40 Cal.App.5th 1166
Cal. Ct. App.2019Background
- In 2005 Chase Insurance issued William Patrick McHugh a 60‑year term life policy; Protective Life later acquired Chase and administered the policy.
- Premium due January 9, 2013 was unpaid; the policy lapsed 31 days later under a 31‑day grace period; McHugh died June 2013.
- Appellants (McHugh’s beneficiary and successor‑in‑interest) sued Protective Life for breach of contract and breach of the implied covenant, claiming failure to provide the 60‑day grace period and designee notice required by Insurance Code §§10113.71 and 10113.72 (effective Jan 1, 2013).
- The trial court ruled the statutes applied to the claim and the case went to a jury, which returned a verdict for Protective Life; appellants’ post‑trial JNOV motion was denied.
- On appeal, Protective Life sought affirmance on the additional ground (CCP §906) that the statutes do not apply retroactively to policies issued before Jan 1, 2013; the Court of Appeal agreed and affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ins. Code §§10113.71 & 10113.72 apply to policies issued before Jan 1, 2013 | The statutes' mandatory language ("each policy"/"shall") shows they apply to all existing term policies and must be applied to McHugh's 2005 policy | Statutes apply prospectively to policies issued or delivered on or after Jan 1, 2013; Department of Insurance interpretation and statutory language support nonretroactivity | Held: Statutes apply only to policies issued or delivered on or after Jan 1, 2013; they do not apply to McHugh’s 2005 policy, so trial court erred in denying directed verdict on retroactivity but judgment affirmed on that ground |
Key Cases Cited
- Christensen v. Lightbourne, 7 Cal.5th 761 (2019) (agency interpretations receive situational deference when carefully considered)
- Yamaha Corp. v. State Bd. of Equalization, 19 Cal.4th 1 (1998) (great weight to administering agency's construction)
- Southern Cal. Edison Co. v. Peevey, 31 Cal.4th 781 (2003) (reasonableness required for deference to agency interpretation)
- Myers v. Philip Morris Cos., Inc., 28 Cal.4th 828 (2002) (statutes are retroactive only if express or clearly intended)
- Ball v. Cal. State Auto. Assn. Inter‑Ins. Bureau, 201 Cal.App.2d 85 (1962) ("issued or delivered" imports prospective application)
- Interinsurance Exchange of Auto. Club v. Ohio Cas. Ins. Co., 58 Cal.2d 142 (1962) (policies governed by law in force when issued)
- Microsoft Corp. v. Franchise Tax Bd., 39 Cal.4th 750 (2006) (if statute unambiguous, no further interpretation needed)
- Foley v. Interactive Data Corp., 47 Cal.3d 654 (1988) (legislature presumed aware of established judicial constructions)