Salinas Valley Memorial Healthcare System v. Monterey Peninsula Horticulture, Inc. d/b/a Rocket Farms et al
Filing
98
Order by Judge Lucy H. Koh Granting EBMS's 71 Motion to Dismiss Without Leave to Amend.(lhklc4, COURT STAFF) (Filed on 6/21/2019)
1
2
3
4
5
6
7
8
UNITED STATES DISTRICT COURT
9
NORTHERN DISTRICT OF CALIFORNIA
10
SAN JOSE DIVISION
United States District Court
Northern District of California
11
12
13
14
SALINAS VALLEY MEMORIAL
HEALTHCARE SYSTEM,
Case No. 17-CV-07076-LHK
ORDER GRANTING EBMS’S MOTION
TO DISMISS MONTEREY’S THIRD
PARTY COMPLAINT WITHOUT
LEAVE TO AMEND
Plaintiff,
v.
15
16
17
MONTEREY PENINSULA
HORTICULTURE, INC., et al.,
Re: Dkt. No. 71
Defendants.
18
19
20
21
22
23
24
25
26
27
28
Plaintiff Salinas Valley Memorial Healthcare System (“Salinas Valley”) sues Defendants
Monterey Peninsula Horticulture, Inc. (“Monterey”) and the Monterey Horticulture / Steven
Roberts Original Desserts, LLC Employee Benefit Plan (“the Plan”) to recover money allegedly
owed for healthcare services. ECF No. 1. Monterey filed a Third Party Complaint against Third
Party Defendants Employee Benefit Management Services, Inc. (“EBMS”), Advanced Medical
Pricing Solutions, Inc. (“AMPS”), Claims Delegate Services, LLC (“CDS”), and Alliant
Insurances Services, Inc. (“Alliant”) (collectively, “Third Party Defendants”). ECF No. 44
(“TPC”). Before the Court is EBMS’s motion to dismiss the TPC. Having considered the parties’
submissions, the relevant law, and the record in this case, the Court GRANTS EBMS’s motion to
1
Case No. 17-CV-07076-LHK
ORDER GRANTING EBMS’S MOTION TO DISMISS MONTEREY’S THIRD PARTY COMPLAINT WITHOUT
LEAVE TO AMEND
1
dismiss the TPC without leave to amend.
2
I.
3
4
BACKGROUND
A. Factual Background
Monterey, which does business as Rocket Farms, “provides nursery products, including
5
greenhouse growers, indoor potted foliage plants, and edible herbs, fruits and vegetables to its
6
customers.” TPC ¶ 4. Monterey is the sponsor and administrator of the Plan, as well as a
7
fiduciary of the Plan. Id.
8
9
The Plan was Monterey’s health benefit plan that existed from July 1, 2014 to June 30,
2017, and was self-funded by employer and participant contributions. Id. ¶ 9. The Plan insured
“Monterey’s employees and employees’ dependents against losses arising from their medical
11
United States District Court
Northern District of California
10
care.” Id.
12
EBMS is a Montana corporation and a “third-party administrator providing administrative
13
services, including plan design, medical bill review, and claims administrative services, to self-
14
funded plans.” Id. ¶ 5. EBMS “adjusted, reviewed and paid claims under the Plan.” Id. EBMS
15
also “determined what healthcare providers would be paid by the Plan, and in what amount.” Id.
16
Monterey alleges that in 2014, Alliant convinced Monterey to switch from a fully insured
17
plan to a self-insured plan. Id. ¶ 15. The Third Party Defendants “presented the self-insured plan
18
as a cost-savings mechanism” for Monterey. Id. ¶ 16. The Third Party Defendants also
19
“represented they were knowledgeable in self-funded plans, claim review and validation.” Id. ¶
20
17. Alliant advised Monterey to use the services of EBMS, AMPS, and CDS. Id. ¶ 18.
21
EBMS was the Claims Administrator for the Plan. Id. ¶ 21. Monterey alleges that “[t]he
22
services agreement between Monterey and EBMS listed EBMS’ duties and responsibilities as
23
Claims Administrator.” Id. The services agreement stated that EBMS’s “duties and
24
responsibilities included, but were not limited to, preparing the SPD [Summary Plan Document],
25
processing and adjudicating all claims, reviewing and responding to appeals regarding benefit
26
determinations, facilitating reviews by independent review organizations, and answering medical
27
28
2
Case No. 17-CV-07076-LHK
ORDER GRANTING EBMS’S MOTION TO DISMISS MONTEREY’S THIRD PARTY COMPLAINT WITHOUT
LEAVE TO AMEND
1
benefit and claim questions.” Id. Monterey also entered a services agreement with AMPS and
2
CDS. Id. ¶ 22.
3
Monterey alleges that EBMS “discounted virtually all substantive medical claims
4
submitted to the Plan by healthcare providers in a similar fashion,” and that EBMS “did not
5
administer the Plan according to the SPD.” Id. ¶ 23b. EBMS also “made false communications to
6
healthcare providers regarding the level of plan benefits” and the coverage that the Plan would
7
provide. Id. ¶ 23c. According to Monterey, “EBMS, CDS and AMPS exercised complete
8
authority and control over Plan assets by determining what payment would be made out of Plan
9
assets, to whom such payments would be made, and in what amount.” Id. ¶ 24.
10
Monterey alleges that the SPD “deceived Monterey, the Plan and Monterey’s employees
United States District Court
Northern District of California
11
and employee beneficiaries into believing EBMS, AMPS, and CDS were achieving savings in
12
claims paid by the Plan when no savings were actually realized or could ever possibly be
13
realized.” Id. ¶ 27.
14
Healthcare providers, including Salinas Valley, appealed benefit determinations to EBMS,
15
and then to AMPS and CDS. Id. ¶ 28. After exhausting these avenues, Salinas Valley and other
16
healthcare providers sued Monterey in various actions. Id. ¶ 29. Monterey alleges that the Third
17
Party Defendants’ actions “forced Monterey to expend significant time and resources in
18
identifying, disputing, appealing and negotiating allegedly underpaid claims.” Id. ¶ 30.
19
20
B. Procedural History
On December 12, 2017, Salinas Valley filed its complaint against Monterey and the Plan.
21
ECF No. 1. The case was originally assigned to United States Magistrate Judge Howard R. Lloyd.
22
ECF No. 4.
23
On January 12, 2018, Monterey and the Plan filed a motion to dismiss Salinas Valley’s
24
complaint. ECF No. 10. On May 31, 2018, Judge Lloyd issued an order granting in part and
25
denying in part Monterey and the Plan’s motion to dismiss. ECF No. 29.
26
27
28
On June 4, 2018, the case was reassigned to United States Magistrate Judge Virginia K.
3
Case No. 17-CV-07076-LHK
ORDER GRANTING EBMS’S MOTION TO DISMISS MONTEREY’S THIRD PARTY COMPLAINT WITHOUT
LEAVE TO AMEND
1
DeMarchi. ECF No. 30.
On June 14, 2018, Salinas Valley filed its first amended complaint. ECF No. 32 (“FAC”).
2
3
Salinas Valley brings the following claims against Monterey and the Plan: (1) recovery of
4
payments due under the Employee Retirement Income Security Act (“ERISA”); (2) violation of
5
the Affordable Care Act’s maximum-out-of-pocket limitations; (3) intentional misrepresentation;
6
and (4) negligent misrepresentation. FAC ¶¶ 226–263.
On June 28, 2018, Monterey and the Plan moved to dismiss the FAC. ECF No. 34. On
7
8
November 29, 2018, Judge DeMarchi denied Monterey and the Plan’s motion to dismiss the FAC.
9
ECF No. 42.
On December 13, 2018, Monterey and the Plan filed an answer to Salinas Valley’s
10
United States District Court
Northern District of California
11
amended complaint. ECF No. 45.
That same day, Monterey filed its third party complaint (“TPC”) against EBMS, Advanced
12
13
Medical Pricing Solutions, Inc. (“AMPS”), Claims Delegate Services, LLC (“CDS”), and Alliant
14
Insurances Services, Inc. (“Alliant”). ECF No. 44.
The TPC brings claims against EBMS for (1) breach of fiduciary duty under Section
15
16
502(a)(2) of ERISA, TPC ¶¶ 31–39; (2) breach of contract, id. ¶¶ 59 – 62; and (3) professional
17
negligence, id. ¶¶ 79–83.
On February 22, 2019, EBMS filed the instant motion to dismiss the TPC. ECF No. 71
18
19
(“Mot.”).
On March 1, 2019, EBMS declined magistrate judge jurisdiction, and the case was
20
21
reassigned to the undersigned. ECF Nos. 73, 75.
On March 8, 2019, Monterey and the Plan filed their opposition to EBMS’s motion to
22
23
dismiss. ECF No. 78. On March 15, 2019, EBMS filed its reply. ECF No. 79 (“Reply”).
24
II.
25
26
27
28
LEGAL STANDARD
A. Motion to Dismiss Under Federal Rule of Civil Procedure 12(b)(6)
Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a complaint to include “a
4
Case No. 17-CV-07076-LHK
ORDER GRANTING EBMS’S MOTION TO DISMISS MONTEREY’S THIRD PARTY COMPLAINT WITHOUT
LEAVE TO AMEND
1
short and plain statement of the claim showing that the pleader is entitled to relief.” A complaint
2
that fails to meet this standard may be dismissed pursuant to Federal Rule of Civil Procedure
3
12(b)(6). The U.S. Supreme Court has held that Rule 8(a) requires a plaintiff to plead “enough
4
facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S.
5
544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that
6
allows the court to draw the reasonable inference that the defendant is liable for the misconduct
7
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility standard is not akin to a
8
probability requirement, but it asks for more than a sheer possibility that a defendant has acted
9
unlawfully.” Id. (internal quotation marks omitted). For purposes of ruling on a Rule 12(b)(6)
motion, the Court “accept[s] factual allegations in the complaint as true and construe[s] the
11
United States District Court
Northern District of California
10
pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire &
12
Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).
13
The Court, however, need not accept as true allegations contradicted by judicially
14
noticeable facts, see Schwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000), and it “may look
15
beyond the plaintiff’s complaint to matters of public record” without converting the Rule 12(b)(6)
16
motion into a motion for summary judgment, Shaw v. Hahn, 56 F.3d 1128, 1129 n.1 (9th Cir.
17
1995). Nor must the Court “assume the truth of legal conclusions merely because they are cast in
18
the form of factual allegations.” Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (per
19
curiam) (internal quotation marks omitted). Mere “conclusory allegations of law and unwarranted
20
inferences are insufficient to defeat a motion to dismiss.” Adams v. Johnson, 355 F.3d 1179, 1183
21
(9th Cir. 2004).
22
B. Leave to Amend
23
If the Court determines that a complaint should be dismissed, it must then decide whether
24
to grant leave to amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to
25
amend “shall be freely given when justice so requires,” bearing in mind “the underlying purpose
26
of Rule 15 to facilitate decisions on the merits, rather than on the pleadings or technicalities.”
27
28
5
Case No. 17-CV-07076-LHK
ORDER GRANTING EBMS’S MOTION TO DISMISS MONTEREY’S THIRD PARTY COMPLAINT WITHOUT
LEAVE TO AMEND
1
Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (alterations and internal quotation
2
marks omitted). When dismissing a complaint for failure to state a claim, “a district court should
3
grant leave to amend even if no request to amend the pleading was made, unless it determines that
4
the pleading could not possibly be cured by the allegation of other facts.” Id. at 1130 (internal
5
quotation marks omitted). Accordingly, leave to amend generally shall be denied only if allowing
6
amendment would unduly prejudice the opposing party, cause undue delay, or be futile, or if the
7
moving party has acted in bad faith. Leadsinger, Inc. v. BMG Music Publ’g, 512 F.3d 522, 532
8
(9th Cir. 2008).
9
III.
DISCUSSION
EBMS’s motion to dismiss Monterey’s TPC against EBMS1 centers on a single issue:
10
United States District Court
Northern District of California
11
whether Monterey has exhausted a contractual obligation to mediate before filing suit. For the
12
reasons explained below, the Court concludes that because Monterey has not exhausted that
13
obligation, the Court must dismiss Monterey’s TPC against EBMS.
The claims in Monterey’s TPC arise from the Administrative Services Agreement
14
15
(“Services Agreement”) between EBMS and Monterey. Mot. at 2. The TPC refers to the Services
16
Agreement as “[t]he services agreement between Monterey and EBMS,” which made EBMS the
17
Claims Administrator and listed EBMS’s responsibilities and duties in that role. TPC ¶ 21. First,
18
the Court must decide whether to consider the contents of the Services Agreement. Although
19
Monterey did not attach the Services Agreement to the TPC, each of Monterey’s causes of action
20
references the Services Agreement and the TPC even includes an image of one section of the
21
Services Agreement.
Specifically, in Monterey’s breach of fiduciary duty claim, Monterey alleges that EBMS
22
23
breached a fiduciary duty through misrepresentations about savings under the Plan and alleges that
24
without “the trust that Monterey had in Alliant and EBMS, Monterey would not have signed the
25
26
27
28
None of the other Third Party Defendants—Alliant, AMPS, and CDS—has joined EBMS’s
motion to dismiss.
6
1
Case No. 17-CV-07076-LHK
ORDER GRANTING EBMS’S MOTION TO DISMISS MONTEREY’S THIRD PARTY COMPLAINT WITHOUT
LEAVE TO AMEND
1
services agreement with EBMS.” TPC ¶ 36. Monterey’s breach of contract claim alleges that
2
EBMS “breached the services agreement.” Id. ¶ 61. The TPC includes an image of the section in
3
the Services Agreement setting forth EBMS’s duties and responsibilities as claims administrator.
4
Id. ¶ 60. Finally, Monterey’s negligence claim is also based on the Services Agreement: Monterey
5
alleges that under the “service agreement with EBMS,” EBMS “was required to use the skill and
6
care that a reasonably careful administrative service organization/third-party administrator would
7
have used in similar circumstances.” Id. ¶ 81.
8
9
The Ninth Circuit has held that a court may consider materials referenced in a pleading
under the incorporation by reference doctrine, even if a plaintiff failed to attach those materials to
the complaint. Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). The purpose underlying
11
United States District Court
Northern District of California
10
this doctrine is to “[p]revent plaintiffs from surviving a Rule 12(b)(6) motion by deliberately
12
omitting references to documents upon which their claims are based.” Steinle v. City & Cty. of
13
S.F., 919 F.3d 1154, 1167 n.17 (9th Cir. 2019) (alteration in original) (internal quotation marks
14
and citation omitted).
15
For example, in Knievel, after the plaintiffs attached only a photograph and caption to their
16
defamation complaint, the defendant asked the court to review the web pages on which the
17
photograph and caption appeared because “viewers accessing the website could not help but to see
18
at least some of the surrounding web pages in order to view the photograph and caption.” Id. at
19
1076–77. The Ninth Circuit held that a court could consider those webpages under the
20
incorporation by reference doctrine on a motion to dismiss. Id. at 1077. Similarly, Monterey’s
21
TPC explicitly references the Services Agreement throughout, and even includes an image of the
22
Services Agreement. See TPC ¶¶ 36, 60, 81. Accordingly, the Court may consider the Services
23
Agreement under the incorporation by reference doctrine. See also Smith v. AMC Networks, Inc.,
24
2019 WL 402360, at *4 (N.D. Cal. Jan. 31, 2019) (taking judicial notice of written works
25
“referenced in the complaint”). To do otherwise would be to permit Monterey to base its claims
26
on the Services Agreement, but avoid a motion to dismiss by omitting other large portions of the
27
28
7
Case No. 17-CV-07076-LHK
ORDER GRANTING EBMS’S MOTION TO DISMISS MONTEREY’S THIRD PARTY COMPLAINT WITHOUT
LEAVE TO AMEND
1
Services Agreement. Considering the Service Agreement does not convert EBMS’s motion to
2
dismiss into a motion for summary judgment, contrary to Monterey’s argument. Shaw v. Hahn, 56
3
F.3d 1128, 1129 n.1 (9th Cir. 1995).
4
Monterey also argues that the Declaration of J. Matthew Johnson is insufficient to
5
authenticate the Services Agreement because Johnson—who is Corporate Counsel and Vice
6
President of Legal at EBMS, Johnson Decl. ¶¶ 1–2—has only worked at EBMS for nine months.
7
In his declaration, Johnson states “I am familiar with and maintain, among other things, the
8
various agreements between EBMS and its clients. The documents attached collectively as
9
Exhibit A are a true and correct copy of the 2014 Administrative Services Agreement and
corresponding renewals for 2015 and 2016 between EBMS and Rocket Farms (except for pricing
11
United States District Court
Northern District of California
10
information, which has been redacted).” Johnson Decl. ¶ 2. Although Johnson’s declaration does
12
not quite establish that the Services Agreement is a business record, the Court overrules
13
Monterey’s objection for the following reasons. Monterey included an image of the Services
14
Agreement in its own TPC. Monterey does not dispute that Monterey signed the Services
15
Agreement attached to Johnson’s declaration. Monterey does not contend that the version
16
attached to Johnson’s declaration is not a true and correct copy of the Services Agreement.
17
Monterey does not contest that Monterey agreed to the Services Agreement.
18
Here, as EBMS contends, the Services Agreement requires mediation as a condition
19
precedent to legal action. Specifically, Section 11.01 of the Services Agreement reads as follows:
20
Dispute Resolution
Plan Sponsor and Contract Administrator will meet and confer in an attempt to
resolve any dispute arising out of or relating to this Agreement. A dispute not
resolved within 60 days of this meeting will be submitted to mediation . . . . If the
dispute is not resolved through mediation, the parties will be free to pursue all legal
and equitable remedies otherwise available.
21
22
23
24
ECF No. 71-1, Ex. A at 10 (emphasis in original). Thus, the Services Agreement requires EBMS
25
and Monterey to mediate any dispute “arising out of or relating” to the Services Agreement before
26
a party may pursue “legal and equitable remedies.”
27
28
8
Case No. 17-CV-07076-LHK
ORDER GRANTING EBMS’S MOTION TO DISMISS MONTEREY’S THIRD PARTY COMPLAINT WITHOUT
LEAVE TO AMEND
1
In Simula, Inc. v. Autoliv, Inc., 175 F.3d 716 (9th Cir. 1999), the Ninth Circuit held that the
2
similar “language ‘arising in connection with’ reaches every dispute between the parties having a
3
significant relationship to the contract and all disputes having their origin or genesis in the
4
contract.” Id. at 721; see also Good(E) Bus. Sys., Inc. v. Raytheon Co., 614 F. Supp. 428, 429
5
(W.D. Wis. 1985) (noting that the phrase “arising out of or relating to this Agreement” has been
6
“broadly construed”) (citing Prima Paint Corp. v. Floor & Conklin Mfg. Co., 388 U.S. 395
7
(1967)).
Section 11.01 is plainly applicable to the instant dispute because Monterey’s TPC alleges
9
that EBMS breached the Service Agreement, and thus the dispute has a “significant relationship”
10
to the Services Agreement. See TPC ¶¶ 60–61 (alleging breach, and including a screenshot of the
11
United States District Court
Northern District of California
8
Service Agreement). As the TPC alleges, Monterey and EBMS’s relationship was governed by
12
the Service Agreement: “The services agreement between Monterey and EBMS listed EBMS’
13
duties and responsibilities as Claim [sic] Administrator” for the Plan. Id. ¶ 21. The TPC also
14
alleges that EBMS was negligent because under the “service agreement with EBMS,” EBMS “was
15
required to use the skill and care that a reasonably careful administrative service
16
organization/third-party administrator would have used in similar circumstances.” Id. ¶ 81.
17
Even if the Court adopts Monterey’s interpretation that Section 11.01 covers “disputes
18
only between MPHI and EBMS about the execution or handling of the subject matter within the
19
ASA agreement, vis-à-vis each other,” Opp. at 6 (emphasis removed), Section 11.01 applies. In
20
the TPC, Monterey alleges that EBMS is liable for breach of contract because EBMS did not
21
execute its duties under the Services Agreement, and that EBMS was negligent in handling its
22
duties under the Services Agreement. This qualifies as a dispute between Monterey and EBMS
23
“about the execution or handling of the subject matter within the ASA agreement, vis-à-vis each
24
other.” Thus, Section 11.01 applies.
25
26
27
28
Furthermore, the TPC includes no allegation that EBMS and Monterey have mediated the
dispute underlying the TPC, as required by the Services Agreement, and Monterey does not
9
Case No. 17-CV-07076-LHK
ORDER GRANTING EBMS’S MOTION TO DISMISS MONTEREY’S THIRD PARTY COMPLAINT WITHOUT
LEAVE TO AMEND
1
contest in its brief that Monterey and EBMS have not engaged in mediation. Thus, Monterey has
2
not fulfilled a condition precedent to its legal action against EBMS, and the Court must dismiss
3
the TPC’s claims against EBMS.
4
District courts have dismissed claims in similar circumstances. For example, in Brosnan v.
5
Dry Cleaning Station Inc., 2008 WL 2388392 (N.D. Cal. Jun. 6, 2008), the plaintiffs brought fraud
6
and breach of contract claims against the defendants. Id. at *1. The franchise agreement between
7
the parties stated that “the Company [defendants] and the Franchisee [plaintiffs] each agree to
8
enter into mediation of all disputes involving this Agreement or any other aspect of the
9
relationship . . . prior to initiating any legal action against the other.” Id. The district court
granted the defendants’ motion to dismiss the plaintiffs’ lawsuit because “[f]ailure to mediate a
11
United States District Court
Northern District of California
10
dispute pursuant to a contract that makes mediation a condition precedent to filing a lawsuit
12
warrants dismissal.” Id. (citing, inter alia, Charles J. Rounds Co. v. Joint Council of Teamsters
13
No. 42, 4 Cal. 3d 888 (1971)); see also B & O Mfg., Inc. v. Home Depot U.S.A., Inc., 2007 WL
14
3232276, at *8 (N.D. Cal. Nov. 1, 2007) (dismissing claim because plaintiff failed to first mediate
15
as required by an agreement between the parties).
16
Similarly, in Free Range Content, Inc. v. Google Inc., 2016 WL 2902332 (N.D. Cal. May
17
13, 2016), the district court dismissed claims where the plaintiffs had failed to satisfy “a condition
18
precedent to filing suit,” which in that case was the requirement to provide the defendants notice
19
before filing suit. Id. at *13–14; see also Target Corp. v. Wolters Kluwer Health, Inc., 2015 WL
20
12646483, at *5 (C.D. Cal. Dec. 16, 2015) (explaining that an “alternative dispute provision . . . is
21
considered a condition precedent to filing lawsuit”).
22
Monterey makes two arguments against dismissal, none of which are availing. First,
23
Monterey appears to argue that Section 11.01 is inapplicable because the instant dispute concerns
24
Monterey’s TPC and “the TPC is not a lawsuit filed against EBMS.” Opp. at 2, 6. However, the
25
TPC is in fact a set of legal allegations filed against EBMS, and Monterey identifies no language
26
in Section 11.01 exempting third party complaints from its ambit. By its plain language, Section
27
28
10
Case No. 17-CV-07076-LHK
ORDER GRANTING EBMS’S MOTION TO DISMISS MONTEREY’S THIRD PARTY COMPLAINT WITHOUT
LEAVE TO AMEND
1
11.01 requires mediation before either EBMS or Monterey pursues “all legal and equitable
2
remedies.” Ex. A at 10 (emphasis added). Section 11.01 thus necessarily applies to the TPC,
3
which requests both damages (a legal remedy) and an injunction (an equitable remedy) against
4
EBMS based on claims arising from the Services Agreement. TPC at 24–25. Salinas Valley’s
5
allegations against Monterey in the FAC are simply not relevant to the instant motion, which
6
concerns whether the dispute at issue in Monterey’s legal action against EBMS arises from or
7
relates to the Services Agreement.
8
Second, Monterey argues that because many other provisions of the Services Agreement
9
other than Section 11.01 are subject to reasonable dispute, the instant motion is functionally one
for summary judgment. See, e.g., Opp. at 8 (arguing that there are “disputed factual issues”
11
United States District Court
Northern District of California
10
concerning Section 2.01, which states that “EBMS will assist in the preparation of the Plan
12
documents, benefits summaries, and materials necessary to operate the Plan”). However, the
13
instant motion implicates none of those disputes. Moreover, Monterey’s invocation of the
14
substantive Services Agreement provisions in dispute further reinforces how Monterey’s TPC
15
arises from and relates to the Services Agreement.
16
Therefore, because Section 11.01 of the Services Agreement requires mediation as a
17
condition precedent to legal action, and because Monterey does not allege that it mediated the
18
instant dispute with EBMS, the Court must dismiss Monterey’s TPC claims against EBMS. The
19
dismissal is without prejudice to Monterey refiling once Monterey and EBMS have fulfilled the
20
mediation condition. See Brosnan, 2008 WL 2388392, at *2 (dismissing complaint without
21
prejudice where plaintiff failed to fulfill mediation condition precedent).
22
Finally, the Court considers whether to grant leave to amend. The Ninth Circuit has held
23
that leave to amend should be denied where amendment would unduly prejudice the opposing
24
party, cause undue delay, or be futile, or if the moving party has acted in bad faith. Leadsinger,
25
512 F.3d at 532. Granting Monterey leave to amend its TPC claims against EBMS would be
26
futile, cause undue delay, and unduly prejudice EBMS. Amendment would be futile because the
27
28
11
Case No. 17-CV-07076-LHK
ORDER GRANTING EBMS’S MOTION TO DISMISS MONTEREY’S THIRD PARTY COMPLAINT WITHOUT
LEAVE TO AMEND
1
Services Agreement requires mediation before Monterey may file suit against EBMS, and
2
Monterey does not contest that Monterey and EBMS have not mediated. Similarly, granting
3
Monterey leave to amend would only delay mediation and the ultimate resolution of this dispute
4
between Monterey and EBMS, and would force EBMS to file a second motion to dismiss on
5
Monterey’s futile claims. Therefore, the Court DENIES Monterey leave to amend the TPC
6
against EBMS.
7
IV.
8
9
CONCLUSION
For the foregoing reasons, the Court GRANTS EBMS’s motion to dismiss Monterey’s
TPC against EBMS without leave to amend. The Court’s dismissal is without prejudice to
Monterey refiling its claims against EBMS once Monterey has fulfilled the mediation condition
11
United States District Court
Northern District of California
10
precedent in the TPC.
12
IT IS SO ORDERED.
13
Dated: June 21, 2019
14
15
______________________________________
LUCY H. KOH
United States District Judge
16
17
18
19
20
21
22
23
24
25
26
27
28
12
Case No. 17-CV-07076-LHK
ORDER GRANTING EBMS’S MOTION TO DISMISS MONTEREY’S THIRD PARTY COMPLAINT WITHOUT
LEAVE TO AMEND
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?