Lori Jean Klees v. Liberty Life Assurance Company of Boston, No. 2:2015cv00992 - Document 25 (C.D. Cal. 2015)
Court Description: ORDER DENYING DEFENDANTS MOTION TO DISMISS 15 by Judge Dean D. Pregerson. (lc). Modified on 6/23/2015 (lc).
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Lori Jean Klees v. Liberty Life Assurance Company of Boston Doc. 25 1 2 O 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 LORI JEAN KLEES, 12 Plaintiff, 13 14 v. LIBERTY LIFE ASSURANCE COMPANY OF BOSTON, 15 16 Defendant. ___________________________ ) ) ) ) ) ) ) ) ) ) ) Case No. CV 15-00992 DDP (AJWx) ORDER DENYING DEFENDANT’S MOTION TO DISMISS [Dkt. No. 15] 17 18 19 Presently before the Court is Defendant’s motion to dismiss 20 21 the complaint as to both counts. (Dkt. No. 15.) Having heard oral 22 arguments and considered the parties’ submissions, the Court adopts 23 the following order. 24 25 26 /// 27 /// 28 /// Dockets.Justia.com 1 I. BACKGROUND 2 3 Plaintiff is a former employee of the University of California 4 (UC) system who alleges that she was provided disability insurance 5 coverage by Defendant pursuant to an agreement with the university. 6 (First Amended Complaint (“FAC”), ¶ 6.) 7 suffered “sickness and injury” “on or before January 1, 2012.” 8 (Id. at ¶ 8.) 9 seronegative inflammatory arthritis, fibromyalgia, and injuries Plaintiff alleges that she She alleges that her conditions included 10 from a car accident, and that these constitute a “loss compensable 11 under the terms of the Policy.” 12 she had performed all obligations on her part, including paying 13 premiums, that she submitted a timely long term disability claim to 14 Defendant, and that Defendant initially approved the claim. 15 at ¶¶ 7, 9.) 16 (Id.) She further alleges that (Id. Plaintiff alleges she was examined, at Defendant’s request, by 17 a Dr. Vlachos on May 8, 2014, and that Dr. Vlachos’ report 18 indicated that she could not work full time due to side effects of 19 medication related to her fibromyalgia, but that she might be able 20 to work “24 hours per week.” 21 Dr. Dennis, a separate medical reviewer, consult with Plaintiff’s 22 treating physicians, Drs. Ben-Artzi and Hui, who allegedly told 23 Dennis that Plaintiff “might be capable of ‘light duty work.’” 24 (Id. at ¶¶ 14-15.) 25 stated that Plaintiff could work full time, but did not opine on 26 whether Plaintiff “was capable of returning to her occupation or 27 any occupation for which she was suited by her education, training, 28 and experience.” (Id. at ¶ 12.) Defendant then had a Dennis allegedly wrote a report in which she (Id. at ¶ 16.) 2 1 Defendant’s vocational department then conducted a 2 “Transferable Skills Analysis” and concluded that Plaintiff could 3 perform several alternative occupations at a “‘light’ exertional 4 level as defined by Social Security Regulations.” 5 18.) 6 based on a determination that “Plaintiff’s disability did not 7 render her unable to perform ‘any occupation’ for which she was 8 qualified by reason of her age, experience, [and] training.” 9 at ¶ 20.) 10 (Id. at ¶¶ 17- On August 11, 2014, Defendant terminated benefit payments, (Id. Plaintiff appealed the decision, allegedly providing evidence 11 that she suffered pain; swelling; fatigue and a sleep disorder; 12 difficulty sitting, handling stressful situations, and performing 13 repetitive hand movements; and that she still required medication. 14 (Id. at ¶ 21.) 15 Plaintiff’s appeal was denied. (Id. at ¶¶ 21-22.) Thereafter she filed this suit alleged breach of contract and 16 breach of the covenant of good faith and fair dealing. 17 II. 18 LEGAL STANDARD In order to survive a motion to dismiss for failure to state a 19 claim, a complaint need only include “a short and plain statement 20 of the claim showing that the pleader is entitled to relief.” 21 Atl. Corp. v. Twombly, 550 U.S. 544, 55 (2007) (quoting Conley v. 22 Gibson, 355 U.S. 41, 47 (1957)). 23 “sufficient factual matter, accepted as true, to state a claim to 24 relief that is plausible on its face.” 25 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). 26 considering a Rule 12(b)(6) motion, a court must “accept as true 27 all allegations of material fact and must construe those facts in Bell A complaint must include 28 3 Ashcroft v. Iqbal, 556 U.S. When 1 the light most favorable to the plaintiff.” 2 F.3d 443, 447 (9th Cir. 2000). 3 III. DISCUSSION 4 A. Resnick v. Hayes, 213 Defendant’s Request that the Court Consider Certain Documents 5 Under the Incorporation by Reference Doctrine 6 Defendant asks the Court to consider certain documents 7 allegedly related to the insurance policy and the decision to 8 terminate benefits. 9 dispute the authenticity of these documents but argues that the (Decl. Paula McGee & Exs.) Plaintiff does not 10 Court should not consider most of them, as they are not attached to 11 the complaint and do not fall within any relevant exception. 12 (Pl.’s Obj. McGee Decl.) 13 Generally, on a motion to dismiss, if “matters outside the 14 pleadings are presented to and not excluded by the court, the 15 motion must be treated as one for summary judgment.” 16 P. 12(d). 17 doctrine, a court may consider documents “whose contents are 18 alleged in a complaint” or that “plaintiff’s claim depends on,” as 19 long as the authenticity of the document is not disputed. 20 v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). 21 language is also sometimes phrased as “central to,” (id. (quoting 22 Horsley v. Feldt, 304 F.3d 1125, 1135 (11th Cir.2002)), “crucial 23 to,” 24 “integral to,” id. at 706, n.4, or “the basis of” the complaint. 25 United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). 26 contrast, where the documents are not cited or referred to in the 27 complaint, are not “integral to” the complaint, and serve only as 28 evidence intended to undermine the factual basis of plaintiff’s Fed. R. Civ. However, under the “incorporation by reference” Knievel The “depends on” Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998), 4 By 1 claims, consideration under the incorporation by reference doctrine 2 is inappropriate. 3 847 F. Supp. 2d 1253, 1259 (S.D. Cal. 2012). 4 In re Jiffy Lube Int'l, Inc., Text Spam Litig., After reviewing the claims in the complaint, the Court 5 concludes that it is appropriate to consider the following exhibits 6 to the McGee declaration: Exhibit A, the insurance policy; Exhibit 7 C, a July 29, 2011 letter approving short term total disability 8 benefits; Exhibit D, a June 29, 2012 letter approving long term 9 total disability benefits; Exhibit J, the August 11, 2014 letter 10 terminating payment of benefits; and Exhibit K, the February 5, 11 2015, letter denying Plaintiff’s appeal of the termination. 12 of these is explicitly or implicitly referenced in the complaint, 13 and Plaintiff’s complaint depends on, at a minimum, the existence 14 of a contract and the termination of benefits that are alleged to 15 be owed under the contract. 16 consider these documents along with the complaint in the motion to 17 dismiss. 18 Each It is therefore appropriate to Many of the documents, however, are statements by doctors as 19 to Plaintiff’s ability to work, or communications between 20 Defendant’s agent and certain examining doctors. 21 reasons not to consider these. 22 all, of the documents in her complaint. 23 complaint does not depend for its validity on the medical opinion 24 of any particular doctor (even her own); nor does it even depend on 25 the conclusions drawn by Dr. Dennis or Defendant’s vocational 26 department. 27 may not) be relevant evidence at trial, to help the finder of fact 28 determine whether Plaintiff had a disability within the meaning of There are good Plaintiff refers to some, but not However, Plaintiff’s Although all those opinions and conclusions may (or 5 1 the insurance policy, they are not appropriate for the Court to 2 consider on a motion to dismiss. 3 implicated in relying on such documents that likely require them to 4 be submitted to a fact-finder’s judgment after appropriate 5 evidentiary rulings and cross-examination.1 There are credibility issues Exhibit B, a “University Statement” showing Plaintiff’s 6 7 employment status and last day of work, may be helpful in 8 establishing the timeline of events, but it also does not form the 9 basis of Plaintiff’s complaint. The document allegedly records 10 facts about her employment history, but it performs no legal 11 function in Plaintiff’s complaint. The exhibits other than A, C, D, J, and K therefore form no 12 13 part of the basis for the Court’s decision. 14 The Court also does not consider the statements of Ms. McGee 15 in her declaration, except to the extent that they authenticate the 16 documents on which the Court relies. 17 possibly depend on Ms. McGee’s statements, which were made after 18 the complaint was written. 19 B. 20 Plaintiff’s complaint cannot Breach of Contract To state a claim for breach of contract under California law, 21 a plaintiff must allege “(1) existence of the contract; (2) 22 plaintiff's performance or excuse for nonperformance; (3) 23 defendant's breach; and (4) damages to plaintiff as a result of the 24 25 1 26 27 28 The Court will not, for example, impute to the complaint statements of medical opinion allegedly given over the telephone by a physician (who may not have used words in their technical legal sense), and later memorialized in a letter drafted by Defendant’s agent, whether the authenticity of the letter is called into question or not. (E.g., Ex. G.) 6 1 breach.” 2 1239 (2008). 3 CDF Firefighters v. Maldonado, 158 Cal. App. 4th 1226, Defendant argues that Plaintiff has not adequately pled the 4 terms of the contract. 5 copy of the contract, which Plaintiff does not dispute the 6 authenticity of, the Court finds the existence of the contract, and 7 the nature of its terms, to be adequately pled. 8 A.) However, as Defendant has itself provided a (McGee Decl., Ex. 9 Defendant does not dispute that Plaintiff adequately alleges 10 her own performance under the contract, nor that, if the contract 11 was breached, loss of benefits would supply the necessary damages. 12 Thus, the key question is what Defendant’s duties were under the 13 contract, and whether Plaintiff properly alleges breach. 14 The insurance policy appears to provide for at least three 15 different kinds of coverage: partial disability coverage; “short 16 term” total disability coverage; and “long term” total disability 17 coverage. 18 alleges Defendant wrongfully denied coverage under the total 19 disability provisions. (McGee Decl., Ex. A at P00022-33, P00045-46.) Plaintiff 20 The key term of those provisions, “total disability,” is 21 defined in two different ways, depending on the length of the 22 disability: 23 “Total Disability” or “Totally Disabled” with respect to Short 24 Term Disability coverage means the Covered Person will be 25 considered Totally Disabled when Liberty determines that . . . 26 1. Due to a medically determinable physical impairment or 27 mental impairment resulting from a bodily injury or disease, 28 7 1 the Covered Person is completely unable to perform any and 2 every duty pertaining to his/her own occupation . . . . 3 4 “Total Disability” or “Totally Disabled” with respect to Long 5 Term Disability Coverage means the Covered Person will be 6 considered Totally Disabled when . . . 7 From the 13th month of benefits onward: 8 1. Due to a medically determinable physical impairment or 9 mental impairment resulting from a bodily injury or disease, 10 the Covered Person is completely unable to perform the 11 material and substantial duties of any occupation for which 12 he/she is reasonably fitted by education, training or 13 experience . . . . 14 15 (McGee Decl., Ex. A at P00018 (emphases in original).) Thus, the terms of the contract allow that a covered person 16 may receive benefits for 12 months (“short term” benefits) based on 17 inability to perform the duties of her own occupation. 18 alleges that she “in a timely fashion . . . submitted a long term 19 disability claim to Liberty Life.” 20 provide specific dates. 21 Defendant appear to show that Defendant provided short term total 22 disability benefits for exactly 12 months (June 2011 to June 2012), 23 approved long term total disability benefits in June 2012, and then 24 terminated benefits in August 2014. 25 Taken as part of the pleading, these documents show that short-term 26 total disability payments were made in conformity with the 27 provisions of the contract; therefore, the only remaining question (FAC, ¶ 9.) Plaintiff She does not Nonetheless, the documents submitted by 28 8 (McGee Decl., Exs. C, D, J.) 1 is whether there has been a breach of the long-term total 2 disability provisions. 3 Those provisions state that the insured may only receive 4 benefits after the short-term benefit expires based on an inability 5 to perform the duties of “any occupation for which he/she is 6 reasonably fitted by education, training or experience.” 7 phrase means is the crux of this motion. 8 9 What that The “definitions” section of the policy does not define “occupation,” “education,” “training,” or “experience.” Therefore, 10 in keeping with general principles of California contract law, the 11 Court interprets contract terms to “their ordinary and popular 12 sense, unless . . . a special meaning is given to them by usage.” 13 George v. Auto. Club of S. California, 201 Cal. App. 4th 1112, 1120 14 (2011) (internal quotation marks omitted). 15 notes that “[t]he meaning of particular words or groups of words 16 varies with the verbal context and surrounding circumstances.” 17 at 1121 (internal quotation marks and ellipses omitted). 18 Additionally, the Court Id. The phrase “any occupation” in a disability policy of this 19 kind has been given a special meaning by California cases – 20 especially Erreca v. W. States Life Ins. Co., which both parties 21 cite.2 22 farmer, was thrown from a horse and seriously injured; even after 23 being released from the hospital, he was unable to walk for any 24 extended period and suffered “shortness of breath and quick heart 25 action.” 19 Cal. 2d 388 (1942). Id. at 390. In that case, the insured, a In his occupation as a farmer, he 26 2 27 28 Indeed, “California law requires courts to deviate from the explicit policy definition” of “any occupation” to the degree that it conflicts with the definition given in Erreca. Hangarter v. Provident Life & Acc. Ins. Co., 373 F.3d 998, 1006 (9th Cir. 2004). 9 1 “personally managed and supervised the farm work” and was 2 “compelled to engage in activities requiring physical exertion,” 3 including outright manual labor. 4 accident, he turned day-to-day management of the operation over to 5 his son, although he still participated in the negotiation of 6 leases and loans and other such non-physical business activities. 7 Id. at 392-93. 8 9 Id. at 391-92. After the The Erreca court distinguished between “occupational” disability policies, which insure against the loss of the ability 10 to engage in a specific occupation, and “general” disability 11 policies, which insure “against” total and permanent disability 12 which prevents the insured from performing the work of any 13 occupation.” 14 functions as an occupational policy as to short-term total 15 disability – referring to the insured’s “own occupation” – but 16 converts to a general policy for disabilities lasting longer than 17 12 months. 18 Id. at 393. The policy in the present case, then, However, the primary teaching of Erreca is that even a general 19 disability policy must take into account the individual’s personal 20 circumstances in determining his ability to work in “any 21 occupation”: 22 The authorities supporting this rule define total disability 23 which prevents the insured from engaging in any occupation or 24 performing any work for compensation as a disability which 25 prevents his working with reasonable continuity in his 26 customary occupation or in any other occupation in which he 27 might reasonably be expected to engage in view of his station 28 and physical and mental capacity. 10 1 This construction of the words ‘any occupation’ is based upon 2 the theory that it is unreasonable to deprive an uneducated 3 laborer, disabled from performing any manual work, of the 4 benefits of his policy, because he might, notwithstanding 5 those disabilities, with training and study, pursue a 6 profession at some future date, or become an accountant or a 7 banker. And it would be equally unreasonable to hold that a 8 doctor, lawyer, or business executive is not totally disabled 9 from engaging in ‘any occupation’ or from performing ‘any 10 work’ because he is able to run a news stand or work as a day 11 laborer. 12 Id. at 394-95 (emphases added) (internal quotation marks and 13 citations omitted). 14 Co., 150 Cal.App.3d 610, 630 (1984)(employee is not totally 15 disabled if he can work “with reasonable continuity in his 16 customary occupation or in any other occupation in which he might 17 reasonably be expected to engage.”) (emphasis added). See also Moore v. American United Life Ins. 18 It should be noted that Erreca does not create a bright line 19 rule as to whether an insured person may receive benefits under a 20 general total disability policy if he can work or has worked part- 21 time. 22 the ability to work occasionally or intermittently, but not 23 regularly, does not preclude a finding of total disability. 24 Erreca, 19 Cal. 2d at 396-99 (holding that “[r]ecovery is not 25 precluded under a total disability provision because the insured is 26 able to perform sporadic tasks” and citing cases in which sporadic 27 employability did not preclude total disability); Wible v. Aetna 28 Life Ins. Co., 375 F. Supp. 2d 956, 970 (C.D. Cal. 2005) (“[T]he But the requirement of “reasonable continuity” means that 11 1 ability to work sporadically or part time is an insufficient ground 2 on which to deny benefits under a ‘total disability’ policy.”). 3 Indeed, even actual attempts to return to work, over a two-year 4 period, do not render a person less than totally disabled. 5 v. Prudential Ins. Co. of Am., 27 Cal. App. 2d 195, 216 (1938); 6 Zambito v. Nw. Mut. Life Ins. Co., 85 F. App'x 625, 627 (9th Cir. 7 2004). 8 line from “sporadic” employability to being able to carry on an 9 “occupation” in a reasonably continuous way, even if only part Wright Thus, the question of when an insured party crosses the 10 time, is a question of fact that will usually be submitted to the 11 jury. 12 of Am. v. S., 179 Ga. 653 (1934)). 13 Wright, 27 Cal. App. 2d at 209 (quoting Prudential Ins. Co. The FAC sometimes directly alleges Plaintiff’s symptoms or her 14 inability to work and sometimes merely alleges statements from 15 doctors. 16 Plaintiff and accepting her allegations as true, the Court finds 17 that Plaintiff alleges ongoing pain, swelling, and an inability to 18 sit for long periods, “handle stressful situations,” or do 19 repetitive manual tasks. 20 generally inactive due to her illnesses and that she needs physical 21 therapy. 22 “sedating” medications, which leave her fatigued, and that she 23 suffers from depression. 24 alleges that “her current limitations [do] not allow her to work.” 25 (Id. at ¶ 21.) 26 have said that “fatigue” could be a “limiting factor” preventing 27 her from taking full-time work, that she cannot return to nursing But taking the allegations in the light most favorable to (FAC, ¶ 21.) (Id. at ¶¶ 10, 15.) She alleges she is She also alleges that she requires (Id. at ¶ 12, 18.) Plaintiff alleges On the other hand, she also alleges that doctors 28 12 1 or patient care, but that she might be able to do “light duty 2 work.” 3 (Id. at ¶¶ 12, 15.) The parties spend a good deal of their briefs on this last 4 phrase, attempting to divine from it a determinative answer to 5 whether there has been a breach of contract. 6 a case under the Fair Employment and Housing Act, attempts to 7 distinguish between “light duty,” which she describes as “positions 8 . . . created for the purpose of accommodating a disabled 9 employee,” and “light occupations,” defined under the Social Plaintiff, relying on 10 Security regulations as jobs requiring frequent walking or standing 11 with intermittent sitting. 12 other hand, cites a long line of federal authority, including many 13 cases decided under the federal ERISA statute, stating that a 14 claimant who can work part time is not totally precluded from 15 working “any occupation.” 16 (Opp’n at 6 & n.5.) Defendant, on the (Reply at 11.) Both lines of reasoning are red herrings. Nothing in the 17 Erreca line of cases speaks of “light duty” or a “light 18 occupation.” 19 insurance law – numerous federal courts have held that ERISA 20 specifically preempts California’s definition of “total disability” 21 under Erreca. 22 2d 1274, 1282-83 (N.D. Cal. 2012). 23 ERISA, and Defendant has not argued that ERISA applies to this 24 policy.3 And ERISA cases are irrelevant to California Brady v. United of Omaha Life Ins. Co., 902 F. Supp. This case is not brought under 25 26 27 28 3 Insurance plans provided by government agencies to their employees are exempt from ERISA. 29 U.S.C. §§ 1002(32), 1003(b)(1). 13 1 Rather, the correct standard is the one discussed above. On 2 that standard, taking Plaintiff’s allegations as true and taking 3 all inferences in her favor, breach is adequately pled. 4 symptoms as alleged, and the allegations as to their impact on her 5 ability to work, support an inference that she either cannot work 6 at all or can only work “sporadically,” rather than “with 7 reasonable continuity” in an occupation appropriate to her 8 “station” and “capacity.”4 9 that is needed to support her claim for breach of contract. Erreca, 19 Cal. 2d at 395. 10 C. That is all Plaintiff’s breach claim therefore survives. 11 Her Breach of Covenant of Good Faith and Fair Dealing 12 Plaintiff alleges that Defendant breached the covenant of good 13 faith and fair dealing by, essentially, selectively and dishonestly 14 reading the record of physician statements in Plaintiff’s claim 15 file in order to come to the conclusion that she was not totally 16 disabled. 17 cannot make out a claim for breach of the covenant, because there 18 was a genuine dispute as to coverage. 19 (FAC, ¶ 26.) Defendant, however, argues that Plaintiff (Mot. Dismiss at 14-15.) Under California law, “Every contract imposes upon each party 20 a duty of good faith and fair dealing in its performance and its 21 enforcement.” 22 California, Inc., 2 Cal. 4th 342, 371 (1992). Carma Developers (Cal.), Inc. v. Marathon Dev. “The covenant . . . 23 4 24 25 26 27 28 At oral argument, Plaintiff’s counsel suggested that Plaintiff specifically could not work at the alternative occupations identified by Defendant because those jobs require mental acuity, and Plaintiff’s mental functioning is diminished by both her depression and the sedating effect of her medication. Although the point was not directly argued in the papers, the allegation of a sedating effect of Plaintiff’s medication, at the very least, supports an inference that she may not be able to work at occupations for which she is trained and suited, apart from her physical limitations or any question of full-time versus part-time. 14 1 finds particular application in situations where one party is 2 invested with a discretionary power affecting the rights of 3 another. 4 Such power must be exercised in good faith.” Id. at 372. In this case, Defendant was invested under the policy with the 5 power to determine eligibility for benefits, and so it was under a 6 duty to exercise that power in good faith – i.e., to make a 7 reasonable determination. 8 388, 409 (Bankr. C.D. Cal. 2015) (an insurer breaches covenant if 9 its investigation of an insured's claim is unreasonable). 10 In re C.M. Meiers Co., Inc., 527 B.R. Here, Plaintiff alleges that Defendant failed to consider the 11 opinion of the first physician it hired, hired another physician 12 “predisposed” to make findings in Defendant’s interest, conducted a 13 biased and selective review of the record, and “mischaracterized” 14 the opinions of her prior physicians. 15 allegations would suffice to state a claim for bad faith 16 investigation. 17 (FAC, ¶ 26.) If true, those Defendant argues that its determination of benefits, even if 18 objectively in breach of contract, was reasonable, because there 19 was a “genuine dispute” as to Plaintiff’s level of disability. 20 (Mot. Dismiss at 14 (citing, inter alia, Wilson v. 21st Century 21 Ins. Co., 42 Cal. 4th 713, 723 (2007)).) 22 even on Plaintiff’s pleadings, the record shows that it made its 23 determination of coverage on “substantial evidence,” because it 24 relied on several expert opinions. 25 as Plaintiff alleges, those opinions were biased or based on 26 incomplete or mischaracterized evidence, the investigation could 27 still be unreasonable. 28 those allegations are true and whether the investigation was Defendant argues that (Mot. Dismiss at 15.) But if, A full factual record may clarify whether 15 1 reasonable, which is why the “genuine issue” doctrine is generally 2 applied at the summary judgment stage. 3 D. 4 Wilson, 42 Cal. 4th at 724. Punitive Damages Punitive damages are not available for breach of contract, but 5 may be available for breach of the covenant of good faith and fair 6 dealing, which is essentially a tort claim, “where it is proven by 7 clear and convincing evidence that the defendant has been guilty of 8 oppression, fraud, or malice.” 9 insurance cases, the evidence needed to show “oppression” is the Cal. Civ. Code § 3294(a). In 10 same as the evidence needed to show bad faith. 11 v. Innovative Products Sales & Mktg., Inc., 78 Cal. App. 4th 847, 12 890 (2000). 13 “dimension” than that which would be enough to make out a 14 “marginally sufficient” case for bad faith. 15 Shade Foods, Inc. But the conduct involved must be of a different Id. at 909-10. Plaintiff alleges serious misconduct in Defendant’s 16 investigation, as noted above.5 17 misconduct (if any) is, inherently, a factual question that, like 18 the claim of bad faith, is best resolved on a complete factual 19 record. 20 E. 21 The degree or “dimension” of that Treble Damages Plaintiff seeks treble punitive damages under Cal. Civ. Code § 22 3345, which allows for such damages in cases involving “unfair or 23 deceptive acts or practices” against senior citizens and the 24 25 26 27 28 5 Defendant argues that punitive damages against a corporate entity are only available if on officer, director, or managing agent of the entity “authorized or ratified the wrongful conduct.” Cal. Civ. Code § 3294(b). However, an “unwillingness to reconsider a denial when presented with evidence of factual errors” supports an inference that the corporation authorized or ratified the wrongful conduct. Shade Foods, 78 Cal. App. 4th at 880. 16 1 disabled, “[w]henever a trier of fact is authorized by a statute to 2 impose either a fine, or a civil penalty or other penalty, or any 3 other remedy the purpose or effect of which is to punish or deter.” 4 Numerous cases have held that treble damages are available when a 5 senior citizen or disabled person sues an insurer and seeks 6 punitive damages under Cal. Civ. Code § 3294 – and, indeed, that § 7 3345 was enacted specifically to enable treble damages when 8 punitive damages were authorized under § 3294. 9 Life Ins. Co., 545 F. Supp. 2d 1061, 1066-67 (C.D. Cal. 2008) Ross v. Pioneer 10 (reviewing the legislative history); Hood v. Hartford Life & Acc. 11 Ins. Co., 567 F. Supp. 2d 1221, 1227-28 (E.D. Cal. 2008); Williams 12 v. Prudential Ins. Co., No. C 08-04170 SI, 2010 WL 431968, at *4 13 (N.D. Cal. Feb. 2, 2010). 14 persuasive. 15 The reasoning of these cases remains Defendant argues that these cases are overruled by Clark v. 16 Superior Court, 50 Cal. 4th 605 (2010). 17 Court can find nothing in Clark that prevents recovery under § 3345 18 where a disabled plaintiff successfully proves that punitive 19 damages are merited under § 3294 against an insurer who has engaged 20 in unfair practices. 21 that treble damages were not available in a suit under California’s 22 unfair competition law, because that statute provides only for 23 restitution, not damages, and restitution is not punitive in 24 nature. 25 obviously are punitive in nature, so the limitation announced in 26 Clark is not applicable.6 (Reply at 24-25.) But the In Clark the California Supreme Court held 50 Cal. 4th at 614. Punitive damages under § 3294 At least two post-Clark cases have found 27 6 28 However, the holding in Clark does dispose of one of (continued...) 17 1 that § 3345 applies to statutory punitive damages, including one 2 case involving Defendant itself, on causes of action similar to 3 those asserted here. 4 Boston, No. C 14–01587 RS, 2014 WL 4099128 at *5 (N.D. Cal. Aug. 5 19, 2014); Johnston v. Allstate Ins. Co., No. 13-CV-574-MMA BLM, 6 2013 WL 2285361, at *4 (S.D. Cal. May 23, 2013). 7 Alberts v. Liberty Life Assurance Co. of Defendant also argues that the plain language of the statute 8 excludes the trebling of punitive damages, because the statute does 9 not repeat the cumbersome phrase “the purpose or effect of which is 10 to punish or deter” after every iteration of the words “other 11 remedy.” 12 frivolous. 13 plain that the “other remedy” referred to again in the second 14 sentence must be the “other remedy the purpose or effect of which 15 is to punish or deter,” because that “other remedy” is tied to “the 16 statute” – i.e., the statute in the first sentence that authorizes 17 the “fine, “civil penalty or other penalty,” or “other remedy.” 18 IV. 19 (Reply at 10-11.) This argument borders on the The parallel construction of the statute makes it quite CONCLUSION Defendant’s motion to dismiss is DENIED. 20 IT IS SO ORDERED. 21 Dated:June 23, 2015 DEAN D. PREGERSON United States District Judge 22 23 24 25 26 27 28 6 (...continued) Defendant’s other arguments, that the statute does not mean what it says about “other remedies” because “[a]ll remedies have some punitive or deterrent purpose or effect.” (Reply at 10.) That may be true in some larger sociological sense, but Clark makes quite plain that it is not true of, e.g., restitutionary remedies for § 3345 purposes. Thus, “remedy the purpose or effect of which is to punish or deter” should be read in an ordinary, common-sense way – that is, to include punitive damages authorized by statute. 18
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