Judge: Joseph Lipner, Case: 23STCV00049, Date: 2024-07-11 Tentative Ruling

Case Number: 23STCV00049    Hearing Date: July 11, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Plaintiffs GCIU-Employer Retirement Fund (the “Plaintiff Fund”) and Board of Trustees of the GCIU-Employer Retirement Fund (the “Plaintiff Board”) (collectively, “Plaintiffs”) move for summary adjudication of issues against Defendant Management Applied Programming, LLC d/b/a Benefit Programs Administration (“Defendant”)

The Court GRANTS Plaintiff’s motion.

Background

This is a breach of contract case.

Plaintiff Fund is a multiemployer defined benefit pension plan, which means that it receives pension contributions from numerous separate employers who make the contributions on behalf of their employees. Plaintiff Board is the Board of Trustees of Plaintiff Fund. Plaintiff board has the fiduciary task of ensuring that employees of participating employers receive their pension benefits.

On May 12, 1988, Plaintiff Board and Defendant entered into a written Administrative Services Contract (the “Contract”) whereby Defendant was to provide certain administrative services for the operation of Plaintiff Fund. (Undisputed Fact (“UF”) 1.) Pursuant to the Contract, Defendant was required to maintain offices and personnel to perform the services laid out in the Contract. (UF 2.) Those services included maintaining a current record of employers participating in the trust fund, maintaining a file for each employer, keeping records of the covered hours of employment reported, receive and verify the accuracy of employer contributions and reports, process delinquent employer accounts, prepare the agenda and minutes for trust fund meetings, and attend trust fund meetings. (UF 3.)

Section 6.3 of the Contract states:

“While [Defendant] is executing this agreement as an independent contractor, it is understood and agreed that, as respects all matters of Trust Fund administration, [Defendant] shall follow and abide by the motions, resolutions, benefit plan provisions, and administrative procedures adopted by the Board of Trustees. [Defendant] shall be liable to the Trust Fund for any acts or omissions which are not in compliance with such motions, resolutions, benefit plan provisions, and administrative procedures, provided however, that [Defendant] shall not be liable for acts or omissions which are beyond the reasonable control of [Defendant] or which, by the exercise of reasonable diligence, the Company is unable to prevent.”

(UF 4; Ex. 1 at AOE-12, ¶ 6.3.)

Defendant continued acting as Plaintiffs’ third-party administrator from May 1998 through August 31, 2018. (UF 5, 17.)

On November 21, 2002, the Plaintiff Board adopted written Withdrawal Liability Procedures (the “Procedures”). (UF 6.) The stated purpose of the Procedures was to enforce the liabilities imposed on employers that withdraw from the Plaintiff fund on or after January 1, 2002, in a manner consistent with the Employee Retirement Income Security Act (“ERISA”) and applicable regulations promulgated by the Pension Benefit Guarantee Corporation. (UF 7.)

The Procedures require Defendant to, among other things, identify when a participating employer has partially or completely withdrawn from the Plaintiff fund (UF 8.) These tasks include:

“(i) identify when an employer ‘complete withdrawal’ has occurred, using the criteria set forth in the Procedures;

(ii) identify when an employer ‘partial withdrawal’ has occurred, using the criteria set forth in the Procedures;

(iii) consult with Fund Legal Counsel if there is any question as to whether a complete withdrawal has occurred and an employer’s specific withdrawal date;

(iv) promptly notify the Fund Actuary in writing once a complete withdrawal or partial withdrawal and withdrawal date are identified for an employer, so that the Fund Actuary may calculate the withdrawal liability.”

(UF 8, Exhibit 2 at AOE-022, ¶ II(2); AOE- 023, ¶¶ III(4); AOE-024, ¶ III(5); AOE- 025, ¶ IV(1); AOE-026, ¶ V(1); and AOE-027, ¶ V(5).

            After the Plaintiff Fund’s actuary (the “Actuary”) has calculated an employer’s withdrawal liability, the Procedures require the Actuary to notify the Administrative Office, run by Defendant, in writing. (UF 9.) Upon receipt of the Actuary’s calculation of employer liability, the Procedures require the Administrative Office to notify the employer of the amount of the liability and the schedule for payments, and to demand repayment. (UF 10.) Such notices are required to be sent by registered mail within 30 days of the Administrative Office’s receipt of the Actuary’s calculations. (UF 10.) If an employer fails to make any withdrawal liability payment when due, the Procedures require the Administrative Office to provide written notice of such failure and demand cure. (UF 11.)

            Defendant oversaw the withdrawal liability program from November 21, 2002 until August 31, 2018. (UF 17.)

            On January 1, 2003, and January 1, 2004, Plaintiffs and Defendant entered into amendments to the Contract which increased Defendant’s compensation for performing administrative services. (UF 13-14.) In Defendant’s contract extension requests for 2004-2012, Defendant requested further fee increases, citing Defendant’s administration of the employer withdrawal liability program as a reason for further fee increases. (UF 15-16.)

Plaintiff filed this action on January 3, 2023, raising claims for (1) breach of contract; and (2) breach of implied covenant of good faith and fair dealing.

Plaintiffs allege that Defendant failed to comply with the Withdrawal Liability Procedures and failed to diligently pursue withdrawal liability assessments and collections. Plaintiffs allege that they were denied the opportunity to recover and precluded from recovering over $7 million in withdrawal liability assessments that they would otherwise have had the right and ability to collect.

In Defendant’s responses to Plaintiff’s Requests for Admission, Defendant denied (i) that it was obligated to follow and abide by the motions, resolutions, benefit plan provisions, and administrative procedures adopted by Plaintiffs; and (ii) that it was obligated to follow the Plaintiff Fund’s Withdrawal Liability Procedures. (UF 18.)

            Plaintiffs filed this motion for summary adjudication on April 25, 2024. Plaintiffs seek summary adjudication that, as a matter of law, Defendant owed a contractual duty to Plaintiffs to comply with and act in accordance with the Withdrawal Liability Procedures the Plaintiff Board adopted on November 21, 2002, as subsequently amended by the Plaintiff Board.

            Defendant did not file an opposition.  Defendant filed a notice of non-opposition on July 2, 2024.

Legal Standard

The purpose of a motion for summary judgment or summary adjudication “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 843.) “Code of Civil Procedure section 437c, subdivision (c), requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) 

“In ruling on the motion, the court must consider all of the evidence and all of the inferences reasonably drawn therefrom [citation] and must view such evidence [citations] and such inferences [citations] in the light most favorable to the opposing party.” (Aguilar, supra, at pp. 844-845 [quotation marks omitted].) 

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.” (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) 

“A plaintiff or cross-complainant has met his or her burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action. Once the plaintiff or cross-complainant has met that burden, the burden shifts to the defendant or cross-defendant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto. The defendant or cross-defendant shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.” (Code Civ. Proc. § 437c, subd. (p)(1).)

 To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.) “If the plaintiff cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467.)

Discussion

A party may move for summary adjudication of issues of duty. (Code Civ. Proc., § 437c, subd. (f)(1).) “[I]f, under the facts and circumstances of a given case, a court finds it appropriate to determine the existence or nonexistence of a duty in the nature of a contractual obligation, it may properly do so by a ruling on that issue presented by a motion for summary adjudication.” (Linden Partners v. Wilshire Linden Assocs. (1998) 62 Cal.App.4th 508, 519.)

Section 6.3 of the Contract requires Defendant to follow the administrative procedures adopted by the Plaintiff Board. (UF 4.) The Plaintiff Board adopted the Procedures on November 21, 2002. (UF 6, 7.) Defendant was required to attend and prepare minutes for the board meeting. (UF 3.)

The Procedures require Defendant to determine when an employer withdrawal has occurred and inform the Actuary. (UF 8.) The Procedures also require Defendant, upon receipt of the Actuary’s liability calculations, to inform withdrawing employers of their liability and pursue collection. (UF 9-11.) Further, Defendant’s subsequent behavior in seeking fee increases during contract renewals indicates that Defendant was aware of its obligation to administer the employer withdrawal liability program. (UF 13-16.)

Plaintiffs have shown that the undisputed facts show that Defendant was required under the Contract to comply with and act in accordance with the Withdrawal Liability Procedures. Defendant has not raised a triable issue of fact in response to this showing. Summary adjudication is therefore appropriate.

The Court grants Plaintiff’s motion for summary adjudication.