Board of Trustees of the San Diego Electrical Health and Welfare Trust et al v. Vickers et al

Filing 7

ORDER Granting Plaintiff's 2 Motion for Temporary Restraining Order. Signed by Judge Barry Ted Moskowitz on 2/12/2018. (mxn)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 13 14 BOARD OF TRUSTEES OF THE SAN DIEGO ELECTRICAL HEALTH AND WELFARE TRUST; ANDY BERG AND NICHOLAS SEGURA, Trustees, Plaintiffs, 15 16 Case No.: 18-cv-0296-BTM-JMA ORDER GRANTING PLAINTIFFS' MOTION FOR TEMPORARY RESTRAINING ORDER v. 20 MARILEE VICKERS, an individual; STEVEN VICKERS, an individual; and SEAN M. FOLDENAUER, an individual; and the FOLDENAUER LAW GROUP, a California professional law corporation, 21 Defendants. 17 18 19 22 23 On February 9, 2018, the Court heard oral arguments on Plaintiffs Board of 24 Trustees of the San Diego Electrical Health and Welfare Trust’s (the “Healthcare 25 Trust”), Andy Berg’s, and Nicholas Segura’s motion for a temporary restraining 26 order (“TRO”) against Defendants Marilee and Steven Vickers, Sean M. 27 Foldenauer, and the Foldenauer Law Group. (Mot. for TRO, ECF No. 2.) The 28 Court GRANTED Plaintiffs’ motion for a TRO for the reasons set forth below. 1 18-cv-0296-BTM-JMA 1 2 I. FACTUAL BACKGROUND The Healthcare Trust operates a health care plan under the Labor 3 Management Relations Act of 1947 for current employees of employers that are 4 bound to a collective bargaining agreement with the International Brotherhood of 5 Electrical Workers Local 569. (Verified Compl., ECF No. 1, ¶ 6.) Defendant 6 Steven Vickers is a plan participant and his wife, Marilee Vickers, is a 7 beneficiary. (Id. ¶ 7.) As covered persons under the Healthcare Trust’s plan, the 8 Vickers are bound by the terms of the Summary Plan Description (“SDP”). (Id. ¶ 9 8.) The Healthcare Trust has rights of subrogation and reimbursement in the 10 event a covered person under the plan is injured by a third party. (Id. ¶ 10.) The 11 SDP provides in relevant part: 12 Third Party Claims 13 If a Covered Person receives benefits from this Trust for Bodily Injuries or illnesses sustained from the acts or omissions of any third party, the Trust shall have the right to be reimbursed in the event the Covered Person recovers all or any portion of the benefits paid by the Trust by legal action, settlement, or otherwise, regardless of whether such benefits were paid by the Trust prior to or after the date of any such recovery. The Covered Person will not be entitled to receive any benefits for such expenses under this Trust unless they execute a Subrogation Agreement and agrees in writing to the following conditions: 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Reimbursement to Trust To authorize reimbursement to the Trust to the extent of all benefits paid by this Trust as a result of such injuries immediately upon obtaining any monetary recovery from any party or organization whether by action at law, settlement or otherwise by virtue of executing a Subrogation Agreement, with the understanding that any and all monies recovered from any third party are to be deposited in an exclusive bank to be established in joint name including the Trust, or into a representing attorney’s client trust account. No monies shall be withdrawn from such account without express written acknowledgment and authorization from this Plan’s Administrator or legal representative. Any payment received by the participant or the participant’s eligible Dependents is subject to a constructive trust. 2 18-cv-0296-BTM-JMA 1 2 3 4 5 6 Any third-party payment received by the participant or the participant’s eligible Dependents must be used first to provide restitution to this Plan to the full extent of the benefits paid or payable under this Plan. (Id. ¶¶ 10–11.) To obtain coverage for treatments of injuries caused by third parties, covered persons must sign a subrogation-reimbursement agreement. (Id. ¶ 11.) 7 On or about May 3, 2014, Marilee Vickers suffered injuries from consuming 8 food that was served and prepared by third parties. (Id. ¶ 9.) The Vickers filed a 9 personal injury action in the California Superior Court of San Diego against 10 various third parties alleged to have caused or contributed to the Vickers’ injuries. 11 (Id. ¶ 12.) The Vickers retained Mr. Foldenauer and the Foldenauer Law group 12 to serve as their counsel. (Id.) 13 Despite the Healthcare Trust’s numerous attempts, the Vickers failed to sign 14 the subrogation agreement as required by the SDP. (Id. ¶ 13.) The Healthcare 15 Trust nevertheless paid $149,890.64 for Marilee Vickers’ medical costs. (Id. ¶ 16 14.) After continued failed attempts at obtaining a signed subrogation 17 agreement, counsel for the Healthcare Trust discovered that the Vickers had 18 settled their claims with the third parties for $500,000. (Id. ¶¶ 15–18.) The 19 Healthcare Trust alleges that the Vickers and Mr. Foldenauer intentionally failed 20 to inform it that any settlement had been reached in an attempt to evade or 21 undermine its right to subrogation and reimbursement for the full amount of 22 medical benefits paid. (Id. ¶ 20.) The Vickers, through Mr. Foldenauer, 23 subsequently stated that they would not sign the subrogation agreement. (Id. ¶ 24 23.) 25 On January 26, 2018, the Healthcare Trust sought to intervene in the state 26 court action. (Id. ¶ 25.) The Judge set a hearing for February 23, 2018 and 27 asked Mr. Foldenauer to hold the disputed amount in trust pending resolution of 28 the pending motion to intervene and Mr. Foldenauer agreed. (Id. ¶ 26.) Since 3 18-cv-0296-BTM-JMA 1 then, the Healthcare Trust has withdrawn its application for intervention in the 2 state court action and has initiated this action against the Vickers, Mr. 3 Foldenauer, and the Foldenauer Law Group. (Id. ¶ 27.) The Healthcare Trust 4 now moves this Court for a TRO fearing that the Vickers may attempt to dissipate 5 the settlement proceeds in an effort to preclude the Healthcare Trust from 6 enforcing its right to reimbursement. 7 8 9 II. DISCUSSION A plaintiff seeking a preliminary injunction or TRO must establish that (1) he is likely to succeed on the merits; (2) he is likely to suffer irreparable harm in the 10 absence of preliminary relief; (3) the balance of equities tips in his favor; and (4) 11 an injunction is in the public interest. Winter v. Natural Resources Defense 12 Council, 555 U.S. 7, 20 (2008). Alternatively, “serious questions going to the 13 merits and a balance of hardships can support issuance of a preliminary 14 injunction, so long as the plaintiff also shows that there is a likelihood of 15 irreparable injury and that the injunction is in the public interest.” Alliance for the 16 Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011) (internal quotation 17 marks omitted). 18 First, the Court finds that Plaintiffs have at the very least shown serious 19 questions going to the merits of this case. The Employment Retirement Income 20 Security Act (“ERISA”), § 502(a)(3) permits a fiduciary to bring an action to: “(A) 21 enjoin any act or practice which violates any provision of [an ERISA plan], or (B) 22 to obtain other appropriate equitable relief (i) to redress such violations or (ii) to 23 enforce any provisions of [the terms of the ERISA plan].” 29 U.S.C. § 1132(a)(3); 24 Sereboff v. Mid Atl. Med. Servs., 547 U.S. 356, 361 (2006). Here, Plaintiffs seek 25 equitable relief to enforce the plan’s terms, specifically the third party claims and 26 reimbursement provisions. 27 identifiable funds that [are] in the possession and control of the [Defendants].” 28 Sereboff, 547 U.S. at 362–63. Though the Vickers have refused to sign the Plaintiffs seek reimbursement from “specifically 4 18-cv-0296-BTM-JMA 1 2 subrogation agreement, they are still bound by the terms of the SDP. Second, absent a TRO, Plaintiffs risk suffering irreparable harm. If Mr. 3 Foldenauer disburses the settlement proceeds to the Vickers, the Healthcare Trust 4 is at risk of losing its remedies under ERISA, as “an equitable lien cannot ‘be 5 enforced against general assets when the specifically identified property has been 6 dissipated.’” Or. Teamster Emp’rs Trust v. Hillsboro Garbage Disposal, Inc., 800 7 F.3d 1151, 1159 (9th Cir. 2015) (quoting Bilyeu v. Morgan Stanley Long Term 8 Disability Plan, 683 F.3d 1083, 1095 (9th Cir. 2012). Third, the balance of equities 9 is in Plaintiffs’ favor, as a TRO simply preserves the status quo while the merits of 10 the case are litigated. Lastly, it is within the public’s interest to grant Plaintiffs a 11 TRO order and uphold a fiduciary’s subrogation and reimbursement rights under 12 ERISA. 13 14 15 III. CONCLUSION For the reasons discussed above, the Court GRANTED Plaintiffs’ motion for a TRO. 16 17 IT IS SO ORDERED. 18 Dated: February 12, 2018 19 20 21 22 23 24 25 26 27 28 5 18-cv-0296-BTM-JMA

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