Phan v. Transamerica Premier Life Insurance Company

Background

Dung Phan acquired a life insurance policy in 1998. The policy is now administered by Transamerica. After Phan missed a premium payment in May 2018, Transamerica sent her a notice requiring payment or the policy would lapse. The policy lapsed on July 23, 2018. Phan attempted to pay the premium on July 31, 2018, but Transamerica required her to apply for reinstatement instead. Transamerica denied that application and returned the payment.

Phan filed this lawsuit in 2020. Her operative complaint alleges that Transamerica failed to comply with California Insurance Code sections 10113.71 and 10113.72. It asserts claims for declaratory judgment, breach of contract, violations of California’s Unfair Competition Law, and violations of California’s elder abuse statute.

Phan later filed an amended complaint and a new motion for class certification. The proposed class consists of owners or beneficiaries of certain California life insurance policies that Transamerica allegedly lapsed or terminated for nonpayment without complying with the statutory requirements. She also proposed an elder-abuse subclass for class members who were at least 65 years old when their policies lapsed or were terminated.

Motion to Stay

Transamerica moved to stay, or pause, the case while the Ninth Circuit considered appeals in Farley v. Lincoln Benefit Life Co. and Small v. Allianz Life Insurance Co. of North America. Those cases involved similar proposed classes and questions about whether classes could be certified when an insurer allegedly terminated life insurance policies for nonpayment without following the same California statutes.

The court applied a three-factor balancing test that considers possible harm from a stay, hardship from requiring the case to continue, and whether a stay would promote the orderly and efficient administration of justice. The court found that the first two factors favored a stay. It reasoned that the declaratory relief Phan sought would have the same effect if awarded later, and that monetary relief did not by itself justify denying a stay. The court also found that proceeding with class-wide discovery and other litigation could require the parties and the court to spend substantial resources that might become unnecessary after the Ninth Circuit’s decisions.

The court rejected Phan’s argument that it also had to consider the likelihood of success. It had rejected that argument in an earlier stay order because the authority Phan cited involved a different subject and procedural posture.

The court found that the third factor strongly favored a stay because decisions in Farley or Small could clarify major issues and simplify the court’s later decision on class certification. The court also concluded that a definite stay was fairer than an indefinite one.

Disposition

The court GRANTED Defendant Transamerica Life Insurance Company’s motion to stay the action. The case was stayed until November 14, 2024. The parties were ordered to submit a joint status report within 14 days after the resolution of Farley or Small, or on November 14, 2024, whichever came first.

The court also terminated the pending class-certification motion without prejudice to Phan. After the stay is lifted, Phan may either rewrite the motion to conform to Ninth Circuit precedent or resubmit the previously presented motion.