Rosemary Johnson v. The Mutual Benefit Life Insurance Company

Rosemary Johnson appeals the district court’s order granting summary judgment in favor of her insurer, The Mutual Benefit Life Insurance Company. On appeal, Johnson challenges the district court’s determination, made on a motion for summary judgment, that Mutual Benefit was entitled to judgment as a matter of law on her California state law claims for breach of the implied covenant of good faith and fair dealing and for negligent infliction of serious emotional distress. We reverse and remand.

FACTS

Since 1980, Mutual Benefit has insured Johnson for major medical coverage. After the policy was issued, Johnson was treated for cancer. As a result, she probably would be uninsurable were she to seek medical insurance from a different carrier. On February 4, 1985, Johnson mailed her quarterly premium payment to Mutual Benefit. Mutual Benefit negotiated the check, but credited the wrong account. Mutual Benefit then cancelled Johnson’s medical policy. After receiving notice of the policy’s cancellation, Johnson sent Mutual Benefit a copy of her cancelled check as proof of payment.

Although Mutual Benefit subsequently reinstated coverage, it put Johnson’s account on the wrong billing…