Sullivan v. New York Life Insurance Company et al
Filing
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///ORDER granting 18 Motion to Dismiss for Failure to State a Claim filed by Kathleen M. O'Connor; denying as moot without prejudice 20 Motion for Judgment on the Pleadings filed by Securian Life Insurance Company, Tr ustee. Sullivan may seek leave to amend her complaint by March 19, 2016, to state a viable ERISA claim. Securian's motion denied as moot without prejudice to the motion's renewal should Sullivan amend her complaint. If leave to amend is not sought by March 19, 2016, judgment will be entered for the defendants. So Ordered by Chief Judge Joseph N. Laplante.(jb)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Dorothy A. Sullivan, Administrator of
the Estate of Leonard L. Dobens
v.
Civil No. 15-cv-183-JL
Opinion No. 2016 DNH 045
Kathleen M. O’Connor,
New York Life Insurance Co., and
Securian Life Insurance Co.
MEMORANDUM ORDER
This civil action, removed from state court, involves
dueling claims to life insurance proceeds of a decedent who died
intestate in December 2014.
Leonard L. Dobens (“Dobens”), who,
at the time of his death, was insured under a group policy issued
by defendant Securian Life Insurance Co. through a plan sponsored
by Dobens’s former employer, defendant New York Life Insurance
Co. (“the Securian policy”).
His daughter, plaintiff Dorothy
Sullivan is the Administrator of his estate.
The other remaining
defendant is Kathleen O’Connor, who was divorced from Dobens in
2004 after what the Complaint describes as a “short” marriage.1
The Securian policy names ex-wife O’Connor as the primary
beneficiary.
Sullivan claims that the Dobens's divorce decree
extinguished O’Connor's right to the policy’s benefits – roughly
1
The court previously granted New York Life Insurance Co.’s
motion to dismiss the single claim of negligence asserted against
it, (doc. no. 12), to which Sullivan did not object.
$70,000 – and that the proceeds should be distributed to Sullivan
and her two brothers, Charles Dobens and Leonard Dobens, Jr., as
equal beneficiaries.
Together with answering the complaint, Securian filed a
combined counterclaim and crossclaim against Sullivan and
O’Connor, respectively, seeking interpleader relief with respect
to the disputed policy proceeds.
R. Civ. P. 22.
See 28 U.S.C. § 1335 and Fed.
Securian seeks to deposit the disputed funds with
the Clerk of Court, Fed. R. Civ. P. 67, and reimbursement (from
the policy proceeds) of the legal fees and costs associated with
defending this lawsuit.
There are two motions pending before the court.
First,
O’Connor moved to dismiss pursuant to Fed. R. Civ. P. 12(b)(6),
arguing that Sullivan’s claims are pre-empted by the Employee
Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et
seq., and that Securian’s interpleader action is thereby mooted.
Both Sullivan and Securian timely objected.
Shortly thereafter,
Securian moved for judgment on the pleadings with respect to its
interpleader claim, to which only O’Connor objected.
Civ. P. 12(c).
2
See Fed R.
After review of the pleadings, motions, objections, the
insurance policy at issue, and certain other documents2 in the
administrative record, the court grants O’Connor’s motion to
dismiss, but will allow Sullivan to seek leave amend her
complaint to assert a viable ERISA claim.
Securian's motion for
judgment on the pleadings is denied, without prejudice to renewal
should Sullivan file an amended complaint.
I.
Standard of review
To survive a motion to dismiss under Rule 12(b)(6), the
party bringing the claims must make “factual allegations that
‘raise a right to relief above the speculative level, on the
assumption that all the allegations in the complaint are true.’”
Simmons v. Galvin, 575 F.3d 24, 30 (1st Cir. 2009) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
In ruling on
such a motion, the court must accept as true all well-pleaded
facts set forth in the complaint and must draw all reasonable
inferences in the plaintiff’s favor.
See, e.g., Martino v.
Forward Air, Inc., 609 F.3d 1, 2 (1st Cir. 2010).
2
A motion for
While the court ordinarily may not consider documents
outside the pleadings in ruling on a motion to dismiss or for
judgment on the pleadings, a document “sufficiently referred to
in the complaint . . . merges into the pleadings” and can
properly be considered by the court. Alt. Energy, Inc. v. St.
Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001).
Both the life insurance policy at issue and the Dobbens’s divorce
stipulation fit this description.
3
judgment on the pleadings under Rule 12(c) is evaluated under
essentially the same standard as a Rule 12(b)(6) motion.
See
Perez–Acevedo v. Rivero–Cubano, 520 F.3d 26, 29 (1st Cir. 2008).
With this standard in mind, the court turns to the Complaint.
II.
Background facts
In August 2002, Dobens named “Kathleen O’Connor Dobens,” his
then-wife,3 as the first beneficiary on a life insurance policy
offered by his employer, New York Life Insurance Co.
was issued by a Securian subsidiary.
The policy
The policy required any
beneficiary changes to be submitted in writing.
Dobens and
O’Connor were divorced in New Hampshire state court in August
2004 and had no relationship thereafter.
One provision of the
permanent stipulation that ended the divorce case is relevant
here.
Paragraph 11, captioned “Life Insurance,” provides that
“[e]ach party is awarded all policies of life insurance standing
in his/her own name, free of any claim or interest of the other
and without restriction.”
The divorce notwithstanding, O’Connor
remained as the first beneficiary in the Securian policy for the
remainder of Dobens’s life.
3
For ease of reference, the court will refer to the former
Mrs. Dobens as “O’Connor” regardless of the time period being
discussed.
4
Upon Dobens’s death, Securian informed Sullivan and her
siblings that O’Connor remained as the primary beneficiary on the
Securian policy.
The children, however, believe that Securian
and New York Life acted in error, and that the beneficiary
designation “should have been changed, pursuant to the wishes of
Leonard Dobens, from Kathleen O’Connor to his three (3)
children.”
(Complaint ¶ 23).
They base this claim on the above-
quoted language in the divorce stipulation.
Plaintiff also
alleges that Dobens “[a]ssured his children that Kathleen had
been removed from all benefit plans and that the life insurance
proceeds were to be paid to his children.”
(Id. at ¶ 27).
Sullivan filed suit in New Hampshire Superior Court in April
2015.
Securian timely removed the case to this court, citing 28
U.S.C. § 1331 (federal question jurisdiction) and ERISA.4
Two
counts remain following New York Life Ins. Co.’s dismissal:
1) a
request that the court impose a constructive trust on the policy
proceeds and designate the three Dobens children as trust
beneficiaries; and 2) breach of contract (the divorce decree)
against O’Connor.
4
Cases involving ERISA preemption are “‘necessarily federal
in character,’” and therefore this case “‘arises under ... the
laws ... of the United States’” for jurisdictional purposes.
Fitzgerald v. Codex Corp., 882 F.2d 586, 588 (1st Cir. 1989)
(citation omitted).
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III.
A.
Legal analysis
ERISA preemption
ERISA provides for the “preemption of all state law causes
of action insofar as they may now or hereafter relate to any
employee benefit plan.”
McMahon v. Digital Equip. Corp., 162
F.3d 28, 36 (1st Cir. 1998); 29 U.S.C. § 1144(a).
This provision
is “conspicuous for its breadth” and serves to preempt state law
claims even if their effect on ERISA is “indirect.”
Hampers v.
W.R. Grace & Co., Inc., 202 F.3d 44, 49 (1st Cir. 2000).
At the
same time, ERISA does not preempt state law claims if those
claims “affect employee benefit plans in too tenuous, remote or
peripheral a manner to warrant a finding that the law ‘relates
to’ the plan.”
Shaw v. Delta Airlines, Inc., 463 U.S. 85, 100
n.21 (1983).
ERISA preemption analysis involves “two central questions:
(1) whether the plan at issue is an ‘employee benefit plan’ and
(2) whether the cause of action ‘relates to’ this employee
benefit plan.”
McMahon, 162 F.3d at 36 (citing Rosario–Cordero
v. Crowley Towing and Transp. Co., 46 F.3d 120, 124 (1st Cir.
1995)).
Neither party disputes that Dobens’s life insurance
policy, issued by Securian pursuant to New York Life’s benefit
package, is an ERISA “employee benefit plan.”
The question,
then, is whether Sullivan’s claims for constructive trust and
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breach of contract “relate to” Leonard Dobens’s benefit plan for
preemption analysis purposes.
A cause of action “‘relates to a
covered employee benefit plan ... if it [1] has a connection with
or [2] a reference to such a plan.’”
Carpenters Local Union No.
26 v. U.S. Fidelity & Guar. Co., 215 F.3d 136, 140 (1st Cir.
2000) (citing Cal. Div. of Labor Standards Enforcement v.
Dillingham Constr., 519 U.S. 316, 324 (1997)).
“Under this
‘broad common sense meaning,’ a state law may ‘relate to’ a
benefit plan, and thereby be pre-empted, even if the law is not
specifically designed to affect such plans . . . .” IngersollRand Co. V. McClendon, 498 U.S. 133, 139 (1990) (quoting Pilot
Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47,(1987)).
As the First Circuit Court of Appeals has recognized,
“[d]rawing the line between those state laws that ‘relate to’
ERISA-regulated plans, and those that are only ‘tenuous, remote
or peripheral’ has proven considerably difficult in practice,
producing an ‘avalanche of litigation.’”
Hampers, 202 F.3d at 49
(quoting DeBuono v. NYSA-ILA Med. & Clinical Servs. Fund, 520
U.S. 806, 809 n.1 (1997)).
The Court of Appeals suggested that
in “drawing the line,” the court should focus on ERISA’s
“carefully crafted civil enforcement scheme,” 29 U.S.C.
§ 1132(a), as the ERISA provisions provide guidance as to which
causes of action ERISA preempts.
Id. at 50; see Pilot Life Ins.
7
Co., 481 U.S. at 54 (“The policy choices reflected in the
inclusion of certain remedies and the exclusion of others under
the federal scheme would be completely undermined if ERISA-plan
participants and beneficiaries were free to obtain remedies under
state law that Congress rejected in ERISA.”); see also Turner v.
Fallon Cmty. Health Plan, 127 F.3d 196, 197-98 (finding state law
claims preempted where those claims fell within ERISA’s civil
enforcement scheme).
As relevant here, the civil enforcement
provisions of ERISA allow a plan participant or beneficiary to
sue to recover benefits due under the plan, to enforce the
participant’s rights under the plan, or to clarify rights to
future benefits.
29 U.S.C. § 1132(a).
Relief may take the form
of accrued benefits due, a declaratory judgment on entitlement to
benefits, or an injunction against a plan administrator’s
improper refusal to pay benefits.
Pilot Life Ins., 481 U.S. at
53.
Ultimately, the court’s inquiry must keep in mind that ERISA
“ensure[d] that plans and plan sponsors would be subject to a
uniform body of benefits law.”
New York State Conference of Blue
Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645,
656 (1995).
The Travelers court identified three categories of
state laws subject to ERISA preemption:
(1) state laws that
“mandate[ ] employee benefit structures or their administration,”
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(2) state laws that “bind plan administrators to [a] particular
choice,” and (3) state law causes of action that provide
“alternative enforcement mechanisms” to ERISA’s enforcement
regime.
Id. at 658-59.
With this framework in place, the court
turns to Sullivan's specific causes of action.
1.
Breach of contract
In analyzing Sullivan’s breach of contract claim, the court
finds instructive the Supreme Court’s reasoning in a factually
similar case, Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141
(2001).
There, the children of a decedent sued their father’s
second wife, whose marriage to the decedent ended in a divorce
shortly before his intestate death.
Id. at 144.
At the time of
death, the wife was the named beneficiary under the decedent’s
employer-sponsored life insurance policy and pension.
Id.
The
children argued that they were entitled to the life insurance
proceeds because a Washington state statute disqualified the wife
as a beneficiary of a non-probate asset as a result of the
divorce.
Id. at 145.
Although the state trial court found in
the wife’s favor, both the intermediate appellate court and
Washington Supreme Court found, inter alia, that the statute
lacked a “connection with” the ERISA plan.
Id. at 145.
The Court reversed, noting several different ways that the
statute had a “connection with” the ERISA plan.
9
First the Court
observed that the statute binds plan administrators to pay
benefits according to state rules, rather than plan documents.
Id. at 147.
This would run counter to ERISA’s requirements that
a plan specify the basis of payments to and from the plan, and
that the plan be administered in accordance with its governing
documents regarding beneficiaries designated by a participant or
by the plan.
Id. (citing 29 U.S.C. §§ 1102(b)(4), 1104
(a)(1)(D), and 1002(8)).
Next, the Court found that application of the state statute
would interfere with ERISA’s imposition of national uniformity in
plan administration.
Id. at 148 (citing Fort Halifax Packing Co.
v. Coyne, 482 U.S. 1, 9 (1987)).
“Uniformity is impossible,
however, if plans are subject to different legal obligations in
different States” and “[p]lan administrators cannot make payments
simply by identifying the beneficiary specified in the plan
documents.”
Id.
Finally, the Court noted that the uniformity problem could
be exacerbated by choice-of-law concerns if an administrator was
faced with a situation where an employer, a plan participant, and
an ex-spouse live in different states, each of which impose
conflicting legal obligations.
Id. at 149.
Here, Sullivan’s requested relief for O’Connor’s alleged
breach of the divorce stipulation is that the court order
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O’Connor “to disclaim her interest as a beneficiary” under
Dobens’s life insurance policy.
In the court’s view, such relief
“relates to” the ERISA plan at issue as it falls squarely within
ERISA’s enforcement powers as set forth in 29 U.S.C. § 1132(a).
Moreover, granting Sullivan the requested relief would also run
afoul of the Court’s mandate to pay heed to ERISA’s requirements,
as it would both “bind the plan administrator” and serve as an
“alternative enforcement mechanism.”
Travelers, 514 U.S. at 658-
59.
In addition, the Egelhoff court’s choice-of-law concerns are
implicated here because Sullivan, O’Connor and Securian are
citizens of New Hampshire, Massachusetts and Minnesota,
respectively, while New York Life, the plan administrator, is a
New York Corporation.
Against this legal and factual backdrop, the court finds
that Sullivan’s breach of contract claim is preempted by ERISA.5
5
O'Connor also relies on this court's decision in
Metropolitan Life v. Hanson, 2009 DNH 146, a case which involved
a dispute among a decedent’s children and two ex-wives over life
insurance proceeds. In that case, the court first observed that
if ERISA applied, state law surrounding the divorce decrees would
be preempted and the insurance proceeds would go to the named
beneficiary, decedent’s third wife, who claimed that ERISA’s
anti-alienation policy, 29 U.S.C. § 1056, controlled such that
decedent’s first divorce decree could not re-direct the policy
proceeds to his children. The court, however, found that the
anti-alienation provision (and preemption) did not apply to the
qualified domestic relations order (QDROs) specifically naming
decedent’s first wife and children as beneficiaries. Id. at 6-8.
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2.
Constructive trust
Sullivan’s state-law constructive trust claim warrants
little discussion.
Here, Sullivan asks that the court impose a
trust on the life insurance proceeds and that the trust then
designate the three Dobens children as beneficiaries.
It is hard
for the court to conceive of a state law cause of action that
“relates to” an ERISA plan more than one that would essentially
seize the plan’s funds – which have not been distributed – and
treat the plan as a nullity.
It is therefore pre-empted.
Cf.
Nikolopoulos v. Nikolopoulos, 2006 DNH 137 (finding that
constructive trust claim does not fall within ERISA where funds
have already been distributed to decedent’s children’s stepmother).6
O’Connor seizes on the court’s “if ERISA applied” language for
the proposition that only a QDRO can defeat preemption. The
court, however, did not undertake that particular analysis, so
the fit is not as precise as O’Connor claims.
6
Although the defendant has not pursued this line of
argument, the court points out that creating a constructive trust
where no policy proceeds have been distributed might implicate
ERISA’s anti-alienation provision, 29 U.S.C. § 1056(d)(1). See
Hoult v. Hoult, 373 F.3d 47, 54-55 (1st Cir. 2004) (holding that
court order requiring judgment debtor to disgorge pension
benefits already received did not violate anti-alienation
provision).
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IV.
Conclusion
For the reasons set forth herein, Sullivan’s claims for
breach of contract and constructive trust are preempted by ERISA.
Accordingly, O’Connor’s motion to dismiss7 is GRANTED.
The
court, however, is mindful of the Court of Appeals’s admonition
that district courts “should not hasten to employ technical rules
of pleading and practice to defeat” ERISA’s goal of “fashion[ing]
anodynes that protect the interests of plan participants and
beneficiaries.”
Degnan v. Publicker Industries, 83 F.3d 27, 30
(1st Cir. 1996) (citing Fitzgerald v. Codex Corp., 882 F.2d. 586,
588 (1st Cir. 1989)).
Thus, Sullivan may seek leave to amend her
complaint by March 19, 2016, to state a viable ERISA claim.
e.g., Perrotti v. Wal-Mart Stores, Inc., 2006 DNH 005.
See,
The court
DENIES Securian’s motion for judgment on the pleadings8 as moot
without prejudice to the motion’s renewal should Sullivan amend
her complaint.
If leave to amend is not sought by March 19,
2016, judgment will be entered for the defendants.
7
Doc. no. 18.
8
Doc. no. 20.
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SO ORDERED.
Joseph N. Laplante
United States District Judge
Dated: March 2, 2016
cc:
Robert M. Shepard, Esq.
Tanya L. Spony, Esq.
John A. Wolkowski, Esq.
Megan E. Douglass, Esq.
Gary M. Burt, Esq.
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