WOERNER v. FRAM GROUP OPERATIONS, LLC et al
OPINION. Signed by Judge Stanley R. Chesler on 10/4/17. (cm, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
NOT FOR PUBLICATION
LOU ANN WOERNER, as the beneficiary
of Michael J. Woerner,
FRAM GROUP OPERATIONS, LLC, and
THAT CERTAIN EMPLOYEE
WELFARE BENEFIT PLAN SPONSOED
BY FRAM GROUP OPERATIONS, LLC,
FRAM GROUP OPERATIONS, LLC, and
THAT CERTAIN EMPLOYEE
WELFARE BENEFIT PLAN SPONSOED
BY FRAM GROUP OPERATIONS, LLC,
Third Party Plaintiffs,
LIFE INSURANCE COMPANY OF
Third Party Defendant.
Civil Action No. 12-6648 (SRC)
CHESLER, District Judge
Plaintiff Lou Ann Woerner (“Plaintiff”) brought this action under Section 502(a)(1)(B) of
the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132(a)(1)(B),
to challenge a denial of life insurance benefits allegedly owed to her as the beneficiary of her late
husband’s employee welfare benefit plan. Defendant FRAM Group Operations, LLC (“FRAM”)
has filed a third-party complaint against the Life Insurance Company of North America
(“CIGNA”).1 (ECF No. 134.) CIGNA now moves to dismiss the third-party complaint, pursuant
to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 141.) FRAM opposes the motion. (ECF
No. 146). The Court has reviewed the parties’ submissions and proceeds to rule without oral
argument. See Fed. R. Civ. P. 78(b). For the reasons set forth below, CIGNA’s motion will be
Plaintiff’s late husband, Michael Woerner, was diagnosed with brain cancer in July 2010
while he was an employee of Honeywell International Inc. (“Honeywell”). (Am. Compl., ¶¶ 3,
13.) In June 2011, Mr. Woerner commenced short-term disability leave. (Am. Compl., ¶¶ 16.)
Approximately one month later, in July 2011, Honeywell sold Mr. Woerner’s business unit to
FRAM, making him an employee of the latter. (Am. Compl., ¶ 17.) Mr. Woerner remained on
short-term disability leave as an employee of FRAM until his death in February 2012. (Am.
Compl., ¶ 58.)
In October 2012, Plaintiff commenced the instant action against FRAM. Her amended
complaint alleges that FRAM established a benefits plan for its employees and that this plan
included basic and voluntary life insurance. (Am. Compl., ¶¶ 1, 4.) The amended complaint
further alleges that Mr. Woerner enrolled in these life insurance benefits; that his coverage under
them became effective prior to his death; that Plaintiff was named as the sole beneficiary of the
benefits; and that Plaintiff has yet to receive the proceeds of those benefits because “Defendants”
denied them. (Am. Compl., ¶¶ 30-36, 39-40, 65, 70, 80.)
The Court uses “FRAM” to refer collectively to Defendant FRAM Group Operations, LLC and That Certain
Employee Welfare Benefit Plan Sponsored by FRAM Operations Group LLC.
After Plaintiff filed her amended complaint, she and FRAM each filed motions for
summary judgment. By order dated June 30, 2015, this Court denied Plaintiff’s motion and
granted FRAM’s motion. Plaintiff appealed, and on September 12, 2016, the Court of Appeals
for the Third Circuit vacated this Court’s prior order, remanding the case “for application of the
correct standard as to the existence and terms of the Plan at the time that [Plaintiff’s] benefits, if
any, vested.” Woerner v. FRAM Grp. Operations, LLC, 658 F. App’x 90, 97 (3d Cir. 2016).
The Third Circuit held that the correct standard for determining “the existence . . . of the
Plan,” if any, governing Plaintiffs claims was whether “from the surrounding circumstances a
reasonable person can ascertain the intended benefits, a class of beneficiaries, the source of
financing, and procedures for receiving benefits.” Id. at 95 (quoting Shaver v. Siemens Corp.,
670 F.3d 462, 475 (3d Cir. 2012)). Plans which satisfy this standard have been called “informal
plan[s],” Smith v. Hartford Ins. Grp., 6 F.3d 131, 136 (3d Cir. 1993); Henglein v. Informal Plan
for Plant Shutdown Ben. for Salaried Emps., 974 F.2d 391, 400 (3d Cir. 1992), because they are
“constitute[d]” by “informal written and oral communications,” Woerner, 658 F. App’x at 90
(quoting Shaver, 670 F.3d at 475), rather than established by a “formal plan document,”
Henglein, 974 F.2d at 400, or “written instrument” in accordance with 29 U.S.C. § 1102(a)(1).
The Third Circuit further instructed that, in determining the terms of any plan established
in the above manner, this Court should exclude evidence of “the version of the Plan delivered to
and executed by FRAM after Mr. Woerner’s death.” Woerner, 658 F. App’x at 96. Such
evidence, the Third Circuit held, “cannot provide a basis for ascertaining [Plaintiff’s] benefits,”
Id., because it is not probative of the terms of any informal plan governing Plaintiff’s claims.
Woerner, 658 F. App’x at 97.
After the case was remanded back to this Court, FRAM filed a motion to dismiss for
failure to state a claim, pursuant to Rule 12(b)(6), and Plaintiff filed a second motion for
summary judgment. By orders dated April 27, 2017, this Court denied both motions.
Approximately one month later, in May 2017, FRAM filed its answer and the subject third-party
complaint (“TPC”) against CIGNA. The TPC seeks a declaration that “if . . . benefits are due to
Plaintiff, those benefits are payable solely by CIGNA” (Count I), and it asserts claims for
“equitable relief,” pursuant to 29 U.S.C. § 1132(a)(3)(ii), (Count II) and “indemnif[ication]”
(Count III). (TPC, ¶¶ 28, 30, 37.)
As grounds for these claims, the TPC avers the following. First, it alleges that
“CIGNA . . . issued a group life insurance policy, No. FLX964429, that was effective January 1,
2012 and [that] provides the sole source of funds for benefits payable under the plan” governing
Plaintiff’s claims. (TPC ¶ 14.) A copy of the group insurance policy (the “Policy”) and a copy
of a Group Life Insurance Certificate for the Policy are attached as parts of exhibit 2 to the TPC.
(Id.; ECF No. 134-2, Exhibit 2, at 1-20, 40-146.) Second, the TPC alleges that “[t]he terms of
the plan [governing Plaintiff’s claims] are referenced in a Wrap Around Document, titled
‘FRAM Group Operations, LLC, Group Benefits Plan (Effective January 1, 2012).’” (Id. at ¶
17.) A copy of that document is attached as exhibit 3 to the TPC. The document was signed and
executed on September 10, 2012. (ECF No. 134-3, Exhibit 3, at 21.) The TPC further alleges
that the Wrap Around Document “provides that all benefits payable ‘through a Group Insurance
Policy shall be paid solely pursuant to the terms of the Group Insurance Policy.’” (Id. at ¶ 18)
Third, the TPC alleges that “[o]n December 2, 2011, CIGNA accepted appointment as the
‘Claim Fiduciary’ . . . for [the] Employee Benefit Welfare Plan,” pursuant to which “CIGNA
agreed to . . . be responsible for adjudicating benefits under the Plan, and for deciding any
appeals of adverse determinations.” (Id. at ¶¶ 15-16.) A copy of the document titled “Employee
Welfare Benefit Plan Appointment of Claim Fiduciary” (the “Claim Fiduciary Appointment”) is
attached as part of Exhibit 1 to the TPC. (Id. at ¶ 12.) This Claim Fiduciary Appointment states
that CIGNA “shall have the authority, in its discretion, to interpret the terms of the Plan,
including the Policies; to decide questions of eligibility for coverage or benefits under the Plan;
and to make any related findings of fact.” (Id. at ¶ 16.)
Fourth, the TPC alleges that, after Mr. Woerner’s death, CIGNA “[a]s Claim
Fiduciary . . . made the determination that Plaintiff was not entitled to life insurance benefits
because Mr. Woerner did not satisfy the active service requirement.” (Id. at ¶ 23.) The TPC also
alleges that “CIGNA also denied Plaintiff’s claim because [she] had already received benefits
under an employer-provided life insurance policy that had been in effect prior to the formation of
FRAM.” (Id. at ¶ 24.) Finally, the TPC alleges that CIGNA “informed Plaintiff of its denial of
benefits under the plan.” (Id. at ¶ 25.)
CIGNA now moves to dismiss. It argues, inter alia, that the TPC ’s allegations, and
documents referenced therein, only establish that CIGNA was designated authority and bore
obligations with respect to the Policy that it issued and, by extension, with respect to the formal
plan that FRAM ultimately established and in which Mr. Woerner did not participate. (ECF No.
141-1, Defendant Life Insurance Company of North America’s Memorandum of Law in Support
of Its Motion to Dismiss (“Mov. Br.”), at 13.) Consequently, CIGNA argues, the TPC’s
allegations, even if taken as true, do not justify the inference that CIGNA bore an obligation or
possessed authority with respect to any informal plan that FRAM may have established and in
which Mr. Woerner did participate. (Id.) CIGNA asserts that, at minimum, the Third Circuit’s
holding in Woerner and its instructions to this Court compel such a conclusion.
In opposition, FRAM argues that the Third Circuit’s ruling does not foreclose its claims
against CIGNA. (ECF No. 146, Memorandum in Opposition to Third Party Defendant’s Motion
to Dismiss (“Opp’n Br.”), at 4.) Specifically, FRAM argues that, even in light of the Third
Circuit’s holding, the documents attached to the TPC may regarded as “surrounding
circumstances” in determining the terms of any informal plan in which Mr. Woerner
participated. (Id. at 4-5.) Thus, FRAM contends, those documents, and the allegations relating
thereto, could support a reasonable inference that CIGNA bore fiduciary, statutory, or
contractual obligations with regard to the purported informal plan governing Plaintiff’s claims.
To survive a Rule 12(b)(6) motion to dismiss, “a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft
v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (quoting Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). “A claim has
facial plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id. (quoting
Twombly, 550 U.S. at 556.)
When considering a Rule 12(b)(6) motion to dismiss, a court may consider allegations in
the complaint, documents attached thereto or specifically referenced therein, and matters of
public record. Pittsburgh v. W. Penn Power Co., 147 F.3d 256, 259 (3d Cir. 1998). A “court
must accept as true all factual allegations contained in the complaint and all reasonable
inferences that can be drawn therefrom, . . . view[ed] . . . in [a] light most favorable to the
plaintiff.” OFI Asset Mgmt. v. Cooper Tire & Rubber, 834 F.3d 481, 489 (3d Cir. 2016)
(citations omitted). On the other hand, it must “disregard rote recitals of the elements of a cause
of action, legal conclusions, and mere conclusory statements.” In re Vehicle Carrier Servs.
Antitrust Litig., 846 F.3d 71, 79 n. 4 (3d Cir. 2017) (quoting James v. City of Wilkes-Barre, 700
F.3d 675, 679 (3d Cir. 2012)).
The TPC’s allegations refer to, and rely upon, four documents: the Policy, the Wrap
Around Document, the Group Life Insurance Certificate, and the Claim Fiduciary Appointment.
The first two of these documents, the Policy and the Wrap Around Document, were clearly
created after Mr. Woerner’s death and, therefore, after Plaintiff’s benefits, if any, vested.
Therefore, consistent with the Third Circuit’s instructions, this Court may only regard those
documents as evidence of “the version of the Plan delivered to and executed by FRAM after Mr.
Woerner’s death” see Woerner, 658 F. App’x at 96. As a result, these documents may not be
considered in determining the existence or terms of any informal plan “at the time that Plaintiff’s
benefits, if any, vested,” see Id. at 97. Thus, viewing these documents in a light most favorable
to FRAM, a fact finder could only reasonably infer that they pertain to the formal plan that
FRAM ultimately established.
The same may be said of the Group Life Insurance Certificate and the Claim Fiduciary
Appointment. Although the Group Life Insurance Certificate is undated, it specifically provides
that “[i]f questions arise, the Policy will govern,” and it states that it merely “describes the
benefits and basic provisions of . . . coverage” under the Policy. (Exhibit 2, at 8.) Similarly,
although the Claim Fiduciary Appointment was signed in early December 2011, before Mr.
Woerner’s death, it clearly states that CIGNA’s “sole liability to the Plan and to Participants
[therein] and Beneficiaries [thereof]” is limited to “the payments of benefits provided with
respect to Policies issued by [CIGNA] to the Plan.” (Appointment Form, at 1.) In other words,
the appointment of authority and acceptance of obligations set forth in that document were
limited to plans which were funded by insurance policies which CIGNA had actually issued.
Therefore, viewing these documents in a light most favorable to FRAM, a fact finder could also
only reasonably infer that they pertain to the formal plan that FRAM ultimately established.
In sum, given the Third Circuit’s holding, this Court must conclude that the four
documents, and the allegations in the TPC pertaining thereto, cannot justify a reasonable
inference that CIGNA possessed authority or bore any obligation with respect to any informal
plan potentially governing Plaintiff’s claims. Consequently, based on the TPC’s allegations, this
Court must also conclude that no trier of fact could reasonably infer that CIGNA bore a
fiduciary, statutory, or contractual obligation to FRAM or Plaintiff with regard to any informal
plan. Therefore, the Court finds that FRAM has failed to plead sufficient factual content to
justify the inference that CIGNA is liable to FRAM under any of its theories.
The Supreme Court characterizes dismissal with prejudice as a “harsh remedy.” New
York v. Hill, 528 U.S. 110, 118 (2000). Such dismissal with prejudice is only appropriate on the
grounds of bad faith, undue delay, prejudice, or futility. Alston v. Parker, 363 F.3d 229, 236 (3d
Cir. 2004) (quoting Shane v. Fauver, 213 F.3d 113, 115 (3d Cir. 2000)). “When a plaintiff does
not seek leave to amend a deficient complaint after a defendant moves to dismiss it, the court
must inform the plaintiff that he has leave to amend within a set period of time, unless
amendment would be inequitable or futile.” Grayson v. Mayview State Hosp., 293 F.3d 103,
108 (3d Cir. 2002). Defendant points to no unpled facts that might allow an amended third-party
complaint against CIGNA to withstand a future motion to dismiss. This Court concludes,
therefore, that amendment is futile. Because amendment is futile, the third-party claim will be
dismissed with prejudice.
Accordingly, for the foregoing reasons, CIGNA’s motion to dismiss the TPC, pursuant to
Fed. R. Civ. P. 12(b)(6), is GRANTED, and the TPC is dismissed WITH PREJUDICE. An
appropriate order shall issue.
/s Stanley R. Chesler
STANLEY R. CHESLER
United States District Judge
Dated: October 4, 2017
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