Title: Protective Life Insurance Company v. Apex Parks Group, LLC
Citation: N/A
Docket Number: 1180508
State: Alabama
Issuer: Alabama Supreme Court
Date: September 18, 2020

REL:  September 18, 2020
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
SPECIAL TERM, 2020
____________________
1180508
____________________
Protective Life Insurance Company
v.
Apex Parks Group, LLC
Appeal from Jefferson Circuit Court
(CV-17-165)
MENDHEIM, Justice.
Protective Life Insurance Company ("Protective") appeals
from a judgment entered on a jury verdict rendered in the
Jefferson Circuit Court against Protective and in favor of
Apex 
Parks 
Group, 
LLC 
("Apex"), 
in 
the 
amount 
of
1180508
$11,495,890.41.  We reverse the judgment and render a judgment
for Protective. 
I.  Facts
Apex, a California-based corporation, owns and operates
16 moderately sized amusement parks, water parks, and family-
entertainment centers nationwide.  Apex's founder and chief
executive officer was Alexander Weber, who had possessed
43 years' experience in the industry and who was critical to
Apex's success.  Because of Weber's importance, in early 2016
Apex 
sought 
a 
"key-man" 
insurance 
policy 
on 
Weber.1 
Protective is a Birmingham-based insurance company owned by
the Dai-ichi Corporation.
1
"'Key man' life insurance policies are life
insurance policies purchased by businesses to pay
the expenses triggered by loss of a person essential
to the business's operation -- the irreplaceable
CEO, inventor, marketing vice president, or any
other 'key' man or woman.  These are often (but not
always) intended to pay for a buy-out of the
deceased key person's share in the firm's equity
(especially 
if 
the 
firm 
is 
a 
closely 
held
corporation or a partnership)."
Malla Pollack, Proof of 
Facts Evidencing Insurable Interest in
Key Man Life Insurance Policy, 152 Am. Jur. Proof of Facts 3d
§ 5, 518 (2016) (footnotes omitted).
2
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Apex applied for key-man insurance for Weber with
Protective in March 2016; Apex used an insurance broker to aid
in the application process.  At that time, Weber was 64 years
old.  The initial premium quote provided to Apex on the
insurance 
application 
was 
$40,054.33, 
contingent 
upon 
approval
by Protective's underwriters.  
On March 2, 2016, Protective had Weber interviewed by a
paramedical 
professional to 
gain 
information 
about 
his 
medical
history.  Weber answered several detailed questions, and in
the process he revealed that he had high blood pressure, high
cholesterol, and that he had had a "left bundle branch block"
("LBBB") since childhood.  In detailing what an LBBB is,
Protective's medical expert, Dr. Vance Plumb, explained: 
"[T]he normal heartbeat is created by the passage of
electricity through the heart.  ...  [T]here are
special fibers in the heart that carry this
electricity ... directly to the left bottom chamber
of the heart into the right bottom chamber of the
heart.  The fibers that carry the electricity to the
left, we call it a left bundle branch block.  The
ones that go to the right, the right bundle branch.
...  Electricity is delivered late to the left
ventricle when there is left bundle branch block."
Dr. Plumb further explained that if you have an LBBB, "you are
more likely to have heart disease.  If you have heart disease,
you are somewhat more likely to have atrial fibrillation." 
3
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Both Dr. Plumb and Apex's medical expert, Dr. Hugh McElderry,
testified that an LBBB is a serious heart condition.  Weber
also disclosed that both his father and his mother had died of
heart attacks at ages 47 and 56, respectively.
The answers from Weber's interview with the paramedical
professional were incorporated into the Apex application for
insurance.  On March 10, 2016, the application was finalized
and signed by Weber and Apex's chief financial officer, Doug
Honey ("the application").  Apex sought $10 million in
coverage in the application.
Protective received the application on March 14, 2016. At
that point, Protective underwriter Paula Nicols began the
process of determining whether Protective would issue the
policy and what premium it would charge.  Nicols testified at
trial that the standard approach for this task included
consulting two underwriting manuals issued by Protective's
reinsurers.  Those manuals -- the "Gen Re" and "Swiss Re"
manuals -- prescribe premiums in light of an applicant's
medical history.  Protective generally compares the "rate
classifications" in the two manuals and offers an applicant
the lower of the two.  Protective has several ratings, which
4
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correspond 
to 
successively higher 
premiums. 
 
Protective's 
best
rating, for which Protective charges its lowest premium, is
called "select-preferred."  That rating is followed by
"preferred," and then "standard," which each carry higher
premiums than the "select-preferred" rating.  After the
"standard" rating, Protective has seven "table" ratings,
ranging from "Table 2" to "Table 8."  As the table number goes
up, so does the charged premium.  
Nicols testified that she considered four pieces of
medical information in determining Weber's insurance rating:
his LBBB, his high blood pressure, his high cholesterol, and
his parents' deaths from heart attacks.  Weber's LBBB meant
that he could not receive Protective's select-preferred or
preferred ratings.  Nicols informed the insurance broker that
Apex could not receive the preferred rating Apex had requested
and that Protective would need Weber's medical records.  Those
records did not include tests associated with assessing the
current status of Weber's heart issues.  In fact, Weber had
not seen a cardiologist in 10 years.  The medical records did
reveal that Weber previously had undergone stress tests, but
the records did not show the results of those tests.  On
5
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April 19, 2016, Protective requested "complete records" from
any cardiologist Weber may have visited for his LBBB.  Weber
responded that he had not yet seen a cardiologist for his
LBBB.  Nicols testified that she was not troubled by the fact
that Weber had not seen a cardiologist, despite the fact that
he had been given a referral to see one, because Weber "was
not told he had to be seen by a cardiologist so that was up to
Mr. Weber whether or not he chose to do that."
On April 30, 2016, Nicols e-mailed the broker with a
"tentative offer" to Apex, stating, in part:
"At this point and AS IS MEDICALLY, Table 2 Non-
Tobacco due to left bundle branch block per exam,
records from Dr. Jenkins and Dr. Dyksterhouse.  ...
"....
"If [Apex] will accept Table 2, no additional
records are needed.  However, if [Apex] wants
reconsideration, we will need copy of past testing
noted per Dr. Dyksterhouse's records, or [Weber]
will 
need 
to 
get 
established 
with 
his 
new
cardiologist 
for 
follow-up 
to 
include 
either
treadmill stress test or nuclear/imaging stress
test, at no cost to Protective Life."
A Table 2 rating meant a substantial premium increase from the
initial premium quoted to Apex in the application, with a
first-year 
premium 
of 
$89,771.75. 
Nonetheless, 
Apex
subsequently orally agreed to the Table 2 rating offer, and on
6
1180508
May 3, 2016, another Protective underwriter approved the
policy based on that rating.
On May 5, 2016, Weber had an appointment for an annual
physical with a physician he had not previously seen,
Dr. Samuel Fink.  Based on Weber's family and personal medical
history, particularly the deaths of his father and mother as
a result of heart attacks and his diagnosis of an LBBB,
Dr. Fink recommended that Weber return the following day for
a "stress echo" test.  On May 6, 2016, Weber visited Dr. Fink
and underwent a stress test that involved Weber being
connected to an EKG machine while he walked and then ran on a
treadmill as the treadmill increased speed and incline level.
The test lasted for 13 minutes.  All the medical experts at
trial agreed that Weber performed extremely well in the test
in terms of demonstrating physical fitness.  However, Dr. Fink
had a cardiologist, Dr. Michael Burnam, read the results from
the EKG machine remotely.  Dr. Burnam testified that during
the stress test Weber experienced an episode of paroxysmal
atrial fibrillation ("AFib").  Dr. Burnam explained that
paroxysmal AFib is a separate condition from -- and is not
caused by -- LBBB and that it occurs when there is a temporary
7
1180508
or intermittent irregular rhythm of the upper chamber of the
heart.  Dr. McElderry confirmed that Weber's AFib "came and
went on its own."  Dr. Plumb testified that, because of its
intermittent nature, it was possible that Weber had been
"living with this for a while."  Indeed, Weber did not feel
any physical difference during the stress test.  Because
Dr. Burnam was not able to tell from the stress test whether
there was a restriction in the blood flow of Weber's coronary
arteries, he recommended that Weber be taken to the emergency
room ("ER").
Because of Dr. Burnam's recommendation, Dr. Fink escorted
Weber to the ER during his May 6, 2016, appointment.  Weber's
wife testified that when Weber arrived at the ER he telephoned
her to tell her about the AFib diagnosis, and she stated that
they laughed about it because they recalled a television
commercial with famous golfers talking about having AFib. 
Dr. Fink presented Weber to the ER doctor on call, Dr. Scott
Brewster.  Weber also met Dr. Burnam in the ER.  Dr. Burnam
examined Weber, and he confirmed that Weber had paroxysmal
AFib, rather than persistent AFib, which meant that it was not
necessary to perform a cardioversion, "an electrical shock to
8
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the heart to return its normal rhythm."  Dr. Burnam concluded
that Weber had a low risk of having a stroke and so, for the
time being, his condition could be treated with a mild blood-
thinning medication, such as aspirin.  Dr. Burnam prescribed
that Weber take one aspirin tablet per day, and they discussed
two additional treatment options:  either taking medication or
using an "an electrophysiologic approach," meaning having a
procedure on the heart to correct the AFib, called an
ablation.  Altogether, Weber spent two hours at the ER.  A
follow-up appointment with Dr. Burnam was scheduled for May 9,
2016, which Dr. Burnam testified was "for additional testing"
and for Weber "to decide which approach he wanted."
On May 9, 2016, Weber had the follow-up appointment with
Dr. Burnam.  An EKG revealed that Weber's heart was in normal
rhythm during that visit.  Dr. Burnam testified that his notes
of that visit reflected that he and Weber discussed Weber's
options for treating his AFib and that Weber "was going to
strongly 
consider 
the 
electrophysiologic 
approach." 
Accordingly, Dr. Burnam gave Weber a referral to Dr. Eli Gang,
a cardiologist in the subspecialty that treats AFib,
electrophysiology.  On the same date, after speaking with
9
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Dr. Burnam, Dr. Fink entered a note in Weber's patient record
that stated: "Discussed [condition] with Dr. Burnam.  A repeat
EKG shows [Weber] is in normal sinus rhythm.  He is still on
the Aspirin.  He will be seeing Dr. Eli Gang."  On May 10,
2016, Weber wrote an e-mail, apparently as a note to himself,
in which he listed several dates, one line of which stated: 
"June 8-9th have a Dr. appointment on Fri 10th."  On May 19,
2016, Weber spoke with Dr. Fink, and Dr. Fink entered a note
in Weber's medical record that stated in part that Weber "is
referred to Dr. Gang."
On May 18, 2016, Protective issued the insurance policy
to Apex for $10 million in coverage at a Table 2 premium ("the
policy"); the policy included a cover letter, the policy
schedule, policy provisions, endorsements or riders to the
policy, and other information.  When Protective e-mailed the
policy to Apex, it explained that three "delivery" documents
were included with the policy that needed to be signed in
order "[t]o bind the Key-Man Life Insurance Policy for
Al Weber."  The first document was an "Amendment to
Application with Health Statement" ("the amendment") that the
e-mail explained would "acknowledg[e] that the premium was
10
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increased for underwriting risk factors to be signed by
Al Weber and Doug Honey on behalf of Apex."  The second
document was a notice regarding "save-age" dating in the
policy that had to be signed by both Weber and Honey.  This
document specifically noted that "coverage begins only when
the policy is delivered and the first premium is paid."  The
third document was a policy-delivery receipt to be signed by
Honey.  Weber and Honey signed the amendment and the notice
regarding "save-age" on May 31, 2016.
The central document in this case is the amendment; its
contents, therefore, must be provided in detail.  In addition,
a copy of the amendment is attached to this opinion as an
appendix.  The amendment is a single-page document, and, as
already noted, it is titled:  "AMENDMENT TO APPLICATION WITH
HEALTH STATEMENT."  (Capitalization in original.)  It lists
the "Name of Insured" as "Al Weber, Jr." and provides the
policy number.  The amendment then states:  "The application
to [Protective] for the policy named above is hereby amended
by the undersigned to conform in every respect to any and all
changes indicated below ...."  Below this statement is a table
that lists the "Amount of Insurance" as $10 million, the type
11
1180508
of policy plan, and the "Premium Payable," which is stated to
be "$89,771.75 ANNUALLY." 
(Capitalization in original.) 
Following the table, the amendment states:
"Other Changes:
"Planned Periodic Premium shall be as
stated above.
"I understand that the premium rate payable
for each $1,000 of coverage has been
increased due to underwriting risk."
After a gap of blank space on the page, the amendment
continues with a paragraph in bold typeface stating:
"HEALTH STATEMENT:  I represent that I have not
consulted any physician or other practitioner since
the date of my medical examination (or date I signed
the last application with [Protective], if no
medical examination was required). It is further
agreed that, except as stated above, all insured
persons are in the same health as that stated in the
last application, or medical examination with
[Protective]."
(This statement is hereinafter referred to as "the health
statement.")  Another paragraph follows the health statement
but is not in bold typeface:
"It is agreed by the undersigned that the changes
shown above shall be an amendment to and form a part
of the application and the policy, and that the
changes shall be binding on any person who shall
have or claim any interest in the policy.  A copy of
this form shall be as valid as the original."
12
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Signature and date lines are contained below this paragraph.
The bottom of the page contains a paragraph in bold typeface
titled "IMPORTANT NOTICE":
"If any change is incorrect or incomplete, correct
information should be written on this form. If any
change is made, the policy and this form must be
returned to [Protective].  No insurance will take
effect until such changes have been reviewed and
accepted by [Protective]."
As already noted, Weber and Honey signed the amendment
and the other delivery-requirement documents on May 31, 2016. 
There were no written notations on the amendment of any
changes.  Protective received the signed amendment on June 23,
2016.2  On June 6, 2016, Weber e-mailed Honey with a question: 
"Did we pay for my work life insurance?"  Honey replied:  "Not
yet."  Weber responded:  "Could you get completed by []Weds
[June 8]?"  However, Apex did not mail the check for the
amount of the first premium until June 15, 2016.  It is
undisputed that Protective cashed the check on June 21, 2016.
On June 8, 2016, Weber had an appointment with Dr. Gang.
Dr. Gang first reviewed with Weber how he felt given his AFib
diagnosis.  Dr. Gang testified that Weber "was remarkably
2No explanation for the length of the delay in receiving
the 
delivery-requirement documents 
is 
apparent 
from 
the 
record
on appeal or the parties' briefs.
13
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absent of symptoms" and "[h]e felt well ... was very active."
Dr. Gang then performed a physical examination.  He testified
as follows with regard to that exam:  "So again, [Weber was]
in good shape, and I found no particular murmurs or any other
physical exam findings.  The only noteworthy -- noteworthy
thing was that his blood pressure was somewhat elevated on
that one visit."  Dr. Gang also ran another EKG on Weber, the
result 
of 
which 
showed 
that 
Weber 
was 
"in 
atrial
fibrillation," although his heartbeat was "within the normal
range, even though it was irregular."  Dr. Gang further
testified that he discussed the "implications" of 
Weber's AFib
with Weber in light of the fact that "it had no effect on his
life as far as his quality of life is concerned.  He was sure
of that."  Dr. Gang elaborated:  "[W]e talked about ... what
could he do about it, if anything, and the possibility of
taking medications to suppress it, doing nothing about it, or
doing an ablation about it.  Those were the three general
paths that he could choose that we discussed."  Dr. Gang
stated that he gathered from that conversation that Weber "was
a very determined person to take care of what needs to be
taken care of and to be on the fewest possible medications,"
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and so Weber "was going to give [an ablation] serious
consideration."  Dr. Gang gave Weber three recommendations. 
First, he provided Weber with a "ZIO" patch, which Dr. Gang
described as a patch that is attached to a patient's chest for
an extended period and that provides "a realtime 24/7 EKG,"
allowing a physician "to see how often [a patient] actual
ha[s] atrial fibrillation."  Second, Dr. Gang recommended that
Weber undergo a "CT angiogram" that would help Dr. Gang
determine what kind of ablation to perform.  Third, Dr. Gang
prescribed the blood thinner Xarelto to Weber to lessen the
risk of blood clots and stroke from AFib; Weber began taking
the Xarelto that day.
Weber wore the ZIO patch from June 8 through June 11,
2016.  The results from the patch showed that Weber was in
AFib 61 percent of the time that he wore the patch and that
his longest stretch of being in AFib was 22 hours and
36 minutes.  Dr. Gang concluded that the results from the ZIO
patch confirmed that Weber should undergo an ablation.  On
June 10, 2016, Weber drafted an e-mail titled "Medicine" in
which he indicated that he was going to ask Dr. Fink's opinion
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about getting an ablation and in which he listed "Ablation
dates (July 14-15 or 21-22)."
On June 10, 2016, Weber had an appointment with Dr. Fink.
On this visit, Weber's heart had a regular rate and rhythm.
Dr. Fink told Weber that undergoing an ablation made sense
under the circumstances.  On June 15, 2016, Weber wrote an
e-mail, apparently as a note to himself, titled "Gang" in
which he noted:  "Ablation Aug 18th."
As we have already noted, on June 21, 2016, Protective
received and cashed the first premium check for the policy.
There is no dispute that the insurance coverage went into
effect when Protective received that first payment.  On
June 23, 2016, Protective received the signed amendment from
Apex.
On July 15, 2016, Weber had a follow-up appointment with
Dr. Fink.  Dr. Fink noted in Weber's patient record that an
EKG on that date indicated that Weber was in AFib.  He also
recorded that Weber was scheduled to have an ablation on
August 23, 2016. 
On August 23, 2016, Weber underwent an
ablation performed by Dr. Gang.  The medical experts agreed
that the surgery was a success.  Dr. Gang saw Weber on
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August 29, 2016, and reported that Weber felt "well" and that
he wanted "to exercise vigorously."  On September 2, 2016,
Weber had an appointment with Dr. Fink, who noted that Weber's
heart had a regular rhythm on that visit.  Dr. Gang saw Weber
on October 31, 2016, and he determined that Weber was doing
well.
On November 8, 2016, while on vacation with his wife,
Weber died.  The death certificate listed the cause of death
as "sudden cardiac death" due to "ischemic heart disease." 
All the medical experts agreed at trial that Weber's AFib did
not cause his death.
Shortly after Weber's death, Apex submitted its claim
under the policy for the $10-million benefit.  Protective then
began a contestable-claim investigation.3  The investigation
was initiated by Protective compliance analyst Janice Wisner,
3As we more fully explain in Part II of this opinion,
which addresses the standards of review, California law
governs the substantive issues in this case.  The California
Insurance Code affords insurers a two-year contestability
window after a policy takes effect.  See Cal. Ins. Code
§ 10113.5(a) (stating in part that "[a]n individual life
insurance policy delivered or issued for delivery in this
state shall contain a provision that it is incontestable after
it has been in force, during the lifetime of the insured, for
a period of not more than two years after its date of issue
....").
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who had a third-party administrator obtain Weber's medical
records.  Those records included files from Dr. Fink,
Dr. Burnam, and Dr. Gang, which revealed Weber's AFib
diagnosis and the treatment he received for it.  The review of
Apex's claim was then submitted to Protective underwriter
Edmund Peña, one of two Protective underwriters who were
specifically assigned to review contestable claims.  Wisner
testified that Protective has underwriters who are separate
from the underwriters who issue policies to 
review contestable
claims because Protective "want[s] an objective review of the
claim from the start to finish."  Peña testified that he
reviewed each document Protective received, from both before
it issued the policy and after Apex submitted its claim, with
the goal being "to make sure that all of the statements by the
applicant and the policy owners [were] true and accurate."
Peña stated that his job was, if there was a discrepancy, to
evaluate the policy based on the new information, taking into
account the ratings in the Gen Re and Swiss Re manuals, to
determine whether Protective would have issued the policy if
initially it had known all the information about the
18
1180508
applicant.  Peña testified as follows with respect to his
conclusion upon completion of the investigation:
"A.  I determined that the Table 2 rating that the
original underwriter Paula Nicols approved the file
at was correct based on Mr. Weber's history of left
bundle branch block. And then I noticed that
Mr. Weber saw a new doctor -- one that he had never
seen before -- on May 5th of 2016.  ...
"....
"The visits with ... Dr. Burnam and Dr. Fink --
yeah.  Dr. Burnam were not admitted on the good
health statement on our amendment to the policy
where it asks have you seen or consulted any other
physician since the time that the part 2 paramed
exam was completed.
"Based on that information, I determined that
there was a material misrepresentation since he did
not provide that information to us and I made a
recommendation to the claim committee -- or I
advised the claim committee of my findings.
"[Protective's 
counsel:] 
 
When 
you 
say 
you
determined there was a material misrepresentation
based on Mr. Weber's failure to disclose those
doctors' visits and the AFib diagnosis, what do you
mean by material misrepresentation?
"A.  I mean that his present medical history at the
time that the delivery requirements were received
[was] not the same as what was admitted on the
application and that based on our underwriting
manual, that he would have been rated at a different
rate; so the Table 2 rating was no longer
applicable.
"....
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1180508
"Q.  ...  Under both manuals, did you conclude that
under no circumstances if Protective had known that
information would it have issued this $10 million
policy?
"A.  No, we would not."
Although she was 
not 
involved in the contestable-claim review,
underwriter Nicols similarly testified that, given the
information provided regarding Weber's May doctors' visits,
the underwriting manuals would have required postponing
coverage until Weber's AFib condition had been fully
evaluated, and, based on the results of that evaluation, "the
policy would not have ever been issued as originally issued,
if it was issued at all."
Peña further testified that, after he reached his
conclusion that Apex's claim should be denied, he asked his
supervisor for a second opinion, and the supervisor concurred
with Peña's assessment.  He also consulted with Protective's
head underwriter and its chief medical director, both of whom
also agreed with Peña's conclusion.  Peña then e-mailed his
findings 
to 
Wisner. 
 
Wisner 
then 
e-mailed 
Peña's
recommendation to Protective's reinsurers, one of which was
Gen Re.  An employee at Gen Re wrote Wisner an e-mail stating
that he agreed with Peña's conclusion that the policy would
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1180508
have been postponed based on the AFib diagnosis and that Weber
"died during the postpone period."  Wisner then submitted the
claim to a Protective claim committee, which consisted of
herself and two other Protective employees. The committee
concluded that the claim should be denied. 
On March 27, 2017, Wisner, on behalf of Protective, wrote
a letter to Apex that explained that the claim was being
denied.  The letter quoted from the amendment, and it related
the 
information 
discovered 
in 
the 
contestable-claim
investigation about Weber's May doctors' visits.  Wisner then
stated:
"This medical history was not disclosed on the
[amendment].  Our Underwriters have opined that had
they known of this material change of health that
occurred after the application dates of March 2,
2016, and before signing the [amendment] on May 31,
2016, the policy would not have been placed in force
at that time and they would not have issued this
Table 2 Non-tobacco policy.
"In view of the unadmitted medical history,
[Protective] deems that no insurance ever became
effective and we must void the policy as of the date
it was issued.  Under separate cover, we are issuing
a full refund of the premium paid under this policy,
plus applicable interest."
As the letter stated, Protective refunded the premium Apex had
paid in June 2016.  
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On May 16, 2017, Apex sued Protective in the Jefferson
Circuit Court asserting claims of breach of contract and bad
faith in failing to investigate all bases supporting coverage
and in making false promises that the claim would be paid. 
Protective answered the complaint and asserted a counterclaim
seeking rescission of the policy based upon material
misrepresentations 
during 
the 
application 
process. 
 
Protective
filed several summary-judgment motions, all of which the 
trial 
court denied.  A two-week trial ensued.  At the close of
Apex's case, Protective moved for a judgment as a matter of
law, contending that it had conclusively demonstrated all the
elements of rescission under California law.  The trial court
denied the motion.  Protective moved again for a judgment as
a matter of law at the close of all the evidence, and the
trial court again denied the motion.
After closing arguments, Protective stated that it had an
objection to a portion of the trial court's jury instruction
on materiality.  The trial court determined that it would give
the jury instructions and then it would hear any exceptions
the parties had to those instructions.  The jury instruction
at issue stated:
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"If 
you 
determine 
that 
information 
was
misrepresented in or omitted from the application or
amendment and that the information misrepresented or
omitted was material, you must next consider whether
Protective has proved that Mr. Weber knew both that
the information sought had been represented or
omitted and that the information was material to
Protective.
"If Protective fails to prove that Mr. Weber
knew and appreciated the significance of the medical
information at issue, then incorrect or incomplete
responses to the application or the amendment did
not excuse Protective's failure to pay.
"Ladies and gentlemen, an insured has a duty to
disclose only those changes in health that he,
acting in good faith, actually believes were
material. 
In 
addition, 
someone 
applying 
for
insurance will not be held to the level of knowledge
or understanding that a doctor or other expert might
have.
"In considering whether Protective has met its
burden of proving that Mr. Weber knew that
information had been omitted from the application or
amendment and that the information was material, you
must consider the evidence of Mr. Weber's actual
knowledge and belief about the state of his health,
not merely what a reasonable person should have or
could have concluded based on the information
presented to him."
After the trial court completed giving its instructions to the
jury, Protective registered its objection:
"[Protective's counsel:]  Okay. Your Honor, yes,
[Protective] objects to giving the jury instruction,
special instruction on page -- it was on page 27 of
my notes, the insured's subjective knowledge as a
misstatement of the law in that the law in
23
1180508
California and the instruction that should have been
given on this point is that materiality is
determined by the probable and reasonable affect
that truthful disclosure would have had on the
insurer in determining the advantages of the
proposed contract.  That's the instruction that
should have been given with respect to whether a
misrepresentation was material.
"THE COURT:  Okay.  I understand.  Noted.  I stand
on what was given."
On September 21, 2018, the jury rendered its verdict. 
The jury found Protective liable for breach of contract but
not liable for bad faith.  The verdict form specified that if
the jury found Protective liable for breach of contract, Apex
would be "entitled to the policy benefit of $10,000,000."  The
trial court entered a judgment for $10 million plus applicable
prejudgment interest of $1,495,890.41, for a total amount of
$11,495,890.41.  Protective renewed its motion for a judgment
as a matter of law based on rescission. Protective also moved,
in the alternative, for a new trial based on its objection to
the jury instruction.  The trial court denied those motions
without comment.  Protective appealed.
24
1180508
II.  Standards of Review
The contract at issue -- the policy -- is governed by
California law because the policy was issued and was delivered
to Apex in California.  See, e.g., Lifestar Response of
Alabama, Inc. v. Admiral Ins. Co., 17 So. 3d 200, 213 (Ala.
2009) (explaining that, "[u]nder the principles of lex loci
contractus, a contract is governed by the law of the
jurisdiction within which the contract is made").  However,
because the lawsuit was filed in Alabama, procedural questions
are governed by Alabama law.  See, e.g., Middleton v.
Caterpillar Indus., Inc., 979 So. 2d 53, 57 (Ala. 2007)
(noting that "lex fori -- the law of the forum -- governs
procedural matters").  
In reviewing the trial court's denial of Protective's
motions for a judgment as a matter of law, this Court employs
the same standard applicable to the trial court:
"'This Court reviews de novo the grant
or denial of a motion for a [judgment as a
matter of law], determining whether there
was substantial evidence, when viewed in
the light most favorable to the nonmoving
party, to produce a factual conflict
warranting jury consideration.  Alfa Life
Ins. Corp. v. Jackson, 906 So. 2d 143, 149
(Ala. 2005) (citing Ex parte Helms, 873 So.
2d 
1139, 
1143–44 
(Ala. 
2003)).
25
1180508
"'"[S]ubstantial evidence is evidence of
such weight and quality that fair-minded
persons in the exercise of impartial
judgment 
can 
reasonably 
infer 
the 
existence
of the fact sought to be proved."'"
Dolgencorp, Inc. v. Hall, 890 So. 2d 98,
100 (Ala. 2003) (quoting Wal–Mart Stores,
Inc. v. Smitherman, 872 So. 2d 833, 837
(Ala. 2003), quoting in turn West v.
Founders Life Assurance Co. of Florida, 547
So. 2d 870, 871 (Ala. 1989)).'"
Alabama River Grp., Inc. v. Conecuh Timber, Inc., 261 So. 3d
226, 240–41 (Ala. 2017) (quoting Jones Food Co. v. Shipman,
981 So. 2d 355, 360–61 (Ala. 2006)).
Concerning the trial court's ruling on Protective's
motion for a new trial based on its objection to a jury
instruction, this Court considers whether the trial court
exceeded its discretion in giving the instruction.  "[A] trial
court has broad discretion in formulating jury instructions,
provided the instructions accurately reflect the law. 
Additionally, reversal is warranted only if the error in the
instructions is prejudicial."  Certain Underwriters at
Lloyd's, London v. Southern Nat. Gas Co., 142 So. 3d 436, 462
(Ala. 2013).
26
1180508
III.
Analysis
A. Issue of Bankruptcy
On June 25, 2020, Protective filed with this Court a
"Suggestion of Bankruptcy" asserting that on April 8, 2020,
Apex filed a Chapter 11 bankruptcy petition "in the United
States Bankruptcy Court for the District of Delaware, Case
No. 20-10911-JTD."  Apex states that "neither this case nor
Protective was referenced in the bankruptcy proceeding." 
Protective's 
filing 
also 
asserts 
that 
"[c]ounsel 
for
Protective has now conferred with counsel for Apex and
confirmed that the bankruptcy petition was filed."
We hesitate to comment on this issue given that the Court
has not received specific confirmation from Apex concerning a
petition for bankruptcy.  At the same time, we note that,
under 11 U.S.C. § 362(a)(1), the filing of a bankruptcy
petition "operates as a stay, applicable to all entities, of
... the commencement or continuation, including the issuance
or employment of process, of a judicial ... proceeding against
the debtor that was or could have been commenced before" the
filing of the bankruptcy petition.  
"'The automatic stay is of broad
scope, directing that "[a]ll judicial
27
1180508
actions against a debtor seeking recovery
on a claim that [was] or could have been
brought 
before 
commencement 
of 
a 
bankruptcy
case, are automatically stayed."  Maritime
[Elec. Co. v. United Jersey Bank], 959 F.2d
[1194,] at 1203, 1206 [(3d Cir. 1991)].
Thus, "[o]nce triggered by a debtor's
bankruptcy petition, the automatic stay
suspends 
any 
non-bankruptcy 
court's
authority to continue judicial proceedings
then pending against the debtor."  Id. at
1206.  Unless relief from the stay is
granted, the stay continues until the
bankruptcy case is dismissed or closed, or
discharge is granted or denied. 11 U.S.C.
§ 362(c).  ...'"
Bradberry v. Carrier Corp., 86 So. 3d 973, 983-84 (Ala. 2011)
(quoting Constitution Bank v. Tubbs, 68 F.3d 685, 691-92 (3d
Cir. 1995)).  Thus, because there could be a question about
our adjudicating this appeal, we will explain why we do not
believe the § 362(a)(1) stay is applicable in this instance.
As we have noted, the stay under § 362(a)(1) operates to
stay actions "against the debtor."
"[C]ourts of appeals that have considered this issue
have held that whether a proceeding is against the
debtor within the meaning of Section 362(a)(1) is
determined from an examination of the posture of the
case at the initial proceeding. ... If the initial
proceeding is not against the debtor, subsequent
appellate proceedings are also not against the
debtor within the meaning of the automatic stay
provisions of the Bankruptcy Code."
Freeman v. Comm'r, 799 F.2d 1091, 1092–93 (5th Cir. 1986). 
28
1180508
Apex filed this action against Protective asserting that
Protective breached its insurance contract with Apex when
Protective refused to pay benefits under the policy following
Weber's death.  Thus, at its commencement, the suit was not an
action "against the debtor" -- Apex.  For purposes of whether
the automatic-stay provision of § 362(a)(1) applies, it is
immaterial that Protective appealed the judgment against it.
Protective did style its response to Apex's suit as a
"counterclaim" seeking rescission, but under California law
rescission is an affirmative defense to an insurance-policy
claim.  See, e.g., Duarte v. Pacific Specialty Ins. Co., 13
Cal. App. 5th 45, 56, 220 Cal. Rptr. 3d 170, 179 (2017)
(observing that "[i]t is well established that although an
insurer may not file a separate action for rescission once the
insured has filed suit, the insurer may assert rescission as
an affirmative defense or in a cross complaint").  
"[T]he automatic stay provision of section 362 '"by
it terms only stays proceedings against the debtor,"
and "does not address actions brought by the debtor
which would inure to the benefit of the bankruptcy
estate."'  Carley Capital Group v. Fireman's Fund
Ins. Co., 889 F.2d 1126, 1127 (D.C. Cir. 1989)
(per curiam) (quoting Association of St. Croix
Condominium Owners v. St. Croix Hotel Corp., 682
F.2d 
446, 
448 
(3d 
Cir. 
1982) 
(emphasis 
in
original)); see Maritime Elec. [Co. & United Jersey
29
1180508
Bank], 959 F.2d [1194] at 1205 [(3d Cir. 1991)]
('within one case, actions against a debtor will be
suspended 
even 
though 
closely 
related 
claims
asserted by the debtor may continue'); Brown v.
Armstrong, 949 F.2d 1007, 1009–10 (8th Cir. 1991).
"Since section 362 mandates a stay only of
litigation 'against the debtor' designed to seize or
exercise control over the property of the debtor, 11
U.S.C. § 362(a), it does not prevent entities
against whom the debtor proceeds in an offensive
posture -- for example, by initiating a judicial or
adversarial proceeding -- from 'protecting their
legal rights.'  Martin–Trigona v. Champion Federal
Savings and Loan Ass'n, 892 F.2d 575, 577 (7th Cir.
1989); see In re Berry Estates, Inc., 812 F.2d 67,
71 (2d Cir.) (automatic stay provision applicable
only to actions against the bankrupt or to seizures
of property of the bankrupt), cert. denied, 484 U.S.
819, 108 S.Ct. 77, 98 L.Ed.2d 40 (1987); Price &
Pierce Int'l Inc. v. Spicer's Int'l Paper Sales,
Inc., 50 B.R. 25 (S.D. N.Y. 1985)."
Justice v. Financial News Network, Inc. (In re Financial News
Network, Inc.), 158 B.R. 570, 572–73 (S.D. N.Y. 1993)
(emphasis added).  In asserting the defense of rescission,
Protective sought only to defend its legal rights, not to
obtain control over any property belonging to Apex. 
Therefore, Protective's affirmative defense of rescission was
not a claim "against the debtor" within the meaning of
§ 362(a)(1).
In short, because the original action was initiated by
the bankruptcy debtor Apex and Protective's affirmative
30
1180508
defense does not seek damages or property from Apex, the
automatic stay imposed by § 362(a)(1) does not apply to this
appeal.  Accordingly, we examine the issues presented in this
appeal.
B.  Pertinent Background in California Insurance Law
To understand the parties' arguments in this case some
explication of California insurance law must be provided.
There is no dispute that Apex had paid its first premium on a
"key-man" life-insurance policy for its chief executive
officer Al Weber to Protective when the event triggering
coverage under that policy -- Weber's death –- occurred.  It
is also undisputed that, when Apex submitted its claim for
benefits under the policy, Protective declined to pay. 
Consequently, unless 
Protective could 
prove 
a 
complete 
defense
to its breach of the contract, Protective would be liable for
breach of the insurance contract.  As we shall explain, under
California law, rescission is such a complete defense.  
"If a representation is false in a material point,
whether affirmative or promissory, the injured party is
entitled to rescind the contract from the time the
representation becomes false."  Cal. Ins. Code § 359.  Thus,
31
1180508
for an insurer to establish a right to rescind, the insurer
must demonstrate that the insured made a materially false
representation in the procurement of insurance.  See, e.g.,
Thompson v. Occidental Life Ins. Co., 9 Cal. 3d 904, 919, 513
P.2d 353, 362 (1973) (explaining that, "under the 
authorities,
the burden of proving misrepresentation rests upon the
insurer").  "It is not necessary that the misrepresentation
have any causal connection with the death of the insured."
Torbensen v. Family Life Ins. Co., 163 Cal. App. 2d 401, 405,
329 P.2d 596, 598 (1958).  Accordingly, California law
requires Protective to prove that, by signing the amendment,
Weber made a (1) false and (2) material statement to
Protective.
"A representation is false when the facts fail to
correspond with its assertions or stipulations."  Cal. Ins.
Code § 358.
"Materiality is to be determined not by the
event, but solely by the probable and reasonable
influence of the facts upon the party to whom the
communication is due, in forming his estimate of the
disadvantages of the proposed contract, or in making
his inquiries."
Cal. Ins. Code § 334.  In other words,
32
1180508
"[t]he 
test 
for 
materiality 
is 
whether 
the
information would have caused the underwriter to
reject the application, charge a higher premium, or
amend the policy terms, had the underwriter known
the true facts.  ...  'This is a subjective test;
the critical question is the effect truthful answers
would have had on [the insurer], not on some
"average reasonable" insurer.'"
Mitchell v. United Nat'l Ins. Co., 127 Cal. App. 4th 457, 474,
25 Cal. Rptr. 3d 627, 638 (2005) (quoting Imperial Cas. &
Indem. Co. v. Sogomonian, 198 Cal. App. 3d 169, 181, 243 Cal.
Rptr. 639, 644 (1988)). 
"On the other hand, if the applicant for
insurance had no present knowledge of the facts
sought, or failed to appreciate the significance of
information related to him, his incorrect or
incomplete responses would not constitute grounds
for rescission.  ... [A]s the misrepresentation must
be a material one, '[a]n incorrect answer on an
insurance application does not give rise to the
defense of fraud where the true facts, if known,
would not have made the contract less desirable to
the insurer.'  ...  And the trier of fact is not
required to believe the 'post mortem' testimony of
an insurer's agents that insurance would have been
refused had the true facts been disclosed.  ..."
Thompson, 9 Cal. 3d at 916, 513 P.2d at 360.
C.  The Parties' Arguments
In the trial court, Protective contended that Weber made
two material misrepresentations by signing the amendment on
May 31, 2016, without adding any additional information:
33
1180508
(1) He misrepresented that he had "not consulted any physician
or other practitioner since" he had signed the initial policy
application on March 10, 2016, and (2) he misrepresented that
he was "in the same health as that stated in the last
application."  In challenging the trial court's denial of its
renewed motion for a judgment as a matter of law before this
Court, Protective focuses solely on the first 
alleged material
misrepresentation, 
contending 
that 
Weber's 
representation 
that
he did not consult any physicians was sufficient to allow
Protective to rescind the policy.   Protective notes that in
between March 10, 2016, and May 31, 2016, Weber consulted with
three physicians about a new heart condition:  (1) He saw
Dr. Fink and underwent a stress test that revealed that he had
an occurrence of AFib during the test; (2) he went to the ER
and consulted with Dr. Brewster and cardiologist Dr. Burnam
about the AFib diagnosis; and (3) he had a follow-up
appointment with Dr. Burnam in which Dr. Burnam and Weber
discussed Weber's options for treating AFib, Weber expressed
that he "was going to strongly consider" having an ablation
procedure, and Weber was given a referral to Dr. Gang. 
Evidence indicated that he was going to see Dr. Gang soon.  As
34
1180508
to materiality, Protective contends that testimony from
underwriters Peña and Nicols demonstrated that if Protective
had known about those doctors' visits, Protective would have
requested the medical records from the visits, which would
have revealed Weber's AFib diagnosis.  Peña and Nicols further
testified that, according to the underwriting manuals
Protective consulted, the AFib diagnosis would have caused
Protective to delay the application to see how the AFib
condition was resolved and that Weber's subsequent doctors'
visits and the ablation procedure would have 
caused Protective
to issue the policy at a higher rate or not issue it at all. 
Consequently, Protective maintains that Weber's failure to
reveal his May 2016 doctors' visits in the amendment
unquestionably constituted a material misrepresentation
because, it argues, the information ultimately would have
caused Protective to charge a higher premium or to reject the
application altogether.
Apex counters that substantial evidence supports the
conclusion that a jury could have inferred that Weber did not
make, or at least did not knowingly make, a material
misrepresentation in the amendment.  Apex offers three
35
1180508
arguments in support of this contention.  First, Apex argues
that the amendment was an ambiguous document subject to more
than one reasonable interpretation because it asked Apex and
Weber to make multiple attestations without providing clarity
as to what should be done if there was agreement on one
attestation but not another.  Second, Apex argues that the
representation in the health statement concerning physician
consultations cannot be viewed in isolation but rather was
relevant only in combination with the representation about the
applicant's being in the same health.  Apex insists that Weber
could have reasonably believed on May 31, 2016, that he was in
the same health as he was on March 10, 2016, because he had
only been diagnosed with a single episode of AFib that had not
affected his daily life at all.  Third, Apex argues that its
underwriting expert provided substantial evidence that, even
if Protective had been given the medical records of Weber's
May 2016 doctors' visits, Protective would have proceeded with
approving the policy at a Table 2 rating rather than
suspending the application to wait for further developments
concerning Weber's AFib diagnosis.
36
1180508
Our review of the record indicates that Protective has
accurately characterized the evidence that supported its
motions for a judgment as a matter of law.  That is, it is
clear that Weber consulted physicians between the time he
signed the initial application on March 10, 2016, and the time
he signed the amendment on May 31, 2016, that those visits
revealed an AFib diagnosis, and that such a diagnosis
potentially could have altered Protective's policy offer.
Therefore, we must closely examine Apex's responses to that
evidence.
As we have noted, Apex vigorously argues -- as it did in
the trial court -- that the amendment was ambiguous and that,
therefore, it should be left to a jury to determine what Weber
was actually attesting to by signing the amendment.  See,
e.g., Jefferson Standard Life Ins. Co. v. Anderson, 236 Cal.
App. 2d 905, 912, 46 Cal. Rptr. 480, 485 (1965) (explaining
that "[w]here, as related to the circumstances in a particular
case, the form of a question soliciting information respecting
a proposed insured's physical condition is ambiguous, that
interpretation thereof against avoidance of the policy will be
accepted").  Specifically, Apex contends that the 
amendment is
37
1180508
ambiguous because it does not define key terms, it does not
explain how an applicant is supposed to include additional
information, and it serves at least two purposes --
acknowledging an increase in the premium and attesting that
the applicant is in "the same health" as when he or she signed
the initial application.
"The interpretation of an insurance policy is a
question of law.  (Waller v. Truck Insurance
Exchange, Inc. (1995) 11 Cal. 4th 1, 18, 44 Cal.
Rptr. 2d 370, 900 P.2d 619).  We 'look first to the
language of the contract in order to ascertain its
plain meaning or the meaning a layperson would
ordinarily attach to it.'  (Ibid.)  A provision in
a policy is considered ambiguous when it is capable
of two or more constructions, each of which is
reasonable.  (Ibid.)  We construe ambiguities
against the insurer, as drafter of the policy.
(State of California v. Continental Insurance
Company (2012) 55 Cal. 4th 186, 195, 145 Cal. Rptr.
3d 1, 281 P.3d 1000.)  These principles apply
likewise to the questions in an application prepared
by an insurer.  Therefore, although an insurer
generally 'has the right to rely on the applicant's
answers without verifying their accuracy[,] ... [¶]
... [t]he insurer cannot rely on answers given where
the applicant-insured was misled by vague or
ambiguous questions.'  (Croskey et al., Cal.
Practice Guide:  Insurance Litigation (The Rutter
Group 2016) ¶¶ 5:217 to 5:218, p. 5-64 (Croskey).)
Croskey provides several '[e]xamples of "inartful"
questions in insurance applications,' including
questions with 'ambiguous' or 'unfamiliar' terms,
and questions 'lumping together many different
conditions.'  (Id. ¶ 5:218, p. 5-64, italics
omitted.)"
38
1180508
Duarte, 13 Cal. App. 5th at 54, 220 Cal. Rptr. 3d at 178.
The amendment itself refutes Apex's assertion of
ambiguity.  Although it is true that the amendment serves more
than one purpose, the title of the document plainly states its
dual purpose:  "AMENDMENT TO APPLICATION WITH HEALTH
STATEMENT."  (Capitalization in original; emphasis added.) 
There is a large blank-space gap between the premium-
adjustment information and the health statement.  The health
statement itself is prefaced with the words "HEALTH STATEMENT"
in bold typeface and capital letters.  Additionally, the
entire health statement is in bold typeface.  In short, there
was no plausible way for Weber to miss the health statement in
the amendment or for Weber to believe that by signing the
amendment he was attesting only to an increase in the policy
premium.
Furthermore, the representation in the health statement
concerning physician consultations is clear:  "I represent
that I have not consulted any physician or other practitioner
since the date of my medical examination (or date I signed the
last application with Protective Life Insurance Company, if 
no
medical examination was required)."  Contrary to Apex's
39
1180508
assertion, the word "consulted" is not in any way ambiguous
just because it was not defined.  "The fact that a term is not
defined in the [insurance] policies does not make it
ambiguous."  County of San Diego v. Ace Prop. & Cas. Ins. Co.,
37 Cal. 4th 406, 415, 118 P.3d 607, 612 (2005).
"Insurance policies are contracts construed in
accordance with the parties' mutual intent at the
time of contract formation, as inferred from the
written provisions.  (Civ. Code, §§ 1636, 1639;
Montrose Chemical Corp. v. Admiral Ins. Co. (1995)
10 Cal. 4th 645, 666, 42 Cal. Rptr. 2d 324, 913 P.2d
878.)  The 'clear and explicit' meaning of the
provisions, interpreted in their 'ordinary and
popular sense,' controls judicial interpretation
unless 'used by the parties in a technical sense or
a special meaning is given to them by usage.'  (Civ.
Code, §§ 1638, 1644.)  If the meaning a layperson
would ascribe to insurance contract language is not
ambiguous, courts will apply that meaning. 
(AIU
Ins. Co. v. Superior Court (1990) 51 Cal. 3d 807,
822, 274 Cal. Rptr. 820, 799 P.2d 1253 (AIU).)"
Vandenberg v. Superior Court of Sacramento Cnty., 21 Cal. 4th
815, 839–40, 982 P.2d 229, 244–45 (1999).  Weber was the chief
executive officer of a successful company with over 40 years'
experience in his industry. 
There is simply no way to
conclude that Weber could have thought that such a statement
would not cover three scheduled doctors' visits with two
separate doctors, one of whom was a cardiologist, plus a visit
to an ER during which he was seen by two doctors, all of which
40
1180508
concerned a diagnosis of AFib.  See, e.g., Feurzeig v.
Insurance Co. of the West, 59 Cal. App. 4th 1276, 1283, 69
Cal. Rptr. 2d 629, 632 (1997) (observing that, "[i]n
construing a policy, the courts may consider whether the
insured was a sophisticated buyer of insurance represented by
a professional broker").
Moreover, the fact that the amendment did not provide
instructions on what to do if the health statement itself
could not be signed even if there was agreement as to the
premium increase also does not render the document ambiguous.
Apex points out that it introduced health-statement documents
from other insurers that were clearer because they dealt
solely with health matters, they asked specific health
questions, and they gave lined spaces for the applicant to
provide answers.  Apex also notes that its underwriting
expert, Joseph Schlesser, testified that he found the
amendment confusing and not like other health-statement
documents used in the insurance industry.  But "[t]he fact
that an agreement could have been made even clearer does not
render 
the 
existing 
terms 
ambiguous." 
Banning 
Ranch
Conservancy v. Superior Court of Orange Cnty., 193 Cal. App.
41
1180508
4th 903, 914, 123 Cal. Rptr. 3d 348, 356 (2011).  Again, all
indications are that Weber was a smart individual, and Apex
worked with a broker in procuring the policy.  Nothing
prevented Weber from seeking clarification as to how to
proceed before he signed the amendment.  Nothing required
Weber to sign the amendment absent any further disclosures
just because Apex had agreed to the premium increase.
Accordingly, as a matter of law, because the health statement
was clear and unambiguous, the trial court erred in submitting
this issue to the jury.  
Apex's second argument is that the representation in the
health 
statement 
pertaining 
to 
physician 
consultations must 
be
viewed in combination with the representation that the
applicant was in "the same health" as when he or she signed
the initial application and that, therefore, the physician-
consultation representation, standing alone, could not
constitute a misrepresentation.  In support of 
this assertion,
Apex cites the letter Protective sent Apex explaining the
reason it was denying the claim, which focused on a "material
change of health" rather than the physician consultations. 
Apex also notes that Peña admitted that, if an insured
42
1180508
consulted a doctor for a minor ailment and failed to disclose
that visit, it would not be a material misrepresentation and
that he also stated that the "same health" representation was
the "linchpin" of the health statement.
"[Apex's counsel:]  ...  But you would agree,
wouldn't you, that if someone saw the doctor for
poison ivy, the only diagnosis was poison ivy, the
treatment was itch cream, that would not be a
material misrepresentation for failing to disclose
that, right?
"A.  Correct.
"Q.  In fact, you will agree with me that really the
linchpin of that form over there is whether or not
you are in the same health as you were when you
disclosed your health up front, right?
"A.  Correct."
Apex argues that this testimony demonstrates that Weber's
representation about physician consultations alone could not
constitute a material misrepresentation and that, therefore,
Weber's beliefs about his health at the time he signed the
amendment become relevant to the inquiry of materiality.  In
that regard, Apex repeatedly argues that it was plausible for
Weber to believe his health had not changed because he
experienced no symptoms from his AFib and his doctors
consistently commented on his excellent physical fitness.
43
1180508
However, there are at least two problems with Apex's
argument. 
First, under the plain language of the  health
statement, 
the 
representation 
concerning 
physician
consultations 
and 
the 
representation about 
the 
applicant being
in the same health are separate sentences.  Again, the health
statement provides:
"HEALTH STATEMENT:  I represent that I have not
consulted any physician or other practitioner since
the date of my medical examination (or date I signed
the last application with Protective Life Insurance
Company, if no medical examination was required). 
It is further agreed that, except as stated above,
all insured persons are in the same health as that
stated 
in 
the 
last 
application, 
or 
medical
examination with Protective Life Insurance Company."
Thus, the representation about physician consultations does
not depend upon the good-health representation. 
Compare
McAuliffe v. John Hancock Mut. Life Ins. Co., 245 Cal. App. 2d
855, 857, 54 Cal. Rptr. 288, 289 (1966) (noting that "[h]ere
the inquiry about medical consultation was part of the same
sentence asserting 'good health' of the insured, and denying
any 'injury, ailment, illness, or disease or 
symptom thereof.' 
Such an inquiry does not relate to minor indispositions but is
construed as 'referring to serious ailments which undermine
the general health.'" (quoting Jefferson Standard Life Ins.
44
1180508
Co. v. Anderson, 236 Cal. App. 2d 905, 910, 46 Cal. Rptr. 480,
484 (1965))).
Second, Apex ignores testimony from Peña that immediately
preceded the portion it highlights:  
"[Apex's counsel:]  And you will agree with me that
in filling out that form, if someone had seen a
doctor for something minor like poison ivy or went
to an orthopedic because they got tennis elbow and
they failed to disclose that, that would not be a
material change?
"A.  It would be a material -- it would be a
misrepresentation if they didn't include it on the
form.  We would make that determination whether or
not 
it 
would 
be 
considered 
a 
material
misrepresentation on the form.
"Q.  Fair enough.  It might be a misrepresentation. 
..."
In the foregoing portion of his testimony, Peña raises the
salient point -- which Apex's counsel conceded -- that the
insurer 
determines 
whether 
an 
applicant's 
particular
consultation with a physician is material.  "It is generally
held that an insurer has a right to know all that the
applicant for insurance knows regarding the state of his
health and medical history."  Thompson, 9 Cal. 3d at 915, 513
P.2d at 360.  Throughout its brief Apex cites several
California cases stating that, when an applicant is ignorant
45
1180508
of a fact or fails to appreciate its significance, the failure
to reveal the fact to the insurer cannot be deemed a
misrepresentation.  Indeed, Thompson is one such case.  See 9
Cal. 3d at 916, 513 P.2d at 36 ("[I]f the applicant for
insurance had no present knowledge of the facts sought, or
failed to appreciate the significance of information related
to him, his incorrect or incomplete responses would not
constitute grounds for rescission."); see, e.g., MacDonald v.
California-Western States Life Ins. Co., 203 Cal. App. 2d 440,
451–52, 21 Cal. Rptr. 659, 666 (1962) (concluding that,
because the plaintiff did not know the seriousness of his
heart ailment, his failure to disclose it did not constitute
concealment); Miller v. Republic Nat'l Life Ins. Co., 789 F.2d
1336, 1339–40 (9th Cir. 1986) ("First, there is no breach of
the duty to disclose if the applicant is ignorant of the
relevant information.  ...  Second, there is no breach of the
duty to disclose if the applicant, acting in good faith, does
not understand the significance of the information he fails to
disclose.  ...  A lay person will not be held to the level of
knowledge or understanding that a doctor or other expert might
have.").  But the legal observation Apex highlights from
46
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Thompson, MacDonald, Miller, and other cases is irrelevant to
the physician-consultation representation in the health
statement.  Weber unquestionably knew that in May 2016 he had
recently consulted multiple physicians concerning the AFib
diagnosis.  Because the health statement clearly and directly
prompted Weber about physician consultations, Weber had 
a 
duty
to honestly attest to whether he had visited any doctors since
the date he signed the application.  It was left to Protective
to determine whether those physician consultations were for a
minor indisposition or were material to the application.  See,
e.g., Cohen v. Penn Mut. Life Ins. Co., 48 Cal. 2d 720, 727-
28, 312 P.2d 241, 245 (1957) ("Defendant did not ask on the
application for merely his evaluation of his physical
condition, but also for a truthful statement of his medical
history.  ...  Defendant was entitled to determine for itself
the matter of the deceased's insurability, and to rely on him
for such information as it desired 'as a basis for its
determination to the end that a wise discrimination may be
exercised in selecting its risks.'" (quoting Robinson v.
Occidental Life Ins. Co., 131 Cal. App. 2d 581, 586, 281 P.2d
39, 42 (1955) (emphasis added))); Freeman v. Allstate Life
47
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Ins. Co., 253 F.3d 533, 537 (9th Cir. 2001) (applying
California law and holding that "[w]here an insured is aware
of her condition, symptoms, or treatment, she is obliged to
disclose them upon request" (emphasis added)).  In short, the
fact that a particular physician consultation could be
immaterial does not mean that all such consultations are
immaterial; it was Weber's duty to disclose the consultations
and 
Protective's duty 
to 
determine 
whether 
those 
consultations
would materially affect its offer of insurance.  Weber's
belief about the seriousness of his condition had no role in
this assessment because, in the health statement, the
physician-consultation representation is independent of the
same-health representation.
Protective's assessment as to the materiality of Weber's
May 2016 physician consultations would, of course, depend upon
the information it obtained after learning of those
consultations, i.e., the reason for Weber's consultations as
detailed in his medical records.  That is the subject of
Apex's 
final 
argument 
in 
defense 
of 
Weber's 
misrepresentation.
Apex argues that, even if Protective had been aware of Weber's
physician consultations in May 2016, Protective still would
48
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have issued the policy at the Table 2 rating and thus that
Weber's misrepresentation about doctors' visits was not
material to Protective.  As we noted at the outset of this
analysis, "'[t]he test [for materiality] is the effect which
truthful answers would have had upon the insurer.'"  Old Line
Life Ins. Co. of America v. Superior Court of Alameda Cnty.,
229 Cal. App. 3d 1600, 1604, 281 Cal. Rptr. 15, 17–18 (1991)
(quoting Taylor v. Sentry Life Ins. Co. 729 F.2d 652, 655 (9th
Cir. 1984)).  Apex's underwriting expert, Joseph Schlesser,
testified that the Protective underwriter who initially
approved Apex's application, Paula Nicols, was -- 
like himself
-- an "aggressive" underwriter.   Schlesser explained that an
aggressive underwriter often approves applications without
seeking every single bit of medical information on the
applicant that he or she could possibly obtain.  Additionally,
he opined, an aggressive underwriter heavily relies on his or
her experience in arriving at the correct rating for an
application rather than strictly following the underwriting-
manual guidelines.  
Schlesser supported his labeling Nicols an
"aggressive" underwriter by noting that Nicols could have
requested more information or asked Weber to provide a more
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current evaluation of his LBBB before approving the Apex
application but that she chose not to do so because she was
comfortable with the information she had.  Schlesser also
observed that Nicols did not strictly follow the Swiss Re
guidelines in a couple of areas with respect to the
information Weber provided in the application, with Nicols
being more lenient toward Weber's health than a strict
application of the guidelines would have dictated.  Schlesser
then opined that an aggressive underwriter like Nicols or
himself most likely would have approved Apex's application at
the Table 2 rating even if he or she had been given the
medical records for Weber's May 2016 doctors' visits.
"[Apex's counsel:]  Would you, as a self-described
aggressive underwriter, then -- would you have been
comfortable then issuing a policy to Mr. Weber, even
though he had atrial fibrillation, in light of the
other medical conditions that you knew about?
"A.  Yeah.  And mainly because it wasn't chronic
atrial fibrillation.  There wasn't a recommendation
at that time for any further intervention.  That is
not a major finding.  You look at other factors,
too.  The gentlemen was in very good cardiovascular
health.
"....
"Q.  ...  What other factors would have contributed
to you as an underwriter in determining that even
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though Mr. Weber had AFib, that you could still
insure him at the Table 2 rates? 
"A.  Just his cardiac fitness.  He also had a
resting echocardiogram.  He had no symptoms that
would suggest further or, you know, significant
obstructive heart disease."
Schlesser then explained why he believed that Protective
underwriter Peña had misapplied the underwriting-manual
guidelines in concluding that Weber's AFib diagnosis would
have required a postponement of Apex's application to await
further evaluation of his newly diagnosed AFib condition.
"[Apex's counsel:]  ...  So why did you disagree
then with how Mr. Peña decided to rate Mr. Weber as
not being insurable anymore because of the AFib?
"A.  I believe he ran the guidelines incorrectly. 
He used --
"Q.  In what way?  In what way?
"A.  Both manuals say that atrial fibrillation newly
found 
on 
exam 
should 
be 
postponed 
until
investigation.  That -- the -- both manuals cover
this, and that is, as I understand it, the many
years that I've been in underwriting and I've seen
many occasions of atrial fibrillation.  It's put in
there when we don't have a real good picture.  We
have one EKG, and we have nothing else to go by.
"If we're looking at May 31st, we have more than
just a single EKG.  We have a stress test.  We have
an echocardiogram.  We have notes that say he was
sent home after the heart rate -- the rapid heart
rate resolved spontaneously.  He had a follow-up
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where he was back into a normal heart rate.  So I
think he interpreted those guidelines incorrectly."
Apex argues that Schlesser's testimony presented an issue of
fact as to whether Weber made a material misrepresentation on
the health statement because he stated that the medical
records from Weber's May 2016 doctors' visits reflected that
Weber's AFib was not serious and that, therefore, at that
time, Nicols would have approved Apex's application at the
Table 2 rating.  Because "the true facts, if known, would not
have made the contract less desirable to [Protective]," Apex
contends, 
Weber's 
misrepresentation 
about 
physician
consultations was not "material" to its approval of the
policy.  Thompson, 9 Cal. 3d at 916, 513 P.2d at 360.
Schlesser's testimony is 
Apex's most 
compelling evidence,
but Protective contends that his testimony is both legally and
factually flawed.  Protective argues that Schlesser's
testimony is legally flawed because he testified as to how he
would interpret the underwriting manuals rather than how
Protective would have done so.  Because materiality "is a
subjective test viewed from the insurer's perspective,"
Superior Dispatch, Inc. v. Insurance Corp. of New York, 181
Cal. App. 4th 175, 191, 104 Cal. Rptr. 3d 508, 520 (2010),
52
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Protective contends that Schlesser's opinion about the proper
way to read the underwriting manuals is irrelevant.  However,
as Apex observes, if expert testimony was irrelevant to a
determination of materiality, "then there would be no need for
a trial in any insurance [rescission] case because the insurer
would just announce 'what it would have done' and that would
be the end of every dispute."  Apex's brief, p. 58.  Indeed,
the California Supreme Court has stated that "the trier of
fact is not required to believe the 'post mortem' testimony of
an insurer's agents that insurance would have been refused had
the true facts been disclosed."  Thompson, 9 Cal. 3d at 916,
513 P.2d at 360.  In any event, as the foregoing summary of
Schlesser's testimony relates, Schlesser did address his
evaluation from Protective's perspective by specifically
positing what he believed Nicols would have done if she had
been made aware of Weber's May 2016 doctors' visits at that
time.  Protective's first objection to Schlesser's testimony
is therefore without merit.
Protective also argues that Schlesser's testimony is
based on two inaccurate factual premises and therefore must be
rejected. 
 First, 
Protective 
contends 
that 
Schlesser
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mistakenly asserted that Protective's evaluation of the
application must be viewed as of May 31, 2016.  
Schlesser testified:
"A.  When presented all the information as of
May 31st, we have to take -- remember when we are
looking at a point in time, people have episodes of
rapid heart rate that are spontaneously resolved and
never come back again.
"[Protective's counsel:]  Was his resolved?
"A.  As of May 9th, yes.
"Q.  Was it resolved in June?
"A. In June, they did a Holter monitor or a ZIO
patch, and it showed that he was -- he had a rapid
heart rate 22 hours out of 61.
"Q.  That doesn't [seem] very resolved, does it?
"A.  Well, as of May 31st, that's the information
you have to go by."
Protective contends that Schlesser's assumption of
May 31, 2016, as the correct date for evaluating the
materiality 
of 
Weber's 
misrepresentation 
is 
erroneous 
because,
even though Weber signed the amendment on May 31, 2016,
Protective did not receive the amendment until June 23, 2016. 
Consequently, Protective maintains, if Weber had indicated in
the amendment that he had consulted physicians, Protective
would have requested all of Weber's medical records up to
54
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June 23, 2016. This would have meant that Protective would
have seen the medical records from Weber's visit to Dr. Gang
on June 8, 2016, which showed that Weber was in AFib during
that visit, that Dr. Gang prescribed the blood thinner Xarelto
to Weber, that Weber was given a ZIO patch to further evaluate
his AFib, and that Weber "was going to give [an ablation]
serious consideration."  Protective also would have seen the
results from Weber wearing the ZIO patch in June 2016, which
showed that, over a three-day period, Weber was in AFib 61
percent of the time, and that his longest stretch of being in
AFib was 22 hours and 36 minutes.  Protective further would
have seen that, based on the ZIO patch results, Dr. Gang
recommended that Weber undergo an ablation.  
Protective argues
that it is undisputed that, if Weber's June 2016 medical
records are considered, Protective would have reissued the
policy at a higher premium rate.  Indeed, Schlesser admitted
that Weber's medical records from June 2016 showed that his
AFib had not, in fact, resolved and that this would have
entirely changed Protective's materiality evaluation. 4 
4In his testimony, Schlesser acknowledged that "if we're
looking on June 21st and saying there's been no change in
health insurability from what's described in the application,
what was described in the application is now completely
55
1180508
However, just because Protective would have had access to
the June 2016 medical records because it happened not to
receive the amendment until June 23, 2016, does not mean that
it could use that information in evaluating whether Weber had
made a material misrepresentation in the amendment.  Apex
argues -- correctly, we believe -- that Weber cannot be held
responsible for information he could not have known as of the
date he signed the amendment.  "It would be 'patently unfair'
to allow the insurer to avoid its obligations under the policy
on the basis of information that the applicant did not know
...."  Miller, 789 F.2d at 1340.  Obviously, Weber could not
have known on May 31, 2016, the information discovered during
his June 2016 doctors' visits because they had not yet
occurred.  "A representation is false when the facts fail to
correspond with its assertions or stipulations."  Cal. Ins.
Code § 358.  The facts corresponding to a representation are
those that exist at the time the representation is made.5
different."
5Section 356, Cal. Ins. Code, provides:  "The completion
of the contract of insurance is the time to which a
representation must be presumed to refer."  However, § 356 was
not discussed or argued by the parties at trial or on appeal.
Therefore, its potential implications have no bearing on this
case.
56
1180508
Therefore, the information discovered about Weber's AFib
condition in June 2016 is irrelevant to whether Protective was
permitted to rescind the policy based on the representations
Weber made in the amendment he signed on May 31, 2016. 
Accordingly, the fact that Schlesser based his 
assessment from
the vantage point of May 31, 2016, did not invalidate his
testimony.
A more valid objection to Schlesser's testimony concerns
what the record reflects about Weber's AFib condition in
May 2016.  Schlesser's testimony was based on the premise
that, as of May 31, 2016, Weber's AFib had resolved.  As we
have already recounted, Schlesser testified that "[t]here
wasn't a recommendation at that time for any further
intervention." More specifically, Schlesser also testified: 
"As of May 31st, he had one episode of rapid
heartbeat.  It resolved on its own, and he was sent
home by a doctor with an Aspirin.  And he followed
up the following week by another doctor -- I'm sorry
-- with a cardiologist.  At that time his heart was
back into what's called normal sinus rhythm."
Protective contends -- and we agree -- that Schlesser's
premise is flatly contradicted by Weber's May 2016 medical
records.  Instead, those medical records show that Weber's
doctors were encouraging, and that Weber was seeking, further
57
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treatment for his AFib.  It is true that during Dr. Burnam's
physical evaluation of Weber in the ER on May 6, 2016,
Dr. Burnam confirmed that Weber's AFib was not persistent and
concluded that it was sufficient for the time being to
prescribe aspirin as a blood thinner to Weber.  But, on that
visit Dr. Burnam and Weber also discussed further treatment
options, including the possibility of Weber undergoing an
ablation procedure.  It is true that during Weber's May 9,
2016, follow-up appointment with Dr. Burnam, an EKG showed
that Weber's heart was in normal sinus rhythm.  But,
Dr. Burnam's notes specifically reflected that he and Weber
again discussed further treatment options and that Weber "was
going to strongly consider" undergoing an ablation.  To that
end, during that appointment Dr. Burnam gave Weber a referral
to Dr. Gang, an AFib subspecialist.  Additionally, after
talking to Dr. Burnam that day, Dr. Fink entered a note in
Weber's medical file confirming that Weber "will be seeing
Dr. Eli Gang."  After speaking with Weber on May 19, 2019,
Dr. Fink entered a note in Weber's medical file that
reiterated that Weber "is referred to Dr. Gang."  Those facts
show that Apex is simply incorrect in arguing that the only
58
1180508
evidence from that time supporting that Weber was going to see
Dr. Gang was Weber's "cryptic handwritten notes" about his
AFib condition and a May 10, 2016, note referencing an
appointment with an "unnamed doctor" in June 2016.  Apex's
brief, pp. 48, 21.  Weber's notes are certainly corroborative
evidence, but the medical records alone -- which Protective
would have requested had it been aware of Weber's May 2016
physician consultations -- plainly indicated that Weber's
doctors had encouraged, and that Weber was going to seek,
further treatment from an AFib subspecialist.  In other words,
the actions of both Weber and his doctors in May 2016 belied
any notion that Weber's AFib had "spontaneously resolved." 
Based on this information, the only reasonable conclusion is
that Protective would have postponed the application to await
further developments regarding Weber's AFib condition. 
Waiting would have revealed the subsequent developments in
June 2016 we previously discussed, and Schlesser conceded that
information from June and beyond would have required:  (1) a
postponement of the application and (2) the ultimate
reissuance of the policy at a higher rating.  Thus, because
Schlesser's assessment was based on the erroneous assumption
59
1180508
that Weber's May 2016 medical records reflected that his AFib
condition had spontaneously resolved, his testimony did not
provide 
substantial 
evidence 
that 
Protective 
nonetheless 
would
have issued the policy at a Table 2 rating if it had been made
aware of Weber's May 2016 physician consultations at that
time. 
 
Accordingly, 
Weber's 
misrepresentation 
concerning 
those
physician consultations unquestionably was material to
Protective.
In sum, the amendment was not ambiguous and the
representation in the  health statement about physician
consultations was separate from the representation that the
applicant was in the same health.  Therefore, because Weber
indisputably knew he had consulted multiple physicians in May
2016 and yet signed the amendment on May 31, 2016, without
disclosing those consultations, Weber misrepresented his
medical history to Protective.  Furthermore, because the May
2016 medical records revealed that both Weber and his doctors
believed he needed further treatment for his AFib condition,
Weber's 
misrepresentation 
clearly 
was 
material 
to 
Protective's
policy offer to Apex.  Accordingly, we conclude that the
record unequivocally demonstrated that Weber made a material
60
1180508
misrepresentation to Protective by signing the amendment on
May 31, 2016, without revealing the fact of his multiple
physician 
consultations 
during 
that 
month. 
 
Because 
Protective
demonstrated that Weber made a material misrepresentation and
Apex failed to introduce substantial evidence to 
the 
contrary,
Protective was entitled to rescind the policy, which was a
complete defense to Apex's claims of breach of contract. 
Thus, the trial court erred in denying Protective's motions
for a judgment as a matter of law.
IV.
Conclusion
For the reasons discussed above, Protective was entitled
to a judgment as a matter of law on Apex's claim of breach of
contract, and the trial court erred by submitting this claim
to the jury for consideration. Accordingly, we reverse the
judgment in favor of Apex on the breach-of-contract claim and
render a judgment as a matter of law in favor of Protective. 
Because of this Court's resolution of the issues, we pretermit
discussion of the parties' arguments pertaining to the jury
instructions.
61
1180508
REVERSED AND JUDGMENT RENDERED.
Bolin, Wise, Bryan, Sellers, and Stewart, JJ., concur.
Parker, C.J., dissents.
Mitchell, J., recuses himself.
62