905 F2d 1541 Wander v. United Benefit Life Ins Co

905 F.2d 1541

Unpublished Disposition

NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.

Douglas WANDER, Harry Wander, Plaintiffs-Appellants,
UNITED BENEFIT LIFE INS. CO., Mutual of Omaha, United of
Omaha Life, Medical Group Ins. Serv. Co., Inc.,

No. 89-15617.

United States Court of Appeals, Ninth Circuit.

Submitted June 7, 1990.*
Decided June 29, 1990.

Before CANBY, NOONAN and RYMER, Circuit Judges.

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Appellants Douglas and Harry Wander appeal the district court's grant of summary judgment in favor of United Benefit Life Insurance Company (United). We affirm.


We review a grant of summary judgment de novo. T.W. Elec. Serv. v. Pacific Elec. Contractors, 809 F.2d 626, 629 (9th Cir.1987).


The Wanders first argue that the district court erred procedurally. The district court, sua sponte, ordered that the parties brief issues relating to the covenant of good faith and fair dealing. These issues were outside the scope of United's summary judgment motion. The district court's order also granted the parties sixty additional days of discovery relative to these issues.


The Wanders argue that the district court's order did not meet the demands of due process. In Portsmouth Square, Inc. v. Shareholders Protective Comm., 770 F.2d 866, 869 (9th Cir.1985), we held that where a district court grants summary judgment sua sponte, due process is met if "the party against whom judgment was entered had a full and fair opportunity to develop and present facts and legal arguments in support of its position." The record clearly indicates that the Wanders had a full opportunity to make their case. See id. at 869-70. Therefore, the Wanders' argument must fail.


The Wanders next argue that the district court erred in not distinguishing between the tort aspect and the contractual aspect of the covenant of good faith and fair dealing in holding that ERISA preempted the Wanders' claims.1 The district court held that "[t]o the extent plaintiffs' claims are based on a purported breach of the group insurance policy issued to the Marysville Clinic, they are preempted by ERISA."


In Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48 (1987), the Supreme Court held that both common law tort and contract actions "based on alleged improper processing of a claim for benefits under an employee benefit plan" fall under ERISA's express preemption clause, Sec. 514(a), 29 U.S.C. Sec. 1144(a). Consequently, since ERISA preempts all of the Wanders' common law tort and contract causes of action, the district court did not need to separately distinguish the tort and contract aspects of the covenant of good faith and fair dealing. The district court's holding was proper.

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The Wanders next argue, citing Fields v. Blue Shield of Cal., 163 Cal.App.3d 570 (1985), that California law recognizes the vesting of "Maximum Life Benefits." Thus, they argue, Douglas Wander had vested rights to lifetime medical benefits, up to the policy limits, for his permanent disabilities and that these vested rights entitled him to receive benefits under the policy even after the policy had terminated.


First, to the extent that the Wanders view this right as deriving from the group policy, ERISA preempts this claim. See Nishimoto v. Federman-Bachrach & Assoc., No. 88-6338, slip op. 4991, 4998 (9th Cir. May 17, 1990) ("ERISA preempts 'any and all State laws insofar as they may now or hereafter relate to any employee benefit plan' covered by the statute. 29 U.S.C. Sec. 1144(a)").


Further, and to the extent the Wanders view their rights as deriving from the 1981 settlement agreement, their argument misinterprets the court's holding in Fields. The contract provisions of an insurance policy determine the extent of coverage and whether lifetime benefits vest. In Fields, the court held that the contractual provisions contained in the insurance policy that limited coverage were unclear and inconspicuous and thus were not effectuated. Id. at 579. Since the contractual restrictions were not effectuated, the insurer could not effectively reduce benefits. Id. at 583. The benefits, therefore, were vested.


In this case the settlement agreement and endorsement to the group policy clearly and conspicuously limited coverage. Paragraph 2.4 of the settlement agreement specifically provides that the agreement to provide coverage to Douglas Wander under a United policy "is not a guarantee of lifetime coverage." The endorsement provides that "Douglas's coverage shall in all other respects be governed strictly by the provisions of the policy." The policy's provisions concerning termination of coverage are clear and unambiguous. The Certificate of Coverage clearly provides that an employee's insurance shall terminate "[t]he date the participating employer ceases to be a participating employer." The Certificate also provides that the insurance of any dependent terminates "[t]he date the employee's coverage hereunder terminates." Consequently, when Marysville Medical Clinic ceased to be a participating employer, the Wanders' coverage under the policy ceased. The Wanders' reliance on Fields is misplaced.


Finally, the Wanders argue that the district court erred in holding that the Wanders did not "establish the existence of triable issues of fact regarding United's motivations for re-rating the Marysville policy and raising the premiums."


Summary judgment is properly granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "If the party moving for summary judgment meets its initial burden of identifying for the court the portions of the materials on file that it believes demonstrate the absence of any genuine issue of material fact," then "the nonmoving party must set forth, by affidavit or as otherwise provided in Rule 56, 'specific facts showing that there is a genuine issue for trial.' " T.W. Elec. Serv. Inc. v. Pacific Elec. Contractors Ass'n., 809 F.2d 626, 630 (9th Cir.1987) (citations omitted) (emphasis added). "Inferences from the nonmoving party's 'specific facts' as to other material facts, however, may be drawn only if they are reasonable in view of other undisputed background or contextual facts and only if such inferences are otherwise permissible under the governing substantive law." Id. at 631-32.


The record in this case contains no material evidence from which a reasonable inference could be drawn that United set premium rates for "the purpose of depriving the Wanders of the benefits of the settlement agreement." There is no material evidence that United set premiums arbitrarily, in bad faith, or unfairly. Therefore, the Wanders have not met their burden to survive summary judgment.




The panel unanimously finds this case appropriate for submission without oral argument pursuant to Fed.R.App.P. 34(a) and 9th Cir.R. 34-4


This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3


Neither party contests that the plan at issue in this case is an employee benefit plan as defined in 29 U.S.C. Sec. 1002