Grenall v. United Of Omaha Life Insurance Company

165 Cal.App.4th 188, 80 Cal.Rptr.3d 609 (2008)

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Nature of the Case

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Facts

Simes submitted a signed annuity application to D's agent on October 2, 2001, along with a single premium of $321,131. D then issued a policy for a single premium immediate annuity, effective the date of Simes's application. Simes received a copy of the policy six weeks after her application. The policy includes the following provision: “READ YOUR POLICY CAREFULLY. [¶] It includes the provisions on the following pages. [¶] If you are not satisfied with your policy, return it to us or our agent within 30 days after you receive it. We will refund the single premium and cancel the policy as of its date of issue.” The annuity policy provided for monthly payments of $ 3,000 to Simes for “life only”-specifically, a “life contingent payable … as long as the annuitant lives.” After receiving three benefit payments, Simes was diagnosed with ovarian cancer. She died less than a week later on January 30, 2002. United stopped making annuity payments in April 2003 when it learned of her death. P filed suit. D moved for summary judgment, claiming the terms of the contract provided for a life annuity and did not require a refund of the premium to P. The trial court granted summary judgment on the breach of contract cause of action, concluding that the undisputed facts showed that D had not breached the payment option to which the parties agreed, as the contract required monthly benefit payments only during Simes's lifetime. The court denied the motion as to the declaratory relief cause of action, concluding that the evidence raised triable issues of material fact as to whether Simes made a unilateral mistake in agreeing to the life annuity payment option, justifying reformation, and whether surrounding circumstances justified rescission and restitution based on a mistake of fact or a mistake of law. After additional discovery, United renewed its motion for summary judgment on the declaratory relief cause of action. D asserted that there was no evidence of a mistake by Simes or of what was in her mind when she purchased the annuity. P produced evidence that Simes did not know she had a terminal illness when she entered the annuity contract or during the statutory rescission period. P also argued that the contract was procedurally and substantively unconscionable. The court concluded that Simes's undetected cancer did not constitute a mistake of fact rendering enforcement unconscionable. Simes assumed the risk of dying before recouping her investments, and it was reasonably foreseeable that Simes would die before the benefit payments matched her premium. The trial court held that it was reasonable to allocate to Simes the risk of a mistake regarding her health and life expectancy. P appealed.