Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_07-cv-00129/USCOURTS-caed-2_07-cv-00129-0/pdf.json

Parties Involved:
AXA Equitable Life Insurance Company
Defendant
Equitable Life Assurance Society of the United States
Defendant
Larry Finnell
Plaintiff
The Equitable
Defendant

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IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF CALIFORNIA 

LARRY FINNELL, 

 Plaintiff, 

 v. 

THE EQUITABLE LIFE ASSURANCE 

SOCIETY OF THE UNITED STATES 

also known as THE EQUITABLE and 

renamed AXA EQUITABLE LIFE 

INSURANCE COMPANY, DOES 1 

through 10, inclusive, 

 Defendants. 

______________________________/

 

No. Civ. S-07-0129 RRB GGH

Memorandum of Opinion

and Order

Larry Finnell (“Finnell”) filed a state action against his 

disability carrier AXA Equitable Life Insurance Company (“AXA 

Equitable”) alleging breach of contract and breach of the 

implied covenant of good faith and fair dealing. AXA Equitable 

removed the action on the basis of diversity. AXA Equitable now 

moves for summary judgment/adjudication on the ground that 

Finnell’s claims are time-barred under the applicable 

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limitations periods. For the reasons stated below, the court 

GRANTS the motion.1

I. BACKGROUND 

 On October 21, 1982, AXA Equitable issued disability income 

insurance policy no. 82717035 (“Policy”) to Finnell. Pl.’s 

Separate Statement of Undisputed Facts (“UMF”) ¶ 1. The terms 

of the Policy provide that AXA Equitable will pay monthly 

benefits to age sixty-five for disabilities caused by “sickness” 

and lifetime benefits for disabilities caused by an “injury.” 

Id. ¶ 2. “Sickness” is defined under the Policy as “sickness or 

disease of the Insured which first manifests itself while this 

policy is in force.” Id. ¶ 6.2

 “Injury” is defined under the 

 

1

 Inasmuch as the Court concludes the parties have submitted 

memoranda thoroughly discussing the law and evidence in support 

of their positions, it further concludes oral argument is 

neither necessary nor warranted with regard to the instant 

matter. See Mahon v. Credit Bureau of Placer County, Inc., 171 

F.3d 1197, 1200 (9th Cir. 1999)(explaining that if the parties 

provided the district court with complete memoranda of the law 

and evidence in support of their positions, ordinarily oral 

argument would not be required). 

2

 The Policy defines “Sickness Total Disability” as “total 

disability caused or contributed to by sickness or by any of the 

following: (a) hernia of any kind; (b) bodily or mental 

infirmity; (c) bacterial infection other than stemming from 

injury on the exterior of the body; (d) complications of 

pregnancy; (e) medical or surgical treatment of any of (a) 

through (d) above or any sickness or disease.” Pl.’s UMF ¶ 5. 

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Policy as “accidental bodily injury which occurs while this 

policy is in force.” Id. ¶ 4.3 

On September 9, 1999, Finnell submitted a claim for 

benefits under the Policy after allegedly suffering an injury 

while performing the duties of his occupation as a chiropractor 

as the result of an “accident.” Pl.’s UMF ¶¶ 7-8. Finnell 

claimed to be disabled from neck and back injuries he sustained 

after adjusting a patient weighing over three hundred and fifty 

pounds and lifting a piece of plywood. Id. ¶¶ 8-9. On 

October 15, 1999, Finnell was advised by an AXA Equitable claim 

representative that his medical records supported disability due 

to “sickness,” not an “accident.” Id. ¶¶ 10-11. On October 21, 

1999, and December 17, 1999, AXA Equitable sent Finnell written 

correspondence advising him that his eligibility for “Total 

Disability” benefits was established under the “sickness” 

provision of his Policy, not the “injury” provision, based on a 

determination by AXA Equitable’s orthopedic consultant that his 

condition appeared to be caused by an exacerbation of 

degenerative disc disease of the thoracolumbar spine. Id. ¶¶ 

12, 14. The October 17, 1999, correspondence specifically 

advised Finnell that the maximum benefit period for “sickness” 

 

3

 The Policy defines “Accident Total Disability” as “total 

disability resulting from injury.” Pl.’s UMF ¶ 3. 

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related “Total Disability” benefits under his Policy was the 

first policy anniversary following his sixty-fifth birthday. 

Id. ¶ 12. 

On January 13, 2004, AXA Equitable sent Finnell written 

correspondence advising him that it had reviewed his claim file 

and affirmed its earlier determination that his benefits should 

be paid under the “sickness” provision of his Policy. Id. ¶ 15. 

In this letter, AXA Equitable explained to Finnell that its 

determination was based on a review of his medical history, 

including the independent medical exam performed on July 29, 

2003, and the functional capacity exam performed on September 

25, 2003. Id. AXA Equitable expressly advised Finnell that it 

would continue to administer his claim under the “sickness” 

provision of his Policy because his medical records indicated 

that his 1999 diagnosis of back and neck strain was caused by an 

exacerbation of pre-existing degenerative disc disease. Id. 

Finally, on July 7, 2006, AXA Equitable sent Finnell written 

correspondence advising him that it was making its final payment 

under the “sickness” provision of his Policy because the policy 

period July 3, 2006 to October 20, 2006 was the first policy 

anniversary following his sixty-fifth birthday. Id. ¶ 16. 

 On November 22, 2006, Finnell filed the instant action 

alleging breach of contract and breach of the implied covenant 

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of good faith and fair dealing. Compl. at 1-6. AXA Equitable 

now moves for summary judgment/adjudication on the ground that 

Finnell’s claims are time-barred under the applicable 

limitations periods. 

II. DISCUSSION 

A. Legal Standard 

 Rule 56(c) provides that summary judgment “shall be entered 

forthwith if the pleadings, depositions, answers to 

interrogatories, and admissions on file, together with the 

affidavits, if any, show that there is no genuine issue as to 

any material fact and that the moving party is entitled to a 

judgment as a matter of law.” Fed. R. Civ. P. 56(c). An issue 

of fact is “genuine” if it constitutes evidence with which “a 

reasonable jury could return a verdict for the nonmoving party.” 

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). That 

genuine issue of fact is “material” if it “might effect the 

outcome of the suit under the governing law.” Id.

 The moving party bears the initial burden of demonstrating 

the absence of a genuine issue of material fact. See Celotex 

Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party 

meets its burden, the burden then shifts to the non-moving party 

to go beyond the pleadings and by his or her own affidavits, or 

by the depositions, answers to interrogatories, and admissions 

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on file, designate specific facts showing that there is a 

genuine issue for trial. See id. at 324 (quotation marks 

omitted) (citing Fed.R.Civ.P. 56(e)). This burden requires more 

than a simple showing that there is some “metaphysical doubt as 

to the material facts.” Matsushita Elec. Indus. Co., Ltd. v. 

Zenith Radio Corp., 475 U.S. 574, 586 (1986). The mere 

existence of a scintilla of evidence is likewise insufficient to 

create a genuine factual dispute. Anderson, 477 U.S. at 252. 

“Where the record taken as a whole could not lead a rational 

trier of fact to find for the non-moving party, there is no 

‘genuine issue for trial.’” Matsushita, 475 U.S. at 587. 

 On a motion for summary judgment, all reasonable doubt as 

to the existence of a genuine issue of fact should be resolved 

against the moving party. Hector v. Wiens, 533 F.2d 429, 432 

(9th Cir. 1976). The inferences drawn from the underlying facts 

must be viewed in the light most favorable to the party opposing 

the motion. Valadingham v. Bojorquez, 866 F.2d 1135, 1137 (9th 

Cir. 1989). Where different ultimate inferences may be drawn, 

summary judgment is inappropriate. Sankovich v. Insurance Co. 

of North America, 638 F.2d 136, 140 (9th Cir. 1981). 

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B. Statutory Limitations Periods 

AXA Equitable argues that the instant action is time-barred 

because Finnell’s claims were not filed within the applicable 

limitations periods. 

Under California law, a breach of contract claim is subject 

to a four-year limitations period. ABF Capital Corp. v. Osley, 

414 F.3d 1061, 1066 (9th Cir. 2005); Love v. Fire Ins. Exchange, 

221 Cal. App. 3d 1136, 1143 n.4 (1990); Cal. Civ. Proc. Code 

§ 337(1). In the context of insurance contracts, when tortious 

conduct is alleged and tort remedies are sought a breach of the 

implied covenant of good faith and fair dealing claim is subject 

to a two-year limitations period. Heighley v. J.C. Penney Life 

Ins. Co., 257 F. Supp. 2d 1241, 1257 (C.D. Cal. 2003) 

(concluding that a tort action against an insurer for bad faith 

is subject to the two-year limitations period of § 339(1) when a 

plaintiff alleges tortious conduct and seeks tort remedies);

Smyth v. USAA Prop. & Cas. Ins. Co., 5 Cal. App. 4th 1470, 1476-

77 (1992) (where a claim for breach of the implied covenant of 

good faith and fair dealing sounds in tort, it is subject to the 

two-year statute of limitations set forth in § 339(1)).4

 

4

 Because Finnell’s Complaint alleges tortious conduct and 

seeks tort remedies (Compl. at 4-6), his claim for breach of the 

implied covenant of good faith and fair dealing is governed by 

§ 339’s two-year limitations period. 

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The statute of limitations commences when a party knows or 

should know the facts essential to his or her claim. See Love,

221 Cal. App. 3d at 1143 (holding that insureds’ causes of 

action accrued when they “were aware of the factual predicate to 

their suit and were aware their claim had been unconditionally 

denied”) (citation omitted); State Farm Fire & Casualty Co. v. 

Superior Court, 210 Cal. App. 3d 604, 609 (1989) (an insured’s 

cause of action accrues at the latest upon the date of 

unconditional denial of his or her claim).5

In the instant action, it is undisputed that AXA Equitable 

sent Finnell a letter on October 21, 1999, explicitly advising 

him that his eligibility for “Total Disability” benefits had 

been established under the “sickness” provision of his Policy 

and that his maximum benefit period was the first policy 

anniversary following his sixty-fifth birthday. Pl’s UMF ¶ 12; 

 

5

 “In order to establish a breach of the implied covenant of 

good faith and fair dealing under California law, a plaintiff 

must show: (1) benefits due under the policy were withheld; and 

(2) the reason for withholding benefits was unreasonable or 

without proper cause. The key to a bad faith claim is whether 

or not the insurer’s denial of coverage was reasonable.” 

Guebara v. Allstate Ins. Co., 237 F.3d 987, 992 (9th Cir. 2001) 

(citation omitted); see Chateau Chamberay Homeowners Ass’n v. 

Associated Intern. Ins. Co., 90 Cal. App. 4th 335, 346-47 (2001) 

(an insurer acts tortiously (i.e., in bad faith) when it 

unreasonably or without proper cause delays or denies the 

payment of policy benefits). Thus, Finnell’s bad faith cause of 

action accrued when AXA Equitable unreasonably or without proper 

cause denied him payment of benefits. 

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Exh. E, Decl. of Barbara Nason (“Nason”). It is also undisputed 

that this letter specifically advised Finnell that AXA Equitable 

was aware of his belief that his condition was caused by an 

“injury” but that it had nonetheless established his eligibility 

for disability benefits under the “sickness” provision of his 

Policy based on the opinion of its orthopedic consultant. Id. 

Additionally, it is undisputed that AXA Equitable sent Finnell a 

letter on December 17, 1999, advising him that it was handling 

his claim under the “sickness” provision of his Policy based on 

the fact that his medical records did not support accidental 

bodily injury as his condition appeared to be caused by 

degenerative disc disease of the thoracal lumbar spine that was 

exacerbated by chiropractor manipulations of several obese 

patients and the lifting of plywood. Id. ¶ 14; Exh. G, Decl. of 

Nason. Finally, it is undisputed that AXA Equitable sent 

Finnell a letter on July 7, 2006, advising him that it was 

making its final payment under the “sickness” disability 

provision of his Policy because it was the first policy 

anniversary following his sixty-fifth birthday. Id. ¶ 16; Exh. 

I, Decl. of Nason. 

 Notwithstanding the foregoing, Finnell maintains that the 

instant action is not time-barred because AXA Equitable never 

clearly or unconditionally denied his claim for benefits under 

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the “injury” provisions of his Policy until it advised him that 

it was making its final payment of Policy benefits on July 7, 

2006. In support of this argument, Finnell points to AXA 

Equitable’s continual investigation of his medical condition and 

its failure to unequivocally state that his condition was due to 

“sickness” rather than an “injury.” In particular, Finnell 

cites to letters written by AXA Equitable dated February 28, 

2000, and September 8, 2000, requesting that he undergo 

independent medical evaluations/assessments so that his claim 

for disability benefits could be further evaluated. Exhs. A, D, 

Decl. of Larry Finnell (“Finnell”). Additionally, Finnell cites 

to letters written by Disability Management Services, Inc. 

(“DMS”) on behalf of AXA Equitable dated February 20, 2001, and 

August 23, 2003,6 requesting that he complete a physical 

capabilities assessment and attend a functional capacity 

evaluation so that DMS could further evaluate his claim and gain 

a better understanding of his restrictions and limitations. 

Exh. E, G, Decl. of Finnell. Finally, Finnell cites to a letter 

written by a treating physician dated January 7, 2004, 

indicating that he was continuing to be evaluated regarding his 

back and neck injuries. Exh. I, Decl. of Finnell. In short, 

 

6

 DMS was AXA Equitable’s third party administrator of 

Finnell’s claim.

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Finnell claims that the instant action is not time-barred 

because AXA Equitable never expressly denied his claim to 

disability benefits under the “injury” provision of his Policy, 

and even if the October and December 1999 letters could be 

construed to constitute a denial of such benefits, AXA Equitable 

“equivocated” this denial by inviting him to submit further 

information regarding his medical condition. The court 

disagrees. 

 In the instant action, AXA Equitable’s October and December 

1999 letters were sufficient to constitute an unequivocal denial 

of Finnell’s claim to have his eligibility for “Total 

Disability” benefits paid out under the “injury” provision of 

his Policy. The October 21, 1999, letter specifically 

acknowledged Finnell’s belief that his benefits should be 

established under the “injury” provision of his Policy but 

nonetheless expressly stated that his benefits had been 

established under the “sickness” provision of his Policy and 

that his benefits would expire upon the first policy period 

following his sixty-fifth birthday. Additionally, the 

December 17, 1999, letter clearly stated that Finnell’s 

disability benefits would be paid under the “sickness” provision 

of his Policy, not the “injury” provision, and provided an 

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explanation as to why this determination was made.7 Accordingly, 

the court concludes that Finnell’s claims accrued no later than 

December 17, 1999. As of this date, Finnell knew or should have 

known the factual basis for his claim: he was injured while 

performing his duties as a chiropractor, that AXA Equitable had 

nonetheless determined that his disability was attributable to 

sickness, and that he would be entitled receive benefit payments 

under the “sickness” provision until the first anniversary 

 

7

 To the extent that Finnell argues that the instant action 

is not time-barred because AXA Equitable never expressly stated 

that his claim for disability benefits under the “injury” 

provision of his Policy was denied, and/or because AXA Equitable 

subsequently requested further medical information, the court 

finds these arguments unavailing. It is well-established under 

California law that an invitation to provide further information 

does not render a denial equivocal nor does the failure to use 

the words deny or denial render a denial equivocal. Migliore v. 

Mid-Century Insurance Co., 97 Cal. App. 4th 592, 605 (2002). 

“Rather, this evidence suggests that the insurer was willing to 

reconsider its denial upon receipt of further pertinent 

information. A statement of willingness to reconsider does not 

render a denial equivocal.” Id. (citing Singh v. Allstate Ins. 

Co., 63 Cal. App. 4th 135, 147-48 (1998)). Finally, to the 

extent that Finnell argues that AXA Equitable should be 

equitably estopped from asserting a statute of limitations 

defense because it never provided written notice of the 

applicable limitations periods, the court also finds this 

argument unavailing. See Spray, Gould & Bowers v. Associated 

Int’l. Ins. Co., 71 Cal. App. 4th 1260 (1999). Spray, on which 

Finnell relies, is inapposite: it involved an insurer’s duty to 

notify an insured of a contractual limitations period, not a 

default limitations period. Therefore, because Finnell failed 

to demonstrate that AXA Equitable had a duty to notify him of 

the default limitations periods, equitable estoppel is 

inapplicable. See Spray, 71 Cal. App. 4th at 1268 (“It is well 

established that mere silence will not create an estoppel, 

unless there is a duty to speak”).

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period following his sixty-fifth birthday. As such, the 

applicable limitations periods ran on Finnell’s claims in 2001 

(implied covenant) and 2003 (breach of contract), respectively. 

Therefore, the instant action, filed on November 22, 2006, is 

time-barred.

III. CONCLUSION 

 For the reasons stated above, the motion for summary 

judgment is GRANTED. 

IT IS SO ORDERED. 

 ENTERED this 16th day of November, 2007. 

s/RALPH R. BEISTLINE 

 United States District Judge 

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