Masters v. San Bernardino County Employees Retirement Assn.

• Decision Date: 19 January 1995
• Docket Number: No. E012014,E012014
• Citation: 32 Cal.App.4th 30,37 Cal.Rptr.2d 860
• Court: California Court of Appeals
• Parties: Deborah MASTERS, Plaintiff and Appellant, v. SAN BERNARDINO COUNTY EMPLOYEES RETIREMENT ASSOCIATION, et al., Defendants and Respondents.

Page 860

37 Cal.Rptr.2d 860

32 Cal.App.4th 30

Deborah MASTERS, Plaintiff and Appellant, v. SAN BERNARDINO COUNTY EMPLOYEES RETIREMENT ASSOCIATION, et al., Defendants and Respondents.

No. E012014.

Court of Appeal, Fourth District, Division 2, California.

Jan. 19, 1995.

[32 Cal.App.4th 34] Lemaire, Faunce, Pingel & Singer and Steven R. Pingel, Seal Beach, for plaintiff and appellant.

White & Case, C. Randolph Fishburn and David J. Wilson, Los Angeles, for defendants and respondents.

OPINION

DABNEY, Acting Presiding Justice.

Plaintiff and appellant Deborah Masters (applicant) sued defendants San Bernardino County Employees Retirement Association (Association), the individual members of the Association's retirement board, the board's medical advisor and an administrator for the Association for alleged wrongful conduct in initially denying and failing to promptly award her a disability retirement pension. She alleged she was damaged in various ways by a delay of 19 months between the time she applied for and the time she was ultimately awarded the disability pension. The Association and the individual defendants demurred to applicant's complaint, asserting governmental immunity and other grounds. The trial court sustained the demurrer without leave to amend and entered judgment for the Association and the other defendants. Applicant appeals. We affirm in part.

FACTS AND PROCEDURAL HISTORY ¹

On appeal after a demurrer is sustained without leave to amend, we deem all well-pleaded factual allegations of the complaint to be true. (Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, 496, fn. 2, 229 Cal.Rptr. 456, 723 P.2d 573; Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 496, 86 Cal.Rptr. 88, 468 P.2d 216.)

Applicant was employed as a custodian/housekeeper at the San Bernardino County Medical Center and was a member of the Association. Applicant applied for a disability retirement pension on April 9, 1989, alleging she had suffered a back injury at work. Applicant alleged she submitted medical reports of Dr. Brodie, Dr. Heppenstall, Dr. Watkin, Dr. Lobley and Dr. Dean in support of her application.

The Association's administrator, Sylvia Miller, allegedly "caused to be withheld from consideration by the Association's Medical Advisor" the medical reports substantiating applicant's claim. ² The medical advisor, without benefit of the reports and without himself examining applicant, reported to the board on August 23, 1989, that, although applicant was disabled, there was insufficient medical evidence to establish the service connection of the injury to applicant's employment.

On September 7, 1989, "the defendants" denied applicant's application, on the ground of a lack of evidence of disability. Applicant alleged that, at that time, all the competent medical evidence clearly showed she was disabled and that the disability was service-connected.

Applicant requested reconsideration of her application; the request was denied on November 2, 1989.

Applicant thereupon filed an administrative appeal from the decision denying her disability retirement. Defendants scheduled applicant for a medical evaluation by Dr. Lobely on June 18, 1990. Dr. Lobely reported on July 11, 1990, that applicant was disabled from her position. Applicant alleged defendants "did nothing" about Dr. Lobely's report, and that she had several times requested prompt action on her claim.

On September 19, 1990, a hearing on applicant's administrative appeal was held before a hearing officer. The report of Dr. Lobely and the other medical reports were all received in evidence at that time. Applicant asserts that all the medical reports "established the unanimous opinion of the doctors that [applicant] was disabled." On October 15, 1990, the hearing officer issued findings of fact, conclusions and a recommendation in the case, reporting that applicant was disabled and that applicant's claim "her employment contribut[ed] to her incapacity was both real and measurable and substantial.... Although she may have had some other predisposing factors nevertheless her condition was brought about and precipitated by her work activities." The hearing officer recommended that applicant's appeal be granted and that she be awarded a service-connected disability retirement, effective as of the day after her last regular compensation. The Association on November 1, 1990, adopted the hearing officer's report finding applicant entitled to a service-connected disability retirement. Applicant received her first disability pension check in early 1991.

Applicant thereafter sued the Association, Sylvia Miller, an administrator of the Association, Dr. Owen J. O'Connor, the medical advisor, and the nine individuals who were members of the Association's board of retirement, alleging causes of action for breach of fiduciary duty, promissory fraud, negligent misrepresentation, violation of federal due process rights under 42 United States Code section 1983, and intentional infliction of emotional distress.

The first cause of action, for breach of fiduciary duty, was apparently based on allegations that defendant Miller, the administrator, had "caused [applicant's medical reports] to be withheld from consideration" by the medical advisor, who, in the absence of applicant's medical evidence, apparently reported to the board that there was insufficient evidence of service-connected disability. Applicant further alleged the conclusion that the medical advisor "misrepresented the medical evidence concerning the causation of [applicant's] disability," although the complaint provides no allegations of fact to support or explain this conclusion.

Otherwise, the first cause of action simply details the progress of applicant's application, from submission in April 1989, through the report of the medical advisor (August 23, 1989) and initial denial of her application (September 7, 1989), to her requests for reconsideration (denied November 2, 1989) and administrative appeal, culminating in a medical evaluation on June 18, 1990, in preparation for a hearing before a hearing officer (held September 19, 1990) and ultimately an award of the disability pension on November 1, 1990. Applicant urged that defendants breached their fiduciary obligations in that they "failed ... to act on the application within a reasonable time," and that they "failed ... to act reasonably, and not arbitrarily, in considering the medical evidence concerning [applicant's] application."

Applicant asserted that she suffered damages consisting of (a) anger, frustration, humiliation, pain, emotional distress and mental anguish, (b) $8,000 in attorney fees to process her application, (c) denial of the use of disability pension funds for 20 months, (d) the cost of borrowing funds, diminishment of her credit rating, and payments for private medical insurance while the disability pension was denied, and (e) bankruptcy. Applicant further alleged defendants breached their fiduciary duties maliciously so as to entitle her to punitive damages.

The second cause of action, for promissory fraud, was based on allegations that defendants told applicant her application would be ruled upon fairly and within three to five months, but that these representations were false. Applicant urged that "Had defendants informed [her] that they take an unreasonable length of time to determine disability pension applications and/or that they make determinations arbitrarily and capriciously, she could have obtained a private disability insurance policy to protect herself during the pendency of her application."

Applicant alleged a third cause of action against all defendants for asserted negligent misrepresentation, essentially repeating her allegations that defendants misrepresented that her application would be ruled upon fairly and within three to five months.

Applicant's fourth cause of action alleged defendants had violated her right to substantive due process by arbitrarily denying her application without a rational basis and then not reconsidering her application when "all of their information compelled only one conclusion--that [applicant] was entitled to a service-connected disability pension." Applicant further alleged defendants violated her right to procedural due process by unreasonably delaying action on her application. Applicant alleged that defendants' conduct deprived her of due process under the Fourteenth Amendment to the United States Constitution and of civil rights under 42 United States Code section 1983.

The fifth cause of action, for intentional infliction of emotional distress, alleged that, because defendants did not immediately award applicant a disability pension upon receiving Dr. Lobely's report on July 11, 1990, but required applicant "to undergo the emotional stress and expense of an administrative hearing" on September 19, 1990, defendants had acted outrageously and intentionally to cause applicant emotional distress.

The Association and the individual defendants demurred to applicant's complaint, on grounds of governmental immunity, failure to timely pursue administrative mandamus, existence of an adequate state law remedy for the alleged civil rights violations, and failure to state facts constituting a cause of action for violation of substantive or procedural due process rights.

The trial court sustained the demurrer without leave to amend on grounds that applicant "failed to timely file a petition for writ of administrative mandate pursuant to Code of Civil Procedure § 1094.5 and on the grounds that the Government Code gives all defendants immunity from liability for [applicant's] claims," and sustained the demurrer specifically with respect to the fourth (due process) cause of action "on the grounds that [applicant] cannot state a cause of action for denial of federal due process rights and on the grounds that [applicant] did not exhaust the available state remedies,...