Filed 10/10/22 McHugh v. Protective Life Insurance CA4/1

OPINION ON REMAND FROM THE CALIFORNIA SUPREME COURT

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication

or ordered published for purposes of rule 8.1115. 

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

BLAKELY McHUGH et al.,

Plaintiffs and Appellants,

v.

PROTECTIVE LIFE INSURANCE,

Defendant and Respondent.

 D072863

 (Super. Ct. No. 37-2014-

00019212-CU-IC-CTL)

APPEAL from a judgment and an order denying motion for new trial 

and judgment notwithstanding the verdict of the Superior Court of San Diego 

County, Judith F. Hayes, Judge. Reversed and remanded.

Winters & Associates, Jack B. Winters, Jr., Georg M. Capielo and 

Sarah D. Ball; Williams Iagmin and Jon R. Williams, for Plaintiffs and 

Appellants.
2

Grignon Law Firm, Margaret M. Grignon; Maynard Cooper & Gale, 

John C. Neiman, Jr.; Noonan Lance Boyer & Banach and David J. Noonan, 

for Defendant and Respondent.

Blakely McHugh and Trysta M. Henselmeier (plaintiffs) sued 

Protective Life Insurance Company (Protective Life) for breach of contract 

and breach of the implied covenant of good faith and fair dealing. They 

alleged that Insurance Code sections 10113.71 and 10113.72,1 which came 

1 Undesignated statutory references are to the Insurance Code.

Section 10113.71 states: “(a) Each life insurance policy issued or

delivered in this state shall contain a provision for a grace period of not less

than 60 days from the premium due date. The 60-day grace period shall not

run concurrently with the period of paid coverage. The provision shall

provide that the policy shall remain in force during the grace period. [¶] 

(b) (1) A notice of pending lapse and termination of a life insurance policy

shall not be effective unless mailed by the insurer to the named policy owner,

a designee named pursuant to Section 10113.72 for an individual life

insurance policy, and a known assignee or other person having an interest in

the individual life insurance policy, at least 30 days prior to the effective date

of termination if termination is for nonpayment of premium. [¶] (2) This

subdivision shall not apply to nonrenewal. [¶ ] (3) Notice shall be given to

the policy owner and to the designee by first-class United States mail within

30 days after a premium is due and unpaid. However, notices made to

assignees pursuant to this section may be done electronically with the

consent of the assignee. [¶] (c) For purposes of this section, a life insurance

policy includes, but is not limited to, an individual life insurance policy and a

group life insurance policy, except where otherwise provided.”

Section 10113.72 states: “(a) An individual life insurance policy shall

not be issued or delivered in this state until the applicant has been given the

right to designate at least one person, in addition to the applicant, to receive

notice of lapse or termination of a policy for nonpayment of premium. The

insurer shall provide each applicant with a form to make the designation. 

That form shall provide the opportunity for the applicant to submit the name,

address, and telephone number of at least one person, in addition to the

applicant, who is to receive notice of lapse or termination of the policy for

nonpayment of premium. [¶] (b) The insurer shall notify the policy owner
3

into effect on January 1, 2013, applied to policies issued before this effective 

date, and that Protective Life failed to comply with the statutes’

requirements before it terminated the term life insurance policy of the 

decedent, William Patrick McHugh.

In the parties’ various filings, including a motion for summary 

adjudication, motions for a directed verdict and for judgment 

notwithstanding the verdict (JNOV), the parties argued whether sections 

10113.71 and 10113.72 applied to McHugh’s policy, which was issued before 

January 1, 2013. The trial court concluded the statutes applied retroactively 

to McHugh’s policy, and that “there are questions of fact in regard to whether 

or not there were material breaches of the insurance contract that require 

consideration by the jury.” Ultimately, the jury returned a special verdict 

that read:

“We answer the questions submitted to us as follows:

1. William McHugh and Protective Life Insurance Company entered 

into a contract.

2. Did William McHugh do all, or substantially all, of the significant 

things that the contract required him to do?

Yes 1 No 11 

or

Was William McHugh excused from having to do all, or substantially 

all, of the significant things that the contract required him to do?

Yes 9 No 3 

annually of the right to change the written designation or designate one or

more persons. The policy owner may change the designation more often if he

or she chooses to do so.”

Section (b) of section 10113.72 is not a focus of the parties’ arguments

or of this opinion.
4

If your answer to either option for question 2 is yes, then answer 

question 3. If you answered no to both options, stop here, answer no further 

questions, and have the presiding juror sign and date this form.

3. Did all the conditions that were required for Protective Life 

Insurance Company’s performance occur or were they excused?

Yes 12 No 0 

If your answer to question 3 is yes, then answer question 4. If you 

answered no, stop here, answer no further questions, and have the presiding 

juror sign and date this form.

4. Did Protective Life Insurance Company fail to do something that 

the contract required it to do?

Yes 3 No 9 

or

Did Protective Life Insurance Company do something that the contract 

prohibited it from doing?

Yes 11 No 1 

If your answer to either option for question 4 is yes, then answer 

question 5. If you answered no to both options, stop here, answer no further 

questions, and have the presiding juror sign and date this form.

5. Was Plaintiff harmed by that failure?

Yes 2 No 10 

If your answer to either option for question 5 is yes, then answer 

question 6. If you answered no to both options, stop here, answer no further 

questions, and have the presiding juror sign and date this form.

6. What are Plaintiff’s damages?

$ ______________
5

7. Did William McHugh unreasonably fail to mitigate any damages 

between February 9, 2013 and March 12, 2013 that Plaintiffs have been able 

to prove?

Yes No 

If your answer #7 yes, state what amount of damages could have been 

avoided.

$ ______________.”

After the court denied plaintiffs’ motion for new trial based on an 

inconsistent verdict and plaintiffs’ JNOV, plaintiffs appealed.

Plaintiffs contended the trial court erroneously (1) declined to decide as 

a matter of law whether Protective Life had complied with sections 10113.71 

and 10113.72, and instead permitted the jury to decide that issue; (2) 

declined to instruct the jury that Protective Life was required to “strictly 

comply” with sections 10113.71 and 10113.72; and (3) instructed the jury that 

McHugh had a duty to mitigate his damages. They further contended the 

instructional errors were prejudicial because they resulted in an inconsistent

verdict.

This court affirmed the judgment on the separate ground that 

Insurance Code sections 10113.71 and 10113.72 did not apply retroactively to 

McHugh’s policy, and the trial court erred as a matter of law when it ruled 

otherwise in denying Protective Life’s directed verdict motion. (McHugh v. 

Protective Life Insurance Co. (2019) 40 Cal.App.5th 1166, 1175–1176.)

Plaintiffs appealed to the California Supreme Court, which granted 

review and reversed. (McHugh v. Protective Life Ins. Co. (2021) 12 Cal.5th

213, 246 (McHugh).) It concluded that sections 10113.71 and 10113.72 

“create a single, unified pretermination notice scheme.” (McHugh, at p. 240.) 

It held: “The grace period and notice protections apply to all policies in effect 
6

as of the sections’ effective date—and in this case, nothing in the 

presumption against retroactive application of legislation as ordinarily 

applied compels another result.” (Id. at p. 246.)

The Supreme Court rejected Protective Life’s contrary arguments: 

“The grace period and notice provisions at issue here simply dictate the 

procedures for terminating policies after January 1, 2013. Applying the 

provisions to policies already in effect on that date does not appear to impose 

new or different liabilities based on earlier conduct.” (McHugh, supra, 12 

Cal.5th at p. 232.) The court remanded for proceedings consistent with its 

opinion. (Id. at p. 246.)

Plaintiffs on remand reiterate their contention that, as a matter of law, 

they are entitled to the policy benefits because the policy remained in effect 

through the date McHugh died: “[T]he record below demonstrates Protective 

Life did not comply with either the McHugh policy terms or applicable 

statutory provisions. Instead, it terminated McHugh’s policy on February 9, 

2013, well before its grace period expired, violating both the insurance 

contract and section 10113.71. It further sent McHugh two notices informing 

him that his policy would be terminated if the premium payment was not 

received by February 9, 2013[,] based upon an improperly calculated grace 

period which also did not comply with section 10113.71. Having not received 

that premium by February 9, 2013, Protective Life then unilaterally 

terminated McHugh’s policy on that date, even though the grace period 

extended by section 10113.71 was still in effect through March 10, 2013.” 

Plaintiffs add that “by further failing to provide McHugh with a proper 

pretermination notice, and then prematurely terminating McHugh’s policy 

while the extended grace period was still running, Protective Life did not 

validly terminate McHugh’s policy consistent with either that policy’s 
7

language or applicable law. As such, its attempted termination of that policy 

was a legal nullity, with the policy therefore remaining in force up through 

the time of McHugh’s subsequent death a few months later, in June of 2013.” 

We conclude the jury’s special verdict was contradictory and hopelessly 

ambiguous. Reversed and remanded for a new trial.

FACTUAL AND PROCEDURAL BACKGROUND

The California Supreme Court summarized the relevant facts as 

follows: “In March 2005, Chase Life Insurance Company, the predecessor in 

interest to [Protective Life], issued a $1 million term life insurance policy to 

William McHugh. The policy named McHugh’s daughter . . . as the 

designated beneficiary and [her] mother and McHugh’s successor in interest, 

[Henselmeier] as a contingent beneficiary. [¶] The policy was for a 60-year 

term, and it set out a schedule of annual premiums to keep the policy in force. 

For the first 10 years of the policy, the insurance policy set the annual 

premium at $310; after that, the premium steadily increased each year. The 

policy included a provision for a 31-day grace period before the policy could be 

terminated for the failure to pay the premium. [¶] McHugh paid all the 

yearly premiums through January 2012. That meant his policy was, by its 

terms, ‘in force’ until February 9, 2013, 31 days after the January 9, 2013 due 

date for that year’s payment. On December 20, 2012, Protective Life sent 

McHugh a letter reminding him of the January 9 deadline and that 

nonpayment by February 9 would cause his policy to lapse or terminate. 

McHugh failed to pay the premium by the due date. Protective Life sent him 

a second letter on January 29, which stated that it had not received his 

premium payment for the year and warned that his policy would lapse if he 

did not make the payment by February 9, the end of the grace period.

McHugh again failed to make the payment, and the policy lapsed. On 
8

February 18, Protective Life sent McHugh a letter informing him the grace 

period had expired, but that he could reinstate the policy if it received his 

payment by March 12, during his lifetime. McHugh did not pay, and 

Protective Life formally terminated his policy. [¶] At some point close to 

when Protective Life sent its last letter, McHugh suffered a serious fall that 

left him disabled, caused him continuing physical pain, and required surgery. 

McHugh passed away in June 2013. Henselmeier contacted Protective Life to 

inquire about the status of McHugh’s policy and whether a claim could be 

made. Protective Life advised that the policy had been terminated.” 

(McHugh, supra, 12 Cal.5th at pp. 220–221.)

Pretrial Motions

Plaintiffs moved for summary adjudication, arguing sections 10113.71 

and 10113.72 applied retroactively to the policy; therefore, Protective Life 

was required to provide McHugh at least a 60-day grace period and at least a 

30-day written notice of lapse and termination. Plaintiffs also stated they 

would take the position at trial “that [Protective Life’s] notice of pending 

lapse and termination was ineffective as a matter of law.” The trial court 

granted plaintiffs’ motion, concluding the statutes applied to McHugh’s 

policy. It found that McHugh failed to pay his premium, and he later 

“acknowledged the lapse and sought to remit payment and reinstate the 

policy once lapsed. His efforts to reinstate the policy were unsuccessful.” It 

ruled, “The remaining issues, such as whether [Protective Life’s] conduct 

amounted to bad faith, whether the notices sent to [McHugh] are void, and 

whether either party’s conduct constituted a breach of the insurance contract, 

shall be determined at trial.”
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Trial Testimony

Protective Life’s assistant vice-president, Patrick West, testified by 

referring to the insurance policy that the “policy date,” which is when 

coverage started, was January 9, 2005. West testified about the three notices 

Protective Life sent McHugh: “[W]hen [Chase] wrote this policy, they put a 

31-day grace period. So according to their contract, the 31 days would have 

expired on [February 9, 2013]. Protective [Life] has what we call our 

[‘]prompt reinstate period.[’] What we do is after the premium is not received 

within the first 31-day period, we send them, on their premium notice, the 

last notice of payment due asking for the premium.” West testified Protective 

Life gave McHugh until March 12, 2013, to pay the premium for the policy to 

be “automatically reinstated” under the insurer’s prompt reinstatement 

practice. West testified McHugh was not required to fill out any forms to 

obtain prompt reinstatement: “No forms, no formal reinstatement for the 

process. That’s why we say, ‘not having to provide evidence of insurability.’

We will accept the premium. Basically, we extended the grace period and 

gave [McHugh] additional time to make the payment.” 

West testified that under the prompt reinstatement practice, McHugh’s 

policy formally terminated on March 12, 2013.2 West testified that on March 

22, 2013, and May 29, 2013, after the policy had expired, McHugh telephoned 

Protective Life requesting insurance reinstatement forms, which were sent to 

him on both occasions. However, McHugh never returned a completed form.

West testified on cross-examination that sections 10113.71 and 

10113.72 were incorporated into the policy: “California has a 60-day grace 

2 According to West, Protective Life has separate criteria for formal 

reinstatement, requiring the policyholder to fill out an application that 

Protective Life reviews. If the application is approved, the policyholder 

reverts to the same class as when the policy was originally issued.
10

period. And it has been deemed that this policy has a 60-day grace period. 

So [McHugh] had a 60-day grace period because of the statute of the law [sic]. 

He had a 60-day grace period. If he had died on [February 19, 2013], . . . he

would have been insured.”

West testified that if McHugh had paid his annual premium at any 

time before March 12, 2013, the policy would have been in effect when he 

died in June 2013.

James Reinholtz, an insurance agent who had been involved in selling 

the policy to McHugh, testified that in 2013, he received an email from

Protective Life and immediately left McHugh a voicemail stating, “I just 

received a notice from [Protective Life. Y]our life insurance policy is cancelled 

and you need to give them a call and get the policy reinstated.”

Approximately one month later, in May or June 2013, McHugh telephoned 

Reinholtz, who asked if McHugh had reinstated the Protective Life policy. 

McHugh said something like, “I need to get a new policy, they won’t reinstate 

me.” Reinholtz helped McHugh fill out a different insurer’s application form

online. That new insurer sought additional information from McHugh, 

including whether he had existing insurance, and he responded in the 

negative. Reinholtz telephoned McHugh another time and told him he 

needed to answer the new insurer’s other questions, and schedule a medical

exam. McHugh never completed this application process.

Plaintiffs’ Counsel’s Closing Arguments

Plaintiffs’ counsel argued to the jury that sections 10113.71 and 

10113.72 applied to the policy, and summarized 10 ways in which Protective 

Life purportedly breached it: “Okay. So, in 2005, [Protective Life] took an 
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overpayment, they didn’t keep good records of it.[3] In December of 2013 [sic] 

they wrote [McHugh] a notice that said, wrong date for grace expiration. On 

January [1, 2013,] they gave [McHugh] no explanation regarding the new 

laws. They didn’t tell him anything. On January [28], 2013, they didn’t 

comply with the new statutes. They gave him 10-day notices, not 30 days’

notice. [¶] On February 9[, 2013], they prematurely terminated during the 

grace period. . . . On February [18, 2013], they sent a post-lapse notice that 

was inaccurate, did not comply with any statutes, misstated the grace period, 

misstated the dates of termination, misstated the date of the lapse. That’s 

wrong. [¶] And on March [12], 2013, by their own admission, they did a 

formal termination. . . . They breached. [¶] And on that date, yeah, 

coverage remained in force. Coverage remained in force.”

Plaintiffs’ counsel also argued: “[McHugh] was given a 31-day grace 

period and then 31 days where he could auto-reinstate. That’s not a 60-day 

grace period, folks. That’s not just accepting the premiums. That is a flatout misrepresentation. . . . He should have been told he had a 31-day grace 

[period] and then told he could reinstate without evidence of insurability.” 

3 Plaintiffs in their first amended complaint stated the policy’s issue date 

was March 1, 2015, but they allege the record is unclear as to whether 

McHugh was insured in the preceding two months: “[T]he records provided 

to date by [Protective Life fail] to indicate when and under what 

circumstances [McHugh] originally paid the sum of $310, other than that the 

payment was made with a credit card by or before March 1, 2005, with 

coverage commencing in March 2005. There is no evidence [the insurers]

actually agreed to or in fact insured [McHugh] during the months of January 

or February of 2005. [They] have produced no binder, no evidence of any

temporary insurance, or anything to indicate if during the months of January 

and/or February of 2005 [McHugh] was in fact insured. Thus, in the year 

2005, Plaintiffs allege, based on the evidence obtained from [Protective Life], 

that [McHugh] in fact over paid two-months of premiums which were 

unearned by [Protective Life].”
12

Counsel added, “The major breach in this case beyond terminating this policy 

during the middle of the grace period was the no payment on the policy.”

Plaintiffs’ counsel conceded in closing arguments that McHugh 

breached his contractual obligations by failing to pay his premium: “Here is 

all of Mr. McHugh’s breaches and errors. He forgot to make one single 

payment one time in [eight] years. As counsel indicated, the defendant in his

opening statement, ‘everybody has missed payments. I’ve missed lots of 

payments.’ ” However, counsel argued McHugh had overpaid his premiums 

by two months and “[h]e was ahead. His policy was in force.” Counsel also 

argued that this breach was excused: “Mr. McHugh’s biggest obligation is to 

pay . . . premiums literally and this time period never really accrues because 

he had a credit. But putting that aside, on [February 9, February 18, 

January 1 and January 9, Protective Life] materially breached the contract. 

And when someone materially breaches a contract, the other person doesn’t 

have to perform anymore. And that’s what happened in this particular case. 

Not only did [McHugh] comply with his obligations, he had paid enough 

premiums. [Protective Life] breached, excusing [McHugh’s] conduct.”

Protective Life’s Counsel’s Closing Arguments

Protective Life’s counsel countered in closing arguments that Protective 

Life sent McHugh notices to pay his 2013 premium in December 2012 and in 

January and February 2013; however, he never paid it. Agreeing sections 

10113.71 and 10113.72 applied here, Protective Life also argued it provided 

McHugh at least the required 60 days’ notice before terminating the policy: 

“[By] operation of law [McHugh] had a 60-day grace period. So when any 

[insurance] company would have said no, the law would have said he had 60 

days if he died. So no matter what you say, he had 60 days. [¶] That’s the 

one thing we agree on is that the operation of the law says that’s the way the 
13

policy reads and there is no dispute about that.” Counsel added: “The second 

thing with respect to the notices, it’s not tricky, it’s not complicated, it’s not a 

mystery. What the statute says with your notices, you have to send one at 

least 30 days before pending lapse of termination. You have to send the 

notice. So if the policy is pending lapse or termination, just send them a 

notice of that 30 days before. [¶] That’s what we did in December.”

Protective Life’s counsel disputed McHugh’s claims that his actions 

were excused, pointing out that, under that theory, McHugh would not “have 

to keep paying his premiums forever. He could have kept his policy for years, 

never had to pay anything.” 

Protective Life’s counsel added that McHugh’s failure to pay the 

premium discharged Protective Life’s duties under the policy: “There will 

also be a charge that the judge will give you, failure of consideration. If one 

party materially fails to perform his promise, the other party’s duty is 

discharged. . . . [¶] [McHugh’s] deleted performance, it was discharged by a 

material failure of consideration, even though the party owing the duty is 

unaware of the failure. We can’t have a duty under this policy when he didn’t 

pay. There is no evidence or suggestion that he did. He is the one who told 

us that he failed to pay. He told us that in May. Two weeks before he died.”

Jury Instructions

Plaintiffs offered two special instructions regarding strict compliance. 

Special instruction No. 43 stated: “As of January 1st, 2013, Protective was 

required to provide a written notice to the policyholder and to a designee 

thirty days before any lapse or termination of the policy. The notice could 

only be sent after a premium was due and unpaid and had to be sent prior to 

any lapse or termination. Until such notice was provided the policy remained 

in force. The law requires strict compliance with this provision.”
14

Special instruction No. 44 stated: “As of January 1[], 2013, Protective 

was required to advise in writing that Mr. McHugh that [sic] he was entitled 

to annually designate someone to receive notices of lapse or termination. The 

law requires strict compliance with this provision.”

The court declined to instruct the jury with those instructions: “If we’re 

going to read the statute and the sections, then I will not have to give these.” 

Accordingly, it instructed the jury with the language of sections 10113.71 and 

10113.72 verbatim. 

The court also instructed the jury that “[w]here a policy provision is 

mandated by statute, the policies that do not contain the required provision 

will be enforced as if they did.” The court instructed the jury: “The word 

‘shall’ for California insurance purposes means an action described is 

mandatory. If one party materially fails to perform his, her or its 

performance or materially delays its performance, the other party’s duty is 

discharged.”

The court instructed the jury with CACI No. 303 regarding the 

elements of a breach of contract claim: “To recover damages from Protective 

for breach of contract, Plaintiffs must prove all of the following: 1. That 

William McHugh and Protective Life entered into a contract; 2. That William 

McHugh did all the significant things that the contract required him to do, 

including paying all premiums owed under the contract; or; 3. That William 

McHugh was excused from having to pay premiums on the life insurance 

policy; 4. That Protective failed to do something that the contract required it 

to do; and 5. That Plaintiffs were harmed by Protective’s breach of contract.”

The court instructed the jury with BAJI No. 10.82 regarding how to 

evaluate breach of duty claims: “If one party materially fails to perform his, 

her or its promise, or materially delays performance, the other party’s duty is 
15

discharged. However, a slight or partial delay or failure to perform does not 

discharge the other party’s duty to perform. [¶] In determining whether a 

failure to perform is material, you should consider: 1. The extent of the 

actual performance or preparation; 2. The good faith, or lack thereof, of the 

defaulting party; 3. The hardship, if any, resulting to the defaulting party; 

and 4. The adequacy of damages to compensate the other party for the 

default. [¶] Delay in performance is material only if time of performance is 

of the essence, that is, if prompt performance is, by the express language of 

the contract or by its very nature, a vital matter. [¶] A duty to perform is 

discharged by a material failure of consideration even though the party owing 

the duty is unaware of the failure or has breached his, her or its own 

promise.”

Jury Questions During Deliberations

During deliberations, the jury asked the court certain questions that 

the court answered after consulting counsel. The jury’s note No. 7 stated: 

“We are stuck on question 2 part b. May we continue on to other questions 

due to our deadlock on question 2? Maybe moving on will help those on the 

fence decide.” The court replied: “You may consider the questions in any 

order you wish; however, in recording your answers to the questions on the 

verdict form, you must record them in the order listed.” 

The jury’s note No. 9 asked, “Do we have to reach a supermajority (9 

votes or more) on each of the parts of a question (such as #2 and #4) that give 

two options, in order for the verdict to be valid?” The court replied: “Yes, as 

set forth in the instructions on the Special Verdict form.” 

The jury asked in note No. 5: “From BAJI 10.82 in the jury 

instructions, concerning “materiality” of a breach: “3. The hardship, if any, 

resulting to the defaulting party”—Does this mean the hardship to the 
16

defaulting party resulting from a judgment that its breach was material? Or 

does it mean the hardship to the defaulting party in performing under the 

contract?” The court replied: “Hardship does not relate to personal 

circumstances in failing to pay premium. Hardship does not relate to the 

hardship to the insurance company in paying the benefit.” 

The Jury’s Special Verdict

The parties agreed to the special verdict form set forth above. After the

jury returned a verdict, the court invited the parties to address whether the 

verdict was inconsistent. Protective Life’s counsel argued the verdict was 

consistent: “I think what [the jurors] are saying, . . . if [Protective Life] 

breached the contract with respect to giving the notices, that the failure to 

give the notice was not what caused [McHugh] harm.”

Plaintiffs’ counsel argued the verdict was inconsistent: “You can’t have 

all of this happen and not have harm to either Mr. McHugh or to the plaintiff 

herself.” The court concluded that the verdict was consistent. At plaintiffs’

request, the court polled the jury.

Plaintiffs’ New Trial Motion

In moving for a new trial, plaintiffs argued the court should have 

instructed the jury regarding “strict compliance” and the fact that Protective 

Life’s “failure to strictly comply left the policy in force.” They also argued the 

verdict was inconsistent: “[I]t is evident the jury found that . . . McHugh was 

excused from performance, i.e., he was excused from paying the premium, 

due to the obvious premature and improper termination of coverage 31 days 

into a 60-day grace period. This material breach clearly caused [Blakely] 

harm.” Plaintiffs also argued that insufficient evidence supported the jury’s 

findings they suffered no harm, as well as that Protective Life’s notices 

complied with the statutory mandates.
17

Protective Life argued in opposition to the new trial motion that based 

on the jury instructions and the uncontradicted evidence, the jury reasonably 

concluded that any harm incurred by Plaintiffs was not proximately caused 

by Protective Life. The court denied Plaintiffs’ new trial motion without

explanation.

Plaintiffs’ JNOV Motion

In moving for a JNOV, plaintiffs reiterated their previous argument 

that because Protective Life failed to comply with sections 10113.71 and 

10113.72, its cancellation was invalid and the policy remained in effect when 

McHugh died. Plaintiffs argued the verdict was inconsistent because “the 

jury excused . . . McHugh’s payment of premium due to the erroneous, 

premature, and illegal termination of the policy on February 9, 2013. As 

such, as a matter of law, [Blakely] was injured and her only measure of 

damages is the policy benefits [sic] of $1 million.” They further argued the 

court should strike the defense of failure to mitigate because Protective Life 

could not and did not prove plaintiffs had failed to mitigate their damages.

Protective Life opposed the JNOV, arguing the jury’s verdict was 

consistent, proper and complete. It reasoned that, “the jury could have found 

that Protective [Life] did not keep adequate records. The jury also could have 

found that Protective [Life] should have told McHugh about the enactment of 

the new code sections. . . . It is clear that neither Plaintiffs, nor the Court, 

nor Protective [Life] can determine exactly what facts the jury’s findings were 

based on; therefore, it is impossible for Plaintiffs to prove ‘that there is no

substantial evidence and no reasonable inference [to] support the jury’s 

verdict[,]’ necessitating denial of . . . the [JNOV].”

Protective Life argued it had introduced substantial trial evidence 

supporting the verdict. It reasoned that even if McHugh did not get a 60-day 
18

grace period, plaintiffs still could not prevail under Civil Code section 3358, 

which provides: “Except as expressly provided by statute, no person can 

recover a greater amount in damages for the breach of an obligation, than he 

could have gained by full performance thereof on both sides.” Protective Life 

concluded that because McHugh died more than 60 days after his premium 

was due and he never paid it, plaintiffs could not recover anything, as that 

would result in plaintiffs’ unjust enrichment.

The court denied the JNOV motion on grounds Protective Life had 

adduced substantial trial evidence supporting the verdict. 

DISCUSSION

I. Instructional Error Claim

We first address plaintiffs’ claim the court erred by failing to instruct 

the jury Protective Life had to strictly comply with the requirements of 

sections 10113.71 and 10113.71; and by instructing regarding mitigation of 

damages.4

We conclude the court did not err by declining to instruct the jury with 

the plaintiffs’ special instructions on “strict compliance,” and instead 

instructing with the language of sections 10113.71 and 10113.72. It is well 

4 The court instructed the jury regarding failure to mitigate: “A party 

injured by a breach of contract must mitigate his damages and is not entitled 

to any loss which could have been avoided by reasonable means.” It further 

instructed with CACI 358: “If Protective breached the contract and the 

breach caused harm, Plaintiff is not entitled to recover damages for harm 

that Protective proves Plaintiff could have avoided with reasonable efforts or 

expenditures only during the period between February 9 and March 12, 2013. 

You should consider the reasonableness of. . . McHugh’s efforts in light of the 

circumstances facing him at the time, including his ability to make the efforts 

or expenditures without undue risk or hardship. [¶] If . . . McHugh made 

reasonable efforts to avoid harm, then your award should include reasonable 

amounts that he spent for this purpose.”
19

settled that “ ‘ “Instructions in the language of an applicable statute are 

properly given.” ’ ” (Metcalf v. County of San Joaquin (2008) 42 Cal.4th 1121, 

1131 [interpreting instruction using the language of Government Code 

section 835]; Garrison v. Pearlstein (1924) 68 Cal.App.334, 340 [“ ‘Laying 

down the law in the words of the law itself ought not to be pronounced to be 

error.’ ”]; Pemberton v. Arny (1919) 42 Cal.App. 19, 24 [“there was no error in 

giving the instruction in the words of the law itself”].) We point out the court 

also instructed the jury that where a policy provision is mandated by statute, 

the policies that do not contain the required provision will be enforced as if 

they did. 

We are mindful this is an action for breach of contract that must be 

decided on its own particular facts. Plaintiffs rely on cases that are factually 

distinguishable from the present case and therefore have no applicability. 

(Mackey v. Bristol West Ins. Servs. (2003) 105 Cal.App.4th 1247, 1258

[involving an automobile insurance]; Kotlar v. Hartford Fire Ins. (2000) 83 

Cal.App.4th 1116 [involving a commercial insurance policy]; and Lee v. Indus. 

Indem. (1986) 177 Cal.App.3d 921 [involving a fire insurance policy].) 

The court instructed the jury on the plaintiffs’ burden of proof to 

prevail in an action for breach of contract. In addition to proving Protective 

Life breached the contract, plaintiffs had the burden of proving they were 

harmed by the breach. The court noted there were factual disputes to be 

decided by the jury. Under these circumstances, there was no error in 

refusing plaintiffs’ special instructions.

We reject plaintiffs’ argument the court erred by instructing the jury on

mitigation of damages. It is clear from the verdict form that the jury never

reached that issue. Further, the court instructed the jury as follows: “After 

you have decided what the facts are, you may find that some instructions do 
20

not apply. In that case, follow the instructions that do apply and use them 

together with the facts to reach your verdict.” We assume the jury followed 

that instruction. (Gray v. Wagner (1969) 272 Cal.App.2d 671, 672.)

II. Inconsistent Verdict

We next address plaintiffs’ claim that the verdict was inconsistent. 

They contend the jury’s “yes” answer to the second part of question 2, asking 

if McHugh was excused from doing all or substantially all of the significant 

things that the contract required him to do, conflicted with its “no” answer to 

question 5, asking if McHugh was harmed by the failure of Protective Life to 

do something that the contract prohibited it from doing. Respondents counter 

that the verdict was “fully consistent.” 

A. Applicable Law

“[A] special verdict is that by which the jury finds the facts only, 

leaving the judgment to the Court. The special verdict must present the 

conclusions of fact as established by the evidence, and not the evidence to 

prove them; and those conclusions of fact must be so presented as that 

nothing shall remain to the Court but to draw from them conclusions of law.” 

(Code Civ. Proc., § 624.) “A special verdict is ‘fatally defective’ if it does not 

allow the jury to resolve every controverted issue.” (Saxena v. Goffney (2008) 

159 Cal.App.4th 316, 325.) “ ‘We analyze the special verdict form de novo’ as 

a matter of law.” (Taylor v. Nabors Drilling USA, LP (2014) 222 Cal.App.4th 

1228, 1242.) 

“Where special verdicts appear inconsistent, if any conclusions could be 

drawn which would explain the apparent conflict, the jury will be deemed to 

have drawn them.” (Wysinger v. Automobile Club of Southern 

California (2007) 157 Cal.App.4th 413, 424.) However, this court has held 

that “[i]f the jury has been discharged and the verdict is ‘hopelessly 
21

ambiguous,’ the judgment must be reversed. [Citation.] A court reviewing a 

special verdict does not infer findings in favor of the prevailing party 

[citation], and there is no presumption in favor of upholding a special verdict 

when the inconsistency is between two questions in a special verdict. 

[Citation.] ‘Where there is an inconsistency between or among answers 

within a special verdict, both or all the questions are equally against the law.’ 

[Citations.] ‘The appellate court is not permitted to choose between 

inconsistent answers.’ [Citation.] . . . [¶] If a verdict is not ‘hopelessly 

ambiguous,’ the court may ‘interpret the verdict from its language considered 

in connection with the pleadings, evidence and instructions.’ ” (Zagami, Inc. 

v. James A. Crone, Inc. (2008) 160 Cal.App.4th 1083, 1092.) 

B. Analysis

The first part of the special verdict form’s question 2 asks: 

“Did . . . McHugh do all, or substantially all, of the significant things that the 

contract required him to do?” The jury answered “No.” The second part of 

question 2 asks, “or [w]as . . . McHugh excused from having to do all, or 

substantially all, of the significant things that the contract required him to 

do?” The jury answered, “Yes.”

McHugh’s only obligation was to pay the premium within the 60-day 

grace period (or the 62-day period allowed by Protective Life). Accordingly,

the jury’s affirmative answer to the second part of question 2 can only mean 

McHugh was excused from paying the premium. To put the answer to 

question 5 in context, we must first set forth the question and answer to 

question 4, which states, “Did Protective Life . . . fail to do something that the 

contract required it to do?” The jury answered, “No.” Question 4 next asks, 

“or [d]id Protective Life . . . do something that the contract prohibited it from 

doing? The jury answered, “Yes.” Question 5 asks, “Was Plaintiff harmed by 
22

that failure?” The jury’s “No” answer can only mean that the policy lapsed as 

a result of McHugh’s failure to pay the premium. The answers to the second 

part of question 2 and question 5 are inconsistent. Nonetheless, Protective 

Life insists the verdict was consistent.

In closing, Protective Life’s counsel urged the jury to answer “No” to 

both parts of question 2: “Did William McHugh do substantially all the 

significant things the contract requires him to do? Was [he] excused from 

having to do all of the substantial things required to do? The jury charge is 

no, he didn’t because he didn’t pay. And was he excused? No. No. No. [¶] 

Why? What do we know? What reason do we have in a discussion about --

what reason do we have that he was excused? So the answers are no and no. 

And you stop. You stop. There is no breach of contract. You don’t have to go 

any further. You stop.”5 

5 Protective Life’s counsel continued instructing the jury on how to fill 

out the special verdict form, insisting McHugh had failed to pay the 

premium: “You don’t perform, if you don’t pay. How can you perform unless 

you have paid your premiums? That’s the way this agreement works. And 

Protective failed to do something the contract required it to do? Never. Did 

Protective do something the contract prohibited them from doing? No, of 

course not. And then was plaintiff harmed by that failure? No. [¶] But you 

don’t have to get there. You stop on number two. You stop. You can’t go any 

further. We didn’t breach the contract. [¶] [McHugh] did not do what he 

was required to do and there is no reason for that. . . . [¶] Again, if this was 

—is two or three weeks I was in the hospital, but this was months, and 

months and months. And we have nothing, other than he knew and said, 

[‘Y]eah, I didn’t pay my premium[’] and still did nothing.”

In rebuttal, plaintiffs’ counsel argued their preferred way for the jury to 

answer the special verdict form: “The first question, that [McHugh] entered 

into a contract, we proved by a preponderance of the evidence. That’s all we 

have to do, is that . . . McHugh did all or the significant things that the 

contract required him to do. He didn’t make the payment that month. But he 

had a credit. And we believe it’s clear that he did everything he was 

significantly supposed to do. He was late. And if he had been told,
23

If the jury had accepted Protective Life’s counsel’s closing argument 

and answered “no” to both parts of question 2, then the jury would have 

signed the verdict and not answered question 5. In short, Protective Life is 

now arguing that a verdict substantially different from the one it urged the 

jury to render in its favor is a consistent verdict. 

On appeal, Protective Life argues that the verdict was consistent: 

“[Protective Life’s counsel] maintained at closing argument that Protective 

‘complied with’ the statutes and indeed ‘more than complied with’ them. The 

jury agreed, finding that Protective had not ‘failed to do’ anything the 

statutes, as incorporated into the policy, ‘required it’ to do. To the extent that 

the jury concluded that Protective did something that the policy ‘prohibited’—

in purporting to lapse the policy before the true lapse date—longstanding 

California law gave the jury ample latitude to conclude that any such error 

had not caused Plaintiffs ‘harm.’ [¶] This finding also was consistent with 

the rest of the verdict. Plaintiffs assert otherwise at various points in their 

brief, claiming that the jury found that McHugh was excused ‘of any further 

performance,’ that he never had to pay another premium, and that as a result 

the policy never could have lapsed. But that is not what the jury found. A 

grace period ‘does not change the date when the premium is due.’ [Citation.] 

maybe he could have done something a little different. But he didn’t know. 

But we still think that his failure was not a material breach of the contract. 

but even if it was, the second question should be answered yes as well. 

Was . . . McHugh excused from having to do all or substantially all of the 

significant things that the contract required him to do?”

Plaintiffs’ counsel also argued in rebuttal: “So clearly, so 

clearly . . . McHugh never failed to do anything reasonable. The only thing he 

did the entire time, he missed one premium because of some reason we will 

never know. And simply because you miss one payment does not put you in 

material breach of the contract.”
24

So even when a policy provides a grace period, the ‘default occurs’ as of ‘the 

[original] due date,’ when the insured fails to pay. That means that when 

McHugh failed to make the payment on January 9, he was in ‘default.’ The 

jury’s finding that McHugh was excused from having to do ‘all, or

substantially all, of the significant things that the contract required him to 

do’ thus meant he was excused from paying during the 62 total days he had 

between the grace period and the prompt-reinstate period. It did not mean 

that he was excused from paying premiums even after then. Those findings 

were fully consistent with its finding that, because Protective gave McHugh 

until the end of that grace period to pay his premium, any purported lapse of 

the policy on February 9 caused no harm to either McHugh or Plaintiffs. The 

trial court rightly allowed the jury’s verdict to stand.”

We are not persuaded by Protective Life’s argument. Because 

Protective Life was only willing to accept McHugh’s premium payment 

through the end of the prompt reinstatement period, its claim—that the 

jury’s “yes” answer to the second part of question 2 refers solely to the 62-day 

period encompassing the grace period and prompt reinstate period—is 

tantamount to saying that McHugh was excused from paying the premium. 

Logically, if McHugh was excused from paying the premium, the insurance 

policy would have remained in effect at the time of his death. The jury’s 

answer to question 5, that plaintiff was not harmed, directly contradicts the 

jury’s determination that McHugh was excused from paying the premium. 

In light of the jury’s responses to the special verdict form, its questions 

to the court during deliberations, counsels’ closing arguments, and our de 

novo standard of review, we conclude the verdict is inconsistent and 

“hopelessly ambiguous.” (Zagami, Inc., supra, 160 Cal.App.4th at p. 1092.) We 
25

therefore order a new trial. There being no lawful verdict, the issues 

regarding the court’s denial of the JNOV are moot.

DISPOSITION

The judgment is reversed and the matter is remanded for a new trial. 

The parties are to bear their own costs on appeal.

O’ROURKE, J.

WE CONCUR:

HUFFMAN, Acting P. J.

AARON, J.