Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_17-cv-00328/USCOURTS-casd-3_17-cv-00328-1/pdf.json

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

---

1

3:17-CV-328-CAB-NLS

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

DOLORES EARLYWINE,

Plaintiff,

v.

USAA LIFE INSURANCE COMPANY,

Defendant.

Case No.: 3:17-CV-328-CAB-NLS

ORDER DENYING MOTION FOR 

RELIEF FROM ORDER AND TO 

AMEND COMPLAINT

[Doc. No. 21]

On January 18, 2017, Plaintiff filed this lawsuit in San Diego County Superior Court 

asserting six claims: (1) breach of contract; (2) breach of the covenant of good faith and 

fair dealing; (3) negligent misrepresentation; (4) fraud; (5) rescission; and (6) unfair 

business practices under California Business and Professions Code section 17200. [Doc. 

No. 1 at 8-16.] Defendant USAA Life Insurance Company (“USAA”) timely removed the 

complaint to this court and filed a motion to dismiss the negligent misrepresentation and 

fraud claims. In response to the motion, Plaintiff filed a first amended complaint (“FAC”), 

which asserted the same six claims. [Doc. No. 7.] USAA again moved to dismiss the 

negligent misrepresentation and fraud claims, and the Court granted the motion, dismissing 

the claims with prejudice. [Doc. No. 12.] Plaintiff now moves from relief pursuant to Rule 

60(b)(1) from the order dismissing her fraud and negligent misrepresentation claims with 

Case 3:17-cv-00328-CAB-NLS Document 30 Filed 10/11/17 PageID.<pageID> Page 1 of 5
2

3:17-CV-328-CAB-NLS

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

prejudice, and for leave to file a second amended complaint with additional allegations 

related to those claims. The motion has been fully briefed, and the Court deems it suitable 

for submission without oral argument. Because Rule 60(b)(1) is not intended to remedy 

the sorts of “mistakes” by Plaintiff’s counsel from which Plaintiff seeks relief, Plaintiff’s 

motion is denied.

I. Background

In its order dismissing the negligent misrepresentation and fraud claims from the 

FAC, the Court summarized Plaintiff’s claims as follows:

Defendant USAA Life Insurance Company (“USAA”) issued a universal life 

insurance policy (“ULP”) effective August 17, 1990 to Plaintiff’s nowdeceased husband, William J. Earlywine. Plaintiff Dolores Earlywine was the 

designated beneficiary of the policy. In January 2016, USAA cancelled the 

policy after the Earlywine’s had been unable to continue paying the 

premiums. [Doc. No. 7 at ¶ 22.] William died on April 23, 2016. [Id.]

According to the FAC, “[a]t the time of sale, the ULP was represented to 

Plaintiff and her husband as having even premiums through age 95. USAA 

advised that the premiums would not go up through age 95. Plaintiff and her 

husband relied upon that assurance.” [Id. at ¶ 10.] The FAC alleged that these 

statements were false and that “the policy premiums skyrocketed” to the point 

that the Earlywines were unable to pay them. [Id. at ¶ 22.] In addition, 

“USAA provided a soft disclaimer about the potential for the policy to not 

perform. However, the likelihood of performance failure was not disclosed,” 

and “[a]s time went on, it became certain that the ULP would fail to perform 

[Id. at ¶ 15.] Before USAA cancelled the ULP, “[e]ven though the policy 

became a sinkhole with no possibility of performing up to the levels at which 

it was marketed, USAA kept accepting premiums [sic] payments and did not 

advise their insured that the policy was failing.” [Id. at ¶ 16.]

The FAC also alleges that “[i]n or around early 2001 the Earlywines contacted 

USAA to ask about the feature which allowed them to miss some payments. 

USAA’s representative responded that it was ‘no problem.’” [Id. at ¶ 17.]

This statement was allegedly false because “[t]he policy was already going to 

require significantly larger extra premium payments to keep it in force through 

the actuarially expected lifespan of Mr. Earlywine.” [Id.] Further, according 

to the FAC, this statement was also false because it contradicted a “Cost of 

Insurance” clause in the ULP itself. [Id. at ¶ 18.]

[Doc. No. 12 at 1-2.] The Court ultimately granted USAA’s motion to dismiss because 

Case 3:17-cv-00328-CAB-NLS Document 30 Filed 10/11/17 PageID.<pageID> Page 2 of 5
3

3:17-CV-328-CAB-NLS

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

these allegations from FAC lacked the specificity required for fraud and negligent 

misrepresentation claims. 

Further, the Court denied leave to amend because in the FAC and in her opposition 

to the motion to dismiss, Plaintiff stated that she did not have any additional specifics about 

the alleged false statements. Specifically, the FAC stated that “the identity of the 

individual(s) who make [sic] the representations about the product at the time of sale are 

not known to Plaintiff” and that “USAA is expected to have records of the sales literature 

used at the time of sale which is not in Plaintiff’s possession.” [Doc. No. 7 at ¶ 14.] 

Plaintiff’s opposition to the motion to dismiss similarly stated that “[t]he missing 

information” about USAA’s interactions with the Earlywines will be found in USAA’s 

records.” [Doc. No. 10 at 3.] It also stated that “greater detail about the full content of the 

[“no problem”] discussion should be in USAA’s records. That information is unknown to 

Plaintiff . . . .” [Id. at 4.] Based on these arguments and allegations, the Court concluded 

that “[b]ecause, by her own admission, Plaintiff lacks additional knowledge of any of the 

specific details that are missing from the FAC and are required before her fraud and 

negligent misrepresentation claims can proceed, allowing Plaintiff to amend her complaint 

again would be futile.” [Doc. No. 12 at 7.]

II. Discussion

Plaintiff moves for relief from the Court’s order denying leave to amend pursuant to 

Federal Rule of Civil Procedure 60(b)(1), which states that “[o]n motion and just terms, 

the court may relieve a party or its legal representative from a final judgment, order, or 

proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable 

neglect.” Plaintiff moves for relief on account of a purported mistake by her counsel. 

Specifically, Plaintiff’s counsel states that due to illness, Plaintiff was unable to assist him 

with the drafting of the FAC and opposition brief, and that the allegations and arguments

therein concerning Plaintiff not having the information needed to plead her fraud and 

negligent misrepresentation claims with specificity were erroneous.

Counsel’s admission of his purported “mistakes” raise a host of issues with respect 

Case 3:17-cv-00328-CAB-NLS Document 30 Filed 10/11/17 PageID.<pageID> Page 3 of 5
4

3:17-CV-328-CAB-NLS

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

to the propriety of the filing of the FAC and his continued prosecution of Plaintiff’s claims

while Plaintiff was incapacitated without advising the Court, but they do not entitle 

Plaintiff to relief from the Court’s order dismissing the fraud and negligent 

misrepresentation claims without leave to amend. The Ninth Circuit has held that “[f]or 

purposes of subsection (b)(1), parties should be bound by and accountable for the deliberate 

actions of themselves and their chosen counsel. This includes not only an innocent, albeit 

careless or negligent, attorney mistake, but also intentional attorney misconduct. Such 

mistakes are more appropriately addressed through malpractice claims.” Latshaw v. 

Trainer Wortham & Co., 452 F.3d 1097, 1101 (9th Cir. 2006).

1

 

Here, the FAC explicitly alleged that Plaintiff did not have specific information 

related to the alleged fraud or negligent misrepresentations. Now, Plaintiff wants to file an 

amended complaint that would directly contradict this unequivocal assertion in that it 

would include additional information about the alleged misrepresentations that Plaintiff 

stated was unknown to her. Plaintiff, however, is bound by the allegations in the FAC. Cf. 

Airs Aromatics, LLC v. Opinion Victoria's Secret Stores Brand Mgmt., Inc., 744 F.3d 595, 

600 (9th Cir. 2014) (“A party cannot amend pleadings to ‘directly contradic[t] an earlier 

assertion made in the same proceeding.’”) (quoting Russell v. Rolfs, 893 F.2d 1033, 1037 

 

1

In its opposition, USAA cites to Washington v. Ryan, 833 F.3d 1087, 1098 (9th Cir. 2016), for the 

proposition that the four part test set forth in Pioneer Investment Services Co. v. Brunswick Associates 

Ltd. Partnership, 507 U.S. 380 (1993), applies to Plaintiff’s motion for relief from judgment. That four 

part test considers: “(1) the danger of prejudice to the non-moving party; (2) the length of the filing delay 

and its potential impact on the proceedings; (3) the reason for the filing delay; and (4) whether the moving 

party acted in good faith.” Washington, 833 F.3d at 1098 (citing Pioneer, 507 U.S. at 395). Although the 

Ninth Circuit stated that “[a] district court must fully consider these factors in every case,” a careful 

reading of both Washington and Pioneer, and even the plain language of the test itself, indicates that this 

test applies in the context of a claim of excusable neglect or mistake arising out of a failure to satisfy a 

filing deadline. See Pioneer, 507 U.S. at 384-85 (concerning failure to timely file proofs of claim in 

bankruptcy proceeding); Washington, 833 F.3d at 1089 (concerning untimely appeal of denial of petition 

for writ of habeas corpus). Indeed, parts two and three to the test specifically require consideration of “the 

filing delay.” Because no “filing delay” is at issue here, this test does not apply. Cf. Allmerica Fin. Life 

Ins. & Annuity Co. v. Llewellyn, 139 F.3d 664, 666-67 (9th Cir. 1997) (making no mention of the fourpart test in Pioneer while affirming denial of motion for relief from judgment because “counsel’s failure 

to plead an affirmative defense of waiver in the First Amended Answer does not provide a basis for 

equitable relief under Rule 60(b)(1)”).

Case 3:17-cv-00328-CAB-NLS Document 30 Filed 10/11/17 PageID.<pageID> Page 4 of 5
5

3:17-CV-328-CAB-NLS

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

(9th Cir. 1990)). That her attorney contends he included these allegations in the FAC and 

other filings by mistake, even if it was done in good faith, is not a basis to set aside the 

Court’s order dismissing her fraud and negligent misrepresentation claims with prejudice. 

See Casey v. Albertson’s Inc., 362 F.3d 1254, 1260 (9th Cir. 2004) (“As a general rule, 

parties are bound by the actions of their lawyers, and alleged attorney malpractice does not 

usually provide a basis to set aside a judgment pursuant to Rule 60(b)(1).”); see also 

Allmerica Fin. Life Ins. & Annuity Co. v. Llewellyn, 139 F.3d 664, 666 (9th Cir. 1997) 

(“[A]ttorney error is insufficient grounds for relief under both Rule 60(b)(1) and (6)”); 

Kagan v. Caterpillar Tractor Co., 795 F.2d 601, 607 (7th Cir. 1986) (“Neither ignorance 

nor carelessness on the part of the litigant or his attorney provide grounds for relief under 

Rule 60(b)(1).”).

III. Disposition

In light of the foregoing, it is hereby ORDERED that Plaintiff’s motion for relief 

from the Court’s order dismissing her fraud and negligent misrepresentation claims with 

prejudice is DENIED.

It is SO ORDERED.

Dated: October 11, 2017

Case 3:17-cv-00328-CAB-NLS Document 30 Filed 10/11/17 PageID.<pageID> Page 5 of 5