Sarah Flynn Thomas v. State Farm Life Insurance Co. ( 2021 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS OCT 6 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
SARAH AISLINN FLYNN THOMAS, No. 20-55231
Plaintiff-Appellee, D.C. No.
3:18-cv-00728-BAS-BGS
v.
STATE FARM LIFE INSURANCE MEMORANDUM*
COMPANY,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of California
Cynthia A. Bashant, District Judge, Presiding
Submitted October 4, 2021**
Pasadena, California
Before: MURGUIA and BADE, Circuit Judges, and MOLLOY,*** District Judge.
Defendant State Farm Life Insurance Company (State Farm) appeals the
district court’s entry of summary judgment in favor of Plaintiff Sarah Aislinn
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Donald W. Molloy, United States District Judge for
the District of Montana, sitting by designation.
Flynn Thomas. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.
This case arises from a contract dispute brought under California law that is
based on State Farm’s failure to pay life insurance benefits to Thomas, the
beneficiary of two life insurance policies held by her brother, James Flynn. State
Farm argues that it did not breach its contractual obligations because the policies
lapsed prior to Flynn’s death due to his failure to pay the premiums.
The policies did not lapse because State Farm failed to comply with two
statutory provisions—sections 10113.71 and 10113.72 of the California Insurance
Code. While State Farm originally argued that these statutory provisions did not
apply to the policies, it now concedes that the provisions are applicable here given
the California Supreme Court’s decision in McHugh v. Protective Life Insurance
Co., No. S259215, 2021 WL 3853061 (Cal. Aug. 30, 2021).
State Farm nevertheless maintains that Thomas is not entitled to summary
judgment on her breach of contract action. Specifically, State Farm argues that
Thomas failed to establish causation because she did not offer any evidence that
the policies would not have lapsed even had State Farm complied with sections
10113.71 and 10113.72. But this evidence is not necessary for Thomas to prevail.
Sections 10113.71 and 10113.72 “create a single, unified pretermination
notice scheme.” McHugh, 2021 WL 3853061, at *14. This scheme requires that
“[n]ew and existing policy owners [] have the opportunity to designate additional
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people to receive a notice of termination,” that “policy owners and any designees []
receive notice within 30 days of a missed premium payment,” and that “insurers
send notice to these parties at least 30 days prior” to “termination for
nonpayment.” See id. (citing Cal. Ins. Code §§ 10113.71(b)(1), (3) and 10113.72).
An insurer’s failure to comply with these statutory requirements means that the
policy cannot lapse. See id. at *13–14, 17–18.
Here, the parties stipulated that “[t]here is no known evidence that State
Farm communicated with Mr. Flynn about designating a third party to receive
notice of lapse or termination of [the policies] for nonpayment of premium or that
it gave Mr. Flynn a form to make such a designation.” Because State Farm failed
to bring forward any evidence indicating that it sent Flynn notice of the right to
designate, there is no genuine dispute of fact about whether it did so. See Fed. R.
Civ. P. 56(c)(1), (e); United States v. Falcon, 805 F.3d 873, 876 (9th Cir. 2015).
Accordingly, based on this record, State Farm failed to comply with sections
10113.71 and 10113.72, which prevented the policies from lapsing. See McHugh,
2021 WL 3853061, at *13–14, 17–18.
Therefore, State Farm breached its contractual obligations by failing to pay
benefits to Thomas under the policies after Flynn’s death. The district court
properly granted summary judgment for Thomas.
AFFIRMED.
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