Habibollah Tabatabai filed a lawsuit against West Coast Life Insurance Company, alleging breach of contract and violation of the implied duty of good faith and fair dealing following the denial of a life insurance policy for his wife, Firouzeh Keshmiri. The district court granted West Coast Life's motion for summary judgment on December 21, 2010, leading to this appeal, which was decided on December 16, 2011, affirming the lower court's ruling.
On June 17, 2006, Keshmiri applied for a $500,000 life insurance policy, selecting the "Super Preferred" classification and paying an initial premium of $100, alongside signing a conditional receipt agreement (CRA). The CRA stipulated that coverage would only become effective if specific conditions were met, including the applicant being insurable as applied for and completion of required examinations.
Following her application, Keshmiri underwent medical testing, which revealed elevated cholesterol levels and concerning urine test results. West Coast Life sought her medical records and requested a second urine specimen, though the timing of this request was unclear. After being hospitalized and diagnosed with a brain tumor on July 22, 2006, Keshmiri underwent surgery and was deemed uninsurable by West Coast Life on August 9, 2006. Tabatabai contended that the delay in requesting the second urine test prevented Keshmiri from obtaining coverage before her diagnosis, leading to the lawsuit.
Tabatabai initially named The O’Brien Financial Group, Inc. and West Coast Life as defendants in his complaint but later voluntarily dismissed claims against The O’Brien Financial Group, leaving West Coast Life as the sole defendant. A second urine sample taken from Ms. Keshmiri during her hospitalization showed elevated bacteria levels, but the cause remains unclear. On January 29, 2008, Tabatabai filed a complaint in Milwaukee County Circuit Court against West Coast Life and The O’Brien Financial Group, which was subsequently removed to the United States District Court for the Eastern District of Wisconsin under 28 U.S.C. 1332. After dismissing The O’Brien Financial Group, Tabatabai amended his complaint against West Coast Life, alleging breach of contract, estoppel, bad faith, and negligence. West Coast Life moved for summary judgment, and Tabatabai focused on the breach of contract and implied duty of good faith and fair dealing claims. The district court granted summary judgment on December 21, 2010, finding no genuine issue of material fact, which Tabatabai appealed.
In his appeal, Tabatabai contended that the district court erred by requiring evidence of intentional misconduct to invoke the doctrine of prevention and by determining West Coast Life did not owe an implied duty of good faith and fair dealing. The doctrine of prevention posits that if one party obstructs the other from fulfilling a contract, the latter's nonperformance is excused. Tabatabai argued that West Coast Life’s delay in notifying Ms. Keshmiri about the need for a second urine sample prevented her from complying with the contract conditions, thus barring West Coast Life from using this failure as a defense. He cited the case of N.L.R.B. v. Local 554, where the defendant's refusal to seek necessary approval hindered contract performance, supporting his argument for applying the doctrine of prevention in his case against West Coast Life.
The nonoccurrence of a condition is excused if caused by the party against whom it operates. Tabatabai argues that "dilatory" actions of West Coast Life differ from intentional misconduct, but the Court finds West Coast Life's good faith in managing Ms. Keshmiri’s insurance policy. Evidence shows West Coast Life made multiple attempts to notify Ms. Keshmiri about a required urine specimen, including a successful voicemail. There is no indication of intentional misconduct by West Coast Life. In contrast, a cited case, Rohde v. Massachusetts Mutual Life Ins. Co., involved bad faith by the insurer, but no similar bad faith is present in Ms. Keshmiri's case, as her health conditions justified West Coast Life's denial of coverage.
Regarding the claim of breach of implied duty of good faith and fair dealing, the district court determined that no contractual agreement existed because Ms. Keshmiri did not fulfill necessary conditions, such as providing the requested urine specimen or qualifying based on her cholesterol levels. Tabatabai argues a contract was formed upon application submission and premium payment, but under Wisconsin law, without a contract, the implied duty does not apply. The summary judgment in favor of West Coast Life is affirmed.
