Lopez v. Liberty Life Assurance Company of Boston et al

Filing 12

ORDER GRANTING 7 MOTION to Dismiss 1 Complaint (Partially).Plaintiff's claim for equitable relief under section 502(a)(3) of ERISA is DISMISSED WITH PREJUDICE(Signed by Judge Gray H. Miller) Parties notified.(rkonieczny, 4)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
REBECCA LOPEZ,
Plaintiff,
v.
LIBERTY LIFE ASSURANCE COMPANY
OF BOSTON and CHART INDUSTRIES
GROUP DISABILITY INCOME POLICY ,
Defendants.

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CIVIL ACTION H-13-2460

O RDER
Pending before the court is a motion to partially dismiss plaintiff Rebecca Lopez’s original
complaint filed by defendant Liberty Life Assurance Company of Boston (“Liberty”). Dkt. 7.
Having considered the motion, response, and applicable law, the court is of the opinion that the
motion should be GRANTED.
I. BACKGROUND
This case relates to the alleged wrongful denial of long-term disability benefits under a plan
governed by the Employee Retirement Income Security Act (“ERISA”). Lopez began work as an
accounts payable clerk at Chart Industries (“Chart”) in November 2007. Dkt. 1. Liberty was Chart’s
insurer for a plan providing insurance for long term disability benefits. Id. Liberty was also the
claims administrator for the plan. Id. Lopez fell at her home in November 2009, and a CT scan of
her back following the fall allegedly revealed that she had severe spinal stenosis. Id. Her physician
also allegedly suspected a meningioma—a type of tumor. Id. Lopez, however, continued to work
at Chart. Id. In November 2010, Lopez visited a physician who allegedly noted that she had a spinal
cord tumor and recommended surgery. Id. Lopez began Family Medical Leave Act leave from

Chart in November 2010 and underwent surgery to remove the spinal cord tumor on November 24,
2010. Id. She applied for short-term disability, was approved, and received payments beginning in
December 2010. Id.
Lopez also applied for long-term disability benefits. Id. Liberty initially approved her claim.
Id. However, in August 2011, after further investigation, Liberty denied Lopez’s long-term disability
claim. Id. Lopez appealed the denial on September 29, 2011. Id. Liberty denied the appeal on
February 2, 2012. Id. Lopez claims that Liberty failed to provide or conduct a full and fair review
of her claim, disregarded evidence of her disability, ignored or failed to consider documented
medical evidence supporting her disability, failed to consider evidence provided by Chart supporting
her disability, failed to consider her Social Security award and the factual basis for that award, failed
to have the medical evidence reviewed by a competent and non-biased third party, ignored evidence
from Lopez’s physicians supporting her disability, terminated her benefits without substantial
evidence to support its decision, failed to apply the terms of the policy as written, failed to follow
its own claims administration rules and guidelines, and terminated Lopez’s benefits in order to
enhance its profits, notwithstanding her continued disability. Id.
Lopez filed the instant lawsuit on August 22, 2013. Id. She asserts that Liberty directly
violated the terms of the ERISA plan when it terminated her long-term disability benefits and that
Liberty failed to properly and thoroughly investigate her claim as required by ERISA. Lopez asserts
that Liberty’s decision to terminate her benefits was arbitrary and capricious, and Lopez seeks to
recover her terminated long-term disability benefits and further reinstate her benefits pursuant to
section 502(a)(1)(B) of ERISA (29 U.S.C. § 1132(a)(1)(B)). Id. She additionally requests “other
equitable relief” pursuant to section 502(a)(3) of ERISA (29 U.S.C. § 1132(a)(3)) because Liberty,
which Lopez claims had a fiduciary duty to act in her best interests, allegedly was unjustly enriched
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by wrongfully denying her benefits. Id. Lopez is seeking disgorgement of all ill-gotten gains and
a surcharge against Liberty to make her whole under section 502(a)(3). Id.
Liberty filed a motion to dismiss Lopez’s section 502(a)(3) claim pursuant to Federal Rule
of Civil Procedure 12(b)(6). Dkt. 7. Liberty argues that Lopez cannot maintain a claim for equitable
relief under section 502(a)(3) because she has adequate redress under section 502(a)(1)(B). Id.
Lopez argues that Liberty’s motion to partially dismiss ignores controlling U.S. Supreme Court and
Fifth Circuit authority.
II. LEGAL STANDARD
“Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and plain statement of the
claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of what
the . . . claim is and the grounds upon which it rests.’” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
545, 127 S. Ct. 1955 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99 (1957)). In
considering a 12(b)(6) motion, the court must accept the factual allegations contained in the
complaint as true. Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d
1045, 1050 (5th Cir. 1982). Additionally, the court does not look beyond the face of the pleadings
to determine whether the plaintiff has stated a claim under Rule 12(b)(6). Spivey v. Robertson, 197
F.3d 772, 774 (5th Cir. 1999). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss
does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds’ of his
‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.” Twombly, 550 U.S. at 554 (internal citations omitted).
The supporting facts must be plausible—enough to raise a reasonable expectation that discovery will
reveal further supporting evidence. Id.

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III. ANALYSIS
Both of Lopez’s claims are asserted pursuant to section 502(a) of ERISA. Section 502(a) of
ERISA states:
Persons empowered to bring a civil action
A civil action may be brought—
(1) by a participant or beneficiary—
(A) for the relief provided for in subsection (c) of this section, or
(B) to recover benefits due to him under the terms of his plan, to
enforce his rights under the terms or the plan, or to clarify his rights
to future benefits under the terms of the plan;
(2) by the Secretary, or by a participant, beneficiary or fiduciary for
the appropriate relief under section 1109 of this title;
(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or
practice which violates any provision of this subchapter or the terms
of the plan, or (B) to obtain other appropriate equitable relief (i) to
redress such violations or (ii) to enforce any provisions of this
subchapter or the terms of the plan . . . .
29 U.S.C. § 1132(a)(1)-(3). Lopez seeks to recover her terminated long-term disability benefits and
reinstatement of her benefits under section 520(a)(1)(B) (section 1132(a)(1)(B)). Dkt. 1. She also
seeks equitable relief under section 502(a)(3) (section 1132(a)(3)). Id.
In Varity Corp. v. Howe, the U.S. Supreme Court determined that section 502(a)(3) is a
“‘catchall’ remedial section” that “act[s] as a safety net, offering appropriate equitable relief for
injuries caused by violations that § 502 does not elsewhere adequately remedy.” Varity Corp. v.
Howe, 516 U.S. 489, 512, 116 S. Ct. 1065 (1996). In Rhorer v. Raytheon Engineers & Constructors,
Inc., the Fifth Circuit interpreted Varity as holding that “an ERISA plaintiff may bring a private
action for breach of fiduciary duty only when no other remedy is available under 29 U.S.C. § 1132.”
Rhorer v. Raytheon Eng’rs & Constructors, Inc. 181 F.3d 634, 639 (5th Cir. 1999), abrogated on
other grounds by CIGNA Corp. v. Amara, ___ U.S. ___, 131 S. C. 1866, 1877 (2011). Thus, under

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Varity and Rhorer, Lopez may not bring a claim under section 502(a)(3) because she has a remedy
available under section 502(a)(1)(B).
Lopez argues, however,(1) that new Supreme Court authority and Fifth Circuit authority
makes it inappropriate to dismiss section 502(a)(3) claims simply because a plaintiff is seeking
monetary damages; and (2) that the court should allow her to maintain her claim under both
subsections to allow time for her to develop trial strategy and preserve alternative ground for relief.
Dkt. 9. The court addresses these arguments seriatim.
A.

New Authority
Lopez argues that the U.S. Supreme Court overruled this narrow interpretation of section

502(a)(3) in Cigna Corp. v. Amara and that the Fifth Circuit held in Gearlds v. Entergy Services, Inc.
that it is no longer proper to dismiss claims under section 502(a)(3) simply because the plaintiff is
seeking monetary damages. Dkt. 9. In Amara, the U.S. Supreme Court held that section
502(a)(1)(B) did not provide relief for beneficiaries of a plan who had been misled by a plan
summary because they were not seeking to “‘recover benefits due . . . under the terms of [their]
plan.’” Amara, 131 S. Ct. at 1876-77. Rather, they were seeking to recover benefits due under the
terms of the plan summary. Id. The Court, however, noted that the plan beneficiaries were actually
seeking a monetary remedy for a loss resulting from breach of fiduciary duty (to prevent unjust
enrichment), known as a “surcharge,” and reasoned that this type of equitable relief—though
monetary—is available under section 502(a)(3). Id. at 1880. The Court remanded the case so that
the district court could consider whether “other appropriate equitable relief” should be imposed. Id.
In Gearlds, the Fifth Circuit considered whether a district court erred in dismissing a claim
for breach of fiduciary duty under section 502(a)(3) because the plaintiff sought only monetary
damages, which the district court concluded was not an available equitable remedy under section
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502(a)(3). Gearlds v. Entergy Servs., Inc. 709 F.3d 448, 449-50 (5th Cir. 2013). The plaintiff in
Gearlds was on long-term disability for several years, but those benefits ended because he was no
longer deemed disabled. Id. at 449. His employer did not officially terminate his employment after
his long-term disability ended, but it did not pay him either. Id. Three years later, the plaintiff took
early retirement. Id. When his employer calculated his early retirement benefits under their plan,
it erroneously believed that the plaintiff had been receiving long-term disability benefits for the
previous three years. Id. Under this incorrect assumption, the employer determined that the plaintiff
was entitled to medical coverage as part of his early retirement package. Id. If the three years had
not been included, the plaintiff would not have been entitled to medical coverage. Id. When the
employer realized there was an error, it advised the plaintiff that his medical coverage would cease.
Id. at 450. The plaintiff filed suit under section 502(a)(3) of ERISA, and he sought past and future
medical expenses, interest, attorneys’ fees, costs, and any other relief to which he was entitled. Id.
The district court determined that the monetary damages the plaintiff sought were not available under
section 502(a)(3). Id. On appeal, the Fifth Circuit noted that until Amara it had generally been
accepted that monetary damages were not within the scope of section 502(a)(3). Id. The Fifth
Circuit stated that under Amara, a determination of whether the damages sought are monetary “is
not the end of the inquiry into equity” with regard to section 502(a)(3). Id. at 452. The Fifth Circuit
concluded that even though the Gearlds plaintiff did not expressly plead “surcharge,” the plaintiff
had, in seeking equitable relief to which he was entitled, stated a plausible claim for relief. Id. The
court remanded to the district court so that it could determine whether the plaintiff could prevail on
the merits of his breach of fiduciary duty claim. Id.
While the court agrees with Lopez that Amara and Gearlds changed the landscape of many
section 502(a)(3) claims, neither case changes the general rule that if relief is available under section
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502(a)(1)(B), equitable relief is not available under section 502(a)(3). Unlike the plaintiffs in Amara
and Gearlds, who did not assert viable claims that they were entitled to benefits under their plans
under section 502(a)(1)(B), there is no contention that Lopez’s claim that she is entitled to benefits
under her plan is improperly pled. Thus, she has a potential remedy under section 502(a)(1)(B) and
is not entitled to relief under the catchall provision.
B.

Preserving Alternative Grounds for Relief
Lopez also argues that she is entitled to maintain her claim under section 502(a)(3) to

preserve alternative ground for relief until a later stage in the litigation. Dkt. 9. She cites North
Cypress Medical Center Operating Co. v. CIGNA Healthcare as authority. Id. In North Cypress
Medical Center, the court decided to take a “more expansive approach” and allow the plaintiffs to
simultaneously plead claims under both section 502(a)(1)(B) and 502(a)(3). N. Cypress Med. Ctr.
Operating Co. v. CIGNA Healtcare, 782 F. Supp. 2d 294, 309 (S.D. Tex. 2011) (Ellison, J.) (finding
it “premature to dismiss North Cypress’ § 502(a)(3) claim solely on the basis that North Cypress has
sufficiently pled a claim under § 502(a)(1)(B)”). This court, however, finds this approach
inappropriate in this case because, as discussed above, no relief will be available under section
502(a)(3) even if Lopez is not ultimately successful on her claim under section 502(a)(1)(B). Both
claims are based on the alleged wrongful denial of Lopez’s benefits. See Dkt. 1. In Tolson v.
Avondale Industries, Inc., the Fifth Circuit fully adopted the district court’s reasoning that because
the plaintiff had adequate redress under section 502(a)(1), a claim for breach of fiduciary duty under
section 502(a)(3) was inappropriate—even though the plaintiff did not prevail on his section
502(a)(1)(B) claim. Tolson v. Avondale Indus., Inc., 141 F.3d 604, 610 (5th Cir. 1998); see also
Adams v. Prudential Ins. Co. of Am., No. 05-2041, 2005 WL 2669550, at *2 (S.D. Tex. Oct. 19,
2005) (Rosenthal, J.) (“[F]ederal courts—including the Fifth Circuit—have concluded that if a
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plaintiff can pursue plan benefits under section 1132(a)(1) [(section 502(a)(1))], she has an adequate
remedy that bars a claim under section 1132(a)(3) [(section 502(a)(3))].”) (collecting cases). Here,
like the plaintiff in Tolson, Lopez has adequate redress under section 502(a)(1)(B). Liberty’s motion
to dismiss Lopez’s claim under section 502(a)(3) of ERISA is therefore GRANTED.
IV. CONCLUSION
Liberty’s motion to dismiss Lopez’s claim for equitable relief under section 502(a)(3) of
ERISA (Dkt. 7) is GRANTED. This claim is hereby DISMISSED WITH PREJUDICE.
Signed at Houston, Texas on October 25, 2013.

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Gray H. Miller
United States District Judge

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