Kamies Elhouty v. Lincoln Benefit Life Company, 886 F.3d 752

Kamies Elhouty owned a flexible premium adjustable life insurance policy with a $2,000,000 face amount issued by Lincoln Benefit Life Company.
The policy required scheduled annual premiums; if the net surrender value fell below a threshold, the owner had 61 days to cure a deficit or the policy would lapse.
On July 23, 2013 Lincoln Benefit mailed a notice saying the policy would terminate on September 22 unless Elhouty paid $55,061.49; Elhouty did not pay during the grace period.
Lincoln Benefit mailed a lapse notice on September 22 and returned a belated September 24 payment; it later offered reinstatement if Elhouty paid $55,880.08, which he did not.
Elhouty sued in California state court for a declaratory judgment that the policy remained in force; Lincoln Benefit removed to federal court based on diversity jurisdiction.
At district court, Elhouty missed the expert-report disclosure deadline and the court struck his expert; the court granted summary judgment for Lincoln Benefit and denied Elhouty’s request to defer the motion for further discovery.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Subject-matter jurisdiction: amount in controversy	The court should not automatically use the policy face value to satisfy §1332; other measures could apply	The controversy is about policy validity, so the face amount ($2,000,000) measures the amount in controversy	Face amount is the proper measure where the dispute concerns policy validity; court had diversity jurisdiction
Striking expert for failure to produce report	Striking the expert was an abuse of discretion and prevented meaningful opposition	Elhouty missed the disclosure deadline, did not timely oppose, and provided no expert report	District court did not abuse its discretion in striking the expert
Summary judgment on lapse/notice	Whether there was a genuine dispute: Elhouty contends notice mailing/receipt and interpretation issues preclude summary judgment	Lincoln Benefit showed it mailed the required notice to the most recent address and the policy and California law require only mailing	No genuine dispute: notice was properly mailed, policy unambiguous, summary judgment for Lincoln Benefit affirmed
Request to delay summary judgment for additional deposition	Elhouty sought deposition of insurer’s representative as potentially dispositive	Lincoln Benefit argued deposition would not change undisputed facts controlling the motion	Denial proper: Elhouty failed to show the deposition would produce dispositive evidence

Bankers Life Co. v. Jacoby, 192 F.2d 1011 (9th Cir. 1951) (when policy ownership/validity is disputed, face amount counts toward amount in controversy)
New York Life Ins. Co. v. Viglas, 297 U.S. 672 (U.S. 1936) (distinguishes cases where policy is not repudiated and future benefits are not the controversy)
Keck v. Fidelity & Cas. Co. of N.Y., 359 F.2d 840 (7th Cir. 1966) (amount in controversy may be limited to accrued benefits when policy validity is not at issue)
Jensen v. Traders & Gen. Ins. Co., 345 P.2d 1 (Cal. 1959) (California law: insurer’s mailing of lapse notice satisfies notice requirement even if insured claims nonreceipt)
Cohn v. PetSmart, Inc., 281 F.3d 837 (9th Cir. 2002) (amount in controversy is the value of the object of the litigation)