Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_08-cv-00519/USCOURTS-caed-2_08-cv-00519-1/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 28:1132 E.R.I.S.A.

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1 Defendants are the California Association of

Professional Firefighters (“CAPF”), California Association of

Professional Firefighters Long Term Disability Plan (the “CAPF

Plan” or the “Plan”) and the California Administration Insurance

Services, Inc. (“CAIS”).

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

DAVID BARBOZA,

NO. CIV. S-08-519 FCD/GGH

Plaintiff,

v. MEMORANDUM AND ORDER

CALIFORNIA ASSOCIATION OF

PROFESSIONAL FIREFIGHTERS, 

a California corporation; 

CALIFORNIA ASSOCIATION OF

PROFESSIONAL FIREFIGHTERS 

LONG TERM DISABILITY PLAN; 

and CALIFORNIA ADMINISTRATION

INSURANCE SERVICES, INC., 

a California corporation,

Defendants.

----oo0oo----

This matter is before the court on (1) plaintiff David

Barboza’s (“plaintiff”) motion for judgment on the administrative

record, pursuant to Fed. R. Civ. P. 52 and (2) defendants’1

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2 Because oral argument will not be of material

assistance, the court orders these matters submitted on the

briefs. E.D. Cal. L.R. 78-230(h).

2

motion for summary judgment, pursuant to Fed. R. Civ. P. 56.2 In

this action, brought under the Employee Retirement Income

Security Act (“ERISA”), 29 U.S.C. § 1001 et seq., plaintiff seeks

recovery of long term disability benefits under the relevant Plan

provided by defendant CAPF. CAPF has agreed to pay plaintiff

benefits subject, however, to certain offsets it contends are

permissible under the Plan. Plaintiff disputes the applicability

of any offsets and seeks payment of his benefits in full.

Before reaching the substantive merits of the parties’

motions, the court must address a threshold issue. In moving for

summary judgment, defendants contend, in the first instance, that

plaintiff’s action should be dismissed for failure to exhaust

administrative remedies. Because the court finds that plaintiff

has failed to exhaust the CAPF Plan’s administrative remedies,

and plaintiff has no valid excuse for failing to do so, the court

does not reach the merits of the parties’ dispute regarding the

amount of benefits due under the policy. 

For the reasons set forth below, defendants’ motion for

summary judgment is GRANTED on the basis that plaintiff failed to

exhaust his administrative remedies prior to bringing the instant

suit. Plaintiff’s cross-motion is accordingly DENIED.

BACKGROUND 

CAPF offers a long term disability plan to eligible

firefighters in California. CAIS is the independent third-party

administrator for the CAPF Plan. (Defs.’ Reply to Pl.’s Stmt. of

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3 Unless otherwise noted, the court finds the following

facts undisputed.

3

Admitted and Disputed Facts in Opp’n to Defs.’ MSJ [Docket #29-

2], filed June 5, 2009 [“UF”],3 ¶ 1.) Prior to March 2006,

plaintiff was a firefighter for the City of Tracy and a

participant in the CAPF Plan. Plaintiff held the rank and

position of Battalion Commander and, in that position, did not

routinely respond to fires. In or about December 2005, the City

decided to eliminate the Battalion Commander position. By letter

dated March 2, 2006, plaintiff was given an official notice of

layoff from the City Manager. According to the letter, plaintiff

had four choices: (1) he could retire if eligible by virtue of

his age and years of service; (2) he could accept a layoff

effective March 21, 2006; (3) he could resign from the Tracy Fire

Department, or (4) if determined by the Personnel Manager to be

qualified, he could accept a demotion to Fire Captain. (UF ¶ 2.)

Plaintiff was too young to retire and did not want to accept

a layoff or resign. (UF ¶ 3.) He was also not physically

qualified to accept the Fire Captain position. Plaintiff injured

his back in 1993 or 1994 and filed a claim for benefits under the

workers’ compensation system. His disability was found to be

permanent and stationary, and he was given a permanent work

restriction for “no very heavy lifting” by his doctor. (UF ¶ 4.) 

Plaintiff was able to continue work, and he received regular

treatments from a chiropractor, but his back never got better. 

(Id.) In 1999, he was promoted to Division Chief, but the pain

from his prior back injury was getting worse. (UF ¶ 5.) The

position changed to Battalion Commander in 2003, a position that

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4

was primarily a supervisory one involving mostly desk work. 

Despite this change, the pain in plaintiff’s neck, back and

shoulders became more of a problem in 2003-2004. (Id.) The pain

was spreading down his back and he developed peripheral

neuropathy in his legs, which caused pain, numbness and tingling. 

In 2005, he was rated “marginal” in his mandatory agility

testing. (Id.)

In early March 2006, Tracy Fire Chief Bosch called plaintiff

in for a meeting to inquire whether in light of his physical

condition, plaintiff could safely do the job of Fire Captain. 

(UF ¶ 6.) Plaintiff told Bosch he did not know if he could

safely perform the job physically and asked if there were any

other positions available. Chief Bosch said that there were not

and sent plaintiff to Dr. Patel to determine if he was physically

qualified to perform the duties of the Fire Captain position. 

(Id.)

Plaintiff reported to work as a Fire Captain on or about

March 21, 2006. (UF ¶ 7.) He was subsequently evaluated by Dr.

Patel on March 27, 2006. Dr. Patel found plaintiff physically

unqualified for the Fire Captain position due to his previously

sustained back injury and peripheral neuropathy. Dr. Patel

placed permanent work restrictions on plaintiff that prevented

him from repetitive lifting above 40 pounds, repetitive bending

at the waist, and repetitive stooping, and he could only

occasionally work at height or climb a ladder. (UF ¶ 8.)

The City placed plaintiff on administrative leave the

following day. (UF ¶ 9.) After two months of paid

administrative leave, the City gave plaintiff a disability

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4 The CAPF Plan specifically provides for an offset for

Section 4850 benefits, which provide a disabled firefighter like

plaintiff with a year-long leave of absence at full salary. The

CAPF Plan states that the offset for any such benefits under

Section 4850 applies, even if the participant fails to apply for

the benefits and/or waives them, as long as the participant would

have been eligible to receive the benefits. (UF ¶ 13.) 

Plaintiff concedes the Plan so provides but disputes that he was

eligible to receive the pay after May 16, 2006 when he received

his disability retirement. Because the court does not reach the

substantive merits of plaintiff’s benefits’ claim herein, it does

not resolve this legal issue.

5

retirement from the position of Fire Captain. (Id.)

On or about March 29, 2006, plaintiff contacted CAIS to

discuss filing a long-term disability claim because he was

physically unable to perform the duties of Fire Captain. CAIS

advised plaintiff to review the benefits available to him under

California Labor Code § 4850, as CAIS understood plaintiff’s

acceptance of retirement benefits may preclude him from receiving

benefits under Section 4850, and that any long-term disability

claim made under the CAPF Plan would be offset by the benefits

available to him under that code section.4

 (UF ¶ 10.) CAIS also

advised plaintiff to file a workers’ compensation claim for

cumulative trauma to his back. (Id.) Defendants assert

plaintiff advised CAIS that he would have his workers’

compensation attorney file a workers’ compensation claim for

cumulative trauma and seek benefits under Section 4850. As such,

defendants maintain they believed that plaintiff would receive

these benefits. (UF ¶ 11.) Plaintiff contends, to the contrary,

that he told CAIS that he would receive Section 4850 pay only

until his disability retirement went through, as his physical

condition was permanent and stationary, thereby precluding him

from receiving Section 4850 benefits. (Id.) Plaintiff filed a

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5 The parties’ various disputes of fact set forth herein

are not material to the issue of whether plaintiff exhausted his

administrative remedies. However, these facts are provided to

give full context to the parties’ relationship.

6

workers’ compensation claim, and CAPF subsequently filed a lien

in the workers’ compensation proceeding. Plaintiff disputes that

defendants’ lien was properly filed and perfected. (UF ¶ 12.)5

Plaintiff did not pursue the statutory benefits available

under Section 4850 and, instead, accepted retirement due to

permanent disability. He was granted disability retirement by

the City effective May 16, 2006. On May 31, 2006, he filed a

written claim for disability benefits under the CAPF Plan. (UF 

¶ 14.) After receiving plaintiff’s claim, CAIS asserts it made

several attempts to communicate with plaintiff and his attorney

to discuss the issue of Section 4850 benefits, but it received no

response. As a result, CAIS presumed that plaintiff had applied

for and was receiving the Section 4850 benefits it believed he

was entitled to, and thus, there was no immediate need for a

determination on plaintiff’s long-term disability claim. (UF 

¶s 15-16.) Plaintiff contends CAIS’s presumption was

unreasonable since it knew plaintiff had been retired for a

permanent disability since May 16, 2006, which plaintiff contends

made him ineligible for Section 4850 benefits. Plaintiff asserts

he was entitled under the Plan to a claims’ decision within 45

days of filing his claim. (Id.)

On October 7, 2006, plaintiff faxed a letter to CAIS

complaining that he had not been given any explanation for why he

was not being paid long-term disability benefits from defendants

and requesting payment of his benefits because his injuries were

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7

permanent. (White Decl. in Supp. of Pl.’s Mot., filed May 8,

2009, Ex. 1 at 0007.) CAIS responded on October 13, 2006,

stating that plaintiff needed to obtain legal advice immediately

before allowing his first PERS retirement payment to be deposited

in his account, as CAIS believed plaintiff could no longer

receive further Section 4850 benefits once he began receiving

PERS payments. (Id. at 0008.) CAIS attempted to contact

plaintiff’s attorney to discuss this issue with him as well, but

counsel never responded to CAIS. (Id. at 0008-0009.)

On May 2, 2007, CAPF received a letter from plaintiff

inquiring why he was not receiving benefits for his claim. (UF 

¶ 17.) This was the first time since October 2006 that CAPF had

been contacted by plaintiff. (UF ¶ 18.) On May 18, 2007, CAIS

denied plaintiff’s claim for disability benefits on the ground

there was “no documentation on file to show that [plaintiff was]

disabled from [his] Own Occupation as a chief officer and you

were able to work full duty as a Battalion Chief until the city

discontinued this position.” (UF ¶ 19; White Decl., Ex. 1 at

0005.) 

Plaintiff appealed CAIS’s decision on July 31, 2007. On

November 16, 2007, plaintiff submitted additional medical

evidence in support of his disability claim. (Pl.’s Add’l

Disputed Facts [Docket #24], filed May 26, 2009 [“ADF”], ¶ 1.) 

On February 20, 2008, the Claims Committee of the Board of

Directors (“Claims Committee”) heard plaintiff’s appeal. Both

plaintiff and his attorney attended the hearing. At the

conclusion of the hearing, the Claims Committee took the appeal

under submission and advised plaintiff it would issue a decision

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6 The committee indicated that the first 12 months of

plaintiff’s long term disability benefits would be offset

entirely because during that time plaintiff could have applied

for and received Section 4850 benefits; the committee stated that

under current California law, plaintiff could not be forced to

accept a disability retirement prior to exhausting these

statutory benefits (citing City of Martinez v. Workers’ Comp.

Appeals Bd., 85 Cal. App. 4th 601, 620 (2000)). (White Decl.,

Ex. 2 at 0345-48.)

8

forthwith.

On March 6, 2008, two weeks following the appeal hearing and

before the Claims Committee rendered its decision, plaintiff

filed the instant lawsuit against defendants. The CAPF Plan,

however, required an additional appeal to the CAPF Executive

Board and then a 30-day period of good-faith negotiation to work

out any disputes prior to filing suit on a claim. (UF ¶ 20.) 

On April 21, 2008, the Claims Committee issued its decision,

granting plaintiff’s disability claim but paying benefits subject

to the offsets permitted by the Plan, which included payments

under Section 4850 that plaintiff was entitled to, and any other

income and/or workers’ compensation settlement amounts plaintiff

may receive. (UF ¶ 21; ADF ¶ 3.)6

Thereafter, plaintiff settled his workers’ compensation

claim with the City through a compromise and release. He settled

this claim without notifying CAPF. The parties dispute whether

CAPF was entitled to participate in the settlement negotiations. 

Defendants contend that under the provisions of the Plan, CAPF

must be a party to and approve of all settlements; in the event

it is not included, the Plan provides that CAFP may take an

offset of the entire settlement, even if that settlement is

characterized as a buy-out of future medical payments. (UF 

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7 Defendants incorrectly assert that failing to meet the

exhaustion requirement precludes this court from exercising

subject matter jurisdiction over the case. The Ninth Circuit has

recently made clear that the ERISA exhaustion requirement is a

judicial doctrine grounded in policy considerations, rather than

a congressionally created jurisdictional requirement establishing

a judicial bar. See Vaught v. Scottsdale Healthcare Corp. Health

Plan, 546 F.3d 620, 627 n.2 (9th Cir. 2008); Metro. Life Ins. Co.

9

¶ 22.) Defendants assert that despite CAPF’s lien and their

attorney specifically advising plaintiff’s counsel of these

provisions of the Plan, plaintiff settled his claim with the City

without notifying CAPF. Thus, defendants argue they may properly

offset plaintiff’s benefits by the entire settlement amount of

$18,000.00. Defendants also emphasize that plaintiff signed a

Benefit Election Form expressly acknowledging his obligation to

repay any amounts received from a workers’ compensation

settlement, and that these settlement proceeds would be taken as

an offset to any benefits payable under the Plan. (UF ¶ 23.) 

Ultimately, defendants argue plaintiff’s total benefits

under the CAPF Plan must be reduced by the Section 4850 benefits

he was entitled to receive under California law and the

$18,000.00 workers’ compensation settlement, resulting in

benefits owing to plaintiff, at most, in the amount of

$12,600.00.

STANDARD

Before the substance of an ERISA claim can be heard,

judicial doctrine requires a plaintiff to “avail himself or

herself of a plan’s own internal review process before bringing

suit in federal court.” Diaz v. United Agricultural Employee

Welfare Benefit Plan and Trust, 50 F.3d 1479, 1483 (9th Cir.

1995).7 The exhaustion requirement “serves several important

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v. Price, 501 F.3d 271, 279 (3d Cir. 2007). 

10

policy considerations, including the reduction of frivolous

litigation, the promotion of consistent treatment of claims, the

provision of a nonadversarial method of claims settlement, the

minimization of costs of claim settlement and a proper reliance

on administrative expertise.” Id. Indeed, the Ninth Circuit has

repeatedly recognized that federal courts “have the authority to

enforce the exhaustion requirement in suits under ERISA, and as a

matter of sound policy they should usually do so.” Amato v.

Bernard, 618 F.2d 559, 568 (9th Cir. 1980). 

However, the courts have recognized exceptions to this

prudential exhaustion requirement. Vaught, 546 F.3d at 626. For

example, “when a plan fails to establish or follow ‘reasonable’

claim procedures required by ERISA, ‘a claimant shall be deemed

to have exhausted the administrative remedies available under the

plan.’” Id. at 627 (citing 29 C.F.R. § 2560.503-1(l)). 

Likewise, a court “is obliged to exercise its jurisdiction . . .

when resort to the administrative route is futile.” Id. at 626-

27 (citing Amato, 618 F.2d at 568). 

Therefore, in deciding whether a plaintiff has exhausted the

administrative claims procedures, the court must consider: 

(1) whether the plaintiff exhausted the remedies available by

following the plan’s claims procedures; and (2) if the plaintiff

did not exhaust the claims procedures, whether the plaintiff is

excused from following those procedures because they do not

comply with federal regulations or because attempts to follow the

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8 Summary judgment is appropriate when it is demonstrated

that there exists no genuine issue as to any material fact, and

that the moving party is entitled to judgment as a matter of law. 

Fed. R. Civ. P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144,

157 (1970). The court properly resolves the issue of exhaustion

on a motion for summary judgment. See Sarraf v. Standard Ins.

Co., 102 F.3d 991 (9th Cir. 1996).

11

procedures would be futile. Diaz, 50 F.3d at 1483-86.8

ANALYSIS

I. CAPF Plan Procedure

Defendants argue plaintiff did not exhaust the

administrative remedies provided by the Plan prior to filing the

instant suit. The CAPF Plan outlines the claim procedures in the

Summary Plan Description, which also provides the guideline for

the appeals process. In the event that a claimant’s initial

claim is denied, the claimant may appeal the decision to the

Claims Committee. If the Claims Committee denies the appeal, the

claimant can apply for reconsideration to the Executive Board. 

If a dispute still exists, the claimant must negotiate in good

faith with the Plan for a 30-day period prior to filing suit. 

Here, plaintiff appealed CAIS’s decision to the Claims

Committee on July 31, 2007. On November 16, 2007, he submitted

additional medical evidence in support of his disability claim. 

On February 20, 2008, the Claims Committee heard plaintiff’s

appeal. Both plaintiff and his attorney attended the hearing. 

At the conclusion of the hearing, the Claims Committee took the

appeal under submission and advised plaintiff it would issue a

decision forthwith. 

However, on March 6, 2008, two weeks following the appeal

hearing, plaintiff filed the instant lawsuit against defendants. 

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9 Title 29 C.F.R. 2560.503-1(l) provides: “In the case

of the failure of a plan to establish or follow claims procedures

consistent with the requirements of this section, a claimant

shall be deemed to have exhausted the administrative remedies

available under the plan.”

12

Prior to filing suit, plaintiff was required to: (1) wait for the

Claims Committee’s decision, (2) if dissatisfied, appeal to the

Executive Board, and (3) negotiate in good faith for a period of

30-days, if any disputes remained. Plaintiff did not do so. 

Thus, by filing suit prior to completing the appeals and

negotiation process, plaintiff did not exhaust his administrative

remedies prior to filing suit.

II. ERISA Procedural Requirements

Plaintiff concedes he did not exhaust the Plan’s

administrative procedures. He contends, however, that he is

excused from doing so because defendants failed to follow the

claims procedures required by ERISA. See Vaught, 456 F.3d at

627. As such, plaintiff maintains his administrative remedies

may be “deemed exhausted” pursuant to 29 C.F.R. § 2560.503-1(l).9

Title 29 C.F.R. § 2560.503-1(i)(3), inter alia, outlines

certain claims procedures required by ERISA specifically for

“disability claims.” In the first instance, subsection (i)(3)

provides that the “general” timing standards for notification of

benefits determinations on appeal, outlined by subsection (i)(1),

apply to disability claims. Subsection (i)(3) modifies

subsection (i)(1) in one respect: it reduces the notification

period under subdivision (i)(1)(i) to 45 days instead of 60 days. 

Subsection (i)(3) provides in pertinent part: 

“[e]xcept as provided in [the case of a “multi-employer

plan], claims involving disability benefits (whether the

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10 Plaintiff asserts defendants were entitled to, at most,

45 days to complete the Claims Committee hearing and, at most, 45

days to complete the Executive Board reconsideration pursuant to

subsection (i)(3) and subdivision (i)(1)(i).

13

plan provides for one or two appeals) shall be governed by

paragraph (i)(1) of this section, except that a period of 45

days shall apply instead of 60 days for purposes of

[Subdivision (i)(1)(i)].” 

29 C.F.R. 2560.503-1(i)(3). 

Plaintiff argues defendants had, at most, 90 days to

complete the appeals process pursuant to subsection (i)(3) and 

subdivision (i)(1)(i).10 Plaintiff appealed CAIS’s decision to

the Claims Committee on July 31, 2007. However, the Claims

Committee did not hear plaintiff’s appeal until February 20,

2008. Therefore, plaintiff argues defendants did not follow the

claims procedures required by ERISA because more than 45 days had

passed before the Claims Committee made its determination.

Defendants argue, to the contrary, that their decision was

timely because the CAPF Plan is subject to the requirements

outlined in subdivision (i)(1)(ii), rather than subdivision

(i)(1)(i) relied on by plaintiff. Subdivision (i)(1)(ii)

provides: 

In the case of a plan with a committee or board of trustees

designated as the appropriate named fiduciary that holds

regularly scheduled meetings at least quarterly, paragraph

(i)(1)(i) of this section shall not apply, and, . . . the

appropriate named fiduciary shall instead make a benefit

determination no later than the date of the meeting of the

committee or board that immediately follows the plan's

receipt of a request for review, unless the request for

review is filed within 30 days preceding the date of such

meeting. In such case, a benefit determination may be made

by no later than the date of the second meeting following

the plan's receipt of the request for review. If special

circumstances (such as the need to hold a hearing, if the

plan's procedures provide for a hearing) require a further

extension of time for processing, a benefit determination

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14

shall be rendered not later than the third meeting of the

committee or board following the plan's receipt of the

request for review. 

29 C.F.R. § 2560.503-1(i)(1)(ii) (emphasis added). Defendants

maintain subdivision (i)(1)(ii) governs because the CAPF Plan

calls for appeals to be heard by a regularly scheduled committee,

rather than a plan administrator. 

Defendants are correct. (UF ¶ 20 [CAPF 0107, 0109

establishing and outlining procedures for the Claims Committee

and the Executive Board].) Subdivision (i)(1)(ii) permits plans

with a committee to make determinations based on their schedule

of quarterly meetings, rather than the redacted 45-day period

outlined in subsection (i)(3) and subdivision (i)(1)(i). 

Defendants complied with the applicable ERISA requirements here

by scheduling plaintiff’s Claims Committee hearing on their next

scheduled quarterly meeting and rendering their decision in April

2008. 

Accordingly, plaintiff’s administrative remedies cannot be

“deemed exhausted” because CAPF’s appeal determination was not

untimely. 

III. Futility

A court “is obliged to exercise its jurisdiction . . . when

resort to the administrative route is futile.” Vaught, 456 F.3d

at 626-27 (citing Amato, 618 F.2d at 568). In order for a claim

to come under the futility exception, the claimant must prove

that “irreparable injury will result unless immediate judicial

review is permitted, or where the administrative proceeding would

be void.” Southeast Alaska Conservation Council, Inc. v. Watson,

697 F.2d 1305, 1309 (9th Cir. 1983).

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15

Here, plaintiff does not argue, let alone proffer evidence,

to establish that either of these two conditions are present in

this case. Indeed, the Claims Committee accepted plaintiff’s

claim, albeit subject to certain offsets. If plaintiff was

dissatisfied with the condition of offsets, he had the option of

appealing for reconsideration to the Executive Board. Moreover,

the Plan required a 30-day good faith negotiation period, which

further ensured that plaintiff would not be irreparably injured

from a lack of immediate judicial review. Plaintiff did not take

advantage of these procedures--procedures that fully complied

with the ERISA regulations. Accordingly, the Plan’s compliance

with the relevant ERISA requirements, and plaintiff’s lack of

evidence establishing a valid basis for failing to comply with

those procedures, precludes deeming the administrative

proceedings void. Under these facts, the court cannot find that

plaintiff was excused from exhausting the administrative remedies

due to futility.

CONCLUSION

For the foregoing reasons, defendants’ motion for summary

judgment is GRANTED. This action is dismissed without prejudice

for plaintiff’s failure to exhaust administrative remedies. 

Accordingly, plaintiff’s cross-motion for entry of judgment in 

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his favor is DENIED. The Clerk of the Court is directed to close

this file.

IT IS SO ORDERED.

 DATED: June 23, 2009

 FRANK C. DAMRELL, JR.

UNITED STATES DISTRICT JUDGE

Case 2:08-cv-00519-KJM-EFB Document 31 Filed 06/23/09 Page 16 of 16