FILED
NOT FOR PUBLICATION NOV 04 2013
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
MARSHALL SALKIN, an individual and No. 12-55089
ELLEN SALKIN, an individual,
D.C. No. 5:10-cv-01322-VAP-OP
Plaintiffs - Appellants,
v. MEMORANDUM*
USAA LIFE INSURANCE COMPANY,
Defendant - Appellee.
Appeal from the United States District Court
for the Central District of California
Virginia A. Phillips, District Judge, Presiding
Argued and Submitted October 10, 2013
Pasadena, California
Before: REINHARDT and CHRISTEN, Circuit Judges, and SEDWICK, District
Judge.**
Appellants seek review of the district court’s order granting United Services
Automobile Association Life Insurance Company’s (“USAA”) motion for
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable John W. Sedwick, District Judge for the U.S. District
Court for the District of Alaska, sitting by designation.
summary judgment. We have jurisdiction pursuant to 28 U.S.C. § 1291. We
review an order granting summary judgment de novo, viewing the evidence in the
light most favorable to the non-moving party to determine whether any genuine
issues of material fact remain. Coszalter v. City of Salem, 320 F.3d 968, 973 (9th
Cir. 2003). We affirm.1
Under California law, an insurer can “‘rescind a policy when the insured has
misrepresented or concealed material information in connection with obtaining
insurance.’” Nieto v. Blue Shield of Cal. Life & Health Ins. Co., 181 Cal. App. 4th
60, 75–77 (Cal. Ct. App. 2010) (quoting TIG Ins. Co. of Mich. v. Homestore, Inc.,
137 Cal. App. 4th 749, 755–56 (Cal. Ct. App. 2006)). The California Insurance
Code provides that “[c]oncealment, whether intentional or unintentional, entitles
the injured party to rescind insurance.” Cal. Ins. Code § 331. It creates a
“statutory framework that imposes ‘heavy burdens of disclosure’ ‘upon both
parties to a contract of insurance, and any material misrepresentation or the failure,
whether intentional or unintentional, to provide requested information permits
rescission of the policy by the injured party.’” Mitchell v. United Nat’l Ins. Co.,
127 Cal. App. 4th 457, 468 (Cal. Ct. App. 2005) (internal citations omitted).
1
In reaching this conclusion, we rely only on evidence the district court
ruled admissible. We address appellants’ motion to strike in an order filed
concurrently with this disposition.
2
“Materiality,” in turn, “is to be determined not by the event, but solely by the
probable and reasonable influence of the facts upon the party to whom the
communication is due, in forming his estimate of the disadvantages of the
proposed contract, or in making his inquiries.” Cal. Ins. Code § 334.
USAA argues that Dr. Salkin made misrepresentations in his 2008
application by stating that he had never consulted with a health care provider
regarding a mental disorder, had not undergone diagnostic tests within the last five
years other than an EKG, and had no medical records. USAA further argues that
these misrepresentations were material, and that USAA would not have issued the
policy in the first place, based on its underwriting guidelines, if Dr. Salkin had
answered its questions accurately. Appellants argue that Dr. Salkin did not
actually “conceal” any information on his application, citing Thompson v.
Occidental Life Ins. Co., 9 Cal. 3d 904 (Cal. 1973).
We agree with the district court that there are no genuine issues of material
fact regarding the material misrepresentations Dr. Salkin made in his application
for insurance. Therefore, USAA was within its contractual rights to rescind the
policy. Appellants’ broad reading of Thompson is inconsistent with the California
Insurance Code and other relevant case law. Under the Code, even an
unintentional misrepresentation can be the basis for rescission. Cal. Ins. Code §
3
331. Moreover, where an insurance applicant is asked specific questions as to his
medical history — as happened here — “the failure to refer to temporary or minor
indispositions” will not be excused as immaterial. San Francisco Lathing Co. v.
Penn Mut. Life Ins. Co., 144 Cal. App. 2d 181, 186 (Cal. Ct. App. 1956). During
his application interview, Dr. Salkin was asked specific questions about his mental
health, diagnostic tests that he had undergone, and whether he had any medical
records. He responded with misrepresentations that USAA considered to be
material. Moreover, given that he was a physician himself, there is no concern
about Dr. Salkin’s ability to comprehend questions containing basic medical
terminology, let alone those questions that require no particular expertise to
understand.
Because appellants’ breach of contract claim fails, their claim for breach of
the covenant of good faith and fair dealing also fails. See San Diego Housing
Comm’n v. Indus. Indem. Co., 68 Cal. App. 4th 526, 544 (Cal. Ct. App. 1998)
(“Where a breach of contract cannot be shown, there is no basis for finding a
breach of the covenant.”). Similarly, because appellants did not oppose USAA’s
summary judgment motion on their claim for relief from rescission under
California Civil Code § 1692, this claim also fails. ER 25. There is no dispute that
USAA refunded all premiums paid on the policy at the time of rescission.
4
Appellants also contend that USAA should not have underwritten Dr.
Salkin’s policy without further investigation. They argue that an insurance
company like USAA “should not be allowed to cherry-pick only the undisclosed
medical abnormalities it considers material in order to rescind a life insurance
policy, while having ignored other disclosed material medical abnormalities that it
required and that were in its underwriting file before it issued the Policy.” In
essence, appellants argue that USAA was negligent in underwriting Dr. Salkin’s
policy in the first place. But their claims in this litigation sound in contract, not
tort, so their suggestion that USAA acted negligently does not raise a genuine issue
of material fact.
Appellants also argue that USAA was precluded from rescinding its policy
based on a prohibition against “postclaims underwriting.” This claim fails
because, in California, postclaims underwriting is a defined statutory phrase
applicable only to health and disability insurance policies. See Cal. Ins. Code §
10384 (“No insurer issuing or providing any policy of disability insurance
covering hospital, medical, or surgical expenses shall engage in the practice of
postclaims underwriting.”) The court declines appellants’ invitation to expand
California law based on public policy considerations.
5
Finally, because the district court rejected appellants’ other claims, their
prayer for punitive damages was properly denied as moot.
AFFIRMED.
6
FILED
NOV 04 2013
Salkin v. USAA, 12-55089 MOLLY C. DWYER, CLERK
REINHARDT, Circuit Judge, Concurring. U.S. COURT OF APPEALS
My question is whether Dr. Salkin’s failures to disclose were material.
USAA offered testimony from an underwriter that they were. Appellants failed to
offer evidence to the contrary. Accordingly, no genuine issue of fact existed for a
fact finder to resolve, and summary judgment for USAA was appropriate.