1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 PHILIP BERG, 10 Plaintiff, No. C 19-04259 WHA 11 v. 12 VIATICUS, INC.; CONTINENTAL ORDER DENYING 13 CASUALTY COMPANY; DOES 1–10; MOTION TO DISMISS and DOE CORPORATIONS 1–10, 14 Defendants. 15 / 16 Plaintiff AIDS victim brings this civil action against defendants viatical investors. 17 Defendants move to dismiss plaintiff’s complaint under FRCP 12(b)(6). For the reasons set 18 19 forth below, the motion is DENIED. The viatical industry profits from the misfortune of AIDS victims by purchasing 20 life insurance policies with the expectation that the victims will die sooner rather than later. 21 After plaintiff Philip Berg came down with AIDS, he acquired a life insurance policy from 22 Mutual of New York (MONY) Life Insurance Company of America. The policy’s death payout 23 would automatically increase yearly until his sixtieth birthday. For the years between his 24 sixtieth and seventieth birthdays, however, the death payout would increase only if he were 25 found insurable by MONY (Dkt. No. 1-1 at 4-7, 16-20). 26 In 1996, Berg entered into a viatical agreement with defendant Viaticus, Inc. under 27 which Viaticus would pay him a percentage of the death payout increase. Defendant 28 1 || Continental Casualty Company is a successor by merger to Viaticus. Section 3.02 of the agreement provided “[i]n the event that the [p]Jolicy contains a provision which raises the 3 || amount of life insurance benefits, Viaticus, Inc. agrees to pay within 30 days of satisfactory 4|| confirmation from MONY Life Insurance Co. by Viaticus an amount equal to no less than 84% 5 || of the life insurance increase” (Dkt. No. 1-1 at 33-34). 6 After Berg reached his sixtieth birthday, the annual increases were no longer automatic and had to be applied for, but Viaticus allegedly failed to make the application. As a result, 8 || death benefits did not increase and Berg claims to have been damaged at the amount of 84% of what the increase would have been (Dkt. No. 20 at 5). 10 The motion to dismiss contends that, on its face, Section 3.02 left discretion in Viaticus 11 || as to whether or not to apply for increased death benefits. In the pleading stage this contention E 12 || must be rejected. Even where discretion is vested in one party to a contract, that discretion 5 13} must be exercised subject to the covenant of good faith and fair dealing so as not to deprive the 5 14}|_ other side of the benefit of their bargain. Carma Developers (Cal.), Inc. v. Marathon Dev. Cal., 5 Inc.,

(1992). At oral argument, both sides agreed that California law governs. In addition, at least at the pleading stage, the provision in question is subject to 17 | interpretation which favors Berg and presupposes that Viaticus will do whatever reasonably 18 necessary to seek the increase in life insurance benefits (Dkt. No. 13 at 14-17). 19 In light of the foregoing, the motion to dismiss is DENIED. 20 21 IT IS SO ORDERED. 22 N 1 23 | Dated: October 11, 2019. {> WILLIAM ALSUP 24 UNITED STATES DISTRICT JUDGE 25 26 27 28