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declining to consider exhibits from another case that were not properly authenticated in the instant case
Summary of this case from Flores v. City of LakewoodOpinion
No. C 99-5173 SI
June 11, 2001
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
On June 8, 2001, the Court heard argument on a motion for summary judgment by defendants UnumProvident Corporation, The Paul Revere Life Insurance Company, and Provident Life and Accident Insurance Company. Having carefully considered the arguments of counsel and the papers submitted, the motion is GRANTED IN PART and DENIED IN PART, for the reasons set forth below.
BACKGROUND
Plaintiff Roy Forest ("Forest") purchased individual income disability insurance in 1980 and 1984 from The Equitable Life Assurance Society of the United States ("Equitable"). First Amended Compl. ("FAC") ¶ 9. This action arises out of Equitable's termination of plaintiff's benefit payments and denial of his claim of disability.
Plaintiff became disabled in February 1994, and drew payments from his insurance policies until November 1997. He alleges that the disability continues to date but that Equitable canceled payments on January 2, 1998, claiming that Forest was no longer disabled. FAC ¶ 14. Equitable refused to reinstate disability payments even after Forest submitted medical evidence allegedly establishing his ongoing disability. FAC ¶ 15.
In the First Amended Complaint, Forest states claims for breach of contract, breach of the implied covenant of good faith and fair dealing arising from his insurance policies, negligence, and intentional infliction of emotional distress. In addition to Equitable, Forest sues The Paul Revere Life Insurance Company ("Paul Revere"), UnumProvident Corporation ("UnumProvident"), and Provident Life and Accident Insurance Company ("Provident Life"). UnumProvident is a holding company that resulted from a merger in June 1999 between Unum Corporation and Provident Companies, Inc. Declaration of Susan Roth ("Roth Decl.") ¶ 7. As a result of the merger, Provident Life and Paul Revere became subsidiaries of UnumProvident. See id. at ¶¶ 3, 6.
As a holding company, UnumProvident is not licensed to conduct the business of insurance and has never underwritten or marketed insurance or financial products. Id. at ¶ 9. UnumProvident's subsidiaries Paul Revere and Provident Life are both licensed and authorized to conduct business as insurance companies. Id. at ¶¶ 11, 12. Both of these insurance companies have entered into agreements to provide claims services for administration Equitable's disability insurance policies, including Forest's policies. See Declaration of Joseph Williams ("Williams Decl.") ¶¶ 3, 6, 7 and Exs. A, D, E (exhibits filed under seal). Paul Revere and Provident Life have also entered into coinsurance agreements with Equitable for purposes of indemnity reinsurance. See id. at 4, 5 and Exs. B, C (exhibits filed under seal).
Presently before the Court is a motion for summary judgment by UnumProvident, Paul Revere and Provident Life.
LEGAL STANDARD
The Federal Rules of Civil Procedure provide for summary adjudication when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with 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).
In a motion for summary judgment, "[if] the moving party for summary judgment meets its initial burden of identifying for the court those portions of the materials on file that it believes demonstrate the absence of any genuine issues of material fact," the burden of production then shifts so that "the non-moving 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) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 317 (1986)).
In judging evidence at the summary judgment stage, the Court does not make credibility determinations or weigh conflicting evidence, and draws all inferences in the light most favorable to the nonmoving party. See T.W. Electrk, 809 F.2d at 630-31 (citing Matsushita Elec. Indus.Cc., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348 (1986)); Ting v. United States, 927 F.2d 1504, 1509 (9th Cir. 1991). The evidence presented by the parties must be admissible. Fed.R.Civ.P. 56(e). Conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment. See Thornhill Publ'g Co., Inc., v GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979); Falls Riverway Realty, Inc. v. City of Niagara Falls, 754 F.2d 49 (2d Cir. 1985). Hearsay statements found in affidavits are inadmissible. See, e.g., Fong v. American Airlines Inc., 626 F.2d 759, 762-63 (9th Cir. 1980).
DISCUSSION
Forest sues UnumProvident, Paul Revere and Provident Life on a theory that they are in a commercial joint venture with Equitable which caused the alleged unjustified cancellation of his benefits and denial of his insurance claim. UnumProvident is sued alternatively as an alleged alter ego of Paul Revere and/or Provident Life, who were both in contractual privity with Equitable. Defendants contend that there are no genuine issues of material fact demonstrating the existence of the alleged joint venture. Instead, defendants argue that Paul Revere and Provident Life, as claims administrators, are only agents of Equitable, and consequently, cannot be held liable for breach of plaintiff's insurance policies to which they are not signatories. Defendants further argue that the alter ego claim, as well as plaintiff's tort claims for negligence and intentional infliction of emotional distress, are unsupported.
A. Evidentiary Objections
Both sides raise objections to the other side's evidence. Forest objects to a statement contained in the declaration of Susan Roth, Vice-President, Corporate Secretary and Assistant General Counsel for UnumProvident. Roth declared that, subsequent to the merger between UnumProvident and Provident Companies, Inc., "UnumProvident Corporation did not and never had assumed liability for the claims maintained against Provident Life and Accident Insurance Company or The Paul Revere Life Insurance Company." Roth Decl. ¶ 8. The Court GRANTS the objection to this statement because it states a legal conclusion without any proper foundation. See Fed.R.Evid. 701, 702.
Defendants make numerous objections to the declarations of Mark Reiser and William Feist and several exhibits submitted with the declaration of Marc L. Terbeek.
1. Declaration of Mark Reiser
Defendants object to this declaration in its entirety on the ground that it is irrelevant to the present motion and, alternatively, that it presents incompetent legal conclusions. According to defendants, the contracts in evidence are unambiguous and do not need explication from plaintiff's asserted expert. The Reiser declaration offers relevant expert opinions concerning the implications and consequences of certain terms and incentive structures in the contracts at issue. These opinions are more than mere interpretations of the contractual terms, and thus are not incompetent legal conclusions. The Court DENIES these objections.
Defendants also challenge Reiser' s qualification to be an expert, arguing that he is not qualified to interpret a third-party administration insurance claims agreement because he is an associate professor of statistics. The Court DENIES this objection.
2. Declaration of William Feist
Defendants object to the Feist declaration (attached as Exhibit F to the Terbeek declaration), arguing that it is not relevant, proffers improper hearsay, and is improper former testimony. The declaration is relevant because it recounts Feist's personal observations of how claims adjusters at Provident Life handled disability insurance claims. However, the declaration, executed in 1998, was offered in another case, and thus is an out-of-court statement offered to prove the truth of the matter asserted. No suggestion is made that the declaration falls under a hearsay exception. For purposes of this motion only, the Court GRANTS the objection to the Feist declaration.
3. Exhibits to Declaration of Marc L. Terbeek
Defendants raise various objections to the exhibits attached to the Terbeek declaration. Defendants object to Exhibits A, D, E, G, and H for lack of relevance, foundation and authentication, and on grounds of hearsay. Plaintiff's attorneys acquired these exhibits in a separate and unrelated lawsuit against Provident Corporations. The exhibits appear to be internal memoranda and reports prepared by various Provident officers and employees. The documents may be relevant to plaintiff's joint venture theory, but are not properly authenticated and are without foundation. For purposes of this motion only, the Court GRANTS the objection to Exhibits A, D, E, G, and H.
Defendants object Exhibit I, a condensed transcript of the deposition of defendants' physician Robert Burton, on grounds of relevance, lack of authentication, lack of foundation, and hearsay. Equitable produced the document during discovery in this action, but the deposition of Dr. Burton occurred in a separate lawsuit. Terbeek Decl. ¶ 12. Plaintiff has not properly authenticated this exhibit, and it is without foundation. The declaration is also inadmissible hearsay. For purposes of this motion only, the Court GRANTS the objection to Exhibit I.
Exhibit L is a printout of UnumProvident's 1999 Annual Report, which plaintiff's counsel obtained from UnumProvident's web site. Exhibit M is a one-page excerpt from an internal memorandum produced by defendants during discovery in this action. The Court DENIES the objections to Exhibits L and M.
Defendants finally object to all of these exhibits to the extent that they are used to vary the terms of the contracts at issue. See Cal. Code of Civ. Proc. § 1856 (parol evidence rule). This action does not have to do with breach or performance of the marketing and administration agreements between Equitable and the other defendants. These exhibits, to the extent they are admissible, are relevant to showing the parties' intentions and desires in creating ajoint venture. The Court DENIES the objection based on the parol evidence rule.
B. Joint Venture Theory
Plaintiff's claims hinge on his theory that Paul Revere, Provident Life and Equitable were joint venturers. Otherwise, Paul Revere and Provident Life must be evaluated as agents of Equitable. Under California law, "an agent cannot be held liable for breach of a duty which flows from a contract to which he is not party." Filippo Industries, Inc. v. Sun Insurance Company of New York 74 Cal.App.4th 1429, 1443 (1999). In Gruenberg v. Aetna Ins. Co., 9 Cal.3d 566, 576 (1974), plaintiff insured brought a claim against his insurer for breach of the duty of good faith and fair dealing implied in an insurance policy. Plaintiff also sued the corporation which had been retained to investigate and adjust his claim, the individual adjuster, and the attorneys for the insurer. The Gruenberg court sustained demurrers as to all defendants who were agents or employees of the insurer, reasoning that "the non-insurer defendants were not parties to the agreements for insurance; therefore they are not, as such, subject to an implied duty of good faith and fair dealing." Gruenberg, 9 Cal.3d at 576.
Several California courts have followed Gruenberg and affirmed the rule stated in Filippo to bar claims against agents or employees of insurance companies based on breach of insurance contracts or breach of the implied duty of good faith and fair representation. See, e.g., Egan v. Mutual of Omaha Ins., Co., 24 Cal.3d 809, 824 (1979) (insurance agents who administered and investigated plaintiff's claim for disability benefits); Henry v. Associated Indem, Corp., 217 Cal.App.3d 1405 (1990) (insurer's underwriter).
As plaintiff correctly notes, however, non-insurer defendants may be held liable under insurance contracts if they are joint venturers with the insurance company, rather than agents or employees. Where there is a joint venture, all members of a joint venture are liable for contracts executed by another member in furtherance of the joint venture. See Lindner v. Friednash, 160 Cal.App.2d 404, 411 (1957) (member ofjoint venture to purchase wine was liable under sales contract for wine even though his co-venturer misappropriated the merchandise); Block v. D.W. Nicholson Corp., 77 Cal.App.2d 739, 744-45 (1947) ("As to third persons who deal with a joint adventurer in good faith and without knowledge of any limitation upon his authority, the law presumes him to have been given power to bind his associates by such contracts as are reasonably necessary to carry on the business in which the joint adventurers are engaged.").
A joint venture is "an undertaking by two or more persons jointly to carry out a single business enterprise for profit." Nelson v. Abraham, 29 Cal.2d 745, 749 (1947). The elements necessary for a joint venture are: (1) an intent to become partners; (2) a community of interest in the undertaking; (3) an understanding to share profits and losses; and (4) equal authority and right to direct and control the conduct of all co-venturers with respect to the joint venture. See 580 Folsom Associates v. Prometheus 223 Cal.App.3d 1, 18 (1990). See also Howard v. Societa di Unione e Beneficenza Italiana, 62 Cal.App.2d 842, 847-48 (1944) (joint venture created "where two or more persons combine their money, property or time in the conduct of some particular line of trade, or for some particular business deal, agreeing to share jointly, or in proportion to the capital contributed, in the profits and losses . . .
Joint ventures can exist by virtue of explicit agreement or through "reasonable deduction from the acts and declarations of the parties." Nelson, 29 Cal.2d at 749-50. It is possible that parties to a contract create a joint venture even though such an undertaking is not expressly contemplated in the contract itself "Whether the parties to a contract have created a joint venture . . . depends upon their actual intention which must be determined in accordance with ordinary rules governing interpretation of contracts." County of Riverside v. Loma Linda University, 118 Cal.App.3d 300, 313 (1981) (citations omitted). See also Universal Sales Coip. v. California Press Mfg. Co., 20 Cal.2d 751, 765 (1942) (that the contract labels the parties independent contractors does not foreclose a finding ofjoint venture, since the conduct of the parties may create a joint venture despite an express declaration to the contrary). Generally, whether a joint venture exists is a question of fact but can determined as a matter of law where there is no conflicting evidence bearing on the issue. Id. Nelson, 29 Cal.2d at 750.
Forest argues in this case that his insurance claim was wrongly canceled and denied pursuant to a joint venture among defendants to administer Equitable's disability insurance claims. As proof of the joint venture, plaintiff refers to a series of contractual agreements between Equitable, Paul Revere and Provident Life concerning underwriting, administering and handling of Equitable's disability insurance policies.
In July 1993, Equitable and Paul Revere executed an Administration and Marketing Agreement ("1993 Agreement") intended to offer and provide "a line of individual disability income insurance products utilizing Paul Revere's skills in product design, underwriting and claims management." 1993 Agreement, preamble (attached at Williams Decl. Ex. A). Paul Revere offered a number of services for Equitable's individual disability income insurance policies, including underwriting, claims management, and policy administration. Id. at § 3.1. Although Paul Revere was required to apply Equitable's guidelines for underwriting and claims management, it could suggest modifications, which Equitable could not deny unreasonably. Id. at §§ 2.1(b), 2.2(b). Equitable retained final authority, however, to issue a policy or payout a claim. Id. at §§ 2.1, 2.2. The 1993 Agreement provided for certain denominated "fees" as compensation for Paul Revere's services. An Initial Claims Management Fee of $2.5 million was paid up front. Id. at §§ 1.1(n), 3.2. Paul Revere also received Guaranteed Claims Management Fees consisting of a percentage of claims benefits (including claim settlement amounts and waived premiums). Id. at § 3.4. Most of plaintiff's attention is focused on an "Incentive Fee" scheme described in § 3.4 of the agreement. Equitable and Paul Revere agreed that Paul Revere was entitled to a percentage share of the annual claims experience for Equitable's policies covered by the agreement. See id. at § 3.4(g)(i)-(ii). Payment was made annually from a payment account which accrued interest for any balance held during the year. Id. at § 3.4(c). Although labeled an "incentive fee," it was contemplated that Paul Revere's share of the claims experience might actually be a liability if the claims experience were a loss in any particular year. See id. at §§ 3.4(c), (f). In years ofa loss experience, Paul Revere was required to pay Equitable a share of the loss. Id. at § 3.4(c).
The 1993 Agreement also provided for a co-marketing and sales arrangement for Paul Revere's own disability insurance policy. Paul Revere's policy would be offered as an Equitable product, and Equitable agreed to use its agents to market, promote and sell the insurance policy. Id. at §§ 6.1(a)-(b), 6.4. Equitable also promised to include Paul Revere in any product development process involving the subject product. Id. at § 6.1(b). Paul Revere in turn was obligated to develop and pay for marketing and sales material, as well as to conduct training and provide materials for Equitable's field force. td. at § 6.5(b)-(d). Paul Revere also agreed to reinsure, on a 20 percent quota share basis, all policies sold pursuant to the co-marketing business. Id. at § 6.2; see also 1993 Reinsurance Agreement (attached at Williams Decl., Ex. B).
The parties further agreed that Paul Revere was responsible for defending or prosecuting, at its own expense, all suits, actions and proceedings arising from any policy underwritten or claim administered pursuant to the 1993 Agreement. Id. at § 7.1. "Extra-contractual" liability, however, was not imposed entirely on Paul Revere; the agreement provides for allocation between Equitable and Paul Revere of such liability. Id. at § 7.3(a).
The contractual relationship established in 1993 was subsequently amended and revised. In April 1994, Paul Revere and Equitable executed a Co-Marketed Business Coinsurance Agreement — essentially an update of the 1993 Reinsurance Agreement without any substantial alterations. See Williams Decl. ¶ 5 and Ex. C. In June 1997, Paul Revere, Provident Life and Equitable agreed to renegotiate and revise certain aspects of the 1993 Agreement to establish a "definitive agreement" governing their relationship. Pending negotiation of the definitive contract, the parties entered into a letter agreement instituting some interim modifications to their business arrangement (" 1997 Agreement"). Sge Williams Decl. ¶ 6, Ex. D.
By March 1997, Paul Revere and Provident Life had both become subsidiaries of the same parent. Provident Corporation. See Roth Decl. ¶¶ 3, 6.
Plaintiffs' benefits were canceled and his claim denied during this interim period.
The 1997 Agreement primarily amends the compensation terms from the 1993 Agreement. The Guaranteed Claims Management Fee and the Incentive Fee structure were eliminated, and Equitable agreed to pay Paul Revere an Interim Fee of $2.5 million. 1997 Agreement, attach. A, §§ 3(a), 8, 9. It was further agreed that the parties would negotiate a "Value Added Fee" to replace the eliminated Incentive Fee. Id. at attach. A, § 9. Equitable also agreed to share the expense of prosecuting or defending lawsuits arising out of the claims handling arrangement. Id. at attach. A, § 3(b).
The negotiation for a definitive agreement was successful, and on January 1, 1999, Equitable, Paul Revere and Provident Life executed the Administration Agreement for Existing Business (" 1999 Agreement") to supersede the 1997 and 1993 Agreements. See Williams Decl. ¶ 7, Ex. E. The 1999 Agreement chiefly affects the claims administration aspect of the parties' arrangement, particularly the compensation structure. In most other respects, the new agreement is similar to the 1993 Agreement (i.e.. extra-contract liability allocation, record-keeping, duties of the parties in administering claims).
For calendar years 1999 through 2002, Equitable must pay Paul Revere and Provident Life an annual Interim Fee of $500,000. 1999 Agreement § 3.3. Additionally, a Service Fee is established to replace the Guaranteed Claims Management Fee from the 1993 Agreement; but the concept remains the same — remuneration for the administrator's actual incurred costs in servicing claims. Id. at § 3.2. The most significant modification in the compensation structure is the elimination of the Incentive Fee scheme in favor of a new structure using a "Value Added Fee." Id. at § 3.4. This fee is based in part on the claims experience of relevant insurance policies within a given calendar year. Unlike the Incentive Fee scheme, however, Paul Revere and Provident Life are immune from liability in years of loss experience. Id. at Schedule B, p. 29. The loss experience is instead carried over and applied against any gain, or compounded with any loss, that arises the following year. Id.
Forest began drawing benefits on his disability insurance claim in February 1994. Equitable, through its claims administrators, canceled the benefit payments in November 1997. Paul Revere and Equitable's contractual arrangement to handle claims like plaintiff's was in place during this entire period. This lawsuit thus results from the alleged joint venture if such a venture indeed existed. On the latter issue, defendants present no evidence to give further meaning to the plain terms of the agreements, such as actual performance of the contract or the parties' intent during negotiations, for purposes of proving there was no joint venture. See ma LindiUniversity, 11 8 Cal.App.3d at 3 1 3 ("Whether a joint venture actually exists depends on the intention of the parties."). Looking just to the agreements themselves, however, the Court finds that there are genuine issues of material fact to support Forest's joint venture theory.
The evidence of record raises triable issues of fact to support the following inferences. The series of contracts indicates that Paul Revere, Provident and Equitable shared a community of interest in the business of claims administration. All parties are in the same line of business and intended to pool their particular skills and resources toward the same business goal: "The Equitable desires to offer and Paul Revere desires to provide a line of individual disability income insurance products utilizing Paul Revere's skills in product design, underwriting, and claims management." 1993 Agreement, preamble. Additionally, the Incentive Fee scheme allowed Paul Revere to share in the profits and losses of all Equitable insurance policies administered by Paul Revere. These factual inferences constitute strong evidence of a joint venture. See Nelson, 29 Cal.2d at 750 ("The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner."); Stoddard v. Goldenberg, 48 Cal.App.2d 319, 324 (1941) ("[B]efore [joint venture] relationship can exist it must be shown that there is a community of interest and an agreement to share jointly in the profits and losses resulting from the enterprise.").
The parties also expressly agreed to a coinsurance plan as a collateral agreement to their general relationship. Here, Equitable's resources were called upon to market and sell Paul Revere's insurance product. Both parties retained joint control over the development, marketing and sales of the product. Although this coinsurance arrangement may not directly bear on the denial of plaintiff's claim, it lends credence to the showing of a common intent to engage in the business of offering and providing disability insurance policies.
The evidence also raises triable issues to satisfy the remaining elements of a joint venture. In administering Equitable's insurance claims, Paul Revere exercised broad discretion and control while Equitable retained final authority in most matters. The parties were obligated to compile and share information relating to the business, further illustrating joint control over the enterprise. Furthermore, the use of joint bank accounts, sharing of human resources, mutual training, and joint marketing development raises the reasonable inference of a close relationship among the parties.
On the present record, it cannot be said as a matter of law that Paul Revere, Provident Life and Equitable were not in a joint venture for the business of offering and providing disability insurance policies such as plaintiff's policy. In such circumstances, Paul Revere and Provident Life can be liable for claims arising out of plaintiff's insurance policy. Defendants thus are not entitled to judgment as a matter of law as to the claims for breach of contract and breach of the implied covenant of good faith and fair dealing.
Defendant UnumProvident is in a different position. Its presence in this lawsuit is only as the holding company of Paul Revere and Provident Life. Plaintiff presents no evidence tying UnumProvident to any of the agreements with Equitable which support the joint venture theory. Plaintiff instead sues UnumProvident on the theory that it is the alter ego of its subsidiaries. See Flynt Distrib, Co. v. Harvey, 734 F.2d 1389, 1393 (9th Cir. 1984) (where a party is the alter ego of a corporation, courts will disregard the corporate form).
To prevail on a claim of alter ego, a plaintiff must show (1) there is such a unity of interest that the separate personalities of the corporations no longer exist; and (2) inequitable results will follow if the corporate separateness is respected. ATT v. Compagnie Bruxelles Lambert, 94 F.3d 586, 591 (9th Cir. 1996); Associated Vendors, Inc. v. Oakland Meat Co., 210 Cal.App.2d 825, 836-837 (1962). More specific indicia of an alter ego include:
financial issues (e.g., was the corporation adequately capitalized?); corporate formality questions (e.g., was stock issued, are minutes kept and officers and directors elected, are corporate records segregated?); ownership issues (e.g., what is the stock ownership picture?); commingling issues (e.g., are corporate assets commingled, does the parent company merely use the corporate shell of the subsidiary to obtain goods and services for the parent company?)
Tomaselli v. Transamerica Ins., 25 Cal.App.4th 1269, 1285 n. 5 (1994).
Plaintiff's evidence to support the alter ego claim includes reference to UnumProvident's advertising material asserting that it is an "insurance holding company" that offers, through its subsidiaries, a comprehensive integrated portfolio of products and services. Plaintiff's Oppo. to Motion for S.J. 18. Plaintiff further cites a statement in UnumProvident's annual report where it describes the business of its insurance subsidiaries using the pronoun "we." Id. Plaintiff surmises from these statements that UnumProvident is actually in the business of insurance and asserts control over Paul Revere and Provident Life, notwithstanding UnumProvident's affirmative and direct statement to the
contrary. See Roth Decl. ¶ 9.
Plaintiff's proffered inferences are not reasonable and are wholly unsupported by the scant evidence he presents. See Tomaselli, 25 Cal.App.4th at 1285 (evidence that parent company owned percent of the subsidiary's stock, shared office space and policy manuals with the subsidiary, had some common personnel, and had consolidated financial statements was "woefully short of the showing on which alter ego normally rests"). The Court concludes that no genuine issues of material fact exist to support the alter ego argument and UnumProvident is entitled to judgment as a matter of law.
At oral argument, counsel for plaintiff requested that the Court defer this ruling to allow plaintiff more time to develop the facts. Plaintiff's attorney submitted a supplemental declaration one day before the hearing to demonstrate that additional discovery could be helpful to raising triable issues of fact. See Supplemental Declaration of Marc L. Terbeek (filed June 7, 2001). However, although the evidence submitted with the declaration supports the joint venture theory, plaintiff has not demonstrated that additional discovery would uncover probative evidence that UnumProvident is the alter ego of its subsidiaries. The request to stay pending further discovery is DENIED.
C. Tort Claims
Defendants additionally argue that Forest has failed to present evidence raising triable issues of fact to satisfy all the required elements of the claims for negligence and intentional infliction of emotional distress.
A negligence claim involves proof that a defendant owed and breached a legal duty to the plaintiff and that the breach was a proximate cause of damages sustained by the plaintiff. Minnesota Mut. Life Ins. Co. v. Ensley, 174 F.3d 977, 981 (9th Cir. 1999) (citing Ann M. v Pacific Plaza Shopping Ctr., 6 Cal.4th 666 (1993)). Paul Revere and Provident Life contend there is no dispute that, as claims administrators, they did not owe a duty of care to Forest, citing Sanchez v. Lindsey Morden Claims Serv., Inc., 72 Cal.App.4th 249, 251 (1999).
Notwithstanding defendants' accurate recitation of the rule from Sanchez, their reliance on that case is misplaced. Plaintiffs can hold Paul Revere and Provident Life liable in tort not as claims handlers, but as joint venturers with Equitable in denying Forest's insurance claim. Defendants do owe a duty of care to Forest in such circumstances. See Leming v. Oilfields Trucking Co., 44 Cal.2d 343, 350 (l955) ("[T]he negligence of one joint venturer or of his employees acting in connection with the joint venture is imputed to the other joint venturers."). As to the negligence claim, defendants fail to demonstrate that they are entitled to summary judgment.
With respect to the intentional tort claim, Paul Revere and Provident Life argue that no genuine issue of material fact exists to show extreme and outrageous conduct. The elements of a claim for intentional infliction of emotional distress are (1) outrageous conduct by the defendant, (2) intention to cause or reckless disregard of the probability of causing emotional distress, (3) severe emotional injury, and (4) actual and proximate causation of the injury. Bogard v. Employer Casualty, 164 Cal.App.3d 602, 616 (1985). "Conduct is extreme and outrageous when it exceeds all bounds of decency usually tolerated by a decent society, and is of a nature which is especially calculated to cause, and does cause, mental distress." Molko v. Holy Spirit Assn., 46 Cal.3d 1092, 1122 (1988) (internal quotations and citations omitted).
Defendants present no evidence to deny the existence of a genuine issue of material fact with respect to outrageous conduct. They instead rely on plaintiffs allegations to argue that, as a matter of law, outrageous conduct cannot be found within the confines of the allegations in the complaint. In support of his claim for intentional infliction of emotional distress, Forest alleges that defendants (1) refused to pay his benefits, (2) attempted to avoid payment despite the legitimacy of the claims, (3) failed and refused to consider evidence demonstrating plaintiffs continuing disability, (4) conducted an inadequate investigation of plaintiffs claim, and (5) made intentional misrepresentations concerning their obligations under the insurance policies. FAC ¶¶ 15, 22. As a result of defendants' alleged conduct, plaintiff claims to suffer anxiety, humiliation, and injuries to his nervous system, health and strength. FAC ¶¶ 30, 35. Contrary to defendants' argument, these allegations could support a finding of extreme and outrageous conduct.
In Little v. Stuyvesant Life Inc., 67 Cal.App.3d 451 (1977), plaintiff insured brought a claim against her insurance company for intentional infliction of emotional distress arising out of defendant's termination of her claim for total disability benefits. The insurer canceled plaintiffs claim of total disability after paying benefits for approximately two years. Defendant urged that no outrageous conduct occurred because it did nothing more than "decline to pay a disputed claim relying upon the opinions of the reputable physicians to whom it sent plaintiff for examination." Id. at 46 1-62. Ajury found that the insurer had engaged in outrageous conduct. The Little court upheld this finding, holding that the jury had reasonable grounds to believe that defendant purposely ignored the great bulk of medical evidence disputing the conclusion of its physician, and that defendant sought only to justify its predetermined course of discontinuing plaintiffs justly due disability benefit payments. Id. at 462. Forest's allegations are similar to the jury's factual findings in Little. Without evidence that conclusively refutes these allegations, Paul Revere and Provident Life fail to prove that no genuine issue of material fact exists to dispute that defendants did not engage in extreme and outrageous conduct. Accordingly, defendants are not entitled to judgment as a matter of law as to the claim for intentional infliction of emotional distress.
CONCLUSION
For the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART defendants' motion for summary judgment. [Docket Nos. 75, 93, 97].
All claims in the First Amended Complaint stand as to defendants The Paul Revere Life Insurance Company and Provident Life Accident Insurance Company.
Defendant UnumProvident, Inc. is DISMISSED from this action, without leave to amend.
IT IS SO ORDERED.