Cobb v. Pacific Mutual Life Insurance Co.

Augustus Cobb (plaintiff) was insured by Pacific Mutual Life Insurance Co. (Pacific Mutual) (defendant). Cobb held two policies with Pacific Mutual, a life insurance policy and an income policy. The income policy insured Cobb against loss of income in the event that he became permanently disabled, promising payments of $250 per month for the duration of the disability. At the time that Cobb obtained the life and income policies, Cobb was examined by a medical examiner. Cobb failed to answer, or incorrectly answered, some of the examiner’s questions. Two and one-half years after obtaining these policies, Cobb became permanently disabled and was unable to work. Cobb gave Pacific Mutual notice of his claim and demanded the $250 per month payments pursuant to his insurance contract. Pacific Mutual repudiated its contract and rescinded it on the basis that Cobb had made misrepresentations to the medical examiner. On this basis, Pacific Mutual refused to make any payments to Cobb. Cobb sued Pacific Mutual for, among other things, $250 per month from the time that Cobb became disabled, and a lump sum of $54,271 comprised of $250 per month for the rest of Cobb’s expected life. At trial, Cobb’s disability was verified, and the misrepresentations and omissions that he made to the medical examiner were determined to be insignificant. The jury found in favor of Cobb. The trial court found that Pacific Mutual had breached its insurance contract with Cobb, and that Cobb was owed damages of $250 per month for his expected lifespan of fifteen years, totaling $30,830. Pacific Mutual appealed. The court of appeals reversed the trial court in regard to its finding of anticipatory breach of the insurance contract. The court held that Cobb was due only the monthly payments that Pacific Mutual had thus far failed to pay him, but not the lump sum damages equaling the payments for Cobb’s anticipated lifespan. Cobb petitioned for a hearing by the supreme court.