325 F. Supp. 3d 1061
N.D. Cal.2018Background
- Plaintiff David Finkelstein, an OB-GYN, purchased four AXA Equitable disability income policies in the 1980s and later claimed disability beginning in 1998 due to wrist/hand conditions.
- Equitable originally paid "residual disability" benefits and in 2004 classified Plaintiff as totally disabled after he turned 50; in 2009 Plaintiff requested reclassification to total disability as of 1998 and Equitable denied that request in a written letter.
- Plaintiff sued in 2017 asserting breach of contract and breach of the covenant of good faith and fair dealing; Equitable moved to dismiss under Rule 12(b)(6) as time-barred.
- Equitable relied on incorporation-by-reference to attach the policies and the 2009 denial letter to the complaint, arguing those documents show accrual in 2009; Plaintiff disputed reliance on those documents and contended accrual occurred in 2016.
- The district court treated the policies and the 2009 denial letter as incorporated by reference, held the denial was a "clear and continuing" repudiation that triggered accrual in 2009, and dismissed the complaint as barred by the applicable statutes of limitations with leave to amend denied as futile.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether policy and denial letter may be considered on 12(b)(6) via incorporation by reference | The documents are not central and not extensively referenced, so they cannot be considered | Documents are referenced in the complaint and authenticated, so they may be incorporated by reference | Court: Documents are incorporated by reference and may be reviewed |
| When breach/accrual occurred for purposes of statutes of limitations | Accrual occurred in 2016 when payments ceased/clear repudiation occurred | Accrual occurred in 2009 when Equitable denied reclassification (causing lost WOP/COLA benefits) | Court: Accrual at the latest in 2009 when denial issued; claims time-barred |
| Whether insurer's statement of willingness to reconsider made the 2009 denial equivocal (tolling accrual) | The letter invited further submissions so denial was not unequivocal | Willingness to reconsider does not make a denial equivocal and does not restart limitations | Court: Willingness to consider additional info did not render the denial equivocal |
| Whether insurer waived limitations defense or is estopped from asserting it | Plaintiff: Equitable failed to notify him of time limits and engaged in inconsistent communications, so waiver/estoppel apply | Equitable: Regulation cited governs claim denial notices, not defense to suit; no misleading post-denial conduct occurred | Court: 10 Cal. Code Reg. §2695.7 does not bar asserting a limitations defense here; no waiver or estoppel shown |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (application of Twombly plausibility standard)
- Martin v. Construction Laborers' Pension Trust, 947 F.2d 1381 (9th Cir. 1991) (accrual triggered by clear repudiation of benefits)
- Davis v. HSBC Bank, 691 F.3d 1152 (9th Cir. 2012) (incorporation-by-reference doctrine on Rule 12(b)(6))
- Migliore v. Mid-Century Ins. Co., 97 Cal. App. 4th 592 (2002) (willingness to reconsider does not make denial equivocal)
- Wagner v. Director, Federal Emergency Management Agency, 847 F.2d 515 (9th Cir. 1988) (declining to allow insurer s reconsideration efforts to extend limitations period)