Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-00208/USCOURTS-caed-2_06-cv-00208-0/pdf.json

Parties Involved:
Tanya Hancock
Plaintiff
Hartford Life and Accident Insurance Company
Defendant
Mercury Insurance Company
Defendant
The Hartford
Defendant

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

TANYA HANCOCK,

NO. CIV. 2:06-CV-00208-FCD-DAD

Plaintiff,

v. MEMORANDUM AND ORDER

HARTFORD LIFE AND ACCIDENT

INSURANCE CO.; THE HARTFORD;

MERCURY INSURANCE COMPANY; AND

DOES 1 TO 100, Inclusive,

Defendant.

----oo0oo----

This matter comes before the court on defendants Hartford

Life and Accident Insurance Company, The Hartford and Mercury

Insurance Company’s (collectively, “defendants”) motion to

dismiss plaintiff Tanya Hancock’s (“plaintiff”) complaint for

failure to state a claim upon which relief can be granted,

pursuant to Federal Rule of Civil Procedure 12(b)(6). For the

reasons set forth below, defendants’ motion to dismiss is

Case 2:06-cv-00208-FCD-DAD Document 17 Filed 06/14/06 Page 1 of 12
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1 Because oral argument will not be of material

assistance, the court orders this matter submitted on the briefs. 

E.D. Cal. Local Rule 78-230(h).

2

DENIED.1

BACKGROUND

Plaintiff, Tanya Hancock, was employed as a claims analyst

by Mercury Insurance Company (“MIC”), policy holder of a longterm disability plan administered by defendant Hartford Life and

Accident Insurance Company and defendant The Hartford

(collectively, “Hartford”). (Pl’s Compl., filed February 9,

2006, at ¶¶ 1-2). Through her employment with MIC, plaintiff

purchased a long-term disability plan from Hartford. (Id. at ¶

1). 

Plaintiff, after suffering a back injury and receiving

medical treatment, stopped working at MIC. (Id. at ¶ 5). She

claims that on or about October 29, 2003, she applied for longterm disability benefits under the policy as a result of her back

injury, shoulder and hip pain, and general pain syndrome. (Id.

at ¶ 6). Plaintiff alleges that on February 5, 2004, Hartford

informed her that her claim had been denied because Hartford did

not receive sufficient “Proof of Loss.” (Id. at ¶ 15). In a

separate letter also dated February 5, 2004, Hartford provided

plaintiff 180 days from that date to appeal the denial. (Id. at

¶ 15). Plaintiff alleges that on that same day, she sent a

letter to defendant “requesting [that] her claim be reconsidered”

to which she received no response from Hartford. (Id. at ¶¶ 16-

17).

Subsequently, on February 9, 2006, plaintiff filed this

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civil action against defendants alleging three causes of action. 

(Id. at ¶¶ 29, 32, 42). Specifically, her complaint alleges that

under 29 U.S.C. § 1132(a), the civil enforcement provision of the

Employee Retirement Income Security Act of 1974 (“ERISA”), she is

entitled to recover unpaid benefits due to her under Hartford’s

long-term disability plan. (Id. at ¶ 32). Alternatively,

plaintiff seeks relief under two state law claims, breach of

contract and breach of the covenant of good faith and fair

dealing, for the disability benefits allegedly owed to her. (Id.

at ¶¶ 29, 42).

Defendants now move to dismiss under Federal Rule of Civil

Procedure 12(b)(6) on the grounds that 1) both state law claims

are preempted by ERISA and 2) plaintiff failed to exhaust all

administrative remedies available and required under ERISA before

filing a civil action, and plaintiff has not adequately plead

that she satisfied the exhaustion requirement.

STANDARD

On a motion to dismiss, the court must accept the

allegations of the complaint as true. Cruz v. Beto, 405 U.S.

319, 322 (1972). The court is bound to give the plaintiff the

benefit of every reasonable inference to be drawn from the “wellpleaded” allegations of the complaint. Retail Clerks Int’l Ass’n

v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). Thus, the

plaintiff need not necessarily plead a particular fact if that

fact is a reasonable inference from facts properly alleged. Id.

As the complaint is construed favorably to the pleader, the court

may not dismiss the complaint for failure to state a claim unless

it appears beyond a doubt that the plaintiff can prove no set of

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facts in support of the claim which would entitle him or her to

relief. Conley v. Gibson, 355 U.S. 41, 45 (1957); NL Industries,

Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).

Nevertheless, the court may not assume that the plaintiff

“can prove facts which it has not alleged or that the defendants

have violated the . . . laws in ways that have not been alleged.” 

Associated Gen. Contractors of Calif., Inc. v. Calif. State

Council of Carpenters, 459 U.S. 519, 526 (1983). Moreover, the

court “need not assume the truth of legal conclusions cast in the

form of factual allegations.” United States ex rel. Chunie v.

Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986).

In ruling upon a motion to dismiss, the court may

appropriately consider only the complaint, exhibits submitted

with the complaint, and matters which may be judicially noticed

pursuant to Federal Rule of Evidence 201. See Mir v. Little Co.

Of Mary Hospital, 844 F.2d 646, 649 (9th Cir. 1988); Isuzu Motors

Ltd. v. Consumers Union of United States, Inc., 12 F. Supp. 2d

1035, 1042 (C.D. Cal. 1998). 

ANALYSIS

I. ERISA Preemption of State Law Claims

Defendants argue that plaintiff’s state law claims for

breach of contract and breach of the covenant of good faith and

fair dealing are preempted because the long-term disability plan

from which plaintiff’s state law claims arise is an employee

benefit plan governed by ERISA.

Under section 1144(a) of ERISA, the statute’s provisions

“shall supersede any and all state laws insofar as they may now

or hereafter relate to any employee benefit plan” as defined by

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ERISA. 29 U.S.C. § 1144(a). This preemption provision may be

invoked only if 1) the relevant plan is governed by ERISA and 2)

the state law claims “relate to” the ERISA plan. 29 U.S.C. §

1144(a); Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-98

(1983). 

An “employee welfare benefit plan” regulated by ERISA is

“any plan, fund or program . . . established or maintained by an

employer” to provide its participants “benefits in the event of

sickness, accident, disability, death or unemployment . . . .” 

29 U.S.C. § 1002(1). The United States Supreme Court has held

that a state law claim is “related to” an ERISA plan if the claim

“has a connection with or reference to such a plan.” Shaw, 463

U.S. at 96-97. In determining whether a state law claim has “a

connection with” an ERISA plan such that the claim is preempted,

the court must consider ERISA’s objectives and the nature of the

effect of state law upon the plan. California Div. Of Labor

Standards Enforcement v. Dillingham Constr., N.A., Inc., 519 U.S.

316, 325 (1997) (quoting New York State Conference of Blue Cross

& Blue Shield Plans v. Travelers Insurance Co., 514 U.S. 645, 656

(1995)). 

Here, defendants first argue that the subject long-term

disability plan constitutes an “employee welfare benefit plan”

for the purposes of ERISA because the plan provides disability

benefits, and plaintiff is a participant in the plan through her

employer, as plaintiff alleges in her complaint. (Pl’s Compl.,

filed February 9, 2006, at ¶¶ 34-35). Further, defendants

contend that plaintiff’s state law claims are “related” to the

long-term disability plan for purposes of ERISA preemption, as

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the claims would allow plaintiff to recover for benefits unpaid

under the alleged ERISA plan.

However, resolution of the instant motion rests not upon an

analysis of these substantive issues, but rather upon the

procedural rights afforded to plaintiff under the Federal Rules

of Civil Procedure. This court has previously held that where

the applicability of ERISA to a particular plan is in doubt, a

plaintiff may properly plead state law claims and, alternatively,

a claim seeking recovery under ERISA. Coleman v. Standard Life

Insur. Co., 288 F. Supp. 2d 1116, 1120-1122 (E.D. Cal. 2003)

(Karlton, L.); Fed. R. Civ. P. 8(e)(2). Federal Rule of Civil

Procedure 8 allows a party to “state as many separate claims or

defenses as the party has regardless of consistency and whether

based on legal, equitable, or maritime grounds.” Fed. R. Civ. P.

8(e)(2). Applying this rule, this court recognized in Coleman

that “‘a pleading should not be construed as an admission against

another alternative or inconsistent pleading in the same case.’” 

288 F. Supp. 2d at 1119 (quoting Molsbergen v. United States, 757

F.2d 1016, 1019 (9th Cir. 1985)). 

Like the instant case, the plaintiff in Coleman applied for

benefits under a long-term disability policy purchased from the

defendant. 288 F. Supp. 2d at 1117. The plaintiff received the

benefits until the defendant closed the plaintiff’s case because,

the defendant alleged, the plaintiff no longer satisfied the

requirements necessary to receive the benefits. Id. After

exhausting his administrative remedies available under ERISA but

still not receiving benefits, the plaintiff filed a civil action

alleging state law claims of breach of contract and breach of the

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implied covenant of good faith and fair dealing. Id.

Alternatively, the plaintiff plead an ERISA claim. Id. The

court noted that, absent a determination as to ERISA’s

applicability, it could not properly dismiss the state law claims

without unfairly prejudicing the plaintiff if, in fact, the plan

was later found not governed by ERISA. Id. at 1121.

In so holding, the court in Coleman distinguished Pane v.

RCA Corp., where the court held there that the plaintiff’s state

law claims were preempted by his ERISA claim. Id. In Pane, the

court previously denied the defendant’s motion to dismiss the

plaintiff’s ERISA claim such that there was “some reason to

believe that the dismissal [of the state claims] would not leave

[the] plaintiff entirely without a remedy.” Id. Here, however,

the court has not previously denied defendants’ motion to dismiss

plaintiff’s ERISA claim. Accordingly, at this stage, a finding

of preemption might deny plaintiff any remedy if ERISA is later

found inapplicable. 

Defendants attempt to distinguish Coleman by submitting the

alleged plan as “proof” of ERISA’s applicability. In Coleman,

the court reviewed only the allegations in the plaintiff’s

complaint, and the defendant did not attempt to introduce 

evidence establishing that the plan was governed by ERISA. Id.

Here, though, defendants attached to their reply, a certified

copy of the alleged group benefit plan. (Ex. A to Defs.’ Reply). 

Defendants request that the court consider the document as

“uncontroverted evidence” that the plan is an employee welfare

benefit plan regulated by ERISA such that plaintiff’s ERISA claim

preempts her state law claims.

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Defendants’ argument presents two issues. First, at the

motion to dismiss stage, the court may only consider the

complaint, exhibits submitted with the complaint, or any matters

judicially noticed in accordance with Federal Rules of Evidence

201. Isuzu Motors Ltd., 12 F. Supp. 2d at 1042. However, the

Ninth Circuit has held that documents not attached to the

complaint but “whose contents are alleged in . . . [the]

complaint and whose authenticity no party questions” are part of

the complaint such that the court may also consider them in

ruling upon a motion to dismiss. Blanch v. Tunnell, 14 F.3d 449,

454 (9th Cir. 1994), overruled on other grounds by Galbraith v.

County of Santa Clara, 307 F.3d 1119 (9th Cir. 2002).

Plaintiff expressly refers to the plan’s content in her

complaint by alleging that defendants wrongfully denied her the

benefits owed to her under the “long-term disability policy

purchased from Defendant[s] through her employment with [MIC] . .

. .” (Pl’s Compl., filed February 9, 2006, at ¶ 32). Although,

because defendants attached the certified copy of the alleged

plan to their reply, plaintiff has not had an opportunity to

respond. The court assumes, however, based upon plaintiff’s

opposition, that she would at this stage, short of formal

discovery, challenge the authenticity of the plan. 

Further, although defendants request the court do so, the

court is not permitted to consider the plan under Rule 201 of the

Federal Rules of Evidence. Under that rule, a judicially noticed

fact may only be considered so long as it is “not subject to

reasonable dispute in that it is either generally known within

the territorial jurisdiction of the trial court” by reasonably

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well-informed people or the facts are “capable of accurate and

ready determination by resort to sources whose accuracy cannot

reasonably be questioned.” Fed. R. Evid. 201(b), cmt. No such

finding can be made here.

Also, for the reasons set above, the plan’s accuracy is

reasonably questionable. At this stage in the litigation, the

court only has one source available to it (defendants) to confirm

the accuracy of the plan. Since defendants are parties to the

case, not objective third parties, and plaintiff has not yet had

an opportunity to respond to the plan’s accuracy, the court would

violate one of the goals of Rule 201's limitations, allowing both

parties to “examine each other’s evidence and to present all

sides to the trier of fact,” by taking judicial notice of the

plan. Fed. R. Evid. 201 cmt.

Nevertheless, even if the court considered the plan,

defendants’ motion to dismiss must still be denied. Defendants

argue that the plan “affects the legal rights” of the parties

involved, states MIC’s obligation to contribute to the plan and

refers to ERISA such that the plan itself shows that defendants

intended to create a plan governed by ERISA. However, under

ERISA’s safe-harbor provision, a plan does not necessarily

constitute an “employee welfare benefit plan” for purposes of the

statute if 1) the employer makes no contributions, 2) the 

employees participate voluntarily in the program, 3) the

employer’s only functions regarding the program are to “permit

the insurer to publicize the program to employees or members, to

collect premiums . . ., and to remit them to the insurer,” and 4)

the employer receives “no consideration . . . other than

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reasonable compensation . . . for administrative services

actually rendered in connection with [collecting premiums] . . .

.” 29 C.F.R. § 2510.3-1(j). 

 Plaintiff validly argues that at this point she does not

know if the “safe-harbor” provision would apply to the plan,

thereby making ERISA inapplicable. For example, according to the

plan submitted by defendants, the employer pays the insurance

premium but may “allocate all or part of the cost to the

employee,” as determined by the employer. (Ex. A to Defs.’

Reply). In the instant case, it is unknown whether plaintiff

paid all of her insurance costs such that minimally, the first

requirement of the safe-harbor provision is met. If the three

remaining criterion also are satisfied, ERISA might not be

applicable to the plan in question. The court, at this dismissal

stage, cannot make these factual inquiries as they would require

the court to consider evidence outside of the permissible scope

afforded by Federal Rule of Evidence 201. Isuzu Motors Ltd.,

Inc., 12 F. Supp. 2d at 1042. Therefore, defendants’ motion to

dismiss plaintiff’s state law claims is denied. 

II. Exhaustion Doctrine 

The Ninth Circuit has held that the exhaustion doctrine,

requiring an aggrieved party to exhaust all administrative

remedies available to her before seeking judicial review, applies

to claims brought under ERISA. Amato v. Bernard, 618 F.2d 559,

566-567 (9th Cir. 1980).

Defendants contend that plaintiff’s ERISA claim should be

dismissed because plaintiff has not sufficiently exhausted the

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plan’s internal review and appeal procedures as required before

seeking judicial review. However, defendants’ argument fails in

light of the liberal standard of review at the motion to dismiss

stage. Rule 8 of the Federal Rules of Civil Procedure requires

only that the claim be a “short and plain statement . . . showing

that the pleader is entitled to relief . . . .” Fed. R. Civ. P.

8(a)(2). Further, “all pleadings [must] be construed as to do

substantial justice.” Fed. R. Civ. P. 8(f). 

 Thus, at this juncture, plaintiff does not have to plead a

particular fact if that fact is a reasonable inference from facts

properly alleged. Retail Clerks Int’l Ass’n, 373 U.S. at 753

n.6. In her complaint, plaintiff states that after Hartford

denied her claim for disability benefits, she sent a letter to

Hartford requesting that her claim be “reconsidered” to which she

received no response. (Pl’s Compl., filed February 9, 2006, at

¶¶ 16-17). Even though plaintiff did not expressly state that

she sent the letter in accordance with the review and appeal

process required by ERISA, this court can reasonably infer that a

letter for “reconsideration” constituted her alleged appeal. 

Accordingly, defendants’ motion to dismiss and alternatively,

motion for a more definite statement, are denied. 

///

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///

///

///

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CONCLUSION

For the foregoing reasons, defendants’ motion to dismiss

plaintiff’s complaint is DENIED. 

IT IS SO ORDERED

DATED: June 14, 2006

/s/ Frank C. Damrell Jr. 

FRANK C. DAMRELL, Jr.

UNITED STATES DISTRICT JUDGE

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