California court rejects wrongful death claim

In Sidorov v. Transamerica Life Insurance Company, Judge Kimberly Mueller of the Eastern District of California considered a number of claims against a life insurance company. The most interesting of those claims were for negligence and wrongful death.

The factual background is that a husband purchased a number of policies on the life of his wife in 2003. Each policy listed the husband as beneficiary. One such policy was issued by Transamerica, with a $2 million dollar benefit.

In 2007, husband apparently reported to Transamerica that wife had died. Transamerica began processing the claim. Husband then notified Transamerica that wife was not deceased, verbally explaining she had “recovered.” Transamerica then closed the pending claim and reinstated the policy.

In January of 2010, Mexican police arrested the husband and an accomplice for the murder of wife at a resort hotel in Acapulco de Juarez. It was unclear if they were ever convicted of a crime, but they were held in a Mexican prison for over six years.

In 2014, a son of the wife eventually opened a probate case in California. The probate court decided that the husband could not receive the Transamerica policy benefits because of California’s “slayer statute.” The probate court further ordered that the son should receive the benefits.

In 2016, son filed a federal court suit against Transamerica. One of the claims was that Transamerica should have paid to him certain premium payments the company received after wife died. The more interesting claims were the ones for wrongful death and negligence.

Son claimed that he learned in 2010 that husband was motivated to murder wife to recover the millions in life insurance policies. He claimed that Transamerica should have been on notice that husband was up to no good, for two primary reasons:

  • Wife had minimal income in 2003 and Transamerica knew or should have known that his mother was over-insured at the time it issued the policy; and

  • The 2007 “report” and application for benefits by husband should have raised red flags. Obviously, people who are deceased do not “recover.” Son alleged that Transamerica failed to engage in any investigation of the obviously fraudulent claim or otherwise report it to the California Department of Insurance.

These are interesting arguments, particularly the 2007 events. As set out in the decision, such an application and withdrawal should have rung alarm bells with Transamerica. That said, it is unlikely that the court would have found Transamerica was legally liable for the wife’s death.

But the court did not reach the merits of those claims. The court noted that the California statute of limitations for negligence and for wrongful death is two years. The court noted that the son filed the federal suit almost seven years after his mother died. The court noted that the son raised the discovery rule. The court dealt with this contention:

Here, [son] has not pled his inability to have made the discovery of multiple insurance policies and information related to those policies by the time he possessed the very paperwork containing these policies. [Son] pleads in the complaint that he “was deeply upset at the perceived injustice of the situation and tossed the materials taken from the house in a box in his closet” in 2011, only providing those materials to his counsel in “or about 2014.” But this allegation does not explain why [son]was unable to review the paperwork he placed in a closet or turn this information over to his attorney at that time. See Briosos v. Wells Fargo Bank, No. C 10-02834 LB, 2011 WL 1740100, at *6–7 (N.D. Cal. May 5, 2011) (plaintiff’s allegation “that he was in a compromised emotional state” without offering “additional factors or explanation as to how this prevented him from exercising reasonable diligence” insufficient; dismissing claim with prejudice). Moreover, that [son] “had not realized the significance of the papers until he spoke with his attorney” has no consequence here. [Son] had the opportunity to obtain critical information from these documents. Thus, taking [son’s] factual allegations as true, the latest date the statutes of limitations could have accrued was December 31, 2011, with a complaint due by December 31, 2013 for any negligence claims

Under the court’s analysis, son missed the statute of limitations by a very wide margin.

It is always important to consult an experienced life insurance attorney as soon as possible when considering a claim regarding benefits.

J. Michael YoungComment