Wells Fargo Bank, N.A. v. American National Insurance Co

FILED
NOT FOR PUBLICATION AUG 10 2012
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
WELLS FARGO BANK, N.A., as trustee No. 11-55366
for BENJAMIN CABAL 2007
INSURANCE TRUST, D.C. No. 2:09-cv-01840-DDP-RZ
Plaintiff / counter-defendant /
Appellee, MEMORANDUM *
v.
AMERICAN NATIONAL INSURANCE
COMPANY, a Texas corporation,
Defendant / counter-claimant
/ Appellant,
EXAMINATION MANAGEMENT
SERVICES, INC., a Texas corporation,
FKA Profile Services, Inc.,
Third-party-defendant / Cross
Defendant ,
and
BENJAMIN CABAL, an individual,
Third-party-defendant / Cross
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Defendant .
WELLS FARGO BANK, N.A., as trustee No. 11-55665
for BENJAMIN CABAL 2007
INSURANCE TRUST, D.C. No. 2:09-cv-01840-DDP-RZ
Plaintiff-counter-defendant -
Appellee,
v.
AMERICAN NATIONAL INSURANCE
COMPANY, a Texas corporation,
Defendant-counter-claimant -
Appellant.,
_____________________,
EXAMINATION MANAGEMENT
SERVICES, INC., a Texas corporation,
FKA Profile Services, Inc.,
Third-party-defendant -
Cross-Claimant,
and
BENJAMIN CABAL, an individual,
Cross-defendant - Third-
party-defendant.
Appeal from the United States District Court
for the Central District of California
2
Dean D. Pregerson, District Judge, Presiding
Submitted August 6, 2012**
Pasadena, California
Before: REINHARDT, SILVERMAN, and NGUYEN, Circuit Judges.
American National Insurance Company (ANICO) appeals: (1) the district
court’s order striking ANICO’s counterclaim allegations regarding the retention of
premiums; and (2) its summary judgment order holding that the policy at issue was
not void for lack of an insurable interest. Neither party appeals the district court’s
summary judgment order sua sponte declaring the Policy rescinded by ANICO.
“[Federal Rule of Civil Procedure] 12(f) does not authorize district courts to
strike claims for damages on the ground that such claims are precluded as a matter
of law.” See Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 974-75 (9th Cir.
2010). Here, the district court struck the request to retain a portion of the
premiums upon concluding it was unavailable as a matter of law. While we
** The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
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acknowledge that Judge Pregerson lacked the benefit of Whittlestone’s guidance at
the time of his decision, striking ANICO’s request under Rule 12(f) was error.1
We review a district court’s grant of summary judgment de novo. Delia v.
City of Rialto, 621 F.3d 1069, 1074 (9th Cir. 2010).
ANICO argues that the policy is void as against public policy because it
lacked an insurable interest. If the policy was void, ANICO would be able to keep
the premiums. See Kelton v. Stravinski, 138 Cal. App. 4th 941, 949 (2006).
The pre-2010 version of California Insurance Code section 10110.1 is
applicable because the beneficial interest was transferred by Thelma Cabal to
Accumulation Trust in January 2008 and the statute does not apply retroactively.
See 2009 Cal. Legis. Serv. Ch. 343 (S.B. 98); McClung v. Emp't Dev. Dep’t, 34
Cal. 4th 467, 475 (2004).
1
We note that the district court may not have considered California Civil
Code section 1692, which allows the court to “require the party to whom such
relief is granted to make any compensation to the other which justice may require
and may otherwise in its judgment adjust the equities between the parties.” Such
relief is not limited to normal “compensatory damages” and “an adjustment may be
compelled so as to forestall unjust enrichment of the nonrescinding party through
whose fault the grounds of rescission have arisen.” Runyan v. Pac. Air Indus., Inc.,
2 Cal. 3d 304, 311-15 (1970). Although ANICO is not entitled to its requested
relief, on remand the district court may determine whether, under Section 1692, a
consideration of the equities permits ANICO to retain some or all of its incurred
costs.
4
Here, Benjamin Cabal formed an insurance trust to apply for and own the
policy insuring his own life and named Thelma Cabal, his wife, the trust
beneficiary. The irrevocable trust therefore had an insurable interest when the
policy took effect. Moreover, under California law, after a policy takes effect, no
insurable interest is required and the policy may therefore be transferred to any
other person. Cal. Ins. Code § 286; Cal. Ins. Code § 10130. An intent to transfer
“does not negate the fact that when the trust acquired the policies, they were
supported by an insurable interest,” and therefore, under the prior version of
section 10110.1, it made no difference that the Cabals always intended to transfer
Thelma Cabal’s interest to Accumulation Trust. See Lincoln Life & Annuity Co. of
N.Y. v. Berck, No. D056373, 2011 WL 1878855, at 5 (Cal. App. May 17, 2011)
review denied Aug. 31, 2011.
ANICO’s focus on the fact that Khrlobian and others “caused [the policy] to
be procured” is misplaced. The “caused to be procured” language in former
section 10110.1(e) comes into play only if the person applying for the insurance
does not have an insurable interest in the individual insured. The Cabal Trust had
an insurable interest in Benjamin Cabal’s life. Because the policy was supported
by a valid insurable interest at the time it took effect the policy is not void. See
Berck, 2011 WL 1878855, at *7.
5
We REVERSE the district court order striking ANICO’s request to retain
premiums. We AFFIRM the district court’s summary judgment order insofar as it
holds that the policy is not void for lack of an insurable interest at its inception.
This case is REMANDED to the district court for further proceedings
consistent with this Memorandum.
Each party shall bear its own costs on appeal.
6