(Ninth Circuit Court of Appeal Affirms Insurer's Statutory Violations Regarding Pretermination Notice, But Rejects Life Insurance Policy Reinstatement Absent Causation)
(September 2025) - In Siino v. Foresters Life Insurance and Annuity Co., 133 F.4th 936 (9th Cir. 2025), the Ninth Circuit Court of Appeals addressed whether an insurer's failure to comply with California's statutory notice requirements invalidated its termination of a life insurance policy for nonpayment of premiums. In this case, Pamela Siino had purchased a life insurance policy from Foresters Life Insurance and Annuity Company ("FLIAC") in 2010. After moving in 2014 and failing to successfully update her address, Siino did not receive notices about her premium due in January 2018 and as a result, failed to pay it by the deadline. FLIAC sent a lapse notice in February 2018, notifying Siino that her policy had lapsed, but also advising she had the opportunity to reinstate it by paying the premium. However, Siino again did not receive the notice and failed to submit her overdue premium to reinstate the policy. In 2020, Siino purchased a new policy from another insurer and later filed a lawsuit against FLIAC, alleging violations of California Insurance Code sections 10113.71 and 10113.72 (collectively, the "Statutes"), which require insurers to provide pretermination and designee notices before terminating a policy.
Siino moved for summary judgment on her claim for declaratory relief under the federal Declaratory Judgment Act, asking the court to declare that (1) FLIAC failed to comply with the Statutes in terminating her policy, (2) her policy remained valid and enforceable, and (3) FLIAC could not require Siino to pay back her missed premiums. The District Court granted partial summary judgment in Siino's favor, finding that FLIAC had violated the statutory notice requirements and that her policy remained valid so long as she paid the overdue premiums. FLIAC timely appealed, raising two primary challenges: (1) the District Court abused its discretion by entertaining Siino's requested declaratory relief because it was duplicative of her breach of contract claim, and (2) the District Court erred by granting the declaratory relief without a proper evidentiary record. The Ninth Circuit Court affirmed in part and reversed in part.
The Ninth Circuit held that the District Court did not abuse its discretion in entertaining Siino's declaratory relief claim, which was not duplicative of her breach of contract claim, reasoning that "the two claims are substantively different."
...Siino, through her claim for declaratory relief, sought a legal declaration that: (1) "Foresters did not comply with all of the provisions of [the Statutes] before it terminated Mrs. Siino's Policy on February 26, 2018"; (2) "Mrs. Siino's Policy remains valid and enforceable"; and (3) "Foresters may not require Mrs. Siino to pay 'back premiums' accruing since January 2018 in order to revive the Policy." By contrast, through her claim for breach of contract, Siino sought damages based on her contention that FLIAC "breached and continue to breach the express terms of their life insurance policies, including Plaintiff's Policy, as well as the statutory mandates regarding such policies."
As a result, the Ninth Circuit found that the two claims are "not coextensive because they answer different questions and turn on different considerations." Additionally, the Ninth Circuit held that even if the two claims are slightly duplicative, the adjudication of both could "service a useful purpose in clarifying the legal relations at issue." Specifically, although the adjudication of both claims could result in a determination that Siino's policy was improperly terminated, only her declaratory relief claim takes it one step further by asking whether she was obligated to pay back her overdue premiums. "That question speaks to the future obligations of the parties, an issue that would not be addressed by Siino's breach of contract claim."
In analyzing whether the District Court erred in granting Siino's requested declaratory relief, the Ninth Circuit first examined the legal framework and requirements for declaratory relief. Specifically, the Ninth Circuit held that "what a claimant must prove to earn declaratory relief is context-specific: It may overlap entirely with the underlying claim, as FLIAC suggests, or it may turn on certain smaller issues or topics to which the desired declaration pertains."
There were two main components to Siino's requested declaratory relief: (1) Siino sought a declaration that FLIAC failed to comply with the Statutes when terminating her policy, and (2) Siino sought a declaration that, as a result of FLIAC's failure to comply with the Statutes, FLIAC's termination of her policy was improper and ineffective, her policy remained valid and enforceable, and she was not required to tender any overdue premium payments. The Ninth Circuit held that determining whether Siino was entitled to the requested declaratory relief required different evidentiary showings. Specifically, the first portion of the declaration regarding FLIAC's failure to comply with the Statutes pertained to the limited question of breach, i.e., whether FLIAC, in terminating Siino's policy, did so in a way that was or was not compliant with the applicable rules set forth in the Statutes. To answer that question, the Ninth Circuit held that the District Court was not required to analyze each element for a breach of contract. "Instead, because the requested relief purely corresponded to the question of breach, that is the sole element that Siino was required to establish." However, with respect to the second portion of the declaration regarding the effects of FLIAC's contractual breach and the continued validity of Siino's policy, the Ninth Circuit held:
...[T]he second portion of the requested declaration is not limited to the question of breach—whether FLIAC failed to comply with the Statutes—but goes further to probe the consequences of that breach—whether FLIAC's failure to comply means that Siino's policy was "improperly lapsed" and remains valid going forward. Id. As a result,...this requested declaration functionally "adjudicate[s] [Siino's] breach of contract claim" and therefore turns on Siino's ability to prove the elements of breach of contract, including causation and damages. (Citations omitted.)
Using the framework set forth above, the Ninth Circuit concluded that the District Court did not err by granting the first portion of Siino's requested declaratory relief. Specifically, the Ninth Circuit held that FLIAC's notice to Siino in February 2018 advising that her policy had lapsed did not satisfy the pretermination notice requirement under California Insurance Code section 10113.71(b)(1) because it was not sent at least 30 days prior to the effective date of termination. Additionally, the Ninth Circuit found that FLIAC violated the designee notice requirement under California Insurance Code section 10113.71(a), which requires insurers to provide policy owners "the right to designate at least one person...to receive notice of lapse or termination of a policy for nonpayment of premium." The Ninth Circuit reasoned that "ecause Siino affirmatively declared FLIAC never sent her notice of the right to designate, and FLIAC failed to bring forward opposing evidence suggesting that it did so, there is no genuine dispute of fact that FLIAC violated the Designee Notice Requirement." Because the Ninth Circuit agreed with the District Court that FLIAC violated two of the requirements set forth in the Statutes, the Ninth Circuit affirmed the District Court's decision to grant the first portion of Siino's requested relief.
However, the Ninth Circuit reversed the District Court's declaration that Siino's policy remained valid. Citing its recent decision in Small v. Allianz Life Insurance Co. of North America, 122 F. 4th 1182 (9th Cir. 2024), the Ninth Circuit emphasized that "a plaintiff pursuing a breach of contract claim under the Statutes must show not only that the defendant failed to comply with the Statutes, but, further, that this lack of compliance is the but-for and proximate cause of the plaintiff's injury." Making this showing requires the plaintiff to prove that they did not engage in any conduct that could have severed the causal relationship between the defendant's actions and the plaintiff's injury." In Siino's case, the Ninth Circuit found that even if FLIAC had sent the required notices, they would not have reached her due to her failure to update her address. Therefore, FLIAC's statutory violations were not the legal cause of the policy's termination. "Instead, the only action with a causal effect on the termination of the policy is Siino's own: her unresolved failure to pay her annual premium in 2018." As a result, the Ninth Circuit reversed the District Court's decision to grant the second portion of Siino's requested declaratory relief and remanded the case for entry of final judgment, with each party bearing its own costs on appeal.
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