Abbit v. ING USA Annuity & Life Insurance Co. (252 F. Supp. 3d 999, 2017)

United States District Court for the Southern District of California 2017-05-16

Citations

Full opinion text

ORDER GRANTING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ON PLAINTIFF’S REMAINING CLAIMS

[ECF No. 130.]

Hon. Gonzalo P. Curiel, United States District Judge

Before the Court is Defendants ING USA Annuity and Life Insurance Company and ING U.S., Inc.’s (collectively, “Defendants” or “ING”) Motion for Summary Judgment on the Remaining Claims. (Dkt. No. 130.) Plaintiff Ernest 0. Abbit (“Plaintiff’ or “Abbit”) opposed the motion, (Dkt. No. 141), and Defendants filed a reply, (Dkt. No. 149).

A motion hearing was conducted on April 6, 2017. (Dkt. No. 163.) Andrew Hutton and Timothy Tatro appeared on behalf of Plaintiff. (Id.) Clark Johnson, Michael Leigh, and David Noonan appeared on behalf of Defendants. (Id.)

After the hearing, the Court granted Plaintiff leave to file supplemental evidence, consisting of the deposition testimony of William Bainbridge and an additional expert report by Dr. McCann, and a supplemental brief explaining the relevance of the evidence to the instant motion. (Dkt. No. 164.) The Court also granted Defendants leave to respond to Plaintiffs supplemental briefing. (Id.) Plaintiff filed the supplemental briefing and evidence, and Defendants responded. (Dkt. Nos. 171, 174,176,178.)

Upon consideration of the moving papers, supplemental briefing, oral argument, and the applicable law, the Court GRANTS Defendants’ motion for summary judgment on Plaintiffs individual claims.

BACKGROUND

Having previously recited the facts of this case at length, the Court declines to repeat them here. (See, e.g., Dkt. Nos. 59, 117.) While the operative facts are few, the parties’ presentations of the facts are substantively enmeshed with them legal theories. A brief review of relevant background suffices.

An annuity is a contract between an insured individual and an insurance company in which the insured pays premiums to the insurance company in exchange for the insurance company’s promise to return the deposit via periodic payments. (Dkt. No. 59 at 2.) Annuity contracts typically undergo two primary periods: the “full accumulation period,” during which the investor deposits funds with the insurance company, and the “annuitization period,” during which the investor withdraws funds in the form of periodic payments. (Id.) Fixed index annuities (“FIAs”) are annuities that generally earn interest linked to or derivative of the price movements of an equity index or other index, such- as the S&P 500® Index. (Id.) Indexed annuities can also guarantee interest. (Id.) The policy parameters (such as “caps,” “participation rates,” and “spreads”) are periodically declared by the insurance company. (Id.)

Defendants designed the Secure Index Opportunities Plus FIA and submitted the annuity product, Form IU-IA-3050(CA) (“Form 3050”), to the California Department of Insurance (“CDI”) for review and approval in 2007. (Dkt. No. 144-1, Plaintiffs Separate Statement of Undisputed Facts (“PL’s SSUF”) ¶¶2-3.) In its submission to the CDI, Defendants represented that the FIA provides for equity-indexed benefits, and that “[t]he Cap, Participation Rate, and Spread will be set such that the annualized option cost for this strategy will be at least 100 bps.” (Declaration of Andrew W. Hutton in Support of Plaintiffs Opposition to Defendants’ Motion for Summary Judgment (“Hutton Decl.”) Ex. B at Oppo. 0075, 0103, Dkt. No. 144-3 at 38, 66.) The CDI approved Defendants’ application to sell Form 3050 to California consumers. (PL’s SSUF ¶ 9.)

Plaintiff, a retired senior citizen, purchased an ING “Secure Index Opportunities Plus” FIA with a $1,000,000 premium payment on September 28, 2010. (Dkt. No. 117 at 2.) Defendants contributed a 5% bonus of $50,000 to Plaintiffs contract. (Dkt. No. 144-1, Plaintiffs Response to Defendants’ Statement of Undisputed Material Facts (“PL’s Resp. to Defs.’ SSUF”) ¶ 1.) Plaintiff currently still holds his contract. (Dkt. No. 130-2, Defendants’ Statement of Undisputed Material Facts in Support of Defendants’ Motion for Summary Judgment on the Remaining Claims (“Defs.’ SSUF”) ¶ 2; PL’s Resp. to Defs.’ SSUF ¶ 2.) At the time of his purchase, and on each of his six contract anniversaries, Plaintiff has elected one or more of the interest-crediting strategies offered pursuant to his FIA. (Declaration of. Michael T. Leigh (“Leigh Decl.”) Ex. 1 at § 6, Dkt. No. 130-4 at 16-20; Leigh Decl. Exs. 5-11, Dkt. Nos. 130-8-130-14.) Plaintiffs FIA has been credited with $84,863.86 in interest. (Defs.’ SSUF ¶ 6; PL’s Resp. to Defs.’ SSUF ¶ 6.)

Section 5.8 of Plaintiffs FIA contract guarantees that “[t]he reserves and guaranteed values will at no time be less than the minimum required by the laws of the state in which this Contract is issued.” (Leigh Decl. Ex. 1, Dkt. No. 130-4 at 16.) Section 6.6 provides definitions applicable to the Monthly Cap Index Strategy, specifies that the “Index Credit” amount “is based on the performance of the applicable Index as measured over the Contract Year,” and provides the formula with which index credits under the Monthly Cap strategy are calculated. (Leigh Decl. Ex. 1, Dkt. No. 130-4 at 20.) The contract confers upon Defendants discretion to add interest-crediting strategies as approved by the CDI, and to change the terms and conditions governing the interest-crediting strategies within contract parameters and state law. (Leigh Decl. Ex. 1 § 6, Dkt. No. 130-4 at 16.)

In applying for his FIA, Plaintiff acknowledged that “[a]ny values shown, other than guaranteed minimum values, are not guarantees, promises or warranties.” (Hutton Decl. Ex. E at Oppo. 0210, Dkt. No. 144-6 at 9.) Hypothetical interest credit illustrations provided in Plaintiffs FIA application show the possibility of him earning 0% in index credits. (Hutton Decl. Ex. E at Oppo. 0215-18, Dkt. No. 144-6 at 14-17.) Plaintiff also acknowledged the following statement: “You should discuss your retirement planning objectives, anticipated financial needs and risk tolerance with your agent to make sure this annuity meets your current financial needs and objectives.” (Hutton Decl. Ex. E at Oppo. 0214, Dkt. No. 144-6 at 13.)

The ING USA sales brochure stated: “Neither your premium, the 5% bonus, nor any previously credited interest can be diminished due to movements in the S&P 500 Index.”- (Leigh Decl. Ex. 2, Dkt. No. 130-5 at 4.) It also stated: “Since the interest credit is related, in part, to movements in the S&P 500 Index, the amount of interest your annuity will be credited at the end of the contract year cannot be known or predicted prior to the end of the contract year.” (Id.) It further stated that “[t]he contract does not directly participate in any stock or equity products.” (Leigh Decl. Ex. 2, Dkt. No. 130-5 at 13.) Finally, the brochure provided illustrations showing that a contract holder might not earn any interest in a contract year, (Leigh Decl. Ex. 2, Dkt. No. 130-5 at 5-10), and stated that ING USA promised no specific rate of return, that ING USA could change the pricing parameters of the strategies each contract year, and that the bonus might be recouped over time with, inter alia, lower credited interest rates, participation rates, index caps, and monthly caps, (Leigh Decl. Ex. 2, Dkt. No. 130-5 at 3,13).

Plaintiff did not communicate with Defendants before or after purchasing his contract. (Leigh Decl. Ex. 3, Abbit Depo. at 43:17-46:7, 65:21-22, Dkt. No. 130-6 at 13-14, 18.) Defendants used independent, third-party marketing organizations to distribute their insurance-based products and annuities; Defendants do not have “company-owned field wholesalers.” (Leigh Decl. Ex. 4, Tope Depo. 17:1-18, Dkt. No. 130-7 at 7.) Matthew Copley, who sold Plaintiff his FIA contract, was an “independent” agent. (Dkt. No. 152 at 5.) Copley testified that in the 2009 and 2010 time frame, he sold annuity products from “around ten” different companies. (Leigh Decl. Ex. 14, Copley Depo. 11:6-9, Dkt. No. 130-17 at 5.) While Defendants required Copley to adhere to ING’s Business Guidelines and General Advertising Rules, (see,- e.g., Hutton Decl. Ex. P at Oppo. 0929-34, Dkt. No. 144-15 at 50-55), Defendants were free to accept or reject Plaintiffs FIA application after Copley submitted it, (Dkt. No. 130-1 at 31 (citing Leigh Decl. Ex. 15, Dkt. No. 130-18)).

Plaintiff filed a First Amended Complaint (“FAC”) on March 27, 2014: (Dkt. No. 20.) On November 16, 2015, the Court granted in part and denied in part Plaintiffs motion for class certification. (Dkt. No. 59 at 26.) Specifically, the Court certified the following five claims: (1) a breach of contract claim- based on “ING setting the prices of the undisclosed derivatives structure so low that the true values of the contracts were below the minimum, values guaranteed,” (id. at 15); (2) a UCL claim, flowing from the breach of contract claim, based on “Plaintiffs theory under the Insurance Code ... that ING failed to maintain guaranteed values of the Secure Index FIAs as required by Cal. Ins. Code § 10168.25,” (id. at 20); (3) a financial elder abuse claim, also flowing from the breach of contract claim, based on “Plaintiffs theory regarding the failure to maintain guaranteed values of the Secure Index FIÁs,” (id. at 22); and (4) two. securities law claims under California law, based on Plaintiffs “novel’theory which would extend the reach of securities law to FIAs” on the basis that “FIAs are securities because ING’s internal execution of the ‘derivatives’ and ‘options’ transfers market risks from ING to Plaintiff• and the California Subclass,” (id. at 23). The Court declined to certify Plaintiffs remaining claims, including, inter alia, ■ claims for breach of the implied covenant of good faith and fair dealing, breach of fiduciary duty, fraud, false advertising under Cal. Bus. & Prof. Code §§ 17500, et seq., and failure to supervise. (Dkt. Nos. 20; 59.) The remaining claims are at issue in the instant motion.

On February 1, 2016, Defendants filed a motion for summary judgment on the certified class claims. (Dkt. No. 70.) The Court directed dissemination of the class notice on April 26, 2016. (Dkt. No. 91.) On June 24, 2016, the Court held a hearing on Defendants’ motion for summary judgment. (Dkt. No. 111.) The class opt-out period expired on July 20, 2016. (Dkt. No. 91 at 1.) On. August 30, 2016, the Court granted Defendants’ motion for summary judgment on all certified class claims. (Dkt. No. 117.) ..

Plaintiff filed a motion for reconsideration of the Court’s August 30, 2016 Order granting Defendants’ motion for summary judgment on all certified class claims. (Dkt. No. 121.) The Court denied Plaintiffs motion for reconsideration on December 12, 2016. (Dkt. No. 129.) On December 23, 2016, Plaintiff filed a motion for certification of partial final judgment of the class claims under Federal Rule of Civil Procedure 54(b). (Dkt, No. 134.) The Court denied Plaintiffs motion, for partial final judgment on February 2, 2017. (Dkt. No. 145.)

On December 15, 2016, Defendants filed a motion for summary judgment on Plaintiffs remaining individual claims. (Dkt. No. 130.) The motion has been fully briefed, (Dkt. Nos. 141,149), complete with supplemental briefing and evidence, (Dkt. Nos. 171,174,176,178).

LEGAL STANDARD

Federal Rule of Civil Procedure 56 empowers the Court to enter summary judgment on factually unsupported claims or defenses, and thereby “secure the just, speedy and inexpensive determination of every action.” Celotex Corp. v. Catrett, 477 U.S. 317, 325, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986), Summary judgment is appropriate if the “pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue , as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). A fact is material when it affects the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The moving party bears the initial burden of demonstrating the absence of any genuine issues of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The moving party can satisfy this burden by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element of his or her claim on which that party will bear the burden of proof at trial. Id. at 322-23, 106 S.Ct. 2548. If the moving party fails to bear the initial burden, summary judgment must be denied and the court need not consider the non-moving party’s evidence. Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).

Once the moving party has satisfied this burden, the nonmoving party cannot rest on the mere allegations or denials of his pleading, but must “go beyond the pleadings and by her own affidavits, or by the ‘depositions, answers to interrogatories, and admissions on file’ designate ‘specific facts showing that there is a genuine issue for trial.’” Celotex, 477 U.S. at 324, 106 S.Ct. 2548. If the non-moving party fails to make a sufficient showing of an element of its case, the moving party is entitled to judgment as a matter of law. Id. at 325, 106 S.Ct. 2548. “Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’ ” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968)). In making this determination, the court must “view[] the evidence in the light most favorable to the nonmoving party?’ Fontana v. Haskin, 262 F.3d 871, 876 (9th Cir. 2001). The Court does not engage in credibility determinations, weighing of evidence, or drawing of legitimate inferences from the facts; these functions are for the trier of fact. Anderson, 477 U.S. at 255, 106 S.Ct. 2505.

DISCUSSION

Defendants move for summary judgment on Plaintiffs remaining individual claims for breach of contract, breach of the implied covenant of good faith and fair dealing, breach of fiduciary duty, fraud, violations of the California Unfair Competition Law (“UCL”) and False Advertising Law (“FAL”), and failure to supervise. (Dkt. No. 130-1 at 7.) The Court examines each of Plaintiffs remaining claims in turn.

I. Breach of Contract

The elements of a breach of contract claim are: (1) the existence of a valid contract, (2) plaintiffs performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff. Reichert v. Gen. Ins. Co. of Am., 68 Cal.2d 822, 830, 69 Cal.Rptr. 321, 442 P.2d 377 (Cal. 1968).

Defendants first argue that Plaintiffs three breach of contract claims fail for lack of a breach and for lack of damages. (Dkt. No. 130-1 at 12-14.) In his FAC, Plaintiff asserts three theories for his breach of contract claims: (1) Defendants failed to credit and compound interest daily; (2) Defendants charged expenses and/or reduced interest credits; and (3) Defendants issued false and misleading periodic statements to Plaintiff. (Dkt. No. 20, FAC ¶¶ 113-22.)

Plaintiff did not respond directly to Defendants’ motion for summary judgment on the remaining breach of contract claims, and he abandoned the “interest compounded daily” theory. (Dkt. No. 149 at 5; Dkt. No. 141 at 28 n.11.) Defendants are entitled to summary judgment on Plaintiffs remaining breach of contract claims on this basis alone. See Shakur v. Schriro, 514 F.3d 878, 892 (9th Cir. 2008) (holding that a plaintiff abandons claims by not raising them in opposition to a defendant’s motion for summary judgment); Vasserman v. Henry Mayo Newhall Mem’l Hosp., 65 F.Supp.3d 932, 963 (C.D. Cal. 2014) (citing Resolution Trust Corp. v. Dunmar Corp., 43 F.3d 587, 599 (11th Cir. 1995) (“There is no burden upon the district court to distill every potential argument that could be made based upon the materials before it on summary judgment. Rather, the onus is on the Parties to formulate arguments; grounds alleged in the complaint but not relied upon in summary judgment are deemed abandoned.”)); Ramirez v. City of Buena Park, 560 F.3d 1012, 1026 (9th Cir. 2009) (“It is a general rule that a party cannot revisit theories that it raises but abandons at summary judgment. A party abandons an issue when it has a full and fair opportunity to ventilate its views with respect to an issue and instead chooses a position that removes the issue from the case.” (internal citations and quotation marks omitted)).

A. First Breach of Contract Claim

In any event, Plaintiff fails to show that Defendants breached the contract under any of the three theories enumerated above. The contract belies Plaintiffs allegation that Defendants were required to credit and compound interest daily. (Leigh Deck Ex. 1, Dkt. No. 130-4 at 10.) The contract specifies that the Minimum Guaranteed Strategy Value of each Strategy is the sum of: “(a) 87.5% of the portion of the Single Premium elected to the Strategy, less Premium Taxes; adjusted for (b) Any Re-elections or Surrenders of Accumulation Value; plus (c) Interest credited daily at the applicable Minimum Guaranteed Strategy Value Rate.” (Id. (emphasis added).) The contract does not require Defendants to credit and compound interest daily.

B. Second Breach of Contract Claim

Plaintiff has not identified any expenses that Defendants have charged him or any interest credits that have been reduced in violation of any express contract term. (See Leigh Deck Ex. 1 § 6, Dkt. No. 130-4 at 16-20.) Rather, Defendants have proffered evidence showing that Plaintiffs contract was credited with the interest credits prescribed under contract terms. (See Dkt. No. 130-1 (citing Leigh Deck Exs. 5-11, Dkt. Nos. 130-8-130-14).)

While Plaintiff does not respond directly to Defendants’ motion for summary judgment on his breach of contract claims, Plaintiff nonetheless maintains throughout his opposition brief that Defendants have imposed “extra-contractual charges” on Plaintiffs investment by failing to ensure “substantive participation” in the equity-indexed benefits. (See Dkt. No. 141-2 at 3-4, PL’s Resp. to Defs.’ SSUF ¶ 3; see also Dkt. No. 141 at 8, 11, 13, 21, 25.) Plaintiff identifies two relevant contract, terms: § 5.8 and § 6.5. (Dkt. No. 141 at 9.) Section 5.8 guarantees that “[t]he reserves and guaranteed values will at no time be less than the minimum required by thé laws of the state in which this Contract is issued,” (Hutton Decl. Ex. G, Dkt. No. 141-11 at 17.) Section 6.5 provides definitions applicable to the Monthly Cap Index Strategy, and specifies that the “Index Credit” amount “is based on the performance of the applicable Index as measured over the Contract Year.” (Id. at 21.)

Plaintiff has not shown a genuine dispute of material fact regarding whether Defendants have breached § 5.8. Plaintiffs “substantive participation” argument fails for the reasons articulated below, infra Part II.B. The Court determined in a prior Order that there was no genuine dispute of material fact as to whether Defendants ever breached the Minimum Guaranteed Strategy Value terms of the contract by failing to guarantee the minimum nonfor-feiture amounts prescribed by California’s nonforfeiture law. (Dkt. No. 117 at 5-9.) Nor has Plaintiff shown a breach of § 6.5. Plaintiffs “based on” argument fails for the reasons articulated below, infra Part II.C.

C. Third Breach of Contract Claim

Plaintiff has not identified any falsity in his periodic statements. The contract requires Defendants to provide an “Annual Statement of Values” showing “the following values as of the statement date: (a) the amount of Single Premium paid; (b) the amount and dates of any partial Surrenders; (c) the Accumulation Value; and (d) the Cash Surrender Value.” (Leigh Decl. Ex. 1 § 8.4, Dkt. No. 130-4 at 23.) Defendants provided Plaintiff with statements annually, as required by the contract. (See Leigh Decl. Exs. 5-11, Dkt. Nos. 130-8-130-14.) While Plaintiff does not respond directly to Defendants’ motion' for- summary judgment on his breach of contract' claims, Plaintiff reiterates his “substantive participation” argument. (Pl,’s Resp. to Defs.’ SSUF ¶¶ 15-16.) Plaintiffs “substantive participation” argument fails for the reasons explained below, infra Part II.B. Plaintiff has not proffered any evidence showing a breach of the contract term governing Defendants’ obligations to provide periodic statéments.

The Court GRANTS Defendants’ motion for summary judgment on Plaintiffs three breach of contract claims.

II. Breach of the Implied Covenant of Good Faith and Fair Dealing

A breach of the implied covenant, of good faith and fair dealing does not require a breach of a specific provision of a contract. See Carma Developers (Cal.), Inc. v. Marathon Dev. California, Inc., 2 Cal.4th 342, 373, 6 Cal.Rptr.2d 467, 826 P.2d 710 (Cal. 1992). Rather, “[t]he covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party’s right to receive the benefits of the agreement actually made.”' Guz v. Bechtel Nat. Inc., 24 Cal.4th 317, 349-50, 100 Cal.Rptr.2d 352, 8 P.3d 1089 (Cal. 2000) (emphasis- in original). The implied covenant of good faith and fair dealing “cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms 'of their agreement.” Id. It does not exist ‘“to protect some general public policy interest not directly tied to the contract’s purposes.’ ” Carma Develop ers, 2 Cal.4th at 373, 6 Cal.Rptr.2d 467, 826 P.2d 710 (quoting Foley v. Interactive Data Corp., 47 Cal.3d 664, 690, 254 Cal.Rptr. 211, 766 P.2d 373 (Cal. 1988)). To impose an implied covenant of good faith and fair dealing, the following requirements must be satisfied:

(1) The implication must arise from the language used or it must be indispensable to effectuate the intention of the parties; (2) it must appear from the language used that it was so clearly within the contemplation of the parties that they deemed it unnecessary to express it; (3) implied covenants can only be justified on the grounds of legal necessity; (4) a promise can be implied only where it can be rightfully assumed that it would have been made if attention had been called to it; (6) there can be no implied covenant where the subject is completely covered by the contract.

Lippman v. Sears Roebuck & Co., 44 Cal.2d 136, 142, 280 P.2d 776 (Cal. 1965) (internal citation and quotation marks omitted).

“The covenant of good faith finds particular application in situations where one party is invested with a discretionary power affecting the rights of another. Such power must be exercised in good faith.” Carma Developers, 2 Cal.4th at 372, 6 Cal.Rptr.2d 467, 826 P.2d 710. Here, Section 6 of the FIA contract provides:

You select the Strategy(ies) to which any portion of the Single Premium and Re-elections are elected, subject to the terms of this Contract. We reserve the right to add Strategies as approved by the Insurance Department of the state in which the Contract is issued. We may cease to offer a specific Strategy or cease to accept Re-elections to a specific Strategy at any time. Any new Re-elec.tions accepted are subject to the terms and conditions in existence for any Strategy(ies) available at that time, including the then existing rates, caps, spreads, and credits, which may .differ from the rates, caps, spreads, and credits applicable to previous elections or Re-elections.

(Leigh Decl. Ex. 1 § 6, Dkt. No. 130-4 at 16.) This is not an express grant of “unfettered discretion." Wolf v. Walt Disney Pictures & Television, 162 Cal.App.4th 1107, 1121, 76 Cal.Rptr.3d 585 (Cal. Ct. App. 2008), as modified on denial of reh’g (June 4, 2008); see also Baymiller v. Guarantee Mut. Life Co., No. SA CV 99-1566 DOC AN, 2000 WL 1026565, at *2 (C.D. Cal. May 3, 2000) (holding that the covenant of good faith and fair dealing'did not apply to defendants’ discretionary authority where “nothing in the express language of Defendants’ life insurance policies requires the use of a specific formula to calculate interest rates and cost of insurance charges”). Rather, the contract affords Defendants discretion within bounds. Defendants reserve the right to add interest-crediting strategies, as approved by the CDI, and to change the terms and conditions governing the interest-crediting, .strategies, within contract parameters and state law. Defendants must accordingly exercise their discretionary authority in good faith.

A. The Parties’ Positions

Defendants argue that Plaintiffs claim fails primarily on two grounds. (Dkt. No. 130-1 at 15-16.) First, Defendants argue that Plaintiff seeks to impose substantive duties beyond the express terms of the agreement he made with- Defendants. (Id.) Second, Defendants argue that Plaintiff has not shown how Defendants have failed to exercise their discretion to adjust certain features of the interest-crediting strategies in good faith. (Id.)

Plaintiffs response is threefold. First, Plaintiff cites Defendants’ January 4, 2007 submission to the CDI, in which Defendants represented that the FIA provides for equity-indexed benefits, and that “[t]he Cap, Participation Rate, and Spread will be set such that the annualized option cost for this strategy will be at least 100 bps.” (Hutton Decl. Ex. B at Oppo. 0075, 0108, Dkt. No. 144-3 at 38, 66.) Plaintiff also cites an internal memorandum in which Defendants observed that “[w]hile it may be possible to credit less on FIA Products, there are [a] number of risks in doing so. The first may be a reputation risk, as we do not wish to be unfair to customers.” (Hutton Decl. Ex. I at Oppo. 0375, Dkt. No. 144-9 at 12.)

Second, Plaintiff contends that Defendants deprived Plaintiff of equity-indexed benefits by setting caps and rates “so low that their values do not substantively participate in the S&P 500 Index, and are not based on the performance of the Index,” in violation of Cal. Ins. Code § 10168.25(e). (Dkt. No. 141 at 24.) Plaintiff cites to Dr. Craig J. McCann’s calculation of what Dr. McCann calls the “equivalent value of S&P 500 Index call options” for Plaintiffs Monthly Cap Index Strategy. (Declaration of Craig J. McCann (“McCann Decl.”) Ex. 1 at Oppo. 0606; Dkt. No. 144-12 at 6.) According to Dr. McCann, the “equivalent bps value” for Plaintiffs Monthly Cap Strategy was less than 100 bps on the investment date and on each subsequent contract anniversary. {Id.)

Finally, Plaintiff contends that the contract does not confer upon Defendants unfettered discretion, but rather requires Defendants to calculate equity-indexed benefits “based on” the performance of the S&P 500. (Dkt. No. 141 at 23-24.) Plaintiff maintains that “based on” can have but one meaning: “based only on.” (Id. at 24.)

In response, Defendants proffer a table from them verified discovery responses showing that the annualized option cost associated with each strategy in which Plaintiff allocated funds exceeded 100 bps each year. (Leigh Decl. Ex. 16, Dkt. No. 149-2 at 5.) Defendants maintain that unlike Dr. McCann’s numbers, their figures are not hypothetical measurements of “equivalent valúe,” but rather are measurements of the annualized option cost associated with each interest-crediting strategy. (Dkt. No. 149 at 7.)

B. Plaintiffs “Substantive Participation” Argument

The implied covenant of good faith and fair dealing “exists merely to prevent one contracting party from unfairly frustrating the other party’s right to receive the benefits of the agreement actually made.” Guz, 24 Cal.4th at 349-50, 100 Cal.Rptr.2d 352, 8 P.3d 1089. Here, Plaintiffs “substantive participation” argument has a basis in the agreement actually made. In their 2007 submission to the CDI, Defendants represented that “[t]he Cap, Participation Rate, and Spread will be set such that the annualized option cost for this strategy will be at least 100 bps.” Section 6 of Plaintiffs contract provides a nexus between the contract and Defendants’ 2007 submission to the CDI. (Leigh Decl. Ex. 1 § 6, Dkt. No. 130-4 at 16 (“We reserve the right to add Strategies as approved by the Insurance Department of the state in which the Contract is issued.”).) Furthermore, William Bain-bridge, the Head of Annuity Product Development for Defendants, testified that “[o]ur contracts, through the actuarial memorandums file, indicated we would • spend 100 basis points on an annualized basis” for contracts purchased before January 3, 2011, including Plaintiffs contract. (Dkt. No. 174-1 at 10, Bainbridge Depo. 151:18-152:08.) Given the above, the Court concludes that the implied covenant of good faith and fair dealing requires Defendants to maintain an annualized option cost of at least 100 bps for each of Plaintiffs interest-crediting strategies.

1. The Statutory and Regulatory Framework Regarding “Substantive Participation”

Contrary to Plaintiffs argument, Cal. Ins. Code § 10168.25(e) and its implementing regulations do not support Plaintiffs implied covenant of good faith and fair dealing claim. Defendants’ 2007 submission to the CDI, rather than Cal. Ins. Code § 10168.25(e) or its implementing regulations, comprises the sole basis for Plaintiffs argument that Defendants were required to spend 100 bps on options on an annualized basis. Cal. Ins. Code § 10168.25(e) and 10 C.C.R. § 2523.5(b)(2) do not define “substantive participation” as requiring an annualized option cost exceeding 100 bps.

At the hearing, the Court asked Plaintiff to point out specific language in the statute that requires the annualized option cost for the equity-indexed benefit to total or exceed 100 bps. Plaintiff did not and cannot do so, as nothing in Cal. Ins. Code § 10168.25(e) mandates 100 bps in annualized option cost as the minimum floor for “substantive participation.”

California’s nonforfeiture statute provides, in pertinent part, that “[d]uring the period or term that a contract provides substantive participation in an equity indexed benefit, it may increase the reduction described in paragraph (1) of subdivision (d) by up to an additional 100 basis points to reflect the value of the equity index benefit.” Cal. Ins. Code § 10168.25(e). Subparagraph (1) of subdivision (d) in turn specifies the calculation to .determine “[t]he interest rate used in determining minimum nonforfeiture amounts.” Cal. Ins. Code § 10168.25(d)(1). Defendants take the additional reduction permitted in Cal. Ins. Code § 10168.25(e) with respect to Plaintiffs FIA and accordingly have to provide “substantive participation.” (C.f Dkt. No. 174-1 at 12, Bainbridge Depo. 157:01-05.) However, the statute does not define “substantive participation.” All Cal. Ins. Code § 10168.25(e) provides for is this: if the contract provides substantive participation in an equity-indexed benefit during a period or term, Defendants are permitted to increase the reduction described in Cal. Ins. Code § 10168.25(d)(1) by a maximum of an additional 100 bps to reflect the value of the equity-indexed benefit.

10 C.C.R. § 2523.5, Cal. Ins. Code § 10168.25(e)’s implementing regulation, defines “substantive participation” as requiring an annualized option cost of at least 25 bps, not 100 bps. The regulation provides that “[i]f a company chooses to take the additional reduction for an equity-indexed benefit as provided under Subsection 10168.25(e) of the Insurance Code, the company shall prepare a demonstration showing compliance with the requirements in Subsection 10168.25(e).” Cal. Code Regs.' tit.- 10, § 2523.5(a). 10 C.C.R. § 2523.5(b)(2) then outlines one of the steps-used to demonstrate compliance with Cal. Ins. Code § 10168.25(e):

If the annualized option cost for the eqüity-indexed benefit is twenty-five ... basis points or more, then the equity-indexed benefit provides substantive participation under Subsection 10168.25(e) of the Insurance Code and the company may take a reduction equal to the lesser of 100 basis points and the annual cost basis value.

Cal. Code Regs. tit. 10, § 2523.5(b)(2) (emphasis added). California law uses an annualized option cost of 26 bps, not 100 bps, as the benchmark for- substantive participation.

As Plaintiff pointed out at the hearing, 10 C.C.R'. § 2523.5 did not take effect until December 19, 2012, well after Plaintiffs contract was issued in 2010. It thus appears that when Plaintiff purchased his FIA contract, the statute and implementing regulations did not specify any minimum annualized option cost for substantive participation. Defendants’ commitment to maintaining an annualized option cost of 100 bps for Plaintiffs contract was not based upon a statutory or regulatory minimum, but upon Defendants’ statements in its 2007 submission to the CDI.

Plaintiff also cites to Defendants’ internal statements which reference the Indexed Standard Nonforfeiture Law (“SNFL’O, (Hutton Decl. Ex, A at Oppo. 0005, Dkt. No. 144-2 at 5 (“SNFL allows for an additional reduction in the nonfor-feiture rate of up-to 1% ... for strategies which provide for substantial participation in an equity index. Substantial participation is defined as providing for a market value of benefit (i.e. 1% option cost) to justify reduction.”); Hutton Deck Ex. C at Oppo. 0124; Dkt. No. 144-3 at 12 (“The initial option budget is from stat pricing model. After the initial guaranteed period, the renewal option budget is set to the greater of the one year risk free rate less the pricing spread or a 1% option budget (required by the Indexed Standard Non-forfeiture Law).”).) The National Association of Insurance Commissioners (“NAIC”) SNFL is a model regulation. It appears that California has not adopted the SNFL’s definition of substantive participation, as neither Cal. Ins. Code § 10168.25(e) nor 10 C.C.R. § 2523.5(b)(2) requires the annualized option cost to exceed 100 bps. What these internal statements show is that Defendants designed Plaintiffs contract to contain a guaranteed annualized option cost of 100 bps for each interest-crediting strategy, even though state law did not specify a minimum threshold of 100 bps.

Accordingly, Plaintiffs “100 bps” theory for his implied covenant of good faith and fair dealing claim rests upon Defendants’ 2007 submission to the CDI, rather than Cal. Ins. Code § 10168.25(e) or its implementing regulations.

2. Whether Defendants Complied with the Implied Covenant of Good Faith and Fair Dealing

Defendants represented the following to the CDI in 2007: •

For the Monthly Cap Index Strategy, on each Contract Anniversary, the Index Credit equals the sum of twelve Monthly Index Changes during the Contract Year. The Index Credit will never be less than zero.

The Monthly Index Change is the lesser of the Monthly Cap or the result of (i) / (ii) — 1, where .

(i) Is the Index Number on each Monthly Anniversary, and

(ii) Is the Index Number on the prior Monthly Anniversary.

The Monthly Cap is declared, for each Premium/Re-election, in advance, and is guaranteed for one year. It may change annually. The Monthly Cap mil be set such that the annualized option cost for this strategy will be at least 100 bps. Annualized option cost will be calculated based on the current Accumulation Value and Monthly Cap. The method and parameters mil be calibrated to capital markets based option pricing at the then current market conditions.

(Dkt. No. 144-3 at 38, Hutton Decl. Ex. B at Oppo. 0075 (emphases added).)

Defendants proffer a table from their verified discovery responses showing that the annualized option cost associated with each strategy in which Plaintiff allocated funds exceeded 100 bps each year. (Leigh Decl. Ex. 16, Dkt. No. 149-2 at 5.) Plaintiff proffers no evidence contradicting Defendants’ numbers. Plaintiff instead proffers Dr. McCann’s measurement of a different, theoretical value to support his argument that Defendants did not meet their target of 100 bps. (Dkt. No. 176-18 at 6, McCann Supp. Report ¶ 10.)

However, Plaintiffs evidence concerns a fundamentally different value, pegging the question: 100 bps of whatfl Plaintiffs expert calculates “equivalent value” based upon the measurement of a theoretical “EIB leg,” (See id.) As Defendants observe, Plaintiffs theories of “equivalent value” and “EIB legs” have arisen for the first time in supplemental briefing after nearly four years of litigation. (Dkt; No. 178 at 2.) Setting aside the fact that these novel theories are recent offerings, Plaintiffs evidence does not create a genuine dispute of material fact for the following reasons.

First, Plaintiffs expert calculates a different value altogether. In an internal document, Defendants described their “FIA Static Hedging Methodology.” (Dkt. No. 176-16 at 22, Supp. Ex. T at 8211.) •.

Static hedging is fairly simple conceptually. When ING sells a policyholder a FIA, ING is implicitly selling them an option, ING then turns around and purchases the same option from an investment bank {in theory)-, thus ING is perfectly hedged (in theory). As new policies are sold, and as existing policies begin a new indexing period, new options need to' be purchased to hedge ING’s equity risk exposures.

(Id. (emphases added).) Plaintiffs expert terms the option “implicitly” sold to Abbit as the “EIB leg” and terms the option Defendants actually purchase as the “Hedge leg.” (Dkt. No. 176-18 at 9-10, McCann Supp. Report 1121.) Characterizing these two “legs” as fundamentally different, Plaintiffs expert estimates the theoretical value of the “EIB leg,” incorporating liquidity discounts proposed by academic studies, (Dkt. No. 176-18 at 6-7, McCann Supp. Report ¶¶ 10-11), whereas Defendants measure the “Hedge leg,” based on actual data, (Leigh Decl. Ex: 1*6, Dkt. No. 149-2 at 5). It is clear that the numbers Plaintiff proffers, all of which fall below 100 bps, reflect measurements of a fundamentally different value.

Not only are Plaintiffs numbers premised on a different calculation, they .are theoretical, not factual. ING did. not and has not actually sold Abbit an option— rather, ING, in theory, “implicitly” sells an option when it sells policyholders FIAs. (Dkt. No. 176-16 at 22, Supp. Ex:. T at 8211.) The only options purchased are those Defendants purchase to hedge risk, (id.), and those are the. options upon which Defendants’ calculations of annualized option cost are based, (see Dkt. No.'178 at 2-6). Indeed,: in accordance with Defendants’ 2007 representation to the CDI, the numbers Defendants produce are “based on then current market prices for options supporting each of Mr. Abbit’s selected Index Strategies as of each Contract Anniversary Date.” (Leigh Decl. Ex. 16, Dkt. No. 149-2 at 5.)

Moreover, nothing in Defendants’ 2007 submission to the CDI suggests that Defendants had to measure annualized option cost by valuing an “implicit,” theoretical “EIB leg.” Defendants simply stated:

The Monthly Cap will be set such that the annualized option cost for this strategy will be at least 100 bps. Annualized option cost will be calculated based on the current Accumulation Value and Monthly Cap. The method and parameters will be calibrated to capital markets based option pricing at the then current market conditions.

(Dkt. No. 144-3 at 38, Hutton Decl. Ex. B at Oppo. 0075 (emphases added).) Nowhere does the term “equivalent value” or “EIB leg” appear in the above language.

Plaintiff argues that Defendants’ numbers do not reflect discounts for the “EIB leg’s” lack of marketability and pon-trans-ferability, and do not reflect potential mismatches between the payoffs of the “EIB leg” and the “Hedge leg.” (Dkt. No. 176-18 at 13-14, McCann Supp. Report ¶¶ 28-29.) However, these objections are premised upon Plaintiffs legally deficient “EIB leg” theory. Setting aside the fact that these objections are relevant only insofar as Plaintiffs “EIB leg” theory is viable, Plaintiffs arguments are insufficient to defeat summary judgment. Plaintiffs expert incorporates theoretical discounts proposed by academic studies from the employee stock option context. (Dkt. No. 176-18 at 5, 13, McCann Supp. Report ¶¶ 10 n.1, 28 n.5.) Moreover, Plaintiffs expert’s opinion is speculative. (Dkt. No. 176-18 at 13-14, McCann Supp. Report ¶ 29 (observing that the “mismatches sometimes result in payoffs to Defendants that are not transmitted to contract holders” and that “the hedging option in that case may have been far more valuable than the EIB” (emphasis added))); c.f. Getz v. Boeing Co., 654 F.3d 852, 865 (9th Cir. 2011) (speculation and conjecture insufficient to defeat summary judgment); Merit Motors, Inc. v. Chrysler Corp., 569 F.2d 666, 673 (D.C. Cir. 1977) (“To hold that Rule 703 prevents a court from granting summary judgment against a party who relies solely on an expert’s opinion that has no more basis in or out of the record than [the expert’s] theoretical speculations would seriously undermine the policies of Rule 56.”).

Finally, Plaintiff complains that Defendants use “stale” options quotes from investment banks, rather than quotes on the actual day of Plaintiffs contract purchase and subsequent anniversaries (September 28 from the year 2010 onward), and that the quotes are not “firm” quotes, but “indicative” quotes. (Dkt. No. 171 at 9-10.) Plaintiffs first objection is unavailing. Defendants’ submission to the CDI makes clear that “[t]he Monthly Cap is declared, for each Premium/Re-election, in advance, and is guaranteed for one year.” (Dkt. No. 144-3 at 38, Hutton Decl. Ex. B at Oppo. 0075 (emphasis added).) In order to declare the Monthly Cap in advance of each strategy selection period and allow Plaintiff the chance to elect interest-crediting strategies during the thirty-day period after his contract anniversary, the annualized option cost necessarily relies upon option quotes from dates preceding Plaintiffs contract anniversary. (See Dkt. No. 178 at 7 n.4; Dkt. No. 130-4 at 14, Leigh Decl. Ex. 1 § 3.1 (“You elect the Strategies for your Single Premium from among those described in the Contract and offered by us. At any time during the 30-day period following a Contract Anniversary, you may re-elect all or a portion of the Accumulation Value in any Strategy to any other Strategy.”).)

Plaintiffs second objection is similarly unavailing. No distinction between “indicative” and “firm” quotes appears in Defendants’ 2007 submission to the CDI. Defendants simply represented to the CDI that it would calculate annualized option costs using methods and parameters “calibrated to capital markets based option pricing at the then current market conditions.” (Dkt. No. 144-3 at 38, Hutton Deck Ex. B at Oppo. 0075.) No evidence in the record indicates that Defendants did not do so. Rather, the only evidence in the record shows that Defendants calculated the annualized option cost “based on then current market prices for options supporting each of Mr. Abbit’s selected Index Strategies as of each Contract Anniversary Date.” (Leigh Decl. Ex. 16, Dkt. No. 149-2 at 5.)

Furthermore, the record contains no evidence of capital market options costs, other than the data Defendants used to calculate the annualized option cost associated with each interest-crediting strategy in which Plaintiff allocated funds. (Dkt. No. 178 at 5-6.) Beyond Plaintiffs expert’s quantification of theoretical “EIB leg” values, which are inapposite for the reasons detailed above, Plaintiff has no evidence that he would have benefited from later option quotes or “firm” option quotes. C.f. Getz, 654 F.3d at 865; Merit Motors, Inc., 569 F.2d at 673.

In sum, there is no genuine dispute of material fact as to whether Defendants have breached the implied covenant of good faith and fair dealing by failing to maintain an annualized option cost of 100 bps for each interest-crediting strategy. The Court GRANTS Defendants’ motion for summary judgment on Plaintiffs claim for breach of the implied covenant of good faith and fair dealing on the “substantive participation” theory.

3. Second Request for Reconsideration of the Court’s Order Granting Defendants’ Motion for Summary Judgment on the Class Claims

At the hearing, and in his supplemental briefing, Plaintiff suggested that the Court, on its own motion, once again reconsider its conclusions regarding the breach of contract class claims. (Dkt. No. 171 at 11-12.) The Court declines to reconsider its prior ruling and instead reaffirms its conclusions in its prior Order denying Plaintiffs first motion for reconsideration. (Dkt. No. 129.)

As was true at the last motion for summary judgment, and as is still true now, Plaintiff has not pointed to a specific contract term in which Defendants expressly guaranteed 100 bps (or any other amount) in annualized option cost to Plaintiff and the rest of the class members. Even taking at face value Plaintiffs assertion that this theory of “substantive participation” could not have arisen earlier, Plaintiffs .failure to identify a salient contract term is fatal to the breach of contract class claims. The closest term Plaintiff points to is § 5.8 of the FIA contract, which guarantees that “[t]he reserves and guaranteed values will at no time be less than the minimum required by the laws of the state in which this Contract is issued.” (Leigh Deck Ex, 1, Dkt. No. 130-4 at 16.) However, as explained above, supra Part II.B.1, Cal. Ins. Code § 10168.25(e) does not specify a minimum floor for “substantive participation.” To the extent Plaintiff argues that Defendants failed to provide the minimum nonforfeiture amounts prescribed by Cal. Ins. Code § 10168.25(e), the Court previously found that Defendants did not breach their obligation to maintain the minimum nonforfeiture amounts guaranteed under the contract and California law. (See Dkt. No. 117 at 5-9.)

Moreover, Plaintiffs attempt to retroactively amend his arguments regarding the certified class claims fails for the additional reason that the “substantive participation” argument is not common to the certified class. Contracts issued before January 3, 2011 are treated differently than contracts issued after January 3, 2011, because Defendants stopped taking the additional reduction in the nonforfei-ture rate after January 3, 2011. (Dkt. No. 174-1 at 10-11, Bainbridge Depo. 150:17-154:22.) As • Plaintiffs contract was purchased1 before January 3, 2011, Defendants did not treat Plaintiffs contract any differently. (Id,) While Defendants’ commitment to maintaining an annualized option cost of at least 100 bps for Plaintiffs con-, tract remained unchanged, contracts issued after January 3, 2011 did not contain a “substantive participation” requirement under Cal. Ins. Code § 10168.25(e). (See id.; see also Dkt. No. 178 at 3 n.2.) And 10 C.C.R. § 2523.5, which applies, at the very least, to contracts issued after December' 19, 2012, provides for a minimum floor of 25 bps in annualized option cost, rather than 100 bps.

For the foregoing reasons, the Court DENIES Plaintiffs renewed request for reconsideration of the Court’s Order granting Defendants’ motion for summary judgment on the certified class claims.'

C. Plaintiffs “Based On” Argument

Plaintiffs “based on” argument has a basis in the agreement actually made. See Guz, 24 Cal.4th at 349-50, 100 Cal.Rptr.2d 352, 8 P.3d 1089. Section 6.5 of the contract provides definitions applicable to the Monthly Cap Index Strategy, and specifies that the “Index Credit” amount “is based on the performance of the applicable Index as measured over the Contract Year.” (Id. at 21.) However, as explained below, infra Part II.C, Plaintiffs unfounded interpretation of “based on” lacks merit, and Plaintiff has not shown how Defendants have breached any express or implied obligation flowing-therefrom.

As a threshold observation, Plaintiffs argument that Defendants failed to ensure that index credits were “based on” the performance of the S&P 500 appears to be coextensive with his argument about “substantive participation,” (See, e,g., Dkt. No, 141 at 8-9,13-14, 23-24, 26.) To the extent Plaintiffs “based on” argument depends upon his “substantive participation” argument, the “based on” argument fails for the same reasons articulated above, supra PartlLB.

Even if. Plaintiffs “based on”, argument stands alone, it, too, fails as a matter of law. First, the contract does not support Plaintiffs assertion. Section 6,5 of the contract indeed defines “Index Credit” as- “the amount credited to the portion of the Single Premium, Bonus or Re-elections elected to this Strategy and is based on the performance of the applicable Index as measured over the Contract Year.” (Hutton Deck Ex, G at Oppo. 0305, Dkt. No. 141-11 at 17; see also Hutton Decl, Ex, E at Oppo. 0212, Dkt. No. 144-6 at 11 (“The value of this annuity ■ may also grow through index credits that depend on the performance of the • S&P 500 index.”).) Plaintiff omits mention of the definitions that break down how the index credits are calculated. The definitions flesh out in technical detail how the amounts credited are “based on” the performance of the S&P 500. Specifically, “[t]he Index Credit equals the sum of the-twelve Monthly-Index- Changes during the Contract Year,” with “Monthly Index Change” defined as “the lesser of the Monthly Cap or the result of (i)/(ii) — 1, where (i)‘is the Index Number on each Monthly Anniversary; (ii) is the Index Number on the prior Monthly Anniversary.'” (Hutton - Deck - Ex. G at Oppo. 0305, Dkt, No. 141-11 at 17.) “Monthly Cap” is in turn defined as “the maximum Monthly Index Change that may be applied in- calculating-the Index Credit at the end of each Contract Year. -It is declared annually in advance and is guaranteed for one year. The initial Monthly Cap is, shown on the Contract Data Page.” (Id.) “Index Number” is defined as “the published value of the [S&P 500] Index.” (Hutton Deck Ex. at Oppo. 0296, Dkt. No. 141-11 at 12.) And “[t]he Index Credit will never be less than zero.”' (Hutton Decl. Ex. G at Oppo. 0305, Dkt. No. 141-11 at 17.) Plaintiff has not shown how Defendants have failed to abide by the- transparent calculation outlined in the definitions.

In addition, neither the contract nor state law supports Plaintiffs assertion that the phrase “based on” means “based solely on,” such that all factors apart from the performance of the S&P 500 are excluded from consideration. See Cal. Code Regs. tit. 10, § 2623.1(b) (defining “equity-indexed benefit” as “a benefit in an annuity contract in which the value of the benefit is determined using an interest crediting rate based on the performance of an equity-based index and contract parameters” (emphasis added)); McDaniel v. Chevron Corp., 203 F.3d 1099, 1111 (9th Cir. 2000) (“In the context of statutory interpretation, courts have held that the plain meaning of ‘based on’ is synonymous with ‘arising from’ and ordinarily refers to a' ‘starting point’ or a ‘foundation.’” (emphasis added)). Nor does “based op” require a linear relationship between the S&P 500 and the index credits.

Finally, the internal memorandum and presentation Plaintiff cites do not show that Defendants failed to determine index credits based on the performance of the S&P 500. In the memorandum, Defendants acknowledged that “[w]hile it may be possible to credit less on FIA Products, there are [a] number of risks in doing so,” in-eluding'“a reputation risk, as we do- not wish to be unfair to customers.” (Hutton Decl. Ex. I at Oppo. 0375, Dkt. No. 144-9 at 12.) In the ■ presentation, Defendants discussed how to meet their internal return-on-investment (“ROI”) targets. (Hutton Decl. Ex. N at Oppo. 0858, Dkt. No. 144-13 at 15.) Plaintiffs evidence shows Defendants’ internal discussions regarding how to optimize ROI while balancing repu-tational risks; it does -not create a genuine dispute of material fact regarding whether Defendants failed to credit interest based on the performance of the S&P 500.

1 In light of the foregoing, the Court concludes that there is no genuine dispute of material fact regarding whether Defendants breached the implied covenant -of good faith and fair dealing on the “based on” theory. The- Court GRANTS Defendants’ motion for summary judgment on this claim.

III. Breach of Fiduciary Duty

A breach of fiduciary duty claim under California law requires “the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.” Pierce v. Lyman, 1 Cal.App.4th 1093, 1101, 3 Cal.Rptr.2d 236 (Cal. Ct. App. 1991). With respect to insurers and insureds, the 'California Supreme Court has observed, '

[T]he insurer-insured relationship ... is not a true “fiduciary relationship” in the same sense as the relationship between trustee and beneficiary, or attorney and client. It is, rather, a relationship often characterized by unequal bargaining power in which the insured must depend on the good faith and performance of the insurer. This characteristic has led the courts to impose “special and heightened” duties, but “[w]hile these ‘special’ duties are akin to, and often resemble, duties which are also owed by fiduciaries, the fiduciary-like duties arise because of the unique nature of the insurance contract, not because the insurer is a fiduciary.”

Vu v. Prudential Prop. & Cas. Ins. Co., 26 Cal.4th 1142, 1150-51, 113 Cal.Rptr.2d 70, 33 P.3d 487 (Cal. 2001) (internal citations omitted). Under this view, “California courts have refrained from characterizing the insurer-insured relationship as a fiduciary one.” Tran v. Farmers Grp., Inc., 104 Cal.App.4th 1202, 1211, 128 Cal.Rptr.2d 728 (Cal. Ct. App. 2002), as modified on denial of reh’g (Jan. 27, 2003). Rather, California decisions have “suggest[ed] that an insurer’s breach of its “fiduciary-like duties” is adequately redressed by a claim for breach of the covenant of good faith and fair dealing implied in the insurance contract.” Id. at 1212, 128 Cal.Rptr.2d 728. “[A]s a matter of California law, no true fiduciary duty arises from the insurer-insured relationship and an insured therefore cannot maintain a claim for breach of fiduciary duty based solely on the insurer-insured relationship.” In re Conseco Ins. Co. Annuity Mktg. & Sales Practices Litig., No. C-0504726RMW, 2007 WL 486367, at *7 (N.D. Cal. Feb. 12, 2007); accord Solomon v. N. Am. Life & Cas. Ins. Co., 151 F.3d 1132, 1138 (9th Cir. 1998) (holding that an insurer owes no fiduciary duty to its insured under California law); Almon v. State Farm Fire & Cas. Co., 724 F.Supp. 765, 766 (S.D. Cal. 1989) (“[A]lthough the duty between the defendant and plaintiffs, is fiduciary in nature, there is no independent cause of action for breach of fiduciary duty.”).

“ ‘[B]efore a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law.’ ” City of Hope Nat. Med. Ctr. v. Genentech, Inc., 43 Cal.4th 375, 386, 75 Cal.Rptr.3d 333, 181 P.3d 142 (Cal. 2008) (quoting Committee on Children’s Television, Inc. v. General Foods Corp., 35 Cal.3d 197, 221, 197 Cal.Rptr. 783, 673 P.2d 660 (Cal. 1983)). Because the insurer-insured relationship does not impose a fiduciary duty as a matter of law, Defendants must “knowingly undertake to act on behalf and for the benefit of Plaintiff’ before they can. be charged with a fiduciary obligation to Plaintiff. Id.; see also Morris v. Paul Revere Life Ins. Co., 109 Cal.App.4th 966, 973, 135 Cal.Rptr.2d 718 (Cal. Ct. App. 2003) (“An insurer is not a fiduciary, and owes no obligation to consider the interests pf its insured above its own.”).

In line with this view, courts have allowed insured plaintiffs to proceed with claims for a breach of fiduciary duty against insurers where affirmative representations and actions by insurers created a fiduciary relationship that would otherwise not exist as a matter of law. See, e.g., In re Nat’l W. Life Ins. Deferred Annuities Litig., 467 F.Supp.2d 1071, 1086-88 (S.D. Cal. 2006) (denying motion to dismiss plaintiffs’ breach of fiduciary duty claim, where the insurers’ “sales agents allegedly held themselves out as objective financial planners who act in Plaintiffs’ best interests” and where the insureds were “senior citizens” who purchased “allegedly complex financial instruments which the average person cannot understand”); Negrete v. Fid. & Guar. Life Ins. Co., 444 F.Supp.2d 998, 1004 (C.D. Cal. 2006) (denying motion to dismiss plaintiffs’ breach of fiduciary duty claim, where plaintiffs alleged that defendant insurers “assumed fiduciary duties” to plaintiffs “[b]y virtue of their purported positions as financial advisors, estate planning specialists, and because of their superior knowledge and ability to manipulate and control senior citizens’ finances and legal status”); Fischer v. Aviva Life & Annuity Co., No. 2:10-CV-1693-GEB-EFB, 2010 WL 3582559, at *6 (E.D. Cal. Sept. 10, 2010) (denying motion to dismiss plaintiffs’ claim for breach of fiduciary duty where plaintiffs alleged that defendant insurers “acted as investment advisors” for plaintiffs); Estate of Migliaccio v. Midland Nat’l Life Ins. Co., 436 F.Supp.2d 1095, 1108 (C.D. Cal. 2006), as amended (Aug. 21, 2006) (denying motion to dismiss plaintiffs’ claim for breach of fiduciary duty where plaintiffs supplied “extensive allegations that defendants trained their sales agents to lure seniors citizens into their confidence by offering assistance with estate and financial planning, ultimately to sell them improper annuities using standardized marketing materials and annuity contracts”).

The California Supreme Court has recognized that while the following four factors may be typical of a fiduciary relationship, the fact that a relationship between parties exhibits these characteristics, which “are common in many a contractual arrangement,” does not necessarily render the relationship fiduciary:

(1) one party entrusts its affairs, interests or property to another; (2) there is a grant of broad discretion to another, generally because of a disparity in expertise or knowledge; (3) the two parties have an “asymmetrical access to information,” meaning one party has little ability to monitor the other and must rely on the truth of the other party’s representations; and (4) one party is vulnerable and dependent upon the other.

City of Hope Nat. Med. Ctr., 43 Cal.4th at 387-88, 75 Cal.Rptr.3d 333, 181 P.3d 142 (internal citations omitted).

Here, Defendants contend that summary judgment is warranted because Plaintiff and Defendants are not in a fiduciary relationship. (Dkt. No. 130-1 at 17-18.) Specifically, Defendants assert that they did not undertake to act on behalf of and solely for Plaintiffs benefit. (Id.) Defendants also contend that Plaintiff has not suffered any damages resulting from any breach. (Id.)

This Court denied Defendants’ motion to dismiss Plaintiffs breach of fiduciary duty claim and allowed it to proceed. (Dkt. No. 19 at 13-14.) However, at the summary judgment stage, Plaintiff has not produced evidence showing a genuine dispute of material fact as to the existence of a fiduciary relationship with Defendants.

Plaintiff cites the FIA application he signed, wherein Defendants stated, “The price [of the annuity contract] also covers the cost of contract guarantees, other costs such as the design, manufacture and service of the contracts, as well as the investment management needed to support the contracts’ values.” (Hutton Deck Ex. E at Oppo. 0214, Dkt. No. 144-6 at 13.) However, Defendants include a caveat on the same page: “You should discuss your retirement planning objectives, anticipated financial needs and risk tolerance with your agent to make sure this annuity meets your current financial needs' and objectives.” (Id.