The Lincoln National Life Insurance Company v. Ridgway et al

Filing 47

ORDER denying Plaintiff's 41 Motion for Reconsideration ; denying as moot Plaintiff's 44 Motion to stay all discovery deadline. Signed by Judge Ricardo S Martinez. (PM)

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IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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LINCOLN NATIONAL LIFE INSURANCE
COMPANY,
Interpleader-Plaintiff,

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Case No. C17-1490RSM
ORDER DENYING MOTION FOR
RECONSIDERATION

v.
CLAUDIA RIDGWAY, et al.,
Defendants.

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THIS MATTER comes before the Court on Interpleader-Plaintiff’s Motion for Partial

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Reconsideration of this Court’s prior Order allowing Plaintiff to interplead funds in this

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Court, but declining to dismiss it from this action. Dkts. #40 and #41. Plaintiff asserts that

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this Court “misapprehended Ridgway’s counterclaim and the remedies available under

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ERISA. Lincoln National, therefore, respectfully moves the Court to reconsider its decision,

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in part, and dismiss Ridgway’s counterclaim.” Dkt. #41 at 2. The Court directed Defendant

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Ridgway to file a response to this motion. Ms. Ridgway filed her opposition on March 17,

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2018. Dkt. #46. This motion is now ripe for review.

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“Motions for reconsideration are disfavored.” LCR 7(h). “The court will ordinarily

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deny such motions in the absence of a showing of manifest error in the prior ruling or a

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showing of new facts or legal authority which could not have been brought to its attention

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ORDER– 1

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earlier with reasonable diligence.” LCR 7(h)(1). In this case, the Court is not persuaded that
it should reconsider its prior Order.

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Plaintiff first argues that this Court has misconstrued Ms. Ridgway’s counterclaim
against it. Specifically, Plaintiff asserts that this Court cannot find both that Plaintiff had a
good faith basis to interplead the disputed funds, but that it acted in bad faith by choosing not

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to pay one of the claimants. Dkt. #41 at 3-4. Plaintiff has misinterpreted the Court’s Order.
Indeed, this Court determined that Ms. Ridgway’s counterclaim is based primarily on
Plaintiff’s handling of her claim, and its alleged failure to comply with the governing claims

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handling statutes and regulations. Dkt. #40 at 12-13. That claim is distinguishable from a
claim simply for a failure to pay funds. Id.
Plaintiff next argues that Ms. Ridgway cannot maintain her Counterclaim as alleged

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under 29 U.S.C. § 1132, because there is no right under ERISA to recover punitive,
consequential, or extra-contractual damages, including damages for alleged bad-faith claim
handling. Dkt. #41 at 4-6. However, Ms. Ridgway seeks relief under ERISA’s “catch-all”

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provision, 29 U.S.C. § 1132(a)(3). Dkt. #46 at 6-8. In Varity v. Howe, 516 U.S. 489, 116 S.
Ct. 1065, 134 L. Ed.2d 130 (1996), the United States Supreme Court explained that this
provision acts “as a safety net, offering appropriate equitable relief for injuries caused by

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violations that § 502 does not elsewhere adequately remedy.” Varity, 516 U.S. at 512. Ms.
Ridgway asserts that a “surcharge” remedy is one type of equitable remedy allowed under 29
U.S.C. § 1132(a)(3). Dkt. #46 at 6 (citing CIGNA v. Amara, 563 U.S. 421, 422-23, 131 S.

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Ct. 1866, 179 L. Ed.2d 843 (2011)). The authority presented by Plaintiff does not contradict
Ms. Ridgway’s assertion.

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ORDER– 2

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Likewise, the Court is not persuaded that Ms. Ridgway cannot characterize her claim
as one for breach of fiduciary duty. See Dkt. #41 at 6. Contrary to Plaintiff’s assertions:

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Supreme Court and Ninth Circuit authorities have both authorized a
claim under section 1132(a)(3) for a fiduciary’s improper handling of an
individual benefit claim in violation of its fiduciary duties. See Varity
Corp. v Howe, 516 U.S. 489, 510-11, 116 S. Ct. 1065, 134 L. Ed. 2d
130 (1996) (“subsection (3)...[is] broad enough to cover individual relief
for breach of a fiduciary obligation” including determination of
entitlement to benefits); Paulsen v. CNF Inc., 559 F.3d 1061, 1075 (9th
Cir. 2009) (“[u]nlike 29 U.S.C. § 1132(a)(2), which requires that relief
sought must be on behalf of the entire plan, the Supreme Court has held
that a participant or beneficiary has standing pursuant to section
1132(a)(3) to seek individual recovery in the form of ‘appropriate
equitable relief,’” citing Varity); Peralta v. Hispanic Bus., Inc., 419
F.3d 1064, 1075 (9th Cir. 2005) (“[i]ndividual substantive relief under
ERISA is available where an employer actively and deliberately
misleads its employees to their detriment”); see also CIGNA Corp. v.
Amara, 563 U.S. 421, 131 S. Ct. 1866, 1881-82, 179 L. Ed. 2d 843
(2011), (“[t]o obtain relief by surcharge for violations of §§ 102(a) and
104(b) [under section 1132(a)(3)], a plan participant or beneficiary must
show that the violation injured him or her”) (emphasis supplied). In
Varity, the Supreme Court held the individual claimants, though
foreclosed from seeking individual remedies under section 1132(a)(2),
and unable to show they had benefits due them under section
1132(a)(1)(B), could nevertheless proceed under 1132(a)(3) for other
appropriate, individual equitable relief. Id. at 515. In so holding, Varity
rejected the idea that section 1132(a)(3) remedies were only to benefit
the plan, not individuals.

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Zisk v. Gannett Co. Income Prot. Plan, 73 F. Supp.3d 1115, 1118 (N.D. Cal. Nov. 6, 2014).
For all of these reasons, the Court is not persuaded that it “misapprehended
Ridgway’s counterclaim and the remedies available under ERISA.” See Dkt. #41. Likewise,

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the Court is not persuaded that it committed manifest error in its prior ruling, or that Plaintiff
has presented legal authority which could not have been brought to the Court’s attention
earlier with reasonable diligence. Accordingly, Plaintiff’s Motion for Reconsideration (Dkt.

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#41) is DENIED.

ORDER– 3

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Plaintiff has also filed a motion to stay all discovery deadlines in this matter until the
Court resolves the instant motion. Dkt. #44. That motion (Dkt. #44) is now DENIED AS

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MOOT.
DATED this 27 day of March, 2018.

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A

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RICARDO S. MARTINEZ
CHIEF UNITED STATES DISTRICT JUDGE

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ORDER– 4