United States District Court, D. Arizona
HONORABLE JENNIFER G. ZIPPS UNITED STATES DISTRICT JUDGE.
the third action brought by Plaintiff Rebecca Brown against
Defendant Life Insurance Company of North America (LINA) to
enforce benefits under a long term disability (LTD) policy.
In this complaint, Brown seeks declaratory relief and a
determination that LINA incorrectly calculated the Cost of
Living Adjustment (COLA) benefits owed to Brown pursuant to
the LTD policy. (Doc. 8, ¶ 52).
has filed a Motion to Dismiss the complaint, pursuant to
Fed.R.Civ.P. 12(b)(6), for failure to state a claim. (Doc.
10). LINA argues that (1) Brown's action is time barred
and (2) the LTD policy language unambiguously supports
LINA's COLA calculation. (Doc. 10). Because the Court
concludes that LINA properly calculated the COLA benefit
pursuant to the policy, the Court will grant LINA's
motion and dismiss this action.
under Rule 12(b)(6) can be based on “the lack of a
cognizable legal theory” or “the absence of
sufficient facts alleged under a cognizable legal
theory.” Balisttreri v. Pacific Police
Dep't, 901 F.2d 696, 699 (9th Cir. 1990).
“While a complaint attacked by a Rule 12(b)(6) motion
to dismiss does not need detailed factual allegations, a
plaintiff's obligation to provide the grounds of his
entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Bell Atlantic Corp.
v. Twombly, 550 U.S. 544, 555 (2007) (citations and
internal quotations omitted). “[O]nce a claim has been
stated adequately, it may be supported by showing any set of
facts consistent with the allegations in the
complaint.” Id. at 563. Dismissal is
appropriate under Rule 12(b)(6) if the facts alleged do not
state a claim that is “plausible on its face.”
Id. at 570; Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (“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.”). When assessing the
sufficiency of the complaint, all well-pleaded factual
allegations are taken as true and construed in the light most
favorable to the nonmoving party, Keates v. Koile,
883 F.3d 1228, 1234 (9th Cir. 2018), and all reasonable
inferences are to be drawn in favor of that party as well.
Caltex Plastics, Inc. v. Lockheed Martin Corp., 824
F.3d 1156, 1159 (9th Cir. 2016).
has attached several documents as exhibits to its Motion.
“In ruling on a 12(b)(6) motion, a court may generally
consider only allegations contained in the pleadings,
exhibits attached to the complaint, and matters properly
subject to judicial notice. . . . [A] court may consider a
writing referenced in a complaint but not explicitly
incorporated therein if the complaint relies on the document
and its authenticity is unquestioned.” Swartz v.
KPMG LLP, 476 F.3d 576, 763 (9th Cir. 2007) (citations
and internal quotations omitted). The First Amended Complaint
relies on the LTD insurance policy and challenges the
interpretation of the provisions of that policy. (Doc. 10-3).
Therefore, the Court will consider the policy and does not
convert LINA's motion to dismiss into a motion for
summary judgment. The Court will not consider the other
exhibits attached to LINA's Motion (Docs. 10-1 &
10-2), because they are not necessary to the Court's
parties agree that the LTD policy provides for a COLA
benefit. The parties disagree as to whether the COLA benefit
applies to the net disability benefit or to the entire
monthly gross disability benefit before applying the
offset for “other income” from Social Security
Disability Insurance or other sources. (Doc. 8, ¶ 43).
LINA has applied the policy's COLA benefit to Brown's
net disability benefit. Brown asserts that LINA should have
applied the COLA to her gross monthly benefit. The Court
concludes there is no ambiguity in the policy, and under the
policy terms, LINA has correctly applied the COLA.
The policy is unambiguous and LINA's interpretation of
the policy is correct.
policies regulated by ERISA are interpreted by applying the
federal common law. Williams v. Nat'l Union Fire Ins.
Co. of Pittsburgh, 792 F.3d 1136, 1140 (9th Cir. 2015)
(internal citations omitted). Policy terms are interpreted
based on the plain meaning of the words, e.g.,
Evans v. Safeco Life Ins. Co., 916 F.2d 1437, 1441
(9th Cir. 1990), and “ambiguities are construed against
the insurer and in favor of the insured.” McClure
v. Life Ins. Co. of N. Am., 84 F.3d 1129, 1134 (9th Cir.
1996) (internal citations omitted).
an ambiguity exists in a contract is a matter of law.
State Farm Mut. Auto. Ins. Co. v. Fernandez, 767
F.2d 1299, 1301 (9th Cir. 1985). An ambiguity exists if a
term is subject to more than one reasonable interpretation.
McDaniel v. Chevron Corp., 203 F.3d 1099 (9th Cir.
2000). However, courts “will not artificially create
ambiguity where none exists . . . . If a reasonable
interpretation favors the insurer and any other
interpretation would be strained, no compulsion exists to
torture or twist the language of the policy.”
Evans, 916 F.2d at 1441 (internal quotations and
citations omitted). Further, specific terms in a contract
govern interpretation over general terms. Idaho v.
Shoshone-Bannock Tribes, 465 F.3d 1095, 1099 (9th Cir.
only reasonable interpretation of the LTD policy is that the
COLA benefit is applied to the net disability benefit as LINA
asserts. There is no ambiguity in the policy provisions. The
policy provides that the COLA benefit is applied to “an
Employee's Disability Benefit.” In describing the
COLA benefit, the policy states:
Each year the Insurance Company will increase an
Employee's Disability Benefit after he
or she has been continuously Disabled for the COLA Benefit
Waiting period. The increase will be the lesser of the annual
increase in the Consumer Price Index (CPI-W) during the
preceding calendar year or the COLA Increase shown in the
Schedule of Benefits.
(Doc. 10-3 at 16 (emphasis added)). The policy describes the
Disability Benefit calculation in the Schedule of Benefits,
and the disability benefit calculation requires offsets for
other income. The ...