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Judge dismisses lawsuit against American General Life Insurance over $1 million policy

Lawsuits

By Scott Holland | May 7, 2019


SAN DIEGO – A federal judge has ruled against a woman who filed a lawsuit over a $1 million life insurance policy.

On April 25, Judge Barry Ted Moskowitz of the U.S. District Court for the Southern District of California denied plaintiff Elizabeth Saaiman’s motion to remand without prejudice and granted the defendants’ motion to dismiss with leave to amend.

According to the ruling, in March 2009, Danie Saaiman bought a policy through defendant American General Life Insurance and listed his wife, plaintiff Elizabeth Saaiman, as the primary beneficiary. The policy lapsed in the summer of 2016, but Danie Saaiman completed a reinstatement application before Labor Day 2016, and the policy was reinstated March 9, 2017. However, Saaiman died Jan. 17, 2017, and no benefits have been paid.

On April 11, 2017, according to the opinion, Elizabeth Saaiman’s lawyer received a letter purportedly undoing the reinstatement and refunding premium payments. The lawyer rejected that refund on May 2 and submitted a claim for benefits, which the company denied in September. 

Saaiman, of San Diego, sued American General and its corporate relatives Nov. 9, 2017, in a superior court, alleging breach of contract, insurance bad faith, conversion and negligence.

American General removed the complaint to federal court on March 21, 2018, arguing the corporate entities are based in Texas, New York and California. Saaiman responded, saying one of the entities, SAFG, a wholly owned subsidiary of AIG Group, wasn’t fraudulently joined and therefore the case can remain in state court.

The defendants filed a motion to dismiss the complaint, citing lack of subject matter jurisdiction and failure to state a claim.

“Any breach of contract claim asserted directly against SAFG must fail because SAFG was never a party to the policy,” Moskowitz wrote. “The only two parties to the contract were Mr. Saaiman and American General.”

Moskowitz further said although SAFG and American General share one corporate officer, Saaiman didn’t allege the existence of a contract, breach or resulting damages with respect to SAFG, and also she failed to successfully allege breach of the implied covenant of good faith and fair dealing because her complaint doesn’t allege contractual privity with SAFG. She also never said SAFG administered the policy or that it wrongfully interfered with her rights or her “possession of unearned premium payments allegedly belonging to her.”

California law allows a parent corporation to be held vicariously liable for a subsidiary, but Moskowitz said that clause requires the subsidiary to be the agent or alter ego of the parent and noted Saaiman failed to establish that connection between SAFG and American General, and further that such a relationship “is a determination of fact, not law.”

Although Saaiman pointed to documents and correspondence containing references to both American General and AIG, Moskowitz said she failed to establish evidence SAFH or other corporate defendants control American General’s operations or decisions.

Moskowitz agreed the delay in reinstating the policy could be deemed unreasonable, but said Saaiman didn’t allege a harm from the delay, as it was eventually reinstated. He also granted dismissal of Saaiman’s allegation of improper denial of insurance, since American General said the reinstatement application was incomplete, creating “genuine dispute” as to the nature of the denial. 

The judge also dismissed the conversion claim, saying although Saaiman argued she was owed $322.01 plus interest based on premium payments that should be refunded, an overcharge alone can’t support a conversion claim.

Finally, Moskowitz dissmissed Saaiman’s negligence claim, saying the policy reinstatement negated half of her argument, and the other half was defeated because California law doesn’t allow allegations of negligent claim handling.

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