PAGE 1 – OPINION AND ORDER

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

NELDA WILSON, et al.,

Plaintiffs,

v.

NATHAN COX,

Defendant.

_______________________________________

NATHAN COX,

Third-Party Plaintiff,

v.

COUNTRY PREFERRED INSURANCE 

COMPANY,

Third-Party Defendant.

Case No. 3:15-cv-0059-SI

OPINION AND ORDER

Steven Goldberg, 3525 SE Brooklyn Street, Portland, OR 97202, and Talia Yasmeen Stoessel, 

BENNET, HARTMAN, MORRIS & KAPLAN LLC, 210 SW Morrison Street, Suite 500, 

Portland, OR 97204.. Of Attorneys for Plaintiffs.

Michael G. Smith, GATTI, GATTI, MAIER, SAYER, THAYER, SMITH & ASSOC., 1781 

Liberty Street S.E., Salem, OR 97302. Of Attorneys for Defendant and Third-Party Plaintiff.

Deanna L. Wray and Heather A. Bowman, BODYFELT MOUNT LLP, 319 S.W. Washington 

Street, Suite 1200, Portland, OR 97204. Of Attorneys for Third-Party Defendant.

Case 3:15-cv-00059-SI Document 37 Filed 08/25/15 Page 1 of 7
PAGE 2 – OPINION AND ORDER

Michael H. Simon, District Judge.

Nathan Cox asserts a third-party claim against Country Preferred Insurance Company 

(“Country”). Mr. Cox alleges that he is currently party to a pending mandatory arbitration with 

Country regarding personal insurance protection (“PIP”) and underinsured motorist (“UIM”) 

claims. Mr. Cox further alleges that those claims arise out of the same common nucleus of 

operative fact as the claims made by Plaintiffs, Trustees for the AGC-International Union 

(“Trustees”). Mr. Cox argues that the Court has supplemental jurisdiction over his state claims 

against Country pursuant to 28 U.S.C. § 1367(a), and that the Trustees should be bound to the 

findings of the arbitration. Country moves to dismiss the third-party claim against it under 

Federal Rule of Civil Procedure 12(b)(6). For the reasons discussed below, Country’s motion is 

GRANTED. 

STANDARDS

A motion to dismiss for failure to state a claim may be granted only when there is no 

cognizable legal theory to support the claim or when the complaint lacks sufficient factual 

allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., 

Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint’s factual 

allegations, the court must accept as true all well-pleaded material facts alleged in the complaint 

and construe them in the light most favorable to the non-moving party. Wilson v. HewlettPackard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat’l Educ. Ass’n, 629 

F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint 

“may not simply recite the elements of a cause of action, but must contain sufficient allegations 

of underlying facts to give fair notice and to enable the opposing party to defend itself 

effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). All reasonable inferences from 

the factual allegations must be drawn in favor of the plaintiff. Newcal Indus. v. Ikon Office 

Case 3:15-cv-00059-SI Document 37 Filed 08/25/15 Page 2 of 7
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Solution, 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the 

plaintiff’s legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556 

U.S. 662, 678-79 (2009).

A complaint must contain sufficient factual allegations to “plausibly suggest an 

entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the 

expense of discovery and continued litigation.” Starr, 652 F.3d at 1216. “A claim has facial 

plausibility when the pleaded factual content allows the court to draw the reasonable inference 

that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 663 (citing Bell Atl. 

Corp. v. Twombly, 550 U.S. 544, 556 (2007)).

BACKGROUND

For purposes of this motion, the Court accepts as true the facts pleaded in Mr. Cox’s first 

amended answer and third-party complaint (Dkt. 27). Mr. Cox filed his amended third-party 

complaint after Country filed its motion to dismiss the third-party complaint. The Court 

considers Country’s motion as applying to the amended third-party complaint.

Mr. Cox was involved in an automobile accident in which another driver rear-ended 

Mr. Cox’s vehicle. Mr. Cox suffered injuries in that accident. At the time of the accident, the 

driver who was at fault had insurance in the amount of $50,000, and Mr. Cox had UIM coverage 

in the amount of $100,000 and PIP coverage in the amount of $50,000 from Country. Mr. Cox 

submitted to Country his medical bills for discograms and back surgeries. Country denied those 

claims, concluding that the procedures were not reasonably and necessarily incurred because of

the automobile accident. 

After Country determined that Mr. Cox’s back problems were not caused by the 

automobile accident, Mr. Cox submitted those medical bills to his medical insurance plan, an 

ERISA-regulated employee benefit plan (the “Plan”). Plaintiffs Trustees are the trustees for the 

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Plan. The Trustees denied coverage for Mr. Cox’s discograms but paid for his two back 

surgeries, which were performed approximately two and one-half years after the date of the 

automobile accident. Mr. Cox has since settled with the at-fault driver’s insurance company for 

$45,000.

The Trustees brought this action against Mr. Cox to enforce the terms of the Plan. In 

essence, the Trustees allege that they paid medical benefits on Mr. Cox’s behalf in connection 

with injuries he sustained as a result of an automobile accident. The Plan provides a first priority 

right of reimbursement on behalf of the Trust Fund in the event that the Plan participant receives 

any personal injury recovery from a third-party. Trustees claim they have a right to be 

reimbursed from Mr. Cox’s $45,000 settlement recovery. 

Mr. Cox also is currently involved in a pending arbitration with Country, as his PIP/UIM 

provider. Allegedly at the insistence of the Trustees, Mr. Cox is disputing in the arbitration the 

denial of PIP and UIM coverage for his back discograms and surgeries.

Mr. Cox has undergone several independent medical examinations, which have all 

concluded that his back injuries were not caused by the automobile accident. Mr. Cox alleges 

that he is disputing those findings at the insistence of the Trustees and that he has requested the 

Trustees take over the litigation with Country and that the Trustees have declined to do so. 

Mr. Cox further alleges that the Trustees have “made it clear that they would not be bound by 

any decision by the PIP and UIM arbitrator” if the arbitrator finds that Mr. Cox’s back injuries 

were not caused by the motor vehicle accident and that the Trustees have stated that they are 

“exempt from the law.”

DISCUSSION

Country argues that Mr. Cox has failed to state a claim against Country, that the amended 

third-party complaint alleges only facts relating to the underlying binding arbitration (that 

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PAGE 5 – OPINION AND ORDER

Mr. Cox submitted medical claims that were denied by Country and are currently in dispute), and 

that any claim against Country is preempted by the agreed-upon arbitration. 

Mr. Cox’s third-party allegations against Country are not well-articulated. The portion of 

Mr. Cox’s amended answer and third-party complaint setting forth his third-party claim alleges 

as follows: (1) Mr. Cox was insured by Country for PIP and UIM; (2) the Trustees assert a claim 

to the proceeds of Mr. Cox’s UIM and PIP coverage and the Trustees assert a “right to insist” 

that Mr. Cox include his back surgeries in his PIP and UIM claim against Country; (3) the 

Trustees assert that because Mr. Cox is claiming in his litigation with Country that his back 

surgeries are covered by his PIP and UIM coverage, that fact conclusively establishes that Mr. 

Cox’s back injuries were caused by the accident and the Trustees can rightfully seize Mr. Cox’s 

accident settlement recovery; and (4) because of these facts, Country is “properly joined” in this 

lawsuit between the Trustees and Mr. Cox. Dkt. 27 ¶¶ 48-49. Mr. Cox seeks in his third-party 

complaint against Country, as an alternative remedy to “joining” Country, that the Trustees 

should be ordered to participate in or be bound by the arbitration proceeding. Id. ¶ 50.

Mr. Cox’s “alternative” third-party allegation that the Trustees should be bound by the 

arbitration is unrelated to Country and is not a basis on which to base a third-party complaint 

against Country. This assertion by Mr. Cox relates only to his dispute with the Trustees, not his 

dispute with Country.

Mr. Cox’s “primary” allegations against Country also do not state a claim for relief. 

Mr. Cox asserts that Country is properly “joined” in this case, but does not articulate what claim 

he is asserting against Country. He does not allege facts from which it can plausibly be inferred 

that he is asserting a claim against Country for improper denial of PIP or UIM benefits. To the 

contrary, much of Mr. Cox’s allegations appear to be that Mr. Cox believes his back injuries 

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PAGE 6 – OPINION AND ORDER

were not caused by the automobile accident and that he is only disputing Country’s decision not 

to pay for those treatments only because the Trustees insist that he do so. Such allegations do not 

assert a good-faith claim against Country in this litigation.1

Additionally, to the extent Mr. Cox is intending to “join” Country in this litigation to 

dispute Country’s denial of coverage for Mr. Cox’s discograms and back surgeries, that dispute 

is properly the subject of the pending arbitration. Mr. Cox does not allege that he did not agree to 

arbitration or that the arbitration agreement with Country is unenforceable. Under Oregon law, 

disputes about the amount of PIP and UIM benefits or denial of PIP and UIM benefits shall be 

decided by arbitration if both parties agree. Or. Rev. Stat. §§ 742.520(6); 742.504(1)(a). Any 

claim at this time by Mr. Cox that Country improperly denied Mr. Cox PIP or UIM benefits, 

therefore, is not properly before this Court.

Mr. Cox also appears to be demanding a jury trial relating to his dispute with Country. To 

the extent he is arguing that the agreed-upon binding arbitration proceedings infringe on his right 

to a jury trial, that argument is unavailing. Because Oregon’s statute does not require binding 

arbitration, but instead makes arbitration binding only upon agreement of both parties, a party’s

agreement to arbitration also waives that party’s right to a jury trial on that issue. Barackman v. 

Anderson, 338 Or. 365, 371-72 (2005). 

The heart of Mr. Cox’s concern appears to be a fear that the arbitrator will conclude that 

Mr. Cox’s discograms and surgeries were not caused by the automobile accident and that 

Country properly denied coverage, and yet the Trustees will continue to seek reimbursement in 

this case for the payments the Plan made for Mr. Cox’s back surgeries, arguing that the back 

surgeries were, in fact, caused by the automobile accident. Although the Court is not 

 

1

The Court reaches no conclusions about the good faith of Mr. Cox’s allegations and 

arguments in the arbitration.

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PAGE 7 – OPINION AND ORDER

unsympathetic to a general concern of potential conflicting results between this case and the 

arbitration, such a concern does not suffice to state a claim for relief against Country. Moreover, 

the preclusive effect of any arbitration decision requires a factual analysis that cannot be 

performed until after the arbitration decision is rendered.2

CONCLUSION

Third-Party Defendant Country Preferred Insurance Company’s motion to dismiss 

(Dkt. 23) is GRANTED. Defendant/Third-Party Plaintiff Nathan Cox’s claims against Country 

are dismissed.

IT IS SO ORDERED.

DATED this 25th day of August, 2015.

/s/ Michael H. Simon

Michael H. Simon

United States District Judge

 

2

The Court notes that arbitrations regarding PIP coverage may have a preclusive effect 

on parties to the arbitration, depending on whether the five requirements established in Nelson v. 

Emerald People’s Utility Dist., 318 Or. 99, 104 (1993), are met. Barackman, 338 Or. at 371.

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