FILED
NOT FOR PUBLICATION JUN 29 2012
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOHN NICHOLS, No. 10-55650
Plaintiff-counter-defendant- D.C. No. 09-01068 VAP (CWx)
Appellant,
v. MEMORANDUM *
THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY,
Defendant-counter claimant -
Appellee.
Appeal from the United States District Court
for the Central District of California
Virginia A. Phillips, District Judge, Presiding
Argued and Submitted November 16, 2011
Pasadena, California
Before: W. FLETCHER and RAWLINSON, Circuit Judges, and MILLS,**
District Judge.
John Nichols appeals the district court’s entry of summary judgment in favor
of Northwestern Mutual Life Insurance Company. We have jurisdiction under 28
*
This disposition is not appropriate for publication and is not precedent except as
provided by 9th Cir. R. 36-3.
**
The Honorable Richard Mills, United States District Judge for the Central District
of Illinois, sitting by designation.
U.S.C. § 1291. We review de novo, see Bravo v. City of Santa Maria, 665 F.3d
1076, 1083 (9th Cir. 2011), and we affirm.
I.
Nichols brought this diversity action against Northwestern Mutual after the
insurance company rescinded his disability policy and reformed his life insurance
policy. He sought damages, attorney’s fees, costs, and declaratory relief based
upon the following claims: (1) breach of contract; (2) fraud; (3) breach of implied
covenant of good faith and fair dealing; and (4) intentional infliction of emotional
distress. Northwestern Mutual lodged a counterclaim against Nichols seeking
rescission of the policy.
The district court granted summary judgment to Northwestern Mutual both
on its rescission counterclaim, and on all of Nichols’ claims.
II.
From August 2001 to the end of 2006, Nichols saw his chiropractor, Dr.
Rodney Cross, in excess of 100 times, seeking treatment primarily for tension
headaches, neck pain, and lower back pain.
In addition, Nichols was involved in an automobile accident in December
2004, and visited Dr. Cross complaining of neck pain, lower back pain, and
tingling in both hands and both feet. At Dr. Cross’ request, Nichols’ neck was x-
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rayed.
However, while applying for life and disability insurance with Northwestern
Mutual over the course of several months in 2007, Nichols provided information at
odds with his significant chiropractic treatment. He signed a medical history
questionnaire, indicating (1) that he had not consulted a chiropractor in the
previous five years; (2) that in the previous ten years he had not had, been told he
had, or been tested or treated for “headaches or any problem, disease or disorder of
the brain or nervous system”; (3) that in the previous ten years he had not had,
been told he had, or been tested or treated for “any pain, problem, disease or
disorder of the muscles, bones, joints, spine, back, neck or extremities”; and (4)
that in the previous five years he had not had “any diagnostic studies (EKG, x-ray,
blood tests or any other).” Nichols also denied receiving chiropractic treatment in
other application documents.
We conclude that Northwestern Mutual had a right to rescind the disability
insurance policy and reform the life insurance policy because Nichols repeatedly
made false representations and concealed material information in the application
process. See O’Riordan v. Kemper Fed. Life Assurance, 36 Cal. 4th 281, 286-87
(2005). Nichols’ declarations regarding his health history were material, and he
had an obligation to communicate this information to Northwestern Mutual. See
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Cal. Ins. Code § 332.
Nichols’ explanations for why he submitted incorrect information–the
questions were asked too quickly, he did not read the forms before signing them,
he did not think he had a disorder, and that he had just had a blood test–are
unavailing. The district court correctly determined that Nichols failed to raise a
triable issue of material fact on this issue.
We are not persuaded by Nichols’ claim that Northwestern Mutual waived
its right to rescind because it had notice of his chiropractic treatment. At a
preliminary “getting acquainted” meeting, Nichols told his insurance agent that he
had seen a chiropractor since college for health maintenance. In addition, viewing
the facts in the light most favorable to Nichols, he told a Northwestern Mutual
employee Dr. Cross’ name and the date of his last chiropractic appointment in a
telephone interview that took place during the application process.
Waiver is an affirmative defense, upon which Nichols bears the burden of
proof, and he has to show a genuine issue of material fact regarding waiver to
defeat summary judgment. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
The district court correctly held that these limited revelations of chiropractic visits
for routine maintenance did not “distinctly imply” that Nichols had a lengthy
history of headaches and back pain and extensive chiropractic treatment. See Cal.
4
Ins. Code § 336; West Coast Life Ins. v. Ward, 132 Cal. App. 4th 181, 188 (2005).
III.
There is a conflict between California and Oregon law regarding the implied
covenant of good faith and fair dealing. While California recognizes the implied
covenant of good faith and fair dealing in relation to first party insurance disputes,
Oregon does not. Compare Employers’ Fire Ins. Co. v. Love It Ice Cream Co., 64
Or. App. 784, 791 (1983), with Century Sur. Co. v. Polisso, 139 Cal. App. 4th 922,
948-49 (2006). (The parties agree that there is no material difference between
Oregon and California law on the remaining claims, and we, like the district court,
have used California law in analyzing those claims.)
We look to California choice of law rules to determine whether to apply the
laws of California or Oregon to the good faith and fair dealing claim. See Klaxon
Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941) (federal courts sitting in
diversity apply the choice of law rules of the forum state).
California uses governmental interest analysis, applying the law of the
jurisdiction whose interest would be more impaired if its law is not applied. See
Wash. Mut. Bank v. Superior Ct., 24 Cal. 4th 906, 915, 920 (2001); Love v.
Associated Newspapers, Ltd., 611 F.3d 601, 610 (9th Cir. 2010). California’s
interest is in protecting the rights of its resident, while Oregon’s interest is seeing
5
that its laws are applied to Oregon insurance contracts.
Nichols was an Oregon resident, he used an Oregon agent, the application
process and medical examination occurred in Oregon, the policy was issued in
Oregon, the policy states that Oregon law controls, and Nichols suffered the injury
giving rise to his disability claim in Oregon.
We hold that Oregon law applies, because its interests would be more
greatly impaired if California’s law was applied. See Zimmerman v. Allstate Ins.
Co., 179 Cal. App. 3d 840, 847 (1986). Accordingly, Northwestern Mutual is
entitled to summary judgment on the claim of breach of the implied covenant of
good faith and fair dealing. See Employers’ Fire Ins. Co., 64 Or. App. at 791.
IV.
Nichols’ breach of contract claim fails because once it is determined that the
policy was properly rescinded the contract is extinguished and Nichols can no
longer recover under it. See Cal. Civ. Code § 1688; Imperial Cas. & Indem. Co. v.
Sogomonian, 198 Cal. App. 3d 169, 184 (1988)
The district court properly found that Nichols failed to demonstrate facts that
would establish the elements of his fraud claim. See Lovejoy v. AT&T Corp., 92
Cal. App. 4th 85, 93 (2001).
Northwestern Mutual is entitled to summary judgment on the intentional
6
infliction of emotional distress claim. Given our determination that Northwestern
Mutual was entitled to rescind the policy, its denial of benefits cannot be classified
as “extreme and outrageous conduct.” See Christensen v. Superior Ct., 54 Cal. 3d
868, 903 (1991).
AFFIRMED.
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FILED
Nichols v. Northwestern Mut. Life Ins. Co., No. 10-55650 JUN 29 2012
Rawlinson, Circuit Judge, concurring: MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
I concur in the result.