Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-08-55277/USCOURTS-ca9-08-55277-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MICHAEL MITCHELL, 

Plaintiff-Appellee,

v.

CB RICHARD ELLIS LONG TERM

DISABILITY PLAN,

Defendant-Appellant, No. 08-55277

METROPOLITAN LIFE INSURANCE  D.C. No.

COMPANY, CV-05-00810-DDP

Defendant-cross-defendantAppellant,

UNUM LIFE INSURANCE COMPANY OF

AMERICA,

Defendant-cross-claimantAppellee. 

10707

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MICHAEL MITCHELL, 

Plaintiff-Appellee,

v.

CB RICHARD ELLIS LONG TERM

DISABILITY PLAN, No. 08-55686

Defendant-Appellant,

D.C. No.

METROPOLITAN LIFE INSURANCE  2:05-cv-00810-

COMPANY, DDP-RNB

Defendant-cross-defendantAppellant, OPINION

and

UNUM LIFE INSURANCE COMPANY OF

AMERICA,

Defendant-cross-claimant. 

Appeal from the United States District Court

for the Central District of California

Dean D. Pregerson, District Judge, Presiding

Argued and Submitted

December 11, 2009—Pasadena, California

Filed July 26, 2010

Before: Stephen Reinhardt, Stephen S. Trott and

Kim McLane Wardlaw, Circuit Judges.

Opinion by Judge Wardlaw

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COUNSEL

Rebecca A. Hull, Esq., of Sedgwick, Detert, Moran & Arnold

LLP, San Francisco, California, for appellants Metropolitan

Life Insurance Company and CB Richard Ellis Long Term

Disability Plan.

Glenn R. Kantor, Esq., of Kantor & Kantor LLP, Northridge,

California, for appellee Michael Mitchell.

Michael B. Bernacchi and Keiko J. Kojima, of Burke, Williams & Sorensen, LLP, Los Angeles, California, for appellee

UNUM Life Insurance Company of America. 

OPINION

WARDLAW, Circuit Judge:

The Metropolitan Life Insurance Company (“MetLife”)

appeals from the district court’s judgment awarding Michael

Mitchell long-term disability (“LTD”) benefits and attorneys’

fees, in an action arising under the Employee Retirement

Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001

et seq. MetLife is the current insurer and administrator for the

LTD benefits plan (“the Plan”) provided by Mitchell’s

employer, CB Richard Ellis, and it insured and administered

the Plan at the time that Mitchell filed his claim for benefits.

Unum Life Insurance Company of America (“UNUM”) was

the insurer and administrator of the Plan at the time of onset

of Mitchell’s claimed disability in October 2003.

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Because we conclude that the district court correctly held

that Mitchell was eligible for benefits under MetLife’s policy,

and because MetLife failed to cross-claim for indemnification

from UNUM in the district court action, we affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Mitchell’s Employment and Disability

Since 1983, Mitchell has worked as a commercial real

estate broker at CB Richard Ellis. In February 2001, Mitchell

was first diagnosed with restless leg syndrome after he suffered symptoms of fatigue. Over time, Mitchell’s condition

grew more severe. In October 2003, he was diagnosed with

major depression, chronic fatigue syndrome, restless leg syndrome, REM-related obstructive sleep apnea syndrome, and

hemochromatosis. Although Mitchell continued to work full

time hours, his physical condition deteriorated to the point

where he could not effectively perform in his job by March

2004. Because Mitchell’s disability reduced his capacity to

produce sales, his compensation, based entirely on commissions and bonuses, decreased substantially over time as his

disability grew more severe: he earned $179,678 in 2001 and

$243,857 in 2002, but only $29,329 in 2003 and $12,585 in

2004.

B. The Plan

CB Richard Ellis provides LTD benefits to its employees

under an employee benefit plan governed by ERISA. From

January 1, 2000, until December 31, 2003, CB Richard Ellis

funded the Plan by purchasing insurance from UNUM, which

served as the insurer and administrator of the Plan. On January 1, 2004, MetLife replaced UNUM as the insurer and

administrator of the Plan. At that time, MetLife issued a new

insurance policy, which specified that it held discretionary

authority to determine a participant’s eligibility for benefits.

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The two insurers’ coverage provisions differed, particularly in

their definitions of “disability.”

1. UNUM’s Policy

The UNUM long term disability policy provided coverage

for disability when, in UNUM’s determination: 

you are limited from performing the material and

substantial duties of your regular occupation due to

your sickness or injury; and

you have a 20% or more loss in your indexed

monthly earnings due to the same sickness or injury;

and 

during the elimination period, you are unable to perform any of the material and substantial duties of

your regular occupation. 

A beneficiary must be continuously disabled for an “elimination period” of 90 days before he becomes eligible for benefits from UNUM. Coverage extends to the date that the policy

or plan is cancelled, but may end earlier if other eligibility

criteria are not met. UNUM’s insuring agreement includes

payable claims that occur while the employee is covered

under the policy or plan. UNUM acts as the claims administrator, and “has discretionary authority to determine eligibility

for benefits and to interpret the terms and provisions of the

policy.”

2. MetLife’s Policy

On January 1, 2004, MetLife replaced UNUM as the

insurer and administrator of the Plan. MetLife issued a new

policy, comprised of a “Certificate of Insurance,” or master

plan document, as well as a summary plan description.

MetLife’s policy defines the term “disability” differently in

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three places: once in the Certificate of Insurance, and twice in

the summary plan description. The Certificate of Insurance

defines “disabled or disability” as:

due to sickness or as a direct result of accidental

injury: 

• You are receiving Appropriate Care and Treatment and complying with the requirements of

such treatment; and 

• You are unable to earn: 

• during the Elimination period and the next 24

months of Sickness or accidental injury, more

than 80% of Your Predisability Earnings at Your

Own Occupation from any employer in Your

Local Economy; and 

• after such period, more than 80% of your Predisability Earnings from any employer in Your

Local Economy at any gainful occupation for

which You are reasonably qualified taking into

account Your training, education and experience.

MetLife’s summary plan sets forth two additional definitions

of disability. First, the summary plan’s “Plan Benefits”

description specifies that a participant is considered “disabled” when determined to be “unable to perform your regular job functions due to sickness, or as a direct result of

accidental injury the employee [sic] is receiving appropriate

care and treatment and complying with the requirements of

such treatment.” The summary plan’s “Definitions” section,

however, defines “disability” as “a condition in which a person is unable to perform the material and substantial duties of

his/her regular occupation due to illness or injury.”

MetLife’s Certificate of Insurance includes a clause specifying “Rules for When Insurance Takes Effect if You were

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insured Under the Prior Plan on the Day Before the Replacement Date,” which states:

• If You are Actively at Work on the day before

the Replacement Date, You will become insured

for Disability Income Insurance under this certificate on the Replacement Date. 

• If You are not Actively at Work on the day

before the Replacement Date, You will become

insured for Disability Income Insurance under

this Certificate on the date You return to Active

Work.

MetLife’s policy, however, also includes two differing definitions of “Actively at Work.” The Certificate of Insurance

defines “Actively at Work” or “Active Work” to mean “You

are performing all of the usual and customary duties of Your

job on a Full-Time basis.” The summary plan defines “Actively at Work” or “Active Work” to mean “Being on the job

as required of an employee or Independent Contractor of CB

Richard Ellis.”

C. Mitchell’s Claims for LTD Benefits with MetLife

On April 15, 2004, Mitchell applied for LTD benefits by

completing and submitting a long-term disability claim

request form with MetLife. In “Section 2: Claim Information,” the request form includes three boxes to be completed

concerning the onset of disability. The first box asks for the

“Date of first treatment for this condition”; Mitchell supplied

“10/2003.” The second box seeks “Date last worked MUST

ANSWER”; Mitchell answered “still working.” The third box

asks for “Date Disability Began”; Mitchell responded

“10/2003.”On April 23, 2004, MetLife denied Mitchell’s

claim on the ground that he was ineligible for benefits

because he did not meet the definition of “disability” or “disabled” under the Certificate of Insurance definition because

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he was capable of performing his work as “VP of Sales,”

which is classified as sedentary. It based this conclusion on

the Attending Physician’s Statement, which indicated that

Mitchell received treatment for osteoarthritis of the knee and

that Mitchell was “working now.” The denial was also explicitly based on Mitchell’s statement on the claim form that he

was “still working.” The letter also advised Mitchell of his

right to appeal this adverse determination. Mitchell then

availed himself of MetLife’s administrative review process as

outlined in the April 23, 2004 letter. In December 2004, he

filed an appeal and submitted additional medical records, supporting letters from examining physicians, and colleagues at

CB Richard Ellis.

On January 18, 2005, MetLife upheld its original decision

to deny LTD benefits to Mitchell, this time finding that he did

not meet its summary plan definition of disability. Under this

definition, a plan participant must be “unable to perform the

material and substantial duties of his/her regular occupation.”

MetLife further stated that an independent physician’s review

of the medical documentation did not support a finding that

Mitchell’s condition was severe enough to prevent him from

performing his own occupation, and concluded that Mitchell

did not meet the summary plan definition of disability. During

the initial claim and the administrative review processes,

MetLife never specified as a reason for denial that it was not

the provider of LTD benefits at the claimed onset of Mitchell’s disability in October 2003. 

D. District Court Proceedings and Mitchell’s Second

Claim for LTD Benefits

On February 2, 2005, Mitchell sued MetLife and the CB

Richard Ellis Long Term Disability Plan in the Central District of California, seeking LTD benefits pursuant to 29

U.S.C. § 1132(a)(1)(B).1MetLife asserted a date of onset cov1Mitchell’s complaint also named the CB Richard Ellis Medical Plan,

CB Richard Ellis Life Insurance Plan, and CB Richard Ellis Pension/Retirement Plan as defendants. On March 17, 2008, the district court

dismissed these defendants without prejudice. 

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erage defense for the first time in its answer to Mitchell’s

complaint. MetLife argued that it was not required to provide

coverage to Mitchell because it was not the provider of LTD

benefits at the onset of Mitchell’s disability in October 2003,

and that Mitchell should have submitted his claim to UNUM,

which was the insurer and administrator for CB Richard

Ellis’s LTD benefits plan at that time.

After MetLife raised its new coverage defense in district

court, Mitchell filed an administrative claim for LTD benefits

with UNUM on October 3, 2005. Mitchell requested that

UNUM review his claim for LTD benefits. On November 6,

2006, UNUM denied Mitchell’s claim, finding insufficient

information to support a disability claim and prejudice due to

his delay in filing. UNUM noted that under the provisions of

its policy, a timely claim had to be filed before April 29,

2005, and added as a second basis for the denial that a physician’s review of the claim had determined that Mitchell’s

medical records did not adequately establish the level of

impairment necessary to be considered “disabled” under its

policy. Mitchell requested review of this decision on November 13, 2006. On January 11, 2007, UNUM denied Mitchell’s

appeal, finding that Mitchell had continued to work beyond

the claimed onset date of his disability, performing the “material and substantial duties of his occupation,” thus rendering

him ineligible for benefits under the UNUM policy’s definition of disability. 

After UNUM rejected his claim, Mitchell amended his

complaint on January 5, 2007, naming UNUM as an additional defendant. On January 31, 2007, UNUM filed a crosscomplaint against MetLife, requesting a declaratory judgment

that it did not owe LTD benefits to Mitchell, and seeking

indemnification from MetLife for any sums recovered by

Mitchell from UNUM. MetLife, however, did not similarly

file a cross-complaint against UNUM for full or partial

indemnification.

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Following a bench trial, the district court issued thorough

Findings of Fact and Conclusions of Law. Mitchell v. Metro.

Life Ins. Co., 523 F. Supp. 2d 1132 (C.D. Cal. 2007). The district court concluded that MetLife’s LTD benefits policy

included conflicting definitions of “disability” in its Certificate of Insurance and summary plan descriptions; that

MetLife had abused its discretion in applying the more limiting summary plan definition to deny Mitchell’s claim on

review; and that Mitchell was eligible for LTD benefits under

MetLife’s definition of “disability” in the Certificate of Insurance. Id. at 1144-45 (citing Bergt v. Ret. Plan for Pilots

Employed by MarkAir, Inc., 293 F.3d 1139, 1145 (9th Cir.

2002). The district court also concluded that MetLife had

abused its discretion in denying Mitchell’s appeal based on a

lack of objective evidence that his medical condition was

severe enough to warrant a finding of disability, because this

standard was not included in its policy. Id. at 1146-47.

The district court further rejected MetLife’s argument that

it was not responsible for Mitchell’s claim because it did not

provide coverage at the time of onset of symptoms in October

2003, on the basis of waiver. The court reasoned that MetLife

could “not disavow that it was the administrator and insurer

for Mitchell’s claim when it never raised that reason during

administrative review.” Id. at 1149. Holding that Mitchell was

entitled to LTD benefits from MetLife for the 24-month

period from October 2003 to September 2005, the district

court also directed MetLife to pay Mitchell costs and interest,

to consider Mitchell’s claim for continued benefits under the

Plan after September 30, 2005, and then awarded attorneys’

fees to Mitchell. The district court also granted UNUM’s

request for a declaration that it was not the responsible party

for any LTD benefits payable to Mitchell and, therefore, concluded that UNUM’s claim for indemnity against MetLife

was moot.

II. JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction under 28 U.S.C. § 1291. We review

the district court’s factual findings for clear error. Abatie v.

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Alta Health & Life Ins. Co., 458 F.3d 955, 962 (9th Cir. 2006)

(en banc) (citing Friedrich v. Intel Corp., 181 F.3d 1105,

1109 (9th Cir. 1999)). Where an ERISA plan grants discretion

to the plan administrator, we review for abuse of discretion.

Id. at 963 (citing Kearney v. Standard Ins. Co., 175 F.3d

1084, 1090 (9th Cir. 1999) (en banc)). This inquiry is “informed by the nature, extent, and effect on the decisionmaking process of any conflict of interest that may appear in

the record.” Id. at 967. “The level of skepticism” with which

we view a conflicted administrator’s decision is low where a

conflict of interest is unaccompanied “by any evidence of

malice, of self-dealing, or of a parsimonious claims-granting

history.” Id. at 968. We weigh a conflict of interest more

heavily where “the administrator provides inconsistent reasons for denial; fails adequately to investigate a claim or ask

the plaintiff for necessary evidence; fails to credit a claimant’s

reliable evidence; or has repeatedly denied benefits to deserving participants by interpreting plan terms incorrectly or by

making decisions against the weight of evidence in the

record.” Id. at 968-69 (citations omitted). We review de novo

a district court’s choice and application of the standard of

review to decisions by plan administrators, id. at 963, as well

as a district court’s conclusion that the ERISA plan administrator abused its discretion. Grosz-Salomon v. Paul Revere

Life Ins. Co., 237 F.3d 1154, 1158 (9th Cir. 2001).

III. DISCUSSION

A. MetLife’s Plan Covers Mitchell’s LTD Benefits Claim

[1] The district court correctly concluded that MetLife

abused its discretion by denying Mitchell LTD benefits in its

administrative review process. As the district court found,

Mitchell had a “disability” as defined in MetLife’s Certificate

of Insurance when he submitted his claim. At that time,

Mitchell was receiving appropriate treatment and was unable

to earn 80% of his predisability earnings during the elimination period and the next 24 months, and was impaired in his

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capacity to work, despite working full-time hours. Mitchell,

524 F. Supp. 2d at 1148. Therefore, MetLife abused its discretion in denying Mitchell’s disability claim by determining that

he was not disabled, and on the basis of “an unwritten and

unexplained objective evidence requirement” not specified

within its policy. Id. at 1146 (citing Canseco v. Constr.

Laborers Pension Trust for So. Cal., 93 F.3d 600, 608 (9th

Cir. 1996)).2

MetLife agrees that because it acts both as plan administrator and the funding source for benefits, it operates under a

structural conflict of interest. Abatie, 458 F.3d at 967. We

thus view its inconsistent bases of denial, culminating in its

latest coverage defense based on Mitchell’s claimed date of

2Although MetLife expends almost its entire opening brief arguing that

the district court erred in deeming its claimed date of onset coverage

defense waived because it did not raise it during the administrative review

process, but only after it was sued, we need not reach this argument.

MetLife was the responsible insurer at the time Mitchell submitted his

claim under the plain language of its policy. In any event, we are not persuaded that the district court erred in concluding that MetLife waived its

date of onset coverage defense. The purpose of ERISA’s requirement that

plan administrators provide claimants with the specific reasons for denial

is undermined “where plan administrators have available sufficient information to assert a basis for denial of benefits, but choose to hold that basis

in reserve rather than communicate it to the beneficiary.” Glista v. UNUM

Life Ins. Co. of Am., 378 F.3d 113, 129 (1st Cir. 2004) (citing Juliano v.

Health Maint. Org. of New Jersey, Inc., 221 F.3d 279, 288 (2d. Cir. 2000);

see 29 U.S.C. § 1133, 29 C.F. R. §§ 2560.503-1(g), 2560.503-1(j). These

provisions “ ‘afford the beneficiary an explanation of the denial of benefits

that is adequate to ensure meaningful review of that denial.’ ” Glista, 378

F.3d at 129 (quoting Halpin v. W.W. Grainger, Inc., 962 F.2d 685, 689

(7th Cir. 1992)). Requiring that plan administrators provide a participant

with specific reasons for denial “enable[s] the claimant to prepare adequately for any further administrative review, as well as appeal to the federal courts.” Halpin, 962 F.2d at 689. “[A] contrary rule would allow

claimants, who are entitled to sue once a claim had been ‘deemed denied,’

to be ‘sandbagged’ by a rationale the plan administrator adduces only after

the suit has commenced.” Jebian v. Hewlett-Packard Co. Employee Benefits Org. Income Prot. Plan, 349 F.3d 1098, 1104 (9th Cir. 2003) (citing

Marolt v. Alliant Techsystems, Inc., 146 F.3d 617, 620 (8th Cir. 1998)).

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onset, with some fair amount of skepticism. On appeal,

MetLife argues that the district court erred by concluding it

waived its date of onset coverage defense by raising it for the

first time in its answer. As best as we can discern, MetLife

contends that the district court violated ERISA law by in

effect extending its term of coverage back to October 2003,

when its coverage was not in effect until January 1, 2004.

Waiver aside, this argument lacks factual support, given that

Mitchell was covered by MetLife’s policy under at least one

of its three definitions of disability and its “Rules for When

Insurance Takes Effect.”

[2] When evaluating whether a plan administrator abused

its discretion in the ERISA context, we review only the

administrative record. Abatie, 458 F.3d at 970. Nothing in the

voluminous record, however, supports MetLife’s effort to

exclude Mitchell from coverage due to his claimed onset date

of October 2003. In support of its argument that the “onset”

of a disability must occur after the Plan’s effective date,

MetLife points to a single line in its policy, the first clause of

which states “If you become Disabled while insured.”

MetLife would have us read this phrase out of context and

without regard to its policy definitions of “disabled” set forth

in the remainder of the Plan documents. The sentence, in its

entirety, states “If You Become Disabled while insured, proof

of disability must be sent to Us.” Thus, read in context, the

clause upon which MetLife relies does not provide that coverage takes effect only if disability begins after the policy’s

effective date. Rather, it stipulates the requirement for submitting a claim if an individual is “disabled” while insured.

[3] MetLife also argues that the district court erroneously

expanded coverage because he was covered only if he was

“actively at work” on the date its policy replaced UNUM’s.

The district court, however, correctly found that Mitchell was

covered because he was “actively at work” as defined by

MetLife’s policy on that date. MetLife’s Certificate of Insurance provides that a participant is “actively at work” when

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“You are performing all of the usual and customary duties of

Your job on a Full-Time basis,” and requires that full-time

work be at least 30 hours a week. The summary plan description also defines “Actively at Work” or “Active Work” to

mean “Being on the job as required of an employee or Independent Contractor of CB Richard Ellis.” As CB Richard Ellis

reported to both MetLife and UNUM, Mitchell was never put

on leave and never stopped working as a full-time employee.

Mitchell’s disability, however, reduced his capacity to generate sales, which, in turn, directly reduced his commissiondriven income. Mitchell thus met the requirements that he be

unable to earn less than 80% of his pre-disability income, as

specified in MetLife’s Certificate of Insurance. 

[4] Moreover, because Mitchell stated on his claim form

that the date of onset was October 2003, MetLife had ample

opportunity to assert this coverage defense, had it believed it

was meritorious. Indeed, the policy required MetLife to “state

the reason why [his] claim was denied and reference the specific Plan Provision(s) on which the denial is based.” It also

provided that “[i]f MetLife denies the claim on appeal,

MetLife will send you a final written decision that states the

reason(s) why the claim you appealed is being denied and references any specific Plan provision(s) on which the denial is

based.” MetLife failed to meet these requirements and offers

no explanation for this failure. Under these circumstances,

MetLife “could hardly be caught by surprise by an insistence

that it comply with its own plan.” Glista, 378 F.3d at 132. We

therefore agree with the district court that MetLife abused its

discretion in denying Mitchell LTD benefits. 

B. UNUM’s Cross-Complaint for Declaratory Relief and

Indemnification Against MetLife.

The district court properly granted declaratory judgment in

favor of UNUM. Because MetLife failed to assert a crossclaim against UNUM for indemnification, the district court

did not err by failing to address such a claim. 

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[5] After Mitchell amended his complaint to include

UNUM as an additional defendant, UNUM filed a cross-claim

against MetLife requesting a declaratory judgment that it was

not the responsible party for any LTD benefits to Mitchell,

and indemnification for any sums recovered by Mitchell

against UNUM. MetLife, however, failed to file a crosscomplaint against UNUM in the district court, where its claim

for indemnification or for a determination of the respective

rights and responsibilities between the two insurers should

have been asserted. Any claim by MetLife for indemnification

against UNUM would have been compulsory under Federal

Rule of Civil Procedure 13(a), which provides:

A pleading shall state as a counterclaim any claim

which at the time of serving the pleading the pleader

has against any opposing party, if the claim (A)

arises out of the transaction or occurrence that is the

subject matter of the opposing party’s claim; and (B)

does not require adding another party over whom the

court cannot acquire jurisdiction.

Fed R. Civ. P. 13(a). The purpose of Rule 13(a) is to prevent

multiplicity of litigation and to promptly bring about resolution of disputes before the court. Rule 13(a), moreover is

“ ‘particularly directed against one who failed to assert a

counterclaim in one action and then instituted a second action

in which that counterclaim became the basis of the complaint.’ ” Local Union No. 11, Int’l Brotherhood of Electrical

Workers v. G.P. Thompson Electric, Inc., 363 F.2d 181, 184

(9th Cir. 1966). We therefore concluded in Local Union that

where a party has failed to plead a compulsory counterclaim,

the claim is waived and the party is precluded by principles

of res judicata from raising it again. Id. 

[6] Here, UNUM’s cross-complaint requesting declaratory

relief and indemnification arose out of the same transaction as

Mitchell’s amended complaint against MetLife and UNUM.

MetLife, however, failed to file a cross-complaint against

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UNUM in district court. It cannot now complain that the district court failed to resolve a claim that was not even before

it. MetLife, moreover, failed to even appeal the district court’s

grant of declaratory judgment in favor of UNUM, so neither

claim is properly before us on appeal.

IV. CONCLUSION

The district court correctly held that MetLife abused its discretion in denying Mitchell long-term disability benefits.

MetLife was the responsible insurer under the terms of its policy. MetLife’s policy contained no exclusion or preclusion of

coverage where the date of onset of disability occurred before

the effective date of the plan. Rather, the critical issue for

determining coverage once the policy took effect is whether

Mitchell was “disabled” as defined in the plan documents.

Because MetLife failed to raise a compulsory counterclaim

requesting that the district court determine the respective

rights and responsibilities between UNUM and MetLife, the

district court did not err by declining to reach the issue. In

light of the foregoing, we affirm the district court’s judgment,

including the award of attorneys’ fees and costs of suit against

MetLife in favor of Mitchell. 

AFFIRMED.

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