Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_07-cv-00045/USCOURTS-casd-3_07-cv-00045-2/pdf.json

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

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1 07cv00045 BTM(LSP)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

FIDELITY & GUARANTY LIFE

INSURANCE CO., a Maryland insurance

company,

Plaintiff,

CASE NO. 07cv00045 BTM(LSP)

ORDER GRANTING MOTION TO

DISMISS THIRD, FOURTH, AND

FIFTH CLAIMS FOR RELIEF OF

v. THE CROSS-COMPLAINT

JAMES ALBERTSON, an individual,

Defendant.

JAMES O. ALBERTSON,

Cross-Complainant,

 v.

OLD MUTUAL FINANCIAL NETWORK

F/K/A/ FIDELITY AND GUARANTY LIFE

INSURANCE CO. AND DOES 1-10,

Cross-Defendant.

Fidelity & Guaranty Life Insurance Co. (“Fidelity”) has filed a motion to dismiss the

third, fourth, and fifth claims for relief in the Cross-Complaint filed by James O. Albertson

(“Albertson”). For the reasons discussed below, Fidelity’s motion is GRANTED.

I. BACKGROUND

This action arises out of a dispute between Albertson and Fidelity over life insurance

proceeds. Albertson was the named beneficiary on a life insurance policy between Fidelity

and Luis Plascencia (“Plascencia”), who is now deceased. According to Fidelity, Plascencia

made material misrepresentations regarding his medical history and criminal record on his

application for the policy. Fidelity contends that it would not have issued the life insurance

Case 3:07-cv-00045-MMA-WVG Document 50 Filed 11/26/07 Page 1 of 3
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policy had Plascencia been truthful on the application. In its Complaint, Fidelity seeks

declaratory relief and rescission of the insurance contract under a two-year contestability

clause. 

Albertson filed a Cross-Complaint. In the Cross-Complaint, Albertson alleges, inter

alia, that Plascencia was non-fluent in English and was functionally illiterate and, therefore,

was incapable of making any material misrepresentations. (Cross-Compl. ¶ 9.) Albertson

further alleges that F&G’s agent, not Plascenica, completed the insurance application.

Albertson asserts the following five claims for relief: (1) breach of contract; (2) breach of the

implied covenant of good faith and fair dealing; (3) waiver; (4) estoppel; and (5) reformation.

II. DISCUSSION 

Fidelity moves to dismiss Albertson’s third, fourth, and fifth claims for relief. The Court

grants Fidelity’s motion in its entirety.

Albertson’s third and fourth claims for “waiver” and “estoppel” are affirmative defenses,

not causes of action. See Fed. R. Civ. P. 8(c). See also Continental Airlines, Inc. v. Intra

Brokers, Inc., 24 F.3d 1099, 1103 (9th Cir. 1994) (“Estoppel is an affirmative defense, for

which the defendant bears the burden of proof”); Intel Corp. v. Hartford Accident & Indemnity

Co., 952 F.2d 1551, 1559 (9th Cir. 1991) (explaining that waiver is an affirmative defense).

Albertson has already asserted an affirmative defense of waiver (Third Defense). Therefore,

the cross-claim for waiver shall be dismissed. The Court shall treat the estoppel claim as an

additional affirmative defense. See Fed. R. Civ. P. 8(c). 

Albertson’s fifth claim for relief is dismissed because the facts alleged do not support

a claim for reformation. California Civil Code § 3399 provides that a contract may be revised

“[w]hen, through fraud or a mutual mistake of the parties, or a mistake of one party, which

the other at the time knew or suspected, a written contract does not truly express the

intention of the parties . . . .” The purpose of reformation is to make a contract express the

true single intention of the parties. American Home Ins. Co. v. Travelers Indemnity Co., 122

Cal. App. 3d 951, 963 (1981). “Although a court of equity may revise a written instrument

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to make it conform to the real agreement, it has no power to make a new contract for the

parties, whether the mistake be mutual or unilateral.” Id. (quoting Shupe v. Nelson, 254 Cal.

App. 2d 693, 700 (1967)). 

According to Albertson, due to Plascencia’s inability to communicate in English and

Fidelity’s failure to make further inquiries, the application did not include the information

regarding Plascencia’s medical and criminal history. Albertson asks the Court to “correctly

answer the questions in the application and adjust the policy L0168467 premium/benefit

payment ratio in accordance with equitable principles.” (Opposition at 14.) 

However, under the facts alleged by Albertson, there never was a “single intention”

or “real agreement” to insure Plascencia at a lower death benefit and/or higher premium in

light of his medical and criminal history. Whether Fidelity should have known that Plascencia

could not communicate in English and/or should have conducted a further investigation, the

fact remains that Fidelity did not know about Plascencia’s medical and criminal history. Any

misconduct on the part of Fidelity with respect to the failure to conduct further inquiries may

entitle Albertson to some form of equitable relief but does not support a claim for reformation.

The Court cannot write a new life insurance policy for the benefit of Albertson. Accordingly,

Albertson’s cross-claim for reformation is dismissed.

CONCLUSION

For the reasons discussed above, Fidelity’s motion to dismiss is GRANTED. The

third, fourth, and fifth claims for relief in the Cross-Complaint are DISMISSED for failure to

state a claim. The fourth claim for estoppel shall be redesignated as an additional affirmative

defense. 

IT IS SO ORDERED.

DATED: November 26, 2007

Honorable Barry Ted Moskowitz

United States District Judge

Case 3:07-cv-00045-MMA-WVG Document 50 Filed 11/26/07 Page 3 of 3