrinsic evidence, or

makes it complete. For purposes of this motion to dismiss, the

contract is not considered integrated, and parol evidence may be

admissible to establish the complete agreement between the

parties. McLain v. Great Am. Ins. Companies, 208 Cal. App. 3d

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7 Plaintiff has attached three illustrations, or “Ledger

Statements,” to his Complaint. Two were allegedly provided to

him in the sales process prior to his purchase of the Policy, and

are dated August 31, 1987 and November 11, 1987. A third one was

subsequently provided to him five years later, dated 1992.

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1476 (1989). Although Plaintiff’s parol evidence--namely the

Ledger Statement--is admissible, Plaintiff must still show that

it evidences a part of the contract between himself and Defendant

in order to state a claim for breach of contract. 

ii. Did the Illustrations Form Part of the

Contract?

Having determined that the contract is not integrated, the

inquiry turns to whether the Ledger Statement formed part of the

agreement between the parties. Plaintiff alleges that it is the

breach of the Ledger Statement, not the breach of the Policy

contract, that is the basis for his breach of contract claim. 

(Doc. 7, Plaintiff’s Opp. at 7:22-26).7 Plaintiff claims that

the Ledger Statement must be considered as part of the written

life insurance agreement because it “relat[es] to the premiums

due and benefits under the subject [P]olicy.” (Doc. 7,

Plaintiff’s Opp. at 7:12-21). The general rule is:

Where two or more written instruments are executed

contemporaneously, with reference to each other, for the

purpose of attaining a preconceived object, they must all

be construed together, and effect given if possible to

the purpose intended to be accomplished.

...

The primary object of all interpretation is to ascertain

and carry out the intention of the parties.

Harm v. Frasher, 181 Cal. App. 2d 405, 412 (1960). “Several

contracts relating to the same matters, between the same parties,

and made as parts of substantially one transaction, are to be

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taken together.” Cal. Civ. Code § 1642. “The general principle

of joint consideration of several instruments as one agreement is

applicable whether they expressly refer to each other or it

appears from extrinsic evidence that they were executed as a part

of one transaction.” Frasher, 181 Cal. App. 2d at 413. 

Plaintiff claims that Frasher supports his claim that the

Ledger Statement should be jointly considered as part of the

written contract. Id. at 412-416. However, Frasher is

distinguishable in significant ways. First, the three contracts

that formed the agreement in Frasher were mutually integrated and

interdependent because the execution of one of the documents

depended on the execution of the other two. Id. at 412. Here,

the Policy contract and the Ledger Statement are not mutually

integrated nor interdependent because the execution of the Policy

contract does not depend on the execution of the Ledger

Statement. Second, the three Frasher agreements each expressly

referred to each other. Id. at 415. Here, there is no mention

of the Ledger Statement in the Policy contract, and vice versa. 

Also, the Ledger Statement is not signed by either Plaintiff or

Defendant. Although it is not required that both parties sign an

agreement to put it into effect, the signature of at least one

party is evidence of contract formation. See id. at 414.

Although Plaintiff’s extrinsic evidence is properly

considered, Plaintiff has not sufficiently pleaded that a

contract was formed between himself and Defendant for an express

agreement that he would not have to pay out-of-pocket premiums

after twenty years. He has failed to sufficiently plead that a

contract including his allegations was formed, and that Defendant

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breached that contract. He fails to state a claim for breach of

contract. Defendant’s motion to dismiss Plaintiff’s claim for

breach of contract is GRANTED with LEAVE TO AMEND.

 2. Fraud.

Defendant moves to dismiss Plaintiff’s claim for fraud for

failure to state a claim. The five elements a plaintiff must

allege to state a claim for tortious fraud are: (1)

misrepresentation of a material fact (false representation,

concealment, or non-disclosure); (2) knowledge of falsity; (3)

intent to defraud, i.e. to induce reliance; (4) justifiable

reliance; and (5) resulting damage. Small v. Fritz Cos., 30 Cal.

4th 167, 173 (2003) (internal quotations and citation omitted). 

Rule 9(b) of the Federal Rules of Civil Procedure provides that

“in all averments of fraud..., the circumstances constituting

fraud...shall be stated with particularity.” See also Berry v.

Valence Tech., Inc., 175 F.3d 699, 706 (9th Cir. 1999). This

means that general, conclusory pleading of fraud is insufficient,

and that every element of the cause of action must be alleged in

full, factually and specifically. Schauer v. Mandarin Gems of

Cal., Inc., 125 Cal. App. 4th 949, 961 (2005). The policy of

liberal construction of pleading will not usually be invoked to

sustain a pleading that is defective in any material respect. 

Id.

MassMutual argues that Plaintiff fails to state a claim for

fraud because he fails to allege facts that support the first and

fourth elements, misrepresentation and justifiable reliance. 

(Doc. 5, Defendant’s Motion at 8:14-16). However, the second,

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third, and fifth elements, knowledge of the falsity, intent to

defraud, and resulting damages, respectively, will also be

discussed below. It is necessary for the plaintiff to allege

facts which show the existence of each of the five elements in

order to state a claim for fraud. Johnson v. State Bar, 268 Cal.

App. 2d 437, 444 (1968).

A. Misrepresentation

Plaintiff’s complaint alleges in general terms that

Defendant engaged in fraudulent misrepresentation of material

facts. (Doc. 1, Notice of Removal at Ex. A, 11, ¶ FR-4; id. at

Ex. A, 11, ¶ FR-3). Fraudulent misrepresentations can be in the

form of false representation, concealment, or non-disclosure. 

Small v. Fritz Cos., 30 Cal. 4th 167, 173 (2003). Although not

specifically pleaded in the Complaint, Plaintiff alleges in his

Opposition that Defendant made false representations of material

facts in the Ledger Statement, and concealed the factual basis of

the projections in the Ledger Statement from Plaintiff. 

i. False Representations

Plaintiff claims that Defendant made false “representations

of material fact.” (Doc. 1, Notice of Removal at Ex. A, ¶ FR-2). 

Plaintiff claims that the representations made in the Ledger

Statement “clearly indicate[]...that the subject policy would

become self-sustaining in 20 years, and that [Deluca’s] annual

out of pocket premium payments prior to then would be no more

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8 Although the Ledger Statement is not considered as part

of the contract, as stated above, it may be used by Plaintiff in

pleading fraud because it is admissible under the parol evidence

rule. The parol evidence rule generally prohibits introduction

of extrinsic evidence, whether oral or written, to vary the terms

of an integrated written agreement. Pacific State Bank v.

Greene, 110 Cal. App. 4th 375, 383-384 (2003) (emphasis added);

see also Cal. Civ. Proc. Code § 1856. As stated above, because

this contract is not integrated, extrinsic evidence is

admissible.

18

than $565.” (Doc. 7, Plaintiff’s Opp. at 8:24-28).8 Plaintiff

claims that “these representations were in fact false[,]” and

that Defendant made them “without any intention of performing”

them. (Doc. 1, Notice of Removal at Ex. A, ¶ FR-2 & ¶ FR-4). 

Apart from these broad assertions, Plaintiff’s Complaint fails to

point to anything specific in the Policy contract or in the

Ledger Statement that “clearly indicates” the existence of the

arrangement he alleges. 

Plaintiff’s claim begins to take more substantive form in

his Opposition, but Rule 9 requires more. Plaintiff’s Complaint

must give Defendant sufficient notice. Because Plaintiff’s

Complaint fails to plead this element with particularity, he does

not sufficiently plead false representation. 

ii. Concealment

As an alternative form of misrepresentation, Plaintiff also

alleges that Defendant concealed material facts by misleading him

and preventing him from discovering material facts. (Doc. 1,

Notice of Removal at Ex. A, 11, ¶ FR-3). Plaintiff argues that

MassMutual “concealed the fact that the historical facts

underlying the dividend growth projections in the Ledger

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Statement’s calculations were non-existent.” (Doc. 7,

Plaintiff’s Opp. at 11:19-22). Defendant argues that it made no

concealments, and that the dividend projections in the Ledger

Statement are based on the “current dividend scale” of 1987, not

on historical performances as alleged by Plaintiff. (Doc. 8,

Defendant’s Reply at 9:21-27; Doc. 1, Notice of Removal at Ex. A,

15). The Ledger Statement states that the projections are “based

on our current dividend scale and policy loan interest rate....” 

(Doc. 1, Notice of Removal at Ex. A, 15). 

Plaintiff fails to plead that MassMutual concealed evidence

of the current dividend scale, that it concealed the historical

dividend performance, or alleged that the listings in the Ledger

Statement are inaccurate or different in any way from the 1987

rates. As such, Plaintiff’s Complaint fails to sufficiently

plead concealment of material facts. 

B. Knowledge of the Falsity

Plaintiff alleges that Defendant knew that the

representations he was making were false or that Defendant had no

reasonable ground for believing the representations were true. 

Defendant does not contest this element. Although conclusory,

the element of knowledge is sufficiently pleaded.

C. Intent to Defraud

Plaintiff alleges that Defendant made the misrepresentations

with the intent to defraud him and to induce him to purchase the

life insurance policy. Defendant does not contest this element. 

Although conclusory, the element of intent is sufficiently

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pleaded. 

D. Justifiable Reliance

Plaintiff alleges that he “acted in justifiable reliance

upon the truth of the representations” in the Ledger Statement. 

(Doc. 1, Notice of Removal at Ex. A, 11, ¶ FR-2). Defendant

responds that because the Ledger Statement contains sufficient

“cautionary language concerning its projections” to notify

Plaintiff that there may be a discrepancy between the Ledger

Statement and the Policy contract, it is not reasonable for

Plaintiff to have relied on the projected figures as being

guaranteed in the future. (Doc. 8, Defendant’s Reply at 10:12-

15). 

In order to plead justifiable reliance, Plaintiff must

allege sufficient facts to establish that his actual reliance on

Defendant’s misrepresentations was reasonable. In State Farm

Fire & Casualty Co. v. Keenan, the court held Appellant’s fraud

claim defective because “they did not allege that they believed

the representation to be true or had no knowledge of its falsity

or had no reason to question its truthfulness.” 171 Cal. App. 3d

1, 29 (1985). Here, Plaintiff alleges that at the time he acted,

he did not know the representations were false and believed they

were true. (Doc. 1, Notice of Removal at Ex. A, 11, ¶ FR-2). 

Plaintiff had no reason to doubt Defendant’s Ledger Statement,

and therefore, reasonably relied on the premium payment

misrepresentations made by the insurance company. Plaintiff

sufficiently pleads justifiable reliance.

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E. Resulting Damage

Plaintiff claims that the Policy is “not paid up[,]” and

that he is “now uninsurable and cannot buy an insurance policy

with any other company.” (Doc. 1, Notice of Removal at Ex. A,

12, FR-6). Furthermore, Plaintiff claims that it was the

aforementioned false representations that forced him to pay more

than $5,000.00 to date in premiums over and above the amount

represented to him in the Ledger Statement. (Doc. 7, Plaintiff’s

Opp. at 8:28-9:2). Plaintiff sufficiently pleads damages.

F. Conclusion Regarding Fraud Claim

Plaintiff does not sufficiently plead the first element of

fraud, misrepresentation of a material fact. The claim must be

dismissed. He will be granted an opportunity to amend his

Complaint.

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VII. CONCLUSION

For the reasons set forth above:

1. Plaintiff’s request to remand this action to Fresno

County Superior Court is DENIED. 

2. Defendant’s motion to dismiss Plaintiff’s claim for

Breach of Contract is GRANTED with LEAVE TO AMEND;

Plaintiff shall have thirty (30) days upon service of

this order to file an amended complaint; Defendant

shall have twenty (20) days following service of the

amended complaint to respond;

3. Defendant’s motion to dismiss Plaintiff’s claim for

fraud is GRANTED with LEAVE TO AMEND; Plaintiff shall

have thirty (30) days upon service of this order to

file an amended complaint; Defendant shall have twenty

(20) days following service of the amended complaint to

respond.

SO ORDERED. 

/s/ OLIVER W. WANGER 

______________________________

 Oliver W. Wanger

UNITED STATES DISTRICT JUDGE

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