Cramer v. Standard Life Insurance Company of America

• Court: District Court, S.D. California
• Decided: May 28, 2025
• Docket: 3:25-cv-00384
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 JANICE CRAMER, an individual, Case No.: 3:25-cv-00384-GPC-DEB

12 Plaintiff, ORDER DENYING DEFENDANT 13 v. POINT LOMA NAZARENE UNIVERSITY’S MOTION TO 14 STANDARD LIFE INSURANCE CO. DISMISS OF AMERICA; POINT LOMA 15 NAZARENE UNIVERSITY, [ECF No. 8] 16 Defendants. 17

19 Plaintiff has filed a complaint alleging a fiduciary breach cause of action under 20 ERISA, claiming that Defendants Point Loma Nazarene University and Standard Life 21 Insurance Company of America violated their duties as fiduciaries towards her late 22 husband and herself. Based on the complaint, the briefing, and for the following reasons, 23 the Court DENIES Defendant Point Loma Nazarene University’s motion to dismiss. 24 FACTUAL BACKGROUND 25 Plaintiff Janice Cramer’s late husband, Andrew Cramer, was an employee of 26 Defendant Point Loma Nazarene University (“PLNU”) starting in August 2021. ECF No. 27 1 1 (“Compl.”) ¶ 9. At an unstated date between August 2022 and January 2023, Mr. 2 Cramer’s employment ended, and Mr. Cramer passed away in January 2023. Id. ¶¶ 12- 3 13. 4 In January 2022, while employed with PLNU, Mr. Cramer elected to become 5 insured under a group life insurance policy (“the Plan”), with the group number 503121- 6 X, issued by Standard Insurance Company (“Standard”) to PLNU employees. Id. ¶¶ 4, 7 11. The policy is regulated by ERISA. Id. ¶ 3. The complaint alleges that at all times 8 between January 2022 and the onset of his medical leave in August 2022 and subsequent 9 termination of his employment, PLNU paid to Standard all premiums necessary to 10 maintain Mr. Cramer’s basic life insurance coverage, and Mr. Cramer paid to Standard all 11 premiums necessary to maintain his supplemental life insurance under the Plan. Id. ¶ 11. 12 Mr. Cramer did not convert his group life insurance coverage to an individual policy and 13 thus did not maintain coverage after his employment ended, meaning he had no coverage 14 when he passed away. Id. ¶¶ 14-15. 15 In January 2023, shortly after Mr. Cramer’s passing, Plaintiff emailed Samara 16 Timms, Defendant PLNU’s Chief Human Resources Officer, asking if she was eligible to 17 receive any benefits based on Mr. Cramer’s employment. ECF No. 1-3 at 2. Another 18 PLNU representative from the Human Resources Office responded, stating that she was 19 “not aware of any benefits at this time,” but that Samara Timms would respond when she 20 was back in the office. ECF No. 1-3 at 3. Plaintiff again emailed Timms in November 21 2024, saying that she “recently found PLNU papers mentioning life insurance that [her] 22 late husband, Andrew Cramer, would have had as a benefit,” and that she wanted a copy 23 of the group life insurance policy. ECF No.1-4 at 2. Timms responded to Plaintiff, 24 stating that the policy was only in place for while Mr. Cramer was working at PLNU, and 25 that the records showed he passed away after his employment ended. Id. Timms emailed 26 Plaintiff a copy of the policy on November 6, 2024, and on November 22, 2024, Plaintiff 27 1 emailed Mrs. Timms expressing her intent to pursue a legal claim against Defendant 2 PLNU. ECF No. 1-4 at 3-4. Plaintiff did not make an administrative claim for life 3 insurance benefits before filing the present suit. See generally Compl. 4 Plaintiff alleges that PLNU breached its fiduciary duties to Mr. Cramer by failing 5 to provide him notice of conversion rights or offer waiver of life insurance premiums. 6 ECF No. 1 ¶ 25. She alleges a claim for breach of fiduciary duty pursuant to 29 U.S.C. § 7 1104(a), an ERISA statutory provision, and seeks legal and equitable relief under 29 8 U.S.C. §1132(a). Id. ¶ 26-30. 9 PROCEDURAL HISTORY 10 On February 21, 2025, Plaintiff filed this instant action against Defendants PLNU 11 and Standard Life Insurance Company of America (“Standard”). ECF No. 1 12 (“Complaint” or “Compl.”). On April 14, 2025, Defendant PLNU filed a motion to 13 dismiss. ECF No. 8 (“Motion” or “Mot.”). On April 14, 2025, Standard filed its Answer 14 to the Complaint. ECF No. 9. On April 23, 2025, Plaintiff filed an opposition to 15 Defendant’s motion to dismiss. ECF No. 12 (“Opposition” or “Opp.”). On May 2, 2025, 16 Standard filed its notice of non-opposition to Defendant PLNU’s motion to dismiss. ECF 17 No. 15. On May 9, 2025, Defendant PLNU filed a reply to Plaintiff’s opposition. ECF 18 No. 16 (“Reply”). 19 LEGAL STANDARD 20 A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint and 21 whether it has “state[d] a claim upon which relief can be granted.” Fed. R. Civ. P. 22 12(b)(6). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a 23 cognizable legal theory or sufficient facts to support a cognizable legal theory. See 24 Balistreri v. Pacifica Police Dep’t., 901 F.2d 696, 699 (9th Cir. 1990); Robertson v. Dean 25 Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984). 26 27 1 A complaint may survive a motion to dismiss only if, taking all well-pleaded 2 factual allegations as true, it contains factual matter that “state a claim to relief that is 3 plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. 4 Corp. v. Twombly, 550 U.S. 544, 555 (2007)). A claim is facially plausible when the 5 factual allegations allow “the court to draw the reasonable inference that the defendant is 6 liable for the misconduct alleged.” Id. 7 Where a motion to dismiss is granted, “leave to amend should be granted ‘unless 8 the court determines that the allegation of other facts consistent with the challenged 9 pleading could not possibly cure the deficiency.’” DeSoto v. Yellow Freight Sys., Inc., 10 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture 11 Co., 806 F.2d 1393, 1401 (9th Cir. 1986)). 12 REQUEST FOR JUDICIAL NOTICE 13 PLNU seeks judicial notice of two exhibits: a copy of Standard Insurance 14 Company’s group life insurance policy, policy number 503121-X (Ex. A) and a copy of 15 the “Summary Plan Description,” which describes PLNU’s employee benefit plan (Ex. 16 B). ECF No. 8-2, Request for Judicial Notice (“RJN”). 17 Generally, on a motion to dismiss, courts will limit their review to the contents of 18 the complaint and may only consider extrinsic evidence that is properly presented as part 19 of the complaint. See Lee v. City of L.A., 250 F.3d 668, 688-89 (9th Cir. 2001). However, 20 under Federal Rule of Evidence 201, a district court may take notice of facts not subject 21 to reasonable dispute that are capable of accurate and ready determination by resort to 22 sources whose accuracy cannot reasonably be questioned. Fed. R. Evid. 201(b). 23 All exhibits are relevant to the instant case and their accuracy is not questioned, so 24 the Court may take judicial notice of them “without converting a motion to dismiss into a 25 motion for summary judgment.” Lee, 250 F.3d at 689 (quotations and citations omitted). 26 Furthermore, Plaintiff references the insurance policy (Ex. A) in her Complaint, Compl. 27 1 ¶¶ 3,4, and also the “welfare benefit plan,” which is described in the Summary Plan 2 Description (Ex. B), id. ¶ 3. The terms of the insurance policy are not in dispute by the 3 parties. See generally Compl. The Court therefore takes judicial notice of the insurance 4 policy and the Summary Plan Description. 5 DISCUSSION 6 PLNU argues in its Motion that Cramer’s complaint fails “because she seeks 7 remedies under an ERISA life insurance plan but has not exhausted the plan’s internal 8 administrative remedies.” Mot. at 2. However, the requirement of administrative 9 exhaustion does not apply to Plaintiff’s breach of fiduciary claim and the Court therefore 10 DENIES the motion to dismiss. 11 I. Exhaustion of administrative remedies 12 Under ERISA Section 502(a)(1)(B), a participant or beneficiary may bring a claim 13 “to recover benefits due to him under the terms of his plan, to enforce his rights under the 14 terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” 29 15 U.S.C. § 1132(a)(1)(B). In other words, a benefits claim. Under Section 502(a)(3), a 16 participant or beneficiary may bring a claim “(A) to enjoin any act or practice which 17 violates any provision of this subchapter or the terms of the plan, or (B) to obtain other 18 appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions 19 of this subchapter or the terms of the plan.” 29 U.S.C. § 1132(a)(3). These claims sound 20 in breach of fiduciary duty. 21 To pursue a benefits claim, “[a]s a general rule, an ERISA claimant must exhaust 22 available administrative remedies before bringing a claim in federal court.” Barboza v. 23 Cal. Ass’n of Pro. Firefighters, 651 F.3d 1073, 1076 (9th Cir. 2011). This is not explicitly 24 stated in the statute, but has been understood as arising out of ERISA’s structure and 25 purpose. See 29 U.S.C. § 1133 (ERISA-governed employee benefit plans must establish 26 and maintain procedures for resolving disputes involving a participant's benefits under 27 1 the plan). This exhaustion requirement “serves several important policy considerations, 2 including the reduction of frivolous litigation, the promotion of consistent treatment of 3 claims, the provision of a nonadversarial method of claims settlement, the minimization 4 of costs of claim settlement and a proper reliance on administrative expertise.” Diaz v. 5 United Agr. Emp. Welfare Ben. Plan & Tr., 50 F.3d 1478, 1483 (9th Cir. 1995). Thus, a 6 claimant must first “avail himself or herself of a plan’s own internal review procedures 7 before bringing suit in federal court.” Id. 8 It is true, as PLNU points out, that Plaintiff did not allege anywhere in the 9 Complaint that she made, or attempted to make, a claim to Standard. See generally 10 Compl. Neither do her conversations with PLNU Chief Human Resources Officer 11 Samara Timms constitute a constructive claim for benefits. See id. ECF No.1-3. 12 Consequently, under the administrative exhaustion requirement, Plaintiff would be barred 13 from pursuing a § 1132(a)(1)(B) benefits claim in federal court. Diaz, 50 F.3d at 1483. 14 However, Plaintiff claims to bring a breach of fiduciary duty claim against PLNU, 15 Compl. ¶¶ 23, 25, and apparently does so under § 1132(a)(3), see id. ¶ 28 (“Plaintiff is 16 entitled to relief pursuant to 29 U.S.C § 1132(a)”); Reply at 2 (Plaintiff’s statutory claim 17 “would be based on 29 U.S.C. section 1132(a)(3)”). The exhaustion requirement applies 18 to benefits claims, but not to fiduciary breach claims, because the latter allege a violation 19 of ERISA, rather than a violation of a retirement plan. Horan v. Kaiser Steel Ret. Plan, 20 947 F.2d 1412, 1416 n.1. (9th Cir. 1991), overruled on other grounds as recognized by 21 Pac. Shores Hosp. v. United Behav. Health, 764 F.3d 1030, 1041 (9th Cir. 2014); accord 22 Fujikawa v. Gushiken, 823 F.2d 1341, 1345 (9th Cir. 1987) (no exhaustion requirement 23 for plaintiffs “suing for violation of an ERISA statutory provision”). 24 In her complaint, Plaintiff makes a single claim of a breach of fiduciary duty: “It 25 was the Fiduciary Duty of Nazarene University, and/or Standard Insurance Company, to 26 affirmatively provide Mr. Cramer with full and complete information as to his right to 27 1 convert his life insurance coverages.” Compl. ¶ 14. Plaintiff alleges that Defendants owed 2 Mr. Cramer and Plaintiff the duties prescribed under ERISA, including those in 29 U.S.C. 3 § 1104(a), and that Defendants failed to discharge their duties “with the care, skill, 4 prudence, and diligence under the circumstances then prevailing that a prudent fiduciary 5 acting in a like capacity and familiar with such matters would use…” Compl. ¶ 26. 6 Specifically, Plaintiff alleges that Defendants breached their fiduciary duty by 7 failing to provide timely notice to Mr. Cramer of his right to convert following 8 termination of coverage; failing to pay life insurance benefits despite accepting premiums 9 up until Mr. Cramer’s death; and failing to provide Mr. Cramer or Plaintiff with 10 conversion or portability rights under the Plan. Compl. ¶ 25. 11 The first and third theories of breach are clearly allegations that fiduciary duty was 12 breached. No administrative exhaustion is required for those. However, the second theory 13 – that Defendant failed to pay life insurance benefits despite accepting premiums up until 14 Mr. Cramer’s death – appears more to be a disguised benefits claim.1 PLNU argues that 15 Plaintiff has “merely disguise[d] a benefits claim as a fiduciary breach” because “the 16 gravamen” of her “sole cause of action is her claim for life insurance benefits.” Mot. at 2- 17 3. It is true that Plaintiff’s sought-out relief is in the form of the benefit payment that she 18 alleges she should have received pursuant to her husband’s policy. Compl. ¶ 25(b) 19 (alleging fiduciary breach by “failing to pay life insurance benefits”); id. ¶ 27 (claiming 20 damages “for loss of life insurance benefits”); id. ¶ at 10 (seeking “payment of the life 21 22

23 24 1 This is apparently in contradiction with the Complaint itself, see Compl. ¶ 11 (stating that premiums were paid until the onset of Mr. Cramer’s medical leave and subsequent 25 termination, not his death), and directly in contradiction with the Plan, which states that 26 life insurance ends “automatically” on the date of termination of employment, see Ex. A at 18. 27 1 insurance benefits due to Plaintiff… or… surcharge in the amount equal to the life 2 insurance benefits under the Plan”). 3 But this is not fatal to Plaintiff’s claim. Plaintiff can seek equitable relief under ¶ 4 1132(a)(3) in the form of surcharge. Castillo, 970 F.3d at 1229. Surcharge is “monetary 5 ‘compensation’ for a loss resulting from a trustee’s breach of duty, or to prevent the 6 trustee’s unjust enrichment.” CIGNA Corp. v. Amara, 563 U.S. 421, 442 (2011). The 7 Supreme Court in Amara held that surcharge, which could be a “make-whole relief,” 8 would be “appropriate equitable relief” against a fiduciary under § 1132(a)(3). Id.; see 9 Ehrlich v. Hartford Life & Accident Ins. Co., 2021 WL 4472845, at *4 (N.D. Cal. May 7, 10 2021) (“the fact that Plaintiff seeks a monetary form of equitable relief does not 11 invalidate his Section 502(a)(3) claim”). Thus, even if Plaintiff is seeking to be made 12 whole here, in the form of a monetary sum equal to the benefits she would have received, 13 this does not automatically convert her fiduciary breach claim into a benefits claim. 14 Additionally, the fact that she seeks individualized relief is also not fatal. Section 15 1132(a)(3) “authorize[s] ERISA plan beneficiaries to bring a lawsuit… that seeks relief 16 for individual beneficiaries harmed by an administrator’s breach of fiduciary obligation.” 17 Castillo v. Metro. Life Ins. Co., 970 F.3d 1224, 1229 (9th Cir. 2020) (citing Varity Corp. 18 v. Howe, 516 U.S. 489, 492 (1996)) (emphasis added). While the Ninth Circuit in Horan 19 declared that “[a]n individual beneficiary may bring a fiduciary breach claim, but must do 20 so for the benefit of the plan,” 947 F.2d at 1417, the Supreme Court in Varity Corp. made 21 clear that § 1132(a)(3) is “broad enough to cover individual relief for breach of a 22 fiduciary obligation,” 516 U.S. at 510. The Ninth Circuit in Horan cited Mass. Mutual 23 Life Ins. v. Russell, 473 U.S. 134, 144 (1985) for its analysis; the Supreme Court in Varity 24 Corp. “reexamined” Russell and held that it did not apply to the § 1132(a)(3) claim 25 before it because Russell discussed a different provision, § 1132(a)(2). 516 U.S. at 509- 26 10. 27 1 The cases cited by PLNU do not offer much support for its claim that Plaintiff is 2 proceeding on a disguised benefits claim. All three of the cases deal with plaintiffs 3 bringing both a benefits claim and a fiduciary claim. See Ehrlich, 2021 WL 4472845, at 4 *4 (“the surcharge remedy sought by Plaintiff here is necessarily duplicative of his 5 remedy under Section 502(a)(1)(B)”); Biggar v. Prudential Ins. Co. of Am., 274 F. Supp. 6 3d 954, 971 (N.D. Cal. 2017) (“Biggar’s section 1132(a)(3) claim duplicates his benefits 7 claim under section 1132(a)(1)(B)”); Western v. Unum Life Ins. Co. of Am., 2018 WL 8 6071090, at *14 (C.D. Cal. July 3, 2018) (“Plaintiff's claim for breach of fiduciary duty is 9 virtually identical to his Section 502(a)(1)(B) claim”). These cases rest on the duplicative 10 nature of bringing both claims when a remedy was available through the benefit claim 11 under § 1131(a)(1)(B). See Ehrlich, 2021 WL 4472845, at *3 (“a claimant may not bring 12 a claim for denial of benefits under [Section 502](a)(3) when a claim under [Section 13 502](a)(1)(B) will afford adequate relief”) (citing Castillo, 970 F.3d at 1229). 14 Here, Plaintiff does not bring a § 1132(a)(1)(B) claim, precisely because it does not 15 provide any adequate relief for her. That avenue is wholly closed off to her because she is 16 not part of any plan that she can recover benefits from or enforce rights under. See Varity 17 Corp., 516 U.S. at 15 (“plaintiffs in this case could not proceed” under section 18 1132(a)(1)(B) because “they had no benefits due them under the terms of the plan”) 19 (cleaned up). She must rely on § 1132(a)(3) because otherwise she would “have no 20 remedy at all.” Id. As such, there is no duplicative claim being made here. 21 Regardless, given that Plaintiff has put forth two viable theories of breach, the 22 Court finds that Plaintiff has pled enough to allege a breach of fiduciary duty that is 23 plausible on its face. 24 Finally, PLNU attempts to bring in novel arguments in its Reply, namely that there 25 was no existing fiduciary duty that PLNU breached, and that Plaintiff failed to plead that 26 the alleged breach was the “but for” cause of Mr. Cramer not signing up for life 27 1 ||insurance. Reply at 7-9. However, “[t]e district court need not consider arguments raised 2 || for the first time in a reply brief.” Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir. 2007). 3 || The Court does not consider these new arguments which Plaintiff has not had an 4 || opportunity to address. 5 CONCLUSION 6 For the foregoing reasons, the Court DENIES the Defendant’s motion to dismiss 7 || the complaint. 8 9 IT IS SO ORDERED. 10 11 Dated: May 27, 2025 12 Hon. athe Cae 13 United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 10 28 3:25-cv-00384-GPC-DEB