ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
I. INTRODUCTION
Plaintiff, an anaesthesiologist, has sued Anesthesia Business Consultants, LLC, an entity which provides business, financial, and managerial services to Northern California Anesthesia Physicians, Inc. (a professional group of which Plaintiff is a member), alleging breach of contract and negligence causes of action. Plaintiff alleges that one of Defendant’s responsibilities was to manage and administer benefits programs for the member physicians— including the group disability insurance policy covering each participating member physician. An employee of Defendant’s predecessor in interest erroneously informed the insurance company that Plaintiff was to be cancelled from the group disability insurance policy in 2006. In 2012, Plaintiff became disabled as a result of a surgery. The insurance company has declined coverage under the group policy, citing the 2006 cancellation. Plaintiff filed the instant suit against Defendant, alleging a cause of action for breach of contract and negligence arising out of the 2006 cancellation. Defendant has moved for summary judgment, arguing that Plaintiffs’ causes of action are barred by the statute of limitations. For the following reasons, Defendant’s motion is DENIED.
II. FACTUAL & PROCEDURAL BACKGROUND
A. Relationship Between, Plaintiff, NCAP, and Defendant
Plaintiff, Dr. Alan Buschman, is an anaesthesiologist and member of the Board of Directors of Northern California Anesthesia Physicians, Inc. (“NCAP”). Compl. ¶ 1 (Docket No. 1). NCAP is a group of approximately 50 anesthesiology physicians who are based in hospitals or operating rooms, and therefore do not have traditional offices. Id. ¶ 11. Accordingly, in or around 1993, NCAP hired Anesthesiologists Associated, Inc. (“AAI”) to provide “management and consulting services related to, among other things, the billing and employee benefit services in which AAI specialized.” Id. ¶ 6. AAI’s services including “all management and billing related to employee benefits, including insurance coverage.” Id. ¶ 5. AAI was, therefore, responsible for “overseeing, managing and bookkeeping responsibilities related to employee benefits, including timely payment of employee insurance premiums.” Id.
On November 1, 2006, AAI and NCAP renewed the 1993 agreement. Id. ¶ 9. The “basic terms and conditions” in the 2006 contract were “substantially similar, if not identical, to the terms and conditions” of the prior contracts. Id. Under the 2006 agreement, AAI agreed to provide, among other things, “Financial Services including maintaining general ledger, payroll, draw and bonus calculations, processing and payment of physician expenses including insurance premiums, employee benefits and general business expenses.... ” Id. ¶ 10 (emphasis in original); see also Services Agreement Between Anesthesiologists Associated, Inc. and Northern California Anesthesia Physicians, Inc., Ex. A-1.4 (“Processing and payment of Client expenses including insurance premiums, employee benefits and general business expenses”) (Docket No.29-3). Accordingly, Dr. Buschman, as well as the other NCAP members, provided AAI with patient billings, expense information, and benefit information for direct
In or around January 2008, Defendant Anesthesia Business Consultants, LLC acquired AAI. Id. ¶ 7. On that date, Defendant “assumed responsibility under the contracts that AAI entered, including the consulting agreement it entered with NCAP.” Id. Defendant did, in fact, begin performing AAI’s contractual obligations. Id. Further, Defendant “retained nearly all of AAI’s employees, including those servicing NCAP.” Id. ¶ 8.
B. NCAP Group Insurance Policy and Dr. Buschman’s Disability Claim
In 1993, NCAP decided to provide group long term disability insurance plan to its physician members, including Dr. Busch-man. Id. ¶ 15. Unum Life Insurance Company of America' (“UNUM”) underwrote this policy. Id. AAI undertook to negotiate the rates and coverage, enrolled the physician members in the policy, and ensured that the premiums were timely paid on behalf of the physicians. Id. ¶ 17. In addition to this group policy, Dr. Busch-man secured an individual disability insurance policy through UNUM, beginning in or about 1990. Id. ¶ 19.
UNUM would send AAI monthly statements and an AAI employee named Marietta Kleve would look at the list of NACP physicians and make sure that the information on the monthly statement was correct — for example, that names were spelled correctly and that no doctors needed to be added to or removed from the list, etc. Deposition of Marietta Kleve (“Kleve Dep.”) at 19 (Docket No. 27-4 & Docket No. 31-2). She would make the necessary changes on the monthly statement before sending it back to UNUM and paying the invoice. Id. In February 2006, she indicated on the monthly statement that Dr. Buschman’s insurance was to be cancelled. Compl. ¶ 25. On the invoice, she listed that Dr. Buschman had been “terminated.” Id. Ms. Kleve testified at her deposition that she would not cancel a participating physician’s insurance coverage without that physician instructing her to do so and without creating a paper trail of the transaction. Kleve Dep. at 19-20. Dr. Busch-man alleges that he neither knew of nor consented to the cancellation of his group disability coverage. Id. Further, at no point was Dr. Buschman terminated from NCAP — -he remains a member physician and board member of NCAP. Compl. ¶ 26.
In 2005, prior to the cancellation of Dr. Buschman’s group coverage, AAI withheld $390 per month from Plaintiffs paycheck. Deposition of Marietta Kleve (“Kleve Dep.”) at 27; see also Rosengren Deck, Ex. E (monthly earning report for Dr. Buschman showing $318 in monthly premiums in 1997).
In 2012, Dr. Buschman underwent surgery to remove a spinal cord tumor. Deposition of Alan Buschman (“Buschman Dep.”) at 248 (Docket No. 29-1). As a result of this surgery, Dr. Buschman became disabled and unable to work. Id. He suffered from extreme pain; sensitivity to cold, pressure, and touch; was unable to sit for extended periods of time; as well as additional symptoms. Id. at 256. As a result of this disability, Dr. Buschman attempted to make a claim under the UNUM group disability policy in May 2012. Compl. ¶ 22; Buschman Dep. at 278. He claims that UNUM’s denial of coverage was the first time he learned that his coverage under the disability policy had been canceled erroneously in 2006. Id. at 269-70.
Dr. Buschman filed the instant lawsuit in California state court on March 22, 2013. Docket No. 1. The complaint alleges two causes of action — breach of contract and negligence. Defendant remove the action to federal court on the basis of diversity jurisdiction on April 19, 2013. On March 10, 2014, Defendant filed the instant motion for summary judgment arguing that Dr. Buschman’s claims are barred by the statute of limitations.
III. JURISDICTION
The notice of removal in this case contains insufficient allegations regarding the citizenship of Defendant. Specifically, the notice of removal alleges that “Defendant ABC, both at the time the state court action was filed and at present, is a resident of the State of Delaware, incorporated and existing under the laws of the State of Delaware and has its principal place of business in Jackson, Michigan.” Docket No. 1, at 2.
Rather than remand this action on the basis of the above error, on April 18, 2014, the Court issued an order to show cause why this case should not be remanded to California state court on the basis of lack of subject matter jurisdiction. Docket No. 35. The order specifically required Defendant to provide information regarding the citizenship of its members. Defendant has responded to the Court’s order to show cause by asserting that Defendant has a single member — MMGS Holdings, LLC. Docket No. 36. MMGS Holdings, LLC, in turn, has two members — MiraMed Global Services, Inc. (a Michigan corporation) and the Hamid Mirafzali Revocable Trust (a trust whose trustee is a citizen of Michigan). Docket No. 37.
As a result, this Court’s April 18, 2014 order to show cause is DISCHARGED.
IY. DISCUSSION
A. Legal Standard
Federal Rule of Civil Procedure 56(c) provides that summary judgment shall be rendered “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). An issue of fact is genuine only if there is sufficient evidence for a reasonable jury to find for the nonmoving party. See Anderson v. Liberty Lobby, Inc.,
B. Analysis
Defendant’s motion for summary judgment presents one core legal question: When did Dr. Buschman’s breach of contract and negligence claims accrue? If the answer is 2006 — when the alleged breach occurred — then Dr. Buschman’s claims are barred by the statute of limitations unless the statute is tolled by application of Cali
1. Breach of Contract Cause of Action
Under California law,
Under this rule, California cases have held that where monetary damages is an element of the offense, accrual of the action does not occur until pecuniary loss is suffered. See, e.g., City of Vista v. Robert Thomas Sec.,
The elements for a breach of contract action under California law are: (1) the existence of a contract, (2) plaintiffs performance or excuse for nonperformance, (3) defendant’s breach, and (4) damages to plaintiff as a result of the breach. See CDF Firefighters v. Maldonado,
Impelled by [a] concern for the pragmatic, we have drifted away from the view held by some that a limitations period necessarily begins when an act or omission of defendant constitutes a legal wrong as a matter of substantive law. Rather, we generally now subscribe to the view that the period cannot run before plaintiff possesses a true cause of action, by which we mean that events have developed to a point where plaintiff is entitled to a legal remedy, not merely a symbolic judgment such as an award of nominal damages.
Id. at 513,
As Defendant recognizes, there are a number of cases in California which hold in particular that when an insurance broker fails to provide insurance, the cause of action for professional negligence will not accrue until the plaintiff actually suffered injury. Thus, for example, in Walker v. Pacific Indemnity Company,
The Court of Appeal began by noting there was “no dispute” that the alleged wrong occurred on March 17, 1952 when “defendant ‘negligently and carelessly’ procured a policy with limits of $15,000, rather than $50,000.” Id. at 516,
It is true that [the truck operator] then received less than he had ordered. But it is difficult to conceive what action he could then have brought. Complaint for defendant’s negligent failure to procure additional coverage would, in view of the ready availability of automobile insurance, have been demurrable. Until an accident occurred, bodily injury was inflicted on another, and a liability in excess of the $15,000 coverage incurred, there was no injury to [the truck operator] in the absence of possible special facts which do not appear here.
Id. at 516,
The reasoning of Walker — and similar cases regarding negligent procurement of insurance — supports Dr. Buschman’s position that his cause of action for negligence and breach of contract did not accrue until he actually suffered damage as a result of the lack of group disability insurance. The Walker court directly rejected the contention that living with reduced insurance coverage constitutes an “injury” or “damage” for purposes of a cause of action accruing.
Defendant seeks to distinguish Walker and related cases by pointing to the fact they all involve insurance brokers who owe an elevated duty to their clients. See Mot. at 7. The Court disagrees. While the heightened duty insurance brokers face may affect the substantive standard applicable to liability analysis, there is no logical reason why broker status should affect the statute of limitations analysis. Defendant has cited no California case where a court has held that special accrual rules apply to causes of action involving certain defendants, like brokers. In fact, the California Supreme Court in Davies — a case not involving insurance brokers or insurance in any sense — found Walker “particularly illustrative” for the proposition the mere breach of a duty which causes only nominal damages, speculative harm, or the risk of future harm will normally not create a cause of action. Davies,
Defendant relies upon two additional cases for its argument that the cause of action in this case accrued on the date Dr. Buschman was erroneously terminated from the group liability insurance policy. First, in Lewis v. Security-First National Bank of Los Angeles,
In the instant case plaintiffs allege that the contract, for the breach of which they are suing, was an oral contract. Since defendant did not, at any time, procure a policy of fire insurance in accordance with its alleged agreement, plaintiffs’ cause of action accrued, if at all, not later than June 1, 1937, the date the building was completed upon the property described in the trust deed mentioned above. The present action was not filed until December 23, 1941. Therefore, since more than two yearshad elapsed after plaintiffs’ cause of action accrued before the present action was commenced, it was clearly barred by the applicable provision of the statute of limitations....
Id. at 829,
However, Lewis has been strictly limited, if not implicitly overruled. First, as quoted above, the California Supreme Court in Davies expressly held it had “drifted away from the view held by some that a limitations period necessarily begins when an act or omission of defendant constitutes a legal wrong.” Davies,
It is difficult to distinguish Lewis from the case at bar. . However, in Lewis the bank was neither licensed nor engaged in the business of insurance brokerage, whereas defendant Fulmore is alleged to be a “licensed insurance agent.” Also, the question whether the fire insurance was to be procured only for the benefit of the bank, to protect its security, is not discussed, and the opinion does not disclose whether the loan remained unpaid at the time of the fire. Admittedly, these distinctions are somewhat thin. However, we elect not to extend the rather harsh rule of Lewis beyond the precise facts there presented.
Walker,
Second, Defendant relies on Marketing West, Inc. v. Sanyo Fisher (USA) Corp.,
It was undisputed that Patricia Rienzi threatened to terminate appellants if they did not sign the 1987 Agreements before leaving the room. That condition was not “good cause” as defined by the oral agreements. Appellants were harmed by giving up their right to be terminated only' for good cause. Accordingly, respondent breached the oral agreements in November 1987, starting the running of the statute of limitations. The complaint was filed on March 6, 1990, more that two years later and is thus barred by the applicable statute of limitations.
Id. at 614,
However, like Lems, the Marketing West decision has not fared well in subsequent interpretations by California courts. In McCaskey v. California State Auto. Association,
necessarily presupposed that the later agreement was ineffectual to have the intended effect. If that was the case, the later agreement inflicted no harm on the plaintiffs, compensable or otherwise, and could not possibly commence the running of the statute of limitations. If, on the other hand, that agreement injured the plaintiffs, as the court supposed, by destroying their erstwhile right not to be terminated without cause, then they had no claim based on that earlier right; the promise sued upon was no longer in effect, and therefore could not have been breached, when they were fired. From a limitations perspective, a cause of action based on that theory had never accrued, and could never accrue.
Id. at 961,
In short, the later agreement could not inflict the harm on which the court predicated its holding unless it rendered the original promise substantively unenforceable. But if it did that, a claim based on the original promise failed on the merits. The net result of the court’s analysis, seemingly, was to beg the truly dispositive question, which is whether the later agreement actually did excuse the employer from complying with the earlier one. If it did, the plaintiffs had no claim. If it did not, they had a claim. The statute of limitations had no proper place in either alternative.
Id. Accordingly, the Court concludes that Marketing West’s one-paragraph discussion of the statute of limitations to be unpersuasive in light of the California Court of Appeal’s subsequent critique of Marketing West’s reasoning.
Given the nature of the breach in this case, and current California law requiring that a plaintiff suffer actual harm before bringing a cause of action, the Court finds that Dr. Buschman’s cause of action did not accrue until he became disabled and was denied coverage under the group disability insurance policy. While the Court recognizes a good argument can be made that Dr. Buschman suffered harm when the terminated policy exposed him to an unwarranted risk, that view has not been accepted by recent California cases, at least with respect to cases involving insurance coverage. See 3 Witkin, Cal. Proc. Actions § 501 (5th ed.2008). Given this holding, the Court need not reach the parties’ argument regarding the applicability of California’s “discovery rule.” Accordingly, Defendant’s motion for summary judgment on Dr. Buschman’s breach of contract action is DENIED.
2. Negligence Cause of Action
Like the breach of contract action, Dr. Buschman’s negligence cause of action is governed by California’s four year “catch all” statute of limitations. See id. § 343 (“An action for relief not hereinbefore provided for must be commenced within four years after the cause of action shall have accrued.”).
The insurance company sued for breach of contract and negligence in 1960. In rejecting defendant’s statute of limitations argument, the California Court of Appeals began by noting that the “breach” of the contract occurred when defendant’s false report was delivered to the insurance company. Id. at 58,
The tort cause of action may not have arisen until the landslide, upon the theory that there is no cause of action in tort for nominal damages. When the landslide occurred in April 1958 plaintiff became unconditionally liable to its assured for the amount of the physical damage to the assured’s home. This ■ supplied the element of damage which made the tort cause of action complete. This occurred more than two years prior to the commencement of the action.
Id. at 58,
Accordingly, for the same reasons discussed above, the Court concludes that the negligence cause of action is not barred by the statute of limitations and Defendant’s motion for summary judgment is DENIED.
V. CONCLUSION
As the Court noted at the hearing, application of California’s accrual rules in the context of insurance cases arguably creates a perverse incentive on the part of plaintiffs to sit on their rights, avoid paying insurance premiums, and wait to bring suit for breach when (and if) they end up needing to make a claim on the insurance policy. On this record, there is no indication that this is what Dr. Buschman did. In fact, at this stage of proceedings, the parties dispute whether Dr. Buschman was even aware in 2006 that his group disability insurance coverage had been cancelled. In any event, even if perverse policy incentives were apparent, the current California
While Defendant’s motion for summary judgment is denied, this ruling is without prejudice to other defenses that might be asserted at trial and the Court does not address whether, and to what extent, e.g., the doctrines of comparative negligence or mitigation of damages ehminates or reduces the scope of damages to which Dr. Buschman will be entitled should he prevail at trial. See, e.g., Kleinclaus v. Marin Realty Co.,
For the foregoing reasons, Defendant’s motion for summary judgment on the basis of the statute of limitations is DENIED.
IT IS SO ORDERED.
Notes
. Dr. Buschman has raised a number of evidentiary objections to the portions of Ms. Kleve’s deposition upon which Defendant relies as well as the exhibits E through H attached to the Rosengren Declaration. These exhibits relate to copies of Dr. Buschmans’ income statements and earning statements for various months in 1997, 2005, and 2007. With regards to Ms. Kleve’s deposition transcript, Dr. Buschman has moved to strike the cited portions as the result of leading questions, speculation, or lack of foundation. To the extent Dr. Buschman complains of the use of leading questions, the objection is OVERRULED. See Morgan v. Bill Vann Co., Inc.,
Dr. Buschman’s objections to Dr. Busch-man’s purported income and earnings statements attached to the Rosengren Declaration are SUSTAINED for purposes of this motion. InOrr v. Bank of America, NT & SA,
Accordingly, the Court does not consider the challenged exhibits for purposes of this motion for summary judgment.
. Dr. Buschman is receiving coverage under his individual disability policy. Buschman Dep. at 32.
. The Court notes that Defendant's repeated assertion that it is "incorporated” in Delaware is mistaken. Defendant is not a corporation, but rather a limited liability company and is, therefore, not incorporated. See, e.g., Alatorre v. Wastequip Mfg. Co. LLC, 2:12-CV-02394 — MCE,
. "For trusts, the Supreme Court has deemed the citizenship of the trustees to be determinative.” Majestic Ins. Co. v. Allianz Int’l Ins. Co.,
. The parties agree that California governs the statute of limitations inquiry in this diversity action. See Simpson v. Robert Bosch Tool Corporation, No. 12-cv-05379 WHO,
. Defendant also seeks to distinguish Walker, arguing that the defendant in that case had provided some insurance' (thus making the fact of harm even more speculative) while here, Dr. Buschman was denied all group disability insurance in 2006. The Court finds this argument unpersuasive as the reasoning of Walker has been applied in cases where the plaintiff was completely denied some form of insurance coverage by the negligence of an insurance broker. See, e.g., Butcher v. Truck Ins. Exchange,
. While California provides a two year statute of limitations for "action[s] for assault, bat