TR. OF HOTEL & REST. EMP. INT. UN. WEL. FUND v. Kirby

• Decision Date: 26 June 1995
• Docket Number: No. CV-S-94-148-PMP (RLH).,CV-S-94-148-PMP (RLH).
• Parties: The TRUSTEES OF HOTEL EMPLOYEES AND RESTAURANT EMPLOYEES INTERNATIONAL UNION WELFARE FUND, Plaintiff, v. Katherine KIRBY (Guardian of Kimberly Taylor, a Minor); Kimberly Taylor; and Doe I, Defendants.
• Court: U.S. District Court — District of Nevada

890 F. Supp. 939

The TRUSTEES OF HOTEL EMPLOYEES AND RESTAURANT EMPLOYEES INTERNATIONAL UNION WELFARE FUND, Plaintiff, v. Katherine KIRBY (Guardian of Kimberly Taylor, a Minor); Kimberly Taylor; and Doe I, Defendants.

No. CV-S-94-148-PMP (RLH).

United States District Court, D. Nevada.

June 26, 1995.

Diana L.S. Peters, Feder & Associates, P.C., Washington, DC, Thomas L. Pursel, Thomas L. Pursel, Ltd., Las Vegas, NV, for plaintiff.

Wayne J. Hardy, Hardy & Hardy, Las Vegas, NV, for defendants.

ORDER

PRO, District Judge.

Before the Court is the Defendants' Motion for Summary Judgment (# 20), filed April 3, 1995. Plaintiffs filed their Opposition to Defendants Motion for Summary Judgment (# 22) on May 15, 1995. Defendants filed their Reply (# 23) on June 14, 1995.

I. Background

Plaintiffs are the trustees ("Trustees") of the Hotel Employees and Restaurant Employees International Union Welfare Fund (the "Fund"), a self-funded multiemployer employee health benefit "Plan" governed by the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001, et seq. ("ERISA"). Defendant Katherine Kirby ("Kirby"), the mother and guardian of Kimberly Taylor ("Kimberly"), a minor child, was a participant in Plan Unit 150, a unit of the Fund that provides benefits to covered employees and their families in Las Vegas.

In July 1993, a car struck Kimberly as she was crossing the street. Kimberly suffered a head injury, multiple rib fractures, a broken left clavicle, a broken left leg, and multiple abrasions. She has received several skin graft procedures and may need corrective surgery.

The Fund paid medical benefits relating to the care and treatment of the child in the amount of $20,798.74. As a condition to receiving those benefits, as required by the Plan, Kirby executed a Reimbursement and Assignment Agreement ("Reimbursement Agreement") in which she agreed to reimburse the Fund for benefits paid to or on behalf of Kimberly "upon recovery of damages from another person or insurance company" up to the full extent of benefits paid.¹

Kirby, on behalf of her daughter, pursued a claim against the driver of the car. On the advice of her attorney, she settled her claims for $100,000.00, which represented the limits of the driver's motor vehicle coverage. Kirby now refuses to reimburse the Fund, as required by the Reimbursement Agreement.

The Trustees filed this action under ERISA, seeking reimbursement in the amount of $20,798.74 under the Reimbursement Agreement and the Subrogation article of the Plan.² See Complaint (# 1), filed February 16, 1994. Defendants filed a Counterclaim (# 5) on February 24, 1994, seeking declaratory relief as to whether Plaintiffs are entitled to any reimbursement under the applicable law.

Defendants now seek summary judgment, contending that the Fund is not entitled to any reimbursement because Kimberly has not been fully compensated for her injuries.

II. Summary Judgment

Pursuant to Federal Rule of Civil Procedure 56, summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."

The party moving for summary judgment has the initial burden of showing the absence of a genuine issue of material fact. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Zoslaw v. MCA Distributing Corp., 693 F.2d 870, 883 (9th Cir.1982), cert. denied, 460 U.S. 1085, 103 S.Ct. 1777, 76 L.Ed.2d 349 (1983). Once the movant's burden is met by presenting evidence which, if uncontroverted, would entitle the movant to a directed verdict at trial, the burden then shifts to the respondent to set forth specific facts demonstrating that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). If the factual context makes the respondent's claim implausible, that party must come forward with more persuasive evidence than would otherwise be necessary to show that there is a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986); California Architectural Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir.1987), cert. denied, 484 U.S. 1006, 108 S.Ct. 698, 98 L.Ed.2d 650 (1988).

If the party seeking summary judgment meets this burden, then summary judgment will be granted unless there is significant probative evidence tending to support the opponent's legal theory. First Nat'l Bank v. Cities Service Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 1593, 20 L.Ed.2d 569 (1968), reh'g denied, 393 U.S. 901, 89 S.Ct. 63, 21 L.Ed.2d 188 (1968); Commodity Futures Trading Com. v. Savage, 611 F.2d 270 (9th Cir.1979). Parties seeking to defeat summary judgment cannot stand on their pleadings once the movant has submitted affidavits or other similar materials. Affidavits that do not affirmatively demonstrate personal knowledge are insufficient. British Airways Board v. Boeing Co., 585 F.2d 946, 952 (9th Cir.1978), cert. denied, 440 U.S. 981, 99 S.Ct. 1790, 60 L.Ed.2d 241 (1979), reh'g denied, 441 U.S. 968, 99 S.Ct. 2420, 60 L.Ed.2d 1074 (1979). Likewise, "legal memoranda and oral argument are not evidence and do not create issues of fact capable of defeating an otherwise valid motion for summary judgment." Id.

A material issue of fact is one that affects the outcome of the litigation and requires a trial to resolve the differing versions of the truth. See Admiralty Fund v. Hugh Johnson & Co., 677 F.2d 1301, 1305-06 (9th Cir.1982); Admiralty Fund v. Jones, 677 F.2d 1289, 1293 (9th Cir.1982).

All facts and inferences drawn must be viewed in the light most favorable to the responding party when determining whether a genuine issue of material fact exists for summary judgment purposes. Poller v. CBS, Inc., 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). After drawing inferences favorable to the respondent, summary judgment will be granted only if all reasonable inferences defeat the respondent's claims. Admiralty Fund v. Tabor, 677 F.2d 1297, 1298 (9th Cir.1982).

The trilogy of Supreme Court cases cited above establishes that "summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Celotex Corp., 477 U.S. at 327, 106 S.Ct. at 2554 (quoting Fed.R.Civ.P. 1). See also Avia Group International, Inc. v. L.A. Gear California, Inc., 853 F.2d 1557, 1560 (Fed.Cir.1988).

III. Discussion

A. Standard of Review

The Court reviews denial of benefits under an ERISA plan under the de novo standard unless the Plan gives the administrator authority to exercise discretion in determining eligibility or construing Plan terms. Kunin v. Benefit Trust Life Ins. Co., 910 F.2d 534, 537 (9th Cir.1990), cert. denied, 498 U.S. 1013, 111 S.Ct. 581, 112 L.Ed.2d 587 (1990), reh'g denied, 498 U.S. 1074, 111 S.Ct. 803, 112 L.Ed.2d 863 (1991) (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109, 109 S.Ct. 948, 953, 103 L.Ed.2d 80 (1989)); see Taft v. Equitable Life Assurance Soc'y, 9 F.3d 1469, 1471 (9th Cir.1993). If the Plan gives the administrator discretion, the Court must determine whether the action or interpretation of the Plan administrator was "arbitrary, capricious, made in bad faith, not supported by substantial evidence or erroneous as a matter of law." Id. at 536 (quoting Johnson v. District 2 Marine Engineers Beneficial Association-Associated Maritime Officers, Medical Plan, 857 F.2d 514, 516 (9th Cir.1988).

Although this is not a denial of benefits case, the same rules should apply. See Sanders v. Scheideler, 816 F.Supp. 1338, 1342 (W.D.Wis.1993), aff'd without op., 25 F.3d 1053 (7th Cir.1994) (applying Firestone to interpretation of subrogation clause).

The Fund contends the Court should review its decision under the arbitrary and capricious standard. The Fund points to the language in the Plan under the heading "Subrogation" that "there may be special circumstances in which full reimbursement is not required by the Trustees." The Plan continues: "In determining whether or not full reimbursement will be required, the Trustees may consider such factors as insufficient recovery, extent of disability and lost wages, attorney fees, expended net recovery to the Person or Eligible Dependent, and other relevant factors...." Plan, Article 33, Subsection (h).

This permissive language gives the Trustees discretion to determine eligibility for special consideration regarding reimbursement.³ As the language meets the Firestone threshold, see Kunin, 910 F.2d at 537, the Court will review the issues under an arbitrary and capricious standard.

B. Request for Special Consideration

Under Subsection (h) of Article 33, the Trustees may consider certain factors, described above, when determining if reimbursement is appropriate in special circumstances. According to the Fund's Summary Plan Description ("SPD"), the Plan participant must make a request in writing for such special consideration.

The Defendant made such a request in writing for special consideration, as provided by Subsection (h), by letter dated September 16, 1993. See Exhibit B to Defendants' Motion (# 20). The Defendants now assert that the Trustees improperly denied this request.

Under the terms of the Plan, the Trustees are not required to compromise their claims for full reimbursement. See Exhibit 1 to Plaintiff's Opposition. Furthermore, the SPD explains that full reimbursement is expected unless "this is not possible, for example, where the recovery is...