Soohyun Cho v. First Reliance Std. Life Ins. ( 2021 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUL 9 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
SOOHYUN CHO, Nos. 20-55314, 20-55581
Plaintiff-Appellee, D.C. No. 2:18-cv-04132-MWF-SK
v. MEMORANDUM*
FIRST RELIANCE STANDARD LIFE
INSURANCE COMPANY,
Defendant-Appellant,
v.
GIORGIO ARMANI CORPORATION,
Third-party-defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
Michael W. Fitzgerald, District Judge, Presiding
Argued and Submitted June 11, 2021
Pasadena, California
Before: CALLAHAN and FORREST, Circuit Judges, and SEEBORG,** Chief
District Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Richard Seeborg, Chief United States District Judge
for the Northern District of California, sitting by designation.
First Reliance Standard Life Insurance Company (“First Reliance”) appeals
from the district court’s order awarding Soohyun Cho the full amount of her
dependent spouse’s life insurance policy. First Reliance also appeals from the
district court’s dismissal of its third-party complaint against Giorgio Armani
Corporation (“Armani”). We have jurisdiction pursuant to 28 U.S.C. § 1291,
review findings of fact for clear error and legal findings de novo, Pannebecker v.
Liberty Life. Assurance Co. of Boston, 542 F.3d 1213, 1217 (9th Cir. 2008), and
affirm.
First Reliance contends no benefits are due under the terms of the plan and,
furthermore, that the inclusion of the non-waiver clause makes Salyers v.
Metropolitan Life Insurance Company inapposite. 871 F.3d 934 (9th Cir. 2017).
On the first point, First Reliance is correct. Though the policy was somewhat
sloppily drafted, the “Effective Date of Dependent Insurance” clause emphasizes
the evidence of insurability requirement so clearly that no reasonable person would
doubt proof of good health was a necessary condition to coverage. Thus, no
benefits are due under the terms of the plan.
Nonetheless, Cho is entitled to the benefits for which she paid. Because the
plan was self-administered and Armani handled “nearly all the administrative
responsibilities,” its “direct interaction with plan participants” would have
suggested it was acting with “apparent authority on the collection of evidence of
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insurability.” See Salyers, 871 F.3d at 940–41 (citation and internal quotation
marks omitted). For over a year Armani accepted Cho’s premiums without any
submission of evidence of insurability though it “knew or should have known” the
terms of the plan required such evidence. See id. at 941. Armani’s actions were “so
inconsistent with an intent to enforce” the requirement that it was reasonable for
Cho to believe she was not required to submit such evidence. See id. (citation and
internal quotation marks omitted).
The insertion of a non-waiver clause in the operative policy does not
displace this conclusion. The Salyers court emphasized that the incorporation of
agency principles into the federal common law governing employee benefit plans
“creates incentives for diligent oversight and prevents an insurer from relying ‘on a
compartmentalized system to escape responsibility.’” Id. at 940 (citation omitted).
Allowing insurers like First Reliance essentially to vitiate Salyers and the good
behaviors it seeks to promote by including one sentence in their plans would be
unfair and unjust. In this case, therefore, Armani is deemed to have waived on First
Reliance’s behalf the evidence of insurability requirement.
Separately, First Reliance cannot maintain a claim for contribution or
indemnification against Armani. In Kim v. Fujikawa, the court concluded that 29
U.S.C. § 1109, as referenced in 29 U.S.C. § 1132(a)(2), “cannot be read as
providing for an equitable remedy of contribution in favor of a breaching
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fiduciary.” 871 F.2d 1427, 1432 (9th Cir. 1989) (emphasis omitted); see also Call
v. Sumitomo Bank of Cal., 881 F.2d 626, 631 (9th Cir. 1989) (rejecting arguments
that ERISA authorizes contribution among co-fiduciaries and noting “[t]he Kim
opinion is unambiguous and undistinguishable”). Furthermore, there is no
indication that Congress, in the course of enacting a comprehensive scheme for the
protection of ERISA plans and beneficiaries, intended to “soften[] the blow on
joint wrongdoers.” Kim, 871 F.2d at 1433. First Reliance makes no persuasive
argument to avoid application of this settled rule to 29 U.S.C. § 1132(a)(3).
Lastly, the district court’s award of attorney’s fees to Cho is affirmed. In the
absence of opposition from First Reliance, her additional request that the action be
remanded for consideration of fees incurred since the last award is granted.
AFFIRMED.
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