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James Erickson Family Partnership LLLP v. Transamerica Life Insurance Co.

United States District Court, D. Arizona

April 19, 2019

James Erickson Family Partnership LLLP, Plaintiff,
Transamerica Life Insurance Company, Defendant.


          Dominic W. Lanza United Slates District Judge.


         Pending before the Court is Defendant Transamerica Life Insurance Company's (“Transamerica”) motion to dismiss Plaintiff James Erickson Family Partnership LLLP's (“Erickson”) first amended complaint. (Doc. 15.) For the following reasons, the Court grants in part and denies in part Transamerica's motion.


         On September 4, 2018, Erickson commenced this action by filing a complaint in Maricopa County Superior Court. Erickson never served this version of the complaint.

         On November 15, 2018, Erickson filed an amended complaint in Maricopa County Superior Court and soon thereafter served Transamerica with the amended complaint.

         On December 10, 2018, Transamerica filed a notice of removal in this Court. (Doc. 7.)[1]

         In a nutshell, the amended complaint (Doc. 7-6) alleges that Erickson purchased a $1 million life insurance policy from Transamerica in July 2006 to insure the life of James Erickson. (Id. ¶ 18.)[2] The complaint further alleges that Transamerica provided various materials, including a “prospectus, ” “annual illustrations, ” “pricing models, ” “accumulated balance projections, ” and “annualized premium outlay projections, ” during the marketing process in an attempt to induce Erickson to purchase the policy. (Id. ¶¶ 19, 20, 43.) These materials, the complaint alleges, suggested there wouldn't be any “exorbitant rate increases” or “drastic premium increases” in the future. (Id. ¶¶ 33, 35.) The complaint further alleges that Transamerica “had no actuarial data” and “no reasonably reliable underwriting criteria” on which to base these representations. (Id. ¶¶ 22, 40.) The complaint alleges that, although the annual premium remained relatively constant between 2006 and 2011, hovering between $61, 392 and $65, 976, “in August of 2017 the annualized premium increased to $208, 956.” (Id. ¶¶ 27-30.) The complaint also alleges that “Erickson made all the premiums payments as of the date of the filing of this complaint.” (Id. ¶ 53.) Based on these allegations, Erickson asserts the following state-law claims: (1) violation of the Arizona Consumer Fraud Act (“ACFA”), (2) negligent misrepresentation, and (3) breach of contract.


         I. Rule 12(b)(6)

         “[T]o survive a motion to dismiss, a party must allege ‘sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'” In re Fitness Holdings Int'l, Inc., 714 F.3d 1141, 1144 (9th Cir. 2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (quoting Iqbal, 556 U.S. at 678). “[A]ll well-pleaded allegations of material fact in the complaint are accepted as true and are construed in the light most favorable to the non-moving party.” Id. at 1144-45 (citation omitted). However, the court need not accept legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 679-80. Moreover, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. at 679. The court also may dismiss due to “a lack of a cognizable legal theory.” Mollett v. Netflix, Inc., 795 F.3d 1062, 1065 (9th Cir. 2015) (citation omitted).

         II. Rule 9(b)

         Transamerica asserts, and Erickson does not seem to dispute, [3] that claims under the ACFA and for negligent misrepresentation are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). See, e.g., In re Banner Health Data Breach Litig., 2017 WL 6763548, *6 (D. Ariz. 2017) (“Claims arising under the ACFA pertain to fraud and are thus subject to the pleading requirements of Rule 9(b) of the Federal Rules of Civil Procedure.”); Estrada v. Capella Univ., Inc., 2018 WL 1428155, *2 (D. Ariz. 2018) (“Claims for negligent misrepresentation must meet the particularity requirements of Rule 9(b).”) (citation and internal quotation marks omitted). See also Sweeney v. Darricarrere, 2009 WL 2132696, *12 n.109 (D. Ariz. 2009) (“Although the Ninth Circuit has suggested that negligent misrepresentation may be a non-fraudulent averment, [m]ost district courts within the Ninth Circuit have held that a [negligent misrepresentation claim is subject to the] heightened pleading requirements of Rule 9(b).”) (citations and internal quotation marks omitted).

         Rule 9(b) requires a plaintiff to “state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). “To satisfy Rule 9(b), a pleading must identify ‘the who, what, when, where, and how of the misconduct charged,' as well as ‘what is false or misleading about [the purportedly fraudulent] statement, and why it is false.'” United States ex rel. Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011) (citation omitted); see also Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986) (noting that under Rule 9(b), the plaintiff “must state the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentation”). “[T]he circumstances constituting the alleged fraud [must] be specific enough to give defendants notice of the particular misconduct . . . so that they can defend against the charge and not just deny that they have done anything wrong.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (citations and internal quotation marks omitted). Importantly, however, “[a] plaintiff in a fraud-by-omission suit faces a slightly more relaxed burden, due to the fraud-by-omission plaintiff's inherent inability to specify the time, place, and specific content of an omission in quite as precise a manner.” In re Banner Health Data Breach Litig., 2017 WL 6763548 at *7 (citations omitted).

         III. Evidence Outside the Pleadings

         Ordinarily, if a district court considers evidence outside the pleadings in ruling on a motion to dismiss, it must convert the motion into a motion for summary judgment and give the nonmovant an opportunity to respond. United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003). A district court may, however, consider “[c]ertain written instruments attached to pleadings” in ruling on a motion to dismiss. Id. at 908. Additionally, “[e]ven if a document is not attached to a complaint, it may be incorporated by reference into a complaint if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff's claim.” Id. The plaintiff need “not explicitly allege the contents of that document in the complaint” for the court to consider it, as long as the “plaintiff's claim depends on the contents of [the] document, the defendant attaches the document to its motion to dismiss, and the parties do not dispute the authenticity of the document.” Kn ...

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