Primerica Life Insurance Company v. Castillo Bucio et al

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
PRIMERICA 	LIFE 	INSURANCE
COMPANY,
Plaintiff,
v.
ROSALIA 	CASTILLO 	BUCIO, 	an
individual; 	HIPOLITO 	CASTILLO
BUCIO, an individual
Defendants.
Case No.: 3:24-cv-01567-RBM-KSC
ORDER GRANTING MOTION FOR
DEFAULT JUDGMENT
[Doc. 11]
On September 9, 2024, Plaintiff Primerica Life Insurance Company (“Plaintiff”)
filed the operative complaint against Defendants Rosalia Castillo Bucio and Hipolito
Castillo 	Bucio 	(“Defendants”). 	(Doc. 1 	(“Complaint”).) 	The Complaint seeks 	a
declaration 	from 	the 	Court 	that 	a 	term 	life 	insurance 	policy 	obtained 	based 	on
misrepresentations is rescinded. (Id. ¶¶ 7, 22–26, 28–33.) On January 31, 2025, Plaintiff
filed for a clerk’s entry of default as to each Defendant. (Docs. 7–8.) The Clerk of Court
entered default against each Defendant on February 3, 2025. (Docs. 9–10.) The pending
Motion for Default Judgment (“Motion”) followed. 	(Doc. 11.) 	Neither Defendant has
appeared in this action.
///
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The Court finds the matter suitable for determination on the papers and without oral
argument pursuant to Civil Local Rule 7.1(d)(1). 	For the reasons set forth below, the
Motion for Default Judgment is GRANTED.
I. 	BACKGROUND
Plaintiff alleges that when Gilberto Castillo (“Castillo”) submitted his January 15,
2020 application for a term life insurance policy (“Application”) it contained material
misrepresentations. 	(Compl. ¶¶ 7–8.) 	Specifically, his answers to questions in the
Application indicated that he had not “[r]eceived professional counseling or medical
treatment due to use of alcohol or drugs (including prescription drugs) … [and had not]
[u]sed illegal or illegally obtained drugs (including prescription drugs)” in the past ten
years. 	(Compl. 	¶¶ 7–8.) 	The 	Complaint 	summarizes 	the 	Application’s 	provisions
regarding: Castillo’s assurances of truth and completeness of the information submitted;
Castillo’s obligation to notify Plaintiff of any “false, incorrect, or incomplete” information
in the Application; “and that coverage under the policy may be rendered void if Castillo
died within two years from the issue date of the policy and [Plaintiff] determined that any
information in the Application was false, incomplete, or incorrect.” 	(Id. ¶¶ 9, 14.) 	The
Application was signed by Castillo, and Castillo never advised Plaintiff “that any
information in the Application was false, incorrect, or incomplete.” (Id. ¶ 11.)
Plaintiff issued a term life insurance policy for $614,000 on February 2, 2020 (“the
Policy”) that designated Defendants as equal primary co-beneficiaries under the Policy.
(Id. ¶ 16.) 	Following Castillo’s death on March 28, 2021 (id. ¶ 15) both Defendants
submitted claims for the Policy’s death benefit (id. ¶ 17). 	“Because [Castillo’s] death
occurred 	during 	the 	Policy’s 	contestability 	period, 	[Plaintiff] 	conducted 	a 	routine
contestable claim investigation,” including review of Castillo’s medical records. (Id. ¶ 18.)
Those records showed “that during an August 30, 2018 visit, Castillo reported having used
meth for two consecutive months, [and] during an October 16, 2018 visit, Castillo reported
daily cocaine use for over one year.” (Id.) Castillo was diagnosed with cocaine abuse and
cocaine-induced anxiety disorder during [the October 16, 2018] visit and requested a
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referral for drug rehabilitation.” (Id.) Pursuant to its underwriting guidelines, [Plaintiff]
would not have issued any life insurance coverage to Castillo if it had known about his true
history of drug use and related counseling and treatment.” (Id. ¶ 19.)
Plaintiff “advised Defendants in writing that it was denying their claims and
rescinding the Policy due to material misrepresentations/omissions in the Application, and
refunded the premiums paid for the Policy.” (Id. ¶ 20.) Defendants then notified Plaintiff
that they contend the rescission was invalid, the Policy is in effect, and that the Policy
benefit must be paid. (Id. ¶ 21.) This action, seeking a declaration from the Court that the
Policy is rescinded because of Castillo’s misrepresentations, followed. (Compl., Prayer at
A–B.)
On December 10, 2024, Plaintiff filed proofs of service showing the Complaint was
served on each Defendant. 	(Docs. 5–6.) 	And, as noted above, on January 31, 2025,
Plaintiff requested the Clerk enter each Defendant’s default (Docs. 7–8), and the Clerk
entered default as to each Defendant on February 3, 2025 (Docs. 9–10). Plaintiff has now
filed the Motion seeking entry of default judgment. (Doc. 11.)
II. 	LEGAL STANDARD
When, as here, the Clerk has entered default under Federal Rule of Civil Procedure
55(a) (Docs. 7–8), default judgment may be entered by the Court under Rule 55(b)(2).
“[T]he decision to enter a default judgment is discretionary.” Alan Neuman Prods., Inc. v.
Albright, 862 F.2d 1388, 1392 (9th Cir. 1988) (citations omitted). “The general rule is that
well-pled allegations in the complaint regarding liability are deemed true” and “[t]he
district court is not required to make detailed findings of fact.” 	Fair Hous. of Marin v.
Combs, 285 F.3d 899, 906 (9th Cir. 2002) (citations omitted).
“Factors which may be considered by courts in exercising discretion as to the entry
of a default judgment include: (1) the possibility of prejudice to the plaintiff, (2) the merits
of plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) the sum of money
at stake in the action, (5) the possibility of a dispute concerning material facts, (6) whether
the default was due to excusable neglect, and (7) the strong policy underlying the Federal
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Rules of Civil Procedure favoring decisions on the merits.” 	Eitel v. McCool, 782 F.2d
1470, 1471–72 (9th Cir. 1986).
III. 	DISCUSSION
The Court finds that the Eitel factors weigh in favor of granting Plaintiff’s Motion.
A. 	Possibility of Prejudice to Plaintiff
Here, if Plaintiff’s Motion is not granted, it will be denied a resolution of its claim
that the Policy is rescinded based on Castillo’s material misrepresentations in his
Application. 	Because Defendants have chosen not to respond, Plaintiff is being denied
judicial resolution of its claims. Denial of Plaintiff’s right to judicial resolution under these
circumstances sufficiently demonstrates prejudice to Plaintiff. 	See PepsiCo, Inc. v. Cal.
Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002) (“If Plaintiffs’ motion for default
judgment is not granted, Plaintiffs will likely be without other recourse for recovery.”).
Principal Life Ins. Co. v. Hill, CASE NO. C21-1716 MJP, 2022 WL 2718087, at *2 (W.D.
Wash. July 13, 2022) (finding Defendant’s “unwillingness to participate in” a lawsuit
seeking rescission of a life insurance policy prejudiced Plaintiff because it could not
“obtain relief on its claims against Defendant without default judgment.”). 	Thus, the
potential prejudice to Plaintiff supports granting Plaintiff’s Motion.
B. 	The Merits of Plaintiff’s Claims, the Sufficiency of Plaintiff’s Complaint,
and the Possibility of a Dispute Concerning Material Facts
The second and third Eitel factors are the merits of Plaintiff’s substantive claims and
the sufficiency of the complaint. “[T]hese two factors require that a plaintiff state a claim
on which the plaintiff may recover.” 	PepsiCo, Inc., 238 F. Supp. 2d at 1175. 	(citations
omitted). In other words, “a default judgment may not be entered on a legally insufficient
claim.” Abney v. Alameida, 334 F. Supp. 2d 1221, 1235 (S.D. Cal. 2004) (citing Cripps v.
Life Ins. Co. of N. Am., 980 F.2d 1261, 1267–68 (9th Cir. 1992)).
The allegations of the Complaint, as summarized above (see Section I) and accepted
as true for purposes of this Motion, demonstrate that Plaintiff is entitled to rescission of the
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Policy.1 Fair Hous. of Marin, 285 F.3d 906 (“well-pled allegations in the complaint
regarding liability are deemed true.”) (citations omitted). 	Plaintiff asserts its rescission
claim under California Insurance Code §§ 330, 331, 359. (Compl. ¶ 24.) California law
“permits an insurer to rescind a policy when the insured has misrepresented or concealed
material information in connection with obtaining insurance.” 	TIG Ins. Co. of Mich. v.
Homestore, Inc., 137 Cal. App. 4th 749, 755–56 (2006); Cal. Civ. Code § 1689 (a party
may rescind a contract where the party’s consent thereto was obtained through fraud or
mistake); Cal. Ins. Code § 331 (entitling “injured party to rescind insurance” based on
concealment); 	Cal. 	Ins. 	Code 	§ 330 	(defining 	concealment 	as 	“neglect[ing] 	to
communicate that which a party knows and ought to communicate”); Cal. Ins. Code § 359
(allowing insurer to rescind a contract of insurance if the insured conceals material
information or makes material misrepresentations) (emphasis added).
Based on the allegations of the Complaint, Castillo’s misrepresentations in his
Application regarding his use of illegal drugs, i.e. that he had not used illegal drugs during
the specified time period when he had (Compl. ¶¶ 7–8, 18) were material because Plaintiff
asked the questions, and also because Plaintiff would not have issued the Policy had it
known Castillo was using illegal drugs (Compl. ¶ 19). 	Thompson v. Occidental Life Ins.
1 Although not addressed in the Motion, the Court notes that based on the allegations of the
Complaint, the Court has subject matter jurisdiction. See In re Tuli, 172 F.3d 707, 712 (9th
Cir. 1999) (Court must have subject matter jurisdiction to enter judgment). The Complaint
alleges jurisdiction based on diversity between Plaintiff, a citizen of Georgia and
Tennessee, and Defendants, citizens of San Diego, California. (Compl. ¶¶ 1–3 (citing 28
U.S.C. § 1332).) And Plaintiff’s allegation that the amount in controversy exceeds $75,000
also appears accurate given Plaintiff seeks to rescind a Policy with a $614,000 Policy
benefit. 	See Locher v. Thor Motor Coach, Inc., Case No.: 3:17-cv-01804-GPC-MDD,
2017 WL 6016114, at*2 (S.D. Cal. Dec. 5, 2017) (“In actions for rescission, Courts have
used the value of the object of the contract as the value of the rescission claim for the
amount-in-controversy determination.”) (collecting cases); see also Hunt v. Wash. State
Apple Advert. Comm’n, 432 U.S. 333, 347 (1977) (“In actions seeking declaratory or
injunctive relief, it is well established that the amount in controversy is measured by the
value of the object of the litigation.”).
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Co., 9 Cal. 3d 904, 916, (1973) (“The fact that the insurer has demanded answers to specific
questions in an application for insurance is in itself usually sufficient to establish
materiality as a matter of law.”); Lunardi v. Great-W. Life Assurance Co., 37 Cal. App. 4th
807, 828 (1995) (“Materiality depends on the probable and reasonable effect that truthful
disclosure would have had upon the insurer in determining the advantages of the proposed
contract.”) 	Additionally, Plaintiff sufficiently alleges compliance with the procedural
requirements for rescission because it gave notice and returned the premiums paid for the
Policy (Compl. ¶ 20). 	Cal. Civ. Code § 1691 (rescission requires notice of the intent to
rescind and return of the value received under the contract).
The fifth factor, the possibility of a dispute concerning material facts, also weighs in
favor of default judgment. Because the allegations of the Complaint are based on Castillo’s
answers in his Application and medical records showing those answers were false, a
dispute as to material facts is unlikely.
Accordingly, the second, third, and fifth factors weigh in favor of default judgment.
C. 	The Sum of Money at Stake
“The fourth Eitel factor examines the amount of money at stake in relation to the
seriousness of a defendant’s conduct.” 	Craigslist, Inc. v. Naturemarket, 694 F. Supp. 2d
1039, 1060 (N.D. Cal. 2010) (citing Eitel, 782 F.2d at 1471) (awarding Plaintiff $470,000
in statutory damages, $840,000 in liquidated damages, $65,038.20 in attorney’s fees, and
$1,712.07 in costs). While the Court is not awarding any sum of money to Plaintiff because
Plaintiff seeks only a finding regarding the rescission of the Policy, the $614,000 Policy
benefit will not have to be paid if the Policy is rescinded. However, even if the Court treats
this sum of money as being at stake, the sum does not dissuade the Court from entering
default judgment for Plaintiff. This factor also weighs in favor of default judgment.
D. 	Whether the Default was Due to Excusable Neglect
“The sixth Eitel factor examines whether any interested party’s failure to respond to
Plaintiff’s allegations was the result of excusable neglect.” KKMI Sausalito, LLC v. Vessel
“Self Inflicted”, 428 F. Supp. 3d 200, 208 (N.D. Cal. 2019) (citing Eitel, 782 F.2d at 1471–
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72). 	Here, Defendants were served with the Complaint (Docs 5–6), and there is no
evidence of or indication of any excusable neglect justifying the lack of any response by
either Defendant. Therefore, this factor weighs in favor of granting Plaintiff’s Motion.
E. 	The Strong Policy Favoring Decisions on the Merits
“Generally, default judgments are disfavored, and a case should be decided on the
merits whenever possible, [but] where a defendant’s failure to appear makes a decision on
the merits impracticable, if not impossible, entry of default judgment is warranted.”
Craigslist, Inc. v. Naturemarket, 694 F. Supp. 2d at 1061 (internal citations and quotations
omitted). 	Here, because Defendants have failed to appear, a decision on the merits is
impossible. Accordingly, this factor also weighs in favor of granting Plaintiff’s Motion.
IV. 	CONCLUSION
Based on the foregoing, the Court finds entry of default judgment is proper and
GRANTS Plaintiff’s Motion for Default Judgment. 	(Doc. 11.) 	The Clerk shall enter
judgment in favor of Plaintiff and against Defendants. 	The Policy (No. 0491628046) is
rescinded, void ab initio, and of no legal force or effect.
IT IS SO ORDERED.
Dated: March 2, 2026
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