August 13, 2012 we received a letter from USAA informing us that we are dangerously close to maturity, and that our policy will expire May 17, 2013! I was shocked, as we believed we had a life insurance policy that ends with death! Called USAA San Antonio, 1-800-245-9359 and talked to Damon Estrada. I asked what does life mean and what does maturity mean? His explanation is clear, I did not have a life insurance policy. After 22 years and approximately $40,000.00 later, I am learning that the sales agent misinformed and sold us what we now believe to be a fraudulent policy, which at the time it should have been clear to the agent we could not afford!

USAA never informed us that the payments would increase as I aged. The home office recommended my wife and I make an appointment with a USAA representative in San Diego. We saw Jason Proctor, September 7th and September 21st 2012. He was very helpful. We went over our payment record and explained the payments missed. In 2001 my wife was diagnosed with lung cancer and a brain tumor at City of Hope. 2002 and 2003 were not my first priority at that time. We tried to play catch up through the years. Jason explained that the IRS will not allow insurance companies to accept retroactive lump payments. In Jason's conversation with the home office Sept. 7, 2012 decision was made. We could resume $576.00 payments quarterly but the age limit would be reduced to age 87. Ten days later written material came from USAA home office that did not reflect our previous meeting of Sept. 7, 2012. We made an appointment with Jason Proctor, Sept. 21, 2012 at which time he explained USAA wants payments of $8,000.00 yearly to age 87. Either accept those conditions or the policy expires in 2013, which I can not afford on our fixed income!

USAA is forcing us out. Now we will not have a life insurance policy and the monies we invested in good faith in a policy we opted for life, perhaps gone!

We strongly feel that USAA owes us restitution!

On October 23, 2012, USAA responded in a letter that stated that the policy would insure Mr. Earlywine up to age 78 based on payment of a quarterly premium of $576. The letter also offered him four different options for extending the policy to age 80 or later.

In January 2016, the policy lapsed.

Mr. Earlywine died on April 23, 2016.

In January 2017, Ms. Earlywine sued USAA, asserting claims for, among other things,

(1) breach of contract;

(2) breach of the covenant of good faith and fair dealing;

(3) rescission; and

(4) unfair business practices under California Business and Professions Code Section 17200.

USAA moved for summary judgment, asserting that Ms. Earlywine's claims were time-barred. It argued that the statutes of limitations for the breach of contract, rescission, and Section 17200 claims were each four years, and that the statute of limitations for the breach of the covenant of good faith and fair dealing was two years. It contended that the statute of limitations for each claim had begun to run no later than Fall 2012, when the Earlywines contacted USAA about the terms of the policy and at which point the Earlywines were aware that the policy would not provide insurance until Mr. Earlywine turned 95 without any increase in premium payments. Thus, according to USAA, because Ms. Earlywine had not filed her original complaint until January 2017, all four claims were time-barred.

In her opposition, Ms. Earlywine did not dispute the applicable statutes of limitations or any of these facts. Rather, she argued that the statutes had not begun to run until January 17, 2016, when USAA cancelled the policy. Thus, according to Ms. Earlywine, all of her claims were filed within the applicable statute of limitations period.

The District Court's Decision

The district court granted USAA's motion.

In its decision, the district court explained that all four of Ms. Earlywine's claims were premised not on failure to pay the death benefit when Mr. Earlywine denied, but on breaches of alleged oral representations by USAA representatives with respect to the terms of the policy, or on a breach of the policy itself by requiring premium payments inconsistent with the Earlywines' understanding that premiums would remain level through age 95.

In other words, the district court said, Ms. Earlywine had not alleged that the terms of the policy entitled her to the $100,000. Instead, she argued that she and her husband had been promised a policy with a $100,000 death benefit that would have a level premium until Mr. Earlywine turned 95 and paid premiums believing that they had received such a policy, when in fact the policy they received did not have level premiums and would expire before Mr. Earlywine turned 95 unless the premiums increased.

Thus, the district court ruled, the alleged breach occurred when the policy actually was issued to Mr. Earlywine, but the Earlywines may not have discovered the breach itself, or any injury as a result of the breach, until USAA told them in 2012 that their premiums were going to increase. In the district court's opinion, any claims arising out of these facts "accrued no later than when USAA told them that they would have to increase their premium payments to avoid lapse" of the policy.

The district court then pointed out that the Earlywines had become aware that the terms of the policy were different from what they had thought they had purchased no later than Fall 2012, at which point they knew that the policy would terminate when Mr. Earlywine was age 78 if they simply continued to make quarterly premium payments of $576. Indeed, the district court noted, Mr. Earlywine's September 28, 2012 letter "implicitly, if not explicitly, threatened legal action as a result of USAA's alleged wrongdoing leaving no doubt that the Earlywines were aware of the claims at that time."

That the Earlywines continued to make premium payments that were inadequate to keep the policy in force through age 95 as they initially had expected did not change the fact that USAA allegedly had breached whatever oral or written contract Ms. Earlywine claimed was breached and that the Earlywines had been injured, and had discovered their injury, at that point, "even if the injury was not yet equal to the full death benefit" of the policy, the district court found.

Accordingly, the district court concluded, the statute of limitations had begun to run no later than Fall 2012, meaning the complaint was time-barred.

The case is Earlywine v. USAA Life Ins. Co., No.: 3:17-CV-328-CAB-NLS (S.D. Cal. Feb. 1, 2018). Attorneys involved include: For Dolores Earlywine, Plaintiff: William E. O'Nell, LEAD ATTORNEY, Law Office of William E. O'Nell, San Diego, CA. For USAA Life Insurance Company, a business of unknown form, Defendant: Robert S. McLay, LEAD ATTORNEY, Joshua Nathan Kastan, DKM Law Group, LLP, San Francisco, CA.