Pagendarm v. Life Insurance Company of North America

Filing 24

ORDER granting 17 Motion to Dismiss for lack of subject matter jurisdiction. The Clerk shall close the file. Signed by Judge Edward J. Davila on 12/15/2017. (ejdlc3S, COURT STAFF) (Filed on 12/15/2017) Modified on 12/15/2017 (ejdlc1S, COURT STAFF).

1
2
3
4

UNITED STATES DISTRICT COURT

5

NORTHERN DISTRICT OF CALIFORNIA

6

SAN JOSE DIVISION

7
JOHN PAGENDARM,

8

Case No. 5:17-cv-04131-EJD

Plaintiff,
9

ORDER GRANTING DEFENDANT'S
MOTION TO DISMISS PLAINTIFF'S
COMPLAINT

v.
10
LIFE INSURANCE COMPANY OF
NORTH AMERICA,

United States District Court
Northern District of California

11

Re: Dkt. No. 17

Defendant.

12
13

I. INTRODUCTION
Plaintiff John Pagendarm (“Plaintiff”) brings this action for declaratory, injunctive and

14
15

monetary relief pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), 29

16

U.S.C. §1001 et seq. Defendant Life Insurance Company of North America (“Defendant”) moves

17

to dismiss the complaint for lack of subject matter jurisdiction and for failure to state a claim upon

18

which relief can be granted. The Court finds it appropriate to take the motion under submission

19

for decision without oral argument pursuant to Civil Local Rule 7-1(b). For the reasons set forth

20

below, Defendant’s motion to dismiss is granted.
II. BACKGROUND1

21
22

Plaintiff is a 54-year old male who resides with his wife in Campbell, California. In 1988,

23

Plaintiff was hired into a product development position at Southwall Technologies, Inc.

24

(“Southwall”) and shortly thereafter started running a lab to support product development.

25
26
27
28

1

The Background summarizes the allegations in the complaint. All well-pleaded facts in the
complaint are accepted as true for purposes of adjudicating the instant motion.
CASE NO.: 5:17-CV-04131-EJD
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS PLAINTIFF'S COMPLAINT
1

1

In August 1999, Plaintiff was involved in an accident in the Grand Teton National Park.

2

He fell head-first onto a boulder and had his head wedged into a crevice. Plaintiff suffered severe

3

traumatic brain injury (“TBI”), despite the fact that he was wearing a helmet. Plaintiff remained in

4

a coma for approximately a month following the accident. After emerging from the coma,

5

Plaintiff began extensive physical therapy and rehabilitation.

6

In early 2000, Plaintiff was still suffering from severe cognitive impairments and TBI-

7

related fatigue. Nevertheless, Plaintiff returned to Southwall to perform a modified job on a

8

reduced schedule. According to Plaintiff and his family, Plaintiff’s return to work was made

9

possible by his good relationship with his boss and the fact that Plaintiff returned to the lab he had

10

United States District Court
Northern District of California

11

created and was being run by people who he had trained.
In 2003, Plaintiff was laid off as part of a reduction in force. After being unemployed for

12

two years and taking classes to become a Certified Reliability Engineer, Plaintiff was hired in

13

2005 by United Defense Industries as a Bradley Fighting Vehicle Reliability Engineer. United

14

Defense Industries was later acquired by BAE System, Inc. (“BAE”) and Plaintiff continued his

15

employment with BAE for several years. At BAE, Plaintiff participated in his company’s ERISA

16

benefits plan, including the long-term disability (“LTD”) plan. The plan was insured and

17

administered by Defendants.

18

In 2014, Plaintiff was out hiking when he came across a man collapsed on the trail.

19

Plaintiff performed CPR, but the man did not survive. Following this incident, Plaintiff began

20

exhibiting symptoms of panic, emotional lability and post-traumatic stress disorder (“PTSD”). He

21

also experienced a sudden episode of suicidal thoughts that resulted in a deterioration of self-care

22

skills and a large weight gain.

23

In January 2014, Plaintiff’s doctor, Dr. Kiernan, placed Plaintiff on short-term disability

24

leave based upon his cognitive disorder due to head injury. Dr. Kiernan later cleared Plaintiff to

25

return to work part-time with the restriction that he was to perform only one task at a time. Upon

26

returning to work, Plaintiff was unable to communicate effectively with others and could not do

27
28

CASE NO.: 5:17-CV-04131-EJD
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS PLAINTIFF'S COMPLAINT
2

1

his job well or without mistakes.
In approximately 2015 or 2016, Plaintiff’s job changed so that Plaintiff was required to

2
3

work on the entire Bradley Fighting Vehicle instead of only one part of the Vehicle as he had done

4

in the past.
In March 2016, Plaintiff’s TBI-related symptoms forced him to cease working. On August

5
6

11, 2016, Plaintiff’s treating psychiatrist, Dr. Gayle Hylton, noted that Plaintiff’s coping skills at

7

work were losing effectiveness and that Plaintiff was not as capable of coping with day-to-day

8

stress.
Plaintiff applied for LTD benefits. In a letter dated November 17, 2016, Defendant denied

10

Plaintiff’s claim on the grounds that he had failed to establish any impairment that would preclude

11
United States District Court
Northern District of California

9

him from performing his job. In order to provide Defendant with evidence of his cognitive

12

impairments, Plaintiff underwent an neuropsychological evaluation by Dr. Alexis Smith-

13

Baumann, who diagnosed Plaintiff as having a cognitive disorder due to traumatic brain injury and

14

PTSD in partial remission.
On May 9, 2017, Plaintiff appealed the denial of his claim. By letter dated June 23, 2017,

15
16

Defendant informed Plaintiff that it had reversed its decision and now agreed that he was disabled,

17

stating, “a determination has been made that the prior decision should be overturned. This means

18

that you are entitled to benefits payable under the policy as long as you continue to meet the terms

19

and conditions of the policy.”2
On July 11, 2017, Plaintiff received a second letter stating that Plaintiff’s “claim for long

20
21

term disability benefits” had been “overturned on appeal.”3 Defendant also informed Plaintiff that

22

the 24-month mental illness limitation applied to Plaintiff’s claim. The letter stated in pertinent

23
24
25
26
27
28

2

The Court takes judicial notice of the June 23, 2017 letter, which is referenced in the complaint
and relied upon by Plaintiff, and is attached as Exhibit 4 to the Declaration of Richard Lodi in
Support of Defendant’s Motion (Dkt. No. 17-2).
3
The Court takes judicial notice of the July 11, 2017 letter, which is referenced in the complaint
and relied upon by Plaintiff, and is attached as Exhibit 5 to the Declaration of Richard Lodi in
Support of Defendant’s Motion (Dkt. No. 17-2).
CASE NO.: 5:17-CV-04131-EJD
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS PLAINTIFF'S COMPLAINT
3

1
2
3
4
5
6
7

part as follows:
According to medical information on file, the primary diagnosis is
post-traumatic stress disorder. Therefore, [the 24-month mental
illness limitation] applies to [Plaintiff’s] claim and benefits will
cease as of September 25, 2018 provided he remain totally disabled
due to this condition.
We will continue to monitor his claim, and periodically, we will
request updated information to confirm his restrictions and
limitations. Please be aware that payment of future benefits will
depend on confirmation of continuing disability status, and on other
applicable contract provisions.

8
9
10

United States District Court
Northern District of California

11

The letter also notified Plaintiff that a check had been sent to his counsel’s office for benefits due
as of September 26, 2016 and that his monthly benefit check would be $3,771.00.
Plaintiff initiated this suit on July 21, 2017. Plaintiff alleges that Defendant violated the

12

terms of the policy by approving benefits subject to the 24-month mental illness limitation instead

13

of approving benefits without limitation. Plaintiff seeks an order requiring Defendant to pay LTD

14

benefits without limitation, as well as prejudgment interest, attorneys’ fees and costs.

15
16

III. DISCUSSION
Defendant moves to dismiss the complaint for lack of subject matter, arguing that Plaintiff

17

has not met the “injury in fact” requirement, lacks standing and his claim is not ripe. Defendant

18

reasons that Plaintiff is presently receiving benefits and his claim is premature unless and until

19

Defendant denies Plaintiff benefits. Defendant also asserts that Plaintiff has failed to exhaust his

20

administrative remedies. In support of the motion, Defendant has submitted a copy of a letter

21

from Defendant to Plaintiff’s counsel dated October 23, 2017, stating that the July 11, 2017 letter

22

was not intended to be a decision denying benefits.

23

Plaintiff objects to any consideration of the October 23, 2017 letter as being beyond the

24

scope of the pleadings and opposes dismissal for several reasons. First, Plaintiff contends that

25

ERISA explicitly authorizes his suit to “clarify his rights to future benefits.” 29 U.S.C.

26

§1132(a)(1)(B). Plaintiff seeks clarification that he is entitled to an award of benefits based on a

27
28

CASE NO.: 5:17-CV-04131-EJD
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS PLAINTIFF'S COMPLAINT
4

1

physical disability instead of based upon the mental illness provision of the policy. Second,

2

Plaintiff contends that he could not delay suit because of the contractual statute of limitations

3

provision, which provides that “no action shall be brought more than 3 years after the time

4

satisfactory proof of loss is required to be furnished.” 4 Third, relying on the July 11, 2017 letter,

5

Plaintiff contends Defendant repudiated liability based on a physical impairment. Fourth, Plaintiff

6

contends that he has sufficiently alleged Article III standing and an “injury in fact” because the

7

July 11, 2017 letter clearly stated that his “benefits will cease as of September 25, 2018.” Fifth,

8

Plaintiff asserts that he has exhausted his administrative remedies by appealing the November 17,

9

2016 denial of benefits and further exhaustion would be futile.
Federal Rule of Civil Procedure 12(b)(1) authorizes a party to seek dismissal of a suit for

10

United States District Court
Northern District of California

11

lack of subject matter jurisdiction. “Because standing and ripeness pertain to federal court’s

12

subject matter jurisdiction, they are properly raised in a Rule 12(b)(1) motion to dismiss.”

13

Chandler v. State Farm. Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010). When

14

responding to a motion to dismiss for lack of subject matter jurisdiction where the issues of

15

jurisdiction and substance are not intertwined, the plaintiff bears the burden of proof. Id. If a

16

factual attack to subject matter jurisdiction is made, such as in this case, the court may consider

17

extrinsic evidence, and if the evidence is disputed, weigh the evidence and determine the facts.

18

See Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987) (“[T]he existence of disputed

19

material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional

20

claims.”).
When a factual attack to subject matter jurisdiction is made and the motion is resolved

21
22

without an evidentiary hearing, such as in this case, the allegations in the complaint are accepted

23

as true. See McLachlan v. Bell, 261 F.3d 908, 909 (9th Cir. 2001). Further, without an

24
25
26
27
28

4

The Court takes judicial notice of the group long term disability benefits policy for employees of
BAE Systems, Inc., which is referenced in the complaint and relied upon by Plaintiff, and is
attached as Exhibit 1 to the Declaration of Richard Lodi in Support of Defendant’s Motion (Dkt.
No. 17-2).
CASE NO.: 5:17-CV-04131-EJD
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS PLAINTIFF'S COMPLAINT
5

1

evidentiary hearing, the plaintiff need only establish a prima facie case of jurisdiction. Societe de

2

Conditionnement en Aluminum v. Hunter Eng. Co., Inc., 655 F.2d 938, 942 (9th Cir. 1981). In

3

the context of this lawsuit, a prima facie showing means that Plaintiff has produced admissible

4

evidence, which, if believed, would be sufficient to demonstrate that Plaintiff has suffered an

5

injury in fact, has standing and that his claim is ripe.

6

To establish a “case or controversy” within the meaning of Article III of the United States

7

Constitution, a plaintiff must show, among other things, an “injury in fact.” Spokeo, Inc. v.

8

Robins, -- U.S. --, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016). To establish an “injury in fact,”

9

Plaintiff must show he suffered an “invasion of a legally protected interest” that is “concrete and

10

particularized” and “actual or imminent, not conjectural or hypothetical.” Id. at 1548.

United States District Court
Northern District of California

11

Here, Plaintiff cannot make a prima facie showing that he has suffered an injury that is

12

sufficiently “concrete” to confer standing at present. Plaintiff alleges in his complaint that his

13

right to LTD benefits has been violated. This conclusory allegation, unsupported by facts, need

14

not be accepted as true. Moreover, the allegation is demonstrably false based upon the July 11,

15

2017 letter granting Plaintiff disability benefits, albeit under the mental disability provision.

16

Plaintiff next argues that the July 11, 2017 letter should be construed as a denial of benefits for his

17

claimed physical impairment because the letter recited that “benefits will cease” at the end of the

18

24-month mental illness limitation period. Plaintiff’s interpretation of the July 11, 2017 letter is

19

not reasonable. The July 11, 2017 letter does not mention, much less address Plaintiff’s claim for

20

benefits based upon a physical impairment. To the extent the July 11, 2017 letter is arguably

21

vague or ambiguous, the October 23, 2017 letter from Defendant’s counsel to Plaintiff counsel

22

clarifies that Defendant has not made a final determination as to Plaintiff’s eligibility for long term

23

benefits, stating as follows:

24
25
26
27
28

This is in regards to the Long Term Disability claim for [Plaintiff].
In our letter dated July 11, 2017, we notified you of the appeal
overturn decision as well as information regarding the Mental Illness
provision. . . . This letter was not intended to be an initial decision
denying benefits to [Plaintiff]. We wanted to make you and your
client aware of the 24 month provision as well as our ongoing claim
CASE NO.: 5:17-CV-04131-EJD
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS PLAINTIFF'S COMPLAINT
6

management. We will continue to monitor your client[’]s claim, and
periodically, we will request updated information from all treating
Health Care Professionals for review. These reviews consider all
disabling conditions that would prevent your client from returning to
work in his occupation or any occupation. Should your client meet
the definition of disability in any occupation due to a physical
impairment, benefits may continue beyond September 25, 2018.

1
2
3
4

Declaration of Monique Tokay In Support of Defendant’s Motion to Dismiss (Dkt. 17-8). The

5
possibility that Defendant might terminate benefits in the future is too conjectural to establish an
6
7
8
9
10

“injury in fact” at present. Further, the statutory right to sue conferred by ERISA is insufficient to
confer Plaintiff standing in the absence of an “injury in fact.” “It is settled that Congress cannot
erase Article III’s standing requirements by statutorily granting the right to sue to a plaintiff who
would not otherwise have standing.” Raines v. Byrd, 521 U.S. 811, 820, n. 3 (1997).
In the absence of subject matter jurisdiction, the Court declines to address Plaintiff’s

11
United States District Court
Northern District of California

remaining arguments.
12
V. CONCLUSION
13

For the reasons set forth above, Defendant’s motion to dismiss is GRANTED. The case is

14
ordered dismissed for lack of subject matter jurisdiction, without prejudice. The Clerk shall close
15
the file.
16
IT IS SO ORDERED.
17
Dated: December 15, 2017
18
19
20

______________________________________
EDWARD J. DAVILA
United States District Judge

21
22
23
24
25
26
27
28

CASE NO.: 5:17-CV-04131-EJD
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS PLAINTIFF'S COMPLAINT
7