MORRISON C. ENGLAND, JR., District Judge.
In this action, Plaintiff Loretta Bruce ("Plaintiff") seeks redress under various California laws from Defendant Hartford Life and Accident Insurance Company ("Defendant") arising from Defendant's termination of Plaintiff's long-term disability ("LTD") benefits.
Defendant issued Group Contract Number GLT-677969 (the "Policy") to Los Rios Community College District ("Los Rios"), effective July 1, 2010, for Los Rios employees. Pl.'s Compl., ECF No. 1 ¶ 7. Plaintiff, as a Los Rios employee, was a beneficiary of the Policy.
In relevant part, the applicable Policy provides coverage for injuries in the event of disability, as follows:
Accordingly, Plaintiff applied for LTD benefits ("Your Occupation" benefits) from Defendant in March 2016 after her employer determined she could no longer perform her occupation and could not be accommodated to do so.
Defendant thereafter conducted surveillance of Plaintiff, during which she was observed driving, pumping gas, running errands, carrying items weighing less than approximately twenty pounds, and standing and walking for about twenty to thirty minutes at a time, with sit-down breaks and/or driving in between. Pl.'s Compl. ¶ 19. Plaintiff was also seen performing activities such as ascending and descending two or three steps, adjusting a hose, and sweeping.
One of Defendant's field investigators interviewed Plaintiff, and again her claim was referred to the SIU to clarify [Plaintiff's] current restrictions/limitations and her ability to perform her occupation.
On November 21, 2016, Defendant terminated Plaintiff's Your Occupation benefits by letter.
After receiving Plaintiff's appeal, Defendant requested an independent peer review of Plaintiff's medical file by Dr. Pietro Seni. Def.'s UMF at 50:16-18. Because Dr. Seni ultimately agreed with Dr. Coward on Plaintiff's restrictions and limitations, Defendant reversed its initial termination and reinstated Plaintiff's Your Occupation benefits.
Thereafter, Defendant conducted an Employability Analysis Report ("EAR") using the restrictions and limitations determined by Dr. Seni and other relevant information.
The Federal Rules of Civil Procedure provide for summary judgment when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a);
Rule 56 also allows a court to grant summary judgment on part of a claim or defense, known as partial summary judgment.
In a summary judgment motion, the moving party always bears the initial responsibility of informing the court of the basis for the motion and identifying the portions in the record "which it believes demonstrate the absence of a genuine issue of material fact."
In attempting to establish the existence or non-existence of a genuine factual dispute, the party must support its assertion by "citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits[,] or declarations . . . or other materials; or showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed. R. Civ. P. 56(c)(1). The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law.
In resolving a summary judgment motion, the evidence of the opposing party is to be believed, and all reasonable inferences that may be drawn from the facts placed before the court must be drawn in favor of the opposing party.
Plaintiff brings three state causes of action: breach of contract; breach of implied covenant of good faith and fair dealing; and intentional infliction of emotional distress. Pl.'s Compl. at ¶¶ 43-63. Defendant moves for summary adjudication of the breach of contract claim as it relates to Your Occupation benefits, while Plaintiff moves for summary judgment on the breach of contract claim to the extent it challenges Defendant's denial of Any Occupation benefits. Both parties move for summary judgment as to Plaintiff's breach of implied covenant of good faith and fair dealing. Lastly, Defendant moves for summary adjudication of the intentional infliction of emotional distress claim.
The standard elements of a claim for breach of contract are: "(1) the contract; (2) plaintiff's performance or excuse for non-performance; (3) defendant's breach; and (4) damage to the plaintiff therefrom."
In this case, Plaintiff alleges that Defendant breached its contractual obligations under the Policy by: (1) terminating and failing to pay Your Occupation benefits; and (2) terminating and failing to pay Any Occupation benefits. Pl.'s Compl. ¶ 16. The Court addresses these theories of liability separately.
As indicated, Defendant moves for summary adjudication of the issue of whether there was a breach of contract with respect to Your Occupation benefits. At the outset, it is undisputed that Defendant has paid Plaintiff the full amount of Your Occupation benefits. Therefore, according to Defendant, Plaintiff cannot prove an essential element of her claim—that she suffered damages from the termination of those benefits. Def.'s Mem. Supp. Summ. Adj. at 12:26-13:12. Plaintiff argues, however, that she suffered damages in multiple additional ways: (1) by applying for early retirement; (2) by hiring counsel to litigate her internal appeal of the Defendant's denial of Your Occupation benefits; and (3) by the Defendant's failure to pay interest on the "delayed payment of benefits." Pl.'s Compl. ¶ 48; Pl.'s Reply Supp. Part. Summ. J., ECF No. 72 at 8:15-28. Defendant has the better argument.
First, California Insurance Code § 10111 expressly provides, "[i]n . . . disability insurance, the only measure of liability and damage is the sum or sums payable in the manner and at the times as provided in the policy." Cal. Ins. Code § 10111. Therefore, damages from reduced future retirement benefits cannot serve as a basis for consequential damages because the only measure of damages allowed is the sum payable under the Policy—the total amount of unpaid Your Occupation benefits. It also follows then that Plaintiff's second argument, that mitigation costs arising from retaining counsel constitute damages, likewise fails. Although Plaintiff bases its argument on
Alternatively, Plaintiff argues both that § 10111.2 modifies § 10111 and that § 10111.2 contains a provision which allows mitigation damages to serve as "a remedy made available by `any other law.'" Pl.'s Reply Supp. Part. Summ. J. at 8:15-28. These arguments are not well taken. Section 10111.2 provides for the payment of interest under circumstances not applicable here. As such, none of its provisions are relevant, and Plaintiff's arguments fail.
Third, Plaintiff argues she is entitled to interest based on Defendant's "delayed payment of benefits" under § 10111.2 and that interest qualifies as damages. Cal. Ins. Code § 10111.2; Pl.'s Reply Supp. Part. Summ. J. at 8:15-28. However, when a party raises a new argument in a reply brief, that argument is improper because the opposing party is deprived of an opportunity to respond.
Any Occupation is defined in the Policy as: "[a]n occupation in which You could reasonably be expected to perform satisfactorily in light of your age, education, training, experience, station in life, and physical and mental capacity." Pl.'s Compl. ¶ 9. In keeping with California contract law, the Policy's terms are to be interpreted "in context, with regard to [their] intended function in the policy" and in "their ordinary and popular sense, unless . . . a special meaning is given to them by usage."
Here, it is Plaintiff's burden to demonstrate an absence of issues of material fact as to whether she was unable to engage with reasonable continuity in an occupation in which she could reasonably be expected to perform in light of her age, education, training, experience, station in life, and physical and mental capacity; and therefore, that she is entitled to summary adjudication as a matter of law. Pl.'s Mem. Supp. Part. Summ. J., ECF No. 48-1 at 17:3-19:1.
First, in support of her motion for summary adjudication, Plaintiff takes issue with the Defendant's interpretation of the "station in life" element in the Policy. Plaintiff contends that the jobs she could arguably perform are inconsistent with her station in life because the wages to be earned are less than those she previously earned. More specifically, she argues that the Defendant erred by using the median wage earned, rather than the entry-25% wage, when considering jobs because Plaintiff would likely not earn the median wage immediately. However, prior earnings is only one factor in determining station in life, and in analyzing Plaintiff's employability, Defendant did consider the relevant station in life factors—level of education, relevant experience/work history, and prior level of earnings.
Second, Plaintiff takes issue with Defendant's application of the "training" element in the Policy. In order to properly deny Any Occupation benefits, Plaintiff argues that the Policy requires her to be employable immediately, and, because she would need additional training to work in the jobs found, Defendant improperly denied the benefits. This argument fails for two reasons. First, the Policy does not read as Plaintiff suggests. The Policy in this case defines "Any Occupation" as "an occupation in which You could reasonably be expected to perform satisfactorily" in light of all the relevant factors. Pl.'s Compl. ¶ 9. Therefore, the fact that a job may require some additional training is not necessarily determinative. Second, not only could Plaintiff have learned the clerical jobs in thirty to ninety days with little vocational training, Plaintiff herself admitted she was already qualified to work in such a position. Pl.'s Opp'n at 17:10-13; Bruce Decl., ECF No. 47-47 at 5:17-6:10. Given the foregoing, Plaintiff has failed to meet her burden of showing that the undisputed material facts mandate that judgment be entered in her favor on Any Occupation breach of contract claim.
In conclusion, Defendant's Motion for Summary Adjudication as to the First Cause of Action for breach of contract based on Your Occupation benefits is GRANTED, and Plaintiff's Motion for Partial Summary Judgment as to the First Cause of Action for breach of contract based on Any Occupation benefits is DENIED.
The primary test for tort liability for the breach of the implied covenant of good faith and fair dealing is "whether the insurer withheld payment of an insured's claim unreasonably and in bad faith."
Here, Plaintiff alleges that Defendant breached the implied covenant of good faith and fair dealing by denying Plaintiff's Your Occupation and Any Occupation benefits, failing to reasonably investigate Plaintiff's claims, and through various other related theories. Pl.'s Compl. ¶ 49-59; Pl.'s Mem. Supp. Part. Summ. J. at 8:6-19:1. Both Plaintiff and Defendant filed cross-motions for summary adjudication as to this claim; however, because there was a genuine dispute as to coverage with regard to both Your Occupation and Any Occupation benefits, Defendant is entitled to judgment as a matter of law.
First, for reasons already discussed, Plaintiff has no viable breach of contract claim against Defendant. Accordingly, her claim for breach of implied covenant of good faith and fair dealing also fails as a matter of law.
Second, Plaintiff's bad faith claim fails for the additional reason that there was a genuine dispute regarding Plaintiff's insurance coverage.
Plaintiff's claim for breach of implied covenant of good faith and fair dealing as to Any Occupation benefits also fails since there was at least a genuine dispute as to Plaintiff's coverage. Plaintiff argues Defendant acted unreasonably and in bad faith because it knew its EAR was "make believe" and instructed its employees to use make believe facts. Pl.'s Opp'n at 13:2-6. Plaintiff also argues that witnesses lied in their depositions, and that those untruths were both "coordinated and approved" by Defendant who failed to determine that: (1) Plaintiff's teaching credential was a license, (2) her job was not entry level, and (3) her job was skilled. Pl.'s Opp'n at 14:9-15:15. However, Plaintiff fails to cite to any evidence supporting these conclusions, including her assertions of alleged "false testimony."
Moreover, the pertinent inquiry is, again, whether the Defendant conducted its investigation reasonably and in good faith. Here, no reasonable jury could conclude that there was no genuine dispute over Plaintiff's coverage where the Defendant organized an IME, obtained an independent medical review, performed an EAR, and performed a labor market survey in determining whether Plaintiff met the Policy's Any Occupation definition.
The elements of intentional infliction of emotional distress are: (1) outrageous conduct; (2) intentional or reckless disregard of the probability of causing emotional distress; (3) severe or extreme emotional distress; and (4) the outrageous conduct was the actual and proximate cause of the emotional distress.
Here, Defendant moves for summary adjudication arguing that Plaintiff cannot prove extreme or outrageous conduct. This Court agrees. Plaintiff specifically alleges that the Defendant conducted "systematic fraud" by: (1) training its employees to misinterpret Your Occupation standard in order to deny benefits; and (2) training its vocational personnel to create vocational analyses which systematically misrepresent the facts and rely on "make believe facts."
For the foregoing reasons, Plaintiff's Motion for Partial Summary Judgment (ECF No. 48-1) is DENIED, and Defendant's Motion for Summary Adjudication (ECF No. 47) is GRANTED. The Defendant's Motion to Strike Plaintiff's Separate Statement of Undisputed Facts (ECF No. 63) and Motion to File Sur-reply (ECF No. 82) are DENIED as MOOT. This case shall proceed on Plaintiff's remaining claim for breach of contract as to Any Occupation benefits.
IT IS SO ORDERED.
First, this Court finds the documents in 16, 17, and 19 admissible under the business record exception in the Federal Rules of Evidence 803(6) because the documents were kept in the ordinary course of business as part of Plaintiff's claim file. Further, the documents in 20, 37, 38, and 39 are similarly admissible as business records. The fact that they contain "expert opinions" without Defendant having qualified the individuals as experts does not prevent them from admissibility.
Second, the Court takes judicial notice of Exhibits 1(A) and (B) and Exhibit 6, attached to Pl.'s Mem. Supp. Part. Summ. J. However, as taking judicial notice of Exhibits 2-5, attached to Pl.'s Partial Mot. Summ. J, and Exhibits 1(A) and (B), attached to Pl.'s Reply Supp. Part. Summ. J., is unnecessary to determine the outcome of the present Motion, this Court declines to take judicial notice of those documents.