United States District Court, D. Arizona
MURRAY SNOW CHIEF UNITED STATES DISTRICT JUDGE
before the Court is Defendant Transamerica Life Insurance
Company's (“Transamerica's”) Motion to
Dismiss. (Doc. 14). For the following reasons, the motion is
2007, Plaintiff Patricia Bugher Family Partnership LLLP
(“the Partnership”) purchased a $1 million dollar
life insurance policy (“the Policy”) from
Transamerica. (Doc. 1). In its complaint, Burgher alleges
that Transamerica knew that it was selling a defective
product when it purchased the policy, and made
misrepresentations about the content of the policy. The
insured is Ms. Patricia Burgher, who created the Partnership
to purchase this life insurance policy. The Policy
explained that premiums may increase over time, due to
increases in the monthly deduction rate. (Doc. 14, Ex. A at
the Partnership first purchased the life insurance policy,
the annualized premium was $43, 974. The premiums increased
to $55, 884 in 2010 and again to $62, 400 in 2011. (Doc. 1
Ex. 5 at ¶ 27, 28). Then, in 2017, the Partnership
alleges that Transamerica increased their annualized premium
to $168, 000. Following this alleged premium increase, the
Partnership filed this lawsuit alleging consumer fraud,
negligent misrepresentation, and breach of contract.
responds by making three arguments. First, Transamerica
argues that the Policy clearly specifies that premium
increases may occur, and that the Partnership was warned of
premium increases when it bought the policy. Transamerica
further argues that it didn't increase the
Partnership's premiums at all, and instead the documents
that the Partnership relies upon were merely worst-case
scenario illustrations-not actual increases in annualized
premium amounts. Transamerica finally argues that the
Partnership has not pled their various claims with sufficient
Arizona Consumer Fraud Act is a broad act intended to
eliminate unlawful practices in merchant-consumer
transactions.” Holeman v. Neils, 803 F.Supp.
237, 242 (D. Ariz. 1992) (citing State ex rel. Corbin v.
Hovatter, 144 Ariz. 430, 431, 698 P.2d 225, 226
(Ariz.Ct.App. 1985)). To prevail at this stage, the
Partnership must allege (1) Defendant made a false promise or
misrepresentation in connection with a sale, and (2) that
Defendant's conduct proximately caused the Partnership to
suffer damages. Holeman, 803 F.Supp. at 242
(citing Dunlap v. Jimmy GMC of Tucson, Inc., 136
Ariz. 338, 342, 666 P.2d 83, 87 (Ariz.Ct.App. 1983)).
negligent misrepresentation claim, the Partnership must
allege that “(1) the defendant provided false
information in a business transaction; (2) the defendant
intended for the plaintiff to rely on the incorrect
information or knew that it reasonably would rely; (3) the
defendant failed to exercise reasonable care in obtaining or
communicating the information; (4) the plaintiff justifiably
relied on the incorrect information; and (5) resulting
damage” KB Home Tucson, Inc. v. Charter Oak Fire
Ins. Co., 236 Ariz. 326, 333340 P.3d 405, 412 n.7
(Ariz.Ct.App. 2014). For both the consumer fraud and
negligent misrepresentation claim, Transamerica argues that
the complaint does not comply with Federal Rule of Civil
Procedure 9(b), that the premium increase did not actually
occur, and that the Policy specifically disclosed that
premium increases may occur.
the Partnership alleges that Transamerica breached the Policy
agreement. Defendant's only argument as to the breach of
contract claim is that the premium increase alleged by
Plaintiff did not actually occur.
Plaintiff's Fraud and Negligent Misrepresentation Claims
Comply With Rule 9(b)
9(b) requires a party alleging fraud and negligent
misrepresentation to “state with particularity the
circumstances constituting fraud or mistake.”
Fed.R.Civ.P. 9(b) Under this rule, the complaint “must
state the time, place, and specific content of the false
representations as well as the identities of the parties to
the misrepresentation.” Schreiber Distrb. Co. v.
Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir.
1986). “To allege fraud with particularity, an
[individual]. . . must set forth an explanation as to why the
statement or omission complained of was false or
misleading.” In re GlenFed, Inc. Sec. Litig.,
42 F.3d 1541, 1548 (9th Cir. 1994). Falsity may be
established through inconsistent contemporaneous statements
or information made by the defendants, but such statements
are not required. Id. at 1549. Falsity may also be
established through allegations of circumstantial evidence.
See Cooper v. Pickett, 137 F.3d 616, 625 (9th Cir.
has met the pleading requirements of Rule 9(b) here.
Specifically, the Partnership alleges that Transamerica
issued annual illustrations and other informational graphics
that did not contain accurate representations of the
Policy's value and were not based on actuarial data.
(Doc. 1 Ex. 6 at ¶¶ 15-25). The Partnership further
alleges that Transamerica knew that these annual
illustrations were misleading and issued the ...