Old Dominion Freight Line Incorporated v. Bowman

• Court: District Court, D. Arizona
• Decided: August 3, 2021
• Docket: 2:20-cv-01292
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Old Dominion Freight Line Incorporated, et No. CV-20-01292-PHX-DLR al., 10 ORDER Plaintiffs, 11 v. 12 Kale Bowman, 13 Defendant. 14

16 Before the Court are the parties’ cross motions for summary judgment1 on all claims 17 and counterclaims, which are fully briefed. (Docs. 16, 21, 35, 38-43.) For the following 18 reasons, summary judgment is granted to Plaintiffs and denied to Defendant.2 19 I. Background 20 This case arises under the Employment Retirement Income Security Act of 1974 21 (“ERISA”), 29 U.S.C. § 1001 et seq. At all relevant times, Defendant was an enrolled 22 dependent and covered person of Plaintiffs’ employee welfare benefit plan (the “Plan”). 23 On December 8, 2017, Defendant was injured in a motorcycle accident (the “Accident”). 24 (Doc. 1 at 3.) The Plan paid $137,175.99 of Defendant’s resulting medical expenses. On 25

26 1 The Court construes Plaintiffs’ motion to dismiss Defendant’s counterclaim as a motion for summary judgment pursuant to its October 13, 2020 order. (Doc. 28.) 27 2 The parties’ requests for oral argument are denied because the issues are adequately briefed and oral argument will not help the Court resolve the motion. See Fed. 28 R. Civ. P. 78(b); LRCiv. 7.2(f); Lake at Las Vegas Investors Grp., Inc. v. Pac. Malibu Dev., 933 F.2d 724, 729 (9th Cir. 1991). 1 June 6, 2018, Defendant brought a state court action against multiple third parties to 2 recover for injuries he suffered in the Accident (the “State Action”). (Id.) On March 18, 3 2020, Defendant reached at least a partial settlement in the State Action and recovered 4 $100,641.74. (Id. at 6.) Plaintiffs then brought this lawsuit under 29 U.S.C. § 1132(a)(3) to 5 enforce a reimbursement clause in the Plan’s Summary Plan Description (“SPD”). 6 Plaintiffs seek, inter alia,3 an equitable lien over Defendant’s third-party settlement funds 7 to reimburse the Plan for the medical expenses it paid on his behalf. Defendant 8 counterclaimed against Plaintiffs, alleging that they failed to furnish the required plan 9 documents and seeking statutory penalties under 29 U.S.C. § 1132(c). The parties each 10 filed motions for summary judgment on all claims and counterclaims, which are now ripe. 11 12

13 3 Precisely, in their complaint Plaintiffs request the following relief:

14 A. The imposition of a constructive trust or equitable lien by agreement in favor of the Plan upon the portion of the Third 15 Party Settlement identified herein, in the amount of $137,175.99 which includes the $101,641.74 held in the Friedl 16 Richardson trust account, the balance of $36,534.25 and assets traceable therefrom to which the Plan is entitled. 17 B. For a declaration of the Plan’s ownership of the Third Party Settlement up to the full amount of benefits paid to or on behalf 18 of Kale Bowman; C. That the settlement funds and assets traceable therefrom be 19 held in trust for the benefit of the Plan; D. For first reimbursement of not less than $137,175.99, plus 20 any additional funds expended by the Plan on behalf of Defendants out of the Third Party Settlement; 21 E. For an Order enjoining Defendants and those acting in concert with Defendants from directly or indirectly disbursing, 22 disposing or otherwise dissipating the settlement proceeds received from third parties in payment of damages sustained 23 by Kale Bowman, including the $101,641.74 held in trust and the balance of $36,534.25 and assets traceable therefrom over 24 which the Plan has an equitable lien by agreement. F. For Plaintiffs’ reasonable attorneys’ fees and costs under 25 ERISA § 502(g); G. For pre-judgment and post-judgment interest at the legal 26 rate; and H. For such other and further relief that the Court deems just 27 and proper. 28 (Doc. 1 at 10.) 1 II. Legal Standard 2 When parties submit cross-motions for summary judgment, the Court must consider 3 each motion on its own merits. Fair Hous. Council of Riverside Cty., Inc. v. Riverside 4 Two, 249 F. 3d 1132, 1136 (9th Cir. 2001). Summary judgment is appropriate when there 5 is no genuine dispute as to any material fact and, viewing those facts in a light most 6 favorable to the nonmoving party, the movant is entitled to judgment as a matter of law. 7 Fed. R. Civ. P. 56(a). A fact is material if it might affect the outcome of the case, and a 8 dispute is genuine if a reasonable jury could find for the nonmoving party based on the 9 competing evidence. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Villiarimo 10 v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002). Summary judgment may 11 also be entered “against a party who fails to make a showing sufficient to establish the 12 existence of an element essential to that party’s case, and on which that party will bear the 13 burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). 14 The party seeking summary judgment “bears the initial responsibility of informing 15 the district court of the basis for its motion, and identifying those portions of [the record] 16 which it believes demonstrate the absence of a genuine issue of material fact.” Id. at 323. 17 The burden then shifts to the non-movant to establish the existence of a genuine and 18 material factual dispute. Id. at 324. The non-movant “must do more than simply show that 19 there is some metaphysical doubt as to the material facts[,]” and instead “come forward 20 with specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. 21 Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (internal quotation and citation 22 omitted). Even where there are some factual issues raised, summary judgment is 23 appropriate if the totality of the undisputed facts is such that reasonable minds could not 24 differ on the resolution of the factual question. Chesney v. United States, 632 F. Supp. 867, 25 869 (D. Ariz. 1985). 26 III. Discussion 27 A. Defendant’s Counterclaim 28 Defendant asserts a counterclaim against Plaintiffs under 29 U.S.C. § 1132(c) 1 arising from Plaintiffs’ alleged failure to “furnish a copy of the latest updated summary, 2 plan description, and the latest annual report, any terminal report, the bargaining 3 agreement, trust agreement, contract, or other instruments under which the plan is 4 established or operated.” 29 U.S.C. § 1024(b)(4); (Doc. 12 at 19-20.) When an 5 administrator fails to “mail the material requested . . . within 30 days after such request,” 6 the plan administrator “may in the court’s discretion be personally liable to such participant 7 or beneficiary in the amount of up to $100 a day from the date of such failure or refusal.” 8 29 U.S.C. § 1132(c)(1). 9 Here, Defendant first requested a copy of the “instruments under which the [Plan] 10 is established or operated” from Plaintiffs on January 18, 2018. (Doc. 16-1 at 4.) 11 Thereafter, Plaintiffs had 30 days to provide the requested documents. See 29 U.S.C. § 12 1132(c)(1). On April 26, 2018, admittedly more than 30 days following Defendant’s initial 13 request, Linda McGovern provided Defendant’s attorney with, inter alia, the 2017 SPD, 14 which served as the governing plan document for the reasons described in subsection B 15 below. (Doc. 16-1 at 8.) 16 Although Plaintiffs did not timely provide Defendant with a copy of the 17 documentation under which the Plan operated, Defendant’s counterclaim is barred by the 18 one-year statute of limitations.4 Notably, Defendant’s cause of action for penalties, if any, 19 accrued on February 18, 2018, 30 days following his request. See Stone v. Travelers Corp., 20 58 F.3d 434, 439 (9th Cir. 1995) (a claim under 29 U.S.C. § 1132(c) accrues on the date of 21 the “earliest alleged refusal to provide the requested information”). Thus, Defendant was 22 required to file his claim no later than February 18, 2019. Defendant’s August 19, 2020 23 filing is therefore time-barred. The Court will grant summary judgment to Plaintiffs on 24 Defendant’s counterclaim. 25 4 The Ninth Circuit explained that 29 U.S.C. § 1132(c) provides a “remedy sought 26 by an individual as compensation to address a private wrong” and therefore does not provide for a penalty or forfeiture. Stone v. Travelers Corp., 58 F.3d 434, 439 (9th Cir. 27 1995). Therefore, the Ninth Circuit has applied the relevant statute of limitations for actions “upon a liability created by statute, other than a penalty or forfeiture.” Id. In 28 Arizona, the statute of limitations for an action “[u]pon a liability created by statute, other than a penalty or forfeiture” is one year. A.R.S. § 12-541(5). 1 B. Plaintiffs’ Claim for Equitable Relief Under 29 U.S.C. § 1132(a)(3) 2 An ERISA plan fiduciary may bring a civil action to obtain “appropriate equitable 3 relief” to enforce plan terms. 29 U.S.C. § 1132(a)(3). Such relief may include an equitable 4 lien over specifically identifiable funds that the beneficiary agreed to convey to the 5 plan. See Sereboff v. Mid Atl. Med. Servs., Inc., 547 U.S. 356, 362 (2006). To secure an 6 equitable lien, the plan must show that (1) the beneficiary promised to reimburse the plan 7 for benefits paid under the plan if there is subsequent recovery from a third party, (2) the 8 agreement specifically identifies a fund, apart from the beneficiary’s general assets, from 9 which the plan will be reimbursed, and (3) the specifically identified funds are within the 10 beneficiary’s possession and control. Bilyeu v. Morgan Stanley Long Term Disability 11 Plan, 683 F.3d 1083, 1092-93 (9th Cir. 2012). 12 Two of these requirements are not in dispute. First, the SPD’s reimbursement clause 13 states: “if a third party causes . . . Sickness or Injury for which you receive a settlement, 14 judgment, or other recovery from any third party, you must use those proceeds to fully 15 return to the Plan 100% of any Benefits you received for that Sickness or Injury.” (Doc. 16 1-2 at 128.) Thus, the provision identifies a specific fund distinct from Defendant’s general 17 assets from which the Plan will be reimbursed. Second, Defendant’s attorney is holding 18 $137,175.99 of the settlement funds in trust pending the outcome of this litigation and, 19 therefore, the funds are within his possession and control. (Doc. 12 at 9.) 20 Instead, the dispositive question is whether Defendant promised to reimburse the 21 Plan. The SPD is the only disclosed document detailing the terms of the Plan, and contains 22 provisions giving the Plan the right to reimbursement from third party recoveries. (Doc. 23 1-2 at 16-.) Defendant argues, however, that the SPD’s contents do not constitute Plan 24 terms within the meaning of ERISA and, therefore, Plaintiffs cannot enforce the 25 reimbursement provision under § 1132(a)(3). The Court disagrees and finds that the SPD 26 constitutes the governing plan document and is enforceable. 27 An ERISA plan must “be established and maintained pursuant to a written 28 instrument.” 29 U.S.C. § 1102(a)(1). “And once a plan is established, the administrator’s 1 duty is to see that the plan is ‘maintained pursuant to [that] written 2 instrument.’” Heimeshoff v. Hartford Life & Acc. Ins. Co., 571 U.S. 99, 108 3 (2013) (quoting 29 U.S.C. § 1102(a)(1)). To ensure that participants and beneficiaries 4 understand the terms of their plan, the plan administrator must furnish a summary, referred 5 to as an SPD, “written in a manner calculated to be understood by the average plan 6 participant, and . . . sufficiently accurate and comprehensive to reasonably apprise such 7 participants and beneficiaries of their rights and obligations under the plan.” 29 U.S.C. § 8 1022(a). In this case, however, the SPD does not serve merely as a summary. Instead, it 9 is the only document detailing the rights and obligations of the Plan participants. 10 Relying on Amara, Mull and MLK., Defendant argues that the SPD cannot serve as 11 the governing plan document, because there is no evidence that the Plan adopted the SPD 12 or incorporated the SPD as part of the Plan. See Cigna Corp. v. Amara, 563 U.S 421 13 (2011); Mull v. Motion Picture Industry Health Plan, 865 F.3d 1207 (9th Cir. 2017); 14 Martin Luther King, Jr. Cmty. Hosp. v. Cmty. Ins. Co., No. 2:16-cv-03722-ODW(RAOx), 15 2018 WL 3830009 (C.D. Cal. 2018). Amara, Mull, and MLK, however, did not involve a 16 stand-alone SPD containing all the elements of a written instrument under 29 U.S.C. 17 1102(b). Courts that have addressed such a scenario consistently have found that an SPD 18 can serve as the governing plan document if it is the only document detailing the 19 participants' rights and obligations and contains all necessary information. See e.g., Bd. of 20 Trustees v. Moore, 800 F.3d 214, 220 (6th Cir. 2015) (“Nothing in Amara prevents a 21 document from functioning both as the ERISA plan and as an SPD, if the terms of the plan 22 so provide.”); Admin. Comm. of Wal-Mart Stores, Inc. Assocs.' Health & Welfare Plan v. 23 Gamboa, 479 F.3d 538, 544 (8th Cir. 2007) (“Where no other source of benefits exists, the 24 summary plan description is the formal plan document, regardless of its label.”); Feifer v. 25 Prudential Ins. Co. of Am., 306 F.3d 1202, 1209 (2d Cir. 2002) (“Although the [SPD] 26 contains the disclaimer that it was ‘not intended to cover all details of the Plan’ and that 27 the ‘actual provisions of the Plan will govern,’ we reject the notion that this disclaimer 28 renders the [SPD] a non-plan during the period when it was the only written document 1 describing benefits.”) 2 Here, the SPD contains all the information required of a governing plan 3 document. Specifically, 29 U.S.C. § 1102(b) requires that every employee benefit plan -- 4 (1) provide a procedure for establishing and carrying out a funding policy and method consistent with the objectives of the 5 plan and the requirements of this subchapter, 6 (2) describe any procedure under the plan for the allocation of responsibilities for the operation and administration of the plan 7 (including any procedure described in section 1105(c)(1) of this title), 8 (3) provide a procedure for amending such plan, and for 9 identifying the persons who have authority to amend the plan, and 10 (4) specify the basis on which payments are made to and from 11 the plan. 12 Defendant does not dispute that the SPD contains all these requirements of a written 13 instrument.5 (Doc. 41 at 2.) In sum, the SPD is enforceable because it is the only document 14 describing the rights and obligations of Plan participants, it contains all information 15 required of governing plan documents, and Defendant received benefits pursuant to its 16 terms. See JDA Software Inc. v. Berumen, No. CV-14-01565, 2016 WL 6143188, at * 2-3 17 (D. Ariz. Oct. 21, 2016). 18 / / / 19 / / / 20 / / / 21 / / / 22 / / / 23 / / / 24

25 5 Instead, Defendant, relying on Curtiss-Wright and Grosz-Salomon, argues that the SPD is not enforceable because the Plan failed to abide by the protocol for amending the 26 SPD when adopting it, pointing to the SPD’s amendment provision, rather than the amendment provision of any plan document that preceded it. See Curtiss-Wright Corp. v. 27 Schoonejongen, 514 U.S. 73 (1995); Gross-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154 (9th Cir. 2001). Curtiss-Wright and Gross-Salomon both grappled with whether an 28 amendment to an existing plan was enforceable. Here, the SPD is the only existing plan document, rendering Curtiss-Wright and Gross-Salomon distinguishable. 1 IT IS ORDERED that Plaintiffs’ motions for summary judgment (Docs. 16, 40) 2|| are GRANTED, and Defendant’s motion for summary judgment (Doc. 39) is DENIED. Plaintiffs are awarded $137,175.99 in reimbursement, to be paid from the third-party settlement funds deposited in the trust account of FriedIRichardson operated on behalf of 5 || Defendant. The Clerk shall enter judgment accordingly and terminate this case. 6 Dated this 3rd day of August, 2021. 7 8 : Apues le 10 > Ay 11 Ubited States Dictric Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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