Metaxas v. Gateway Bank F.S.B.

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POPPI METAXAS, Plaintiffs, v. GATEWAY BANK, F.S.B., et al., Defendant.

No. 20-cv-01184-EMC

United States District Court, N.D. California

July 18, 2024

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

DOCKET NO. 127

EDWARD M. CHEN, UNITED STATES DISTRICT JUDGE.

This is an ERISA denial of benefits case involving whether Plaintiff is entitled to benefits under the terms of a supplemental executive retirement plan. Plaintiff was the President and Chief Executive Officer for Defendant Gateway Bank prior to her disability and was a beneficiary of supplemental retirement benefits under it. Plaintiff brings against Defendant three claims of (1) a denial of benefits claims under ERISA §502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B); (2) breach of duty of good faith under ERISA §502(a)(3), 29 U.S.C. § 1132(a)(3N); and (3) failure to produce required documents under ERISA §502(a)(1)(A), 29 U.S.C. § 1132(c).

Now pending is the Defendant's motion to dismiss Plaintiff's complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim. Docket No. 119. For the following reasons, the Court GRANTS IN PART AND DENIES IN PART Defendant's motion to dismiss the denial of benefits claim without prejudice with leave to amend. The Court GRANTS Defendant's motion to dismiss Plaintiff's claim for equitable relief with leave to amend. The Court GRANTS Defendant's motion to dismiss claim for failure to produce documents without prejudice and with leave to amend.

I. FACTUAL AND PROCEDURAL BACKGROUND

The Plaintiff's alleged facts are as follows. Plaintiff was President and CEO of Defendant Gateway Bank. Docket No. 113 (“SC”) ¶ 8. In 2004, in return for Plaintiff's agreement to remain its CEO, Defendant agreed to increase Plaintiff's compensation by approximately $300,000 per year in the form of deferred compensation. Id. ¶ 9. Over the next seven years as part of the deferred compensation, Defendant purchased a $5 million life insurance policy (“Policy”) from an insurance company, NY Life, on Plaintiff's life that would fund a customized Supplemental Executive Retirement Plan (“PLAN.”). The PLAN started in January 2005.

The PLAN offered Disability and Termination benefits to certain key employees of the Bank, including Plaintiff. Id. ¶ 18. Around the inception of the PLAN, Defendant created three accounts in its general ledger that related to the accounting of Defendant's PLAN benefit obligation to Plaintiff and/or Plaintiff's deferred compensation used to purchase the Policy. Id. ¶ 20. As of March 2010, Defendant's general ledger carried a liability for Plaintiff's PLAN benefits of $1,236,448.04. Id. ¶¶ 26. As of June 2010, the cash value of the Policy was $1,867,581. Id. ¶¶ 26, 27. In April 2010, Defendant derecognized the accrued liability of Plaintiff's PLAN benefit on the Defendant's general ledger. Id. ¶ 28. The value of PLAN benefits ($1,236,448.04) added to Defendant's general ledger and increased Defendant's capital. Id. ¶ 29.

In March 2013, Plaintiff filed a claim for Disability and Termination benefits to Defendant. Id. ¶ 37. On February 25, 2016, Defendant denied Plaintiff's claim. Id. ¶ 38. During the pendency of her claim Plaintiff requested multiple times that Defendant produce certain documents to which she was entitled pursuant to ERISA, the applicable Department of Labor regulations, and the terms of the PLAN. Id. ¶ 39. In August 2016, Plaintiff appealed Defendant's denial. In May 2017 Defendant's Administrative Committee upheld the decision to deny Plaintiff's benefit. Id. ¶¶ 40-41.

In February 2020, Plaintiff filed an initial Complaint in this court seeking plan benefits pursuant to ERISA §502(a)(1)(B) and equitable relief pursuant to ERISA §502(a)(3). Id. ¶ 42. In August 2022, the Court issued an order at summary judgment remanding the matter to Defendant's Plan Administrator for reconsideration of whether Plaintiff is entitled to benefits under the terms of the PLAN. Docket No. 90. In March 2023, Defendant's Administrative Committee, after reconsidering Plaintiff's claim for Termination benefit, under Section 5.3(b) of the PLAN, found she was entitled to $9.252.95 per month since Plaintiff's retirement date on May 1, 2013. Id. ¶ 62.

In May 2023, Plaintiff again filed an appeal of Administrative Committee decision that addressed (1) the correct amount of past and future benefits due, which she argues should be at least $19,626.16 per month; (2) interests on back benefits due for the past thirteen years; and (3) the failure to produce documents and information relevant to Plaintiff's claim. Id. ¶¶ 63, 75. In June 2023, Defendant issued checks for the benefits, although various taxes were withheld on the checks and Defendant allegedly failed to specify withholding information as require by California Labor Code § 226, et seq. Id. ¶ 65.

Then, in March 2024, the Court reopened the case pursuant to Rule 60(b)(6) and granted Plaintiff leave to amend to file a Supplemental Complaint. Docket No. 112. Plaintiff's Supplemental Complaint addresses post-remand issues. Plaintiff now bring three claims against Defendant: (1) failure to pay benefits due in violation of ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B); (2) equitable relief from breach of duty of good faith under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3); and (3) failure to produce documents under ERISA § 502(a)(1)(A), 29 U.S.C. § 1132(c). See SC. Plaintiff seeks damages, equitable damages and punitive damages. Id. ¶¶ 1819. Defendant now moves to dismiss the S.C. under Fed.R.Civ.P. 12(b)(6). See Docket No. 119 (“Mot.”).

II. LEGAL STANDARD

A. Failure to State a Claim (Rule 12(b)(6))

Federal Rule of Civil Procedure 8(a)(2) requires a complaint to include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). A complaint that fails to meet this standard may be dismissed pursuant to Rule 12(b)(6). See Fed.R.Civ.P. 12(b)(6). To overcome a Rule 12(b)(6) motion to dismiss after the Supreme Court's decisions in Ashcroft v. Iqbal, 556 U.S. 662 (2009) and Bell Atlantic Corporation v. Twombly, 550 U.S. 544 (2007), a plaintiff's “factual allegations [in the complaint] ‘must. . . suggest that the claim has at least a plausible chance of success.'” Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014). The Court “accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). But “allegations in a complaint . . . may not simply recite the elements of a cause of action [and] must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.” Levitt, 765 F.3d at 1135 (quoting Eclectic Props. E., LLC v. Marcus & Millichap Co., 751 F.3d 990, 996 (9th Cir. 2014)). “A claim has facial plausibility when the Plaintiff pleads factual content that allows the court to draw the reasonable inference that the Defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556).

III. DISCUSSION

A. Claim 1: PLAN Benefit

ERISA § 502(a)(1)(B) provides that a plan participant may bring a civil action “to recover benefits due to him under the terms of his plan; to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B). To state a claim for denial of benefits under ERISA, a plaintiff must allege plausible facts showing they were owed benefits under the .Plan. This requires a plaintiff to allege (1) the existence of an ERISA plan, and to identify (2) “the provisions under the plan that entitle [them] to benefits.” Doe One v. CVS Pharmacy, Inc., 384 F.Supp.3d 967, 992 (N.D. Cal. 2018) (citing B.R. v. Beacon Health Options, No. 16-cv-04576-MEJ, 017 U.S. Dist. LEXIS 194501, 2017 WL 5665667, at *3 (N.D. Cal. Nov. 27, 2017)). See also Steelman v. Prudential Ins. Co. of Am. 2007 U.S. Dist. LEXIS 30149 (E.D. Cal. Apr. 4, 2017) (Ruling that a plaintiff who brings a claim for benefits under ERISA must identify a specific plan term that confers the benefit in question.). A plan is established if a reasonable person “can ascertain the benefits, a class of beneficiaries, the source of financing, and procedures for receiving benefits.” Donovan v. Dillingham, 688 F.2d 1367, 1373 (11th Cir. 1982).

Here, Plaintiff clearly has stated a claim for denial of benefits under ERISA for two reasons. First, her allegations sufficiently establish both the existence of an ERISA plan and identify the relevant provisions. Plaintiff alleges that “the Gateway Bank Supplemental Executive Retirement Plan (hereinafter the “SERP” of the “PLAN”) was an employee benefit plan within the meaning of ERISA § 3(1) (29 U.S.C. §1002(1)), sponsored by Defendant Gateway...” S.C. ¶ 5. She then alleges that the PLAN offered Plaintiff Disability and Termination benefits, id. ¶¶ 18-19, that she filed a claim for Disability and Termination benefits in March 2013, and that Defendant denied her claim in February 2016. Id. ¶¶ 37-38.

In contrast, in Doe One v. CVS Pharmacy Inc., 348 F.Supp.3d 967, 993 (N.D. Cal. 2018), aff'd in part vacated in part, remanded sub nom, Doe v. CVS Pharmacy, Inc., 982 F.3d 1204 (9th Cir. 2020), this Court dismissed a denial of benefits claim because plaintiffs failed to identify any specific term in their plan that conferred the benefits they were allegedly denied. There, Plaintiff argued in...