Medoy v. Warnaco Employees' Long Term Disab. Plan

• Decision Date: 06 April 1999
• Docket Number: No. 97 CV 6612(SJ).,97 CV 6612(SJ).
• Citation: 43 F.Supp.2d 303
• Parties: Audrey MEDOY, Plaintiff, v. WARNACO EMPLOYEES' LONG TERM DISABILITY INSURANCE PLAN, and Warnaco Inc., personally and as Administrator of the Warnaco Employees' Long Term Disability Insurance Plan, Defendants.
• Court: U.S. District Court — Eastern District of New York

43 F.Supp.2d 303

Audrey MEDOY, Plaintiff, v. WARNACO EMPLOYEES' LONG TERM DISABILITY INSURANCE PLAN, and Warnaco Inc., personally and as Administrator of the Warnaco Employees' Long Term Disability Insurance Plan, Defendants.

No. 97 CV 6612(SJ).

United States District Court, E.D. New York.

April 6, 1999.

Legal Services for the Elderly, New York City, by Edgar Pauk, for plaintiff.

Seyfarth, Shaw, Fairweather & Geraldson, New York City, by Edward Cerasia II, Mara-Louise Anzalone, for defendants.

MEMORANDUM AND ORDER

JOHNSON, District Judge.

Audrey Medoy ("Plaintiff") brings this action against the Warnaco Employees' Long Term Disability Insurance Plan (the "Plan") and Warnaco, Inc. ("Warnaco") personally and as administrator of the Plan (collectively, "Defendants"), under the Employee Retirement Income Security Act of 1974 (ERISA), as amended, 29 U.S.C. §§ 1001-1461 (1994).¹ Defendants presently move to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief may be granted. For the reasons set forth herein, Defendants' motion is denied.

BACKGROUND²

Plaintiff was employed by the White Stag Corporation ("White Stag") between August 13, 1979 and February 13, 1983, when she stopped working due to the onset of Crohn's disease. With the assistance of William R. Horner, an attorney, she filed an application for long-term disability benefits with the Plan, which was fully insured by Cigna Group Insurance ("CIGNA"), and began receiving benefits on June 25, 1984 (retroactive to the date of her application). Warnaco subsequently acquired White Stag's assets.

Plaintiff applied for Social Security disability benefits on the advice of Warnaco, and was informed that upon receipt of a Social Security award her benefits would be adjusted accordingly. Her initial application was denied on November 16, 1984, and the appeal was denied on August 21, 1985. Plaintiff forwarded copies of these decisions to CIGNA. A later application resulted in an award of Social Security disability benefits on October 3, 1989, which was initially made retroactive to April 1987 and was subsequently made retroactive to May 31, 1985.

On or about August 31, 1987, the Plan discontinued benefit payments to Plaintiff without providing notice as required by ERISA § 503, 29 U.S.C. § 1133.³ On July 22, 1993—nearly six years after her benefits were terminated—Plaintiff, by her attorneys, delivered to Warnaco a written request for resumption of her long-term disability benefits, and for the production of "copies of all documents and correspondence, which contain the reason(s) and basis for the termination of Ms. Medoy's disability benefits." Having received no response, she renewed her request and additionally asked for "a current copy of the long term disability plan, including the claim and appeal procedure as soon as possible," on November 3, 1993.⁴ She was informed that under the terms of the Plan, CIGNA was responsible for retaining Plan records and responding to information requests from Plan participants. CIGNA later indicated that it had destroyed Plaintiff's file, and therefore could not respond to the document requests.

Plaintiff then appealed the decision to terminate her long-term disability benefits, on April 22, 1994. After further correspondence with Warnaco, and having received no decision on her appeal, Plaintiff issued a letter dated August 20, 1996, demanding the resumption of benefits, and subsequently filed this action on November 12, 1997. The complaint alleges several claims: that CIGNA's termination of her benefits breached the terms of the Plan in violation of ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B); that the failure of Warnaco, as Plan administrator, to provide requested documents breached the disclosure requirements of § 1132(c)(1); and that Warnaco's failure to maintain files regarding Plaintiff's claim determination contravened ERISA § 107, 29 U.S.C. § 1027. Plaintiff seeks declaratory and injunctive relief, as well as retroactive and continuing long-term disability benefits, statutory penalties for the failure to provide documents and costs and attorney's fees.

Defendants contend that Plaintiff's benefits claim should be dismissed as untimely. They further argue that Plaintiff is not within the class of persons owed a duty of disclosure, see ERISA § 104(b)(4), 29 U.S.C. § 1024(b)(4), and that Warnaco had no duty to retain Plaintiff's claims records under ERISA.

DISCUSSION

I. Rule 12(b)(6) Standard

In deciding a motion to dismiss pursuant to Rule 12(b)(6), the function of the district court is to assess the legal feasibility of the complaint, not to weigh the evidence that may be offered at trial. See LaBounty v. Adler, 933 F.2d 121, 123 (2d Cir.1991). The court must accept as true all material facts well pleaded in the complaint and must make all reasonable inferences in the light most favorable to the plaintiff. Id.; see also Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). A motion to dismiss should be granted only when it appears beyond doubt that the plaintiff can prove no set of facts in support of her claim that would entitle her to relief. Yusuf v. Vassar College, 35 F.3d 709, 713 (2d Cir.1994) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).

II. Benefits Claim

ERISA does not prescribe a statute of limitations for actions under Section 502. In this case, the parties do not dispute the applicability of the six-year limitations period for breach of contract actions in Rule 213(2) of the New York Civil Practice Law and Rules, which the Second Circuit has held to be the most analogous state limitations statute and therefore applicable to ERISA benefits claims. Miles v. New York State Teamsters Conference Pension Plan, 698 F.2d 593, 598 (2d Cir.), cert. denied, 464 U.S. 829, 104 S.Ct. 105, 78 L.Ed.2d 108 (1983).⁵ Accordingly, Plaintiff's claim alleging wrongful termination of benefits is untimely if it accrued before November 1991.

"The Second Circuit in Miles also announced the rule that the moment of accrual in a Section 1132 action is `when there has been a repudiation by the fiduciary which is clear and made known to the beneficiaries.'" Patterson-Priori v. Unum Life Ins. Co. of America, 846 F.Supp. 1102, 1106 (E.D.N.Y.1994) (quoting Miles, 698 F.2d at 598). This standard has since been reaffirmed by the Second Circuit. See Larsen v. NMU Pension Trust of NMU Pension & Welfare Plan, 902 F.2d 1069, 1073-74 (2d Cir.1990) (holding that correspondence which did not clearly repudiate claimant's rights as a survivor of a plan participant was not sufficient to trigger the statute of limitations). It is well established that an ERISA cause of action accrues upon the denial of an application for benefits, provided that "[t]he repudiation or denial of benefits [is] `clear,' `unequivocal,' and `continuing.'" Mitchell v. Shearson Lehman Bros., Inc., No. 97 Civ. 0526, 1997 WL 277381, at *2 (S.D.N.Y. May 27, 1997) (quoting Daill v. Sheet Metal Workers' Local 73 Pension Fund, 100 F.3d 62, 66 (7th Cir.1996)); see also Patterson-Priori, 846 F.Supp. at 1106. Because Defendants provided no notice to Plaintiff when her disability benefits were initially terminated, Plaintiff claims that the decision was not "clear and made known" to her until at least July 31, 1995 — the date of what Plaintiff contends is the first correspondence from Defendant that constituted a denial of benefits.

Because Plaintiff was represented by counsel at the time her benefits were terminated and in prior dealings with Defendants,⁶ Defendants argue that under the circumstances she either knew or should have known of her claim at the time her benefits were terminated and, therefore, her cause of action accrued on August 31, 1987 despite Defendants' failure to provide notice. But in the cases relied upon by Defendants — almost exclusively from outside this circuit — the courts were deciding motions for summary judgment, not dismissal under Rule 12(b)(6), and the facts of each case are distinguishable. In Corbett v. International Ass'n of Bridge, Structural and Ornamental Iron Workers, No. 90 Civ. 4161, 1992 WL 178762 (E.D.N.Y. July 14, 1992), for example, the plaintiff's right of action was held to have accrued when pension contributions made on his behalf were returned to his union, and the court granted summary judgment for the defendant. Unlike here, however, the returned check was accompanied by a letter from the pension plan administrator explaining why he was "required by the Plan provisions and by the law" to refund the contributions. Id. at *4. Similarly, summary judgment for the defendant was appropriate in Duch v. Allied Structural Steel Co., No. 85 Civ.1953, 1986 WL 7074 (N.D.Ill. June 16, 1986), where plaintiff's cause of action had accrued when he was "unequivocally notified" by letter regarding the method by which his benefits would be calculated, and therefore possessed "all the information he needed to file his claim for enhanced pension benefits." Id. at *1-3.⁷

Defendants also cite a Fifth Circuit case in which the court granted summary judgment for the defendant, holding that a plan participant's surviving spouse's "duty to assert any remaining rights in [a pension plan] commenced on the date she stopped receiving checks." Russell v. Board of Trustees of Firemen, Policemen and Fire Alarm Operators' Pension Fund of Dallas, 968 F.2d 489, 493 (5th Cir.), cert. denied, 507 U.S. 914, 113 S.Ct. 1266, 122 L.Ed.2d 662 (1993). However, that decision rested upon undisputed proof that the plaintiff had actual knowledge regarding her claim: the termination of benefits was due to her remarriage following the death of the plan participant, and correspondence from plaintiff to the plan's board of trustees established that she "undoubtedly knew her benefits would terminate upon remarriage." 968 F.2d at...