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Estate of Burgard v. Bank of America, N.A.

United States District Court, D. Nevada

March 31, 2017

THE ESTATE OF MARILYN BURGARD, et al., Plaintiffs,
v.
BANK OF AMERICA, N.A. et al., Defendants.

          ORDER

          RICHARD F. BOULWARE, II UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Before the Court are Defendants Bank of America (“BANA”) and Aetna Life Insurance's (“Aetna”) Motion for Summary Judgment, ECF No. 47, Plaintiffs' Objection to Discovery Order, ECF No. 53, and Plaintiffs' Motion for Leave to File Supplement. ECF No. 62. For the reasons stated below, ECF No. 47 Motion for Summary Judgment is granted in part and denied in part; ECF no. 53 Objections to Discovery Order is denied, and ECF No. 62 Motion for Leave to File Supplement is granted.

         II. BACKGROUND

         On May 4, 2015, Defendant removed this action from the Eighth Judicial District Court. ECF No. 1. On May 11, 2015, Defendant filed a motion to dismiss for failure to state a claim. ECF No. 4. On February 17, 2015, this Court denied Defendants motions to dismiss as to claims 1, 2, 3; but granted it as to claims 4 and 5 without prejudice. ECF No. 25. The Court denied without prejudice as to state law claims and granted without prejudice as to Plaintiff's claim for punitive and exemplary damages. On March 15, 2015, Plaintiff filed a second amended complaint. ECF No. 28. The Second Amended Complaint asserts four counts: (1) Breach of Contact, (2) Breach of the Implied Covenant of Good Faith and Fair Dealing, (3) Violation of the Nevada Unfair Practices Act (NRS 686A.310), and (4) ERISA (29 USC § 1132 and § 502(a)).

         A scheduling order was entered on March 28, 2016, which provided a discovery cutoff date of August 23, 2016. ECF No. 31. The order stated the following as to dispositive motions: “Filing Date for Dispositive Motions: Thirty (30) days after the close of discovery, which is September 22, 2016; However, the Court previously ruled that Defendants can file and the Court will consider an earlier summary judgment motion regarding whether ERISA is applicable to this case (see ECF 25).”

         On August 4, 2016, Defendants filed a Motion for a Protective order. ECF No. 39. Plaintiff did not conduct written discovery. The Motion sought to limit deposition testimony of various individuals allegedly possessing knowledge as to Burgard's life insurance policy. On August 26, 2016, Defendant filed a motion for summary judgment. ECF No. 47. On September 9, 2016, Judge Foley granted the Motion for a Protective Order in part and denied in part, permitting one 30(b)(6) deposition of a representative of BANA who “should be prepared to testify about relevant information or documents in the possession of both BANA and Aetna.” The order permitted testimony to cover (1) “the fate of the life insurance policy provided to Ms. Burgard at the time of her retirement in 1986, (2) what records may exist pertaining to cancellation of life insurance policies provided to retired employees by predecessor employers or plans; (3) the process by which retired employees were able to convert to life insurance policies in which they pay premiums; and (4) what records may still exist regarding the termination of Burgard's plan and if she was afforded an opportunity to continue life insurance coverage. On September 23, 2016, Plaintiff filed Objections to Judge Foley's order. ECF No. 53. On December 13, 2016, Defendants filed a Motion for Leave to File a Supplement to ECF No. 47 MSJ. The supplement incorporates the testimony permitted by Judge Foley in the order on September 9, 2016, after the original Motion for Summary Judgment had been filed.

         III. Motion for Leave to File Supplement. ECF No. 63.

         A scheduling order was entered on March 28, 2016, which provided a discovery cutoff date of August 23, 2016. ECF No. 31. The order stated the following as to dispositive motions: “Filing Date for Dispositive Motions: Thirty (30) days after the close of discovery, which is September 22, 2016; However, the Court previously ruled that Defendants can file and the Court will consider an earlier summary judgment motion regarding whether ERISA is applicable to this case. On August 4, 2016, Defendants filed a Motion for a Protective order. ECF No. 39. The Defendants filed their Motion for Summary Judgment on August 26, 2016. ECF No. 47.

         Subsequent to that filing, the parties litigated the Motion for a Protective Order, and Judge Foley narrowed the scope of discovery in his order issued September 9, 2016. The deposition permitted in that order, of Patricia Parker, BANA's Global Human Resources Services Delivery Manager and 30(b)(6) corporate designee, occurred on November 16, 2016. To prepare for the deposition testimony, Parker “researched available historical databases and reached out to prior vendors to ensure that she could fully and completely testify as to the deposition topics.” The Defendants filed the Motion for Leave to File the Supplement on December 13, 2016. ECF No. 62. After extensions of time were granted, Plaintiff Responded to both the Motion for Summary Judgment and the Supplement on February 2, 2017. ECF No. 70.

         The record shows that Plaintiff filed an early Motion for Summary Judgment, as specifically suggested by the Court, while they were litigating a discovery dispute. Pursuant to the decision on that dispute, additional discovery occurred in the form of the deposition of Parker. Plaintiffs were permitted ample time to Respond to the Motion for Summary Judgment and the Supplement. Therefore, the Motion reflects good-faith compliance with the orders and recommendations of the magistrate and the Court, and did not prejudice the Plaintiff. ECF No. 62 Motion for Leave to File is GRANTED, and the Court considers this motion in conjunction with the Motion for Summary judgment.

         IV. LEGAL STANDARD

         A. Motion for Summary Judgment

         Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); accord Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). When considering the propriety of summary judgment, the court views all facts and draws all inferences in the light most favorable to the nonmoving party. Gonzalez v. City of Anaheim, 747 F.3d 789, 793 (9th Cir. 2014). If the movant has carried its burden, the non-moving party “must do more than simply show that there is some metaphysical doubt as to the material facts . . . Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Scott v. Harris, 550 U.S. 372, 380 (2007) (alteration in original) (internal quotation marks omitted).

         V. UNDISPUTED FACTS

         A. The “Fate” of Burgard's Life Insurance Plan

         The Court finds the following facts to be undisputed: On or about April 7, 2012, Marilyn Burgard was killed in a car accident. In 1986, Ms. Burgard received a $10, 000 life insurance benefit from her employer Arizona Bank at the time of her retirement. Patricia Parker discovered 1990 and 1992 benefit enrollment records which confirm that Ms. Burgard had life insurance coverage during this time period through Security Pacific. The enrollment records from 1990 and 1992 preceded Bank of America and Aetna's administration of Ms. Burgard's benefits. The 1990 document identified by Ms. Parker as the “original enrollment” showed enrolled benefits for Ms. Burgard, including medical coverage, dental coverage, retiree life insurance, accidental death, and benefit dollars. The critical information in this document establishes that in 1990 Ms. Burgard had $10, 000 in life insurance coverage, with a premium of $10.90.

         Arizona Bank was acquired by Security Bank around the time of Burgard's retirement and she was subsequently treated as a Security Bank retiree. Security Bank was then acquired by Bank of America. Prior to Aetna and Bank of America becoming partners in January 1, 2009, there were other carriers offering insurance coverage to retirees. In 2009, several years after BANA's acquisition of Security Bank, BANA partnered with Aetna, and its Retiree Life Insurance Plan became effective. The Summary Plan Description (“SPD”) states that “participants and beneficiaries have no vested rights in the BANA Group Benefits Program, any retiree component plan or any program or policy; in particular, no vested rights arise in benefits currently made available to retirees after employment ends or to current contributions required to be paid by retirees.”

         The benefit enrollment offered by Security Pacific provided options for waiving life insurance coverage in exchange for benefit dollars. For example, Ms. Burgard received $196.52 per month in Benefit Dollars, $185.62 for “medical dollars” to be used toward her medical benefit, and $10.90 of “life dollars” related to her life insurance benefit. If she waived these benefits, these amounts would go into her Health Care Savings Fund. Burgard continued her medical and dental coverage, waived vision coverage, and maintained life insurance benefits in the amount of $10, 000, with a premium of $10.90, and a separate AD&D [Accidental Death and Dismemberment] policy of $10, 000.

         Historical records provided by Security Pacific BANA included a Security Pacific newsletter, “The Benefits Newsletter for Retirees” where an article was issued in October 1992, “What's New for 1993.” The article described how retirees could lower or waive their life insurance coverage and apply those benefits to other covered premiums. Once the insured lowered or waived their coverage, the lower coverage would then become the maximum available to them, and once waived the insured could not re-enroll in that benefit. The article further addressed the healthcare savings fund and the use of “Benefit Dollars.” “Benefit Dollars” were payments made by the former employer and were provided to the retirees to purchase life insurance. The article explained, “if you choose coverage lower than you have currently, the excess Benefit Dollars can be used to pay for Dental or Vision coverage, or they can be deposited into your Health Care Savings Fund.” The Health Care Savings Fund is used by the retirees to pay eligible health care expenses not covered by the retirees' medical plans or Medicare. After 1992 there are no records establishing that Ms. Burgard continued to elect life insurance coverage of $10, 000, with a premium of $10.90. The records do identify Ms. Burgard applying her “Benefit Dollars” to her HCSF contribution. There is a gap from 1992 to 2001 for which Defendants have no records related to Ms. Burgard.

         In 1998, Bank of America issued its Plan documents for Retirees where it specifically stated that when a retiree waived his or her life insurance, then it was a permanent election. While some records are missing, BANA did find benefit records for Ms. Burgard between August 2001 and December 2013. From 2001 to 2003 the third party administrator for Bank of America was AON Hewett (“AON”). Aetna did not become the insurer of Bank of America until 2009. The records from AON identify the Plan's identification codes that are set forth in the benefit spreadsheet. The critical codes are the Inactive Plan Codes which are designated for retirees. The critical codes are “7900” (Retiree Life Insurance - West), “7050” (Health Care Saving Fund), “2000” (Retiree Medical), “3050” (Retiree Dental), and “3450” (AD&D). AON's records do not show that Ms. Burgard had a life insurance coverage benefit on August 1, 2001. They do show that she was receiving “Flex/Benefit Dollars” that were being paid into her Health Care Saving Account in the amount of $130.80. Defendants found no records of Ms. Burgard having life insurance coverage after 2001.

         Fidelity was the third party administrator for Bank of America's Plan from 2006 to June 30, 2011. Ms. Parker retrieved from Fidelity a spreadsheet reflecting Ms. Burgard's benefits during this time period. Based on her experience and her review of thousands of these records over a course of years, Ms. Parker stated her professional opinion that this historical data undeniably established that Ms. Burgard had no life insurance benefits and was receiving flex dollars in lieu of coverage. Data Ms. Parker received from Benefit Solutions, the third-party administrator for the health care ...


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