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United States District Court, S.D. California

November 10, 2005.

GEOFF MOYLE, Plaintiff,
GOLDEN EAGLE INS. CORP., et al., Defendants.

The opinion of the court was delivered by: DANA SABRAW, District Judge

Presently before the Court is a motion by Defendants Golden Eagle Insurance Corporation ("Golden Eagle"), Liberty Mutual Insurance Company ("Liberty Mutual") and Liberty Mutual Retirement Benefit Plan ("Benefit Plan"), seeking to dismiss Plaintiff Geoff Moyle's First Amended Complaint ("FAC") for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6). Defendants filed their motion on September 12, 2005. On October 7, 2005, Plaintiff filed an Opposition to the motion, and thereafter Defendants filed a Reply.

The Court heard oral argument on Defendants' motion to dismiss on November 4, 2005. Jack B. Winters, Jr., Esq appeared on behalf of the Plaintiff, and Ashley B. Abel, Esq. appeared on behalf of Defendants. For the reasons discussed below, the Court grants Defendants' motion to dismiss Plaintiff's FAC for failure to state a claim with prejudice. I.


  A. The First Amended Complaint

  Plaintiff's complaint arises from his employment at Golden Eagle and Liberty Mutual. In 1988, Plaintiff was hired by Golden Eagle's predecessor company, Golden Eagle Insurance Company. (FAC at ¶ 8.) In 1997, Liberty Mutual acquired Golden Eagle. (Id. at ¶ 9.) After the acquisition by Liberty Mutual, Plaintiff contends Defendants advised him that Golden Eagle employees would be eligible for participation in the Liberty Mutual Benefit Plan. (Id.) On April 30, 2001, Plaintiff alleges he received a personal benefits statement from Liberty Mutual, which indicated that his hire date was in 1988, and that he had a total employment credit of 18 years and 4 months. (Id. at ¶ 11.) This calculation included all of his years of service with Golden Eagle prior to Liberty Mutual's acquisition.

  On March 15, 2002, Plaintiff was discharged from his employment with Golden Eagle and Liberty Mutual. (Id. at ¶ 19.) Shortly after his discharge, Plaintiff received a "Retirement Benefit Plan Calculations Statement" from Liberty Mutual; the statement provided that he would be credited 4.416670 service years. (Id. at ¶ 20.) Subsequently, in May of 2002, Plaintiff was advised by Liberty Mutual representatives that he would not receive past service credit for his term of employment prior to the date on which Liberty Mutual acquired Golden Eagle. (Id. at ¶ 21.)

  Plaintiff admits he has not made any claim for benefits or any request for a plan distribution under the terms of the Benefit Plan. (Id. at ¶ 22.) In addition, Plaintiff claims he has not sought payment of any amounts under the terms and conditions of the Benefit Plan. (Id.) Rather, Plaintiff claims that under the terms of the Plan, he was under no obligation to file a claim with the Plan Administrator. (See Plaintiff's Opposition to Defendants' Motion to Dismiss at 3) ("[B]y the terms of the Plan, there has been no claim. . . .")

  B. Procedural History

  On February 13, 2003, Plaintiff filed an action in the Superior Court of the State of California, County of San Diego, alleging ten causes of action. On March 13, 2003, Defendants removed the action to this Court pursuant to 28 U.S.C. §§ 1331 and 1441(b). On March 20, 2003, Golden Eagle and Liberty Mutual filed a joint motion to dismiss Plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). On April 3, 2003, Plaintiff filed a motion to remand. On July 17, 2003, the Honorable Irma E. Gonzalez, United States District Judge, issued an Order denying Plaintiff's motion to remand and granting in part Golden Eagle and Liberty Mutual's motion to dismiss. Specifically, the Court concluded the claims relating to the question of past service credit under the Benefit Plan were preempted by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001, et seq. ("ERISA"). (See July 17, 2003 Order at 14.) Accordingly, the Court dismissed Plaintiff's state claims without prejudice and granted leave to amend the complaint to allege claims under ERISA. (Id. at 17.) Thereafter, Plaintiff's prior counsel stipulated that an amended complaint would not be filed under ERISA, and the Court remanded the remaining state law employment claims to state court.

  C. Plaintiff's Instant Action

  On August 23, 2005, Plaintiff filed a FAC with this Court, alleging two claims for relief under ERISA. Under the first claim for relief, Plaintiff seeks a judicial determination of the terms of the Benefit Plan and clarification of his rights to future benefits under 29 U.S.C. § 1132(a)(1)(B).*fn1 (FAC at ¶ 35-46.) Second, based on the alleged representations of Defendants, Plaintiff seeks equitable relief for Defendants' alleged violations of fiduciary obligations under 29 U.S.C. § 1132(a)(3).*fn2 (Id. at ¶ 47-58.) Under the second claim for relief, Plaintiff seeks issuance of a permanent injunction precluding Defendants from denying him benefits and past service credits to which he claims entitlement. (Id. at ¶ 56.)

  In their motion to dismiss, Defendants contend: (1) Plaintiff's claim pursuant to § 1132(a)(1)(B) for clarification of rights to future benefits under the Plan should be dismissed because this action was not filed within the time established by the Benefit Plan; (2) Plaintiff's claim for clarification of rights should be dismissed because he failed to exhaust his administrative remedies under the Plan; (3) Plaintiff's claim for breach of fiduciary duty under § 1132(a)(3) fails because that claim seeks the same relief as the first cause of action for clarification of future benefits under § 1132(a)(1)(B); and (4) the doctrine of laches bars the claim for breach of fiduciary duty under § 1132(a)(3).



  Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it fails to state a claim upon which relief can be granted. The question presented by a motion to dismiss is not whether the plaintiff will prevail in the action, but whether the plaintiff is entitled to offer evidence in support of the claim. Fed.R.Civ.P. 12(b)(6). See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984). In answering this question, the Court must assume that the plaintiff's allegations are true and must draw all reasonable inferences in plaintiff's favor. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). Even if the face of the pleadings suggests that the chance of recovery is remote, the Court must allow the plaintiff to develop the case at this stage of the proceedings. See United States v. City of Redwood City, 640 F.2d 963, 966 (9th Cir. 1981). If the Court dismisses the complaint, it must then decide whether to grant leave to amend. The Ninth Circuit has "repeatedly held that a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (citations and internal quotation marks omitted).



  A. Defendants' Motion to Dismiss Plaintiff's Claim Under 29 U.S.C. § 1132(a)(1)(B)

  Defendants contend Plaintiff's claim under 29 U.S.C. § 1132(a)(1)(B) should be dismissed on two grounds. First, Defendants argue Plaintiff's claim fails because his complaint was not filed within the Plan's one year disputed-claims limitation period. The Benefit Plan provides, "Beginning January 2, 1001, you must file any action in federal or state court with respect to a claim within one year from the date the Plan Administer denies, or is deemed to deny, the claim on review." (See Benefit Plan at H-17, Exhibit A attached to Plaintiff's Opposition.) Plaintiff contends this lawsuit is not controlled by the Plan's one year limitations period because he did not, at any time, make a claim for benefits under the Plan to the Plan Administrator. (See FAC at ¶ 22) ("At no time has Plaintiff made any claim for benefits. . . ."). According to the Plan, a party seeking to initiate legal action against the Plan regarding a claim must do so within one year after the claim was denied, or deemed to have been denied, by the Plan Administrator. Application of the Plan's statute of limitations is predicated upon two elements — first, that a claim was brought by the plan participant or beneficiary; and second, that the claim was subsequently denied by the Plan Administrator. Because Plaintiff never made a claim (and the Administrator had no opportunity to deny such a claim), the one year limitations period in the Benefit Plan does not apply, and Plaintiff is not precluded from raising his ERISA claim at this time, in this forum.

  Second, Defendants argue Plaintiff's claim should be dismissed because he failed to exhaust his administrative remedies under the Benefit Plan. Defendants argue a plan participant, such as Plaintiff, must avail himself of the plan's own internal review procedures before bringing suit in federal court. See Diaz v. United Agr. Employee Welfare Ben. Plan, 50 F.3d 1478, 1483 (9th Cir. 1995) (citing Amato v. Bernard, 618 F.2d 559, 566-68 (9th Cir. 1980)). The Diaz court noted, "[a]lthough not explicitly set out in the statute, the exhaustion doctrine is consistent with ERISA's background, structure and legislative history and serves several important policy considerations, including the reduction of frivolous litigation, the promotion of consistent treatment of claims, the provision of a nonadversarial method of claims settlement, the minimization of costs of claim settlement and a proper reliance on administrative expertise." Diaz, 50 F.3d at 1483. "Consequently the federal courts have the authority to enforce the exhaustion requirement in suits under ERISA, and . . . as a matter of sound policy they should usually do so." Id.

  Plaintiff contends that because he never made a "claim for a benefit or a request for a plan distribution" under the Plan, he was not required to exhaust any administrative remedies before filing this action. Plaintiff also argues ERISA does not require exhaustion in any event. Moreover, Plaintiff argues that even if exhaustion were required, "there is no internal review procedure provided by the Plan which requires an administrative review of a request for a statement of future benefits, explanation of future benefits and what the status of one's employment benefits might be." (Plaintiff's Opposition to Defendants' Motion to Dismiss at 6.) Therefore, according to Plaintiff, there was no available administrative procedure for him to exhaust. Plaintiff's arguments lack merit.

  As an initial matter, the Ninth Circuit has long held that where a plan participant seeks to assert a claim under an employee benefit plan, he or she must exhaust their administrative remedies under the plan before filing suit in federal court. See, e.g., Diaz, 50 F.3d at 1483; Horan v. Kaiser Steel Retirement Plan, 947 F.2d 1412, 1416 (9th Cir. 1991); Graphic Communications Union, District Council No. 2, AFL-CIO v. GCIU-Employer Retirement Benefit Plan, 917 F.2d 1184, 1187 (9th Cir. 1990); Amato, 618 F.2d at 567. Plaintiff contends this precedent is inapplicable because his action is "not a claim for a plan benefit but a request for a determination of what [his] benefits might be in the future when ultimately a claim is made." (Plaintiff's Opposition to Defendants' Motion to Dismiss at 5) (emphasis added). In other words, Plaintiff argues his entitlement to service credits for past employment with Golden Eagle (Liberty Mutual's predecessor) need not have been filed with the Plan Administrator because it is not a present claim for benefits or a request for distribution under the Plan. Plaintiff, however, reads the Plan too narrowly.

  The Plan generally provides that the "Plan Administrator . . . shall make all determinations as to the right of any person to a distribution under the plan[]. . . ." (See Benefit Plan at H-16, Exhibit A attached to Plaintiff's Opposition.) (emphasis added). The Plan also provides: "If a claim for a benefit or a request for a plan distribution by a participant . . . is denied, in whole or in part, the Plan Administrator . . . will provide [the participant] with a comprehensible written notice setting forth[,]" among other things, the reasons for denial, a description of the Plan's claim review procedure and time frames, and a statement of the participant's right to bring a civil action under ERISA following an adverse decision on appeal. (Id. at H-16.)

  Moreover, the Plan provides, under the heading "Interpretation of the Plan," that "[t]he Plan Administrator has the authority, in its sole discretion, to construe the terms of this Plan and to determine benefit eligibility. Decisions of the Plan Administrator regarding construction of the terms of this Plan and benefit eligibility are conclusive and binding." (Id. at H-19, H-20) (emphasis added). Immediately below this section, the Plan discusses under "Additional Provisions" a participant's "Past service credit" for "Golden Eagle Insurance Corporation employees who were employed as of October 1, 1997 for service with Golden Eagle Insurance Co." (Id. at H-20.)

  Despite Plaintiff's protestations to the contrary, the Plan clearly contemplates that its Administrator will hear and determine eligibility for benefits under the Plan, including past service credits. Plaintiff, therefore, had an obligation to first file a claim with the Plan regarding his dispute over past service credits. Having failed to file such a claim, Plaintiff is barred from relief in this action for failure to pursue, let alone exhaust, his administrative remedies.*fn3 See Meza v. General Battery Corp., 908 F.2d 1262, 1279 (5th Cir. 1990) ("We believe that [ERISA policies] require claimants to make some attempt at obtaining their benefits through the administrative route, or, at the very least, to make some effort to learn of the procedures applicable to them.) To hold otherwise would allow Plaintiff and other ERISA claimants to simply characterize their claim as outside the plan, and thereby subject the plan to litigation without first resorting to internal administrative procedures and review. This would be contrary to ERISA's policies. See Diaz, 50 F.3d at 1483.

  B. Defendants' Motion to Dismiss Plaintiff's Claim Under 29 U.S.C. § 1132(a)(3)

  Defendants argue a claim under 29 U.S.C. § 1132(a)(3) may be raised only when adequate relief is not available to the complaining party under ERISA's other enforcement provisions, citing Varity Corp. v. Howe, 516 U.S. 489, 515 (1996). Plaintiff's claim for breach of fiduciary duty under § 1132(a)(3), according to Defendants, falls squarely within the parameters of a claim under § 1132(a)(1)(B) to recover benefits due, to enforce a participant's rights under the terms of a plan, or to clarify a participant's rights to future benefits. (Defendants' Motion to Dismiss at 8.)

  In opposition, Plaintiff provides two grounds for the proposition he may allege a claim under § 1132(a)(3). First, Plaintiff contends that the Defendants in the second claim for relief are different from the Defendant in the first claim for relief. The first claim is against the Plan only, while the second claim is against Golden Eagle and Liberty Mutual. Second, Plaintiff argues that the two claims do not seek the same relief. The first claim seeks to "`clarify' his rights to future benefits", while the second claim seeks to require Golden Eagle and Liberty Mutual to "make good to the PLAN any funds that are necessary to fund Plaintiff's future retirement benefits" and to preclude these Defendants "in the future from denying Plaintiff his future benefits." (Plaintiffs Opposition to Defendants' Motion at 13.)

  Plaintiff's attempt to distinguish the two claims is unavailing. At bottom, the relief sought is the same: an award of past service credits under his retirement plan for prior service with Golden Eagle. As stated in Varity, § 1132(a)(3) is a "catchall provision" that authorizes lawsuits for equitable relief for breach of fiduciary duty and other injuries for "violations that [§ 1132] does not elsewhere adequately remedy." Varity, 516 U.S. at 490. Other courts have interpreted Varity to "clearly limit[] the applicability of § 1132(a)(3) to beneficiaries who may not avail themselves of § 1132's other remedies." Wilkins v. Baptist Healthcare System, Inc., 150 F.3d 609, 615 (6th Cir. 1998).

  In Wilkins, the court held that a plan participant has no claim under any other subsection of § 1132 where the participant avails himself of a remedy under § 1132(a)(1)(B). Wilkins, 150 F.3d at 615. Moreover, the bar to other subsections of § 1132 applies even when the participant's claim under § 1132(a)(1)(B) is unsuccessful. The court held:

Wilkins availed himself of the remedy available to him under [§ 1132(a)(1)(B)]. The district court reviewed his claim de novo and concluded that LINA's denial of benefits was correct. Wilkins therefore has no cause of action under any other subsection of § 1132 (citing Varity, 516 U.S. at 515). Consequently, he cannot recover compensatory damages for an alleged breach of fiduciary duty.
150 F.3d at 615.

  While the plan participant in Wilkins, unlike Plaintiff here, had pursued and exhausted his administrative remedies with his plan, that distinction does not render the holding inapplicable. Plaintiff here, as in Wilkins, has availed himself of the remedies under § 1132(a)(1)(B). Those remedies, absent his failure to pursue administrative remedies with the Plan, would have been adequate to address his alleged grievances. He cannot therefore avail himself of alternative remedies under other subsections of § 1132, because he had an adequate remedy under § 1132(a)(1)(B).*fn4 Because Plaintiff cannot cure the deficiencies of his FAC with leave to amend, the Court grants Defendants' motion with prejudice. See Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000.)



  For the reasons discussed above, the Court GRANTS WITH PREJUDICE Defendants' motion to dismiss Plaintiff's First Amended Complaint for failure to state a claim. The Clerk of the Court shall enter judgment accordingly.



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