The opinion of the court was delivered by: Leslie E. Kobayashi United States District Judge
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
On February 29, 2012, Defendants John J. Ida, in his individual and official capacities, Lorrin T. Matsunaga, in his individual and official capacities, and Urban Works, Inc. ("UWI") (collectively "Defendants") filed their Motion for Summary Judgment ("Motion"). [Dkt. no. 81.] Plaintiff Estate of Rodney Hirata, Audrey Yoneshige, Trustee and Beneficiary ("Plaintiff") filed its memorandum in opposition on April 27, 2012, and Defendants filed their reply on May 4, 2012.*fn1 [Dkt. nos. 97, 102.] On May 17, 2012, Plaintiff filed Uncited Authorities in Opposition to Defendants' Motion for Summary Judgment Filed February 29, 2012. [Dkt. no. 113.] This matter came on for hearing on May 21, 2012. Appearing on behalf of Defendants were Keith Hiraoka, Esq., and Lois Yamaguchi, Esq., and appearing on behalf of Plaintiff was Clayton Kimoto, Esq. On June 27, 2012, this Court issued an entering order directing the parties to file supplemental memoranda addressing the issue of standing. [Dkt. no. 141.] Plaintiff filed its supplemental memorandum on July 12, 2012, and Defendants filed their supplemental memorandum on July 27, 2012. [Dkt. nos. 159, 169.] After careful consideration of the Motion, supporting and opposing memoranda, and the arguments of counsel, Defendants' Motion is HEREBY GRANTED IN PART AND DENIED IN PART for the reasons set forth below.
Plaintiff filed the instant Employee Retirement Income Security Act ("ERISA") action on February 19, 2010. The relevant allegations of the Complaint are set forth in this Court's Order Granting in Part and Denying in Part Defendants' Motion to Dismiss Complaint ("Dismissal Order"):
Rodney Hirata was a UWI employee from July 1, 1985 until his death on December 19, 2007. He became a senior associate on July 28, 1988. [Complaint at ¶ 15.] Hirata and Audrey Yoneshige began dating on May 6, 1989, and attended UWI functions together over the years. Yoneshige was known as Hirata's companion and/or significant other. They were married on July 7, 2006. [Id. at [¶¶] 11-14.] John Ida and Lorrin Matsunaga are, and were at all relevant times, UWI's president and vice president, respectively. The Complaint alleges that they are the administrators for the alleged ERISA plans at issue in this case. [Id. at ¶¶ 7-8.]
The January 1991 UWI General Employment Policy Manual ("Manual") refers to group life insurance provided by General American Life Insurance Company ("Policy"). The Policy states that the death benefit was three times the employee's annual salary, up to $150,000. The Complaint also alleges that, as part of UWI's ERISA benefits package, Hirata was entitled to five percent ownership in UWI's stock. Hirata had the Manual and the Policy in his possession up to his death. [Id. at ¶¶ 16-17.] The instant case arises from UWI's failure to inform Hirata of the cancellation of the Policy in 2001 and its failure to provide a timely valuation of Hirata's stock shares upon Yoneshige's request after Hirata's death.
Hirata was diagnosed with cancer on August 29, 2007. The next day, Yoneshige informed Ida of Hirata's diagnosis. On September 12, 2007, an oncologist informed Hirata that his condition was terminal and that he had a remaining lifespan of one to two years. [Id. at ¶¶ 18-20.]
According to the Complaint, from September 2007 to December 2007, Yoneshige went to UWI four times and spoke with Ida. Hirata had numerous doctors' appointments during that period. Ida was updated about Hirata's health status each time Ida called to inquire about the appointments. Ida did not mention the cancellation of the Policy during any of these conversations. [Id. at ¶¶ 24-29.]
On December 17, 2007, Hirata and Yoneshige met with Matsunaga in Hirata's hospital room. Prior to that meeting, Hirata and Yoneshige learned that Hirata's status at the hospital was going to be changed from acute to hospice and that Hirata's medical insurance would not cover the expenses of hospice care. Hirata and Yoneshige suggested to Matsunaga that the Policy benefits be used to pay for those expenses. Matsunaga agreed with the idea and said he would talk to Ida about it. The next day, Yoneshige called UWI and discussed Hirata's up-coming status change with Matsunaga. In addition, Matsunaga and Ida visited Hirata at the hospital at different times, but neither mentioned the cancellation of the Policy. Hirata passed away on December 19, 2007. [Id. at ¶¶ 30-33.]
On February 14, 2008, Ida called a meeting with Yoneshige at UWI. Also present were Matsunaga and Kathy Hood, UWI's office manager. At the meeting, UWI presented information about the following: an HMSA life insurance policy, which Hirata did not know about; Hirata's stock shares; and Hirata's 401K account. No one mentioned the cancellation of the Policy. [Id. at ¶¶ 34-36.]
On February 22, 2008, Yoneshige called UWI, and Hood informed her that Ida had lapsed the Policy. This was the first time that Yoneshige learned that the Policy had lapsed. She told Hood to inform Ida that Hirata thought he always had the Policy. Yoneshige did not receive any further information from Ida about the lapsing of the Policy. On February 25, 2008, Yoneshige spoke with a representative of Met Life, the successor to General American Life. Yoneshige learned that the Policy, which was effective May 1, 1990, was cancelled on February 28, 2001. She also learned that the Policy contained a conversion option, which would have allowed Hirata to continue the Policy after UWI cancelled it. [Id. at ¶¶ 37-40.]
After speaking with Met Life, Yoneshige called Matsunaga and confronted him about the cancellation of the Policy. Although he initially claimed that Hirata knew the Policy had been cancelled, Matsunaga later admitted that he, like Hirata, did not know the Policy had been cancelled. According to the Complaint, Matsunaga admitted that, as a UWI principal, he should have known about the cancellation, and he took full responsibility for Hirata's ignorance of the cancellation. [Id. at ¶¶ 37-41.]
The Complaint states that Hirata never knew the Policy had been cancelled and that he valued the Policy. The Complaint alleges that, if he had been aware of the cancellation, he would have exercised the conversion option. [Id. at ¶¶ 51-52.] At a May 6, 2008 meeting involving Yoneshige, her attorney-Clayton Kimoto, Esq., Ida, Matsunaga, and counsel for UWI-Frank Goto, Esq., it was confirmed that no letter which was sent to Hirata to inform him of the Policy's cancellation existed. [Id. at ¶ 42.] UWI produced an April 28, 2008 letter from John Khil, Esq., opining that, under the circumstances, UWI was not required to pay any benefits under the Policy to Hirata's beneficiaries. [Exh. 2 to the Complaint.]
Estate of Hirata v. Ida, Civil No. 10-00084 LEK, 2010 WL 2179812, at *1-2 (D. Hawai`i May 28, 2010) (footnote omitted).
The Complaint alleged the following claims: violation of ERISA, 29 U.S.C. § 1132(c)(1)(B), actionable pursuant to § 1132(a)(1)(A), based on Defendants' failure to provide Yoneshige with information about the value of Hirata's stock in UWI ("Count I"); [Complaint at ¶¶ 53-55;] and violation of ERISA, 29 U.S.C. § 1109(a)(1), actionable pursuant to § 1132(a)(2) and (3), based on Defendants' failure to notify either Hirata or Yoneshige of the cancellation of the Policy ("Count II") [id. at ¶¶ 56-58].
The Complaint prayed for the following relief: for Count I, that the Court fine Defendants $54,000 and award that amount to Plaintiff; for Count II, either remedial damages of $150,000 or appropriate equitable relief in the form of restitution, specific performance, and/or a constructive trust in the amount of $150,000; attorneys' fees and costs; prejudgment interest; and all other appropriate relief. [Id. at pg. 9.]
In the Dismissal Order, this Court: dismissed Count I without prejudice; dismissed Count II with prejudice as to Plaintiff's claim for monetary damages and Plaintiff's claim for restitution; dismissed Count II without prejudice as to Plaintiff's claim for specific performance and constructive trust; and denied Defendants' motion to dismiss as to Count II's general prayer for appropriate equitable relief. 2010 WL 2179812, at *9. Plaintiff, however, did not file a timely amended complaint.*fn2 Thus, the only remaining claim in this action is Plaintiff's claim for appropriate equitable relief based on Count II.
In the instant Motion, Defendants point out that, on May 2, 2011, Yoneshige's probate attorneys filed the following documents in the State of Hawai`i, First Circuit Court ("the Probate Court"): Informal Probate Information Sheet; Application for Informal Probate of Will and for Informal Appointment of Personal Representative; and Acceptance of Appointment by Audrey R. Yoneshige. [Defs.' Separate Concise Statement of Facts in Supp. of Motion, filed 2/29/12 (dkt. no. 82) ("Defs.' CSOF"), Decl. of Lois H. Yamaguchi ("Yamaguchi Decl."), Exhs. A-C.*fn3 ] On May 3, 2011, the Probate Court informally appointed Yoneshige as the Personal Representative of Hirata's estate ("the Estate") and issued Letters Testamentary. [Id., Exh. D (Statement of Informal Probate of Will and of Informal Appointment of Personal Representative), Exh. E (Letters Testamentary).] Yoneshige filed a Proof of Service of Personal Representative's Written Information to Interested Persons in the Probate Court on July 8, 2011. [Id., Exh. F.]
Defendants argue that, at the time this action was filed on February 19, 2010, no personal representative or special administrator had been appointed for Hirata's Estate. Yoneshige did not obtain the legal authority to file a civil action on behalf of Hirata's Estate until May 3, 2011. Defendants argue that this Court must dismiss the remaining claim in this case because the Complaint was not filed by a duly appointed personal representative or special administrator. Further, Plaintiff cannot re-file the claim because the statute of limitations has already run and the statute of limitations applicable to an estate's personal injury claim is not tolled while the appointment of the estate's personal representative is pending. [Mem. in Supp. of Motion at 5-7.]
Defendants note that the statute of limitations applicable to an ERISA breach of fiduciary duty claim is three years after the plaintiff acquires actual knowledge of the breach or violation. [Id. at 8 (citing 29 U.S.C. § 1113(2)).] According to the Complaint, Plaintiff learned of the cancellation of the Policy on February 22, 2008. [Id. (citing Complaint at ¶¶ 37, 38).] Thus, the statute of limitations ran before the Probate Court appointed Plaintiff as the personal representative of Hirata's Estate. [Id. at 9.] Further, Defendants argue that Plaintiff has no evidence to support its claim that Defendants' failure to timely notify Hirata or Yoneshige of the cancellation of the Policy was deliberate or in bad faith. Defendants contend it was merely an oversight. [Id. at 8 n.6.] Ida states in his declaration that he decided to cancel UWI's General American group life insurance policy "as a cost-cutting measure[.]" [Defs.' CSOF, Decl. of John J. Ida ("Ida Decl.") at ¶ 5.] Ida does not recall whether he notified qualifying UWI employees about the cancellation, but he asserts that, if he did not provide notice, there was nothing "untoward" or in bad faith, and there was no intent to deceive or otherwise withhold information from anyone. [Id.] Defendants therefore argue that they are entitled to summary judgment on Plaintiff's remaining claim. [Mem. in Supp. of Motion at 9.]
In addition, Defendants point out that the Rodney O. Hirata Living Trust ("the Trust") was created on October 24, 2007. [Yamaguchi Decl., Exhs. G-1, G-2 (trust instruments).] Thus, the Trust was not created until more than six years after the cancellation of the Policy, and Defendants argue that they could not have owed the Trust any duty regarding the Policy. [Mem. in Supp. of Motion at 10.] Further, UWI was the policyholder and owner of the Policy, which stated that UWI could change or end the Policy without the consent of, and without giving notice to, the Policy beneficiaries. [Ida Decl. at ¶ 4, Exh. H (the Policy) at UW000001, UW000024.] Thus, Defendants argue that Hirata had no ownership interest in the Policy and could not have transferred any interest in the Policy to the Trust. Defendants emphasize that there is no evidence that Hirata ever attempted to make the Policy a part of the Trust. Defendants argue that neither the Trust, Yoneshige as Trustee, nor Yoneshige as Trust Beneficiary, ever acquired a legally protectable interest in the Policy. Defendants urge the Court to grant them summary judgment because Plaintiff has no legally cognizable § 1109(a) claim for breach of fiduciary duty. [Mem. in Supp. of Motion at 10.]
Defendants also argue that they are entitled to summary judgment because Plaintiff cannot prove that there is any legally cognizable equitable relief that it is entitled to. Defendants argue that, in the two years that have passed since this Court issued its Dismissal Order, Plaintiff is no closer to identifying what equitable relief it is entitled to. Section 1109(a) provides that the remedy for a breach of fiduciary duty is requiring the fiduciary to restore any losses to the plan or any profits that the fiduciary made through the use of the plan's assets. Defendants argue that they did not cause any losses to the Policy. Further, they did not profit from the use of the Policy's assets. [Id. at 11-12.] UWI paid all of the Policy's premiums to General American Life Insurance Company. Thus, no UWI fiduciary could have used the premiums. No UWI employee paid any premiums, and no UWI employee incurred out-of-pocket losses as a result of the cancellation of the Policy. [Ida Decl. at ¶¶ 4, 6, Exh. H at UW000016, UW000021.] Defendants therefore argue that Plaintiff has not presented any evidence that Defendants benefitted from the cancellation of the Policy or from any failure to timely notify Hirata of the cancellation. Defendants also contend that 29 U.S.C. § 1132(a)(3) does not authorize the payment of life insurance proceeds which a plaintiff claims would have been paid but for the alleged breach of fiduciary duty. [Mem. in Supp. of Motion at 12-13.]
Finally, Defendants emphasize that Plaintiff has no evidence of deliberate deception, bad faith, or intent to harm. They argue that the Ninth Circuit has recognized that it is Congress's responsibility to provide a remedy for such negligent administration. Plaintiff has no statutory remedy, and Defendants are entitled to summary judgment on Plaintiff's sole remaining claim. Defendants urge the Court to grant the Motion and to direct the entry of judgment terminating the action with prejudice. [Id. at 13-14.]
II. Plaintiff's Opposition
In her declaration, Yoneshige states that, on September 13, 2007, she and Hirata met with an estate planning attorney, and Hirata reported the Policy as one of his UWI benefits. On December 17, 2007, she and Hirata suggested to Matsunaga that the Policy be used to pay for Hirata's hospitalization and medical care. Matsunaga said that was a good idea and he would talk to Ida about it. Hirata died on December 19, 2007. [Pltf.'s Concise Statement of Facts in Supp. of Mem. in Opp., filed 4/27/12 (dkt. no. 98) ("Pltf.'s CSOF"), Decl. of Audrey Yoneshige ("Yoneshige Decl.") at ¶¶ 6-8.*fn4]
Yoneshige also states in her declaration that she met with Ida, Matsunaga, and Kathy Wood, on February 14, 2008, but no one mentioned the cancellation of the Policy. On February 22, 2008, Wood informed Yoneshige that Ida had lapsed the Policy. [Id. at ¶¶ 9-10.] When Yoneshige called UWI on February 25, 2008, Matsunaga first claimed that Hirata knew about the cancellation of the Policy. Yoneshige reminded Matsunaga about the December 17, 2007 conversation regarding using the Policy for medical expenses. Matsunaga then admitted that he should have known what was going on in UWI, and he took full responsibility for the fact that Hirata did not know the Policy had been cancelled. [Id. at ¶ 13.]
In its memorandum in opposition, Plaintiff first argues that the Motion is premature because Defendants filed the Motion months before the June 1, 2012 discovery deadline. [Mem. in Opp. at 5-6.] Plaintiff also urges the Court to reject Defendants' argument that the three-year statute of limitations in § 1113(2) applies. Plaintiff contends that the six-year statute of limitations in § 1113(1)(A) and (B) applies. In the alternative, § 1113(2) provides for a six-year statute of limitations in cases of fraud or fraudulent concealment. Plaintiff agues that the six-year limitations period expires in 2014 and, therefore, its action is timely. [Id. at 7-10.]
Plaintiff points out that no where in Defendants' CSOF do they state that they informed Hirata of the cancellation of the Policy. As a result of Defendants' concealment, Yoneshige did not discover the cancellation of the Policy until February 22, 2008. Plaintiff argues that Defendants' concealment triggers the six-year statute of limitations, and its Complaint was timely. [Id. at 10-11.] Although Yoneshige was not appointed as the Estate's personal representative at the time Plaintiff filed the Complaint, Plaintiff argues that other courts have continued a defendant's motion for summary judgment to allow the widow plaintiff time to secure her appointment as the personal representative of her husband's estate. Since the Court has the discretion to continue the Motion to allow Plaintiff to secure standing, and Yoneshige has in fact secured her appointment as the personal representative of Hirata's Estate, the Court would abuse its discretion if it granted the Motion based on Yoneshige's failure to secure her appointment before filing the Complaint. In the alternative, Plaintiff argues that the Court can rule that Yoneshige's appointment relates back to its timely filing of the Complaint. [Id. at 13-15.]
Plaintiff's memorandum in opposition states that, in reliance on UWI's benefits in addition to his salary, Hirata did not seek jobs as an architect with other companies and he "lost out on a significant raise in salary as well as additional benefits." [Id. at 13.] Plaintiff's CSOF, however, does not include any evidence supporting this statement.
Plaintiff argues that UWI was acting as an ERISA fiduciary when it significantly and deliberately misled Hirata. Plaintiff argues that misleading Hirata about the Policy's cancellation violated UWI's fiduciary duties under 29 U.S.C. § 1104. In Varity Corp. v. Howe, 516 U.S. 489 (1996), the United States Supreme Court recognized that ERISA's duties require a plan administrator to follow rules which may exceed what the insurance contract requires. Further, knowingly and significantly deceiving plan beneficiaries to save the employer money at the employees' expense is not acting solely in the interests of the participants and beneficiaries, and individual equitable relief is available under § 1132(a)(3). Plaintiff also argues that appropriate equitable relief may be available in a case, even though benefits are not available under the plan at issue and individual benefits are not available under ERISA. Further, relief is available where the employer actively and/or deliberately misleads employees to their detriment. [Id. at 16-19.] Plaintiff emphasizes that the Dismissal Order ruled that § 1132(a)(3) authorizes actions for individual equitable relief for breach of fiduciary duty. Plaintiff states that the specific equitable remedy it is seeking is an "accounting for profits". [Id. at 20.]
Plaintiff argues that Defendants did benefit from the cancellation of the Policy: UWI benefitted from eliminating the costs of the premiums; by failing to inform Hirata, Defendants avoided the costs that would have been associated with any legal action Hirata may have filed; and Hirata remained as a UWI employee in reliance on his benefits, including the Policy. Plaintiff asserts that "the difference in both salary and benefits need to be ascertained via an accounting for profits." [Id. at 21.]
Finally, Plaintiff contends that there are genuine issues of material fact for trial regarding the applicable statute of limitations. In other words, the jury must determine whether Defendants engaged in conduct which would trigger the six-year statute of limitations instead of the three-year statute of limitations. ...