Colorescience, Inc. v. Bouche

District Court, S.D. California·Decided April 9, 2020·No. 3:20-cv-00595·Unknown

Opinion

COLORESCIENCE, INC, Case No.: 20cv595-GPC(AGS)

Plaintiff, ORDER DENYING PLAINTIFF’S v. MOTION FOR TEMPORARY RESTRAINING ORDER

NIELSEN, and THE NIELSEN LAW [Dkt. No. 2.] FIRM, P.C., Defendants.

Before the Court is Plaintiff’s motion for temporary restraining order. (Dkt. No. 2.) Defendants filed a response on April 2, 2020.1 (Dkt. No. 9.) Plaintiff filed a reply on April 6, 2020. (Dkt. No. 14.) A telephonic hearing was held on April 8, 2020. (Dkt. No. 16.) Deanna Lucci, Esq., James Brown, Esq, and Andrew Gordon, Esq. appeared on behalf of Plaintiff and Eric Nielsen, Esq. and Tiffany Chung, Esq. appeared on behalf of Defendants. (Id.) 1 Defendants assert they reserve the “right to contest this Court’s subject matter jurisdiction, personal jurisdiction, and to plead without waiver all other matters that will shortly be set forth in Defendants’ Based on the reasoning below, the Court DENIES Plaintiff’s motion for temporary restraining order. Factual Background Plaintiff Colorescience (“Plaintiff”) is a small corporation, located in San Diego, that develops, markets, and sells skin care products. (Dkt. No. 1, Comp. ¶¶ 1, 8.) It provides medical, dental, vision, and prescription drug benefits to employees and their dependents and these benefits are self-insured by Plaintiff. (Id. ¶ 9.) Plaintiff is the Plan Administrator of the Colorescience Welfare Benefit Plan (“Plan”). (Id. at p. 2.) The Plan is an ERISA-covered welfare benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1002(2)(A), and Plaintiff is a “fiduciary” and “administrator” as defined under ERISA, 29 U.S.C. §§ 1002(16) and (21). (Id. ¶ 1.) Defendant Stephen Bouche (“Stephen”) is the son of Deborah Bouche (“Deborah”), who is an employee of Colorescience. (Id. ¶ 11.) Effective January 1, 2018, Stephen was enrolled for coverage under the Plan as Deborah’s dependent and became a Plan Participant under the Plan. (Id.) The Plan defines Plan Participants to mean employees or their dependents. (Id. ¶ 10.) According to Plaintiff, around February 25, 2014, Stephen Bouche was injured in an accident which occurred in Houston, Texas on the premises of Quantum Hospitality, LLP (“Quantum Hospitality”). (Id. ¶ 12.) On August 5, 2015, Stephen Bouche filed a civil action in the District Court of Harris County, Texas (“Harris County Tort Action”) against Quantum Hospitality for negligence that caused the alleged injuries sustained by him in the February 25, 2014 accident. (Id. ¶ 13.) Defendant Eric Nielsen, (“Mr. Nielsen”) of the Defendant Nielsen Law Firm is counsel of record for Stephen in the Harris County Tort Action. (Id. ¶ 14.) Around February 2018, Bouche had back surgery to address the injuries he suffered as a result of his accident on February 25, 2014. (Id. ¶ 15.) The Plan paid $477,093.98 to the medical providers and professionals who performed the back surgery. (Id. ¶ 16.) Under the terms of the Plan, Plaintiff claims it is entitled to a subrogation lien to recover 100% of the benefits paid when a recovery through settlement, judgment, award or other payment is received by Plan Participant. (Id. ¶¶ 17-19.) On April 19, 2019, Plaintiff’s counsel sent a letter to Mr. Nielsen along with a copy of the Plan notifying him of the subrogation lien arising under the terms of the Plan, Plaintiff’s intent to exercise such lien, its right to an equitable lien on any benefits received by Mr. Bouche in the Harris County action and the right to be reimbursed for the medical benefits. (Id. ¶ 20; id., Ex. B.) In May, 2019, Plaintiff filed a petition to intervene in the Harris County state action “(a) in order to provide notice to the parties of the provisions of the Plan . . . and of the existence of its potential subrogation and equitable lien and right to reimbursement of medical expenses paid to or on behalf of Stephen Bouche and (b) to enable it to monitor the Harris County Tort Action so it would have prompt access to information concerning any recovery by Mr. Bouche in that action by way of settlement or otherwise.” (Id. ¶ 21.) Trial in the Harris County Tort Action was scheduled to commence in late February 2020 but on February 26, 2020, Plaintiff’s counsel learned that a settlement of the Harris County state action had been reached. (Id. ¶ 22.) On February 27, 2020, Plaintiff’s counsel wrote a letter to Mr. Nielsen and “requested additional details concerning the settlement, reminded Mr. Nielsen of the Plan’s subrogation lien, and demanded repayment by Mr. Bouche of the $477,093.98 in medical benefits which had been paid by the Plan.” (Id. ¶ 23.) In response, Mr. Nielson, requested Plaintiff’s counsel to provide documents confirming the $477,093.98 medical benefits paid by the Plan.” (Id.) On March 3, 2020, Plaintiff’s counsel provided Mr. Nielsen with documents confirming the $477,093.98 medical benefits paid by the Plan. (Id. ¶ 24; id., Ex. D.) On March 23, 2020, a telephone conversation took place between Mr. Nielsen and Plaintiff’s counsel where Plaintiff’s counsel learned that the amount of the settlement in the Harris County Tort Action was $2 million and it was Mr. Nielson’s position that Plaintiff did not have an enforceable subrogation lien and/or that it had waived that lien. (Id. ¶¶ 25-26.) In response, Defendants present the following facts in dispute. Stephen Bouche declares that he was born on July 30, 1987 and was more than 26 years old when he had his slip and fall accident in Houston, Texas on February 25, 2014. (Dkt. No. 9-3, Stephen Bouche Decl.) He also claims he was never a Plan Participant even prior to the age of 26. (Id.) Deborah state that she is Stephen’s mother and he was mentally and physically capable of sustaining his own living before and after the age of 26 and has never represented anything otherwise to Plaintiff. (Dkt. No. 9-5, Deborah Bouche Decl.) Mr. Nielsen states that when Plaintiff filed its First Amended Intervention in the Harris County Tort Action on May 29, 2019, it knew trial was set for February 25, 2020. (Dkt. No. 9-4, Nielsen Decl.) Trial began on February 25, 2020 and Stephen Bouche and Quantum Hospitality announced ready. (Id.) Plaintiff failed to appear at trial or announce ready. (Id.) During voir dire, the Harris County Tort Action settled. (Id.) A final judgment will be entered dismissing Stephen Bouche’s claims and Quantum Hospitality’s counterclaims and dismissing Colorescience’s intervention for want of prosecution. (Id.) Stephen Bouche was involved in a severe car crash in October 2014, 8 months after the slip and fall in February 2014 which caused new low back injuries. (Id.) Based on the testimony of Stephen’s treatment physicians and the medical specialists hired by Quantum Hospitality in the Harris County Tort Action, the medical expenses in 2018 is not causally related to the slip and fall on February 25, 2014. (Id.) Finally, under the terms of the settlement in the Harris County Tort Action, Defendants are contractually obligated to hold the amount of Plaintiff’s claim in trust until the entitlement to the funds is resolved by settlement or final judgment. (Id.; Dkt. No. 9-2, Nielsen Decl., Ex. B.) In reply, Plaintiff disputes Defendants’ facts stating that Deborah enrolled Stephen as a Dependent during the open enrollment period in December 2017 and was a participant as of January 1, 2018. (Dkt. No. 14-1, Plummer Decl. ¶ 2.) Moreover, Mr. Nielsen asserted Stephen was eligible for enrollment and coverage as an incapacitated Defendant. (Id. ¶ 6.) Plaintiff argues that the record in the Harris County Tort Action shows that Stephen did not suffer a car crash in October 2014, and that if a car crash occurred, it was prior to his slip and fall in February 2014. Finally, the st

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