Villalpando v. Transguard Ins. Co. of Am.
| Decision Date | 19 February 2014 |
| Docket Number | C 13–4028 SC |
| Citation | 17 F.Supp.3d 969 |
| Court | U.S. District Court — Northern District of California |
| Parties | Daniel Diaz Villalpando, Plaintiff, v. Transguard Insurance Company of America, Exel Direct, Inc., and Does 1–100, Defendants. |
Kaitlyn G. Johnson, Walter G. Crump, Guy Orville Kornblum, Guy Kornblum and Associates, San Francisco, CA, for Plaintiff.
Ronald Lee Richman, Bullivant Houser Bailey PC, David L. Blinn, Dirk Donald Larsen, Low Ball & Lynch, Mark F. Hazelwood, Allen Glaessner & Werth LLP, San Francisco, CA for Defendants.
ORDER ON MOTIONS TO DISMISS
Now before the Court are Defendants Transguard Insurance Company of America (“Transguard”) and Exel Direct, Inc.'s (“Exel”) (collectively “Defendants”) motion to dismiss Plaintiff Daniel Diaz Villalpando's first amended complaint. ECF Nos. 14 (“FAC”). The motions are fully briefed,1 and the Court finds them appropriate for decision without oral argument, Civ. L.R. 7–1(b). As explained below, both motions are DENIED.
Plaintiff, a Mexican citizen residing in California, was seeking work as a truck driver in September 2008. FAC ¶ 13. On September 8, he met with Jim Dalpino, a representative of Exel. Id. Exel is an Ohio-based delivery service that hires drivers to deliver merchandise, mainly home appliances, to customers who purchase those items from stores that use Exel as a delivery provider. Id. At that meeting, Plaintiff and others who were looking for work as truck drivers talked with Mr. Dalpino for about ten minutes, after which Plaintiff was told that he had a job with Exel but would need to sign certain papers “confirming certain aspects of his work” as an independent contractor. Id.
At the time of the meeting, Plaintiff's English was not fluent, so Mr. Dalpino spoke to him in Spanish and explained that there were four conditions for the job. See id. ¶ 14. Plaintiff would have to (1) “agree to pay for the cost of renting a truck suitable to be used for this delivery service,” (2) “pay for a second person to ride with him on deliveries,” (3) “pay for liability insurance for the truck, as well as coverage for damage to the truck and any contents,” and (4) “pay for insurance on himself and any person assisting him, which Plaintiff believed was workers compensation coverage.” Id.
Upon being asked to read and sign certain legal documents, Plaintiff told Mr. Dalpino that he could not read or understand English documents and would need to have them in Spanish. Id. ¶ 16. He was told that no translated documents were available. Id. Nevertheless, Mr. Dalpino instructed Plaintiff to sign a document called an “Equipment Lease Agreement,” FAC Ex. 1, which included an “Exhibit C,” a specific document related to Plaintiff's responsibility to obtain insurance. Mr. Dalpino apparently told Plaintiff to sign and initial a portion of Exhibit C, which he also told Plaintiff would confirm Plaintiff's purchase of worker's compensation insurance. Id. ¶ 15. Mr. Dalpino also signed and initialed that part of Exhibit C, which reads as follows: “Workers Compensation Coverage—Workers compensation coverage for the CONTRACTOR and for the CONTRACTOR's W2 Labor.” Id.; Equipment Lease Agreement Ex. C. Mr. Dalpino also told Plaintiff he needed to backdate the form to September 3, 2008, which Plaintiff did. FAC ¶ 15. At that point, Plaintiff believed that he was buying workers compensation coverage. Id. Mr. Dalpino also instructed Plaintiff to sign an “Independent Truckman's Agreement,” which was also backdated. FAC Ex. 2.2 For all documents, Plaintiff relied on Mr. Dalpino's representations and statements as to Exel's employment requirements. Id. ¶ 16.
Exel provided insurance through Transguard, a multi-line insurance agency. Id. ¶¶ 8–9. Plaintiff alleges that Mr. Dalpino was acting on behalf of Transguard when he arranged for, sold, and confirmed the issuance of coverage on Transguard's behalf. Id. ¶ 9; ECF No. 40 (“Villalpando Decl.”) ¶¶ 9–12. Plaintiff also alleges that Transguard and Exel were related through the National Association of Independent Truckers (“NAIT”), an “affiliation group” formed to market products and services—in this case, insurance—to independent trucking companies. Id. ¶ 4. According to Plaintiff, Exel is a NAIT member, and Transguard provided its insurance coverage to Exel, via its agent, in that capacity. See id.
After Plaintiff joined Exel as an independent contractor, he was paid per delivery, and the cost of his insurance premiums was deducted from his paychecks. Id. ¶ 17. Transguard allegedly knew of this arrangement because it had arranged for Exel to negotiate its employees' insurance coverage. Id. Plaintiff adds that Transguard ratified this conduct by accepting payments for the insurance Plaintiff purchased through Exel, and also by paying benefits of such coverage. Id. At the time of his meeting with Mr. Dalpino, however, Plaintiff never obtained any copy of any evidence of insurance (including a copy of his policy), though sometime after that meeting, Plaintiff did receive a one-page document entitled “Evidence of Insurance.” Id. ¶ 18 & Ex. 3. Throughout this time, based on Mr. Dalpino's statements and representations, Plaintiff believed he had purchased the requisite workers compensation insurance that Exel required. Id.
On October 17, 2010, while making a delivery for Exel, Plaintiff was badly injured when a refrigerator fell on top of him.Id. ¶ 20. He was knocked unconscious and airlifted to a hospital. Id. He suffered, among other things, “a concussion, sprains/strains of the arms, shoulders, neck and thoracic spine, including a cervical and lumbar radiculopathy
, thus necessitating surgeries.” Id. He spent several months undergoing rehabilitation and may require future surgeries. Id. While he recovered, Exel contacted Transguard to make a claim for him. Id. ¶ 22. Transguard paid some of Plaintiff's bills, and also provided payments of $500 per week for 104 weeks, through October 2012. Id. However, after Plaintiff's doctors told him that he would not be able to return to work at Exel, Plaintiff contacted Transguard to ask for continuing disability benefits. Id. Transguard refused. Id. Transguard's representative told Plaintiff that in order to obtain continuing disability benefits, his policy required that he apply for Social Security benefits. Id.
Plaintiff was unaware of such a requirement and, in fact, had never been given a copy of his insurance policy until he asked for one after Transguard's refusal. Id. He has since discovered that Defendants contend that he did not purchase workers compensation insurance, but rather a different type of insurance that Plaintiff did not understand, the provisions of which Defendants concealed from him. Id. ¶ 25. Until that point Plaintiff believed he had purchased workers compensation insurance that would cover his total disability and medical expenses, an expectation he contends is verified by his weekly payments and the payments of his medical bills, which Plaintiff contends resulted in Transguard's ratification of Mr. Dalpino's and Exel's conduct for Transguard's benefit. Id.
In accordance with Transguard's representative's instructions, Plaintiff requested Social Security benefits—which at that point he had thought were only for retirement, not pre-retirement disability. Id. ¶¶ 24–25. However, as a non-citizen, Plaintiff was not eligible for Social Security benefits because he did not have enough “credits.”3 Id. ¶ 26. Such credits are accumulated by working in certain jobs for certain periods of time, and Plaintiff contends that for Social Security eligibility, he would have needed to work for ten years (forty work quarters) in eligible jobs. Id. ¶ 28.
After Plaintiff received that notice of ineligibility, Transguard informed Plaintiff via an email dated October 15, 2012, that Plaintiff's claim would be denied “not because he was totally disabled from working but because he was not ‘approved for Social Security Disability ... [and he did] not qualify for disability benefits because [he had] not worked long enough under Social Security.’ ” Id. ¶ 27 (alterations in the original). Plaintiff contends that Defendants had always known that he could not qualify for the insurance they sold him. Id. ¶ 28. He alleges that they hid this fact from him, telling him instead that he was purchasing workers compensation insurance that would apply if he was injured while working for Exel. Id. ¶¶ 28–30. In accordance with Plaintiff's beliefs and expectations about his insurance, he paid premiums for 202 weeks. Id. ¶ 29.
Based on these facts, Plaintiff alleges that Transguard's insurance benefit denial was improper because it renders his insurance coverage “illusory,” since Plaintiff could never be covered under the plan given his lack of U.S. citizenship and Social Security credits. Id. ¶ 30. He also maintains that Defendants' position is an act of material non-disclosure under California insurance law, since they never told him that he would not be eligible for coverage under the plan he paid for.Id. ¶ 31. Plaintiff contends that Defendants' coverage position is also a prohibited type of post-claims underwriting, since Transguard determined after Plaintiff submitted a claim that he was never eligible for benefits and was never insured for workers compensation—as opposed to a denial of coverage based on Plaintiff's not being disabled. See id. ¶ 32.
The gist of Plaintiff's complaint is that Defendants collaborated to sell insurance policies to people like Plaintiff who could not understand English when entering the insurance contracts, but were nevertheless tricked into entering them as a condition of their employment.4 Id. ¶ 33. Based on these facts, Plaintiff asserts against Transguard causes of action for (1) breach of insurance contract; (2) declaratory relief, seeking a declaration that Plaintiff is disabled and entitled to benefits wrongfully withheld; and (3)...
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