Grundstrom v. Wilco Life Insurance Company

Background

Julie Grundstrom alleged that she was the primary beneficiary of a flexible-premium adjustable life insurance policy purchased by her father, Richard I. Appleton. The policy allegedly provided a 61-day grace period for quarterly premium payments and required Wilco Life Insurance Company to give at least 31 days’ written notice before coverage lapsed or was terminated for nonpayment.

Grundstrom alleged that Wilco sent Appleton a letter on July 17, 2018, stating that the policy had lapsed as of July 14, 2018. She further alleged that Wilco did not comply with the policy’s notice requirements or with sections 10113.71 and 10113.72 of the California Insurance Code. She also alleged that Wilco failed to provide annual notice of Appleton’s right to designate a third party to receive notices about a potential lapse or termination.

The First Amended Complaint asserted five causes of action, including breach of contract and a claim under California’s Unfair Competition Law, or UCL. The fourth claim sought restitution for unrefunded premiums, withheld benefits, and diminution in the policy’s value. Wilco moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally recognized claim or does not allege enough facts to make the claim plausible.

Court’s Analysis

The court explained that a plaintiff seeking equitable relief under the UCL must show that she lacks an adequate remedy at law, meaning that money damages through a legal claim would not adequately compensate her. The court concluded that Grundstrom had not made that showing.

According to the court, the restitution Grundstrom sought was necessarily less than or equal to the policy benefits she sought through her breach-of-contract claim. The court rejected her argument that potential contract damages might not fully compensate her, explaining that the relevant question was whether an adequate damages remedy was available—not whether Grundstrom chose to pursue it or would ultimately succeed on the contract claim.

The court also rejected Grundstrom’s argument that she could plead the UCL claim in the alternative. The court said that issue did not answer whether equitable relief was available at all. Because the availability of an adequate legal remedy was clear from the complaint, the court found that further amendment would be futile. The court did not reach Wilco’s additional argument that Grundstrom’s grounds for restitution were invalid.

Disposition

The court granted Wilco’s motion to dismiss and dismissed Grundstrom’s Fourth Claim for Relief without further leave to amend. It vacated the hearing scheduled for July 8, 2022.