Ochoa v. State Farm Life Ins. Co.

Dist. Ct. did not err in dismissing for failure to state cause of action plaintiffs’ class action complaints alleging that insurance policies issued by defendants violated section 224(e) of Insurance Code, since, although said policies allowed plaintiffs to receive some annual dividends based upon defendants’ profits, it still permitted defendants to have discretion to set dividend amounts. While plaintiffs argued that section 224(e) required defendants to allow plaintiffs to have “full annual participation” with respect to said dividends, which required defendants to distribute to policyholders any surplus profits beyond contingency-reserve limits, section 224(e) does not regulate dividend amounts. Moreover, Ct. rejected plaintiffs’ claim that term “participate” as used in section 224(e) requires defendants to provide set dividend amount and further found that section 243 of Insurance Code does not limit insurer discretion to set dividend amount.