OPINION AND ORDER

ROBERT E. JONES, District Judge.

In this insurance coverage dispute, plaintiff Enterprising Solutions, Inc., dba Sunwest Employer Services, filed this action against defendant National Union Fire Insurance Company in Arizona state court, alleging claims for declaratory relief, breach of contract, and breach of the implied covenant of good faith and fair dealing. Defendant removed the action to federal court on the basis of diversity jurisdiction.

The action is now before the court on plaintiff's renewed motion for partial summary judgment and defendant's renewed motion for summary judgment (## 71, 81). Both motions address only plaintiff's first claim, for declaratory relief. I have thoroughly reviewed the parties' arguments and submissions, and for the reasons explained below, I deny plaintiff's motion and grant defendant's motion. Plaintiff's Request for Telephonic Status Conference (#109) is denied.

STANDARD

Summary judgment should be granted if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). If the moving party shows that there are no genuine issues of material fact, the non-moving party must go beyond the pleadings and designate facts showing an issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). A scintilla of evidence, or evidence that is merely colorable or not significantly probative, does not present a genuine issue of material fact. United Steelworkers of America v. Phelps Dodge, 865 F.2d 1539, 1542 (9th Cir. 1989).

The substantive law governing a claim determines whether a fact is material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see also T.W. Elec. Service v. Pacific Elec. Contractors, 809 F.2d 626, 630 (9th Cir. 1987). Reasonable doubts as to the existence of a material factual issue are resolved against the moving party. T.W. Elec. Service, 809 F.2d at 631. Inferences drawn from facts are viewed in the light most favorable to the non-moving party. Id. at 630-31.

The standard of review is the same for cross-motions as individual motions for summary judgment: "`The court must consider each motion independently and, when evaluating each, the court must consider the facts in the light most favorable to the non-moving party.'" Winans v. Starbucks Corp., 796 F.Supp.2d 515, 517-18 (S.D.N.Y. 2011)(quoting Morales v. Quintel Entm't, Inc., 249 F.3d 115, 121 (2d Cir. 2001)); see also, e.g., Nipponkoa Insurance Co. v. Norfolk Southern Railway Co., 794 F.Supp.2d 838 (S.D. Ohio 2011).

FACTUAL BACKGROUND

This coverage dispute arises out of plaintiff's admitted failure to properly calculate the necessary contributions to fully fund a group medical and group dental plan, which caused plaintiff to terminate the plans effective August 19, 2009. The present action, between plaintiff and its insurer, defendant National Union Fire Insurance Co., concerns whether plaintiff's policies with defendant cover the claims against plaintiff resulting from termination of the plans.

The following factual background is drawn from the parties' statements of fact and is limited to those facts the court deems relevant to this decision. Unless otherwise noted, the facts set forth below are undisputed for purposes of the present motions.1

a. Plaintiff

Plaintiff is a professional employer organization ("PEO") that provides services to employers by assuming various employer-related responsibilities, such as payroll services. As a PEO, plaintiff assumes the various employer-related responsibilities by entering into "co-employer agreements" with its employer-clients. Under the agreements, plaintiff becomes a co-employer of the employer-client's employees.

One of the PEO services plaintiff offered to its employer-clients was the administration of an employee health benefit program. The benefit plan documents, Exhibits C (group health) and D (dental) to plaintiff's Statement of Facts in Support of Motion for Partial Summary Judgment ("PSOF"), specify, among other things, the names of the plans, the type of plan, the Plan Administrator, the Plan Sponsor, and the Claims Administrator. See PSOF, Exhibit ("Exh.") C, p. 83; Exh. D, p. 34. The group health plan designates Enterprising Solutions, Inc. dba Sunwest Employers Services, Inc., as the Plan Name, Plan Sponsor, and Plan Administrator, and Benefit Systems & Services ("BSSI") as the Claims Administrator. The only difference between the group health plan and the dental plan with respect to the above is the Plan Name for the dental plan, which is Enterprising Solutions, Inc. dba Sunwest Employers Services Inc. Group Standard Dental Plan. I refer to the plans in this decision as the "Sunwest Plans." Both plans are self-funded. See Exh. C, p. 83; Exh. D, p. 34.

Among other things, plaintiff was responsible for determining the amount of contributions to the Sunwest Plans, making sure that the contributions covered the medical and dental claims and other expenses of the plans, properly receiving and processing information and noticing errors that would have reduced or avoided losses sustained by the plans, and taking appropriate remedial measures when necessary.

Plaintiff established the amount of contributions required to be paid into the Sunwest Plans by the employers and employees each year based on, e.g., prior claim history, incurred but not reported claims, records in plaintiff's possession, general claim trends, and other information plaintiff received from the Claims Administrator, BSSI. The aggregate amount of contributions from the employers and employees was intended to cover all costs of the Sunwest Plans for each plan year, including all claims for benefits.

The contribution levels plaintiff established for 2008 and 2009 were insufficient to cover all claims and expenses. Consequently, plaintiff notified the plan participants that it was terminating the Sunwest Plans effective August 19, 2009. According to plaintiff, since April 2009, it has received over 550 complaints from various Sunwest Plans claimants, which plaintiff describes as "Sunwest Plan participants," "the participants' co-employers," and "the contracted medical providers." Complaint, ¶ 36. Defendant disputes the number of complaints, but the dispute over numbers is not material to my decision. Defendant notes that of the claims, it has defended or settled seven on plaintiff's behalf, subject to a reservation of rights. See National Union's Renewed Motion for Summary Judgment, p. 3 and p. 3 n.2.

b. The Insurance Policies2

On March 31, 2008, defendant issued a Staffing Services Liability Policy to plaintiff, effective March 31, 2008, through March 31, 2009. The Staffing Services Liability Policy was renewed and the renewal policy was effective from March 31, 2009, to March 31, 2010. In all respects relevant to the pending motions, the policies are identical.3

The Staffing Services Liability Policy gave plaintiff several different types of coverage, including coverage for "Wrongful Acts, Errors and Omissions" (Coverage A). Coverage A provides:

Defendant's Statement of Facts in Support of Renewed Motion for Summary Judgment ("DSOF"), Exh. 1, p. 003. The Staffing Services Liability Policy included an Employee Benefit Liability ("EBL") Endorsement and a PEO Endorsement.

(1) The PEO Endorsement

The PEO Endorsement includes several definitions that amend the Staffing Services Liability Policy. See DSOF, Exh. 1, pp. 036-037. The PEO Endorsement defines "staffing services" as "service(s) performed for clients for a fee to supply that client with a staffing service employee(s)." Id. at 036. Staffing services "includes professional employer organization (PEO)." Id. The PEO Endorsement defines PEO to mean:

Id.

The PEO Endorsement defines "wrongful act" as:

DSOF, Exh. 1, p. 037. The PEO Endorsement excludes from Coverage A (Wrongful Acts, Errors and Omissions) of the Staffing Services Liability Policy "[a]ny Insured's failure to fulfill any duty or obligation imposed by the Employment Retirement Income Security Act of 1974, including amendments to that law, or similar federal, state, or local statutory or common law." Id.

(2) The EBL Endorsement

The EBL Endorsement provided coverage to plaintiff pertaining to the employee benefits program for:

DSOF, Exh. 1, p. 040. The EBL Endorsement defines "wrongful act" as "any actual or alleged negligent act, error or omission in the "administration of your "employee benefits program." DSOF, Exh. 1, p. 041. "Employee benefits program" is defined to include, among other things, "group accident or health insurance" and "any other similar employee benefits" in programs "offered by you to your `employees.'" Id. at p. 040. "Administration" means:

DSOF, Exh. 1, p. 040.

Similar to the PEO Endorsement, the EBL Endorsement excludes coverage for:

DSOF, Exh. 1, p. 041. "Breach of fiduciary duty" is defined as:

Id.

DISCUSSION

Plaintiff's claim for declaratory relief asks the court to find that plaintiff "is afforded insurance coverage for the claims of the Sunwest Plan Claimants under the Staffing Services Policy and/or the Umbrella Policy, and that [defendant] has the obligation to immediately investigate those claims and provide [plaintiff] with a defense to those claims." Complaint, p. 12. In its motion papers, plaintiff clarifies that what it really seeks is a declaration that defendant must defend and indemnify plaintiff for the claims brought against it.4 See Plaintiff's Motion for Partial Summary Judgment, p. 2. In essence, plaintiff asserts that under Arizona contract law, defendant is obligated under the Staffing Services Liability Policy and the EBL Endorsement to provide coverage.

Defendant, in turn, makes numerous arguments against a finding of coverage. Several of defendant's arguments ask the court to decide issues that are fact-specific and not appropriate for summary judgment. These arguments include: how many actual claims against plaintiff remain; whether plaintiff properly tendered any of the claims to defendant; whether plaintiff is "legally obligated to pay" the remaining claims; whether the claimants submitted all necessary information to obtain benefits; and finally, who is the "insured" under the policy. See generally Defendant's Renewed Motion for Summary Judgment, pp. 12-22. If these were defendant's only arguments, material issues of disputed fact would preclude summary judgment.

Defendant also contends, however, that plaintiff's actions that resulted in termination of the Sunwest Plans do not qualify for coverage as "wrongful acts" under the Staffing Services Liability Policy and endorsements, but more importantly, are specifically excluded from coverage. These arguments raise issues of contract interpretation, which are appropriate for this court to address in the context of summary judgment.

a. Arizona Principles of Insurance Policy Interpretation

The interpretation of an insurance policy presents a question of law. Colorado Cas. Ins. Co. v. Safety Control Co., Inc., 228 Ariz. 517, 525, 269 P.3d 693 (Ariz. App. 2012). Arizona courts interpret insurance contracts "`according to their plain and ordinary meaning,'" id. (quoting Keggi v. Northbrook Prop. & Cas. Ins. Co., 199 Ariz. 43, 46, 13 P.3d 785 (Ariz. App. 2000)), and "examine the policy's terms from the standpoint of one untrained in law or the insurance business." Id. (citing Thomas v. Liberty Mut. Ins. Co., 173 Ariz. 322, 325, 842 P.2d 1335 (Ariz. App. 1992)). "`[A]mbiguity in an insurance policy will be construed against the insurer'; however, this rule applies only to provisions that are `actually ambiguous.'" Keggi, supra, 199 Ariz. at 46 (citation omitted). When interpreting an insurance contract, an Arizona court "ha[s] a duty to `harmonize all parts of the contract by a reasonable interpretation in view of the entire instrument,'" and "the `specific provisions of a contract qualify the meaning of a general provision.'" Aztar Corp. v. U.S. Fire Ins. Co., 223 Ariz. 463, 475, 224 P.3d 960 (Ariz. App. 2010) (citations omitted).

"Generally, the insured bears the burden to establish coverage under an insuring clause, and the insurer bears the burden to establish the applicability of any exclusion." Keggi, 199 Ariz. at 46 (citation omitted).

b. Analysis

Although it is a stretch to categorize plaintiff's conduct as "wrongful acts" within the meaning of the various definitions set forth above, for purposes of this decision, I find that the language of the policy and the endorsements is broad enough to cover plaintiff's potential losses from "wrongful acts" in the administration of the Sunwest Plans, assuming all the conditions precedent for valid claims under the policy were, as a factual matter, satisfied. I conclude, however, that even assuming that plaintiff's failure to pay medical and dental claims and termination of the Sunwest Plans qualify as "wrongful acts" under the policy and that plaintiff properly tendered the claims against it to defendant, the policy excludes coverage for the conduct that resulted in plaintiff's termination of the Sunwest Plans.

Plaintiff admits that it failed to properly calculate the contributions necessary to fully fund the Sunwest Plans, and that the miscalculation of contributions resulted in termination of the plans. Complaint, ¶¶ 30 and 31-35; see also Plaintiff's Motion for Partial Summary Judgment, p. 4 ("Unfortunately, the contributions levels that [plaintiff] established during 2008 and 2009 were insufficient to cover the cost of medical and dental claims and other expenses of the Sunwest Plan that were incurred during 2009, and [plaintiff] was forced to terminate the Sunwest Plan as of August 19, 2009").

Plaintiff contends that miscalculation of benefits does not implicate ERISA fiduciary duties but rather fits within the definition of "administration" of an employee benefit plan covered under the Staffing Services Liability Policy and EBL Endorsement.5 Plaintiff further contends that defendant has failed to identify any ERISA provision that plaintiff's conduct breached.

As noted above, the EBL Endorsement defines "administration" as:

DSOF, Exh. 1, p. 040. Courts have differed in how they interpret "administration" in similar policy endorsements — some narrowly to mean purely ministerial acts,6 and others more broadly7 — but I have found no authority for the proposition that discretionary decision-making activities such as determining the amount of contributions necessary on yearly basis to sustain a benefit plan's ability to reimburse medical and dental claims and pay the plan's expenses qualify as "administration" under the policy definition.

Plaintiff's calculation of contribution levels involved the exercise of discretion and was not, therefore, merely administrative. In that respect, plaintiff's exercise of discretion in failing to properly calculate contributions is not included within the definition of "administration" and is beyond the scope of the policy.

In any event, I find that to the extent plaintiff's miscalculation of contribution levels might qualify as "administration," it nonetheless was a discretionary action undertaken in a fiduciary capacity and was subject to ERISA fiduciary standards of care. Plaintiff, the named plan administrator, was the ERISA fiduciary for the Sunwest Plans. See PSOF Exh. C, p. 83-84 ("The named fiduciary is the plan administrator"), and Exh. D, p. 34-35 (same). ERISA defines a "fiduciary" as follows:

29 U.S.C. § 1002(21)(A). Thus, ERISA defines fiduciary in functional terms of control and authority over a plan. DeLuca v. Blue Cross Blue Shield of Michigan, 628 F.3d 743, 747 (6th Cir. 2010). The Sunwest Plans specify the control and authority over the plans: "The Plan Administrator shall have the sole discretionary authority to control and manage the operation and administration of the Plan." PSOF, Exh. C, p. 84; Exh. D, p. 35. And as the plan fiduciary, plaintiff was charged, by statute, to discharge its duties "with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. . . ." 29 U.S.C. § 1104(a)(1)(B).

As plaintiff states in response to defendant's motion:

Plaintiff's Response to Defendant's Renewed Motion for Summary Judgment, p. 13. Having thoroughly considered the issue, I conclude that plaintiff's failure to properly calculate the contributions necessary to fully fund the Sunwest Plans was, indeed, the exercise of discretion relating to plan management and administration and was, consequently, subject to ERISA fiduciary standards. Consequently, plaintiff's conduct was excluded from coverage under the Staffing Services Liability Policy and the PEO and EBL Endorsements.

I also note the evidence of record of communications between plaintiff's president, Rebeccah Sotelo, and plaintiff's insurance agent concerning pricing for specific fiduciary liability coverage. See DSOF, Exhs. 3-6. Plaintiff declined fiduciary coverage and instead purchased the Staffing Services Liability Policy and endorsements in issue, which, in more than one place, specifically exclude coverage for any breach of fiduciary duty as defined in the policy. The plain language of the policy exclusions thus belie plaintiff's argument that its reasonable expectation was that defendant's policy covered plaintiff as a fiduciary of the benefit plans.

CONCLUSION

Plaintiff's Motion (# 71) for Partial Summary Judgment is DENIED. Defendant's Renewed Motion (# 81) for Summary Judgment is GRANTED. The parties shall inform the court within 20 days as to what remains of the case as a result of this decision.

IT IS SO ORDERED.