[00:00:04] Speaker 04: Good morning. [00:00:05] Speaker 04: May it please the court? [00:00:06] Speaker 04: Pardon me. [00:00:07] Speaker 04: John Williams on behalf of Appellant Pitt. [00:00:11] Speaker 04: I'd like to reserve five minutes of my time for rebuttal. [00:00:15] Speaker 04: I'd like to start this morning by discussing why the memorandum decision or decisions in both Clark and Elmore are not controlling on the renewal doctrine analysis in this case. [00:00:31] Speaker 04: Under the renewal doctrine, when Michael Pitt [00:00:34] Speaker 04: renewed his policy in California starting in 2014. [00:00:38] Speaker 04: It incorporated interim changes in the insurance code intended to regulate all existing life insurance policies in California, including the two statutes in question in this appeal. [00:00:51] Speaker 04: This is a basic articulation of the renewal doctrine, as recognized over 50 years ago in California in the Maglen decision. [00:01:01] Speaker 03: And as accepted- Council, I want to start with a fundamental, a little more fundamental question. [00:01:06] Speaker 03: And that is, why do we even think that California law applies here? [00:01:09] Speaker 03: I assume this is an easy question to answer. [00:01:12] Speaker 03: But the contract itself is signed in Illinois. [00:01:18] Speaker 04: Correct. [00:01:18] Speaker 03: The folks move later on to California. [00:01:20] Speaker 03: So what principle of insurance law tells us, or contractual law here, tells us that when they move to California that the provisions of California law now govern rather than the provisions of the state where it was signed? [00:01:33] Speaker 04: Well, that would be the renewal doctrine, this idea that if a policy is renewed in a state that the law of that state then becomes [00:01:41] Speaker 03: controlling on that policy. [00:01:43] Speaker 03: And is that a matter of Illinois law? [00:01:46] Speaker 03: Is that a matter of just general insurance policy? [00:01:48] Speaker 03: Or is that a matter of the contract? [00:01:49] Speaker 04: Well, that's a matter of California law. [00:01:51] Speaker 03: Because there is no choice of law provision in there. [00:01:53] Speaker 03: There are references to state law in the contract. [00:01:56] Speaker 03: But there's no choice of law provision. [00:01:58] Speaker 03: It doesn't say, well, this will be governed under the laws of Illinois or the laws of New York or California or wherever the insured moves. [00:02:06] Speaker 04: I think that there is a choice of law provision, but it wasn't our position that that controls here. [00:02:12] Speaker 04: The position that we've taken is that once this policy becomes renewed in California, it incorporates the changes in California law. [00:02:22] Speaker 04: Now, that's also consistent with language in the policy itself. [00:02:27] Speaker 04: The conformity with statutes language is found at 9 ER 2080. [00:02:33] Speaker 04: which anticipates that insurers like Pitt will move after a policy's original issuance and require Tower to amend the policy if doing so would give Pitt the benefit of such advantageous state statutes, rules, or regulations. [00:02:52] Speaker 04: So not only does the renewal doctrine itself allow for the application of California law, the policy language [00:03:00] Speaker 04: contained in the policy, the conformity with statutes language also provides that if there is a change in the statute. [00:03:08] Speaker 02: What language are you referring to in the conformity? [00:03:12] Speaker 04: It's called the conformity with statutes language. [00:03:16] Speaker 02: I see a conformity. [00:03:18] Speaker 02: It says if any prediction of this policy is in conflict with the laws of the state which govern this policy. [00:03:25] Speaker 03: It's found at ER 2080. [00:03:27] Speaker 03: It's under Section 7. [00:03:29] Speaker 03: It's the second paragraph under Section 7. [00:03:31] Speaker 03: Correct. [00:03:31] Speaker 03: But all it does is conflict with the laws of the state which govern this policy. [00:03:35] Speaker 03: It assumes that we know which state's laws govern this policy. [00:03:38] Speaker 03: I'm just trying to figure out. [00:03:39] Speaker 03: It doesn't seem that either side disagrees over this. [00:03:43] Speaker 03: I'm just trying to figure out at what point we know that California's laws apply because it may have some implications for where something has either been renewed or whether that changes the idea of issued and delivered. [00:03:54] Speaker 04: And again, I guess I just point back to the renewal principle itself, that if you have this policy that is in force and that it is renewed in California, that it incorporates the existing law in California at that time. [00:04:07] Speaker 02: The question is, where does this renewal doctrine come from? [00:04:10] Speaker 02: Is it a matter of California law? [00:04:13] Speaker 02: Is it a matter of Illinois law? [00:04:14] Speaker 02: Apparently, it's not in the contract. [00:04:16] Speaker 02: So where are you taking it from? [00:04:18] Speaker 04: Well, it's embedded in California law. [00:04:20] Speaker 04: It was first articulated by the Maglen case. [00:04:24] Speaker 02: Okay, so I look at Maglen, and that has language, which says, where a policy is issued or delivered by any insurer licensed in this state, upon any motor vehicle, principal user, principal garage in this state. [00:04:39] Speaker 02: But the any insurer language is not applicable. [00:04:43] Speaker 02: It's not part of 1013.71 and 1013.72. [00:04:50] Speaker 02: So that was specific language that Magdalene looked at, which isn't an issue in this policy. [00:04:57] Speaker 02: So looking at this policy, what creates a California law applicable? [00:05:08] Speaker 04: Look, Maglin has been accepted as articulating the general principle of the renewal theory. [00:05:14] Speaker 04: This court in the Stefan case [00:05:17] Speaker 04: look to modeling as well. [00:05:19] Speaker 03: Why isn't this governed, though, by paragraph three, the renewal privilege in the contract? [00:05:23] Speaker 03: That's on 277. [00:05:25] Speaker 03: Each renewal will be for a term of one year and will begin when the preceding term ends. [00:05:30] Speaker 03: So it looks like the contract renews. [00:05:33] Speaker 03: It's only good for one year. [00:05:34] Speaker 03: It's sort of a one-year period, and then it renews. [00:05:39] Speaker 03: If the pits have now moved to California and formed the insurance company that they are now living in California, I mean, this seems to be plausible that everybody might assume that California law applies, although I'm still not entirely sure why. [00:05:52] Speaker 04: Well, let's understand this. [00:05:54] Speaker 04: Tower designed the policy to renew on an annual basis. [00:05:58] Speaker 04: That's their language. [00:06:00] Speaker 04: And so the policy every year is renewed by the payment of the premium. [00:06:06] Speaker 04: There's nothing about the policy that is frozen in amber at the time that it is first issued and will always be a policy under Illinois law. [00:06:18] Speaker 00: Does the California law, excuse me, in Ball say that when a policy is issued and delivered as a one-time event, it happens at one point in time? [00:06:30] Speaker 00: You're, I think, trying to bring it within the statute by suggesting that issued and delivered is the same as renewed, and that it happens repeatedly rather than at one point in time. [00:06:39] Speaker 00: And I'm not sure how that's consistent with Ball. [00:06:42] Speaker 04: Well, I think the issued and delivered language in Ball [00:06:47] Speaker 04: was questioned by the Supreme Court in California in McHugh. [00:06:53] Speaker 00: McHugh was talking about retroactivity and different issues. [00:06:58] Speaker 04: But it looked exactly at that issued in delivered language and said that Ball's articulation of that issued in delivered language was not firmly established enough that the legislature was presumed to know and adopt Ball's view of that when it passed the statutes. [00:07:14] Speaker 04: It specifically said that with respect to Ball. [00:07:17] Speaker 02: But it said that it didn't matter if the policy was issued and delivered before the statute was enacted. [00:07:24] Speaker 02: It was still applicable. [00:07:26] Speaker 02: That's not an issue here. [00:07:28] Speaker 02: We're not talking about retroactivity of something that was issued and delivered in California. [00:07:33] Speaker 02: So I didn't see how Ball even assisted you. [00:07:37] Speaker 04: I was responding to Judge Beatty's question with respect to the issued and delivered language. [00:07:43] Speaker 04: My position is that the McHugh court [00:07:45] Speaker 04: looked at that language and said, Ball is distinguishable. [00:07:47] Speaker 04: We don't think that the issued and delivered articulation in Ball is applicable to these statutes. [00:07:53] Speaker 00: Moreover, Ball never looked... But I think what Judge Akuta's point is that was not an issue in McHugh. [00:07:58] Speaker 00: So how does McHugh help you? [00:08:01] Speaker 04: I think McHugh is the closest analog for this court. [00:08:04] Speaker 04: The analytical task for this court [00:08:07] Speaker 04: is to try and glean how the highest court in California would decide this issue. [00:08:12] Speaker 04: And a lot of the articulation and reasoning and analysis in MECU that talks about the purpose of these statutes, the uniform pre-termination notice that the statutes impose on policies whenever they were originally issued, and why that [00:08:31] Speaker 04: Scheme is important for purposes of the remedies and the public policies those statutes meant to advance. [00:08:38] Speaker 04: I think all of that is instructive to this court. [00:08:41] Speaker 04: It is true that in McHugh, the issue was not whether a policy originally issued outside of California and then renewed in California was applicable or was subject to the statutes. [00:08:56] Speaker 04: That was not squarely decided in McHugh. [00:08:58] Speaker 04: That was not presented in McHugh. [00:09:00] Speaker 04: But the issue of the renewal theory prior to the McHugh ruling had been something that district courts in this district had looked at and looked at consistently. [00:09:12] Speaker 03: So to put it in terms of the statutes that you're trying to get applied here, those statutes only speak in terms of issued and delivered. [00:09:19] Speaker 03: The legislature could have used the term renewal. [00:09:22] Speaker 03: It's used the term renewal in other statutes. [00:09:25] Speaker 03: And there are statutes in California in which they have used the terms in series, issued, delivered, or renewed, which suggests that renewed may be. [00:09:34] Speaker 03: But your contention is today that renewal means issued and delivered, that it's issued and delivered every year that it's renewed. [00:09:41] Speaker 04: I would say that it's the functional equivalent of issued and delivered. [00:09:44] Speaker 04: It's not the same thing. [00:09:45] Speaker 03: Do you have any case or any provision that supports that? [00:09:49] Speaker 03: Ball seems to be contrary to that. [00:09:51] Speaker 03: McHugh calls Ball into question. [00:09:53] Speaker 03: Yes. [00:09:54] Speaker 03: Do you have any other case that equates renewal with issued and delivered? [00:10:00] Speaker 04: Well, I think that, again, is the function of the renewal doctrine, and this court and Stefan [00:10:08] Speaker 04: looked at that issue, approved Moglen with that language in Moglen by also accepting the renewal doctrine as standing for the proposition that each renewal incorporates any changes in the law that occur prior to the renewal. [00:10:24] Speaker 00: But if renewal is the equivalent of issued and delivered, that seems to put the insured at a tremendous disadvantage because before an insurance company is going to issue a life insurance policy, there are going to be requirements to qualify, you know, health examination, review of medical records, things such as that. [00:10:43] Speaker 00: They issued this contract, I believe, for 20 years, and so Mr. Pitt could renew it each year by paying the premium for 20 years without being subjected to re-qualifying every year to have the policy issued. [00:10:56] Speaker 00: So if renewal means issued and delivered, that would suggest that an insurance company could make an agreement with and ensure that they're going to insure them for 20 years once they are deemed qualified, and then every year just decide to cancel the policy. [00:11:07] Speaker 04: Well, the policy provisions in this policy would prevent them from doing that. [00:11:12] Speaker 04: So they couldn't make that requirement on a contractual basis. [00:11:15] Speaker 00: So why couldn't they just do it as a matter of law? [00:11:17] Speaker 00: Because it's renewed, and that means it's issued and delivered all over again. [00:11:21] Speaker 00: And now you get the benefit of these new statutes. [00:11:24] Speaker 00: And it seems to really upend any sort of, on the one hand, the contract is upheld because it's going to protect the insured. [00:11:32] Speaker 00: On the other hand, it's not upheld. [00:11:34] Speaker 00: because something has happened in the interim. [00:11:36] Speaker 00: I mean, it seems like the contract either is in place or it's not. [00:11:41] Speaker 04: We're not trying to upend the contract or the contractual provisions. [00:11:44] Speaker 04: We're just trying to say what law applies to the contract, at what point. [00:11:48] Speaker 04: And if that contract is renewed in California, then what we're saying is, under the renewal theory, that is the functional equivalent of it being issued there. [00:12:00] Speaker 04: That doesn't mean that it was originally issued there or it's reissued. [00:12:03] Speaker 04: It just means [00:12:05] Speaker 04: it incorporates the law of that state at the time that it's renewed there. [00:12:10] Speaker 04: And again, that renewal principle is well settled in California law. [00:12:14] Speaker 04: It's been accepted by this court in Stefan. [00:12:17] Speaker 04: Other courts in this district, in this circuit, including four different district courts, looked at this issue and found that the renewal doctrine applied [00:12:30] Speaker 04: specifically analyzed the Steffen case, specifically looked at the Moglen case, and said in these instances, when a policy is renewed in California, these changes in the statutes apply. [00:12:44] Speaker 04: And that articulation of the renewal doctrine itself is what makes those changes possible. [00:12:50] Speaker 04: So nobody's here saying that the contract is somehow upended. [00:12:55] Speaker 04: It's just a question of what law applies to that contract. [00:12:59] Speaker 04: And when we're talking about these particular statutes, it's important to remember, too, and I believe this is where McHugh is helpful, is that McHugh found that requiring this pre-termination notice scheme, this 60-day grace period, [00:13:17] Speaker 04: doesn't upend the basic contractual bargain. [00:13:21] Speaker 04: All it does is impose relatively cabined administrative requirements to these policies in the way that they're administered in California to do what? [00:13:32] Speaker 04: To serve the public policy of avoiding inadvertent forfeitures. [00:13:37] Speaker 04: So in that respect, it doesn't upend the entire contractual [00:13:43] Speaker 04: Contract or doesn't rewrite the contract. [00:13:45] Speaker 04: It only requires that the contract be administered in a certain way. [00:13:48] Speaker 02: Do you want to save some time for rebuttal? [00:13:50] Speaker 02: Thank you. [00:14:00] Speaker 01: Good morning, Your Honors. [00:14:01] Speaker 01: I'm Sandra Hauser from Dentons on behalf of Metropolitan Tower Life Insurance Company. [00:14:09] Speaker 01: Judge Bythe, you got it exactly right when you observed that these California lab statutes, by their plain and unambiguous terms, are limited in their application to policies issued or delivered in the state in California. [00:14:24] Speaker 01: Plaintiff Appellant wants this case to be about whether or not the PIT policy renewed in California. [00:14:31] Speaker 01: And I'll get to that in a moment. [00:14:33] Speaker 01: But that's a straw man question here, because these statutes were not written to apply to policies located in California, or administered in California, or renewed in California, or ensuring lives in California. [00:14:46] Speaker 01: Those words are not in these statutes. [00:14:49] Speaker 01: And of course, they have to be read per their clear language. [00:14:52] Speaker 01: Had the legislature intended for the statutes to apply to all policies, regardless of where they were issued, the legislature would simply have written the statutes without any limiting language. [00:15:05] Speaker 01: It would say, each life insurance policy in this state without limitation to policies issued or delivered. [00:15:12] Speaker 03: Is issue delivered a term of art? [00:15:14] Speaker 01: Issued or delivered is a term of art in this sense, right? [00:15:18] Speaker 03: Is it just in California, or is that universal? [00:15:21] Speaker 01: Across the United States. [00:15:22] Speaker 03: I went to Couch, I went to Appleman. [00:15:26] Speaker 03: I'm trying to figure out what issued and delivered means. [00:15:28] Speaker 03: I couldn't find anything. [00:15:29] Speaker 03: I was stunned that it did not appear to be a term of art. [00:15:34] Speaker 01: Right. [00:15:35] Speaker 01: You are correct, because I looked as well, that it's not defined in that way in couch. [00:15:40] Speaker 01: However, it is very frequently used in insurance statutes simply to avoid conflict or confusion, because unlike homeowners insurance or auto insurance, [00:15:53] Speaker 01: A life insurance contract is for life. [00:15:56] Speaker 01: And my opposing counsel mentioned that the terms are somehow not cemented. [00:16:01] Speaker 01: They are cemented. [00:16:02] Speaker 01: They're cemented on the insurer's side. [00:16:03] Speaker 03: The contract contemplates that there may be changes imposed by an insurance commissioner or by a legislature. [00:16:11] Speaker 03: Correct. [00:16:12] Speaker 03: That's paragraph seven. [00:16:13] Speaker 01: That's right. [00:16:14] Speaker 01: There's a conformity with law provisions. [00:16:16] Speaker 01: But conformity with law doesn't help here, because even if you were to look at the California law, California law is written to apply to those policies that were issued or delivered in this state. [00:16:30] Speaker 01: And really, the reason for that is because each state has its own complex insurance scheme and its own scheme of notice. [00:16:38] Speaker 03: The ball goes clearly in your direction. [00:16:40] Speaker 03: McHugh cuts it back, but doesn't really [00:16:42] Speaker 03: answer the question. [00:16:43] Speaker 03: It leaves us with just a great, leaves us scratching our heads thinking, okay, now what are we supposed to do? [00:16:48] Speaker 03: Maglin seems to go a different, a different direction from Ball. [00:16:52] Speaker 03: Stephan seems to be with, with Maglin. [00:16:55] Speaker 03: Did you look at the Borders case? [00:16:57] Speaker 03: It's a California Court of Appeals case from 1977. [00:16:59] Speaker 01: Yes, I looked at the borders. [00:17:02] Speaker 03: What's striking in there is that there was a California statute at that time that said, renewal or to renew means the issuance and delivery. [00:17:12] Speaker 03: So the California statute equated renewal with issuance and delivery. [00:17:17] Speaker 03: Now, I checked that statute. [00:17:20] Speaker 03: That's not the current version of the statute. [00:17:22] Speaker 03: So it doesn't have that. [00:17:23] Speaker 03: And this is an auto policy. [00:17:26] Speaker 03: And I realize there's a difference between auto policies and life insurance policies. [00:17:30] Speaker 03: But the borders tells us, again, quoting Couch and Appelman, that renewal of a policy is a new contract. [00:17:39] Speaker 03: And that seems to be black letter law. [00:17:43] Speaker 01: Well, look, Your Honor, if that is true, then this PIT policy didn't renew, because this PIT policy never changed. [00:17:52] Speaker 01: There was one policy, and this is admitted all over the record, and the district court's decision does quite an elaborate explication of this. [00:18:01] Speaker 01: This policy was issued and delivered once. [00:18:04] Speaker 01: It was signed in Illinois. [00:18:05] Speaker 01: There's a policy delivery sheet in Illinois. [00:18:08] Speaker 01: There are Illinois disclosures. [00:18:10] Speaker 01: There is an Illinois form that it is on. [00:18:13] Speaker 01: There are multiple Illinois provisions in the contract. [00:18:17] Speaker 03: So why does California law apply here then? [00:18:18] Speaker 03: That was my opening question because I'm still confused about that one. [00:18:21] Speaker 03: What makes us think that California law applies at all here? [00:18:24] Speaker 03: But you don't seem to dispute that. [00:18:26] Speaker 01: Well, I would just say that no matter which law you look at, doesn't really matter when you're looking at a California statute that has the language it has. [00:18:37] Speaker 03: But what I would say is that border state. [00:18:40] Speaker 03: But I'm asking a choice of law question here. [00:18:42] Speaker 03: From the very outset, are we confident that California law, if the California legislature had said, issued and delivered or renewed, then you'd be in a very, very different pickle here. [00:18:53] Speaker 03: Now, would you come here and tell us that California law does not apply at all, that it's just Illinois law? [00:19:01] Speaker 03: This seems like a really fundamental question. [00:19:03] Speaker 01: What I would say is that which law applies probably depends on which law it is that we're talking about, because this is an Illinois contract. [00:19:14] Speaker 01: If you just go to basic [00:19:15] Speaker 03: But there's no choice of law provision in here. [00:19:17] Speaker 01: There's no choice of law provision in the contract, right? [00:19:21] Speaker 01: But you would have to look at the different provisions of Illinois law and California law to see whether there was any conflict of law. [00:19:28] Speaker 01: Why? [00:19:28] Speaker 03: If you signed the contract in Illinois, and they live in Illinois, then you'd think that you would live in Illinois. [00:19:34] Speaker 03: If they move to California and inform the insurer that they are now living in California, does California law apply? [00:19:42] Speaker 03: Well, this feels like this ought to be such a fundamental question that it just should be black letter law. [00:19:49] Speaker 01: You know, yes, it seems like it ought to be a fundamental question in that regard. [00:19:55] Speaker 01: But what's the answer? [00:19:56] Speaker 01: However, I mean, I think that California law does apply. [00:20:01] Speaker 01: It certainly applies in certain ways, right? [00:20:03] Speaker 01: Like, I wouldn't tell you that California doesn't have the authority. [00:20:07] Speaker 01: That the Insurance Commissioner of California or the legislature [00:20:10] Speaker 01: doesn't have the right or the authority to issue laws that govern insurance within its state. [00:20:16] Speaker 01: I'm just telling you, we didn't do so here in these statutes. [00:20:19] Speaker 03: If California had a three-year statute of limitations and Illinois had a two-year statute of limitations, and there's nothing in the contract about statute of limitations, whose law applies? [00:20:27] Speaker 01: Well, because we're litigating the case in California, probably the California statute applies. [00:20:33] Speaker 03: So you're willing to accept that once they move to California, that California law does apply? [00:20:38] Speaker 01: Yes, that was our position. [00:20:39] Speaker 03: But now then, we just need to figure out whether issue delivered includes renewals. [00:20:45] Speaker 01: Right. [00:20:46] Speaker 01: And what I submit to you is that the plain words issued and delivered convey their meaning. [00:20:54] Speaker 01: This policy was clearly issued and delivered only once. [00:20:58] Speaker 01: If the California legislature had meant for the statute to apply to renewals, it would have as it had. [00:21:04] Speaker 01: You observed yourself, Your Honor, [00:21:07] Speaker 01: There are other California statutes that include the word renewal. [00:21:10] Speaker 01: We cited numerous in our briefs. [00:21:12] Speaker 01: And I don't think, I mean, the Modulin case doesn't help the plaintiff at all. [00:21:16] Speaker 01: It was previously observed that the statuted issue in Modulin had issued or delivered language, but also had other language that it replied to. [00:21:25] Speaker 03: But Borders, which is subsequent to Modulin, says that the dicta in Modulin is a holding. [00:21:31] Speaker 03: It says that issued and delivered is the equivalent of renewal. [00:21:35] Speaker 01: Well, issued and delivered isn't the equivalent of a renewal here when there's absolutely no right on the part of the insurer to ever have canceled a contract. [00:21:45] Speaker 03: Well, counsel on the other side says that would have been governed by the contract itself rather than other principles. [00:21:53] Speaker 03: That is, that you would not have had the right to just cancel at the end by saying, gee, it's just we're coming up for renewal. [00:22:01] Speaker 03: We've decided not to renew. [00:22:02] Speaker 01: Well, yeah. [00:22:03] Speaker 01: I mean, look, I would say that not Modulin, not Borders, not any other California authority [00:22:08] Speaker 01: has ever held that renewal changes the state in which a policy is issued or delivered, or held that a policy that was issued or delivered in another state somehow becomes issued or delivered in California. [00:22:21] Speaker 03: One thing about this particular statute is this really imposes minimal costs on your client. [00:22:27] Speaker 03: This is not a change, a substantive change. [00:22:31] Speaker 03: It's a really fairly minor change. [00:22:33] Speaker 03: It's not that unusual from the Illinois law. [00:22:36] Speaker 03: It's just a little more generous. [00:22:38] Speaker 03: The question is that we're really down to just counting days here to figure out what kind of notice you had to give. [00:22:44] Speaker 03: And the notice requirement is really not much that's outside of the original contract. [00:22:50] Speaker 03: And it's not much different from what you had under the old contract. [00:22:54] Speaker 01: Well, it's not. [00:22:55] Speaker 01: I would agree with you that it's very consequential. [00:22:58] Speaker 01: That it's not much different. [00:22:59] Speaker 01: But it does have consequences in this case. [00:23:02] Speaker 03: But for my client. [00:23:03] Speaker 03: But in terms of imposing costs, [00:23:05] Speaker 03: on insurers. [00:23:06] Speaker 03: If you were just to look at this law and say, gee, are we going to have to raise premiums because of this law? [00:23:11] Speaker 03: The answer is no, not really. [00:23:13] Speaker 03: It doesn't really have very much to do with that. [00:23:15] Speaker 01: Well, yeah, what I would submit to your honor is if you look at the way that the plaintiff's bar has interpreted the statute and how they've tried to use the statute, that becomes something very costly. [00:23:27] Speaker 01: But for my client, in looking at a statute that has clear language in it, plain and unambiguously says that it applies only to policies issued or delivered in California. [00:23:38] Speaker 01: How on earth is the insurance company supposed to understand that to mean something other than what the... That's why I asked if issued and delivered was a term of art. [00:23:47] Speaker 03: You told me that it was, but I can't find it in Couch or Appleman, so I couldn't find any cases that told us what that meant. [00:23:52] Speaker 01: What I told you is that it's quite a frequent term in insurance statutes because, yes, people do move all the time. [00:24:00] Speaker 01: Take an example of my parents. [00:24:02] Speaker 01: My parents live half the year in Michigan and half the year in California. [00:24:06] Speaker 01: What does that mean about what law applies? [00:24:09] Speaker 01: And each state, because the life insurance contract is something that is fixed in time, it's fixed in time when the insurer delivers it. [00:24:17] Speaker 01: And anything could happen. [00:24:19] Speaker 01: Unlike auto insurance, if somebody starts engaging in risky behavior, an auto insurer can non-renewal, a life insurer can't. [00:24:25] Speaker 01: can't non-renew because somebody starts smoking or skydiving or engages in risky behavior. [00:24:30] Speaker 01: That is why life insurance is fixed in time and why so many laws are written to be clear about whether it's issued or delivered in a state or if the legislature had chosen issue delivered or renewed. [00:24:44] Speaker 01: But Judge Akuta, you had a question. [00:24:46] Speaker 02: the rule in California was that we interpret insurance contracts under plain principles of contract law. [00:24:56] Speaker 02: Isn't that correct? [00:24:57] Speaker 02: Yes. [00:24:58] Speaker 02: And so the question would be, how would a California court look at a contract that had been [00:25:09] Speaker 02: created in Illinois that raises the choice of law question, which is not necessary for it to be covered in the contract itself. [00:25:19] Speaker 02: And do you have an answer to that? [00:25:21] Speaker 02: Under neural principles of contract law, how does California interpret an Illinois contract? [00:25:28] Speaker 01: I think a California court looking at an insured and a claim that's in California would look to California law. [00:25:37] Speaker 01: My point really is here, when you look to California law, the relevant California law speaks to life insurance policies issued or delivered in this state with respect to this particular statute. [00:25:49] Speaker 01: If we were looking at a different statute, there might be a different answer. [00:25:52] Speaker 01: If we're looking at statute of limitations, we're looking at a different statute of limitations in California versus Illinois. [00:26:01] Speaker 01: And I think any court here [00:26:03] Speaker 01: would look to California law for those issues. [00:26:05] Speaker 01: But here, and the reason I think that the question of renewal, even the question of choice of law, no matter what law you apply, when you look at the only California law that we're looking at here, which is these California statutes, they're clear in their application to policies that were issued or delivered in the state, and this policy was not issued or delivered in the state. [00:26:32] Speaker 03: Do you have a policy reason for why the California legislature would have limited it in that way? [00:26:37] Speaker 01: I think the California, and look, I've gone back and I'm sure you may have also looked for the legislative history to see if there's any indication there and there isn't. [00:26:47] Speaker 01: However, the public policy behind it is merely one of avoiding conflicts. [00:26:52] Speaker 01: and having a clear indication of which policies this statute applies to. [00:26:59] Speaker 01: Maybe it's just for the situation of individuals like my parents, right, who are sometimes in California and sometimes not in California. [00:27:08] Speaker 01: There needs to be certainty. [00:27:10] Speaker 01: And California likely respects the laws of other states that have other pre-termination notice schemes, like Illinois. [00:27:18] Speaker 01: And some of the Illinois cases discuss Kansas and discuss some other states. [00:27:23] Speaker 03: Is this question important enough that it would be worth certifying to the California Supreme Court? [00:27:30] Speaker 01: I don't think that this court needs to certify this question to the California Supreme Court simply because I think this court can interpret the language directly on its. [00:27:40] Speaker 03: Do you know whether this is a recurring question? [00:27:43] Speaker 03: Is this one-off? [00:27:44] Speaker 03: Is this really unique to the Pitts because of the way that the notice was handled and mishandled and so on? [00:27:51] Speaker 01: Well, I would say that it is a unique question that doesn't come up often. [00:27:56] Speaker 01: However, it did come up in Elmore and it did come up in Clark. [00:28:01] Speaker 01: But I don't think that makes it a question that this panel needs to certify to the California Supreme Court for a decision because I think there are enough very clear indications about what this statute means simply from its pure language. [00:28:18] Speaker 01: There's no ambiguity when a statute is written. [00:28:21] Speaker 01: When a statute could be written in multiple other ways, it could be written to include renewal, it could be written [00:28:27] Speaker 01: to cover all lives within the state. [00:28:29] Speaker 01: It isn't. [00:28:30] Speaker 01: It's limited. [00:28:30] Speaker 01: It has limiting language in it. [00:28:32] Speaker 01: So I don't think that a referral to the California Supreme Court is necessary here. [00:28:44] Speaker 01: I see that I'm past my time. [00:28:46] Speaker 01: Are there other questions I can answer? [00:28:50] Speaker 01: Thank you. [00:28:54] Speaker 02: Do you have some time for rebuttal? [00:28:57] Speaker 04: Thank you. [00:28:58] Speaker 04: I just want to get back to the basic principle that Tower is not an Illinois company. [00:29:03] Speaker 04: Its only relevant affiliation with Illinois is that is where Pitt resided at the time that the policy was first issued. [00:29:11] Speaker 04: When Pitt subsequently moved to California, Tower continued to do business in California by communicating with Pitt in California, requesting the payment of premiums in California, and accepting the payment of premiums that were made in California. [00:29:27] Speaker 04: No hardship would befall Tower in those situations by requiring it to comply with California law in the way that it administered the policy after it was renewed in California. [00:29:39] Speaker 04: While differences in [00:29:42] Speaker 04: Notice and termination schemes may be unavoidable where a policy is only issued in another state or is issued in California when a policy is issued in another state and then renewed in California and that carrier has conducted business in California, the renewal principle should apply. [00:30:01] Speaker 04: The statutes in question [00:30:04] Speaker 04: according to McHugh, apply to any insured doing business in California as a condition of doing business in California. [00:30:12] Speaker 03: Your renewal principle, do you have any cases in which that applies in a life insurance policy? [00:30:15] Speaker 03: Most of the cases I saw were auto insurance. [00:30:18] Speaker 03: Auto insurance feels like it's different. [00:30:19] Speaker 03: There are increased risks, there are major changes, uninsured motorists, changes in demographics, big trucks. [00:30:28] Speaker 03: that would cause an insurance company to want to need to review the risk. [00:30:34] Speaker 03: Health insurance, again, we assume some risk that you're just going to get old. [00:30:41] Speaker 04: I agree that there is not a case from this circuit or from an appellate level circuit in the state court on that issue. [00:30:48] Speaker 04: There was the, I may be mispronouncing it, the Sarial case, which was a [00:30:54] Speaker 04: district court case that we cited in our briefs, I think it's spelled C-E-R-A-L-E that involved the life insurance policy. [00:31:02] Speaker 04: And then I'll close by saying this. [00:31:05] Speaker 04: This is an important question. [00:31:07] Speaker 04: This is a question that obviously the high court in California is very interested in in terms of its analysis in McHugh and why those statutes operate the way that they do and the public policies espoused by those statutes. [00:31:22] Speaker 04: So I would submit to this court that if it is at all conflicted with respect to the application of the renewal doctrine here, that it certify the question to the California Supreme Court. [00:31:33] Speaker 02: I think we have your argument. [00:31:34] Speaker 02: Thank you. [00:31:35] Speaker 02: Thank you. [00:31:35] Speaker 02: The case of Susan Pitt versus Metropolitan Tower Life Insurance Company is submitted. [00:31:41] Speaker 02: And the court for this session, also for this week, stands adjourned. [00:31:47] Speaker 02: All rise. [00:31:58] Speaker 02: This court for this session stands adjourned.