Dao v. Liberty Life Assurance Company of Boston

Filing 141

ORDER GRANTING PLAINTIFF'S MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT 127 (Illston, Susan) (Filed on 2/22/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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HONG-NGOC T. DAO,

Case No. 14-cv-04749-SI

Plaintiff,
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v.
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United States District Court
Northern District of California

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LIBERTY LIFE ASSURANCE COMPANY
OF BOSTON,

ORDER GRANTING PLAINTIFF’S
MOTION FOR LEAVE TO FILE
SECOND AMENDED COMPLAINT
Re: Dkt. No. 127

Defendant.

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Plaintiff’s motion for leave to file a second amended complaint is scheduled for a hearing

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on February 26, 2016. Pursuant to Civil Local Rule 7-1(b), the Court determines that the matter is

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appropriate for resolution without oral argument, and VACATES the hearing.

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Plaintiff seeks leave to file a second amended complaint to add factual allegations

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regarding certain actions defendant took with regard to offsetting plaintiff's disability benefits

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under her insurance policy based upon plaintiff's receipt of Social Security benefits. Specifically,

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plaintiff seeks to add several paragraphs alleging that "after the Court issued its July 2015 decision

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on LIBERTY'S motion to dismiss, LIBERTY discontinued benefit payments under the guise of

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recovering a debt it claimed Plaintiff owed it for overpaying benefits . . . . " Proposed Second

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Amended Complaint ¶ 106; see also id. ¶ 109 ("LIBERTY'S subsequent reduction of benefit

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payments after litigation had started was, and is, also unreasonable and demonstrates ongoing bad

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faith."). Plaintiff's prior complaint included allegations regarding the Social Security offset in

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support of plaintiff's claim for breach of the implied covenant of good faith and fair dealing (see

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Dkt. 40 ¶¶ 19-22, 31-36, 46) but this is the first time that plaintiff seeks to include such allegations

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under her breach of contract claim.

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Defendant opposes the motion on several grounds. Defendant asserts that plaintiff has

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unduly delayed in seeking to amend the complaint, and that defendant will be prejudiced because

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plaintiff did not seek leave to amend until after the close of written non-expert discovery and after

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plaintiff's deposition was taken. Defendant also argues that the proposed amendment is futile

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because courts have held that an insurance policy's Social Security offset provision, as well as

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related provisions permitting recoupment of overpayments in light of a retroactive Social Security

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benefits award, are legal under the Social Security Act. Plaintiff responds that defendant has long

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been on notice of plaintiff's challenge to the Social Security offset provision in her insurance

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policy, and that she seeks only to add limited allegations regarding newly-arising conduct in

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connection with a question that is already before the Court.
The Court concludes that plaintiff should be permitted to amend the complaint. The Court

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United States District Court
Northern District of California

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finds that defendant has not demonstrated that it will be prejudiced by the amendment because

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plaintiff has challenged the Social Security offset provision since at least April 2015 when

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plaintiff filed the first supplemental complaint. If there is specific discovery that defendant wishes

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to take regarding plaintiff's breach of contract claim as it relates to the Social Security offset

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provision, the Court directs the parties to meet and confer. If the parties are unable to resolve any

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disagreements regarding the need for additional discovery, defendant may seek leave of Court to

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propound additional discovery. With regard to futility, the Court has previously held that the

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parties' arguments regarding the legality of the Social Security offset provision should be resolved

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on a fuller factual record and not on the pleadings.

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Accordingly, for the reasons set forth above, the Court GRANTS plaintiff’s motion for

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leave to file a second amended complaint. Plaintiff shall file the second amended complaint no

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later than February 26, 2016.

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IT IS SO ORDERED.

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Dated: February 22, 2016
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SUSAN ILLSTON
United States District Judge

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