Sycks et al v. Transamerica Life Insurance Company et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
LILA SYCKS, ESTATE OF VERNON
SYCKS,
Plaintiffs,
vs.
TRANSAMERICA LIFE
INSURANCE COMPANY,
BANKERS UNITED LIFE
INSURANCE COMPANY,
Defendants.
Case No. 3:22-cv-00010-JMK
ORDER GRANTING IN PART
DEFENDANT’S MOTION TO
DISMISS FIRST AMENDED
COMPLAINT WITH PREJUDICE
Pending before the Court at Docket 28 is Defendant Transamerica Life
Insurance Company’s1 Motion to Dismiss Plaintiffs’ First Amended Complaint with
Prejudice. 	Plaintiffs Lila Sycks and Vernon Sycks2 filed a response in opposition at
Docket 29. Defendant filed a reply at Docket 34. For the following reasons, Defendant’s
1 The other named defendant, Bankers United Life Assurance Company (“Bankers
United”), merged into Life Investors Insurance Company of America in 2001, which then merged
in Transamerica Life Insurance Company (“Transamerica”) in 2008. Docket 23 at 3 n.1. Bankers
United issued Plaintiffs’ life insurance policy, and Transamerica is the successor-in-interest to
Bankers United. Id. at 3. All references to Transamerica or Defendant in this Order shall be read
to include Bankers United unless otherwise stated.
2 Plaintiff Lila Sycks notified the Court that co-plaintiff Vernon Sycks died on July 5,
2022. 	Docket 29 at 12 n.31. 	The Court granted Lila Sycks’ Motion for Substitution of Party
pursuant to Fed. R. Civ. P. 25(a)(1) to substitute the Estate of Vernon D. Sycks in the place of
Plaintiff Vernon D. Sycks. Docket 46.
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Sycks et al. v. Transamerica Life Ins. Co. et al. 	Case No. 3:22-cv-00010-JMK
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motion is GRANTED IN PART, and Plaintiff’s claim for fraudulent or intentional
misrepresentation 	is 	DISMISSED 	WITHOUT 	PREJUDICE 	and 	with 	LEAVE 	TO
AMEND.
I. 	PROCEDURAL BACKGROUND
This lawsuit arises from the lapse of Plaintiffs’ Last Survivor Flexible
Premium 	Interest 	Indexed 	Universal 	Life 	Insurance 	Policy 	Number 	B119812 	(the
“Policy”).3 Plaintiffs filed suit on December 6, 2021, bringing claims for a declaration that
Defendant must continue the Policy in force without payment of additional premium,
breach of contract, and breach of the covenant of good faith and fair dealing.4 Defendant
subsequently removed the action to this Court on January 13, 2022.5 On March 3, 2022,
Defendant filed a motion to dismiss the Complaint for failure to state a claim.6 	Shortly
after that motion became ripe for a decision, Plaintiffs filed a motion for leave to file an
amended complaint.7 The Court granted Plaintiffs leave to amend, and Plaintiffs filed their
amended complaint on June 17, 2022.8 	Plaintiffs’ amended complaint adds a new claim
for fraud, negligent, or intentional misrepresentation.9 Defendant filed a motion to dismiss
the amended complaint with prejudice for failure to state a claim pursuant to Federal Rule
of Civil Procedure 12(b)(6).10 This motion is ripe for a decision.11
3 Docket 1-1.
4 Id.
5 Docket 1.
6 Docket 15.
7 Docket 22.
8 Docket 25; Docket 26.
9 Docket 26 at 7.
10 Docket 28.
11 See id.; Docket 29 (Plaintiffs’ response in opposition); Docket 34 (Defendant’s reply).
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II. 	FACTUAL BACKGROUND
Although Defendant has not yet submitted its answer to Plaintiffs’ original
complaint or the amended complaint, the parties for the most part do not appear to dispute
this case’s basic facts, which the Court generally accepts as articulated in Plaintiffs’
amended complaint for the purposes of deciding this motion.12 As relevant here, Defendant
issued the Policy to Plaintiffs in Alaska on June 25, 1993.13 	Around that time, Plaintiffs
made one premium payment of $50,000.14
In 2021, Defendant notified Plaintiffs that the Policy would lapse without
payment of additional premiums of $21,683.12 by August 2, 2021.15 After receiving this
notice, Plaintiffs—aged 91 (Vernon) and 86 (Lila) at the time—requested that Defendant
withdraw the lapse notification and continue their coverage without the payment of
additional premiums.16 By letter dated October 1, 2021, Defendant responded to Plaintiffs’
request, stating, “Based on our research and the terms of the contract, we did not find a
way for the policy to remain in force until the maturity date without payment of additional
premium.”17 Defendant’s letter explained its interpretation of the operative provisions of
the “flexible” Policy which, according to Defendant, does not require minimum premium
payments at set intervals in order for the insured to secure coverage:
12 Unless otherwise indicated, the underlying facts are taken from Plaintiffs’ amended
complaint and are presumed true for purposes of reviewing the Rule 12(b)(6) motion to dismiss.
See, e.g., Cavinass v. Horizon Cmty. Learning Ctr., Inc., 590 F.3d 806, 810 n.4 (9th Cir. 2010).
13 Docket 26 at 2.
14 Id. at 3.
15 Id.
16 Id.
17 Docket 26-1 at 2.
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This type of policy requires premium payments to
create an accumulation value, from which a sum is deducted
each month to pay for the cost of the insurance. Premiums for
this type of policy are flexible, and can vary in amount and
frequency, 	subject 	to 	requirements 	and 	limitations. 	The
Maximum Initial Premium of $50,000.00 was paid at issue, an
amount that is equal to the Maximum Total Premiums as
reflected on the policy specifications page. Should the policy
owner wish to contribute premiums, the Maximum Annual
Premium allowed is $5,184.93. Enclosed for your review is a
duplicate copy of the policy, including the application for
insurance.
According to the original illustration, “The policy will
terminate without further value, based on guaranteed interest
and Cost of Insurance rates, if additional premiums are not paid
before the end of the 24 th policy year.”.[sic] 	The initial
premium amount of $50,000.00 was sufficient for the policy to
remain in force until the end of the 24 th policy year. Although
payments are flexible, the policy must always have sufficient
accumulation value to cover the monthly deduction amount. If
at any time the accumulation value is not sufficient to cover the
monthly deduction, the policy will enter the grace period, as it
did on June 3, 2021.
The policy has a 61-day grace period following the date
a premium payment is required to keep the policy in force. The
Grace Period Provision states that “A premium will be required
if, on the last day of a policy month, the Policy Value is less
than the Monthly Deduction schedule [sic] to be made.” 	A
notification letter was sent to request a payment of $21,683.12
by August 2, 2021 to maintain the coverage. As stated in our
response dated August 20, 2021, an extension for submitting
the premium was granted until October 2, 2021.
When the policy was issued, the single premium of
$50,000.00 was sufficient to carry the policy until the 24th
policy year (2017), at a minimum. 	However, an interest rate
that has declined since issue and an increase in the monthly
deduction amount has caused a decline in the accumulation
value. 	It has also caused the policy to enter the grace period
and require additional premiums to maintain the coverage.
Based on our review of the policy values and the terms of the
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contract, the policy will not remain in force until the maturity
date unless changes are made to the premium contribution
amount.18
Defendant’s letter referenced and, 	according to Plaintiffs, 	contained a
“duplicate copy of the insurance policy,” which included Plaintiffs’ original application for
the Policy.19 	Not long after receiving this letter, Plaintiffs filed suit against Defendant,
seeking “speedy” judicial review of their claim for insurance coverage under Alaska law
in light “of their age and the place life insurance holds in their financial and insurance
planning . . . .”20
Although the parties do not appear to dispute these basic facts, Plaintiffs’
amended complaint raises some factual concerns that Plaintiffs seek to address through this
litigation, namely identification of “a true and correct copy of the Policy.”21 	In essence,
Plaintiffs allege that Defendant’s October 1, 2021, letter provided an incorrect copy of the
Policy (the “October 1, 2021, Copy”) because it differed from a copy of the Policy
Defendant submitted as an exhibit with its since-stricken March 3, 2022, motion to dismiss
Plaintiffs’ original complaint (the “March 3, 2022, Copy”) at Docket 15.22 The parties do
not identify any contractual provisions or application materials that differ between these
copies of the Policy. 	However, Plaintiffs have noted that the two copies of the Policy
contain slightly different footers and other differing components, such as a table of contents
18 Id. at 2–3; Docket 1-1 at 63–71.
19 Docket 26-1 at 2.
20 Docket 26 at 5.
21 Id. at 4.
22 Id.
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that appears in the October 1, 2021, Copy but not the March 3, 2022, Copy.23 	Another
difference between the two copies is what Defendant describes as an “illustration” that
appears in the March 3, 2022, Copy but does not appear in the October 1, 2021, Copy.24
The illustration provides an example of the “projected policy value” over time as
adjustments are made to the cost of insurance, interest rates, and premium payments.25
This illustration generally purports to contextualize the degree to which premium payments
impact the value, and, in turn, coverage, of the Policy over time.26 	Notwithstanding the
differences Plaintiffs point out between the two copies of the Policy provided in the parties’
filings and the fact that Plaintiff points to some provisions of the Policy in its amended
complaint, Plaintiffs’ amended complaint and its briefing in response to Defendant’s
motion suggest that the certified, operative copy of the Policy has yet to be produced
through this litigation.27
III. 	LEGAL STANDARD
The Federal Rules of Civil Procedure require pleadings to include “a short
and plain statement of the claim showing that the pleader is entitled to relief . . . .”28 If a
claim “fail[s] to state a claim upon which relief can be granted,” a defendant may move to
dismiss the claim under Rule 12(b)(6).29 	A Rule 12(b)(6) motion challenges the legal
23 Docket 29 at 4–5.
24 Id. at 5–6; Docket 26-1 at 2, 28.
25 Docket 15 at 7.
26 Docket 26-1 at 28.
27 See generally Docket 26; see also Docket 29 at 6 (“Before the court can begin to
interpret and enforce the contract, discovery is necessary in order to clarify the content and express
terms of the contract.”).
28 Fed. R. Civ. P. 8(a)(2).
29 Fed. R. Civ. P. 12(b)(6).
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sufficiency of the claims alleged.30 	To survive a motion to dismiss under Rule 12(b)(6),
“a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’”31 	This test requires a complaint to provide “well-
pleaded facts, not legal conclusions, that ‘plausibly give rise to an entitlement to relief.’”32
The determination of whether a complaint meets this standard is “a context-specific task
that requires the reviewing court to draw on its judicial experience and common sense.”33
When a heightened pleading standard, such as that required of Federal Rule of Civil
Procedure 9 for fraud claims, does not apply, the complaint “need only satisfy the [Federal
Rule of Civil Procedure] 8(a) notice pleading standard . . . to survive a Rule 12(b)(6)
dismissal.”34 Under Rule 8(a), a plaintiff must “give the defendant fair notice of what the
. . . claim is and the grounds upon which it rests.”35
In deciding Rule 12(b)(6) motions to dismiss, district courts “accept as true
all well-pleaded allegations of material fact, and construe them in the light most favorable
to the non-moving party.”36 	Courts need not accept as true “allegations that contradict
exhibits attached to the [c]omplaint or matters properly subject to judicial notice, or
allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable
30 Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001).
31 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)).
32 Whitaker v. Tesla Motors, Inc., 985 F.3d 1173, 1176 (9th Cir. 2021) (quoting Iqbal,
556 U.S. at 679) (citing Twombly, 550 U.S. at 570).
33 Iqbal, 556 U.S. at 679 (citation omitted).
34 Edwards v. Marin Parkcitation Inc., 356 F.3d 1058, 1062 (9th Cir. 2004).
35 Twombly, 550 U.S. at 555 (citation and internal quotation marks omitted).
36 Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010) (citing Manzarek
v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031–32 (9th Cir. 2008)).
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inferences.”37 	Normally, courts limit the scope of their review to the complaint alone.38
But if a complaint “necessarily relies” on an external document, courts may consider the
document if: 	“1) the complaint refers to the document; 2) the document is central to the
plaintiff’s claim; and 3) no party questions the authenticity of the copy attached to the
12(b)(6) motion.”39
When a plaintiff alleges fraud, as here, it faces a heightened pleading
standard under Rule 9 pursuant to which the complaint “must state with particularity the
circumstances constituting fraud.”40 	To meet this heighted standard, “a pleading must
identify the who, what, when, where, and how of the misconduct charged, as well as what
is false or misleading about the purportedly fraudulent statement, and why it is false.”41
Because 	Plaintiffs 	brought 	state-law 	claims 	against 	Defendant 	in 	this
diversity action, the Court looks to Alaska law when evaluating whether the amended
complaint pleads claims upon which relief can be granted.42 Plaintiffs bring claims against
Defendant for: (1) a declaration that Defendant must continue the Policy in force without
payment of additional premium; (2) breach of contract; (3) breach of the covenant of good
faith and fair dealing; and (4) fraud, negligent, or intentional misrepresentation. 	Alaska
37 Id. (citing Manzarek, 519 F.2d at 1031).
38 Id. (citations omitted).
39 Id. (quoting Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006)).
40 Fed. R. Civ. P. 9(b).
41 Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 964 (9th Cir. 2018) (quoting Cafasso,
United States ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011)) (citing
Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003)).
42 See Freund v. Nycomed Amersham, 347 F.3d 752, 761 (9th Cir. 2003) (“Under the rule
of Erie R.R. v. Tompkins, ‘federal courts sitting in diversity jurisdiction apply state substantive law
and federal procedural law.’”) (quoting Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427
(1996)).
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law sets the legal standards for each of these claims, which the Court discusses as relevant
below.
IV. 	DISCUSSION
Defendant argues that the law supports dismissal of Plaintiffs’ claims
because “the allegations do not plausibly support Plaintiffs’ claims.”43 	Defendant’s
argument relies on the premise that the Court must interpret the Policy’s provisions, which
it maintains are not in dispute and clearly require Plaintiffs to make additional premium
payments to remain in force.44 Accordingly, because Plaintiffs have implied that they have
not paid any additional premiums since the initial $50,000 payment in 1993, Defendant
argues that coverage no longer exists.45 Defendant also characterizes Plaintiffs’ allegations
as conclusory and nature and “without specificity or supporting factual allegations.”46
In response, Plaintiffs argue that the Court cannot at this point in the litigation
interpret the Policy because the contents of the Policy are in dispute.47 	According to
Plaintiffs, the Court cannot interpret the Policy until a “complete record” is established
following discovery and the presentation of extrinsic evidence.48 	To demonstrate this
alleged 	dispute 	over 	the 	Policy’s 	contents, 	Plaintiffs 	point 	to 	the 	aforementioned
differences between the two dueling copies of the Policy that Defendant presented to them
43 Docket 28 at 4.
44 See id. at 5 (“The Policy provides the obligations of the parties in regards to payment
and nonpayment of premium. 	Therefore, this motion tasks the Court with interpreting these
provisions.”).
45 Id.
46 Id.
47 Docket 29 at 3–6.
48 Id. at 3.
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and to the Court in earlier filings.49 	In its amended complaint, Plaintiffs have provided
only the March 3, 2022, Copy, having removed the October 1, 2021, Copy that Plaintiffs
provided in their original complaint filed in state court (and which removed to this Court
by Defendant).50 In doing so, Plaintiffs appear to have attached the March 3, 2022, Copy
not for the purpose of providing evidence of its terms but instead to demonstrate that
Defendant has provided a false copy of the Policy to Plaintiffs and the Court. 	Despite
making allegations as to the contents of the Policy in its amended complaint, Plaintiffs do
not appear to support these allegations with any evidence.51
The Court begins its analysis by taking Plaintiffs’ well-pleaded allegations
as true and construing them in the light most favorable to Plaintiffs to determine whether
they present “facial plausibility” to support their claims.52 The crux of Plaintiffs’ factual
allegations relevant to Defendant’s Rule 12(b)(6) motion are: 	(1) Defendant has not yet
provided Plaintiffs the certified, operable copy of the Policy, and (2) the true and correct
copy of the Policy would support Plaintiffs’ substantive interpretation of the Policy.53
Assuming these allegations are true, the Court cannot at this stage delve into the disputed
contractual language to dismiss Plaintiffs’ claims that rely on their interpretation of the
Policy. 	Doing so would require the Court to interpret the provisions of the copy of the
49 Id. at 4–6.
50 Docket 26-1.
51 See, e.g., Docket 26 at 5 (“In light of the terms and conditions of the Policy, as
interpreted and construed in accord with Alaska law, the Defendants are obligated to provide the
assurance, protection, and benefits described in the Policy Specifications . . .”).
52 Carey v. Bardana, No. 1:10-cv-0001 JWS, 2010 WL 11619238, at *2 (D. Alaska
Sept. 9, 2010) (citing Iqbal, 556 U.S. at 663).
53 See generally Docket 26; Docket 29.
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Policy provided as an exhibit to Plaintiffs’ complaint, which is what Defendant argues the
Court can and should do to resolve its motion.54
Defendant suggests that the Court may interpret the terms of the Policy
because Plaintiff attached a copy of the Policy to its complaint, whereas Plaintiff argues
that the Policy’s terms are in question because the certified copy of the Policy has not yet
been provided.55 	Defendant insists that the two copies of the Policy presented up to this
point—the October 1, 2021, Copy, and the March 3, 2022, Copy—are identical as to the
Policy’s material terms.56 	Defendant’s observation about the Policy’s terms may be
correct, but Defendant misses the point of Plaintiff’s argument: Plaintiff essentially argues
that the certified, operative copy of the Policy has not yet been produced or verified as
such.
The Court might well doubt Plaintiffs’ suggestion that the contents of the
certified, operative copy of the Policy are different from those contained in the parties’
filings, but the Court is compelled to accept Plaintiffs’ factual allegations as true at this
stage of the litigation because they are plainly and clearly stated in the complaint and not
clearly contradicted by the limited evidence presented to the Court thus far. 	The Court
finds that Plaintiffs have sufficiently articulated their allegation that the copies of the Policy
Defendant provided to them are false (see paragraph 6 of the amended complaint) and
54 Docket 28 at 7 (contending that “a review of the terms of the Policy demonstrate[s] that
Plaintiffs’ allegations do not plausibly support a contractual duty for Transamerica to maintain the
Policy in force without payment of the required premium.”).
55 Docket 34 at 4 (characterizing Plaintiffs’ argument as asserting that “Defendant’s copy
of the policy is not identical to their copy of the Policy . . .”); Docket 29 at 3.
56 Docket 34 at 4.
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explained why they believe that to be the case (see paragraphs 16-17).57 	There is no
indication from the face of the complaint that these are “conclusory,” “make unwarranted
deductions,” or “draw unreasonable inferences.”58 	If Defendant disagrees, it is free to
prove otherwise. 	In the interim, the Court accepts these facts and construes them in the
light most favorable to Plaintiffs.59
As for Defendant’s assertion that Plaintiffs failed to allege their claims with
sufficient specificity, the Court notes that Plaintiffs need not plead the terms of a contract
with unusual specificity to meet Rule 8’s requirements.60 	As other courts in this Circuit
have recognized, “it is not necessary for a plaintiff to allege the terms of an alleged contract
with precision if the Court is able generally to discern at least what material obligation of
the contract the defendant allegedly breached.”61 Plaintiffs’ allegations provide sufficient
notice of what they deem to be the material terms of the Policy that entitle them to relief.
Indeed, it is clear that the “maximum total premium” provision within the Policy’s “Policy
Specifications” section pulls the laboring oar of Plaintiffs’ argument.62 As it has done in
its motion to dismiss, Defendant is free to argue why it believes that contractual provision
57 Docket 26 at 2, 4.
58 Daniels-Hall, 629 F.3d at 998.
59 See Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 975 n.2 (9th Cir. 2010)
(observing that “factually based arguments” that support the parties’ “respective interpretations of
the contract . . . are appropriate on remand at a later stage of litigation, not on the pleadings”).
60 See Soil Retention Prods. v. Brentwood Indus., 582 F. Supp. 3d 725, 731 (S.D. Cal.
2022) (“In other words, it is not necessary for a plaintiff to allege the terms of an alleged contract
with precision if the Court is able generally to discern at least what material obligation of the
contract the defendant allegedly breached.”) (citations omitted).
61 Id. (citing Langan v. United Servs. Auto. Ass’n, 69 F. Supp. 3d 965, 2014 WL 4744790,
*7 (N.D. Cal. 2014).
62 Docket 26 at 3.
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is not dispositive at the appropriate stage of the litigation. Regardless, Plaintiffs’ amended
complaint provides ample notice of the basis for its claims and why they believe the Policy
entitles them to relief.
Having determined that it will accept Plaintiffs’ allegations as true and
refrain from interpreting the contents of a disputed document for the purposes of evaluating
Defendant’s Rule 12(b)(c) motion, the Court now considers whether the allegations
“show[] that the pleader[s are] entitled to relief” under the Alaska law governing Plaintiffs’
claims.63
A. 	Count I: 	Declaration that Defendant Must Continue the Policy Without
Payment of Additional Premium
Plaintiffs first seek a declaration that Defendant must continue to provide life
insurance coverage pursuant to the terms of the Policy.64 	Alaska Statute § 22.10.020(g),
the State’s analog to the federal Declaratory Judgment Act, “grants to [Alaska] superior
courts the power to issue declaratory judgments in cases of actual controversy.”65 In such
cases, the Alaska Declaratory Judgment Act authorizes a trial court to “declare the rights
and legal relations of an interested party seeking the declaration, whether or not further
relief is or could be sought.”66 	Under this statute, a complaint seeking declaratory relief
simply must allege facts demonstrating that it is entitled to a declaratory judgment.67 The
63 Fed. R. Civ. P. 8(a)(2).
64 Docket 26 at 4.
65 Brause v. Dep’t of Health & Soc. Servs., 21 P.3d 357, 358 (Alaska 2001).
66 Alaska Stat. § 22.10.020(g).
67 Jefferson v. Asplund, 458 P.2d 995, 1000 (Alaska 1969) (“[T]he requirements of
pleadings in actions seeking declaratory relief do not differ from those standards of pleadings
governing other types of civil actions.”) (citing Gomillion v. Lightfoot, 364 U.S. 339 (1960)).
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Alaska Supreme Court has explained that Alaska courts issue declaratory judgments to
clarify and settle legal relations and to “terminate and afford relief from the uncertainty,
insecurity, and controversy giving rise to the proceeding.”68 	Alaska courts generally
decline to award declaratory relief when a declaration would further neither of these
goals.69
Although 	the 	Alaska 	Declaratory 	Judgment 	Act 	requires 	an 	“actual
controversy,” Alaska courts may grant declaratory relief to settle controversies that have
not yet “ripen[ed] into violations of law” or “to afford one threatened with liability an early
adjudication without waiting until an adversary should see fit to begin an action after the
damage has accrued.”70 The Alaska Supreme Court has characterized its standing rules in
a Declaratory Judgment Act case as “liberal,” requiring only that a plaintiff show it has an
“interest adversely affected by the conduct complained of.”71 “The degree of injury to the
interest need not be great; ‘the basic idea . . . is that an identifiable trifle is enough for
standing to fight out a question of principle; the trifle is the basis for standing and the
principle supplies the motivation.’”72
Assuming an “actual controversy” is presented, an Alaska court deciding
Plaintiffs’ claim for a declaratory judgment in an insurance case would proceed to interpret
68 Id. at 997–98 (citing Borchard, Declaratory Judgments at 299 (2d ed. 1941)).
69 Id. at 998.
70 Lowell v. Hayes, 117 P.3d 745, 756 (Alaska 2005) (quoting Charles Alan Wright,
Arthur B. Miller & Mary Kay Kane, Federal Practice and Procedure: Civil § 2751 at 456 (3d ed.
1998)). 71 Bowers Office Prods. v. Univ. of Alaska, 755 P.2d 1095, 1097–98 (Alaska 1988)
(quoting Trs. for Alaska v. Dep’t of Nat. Res., 736 P.2d 324, 327 (Alaska 1987)).
72 Trs. for Alaska, 736 P.2d at 327 (citations omitted).
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the insurance contract according to the principle of “reasonable expectations.”73 	This
principle requires courts to construe insurance contracts “so as to provide that coverage
which a layperson would have reasonably expected from a lay interpretation of the policy
terms.”74 	Even 	so, 	an 	insured’s 	expectation 	of 	coverage 	must 	be 	“objectively
reasonable.”75
To determine an insured’s reasonable expectations, Alaska law directs courts
to look to: (1) the language of the disputed provisions in the policy, (2) other provisions
in the policy, (3) extrinsic evidence, and (4) case law interpreting similar provisions.76
“[B]ecause of inequities in bargaining power, [Alaska courts] construe coverage broadly
and exclusions narrowly, in favor of insureds.”77 Alaska courts will, however, recognize
a coverage restriction “if . . . plain language limits the coverage of [the] policy.”78 In the
absence of plain language, such as when an insurance policy provision is ambiguous,
73 Bering Strait Sch. Dist. v. RLI Ins. Co., 873 P.2d 1292, 1294 (Alaska 1994) (quoting
State v. Underwriters at Lloyds, London, 755 P.2d 396, 400 (Alaska 1988)).
74 Downing v. Country Life Ins. Co., 473 P.3d 699, 704 (Alaska 2020) (quoting U.S. Fire
Ins. Co. v. Colver, 600 P.2d 1, 3 (Alaska 1979)) (other citation omitted); see also Bering Strait,
873 P.2d at 1294 (quoting Lloyds, 755 P.2d at 400) (defining the reasonable expectations principle
as the concept that “[t]he objectively reasonable expectations of applicants and intended
beneficiaries regarding the terms of insurance contracts will be honored even though painstaking
study of the policy provisions would have negated those expectations”).
75 West v. Umialik Ins. Co., 8 P.3d 1135, 1138 (Alaska 2000) (quoting Lloyds, 755 P.2d
at 400); see also State Farm Fire & Cas. Co. v. Bongen, 925 P.2d 1042, 1047 (Alaska 1996)
(quoting Millar v. State Farm Fire & Cas. Co., 804 P.2d 822, 826–27 (Ariz. Ct. App. 1990))
(“[S]ince most insureds develop an expectation that every loss will be covered, the reasonable
expectation doctrine ‘must be limited by something more than the fervent hope usually engendered
by loss.’”).
76 Allstate Ins. Co. v. Teel, 100 P.3d 2, 4 (Alaska 2004).
77 Devine v. Great Divide Ins. Co., 350 P.3d 782, 786 (Alaska 2015) (first alteration in
original) (quoting Whittier Props., Inc. v. Alaska Nat’l Ins. Co., 185 P.3d 84, 88 (Alaska 2008)).
78 Whittier Props., 185 P.3d at 88 (citation omitted).
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Alaska courts “must accept the interpretation that most favors the insured.”79 	Still, “the
mere fact that two parties to an insurance contract have different subjective interpretations
of that contract does not make it ambiguous. 	Rather, ambiguity exists only when the
contract, taken as a whole, is reasonably subject to differing interpretations.”80
Against 	this 	backdrop, 	the 	Court 	must 	determine 	whether 	Plaintiffs’
amended complaint contains non-conclusory statements from which a court could make
reasonable inferences that they are entitled to relief (i.e., a declaration that Defendant must
continue to provide coverage under the Policy).81 Although Plaintiffs’ amended complaint
is not rich with factual allegations regarding the Policy’s terms, it does include a number
of factual allegations meeting this plausibility standard. The amended complaint points to
the “maximum total premium” language it alleges to exist in the Policy, as well as
Plaintiffs’ alleged payment of the premium and Defendant’s refusal to acknowledge the
continuation of coverage under the Policy.82 	This language is not only non-conclusory,
but it also meets the Alaska Supreme Court’s liberal “interest-injury” approach to
establishing existence of a “case of actual controversy.”83 	By describing Defendant’s
refusal to provide continued life insurance coverage without the payment of additional
premiums, Plaintiffs have articulated a “genuine adversarial relationship exists regarding
an interest-injury.”84 	Plaintiffs and Defendant’s dispute over whether the Policy’s
79 Id. at 90 (citations omitted).
80 Downing, 473 P.3d at 704 (footnote, citations, and internal quotation marks omitted).
81 Iqbal, 556 U.S. at 678 (citation omitted).
82 Docket 26 at 3.
83 Bowers Office Prods., 755 P.2d at 1097–98.
84 Id. at 1098.
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coverage can continue without payment of additional premiums provides evidence of such
an adversarial relationship, and Plaintiffs have a clear economic interest in the outcome of
this dispute: the payout of life insurance proceeds upon their death.
Plaintiffs also allege through paragraphs 6–19 of the amended complaint the
following key facts that, if true, would warrant a declaration that coverage exists under the
terms of the Policy: (1) the Policy, an enforceable contract, exists; (2) Plaintiffs paid the
“maximum total premium” required under the Policy to secure coverage; and (3) Defendant
failed to uphold its obligation thereunder to provide coverage by sending and refusing to
withdraw the lapse notice.85 Plaintiffs’ amended complaint goes further by connecting the
dots between these facts and Plaintiffs’ legal claims. 	In Count I, for instance, Plaintiffs
contend that they performed their obligations under the Policy by paying the $50,000
premium in 1993, triggering Defendant’s obligation to provide coverage.86 Taken together,
these assertions, if true, would entitle Plaintiff to its requested declaration. 	Because
Plaintiff neither has offered nor referenced the terms of an undisputed copy of the Policy—
and instead alleges that the terms of the Policy that Defendant would direct the Court
toward are in dispute—the Court will not delve into the interpretative analysis Defendant
requests in its motion.
B. 	Count II: Breach of Contract
To prevail on their breach-of-contract claim, Plaintiffs must establish the
existence of an enforceable insurance contract, a breach of that contract, and damages
85 Docket 26 at 2–4.
86 Id. at 5.
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resulting from the breach.87 Similar to their Count I arguments, Plaintiffs argue that their
purchase of the Policy established a contract pursuant to which Defendants agreed to
provide life insurance and that Defendant breached this contract by declaring its lapse,
resulting in “damages . . . including damages for emotional distress and other non-
economic damages.”88 	The Court finds that Plaintiffs have alleged facts establishing the
existence 	of 	an 	enforceable 	insurance 	contract 	and 	a 	breach 	through 	Defendant’s
repudiation thereof via communication of the lapse notice. As for damages, Plaintiffs do
not plead in detail the damages they claim to have suffered from Defendant’s breach, but
they need not do so. 	Having alleged that they paid Defendant for the Policy and were
damaged by Defendant’s failure to meet its contractual commitment to provide coverage,
Plaintiffs have met the requirements of Rule 8(a) needed to survive a 12(b)(6) motion to
dismiss.89
87 See Great W. Sav. Bank v. George W. Easley Co., 778 P.2d 569, 577–78 (Alaska 1989)
(finding a complaint for breach of contract sufficiently stated a claim for which relief could be
granted because it alleged that a contractual obligation existed, the defendant breached the
contract, and the plaintiff suffered damages).
88 Docket 26 at 5–6.
89 See Lexington Ins. Co. v. Energetic Lath & Plaster, Inc., No. 2:15-cv-00861-KJM-EFB,
2015 U.S. Dist. LEXIS 123123, 2015 WL 5436784, at *8 (E.D. Cal. Sept. 15, 2015) (denying a
motion to dismiss and finding that a party adequately alleged damages because they “allege[d]
they have suffered damages as a result of [the non-moving party’s] failure to provide to them the
coverage and benefits that were due under the policy.”); Soil Retention Prods., 582 F. Supp. 2d at
737 (“In federal court, a plaintiff need not plead contract damages with unusual specificity.”);
Grouse River Outfitters Ltd v. NetSuite, Inc., No. 16-cv-02954-LB, 2016 U.S. Dist. LEXIS
141478, at *34 (N.D. Cal. Oct. 12, 2016) (footnote and citation omitted) (“Grouse River alleges
that it paid NetSuites. 	And it alleges that it was damaged by NetSuite’s failure to meet its
contractual obligations. . . . All this taken together sufficiently pleads breach of contract.”).
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C. 	Count III: Breach of the Covenant of Good Faith and Fair Dealing
Under Alaska contract law, “the covenant of good faith and fair dealing . . .
is implied in all contracts.”90 In the context of insurance contracts, an insurer’s breach of
this covenant gives the insured a cause of action sounding in tort due to “[t]he special
relationship between the insured and insurer in the insurance context” and because tort law
“provide[s] 	needed 	incentive 	to 	insurers 	to 	honor 	their 	implied 	covenant 	to 	their
insureds.”91 Absent “such a cause of action[,] insurers can arbitrarily deny coverage and
delay payment of a claim with no more penalty than interest on the amount owed.”92
In bringing a bad faith action, Alaska Supreme Court precedent requires the
insured to show that the insurer’s actions were objectively unreasonable under the
circumstances.93 	To prevail on their bad-faith claim, Plaintiffs will have to show that
Defendant’s lapse notices and demand for additional premium breached the covenant of
good faith and fair dealing because those actions lacked a “reasonable basis.”94
As 	with 	Counts I 	and II, 	Plaintiffs’ 	bad-faith 	claim 	contains enough
specificity to establish that Plaintiffs plausibly could be entitled to relief. Plaintiffs point
to Defendant’s alleged breach of the contract, discussed above, and argue that Defendant
lacked a reasonable basis in repudiating its obligations under the Policy by failing to
90 State Farm Mut. Auto. Ins. Co. v. Weiford, 831 P.2d 1264, 1266 (Alaska 1992) (citing
Alaska Pac. Assur. Co. v. Collins, 794 P.2d 936, 947 (Alaska 1990)).
91 State Farm Fire & Cas. Co. v. Nicholson, 777 P.2d 1152, 1156–57 (Alaska 1989).
92 Ennen v. Integon Indem. Corp., 268 P.3d 277, 291 (Alaska 2012) (quoting Nicholson,
777 P.2d at 1156)).
93 See Hillman v. Nationwide Mut. Fire Ins. Co., 855 P.2d 1321, 1323–24 (Alaska 1993)
(“[T]he tort of bad faith in first-party insurance cases . . . necessarily requires that the insurance
company’s refusal to honor a claim be made without a reasonable basis.”).
94 Id. at 1324.
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undertake a “full and complete investigation by Defendant[] into the facts and the law” and
through its alleged “fraudulent misrepresentation of the terms and conditions and content
of the Policy.”95 	Plaintiffs have done more than allege bad faith based on Defendant’s
reliance on the insurance contract, which by itself would not rise to the level needed to
sufficiently plead a bad faith claim.96 Plaintiffs also allege facts establishing why they feel
they satisfied their obligation under the Policy and Defendant must honor its commitment
to provide insurance coverage. Although Plaintiffs do not allege in great detail the damages
they have suffered as a result of this breach, their damages allegations meet Rule 8’s
requirements because they connect the breach of the covenant of good faith and fair dealing
with Defendant’s alleged breach of the insurance contract, a contract into which Plaintiffs
paid to enter and expect to receive from Defendant the good-faith financial assurance that
comes with a life insurance policy.
D. 	Count IV: Fraud, Negligent, or Intentional Misrepresentation
To 	prevail 	on 	their 	fraudulent 	or 	intentional 	misrepresentation 	claim,
Plaintiffs face the heightened pleading standard articulated in supra Section II of this
Order. 	To 	obtain 	relief 	under 	Alaska 	law 	on 	either 	the 	fraudulent/intentional
misrepresentation claim (which functionally are the same under Alaska law) or the
negligent misrepresentation claim, Plaintiffs also must establish: 	(1) a misrepresentation
of fact or intention, (2) made fraudulently, (3) for the purpose or with the expectation of
95 Docket 26 at 3–4.
96 See Hillman, 855 P.2d at 1329 (“It is objectively reasonable to rely on contractual
rights.”).
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inducing another to act in reliance; and (4) justifiable reliance by the recipient, (5) causing
loss.97 A fraudulent misrepresentation occurs when the maker knows the misrepresentation
is untrue, although a plaintiff “generally” may allege knowledge and other conditions of
the mind.98 A statement can be both literally true and a fraudulent misrepresentation if the
maker knows the statement is materially misleading.99 	Meanwhile, the elements of
negligent misrepresentation under Alaska law are: 	(1) a misrepresentation made “in the
course of [one’s] business, profession or employment, or in any other transaction in which
she has a pecuniary interest;” (2) the misrepresentation must supply “false information;”
(3) there must be “justifiable reliance” on the false information supplied; and (4) the
accused party must have failed “to exercise reasonable care or competence in obtaining or
communicating the information.”100
Plaintiffs have alleged with specificity all of the above elements except for
the existence of a fraudulent misrepresentation. Plaintiffs’ misrepresentation claim is not
very 	well 	written, 	but 	it 	appears 	that 	Plaintiffs 	claim 	that 	Defendant 	made 	two
misrepresentations: (1) it provided a false copy of the Policy, and (2) it misrepresented the
terms and conditions of the Policy and its coverage.101 	The allegations, if true, establish
the presence of misrepresentations, Plaintiffs’ reliance thereon, a failure to exercise
97 Asher v. Alkan Shelter, LLC, 212 P.3d 772, 782 (Alaska 2009) (citing Lightle v. Real
Estate Comm’n, 146 P.3d 980, 983 (Alaska 2006)).
98 Lightle, 146 P.3d at 983 (citations omitted); see also Fed. R. Civ. P. 9(b) (“Malice,
intent, knowledge, and other conditions of a person’s mind may be alleged generally.”).
99 Id. at 986 (citations omitted).
100 Valdez Fisheries Dev. Ass’n v. Alyeska Pipeline Serv. Co., 45 P.3d 657, 671 (Alaska
2002) (citing Bubbel v. Wien Air Alaska, Inc., 682 P. 2d 374, 380 (Alaska 1984)).
101 Docket 26 at 2–4.
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reasonable care in communicating the misrepresentations, and losses resulting from
Plaintiffs’ reliance. However, Plaintiffs have failed to allege with specificity the existence
of fraud. There is no indication from the complaint that Defendant knew that its submission
of the October 1, 2021, Copy was false, even if it differed from the March 2, 2022, Copy
in what appear to be immaterial respects. The same applies to the alleged misrepresentation
of the Policy coverage. 	Instead, the complaint asserts in a conclusory manner that
Defendant knew or should have known that its representations were false.
To be clear, the Court is aware that Rule 9(b) allows Plaintiffs to “generally”
allege a fraudulent state of mind, but in this case the evidence submitted with Plaintiff’s
complaint contradicts that allegation. 	The October 1, 2021, letter Defendant provided
Plaintiffs explaining its reasoning behind its position that the Policy’s coverage had lapsed
reflects a thoughtful analysis of the Policy’s provisions and coverages.102 	The letter
explains Defendant’s view of the “flexible” Policy at issue here and points to actual
language in the Policy to justify Defendant’s interpretation of the Policy.103 It may be the
case that the letter’s analysis is based on an incorrect copy of the Policy or that Defendant’s
interpretation of this contract of adhesion is vulnerable under Alaska law, but there is no
indication from either the letter or Plaintiff’s complaint that Defendant knew that to be the
case at the time or had knowledge that it was misleading Plaintiffs. This letter seemingly
demonstrates that Defendant rooted its reasoning in the facts before it and not on a
purposeful misrepresentation to Plaintiffs. 	Similarly, Defendant’s filing at Docket 15,
102 Docket 26-1.
103 Id.
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which Plaintiff suggests if further evidence of fraudulent behavior, contradicts any
allegation of fraudulent behavior. 	The affidavit of Defendant’s custodian of records
acknowledges some of the differences between the October 1, 2021, Copy and the March 3,
2022, Copy.104 Although the custodian failed to identify other relatively minor differences
between the copies or provided an incorrect copy of a Policy dating back to the early 1990s,
it appears more likely than not in the Court’s experience that this oversight was
unintentional rather than part of a blatant scheme to defraud Plaintiffs through a direct
submission to the Court. 	Although Plaintiffs need not make more specific allegations of
Defendant’s knowledge or its employees’ conditions of mind for their fraud claim to
survive, Plaintiffs must overcome the presumption of an innocent mistake that the evidence
they submitted to the Court establishes.105 	Otherwise, Plaintiffs have only sufficiently
pleaded a claim for negligent misrepresentation.
The 	Court 	dismisses 	Plaintiffs’ 	claim 	for 	fraudulent 	or 	intentional
misrepresentation, but will grant Plaintiffs leave to amend the complaint pursuant to
Federal Rule of Civil Procedure 15(a)(2), which provides that a court “should freely give
leave [to amend a pleading] when justice so requires.” 	Although Plaintiffs already have
amended their complaint once, they have not had an opportunity to amend the claim they
added in their first amendment, which is the same and only claim the Court dismisses here.
104 Docket 15-1 at 2.
105 See Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th
Cir. 1990) (citation omitted) (“[M]aterial which is properly submitted as part of the complaint may
be considered on a motion to dismiss.”); cf. McKinnon v. Hartford Ins. Co., No. 2:12-cv-1809-
RCJ-CWH, 2013 U.S. Dist. LEXIS 35404, at *19 (D. Nev. Mar. 11, 2013) (finding that a plaintiff’s
claim that a defendant “never at any time intended to comply” with its representations was
insufficient to sufficiently allege a fraudulent misrepresentation claim).
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Because Plaintiffs may be able to cure this defective claim if they can point to other indicia
of fraudulent behavior, or explain why the documents provided show that Defendant knew
it misrepresented the Policy and its coverage when it provided Defendant the lapse notice
or provided purportedly true copies of the Policy to Plaintiffs, the Court finds leave to
amend proper.106 If Plaintiffs cannot overcome what the evidence before the Court appears
to establish, they should refrain from further amending the complaint, particularly since
their claim for negligent misrepresentation survives. 	Additionally, if Plaintiffs choose to
amend 	but 	Defendant 	feels 	that 	the 	amended 	claim 	for 	fraudulent 	or 	intentional
misrepresentation continues to exhibit this or a different defect, it may file a renewed
motion to dismiss that claim.
V. 	CONCLUSION
In light of the above, Defendant’s Motion to Dismiss First Amended
Complaint with Prejudice at Docket 28 is GRANTED IN PART. 	Plaintiffs’ claim for
fraudulent or intentional misrepresentation is DISMISSED WITHOUT PREJUDICE
and with LEAVE TO AMEND. Plaintiffs shall have until December 19, 2022, to correct
the pleading deficiency identified herein and file a Second Amended Complaint.
IT IS SO ORDERED this 2nd day of December, 2022, at Anchorage, Alaska.
/s/ Joshua M. Kindred
JOSHUA M. KINDRED
United States District Judge
106 See Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (quoting Doe v. United States,
58 F.3d 494, 497 (9th Cir. 1995)) (“[A] district court should grant leave to amend even if no request
to amend the pleading was made, unless it determines that the pleading could not possibly be cured
by the allegation of other facts.”).
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