On March 6, 2024, in an 11-page order, the Honorable Jesus G. Bernal granted partial summary judgment in favor of McKennon Law Group PC’s client, Diane Le, ruling that American General Life Insurance Company (“AIG”) could not recover over $1 million it claimed it had mistakenly paid Ms. Le. The court granted McKennon Law Group PC’s partial motion for summary judgment based on the voluntary payment doctrine, permitting Ms. Le to retain over $1 million in life insurance benefits AIG recklessly paid her in error.

AIG paid Ms. Le the proceeds from another person’s $1 million life insurance policy and then filed an aggressive complaint against her to recover the money, even though Ms. Le had accurately submitted all requested information from AIG, and had quit her job and spent a substantial portion of the money by the time she was served.

As we discovered in the ensuing litigation, the correct beneficiary shared the same first and last name and date of birth as Ms. Le’s late husband. However, nothing else matched – the Social Security numbers for the correct policyholder and beneficiary were different from Ms. Le and her late husband; Ms. Le had different first and middle names from the correct beneficiary; the correct policy holder had a different middle name from Ms. Le’s late husband; the contact information on file was in a state where Ms. Le and her husband had never lived; and Ms. Le’s date of birth was different from the correct beneficiary’s date of birth. During the claim review process, Ms. Le even asked for a copy of the policy – which would have informed her that she was not, in fact, the correct beneficiary – but AIG refused to provide it to her.

After filing counterclaims for Ms. Le’s 18-plus months of lost wages and significant emotional damages, we ultimately moved for partial summary judgment seeking a ruling that Ms. Le was entitled to retain the $1 million she was paid under the voluntary payment doctrine defense.

The voluntary payment doctrine is an affirmative defense that bars a plaintiff from bringing an action to recover funds mistakenly paid if the payment was “voluntarily made with knowledge of the facts.” Here, AIG had knowledge of all of the relevant facts, as Ms. Le readily and accurately supplied all requested information. Moreover, the AIG claims representative who was primarily responsible for the egregious error honestly admitted (to her credit) that she did, in fact, review a number of claims documents whereby she should have been able to discover that Ms. Le was not the true beneficiary, but she failed to notice a number of significant discrepancies that should have made it clear to her that she was not the correct beneficiary.

The judge granted partial summary judgment in Ms. Le’s favor, affirming that AIG’s payment to Ms. Le was made with no “mistake of fact,” thereby absolving her of any liability to return the funds.

This is a case of first impression in California, as most insurance companies unsurprisingly have safeguards in place to prevent reckless conduct like that which occurred here. Significantly, the court cited the voluntary payment doctrine cases from the Seventh Circuit Court of Appeals that we cited in our pleadings with approval, making it easier for future litigants in California to prevail under similar circumstances.

Ms. Le is now able to keep the money she was recklessly paid by AIG, for which she is extremely grateful to McKennon Law Group PC.