California Supreme Court To Decide Whether Insurers are Exempt from Usury Law Disclosure Requirements
April 25, 2018
Wishnev v. Northwestern Mutual Life Ins. Co. (9th Cir. 2018) 880 F.3d 493, certified question accepted March 14, 2018 (S246541)
An insured signed applications for life insurance policies that did not expressly authorize charging compound interest on loans made against the policies. The insurer then issued policies that assessed compound interest on such loans. The insured took out loans against the policies and the insurer assessed compound interest. The insured then brought a class action lawsuit against the insurer for breaching the requirement in Civil Code section 1916-2 that “interest shall not be compounded . . . unless an agreement to that effect is clearly expressed in writing and signed by the party to be charged therewith.”
The insurer moved to dismiss, arguing that (1) insurers are exempt from the Civil Code section 1916-2 disclosure requirements under Insurance Code section 1100.1, and (2) the signed applications and policies were integrated contracts that satisfied Civil Code section 1916-2’s disclosure requirements. On appeal from the district court’s denial of the motion, the Ninth Circuit certified these issues to the California Supreme Court, and the Supreme Court has accepted the certified questions for decision.
The insurer’s opening brief on the merits is currently due on June 12, 2018. Amicus briefs will likely be due in September 2018.