Cousens v. Transamerica Life Insurance Company, 24-889

Plaintiff Kristene Cousens, as administrator of John L. Withers, Jr.’s estate, appealed the district court’s summary judgment in favor of Transamerica Life Insurance Company related to a lapsed life insurance policy.
The case arose from a dispute regarding whether proper notice was given before the policy lapsed due to non-payment.
Withers’ estate argued there was a one-day delay in the required grace period notice, which they claimed adversely impacted their rights under the policy.
After initial summary judgment, only the breach of contract claim remained, but Transamerica paid the full death benefit and interest under the policy.
The district court therefore granted summary judgment to Transamerica on all claims, concluding there was no unreasonable conduct or breach of contract by the insurer.
The appellate panel affirmed the district court, finding no genuine issues of material fact regarding bad faith or breach of contract.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Adequacy of Grace Period Notice	The grace period notice was mailed one day late, violating policy notice requirements.	Even if mailed a day late, Withers received sufficient notice and no material harm occurred.	No genuine dispute; a one-day difference does not prove bad faith.
Bad Faith	Transamerica’s late notice and interpretation of "pay" as "received" constituted bad faith.	Interpreted policy reasonably; late notice was at worst a mistake, not bad faith.	No unreasonable conduct found; summary judgment affirmed for Transamerica.
Elder Abuse	Alleged bad faith forms predicate for elder abuse claim.	No bad faith, thus no elder abuse.	Elder abuse claim fails in absence of bad faith.
Breach of Contract	Full death benefit and interest should not bar breach of contract claim.	Payment of all amounts due extinguished any contract breach.	No breach where all sums were paid; summary judgment proper.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (explains standard for summary judgment and materiality of facts)
Morris v. Paul Revere Life Ins. Co., 109 Cal. App. 4th 966 (2003) (standard for bad faith liability under California law)
Chateau Chamberay Homeowners Ass’n v. Associated Int’l Ins. Co., 90 Cal. App. 4th 335 (2001) (describes insurer’s duty of good faith and fair dealing)
Austero v. Nat’l Cas. Co., 84 Cal. App. 3d 1 (1978) (good faith definition in insurance context)