Martens v. Hogan
Filing
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MEMORANDUM OPINION AND ORDER: Defendant's Motion to Dismiss (Doc. No. 3 ) and request for attorney fees are DENIED. (Written Opinion) Signed by Judge Donovan W. Frank on 4/18/2018. (las)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Emmalee Martens, as Personal Representative
of the Estate of John Christopher Rooney,
Civil No. 17-5169 (DWF/DTS)
Plaintiff,
MEMORANDUM
OPINION AND ORDER
v.
Amy Karin Hogan (f/k/a Rooney),
Defendant.
Samantha J. Graf, Esq., Johnson/Turner Legal, counsel for Plaintiff.
Craig T. Dokken, Esq., Henningson & Snoxell, Ltd., counsel for Defendant.
INTRODUCTION
Plaintiff Emmalee Martens (“Martens” or “Plaintiff”) is the personal
representative of decedent John Christopher Rooney’s (“Rooney”) estate. Before Rooney
passed away, he obtained a life insurance policy from Anthem Blue Cross Life and
Health Insurance Company (“Anthem”). The defendant, Rooney’s ex-wife, was named
the beneficiary of the Policy and collected the death benefits from Anthem after Rooney
passed away. Plaintiff brings this lawsuit claiming that Defendant was not entitled to the
death benefits. This matter is before the Court on Defendant’s motion to dismiss. (Doc.
No. 3.) For the reasons discussed below, the Court denies the motion.
BACKGROUND
On May 24, 2007, Defendant Amy Karin Hogan f/k/a Rooney (“Hogan” or
“Defendant”) and decedent John Christopher Rooney (“Rooney”) were married. (Doc.
No. 1-1, Complaint (“Compl.”) ¶ 6.) While Hogan and Rooney were married, Rooney
became the owner of an Anthem Blue Cross Basic Life Insurance Policy in the amount of
$90,000 (the “Policy”). (Compl. ¶ 8.) Rooney named Hogan the sole beneficiary under
the Policy. (Doc. No. 6-4 at 4.)
On January 24, 2012, Hogan and Rooney divorced. (Doc. No. 1-1, Ex. A (the
“Divorce Decree”).) The Divorce Decree awarded Rooney exclusive title to and
ownership of the Policy. (Divorce Decree at 12.) On December 6, 2016, Rooney passed
away. (Compl. ¶ 11.) Rooney never changed the beneficiary designation under the
Policy, however, and Hogan remained the sole beneficiary at the time of Rooney’s death.
(Compl. ¶ 13.) On May 7, 2017, Hogan submitted to Anthem a Beneficiary Claim Form
requesting payment for the applicable death benefits under the Policy. (Doc. No. 6, ¶ 6;
Doc. No. 6-5.) On May 8, 2017, Anthem issued a check in the amount of $90,000.00 to
Hogan as payment of the applicable death benefits under the Policy. (Doc. No. 6, ¶ 7;
Doc. No. 6-6.)
On May 4, 2017, Martens was appointed Personal Representative of the Estate of
the Estate of John Christopher Rooney. (Doc. No. 1-1, Ex. A.) When Martens contacted
Anthem to inquire about the Policy, Anthem informed her that Hogan was the sole
beneficiary. (Compl. ¶¶ 12-13.)
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On October 30, 2017, Martens filed this suit against Hogan alleging breach of
contract, conversion, and unjust enrichment. Hogan now moves to dismiss Martens’
claims under Federal Rule of Civil Procedure 12(b)(6). (Doc. No. 3.)
DISCUSSION
I.
Legal Standard
In deciding a motion to dismiss under Rule 12(b)(6), a court assumes all facts in
the complaint to be true and construes all reasonable inferences from those facts in the
light most favorable to the complainant. Morton v. Becker, 793 F.2d 185, 187 (8th
Cir. 1986). In doing so, however, a court need not accept as true wholly conclusory
allegations, Hanten v. Sch. Dist. of Riverview Gardens, 183 F.3d 799, 805 (8th
Cir. 1999), or legal conclusions drawn by the pleader from the facts alleged, Westcott v.
City of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). A court deciding a motion to
dismiss may consider the complaint, matters of public record, orders, materials embraced
by the complaint, and exhibits attached to the complaint. See Porous Media Corp. v. Pall
Corp., 186 F.3d 1077, 1079 (8th Cir. 1999).
To survive a motion to dismiss, a complaint must contain “enough facts to state a
claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007). Although a complaint need not contain “detailed factual allegations,” it must
contain facts with enough specificity “to raise a right to relief above the speculative
level.” Id. at 555. As the Supreme Court reiterated, “[t]hreadbare recitals of the elements
of a cause of action, supported by mere conclusory statements,” will not pass muster
under Twombly. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S.
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at 555). In sum, this standard “calls for enough fact[s] to raise a reasonable expectation
that discovery will reveal evidence of [the claim].” Twombly, 550 U.S. at 556.
II.
Martens’ State Law Claims
Hogan moves to dismiss Martens’ state law claims alleging that the claims are
improper attempts to “sidestep ERISA law,” which Hogan claims “supersedes any and all
state laws insofar as they relate to any employee benefit plan.” (Doc. No. 5 at 7, 10.)
The motion presents a two-part inquiry: (1) whether Anthem properly distributed the
proceeds to Hogan, and if it did, (2) whether ERISA preempts Martens’ post-distribution
claims of breach of contract, conversion, and unjust enrichment.
A.
Plan Documents Rule
Hogan and Martens agree that Anthem appropriately paid to Hogan the death
benefits under the Policy. (Doc. No. 5 at 4-6; Doc. No. 8 at 4.) Both parties cite
Kennedy v. Plan Adm’r for DuPont Sav. & Inv. Plan, for the principle that an ERISA
plan administrator must disburse benefits according to the directives of the plan
documents, known as the “plan documents rule.” 555 U.S. 285, 299-300, 303 (2009); see
also Matschiner v. Hartford Life & Accident Ins. Co., 622 F.3d 885 (8th Cir. 2010).
Kennedy involved the question of whether, under ERISA’s anti-alienation provision, the
limitation on assignment or alienation of ERISA plan benefits invalidated the act of a
divorced spouse waiving via divorce decree her entitlement to the proceeds of a pension
plan. See 29 U.S.C. § 1056(d)(1). The Supreme Court held that the plan administrator
must distribute the proceeds in accordance with the beneficiary designation in the plan
documents. Kennedy, 555 U.S. at 299-300.
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Here, although the Divorce Decree awarded Rooney exclusive title to and
ownership of the Policy, Rooney never designated a new beneficiary after he and Hogan
were divorced. (Divorce Decree at 12; Compl. ¶ 13.) Consequently, Hogan was the only
beneficiary under the Policy at the time of Rooney’s death. The Court therefore
concludes that Anthem properly distributed the proceeds to Hogan.
B.
Post-Distribution State Law Claims
Martens’ state-law claims are based on Hogan’s alleged breach of the Divorce
Decree, not on any breach of the Policy. Specifically, Martens alleges that Hogan
contractually waived her rights to the proceeds of the Policy by signing the Divorce
Decree, and by receiving and accepting the funds breached the Divorce Decree,
unlawfully converted the funds, and was unjustly enriched at Martens’ expense. (Compl.
¶¶ 20-32.) In response, Hogan argues that Martens’ claims are preempted by ERISA.
(Doc. No. 5 at 10.) Specifically, Hogan contends that Martens’ claims rely on
Minnesota’s Revocation by Dissolution of Marriage statute, which is preempted by
ERISA’s anti-alienation provision. See Minn. Stat. § 524.2-804, subd. 1 (Revocation by
Dissolution of Marriage); 29 U.S.C. § 1056(d)(1) (ERISA anti-alienation provision);
(Doc. No. 5 at 7). ERISA’s anti-alienation provision prohibits any effort to assign or
alienate an ERISA participant’s plan benefits. 29 U.S.C. § 1056(d)(1) (“Each pension
plan shall provide that benefits provided under the plan may not be assigned or
alienated.”).
The remaining issue is whether ERISA’s anti-alienation provision preempts
post-distribution suits against ERISA beneficiaries. The Court and parties have been
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unable to locate any cases directly on point from the Eighth Circuit. In addition, although
Kennedy requires plan administrators to follow the “plan documents rule,” the Court
expressly left open the question “as to whether [an] Estate could have brought an action
in state or federal court against [the beneficiary] to obtain the benefits after they were
distributed.” Id. at 300, n.10. However, numerous other courts, relying on Kennedy,
have allowed individuals and estates to pursue state-law claims to recover ERISA funds
from beneficiaries after disbursement by a plan administrator. See Andochick v. Byrd,
709 F.3d 296, 301 (4th Cir. 2013) (finding “no conflict with either ERISA’s objectives or
relevant Supreme Court precedent” in allowing a post-distribution suit against an ERISA
beneficiary); Hohu v. Hatch, 940 F. Supp. 2d 1161, 1175 (N.D. Cal. 2013) (holding
ERISA anti-alienation provision does not preempt state-law claims); Flesner v. Flesner,
845 F. Supp. 2d 792 (S.D. Tex. 2012) (holding ERISA did not preempt a state-law claim
for breach of a divorce decree). In Andochick, the Fourth Circuit “adopt[ed] the same
view as every published appellate opinion to address the question” in holding that
“ERISA does not preempt post-distribution suits against ERISA beneficiaries.” 709 F.3d
at 301 (citing Estate of Kensinger v. URL Pharma, Inc., 674 F.3d 131, 136 (3d Cir.
2012); Appleton v. Alcorn, 291 Ga. 107, 728 S.E.2d 549, 551-52 (2012), aff’g, 308 Ga.
App. 663, 708 S.E.2d 390, 392 (2011); Sweebe v. Sweebe, 474 Mich. 151, 712 N.W.2d
708, 714 (2006); Pardee v. Pers. Representative for Estate of Pardee, 112 P.3d 308,
315-16 (Okla. Civ. App. 2004)).
Here, Martens claim to the proceeds of the Policy arises out of independent legal
duties unrelated to ERISA. Hogan cites Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S.
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141 (2001), in support of her argument that the state-law claims at issue here run afoul of
ERISA’s anti-alienation provision and conflict with ERISA plan administration
principles.
Egelhoff does not lend support to Hogan’s argument that ERISA preempts
post-distribution claims of the kind at issue here. In Egelhoff, the Supreme Court held that
ERISA preempted the application of a state statute that automatically revoked, upon
divorce, any designation of a spouse as a beneficiary of an ERISA benefit plan. 532 U.S.
at 146-50. The Supreme Court based its holding on the fact that the state statute required
administrators to “pay benefits to the beneficiaries chosen by state law, rather than to
those identified in the plan documents,” id. at 147, creating a “direct[ ] conflict[ ] with
ERISA’s requirements that plans be administered, and benefits be paid, in accordance
with plan documents,” id. at 150.
The holdings in Egelhoff and Kennedy create a simple, easy-to-follow scheme for
plan administrators undertaking the process of reviewing beneficiary claims and
disbursing benefits. Consistent with the holdings in those cases, ERISA preempts
state-law claims challenging the disbursement of benefits according to plan documents.
Here, Martens’ claims do not challenge Anthem’s distribution of benefits to Hogan, but
instead challenge Hogan’s right to “retain the benefits she received” in light of her
contractual obligations set forth in the Divorce Decree. (Doc. No. 8 at 5.) As such, the
state-law claims do not implicate the overriding principles set forth in Egelhoff and
Kennedy. Simply put, Martens’ suit does not require Anthem to pay benefits to anyone
other than the named beneficiary. The suit instead relates to legal obligations separate
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from ERISA, i.e., contractual obligations arising from the Divorce Decree.
Accordingly, Egelhoff is inapposite.
The Court concludes that ERISA’s anti-alienation provision does not shield the
distributed funds from Martens’ claims, which are based on the Divorce Decree. Martens
has therefore pleaded enough facts to state claims of breach of contract, conversion, and
unjust enrichment.
III.
Hogan’s Request for Attorney Fees
In Hogan’s motion to dismiss, she makes a request for an award of attorney fees
incurred in the removal to federal court and subsequent motion to dismiss. (Doc. No. 5 at
9-10.) Martens opposes the request. (Doc. No. 8 at 8.) Any award of attorney fees at
this stage of the litigation would be premature. The Court, however, reserves the right to
award attorney fees to either party to the extent permitted by law at the conclusion of the
litigation.
ORDER
Based on the files, record, and proceedings herein, IT IS HEREBY ORDERED
that Defendant’s Motion to Dismiss (Doc. No. [3]) and request for attorney fees are
DENIED. 1
Dated: April 18, 2018
s/Donovan W. Frank
DONOVAN W. FRANK
United States District Judge
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The Court believes that it is in the best interests of the parties to settle this case. If
the parties would like the Court’s assistance in pursuing a settlement, they may contact
chambers and the Court will help coordinate priority scheduling of a settlement
conference with the Magistrate Judge.
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