                                                                           FILED
                            NOT FOR PUBLICATION                             JUL 28 2015

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS



                            FOR THE NINTH CIRCUIT


JEFFREY L. WISSOT, DDS, an                       No. 13-56195
individual,
                                                 D.C. No. 2:11-cv-10040-RSWL-
              Plaintiff - Appellant,             JCG

 v.
                                                 MEMORANDUM*
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY, a Colorado
Corporation,

              Defendant - Appellee.


                   Appeal from the United States District Court
                       for the Central District of California
                 Ronald S.W. Lew, Senior District Judge, Presiding

                        Argued and Submitted July 9, 2015
                              Pasadena, California

Before: W. FLETCHER, PAEZ, and BERZON, Circuit Judges.

      Jeffrey Wissot appeals the district court’s grant of summary judgment to

Great-West Life & Annuity Insurance Company regarding a disputed insurance

contract. The district court ruled that the contract’s choice-of-law provisions


        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
should be enforced and that Wissot’s claim for benefits was predicated on an

incorrect reading of the unambiguous contract. We affirm.

      1. The contract’s choice-of-law provision is enforceable. “In diversity cases,

federal courts must apply the conflict-of-law principles of the forum state.” S.A.

Empresa v. Boeing Co., 641 F.2d 746, 749 (9th Cir. 1981). Here, that means we

enforce the contract’s choice-of-law provision unless “the chosen state has no

substantial relationship to the parties or the transaction and there is no other

reasonable basis for the parties[’] choice,” or the “application of the law of the

chosen state would be contrary to a fundamental policy of a state which has a

materially greater interest than the chosen state in the determination of the

particular issue.” Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459, 465

(1992) (quoting Restatement (Second) of Conflict of Laws §187 (1971)).

      The parties do not contest that they have a substantial relationship to Illinois,

the chosen state indicated by the contract. The process-of-nature rule, the only law

Wissot identifies as conflicting with Illinois’ law, does not meet the criteria for

“fundamental policy,” at least as applied to this case.

      “[A] fundamental policy may be embodied in a statute which makes one or

more kinds of contracts illegal or which is designed to protect a person against the

oppressive use of superior bargaining power. Statutes involving the rights of an


                                           2
individual insured as against an insurance company are an example of this sort.”

Restatement (Second) of Conflict of Laws § 187 cmt. g. California courts have, on

many occasions, looked to legislative enactments for expressions of “strong public

policy.” See, e.g., Application Grp., Inc. v. Hunter Grp., Inc., 61 Cal. App. 4th 881,

900 (1998); 1800-Got-Junk? LLC v. Superior Court, 189 Cal. App. 4th 500, 515

(2010); Brack v. Omni Loan Co., 164 Cal. App. 4th 1312, 1323-24 (2008). But the

“process of nature” rule is not established in statute; it has its origins in “judicial

decision in other states.” Willden v. Wash. Nat. Ins. Co., 18 Cal. 3d 631, 635

(1976).

       Moreover, while the process-of-nature rule may protect some parties against

those with superior bargaining power, the strength of this consideration is

attenuated in the context of a group insurance plan, where the parties are on a more

even footing. See Restatement (Second) of Conflict of Laws § 192 cmt. h.

Further, the process-of-nature rule has been applied only to contracts that set an

arbitrary time period within which an accident or sickness must manifest as a

disability. See, e.g., Willden, 18 Cal. 3d at 635. Wissot’s contract, in contrast,

does not require that his disability arise within any particular time period after an

accident, but rather that his disability arise before a certain age. Such a provision

is not simply a procedural barrier; it has a substantive rationale, as it allows for


                                            3
greater benefits to accrue to those who are removed from the workforce earlier in

life. As the provision here at issue has a rationale not suggestive of “oppressive

use of superior bargaining power,” Restatement (Second) of Conflict of Laws §

187 cmt. g, application of the process-of-nature rule to this circumstance would not

implicate the “fundamental policy” of protecting insureds from arbitrary,

unjustified policy provisions.

      Finally, even if the process-of-nature rule were a fundamental policy and

applied here, the choice-of-law provision is still enforceable. California does not

have a materially greater interest in the determination of this issue than Illinois.

See Nedlloyd, 3 Cal.4th at 466. California has an interest in promoting party

autonomy, id. at 484 (Kennard, J., concuring in part), and so has adopted “a strong

policy favoring enforcement” of choice-of-law provisions. Id. at 465 (majority

opinion). In addition, as noted, California’s interest in enforcing the “process of

nature” rule is attenuated in the present case. Further, the policy that Wissot

purchased is the product of negotiations between two sophisticated parties: the

American Dental Association, which is headquartered in Illinois, and Great-West.

As a result, California’s interest in applying the “process of nature rule” in this

case is not greater than the combined weight of California’s interest in enforcing

choice-of-law provisions generally and Illinois’s interest in seeing its substantive


                                           4
law applied to a contract entered into in Illinois by an entity domiciled in Illinois.

The district court was therefore correct in applying Illinois law in accordance with

the contract’s provision.

       2. The contract’s terms are unambiguous. “Ambiguity can be found only if

the contract language is ‘reasonably or fairly susceptible of more than one

construction.’” Interim Health Care of N. Ill., Inc. v. Interim Health Care, Inc.,

225 F.3d 876, 879 (7th Cir. 2000) (quoting A.A. Conte, Inc. v.

Campbell–Lowrie–Lautermilch Corp., 477 N.E.2d 30, 33 (Ill. 1985)).

       Out of the context of this disability policy, one could possibly read “[f]or a

Total Disability due to accident or sickness which begins before the member

reaches age 50” in the way Wissot suggests. But the policy itself defines accident

as a “sudden” event that “is definite as to time and place.” In this policy, an

“accident” does not stretch out over time, so it could not “begin” before a member

reaches 50 and continue after that. Sudden, discrete events “happen” or “occur;”

the word “begins,” in contrast, more naturally refers to a continuing event — such

as a disability.

       Construing the phrase “begins” to modify “[t]otal [d]isability” thus results in

a reading that is “ordinary and natural,” Interim Health Care, 225 F.3d at 879,

while reading it to modify “accident or sickness” does not. The examples Wissot


                                           5
furnishes, in which “begins” modifies “accident,” are from unrelated contexts

where the word “accident” would have a different connotation.

      Also, even if the disputed language could reasonably be construed in

Wissot’s favor when read in isolation, such a construction breaks down when we

“construe the policy as a whole with due regard to the risk undertaken, the subject

matter that is insured, and the purposes of the entire contract.” Indiana Ins. Co. v.

Pana Community Unit School Dist. No. 8, 314 F.3d 895, 900 (7th Cir. 2002)

(citing Zurich Ins. Co. v. Raymark Indus., 514 N.E.2d 150 (Ill. 1987)); see also

Pekin Ins. Co. v. Wilson, 930 N.E.2d 379, 386 (Ill. App. Ct. 2009). The contract at

issue is an insurance contract designed to replace income lost in the event of

disability that renders the policy holder unable to earn income. Plan II in particular

provides supplemental income benefits to dentists disabled in their prime earning

years. The focus is thus on whether the policyholder was disabled, and so not able

to earn income during his prime earning years, not on whether he suffered an

injury or sickness but could still work. The possible ambiguity raised by reading

the text in isolation thus diminishes when the contract’s overall structure is

considered.

      The contract’s broader context also clarifies why the disputed text contains

language that could generate ambiguity when read in isolation. The Basic Plan


                                           6
makes a distinction between disability due to accident and disability due to

sickness—the maximum payment period for the former is five years, whereas it is

only two years for the latter. The phrase “due to accident or sickness” in the

caption of Plan II clarifies that, unlike for the Basic Plan, the same benefits are

available regardless of whether the cause is sickness or accident.

      While there is a general principle of construing insurance contracts in favor

of beneficiaries, “the rule of liberal construction in favor of the insured is a rule of

last resort which must not be permitted to frustrate the intention the parties have

expressed, if that can otherwise be ascertained.” Schuchman v. State Auto Prop. &

Cas. Ins. Co., 733 F.3d 231, 238 (7th Cir. 2013) (citing 16 Williston on Contracts §

49:16 (4th ed.)). The rule applies “only if the language of the policy is ambiguous

after application of other principles or canons of interpretation.” Id. Here, in light

of the policy as a whole, the optional insurance provision can only reasonably be

read to provide benefits to those whose inability to earn income began at a younger

age, not those whose accidents occurred at a younger age but who continued to

work until after turning 50. The contract is thus not ambiguous.

      AFFIRMED.




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