CHANG v. PRUDENTIAL INSURANCE COMPANY OF AMERICA et al

Filing 8

OPINION. Signed by Judge Claire C. Cecchi on 1/30/17. (sr, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

HEP1NG CHANG,

Civil Action No.: 16-cv-3351
Plaintiff
OPINION

V.

PRUDENTIAL INSURANCE COMPANY OF
AMERICA, Jll’J LIU, JOHN DOE, and JANEt
DOE,
Defendants.
CECCHI, District Judge.
I.

INTRODUCTION

This matter comes before the Court on the motions of Defendants Jin Liu (“Liu”) (ECF
No. 5) and Prudential Insurance Company of America (“Prudential”) (ECF No. 6) to dismiss the
Complaint (ECF No. 1-1). PlaintiffHeping Chang (“Plaintiff’) is proceeding pg se. The Court
has considered the submissions made in support of the instant motions. Plaintiff has not appeared
or opposed either motion. The motions are decided without oral argument pursuant to Fed. R. Civ.
P. 78(b).’ For the reasons set forth below, Defendants’ motions are GRANTED.
The Court has jurisdiction pursuant to 2$ U.S.C.
II.

§ 1331.

BACKGROUND
In deciding the pending motion, the Court accepts as true all well-pleaded factual

1

The Court considers any new arguments not presented by the parties to be waived.
$
Brenner v. Local 514, United Bhd. of Carpenters & Joiners of Am., 927 F.2d 1283, 1298 (3d Cir.
1991) (“It is well established that failure to raise an issue in the district court constitutes a waiver
of the argument.”).

allegations in the complaint and draws all reasonable inferences in Plaintiffs favor.
Plaintiff was enrolled in a Prudential Retirement 401(k) Plan (the “Plan”) administered by
Prudential. (Compi.

¶

5). The Plan’s governing documents indicate that it is governed by the

Employee Retirement Income Security Act (“ERISA”), 29 U.S.C.

§

1001 et çg (Cert. of Ashley

M. Pappas, Esq. Ex. 3 at 2).2 Before May 23, 2014, Plaintiffs account in the Plan (the “Account”)
had a value of $164,375.00. ([çj.,

¶

6). On May 23, 2014, Prudential distributed a check for

$135,620.63 to Liu, representing the balance of the Account after an early termination penalty was
assessed. (Id.

¶

7). Although the Complaint is silent as to the nature of Plaintiffs and Liu’s

relationship, Liu claims to be Plaintiffs ex-wife. (Liu’s Br. at 1).
Liu allegedly admitted to Plaintiff on July 2, 2015, that she had (1) stolen Plaintiffs identity
in order to terminate the Account and receive the proceeds and (2) had filed a false tax return for
the 2014 fiscal year. (Compi.

¶ 8-9).

On the same day, Liu allegedly issued “two checks in the

amount of $20,000.00 to repay the $164,375.00 she stole from Plaintiff’ but had her bank stop
payment on the checks. (Id.

¶J 11-12).

Plaintiff filed suit against all Defendants in New Jersey Superior Court, Middlesex County,
on April 27, 2016. (ECF No. 1-1). The Complaint alleges Prudential failed to take the proper
steps to ensure the person terminating the Account was Plaintiff rather than Liu, and brings claims
for breach of fiduciary duty (Count One) and negligence (Count Two) against Prudential on this
basis. (Compi.

¶J

14-19). Plaintiff also brings claims against both Prudential and Liu for fraud

(Count Three) and “Thief’ (Count Four), and against Liu alone for “Knowingly Writing Two Bad
Checks” (Count Five) and “Intentional Misrepresentation” (Count Six). (Id.

2

¶J 20-31).

The Court may consider the Plan’s governing documents as “integral to or explicitly
relied upon in the complaint. without converting the motion to dismiss into one for summary
judgment.” In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997).
.

.

2

Prudential removed the action to this Court on June 9, 2016, invoking federal question
jurisdiction. (ECF No. 1). Although the Complaint purports to bring only state law claims,
Prudential contends the Court has jurisdiction because Plaintiffs state law claims against it relate
to 401(k) disbursements and are thus wholly preempted by ERISA. (Id. ¶J 7-13). Also on June 9,
Prudential served the Notice of Removal on Plaintiff by mail to two addresses (including the one
listed in the Complaint) as well as by email. (ECF No. 1). Liu appeared and moved to dismiss on
June 23, and served a copy of the motion on Plaintiff to the same two addresses and email address.
(ECF Nos. 4-5). Prudential moved to dismiss separately on June 29. (ECF No. 6). Plaintiff has
not appeared or responded in any way to either motion, nor has he moved to remand the case to
New Jersey Superior Court, Middlesex County.
III.

LEGAL STANDARD
For a complaint to survive dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6),

it “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible

on its face.” Ashcrofl v. Iqbal, 556 U.S. 662 (2009) (quoting Bell Ati. Corp. v. Twombly, 550
U.S. 544, 570 (2007)). In evaluating the sufficiency of a complaint, the Court must accept all wellpleaded factual allegations in the complaint as true and draw all reasonable inferences in favor of
the non-moving party.

$ Phillips v. Cty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008).

“Factual allegations must be enough to raise a right to relief above the speculative level.”
Twombly, 550 U.S. at 555. “A pleading that offers labels and conclusions will not do. Nor does
a complaint suffice if it tenders naked assertion[s] devoid of further factual enhancement.” Iqbal,
556 U.S. at 678 (internal citations omitted). However, “the tenet that a court must accept as true
all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare
recitals of the elements of a cause of action, supported by mere conclusory statements, do not

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suffice.”

I4 Thus, when reviewing complaints for failure to state a claim, district courts should

engage in a two-part analysis: “First, the factual and legal elements of a claim should be
separated.... Second, a District Court must then determine whether the facts alleged in the
complaint are sufficient to show that the plaintiff has a ‘plausible claim for relief.” See Fowler
v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009) (citations omitted).
A p

litigant’s complaint is held to “less stringent standards than formal pleadings

drafled by lawyers.” Haines v. Kemer, 404 U.S. 519, 520-21 (1972). Courts have a duty to
construe pleadings liberally and apply the applicable law, irrespective of whether a pro se litigant
has mentioned it by name. Mala v. Crown Bay Marina. Inc., 704 f.3d 239, 244 (3d Cir. 2013).
The Court may not ordinarily dismiss the Complaint for failure to state a claim merely
because a plaintiff has failed to oppose the motion to dismiss. Stackhouse v. Mazurkiewicz, 951
F.2d 29, 30 (3d Cir. 1991).

Rather, even absent opposition, the Court must “consider[]

substantively” whether the Complaint states a claim upon which relief may be granted. Id.
IV.

DISCUSSION

A.

Subject Matter Jurisdiction
1.

Claims against Prudential

The Court has subject matter jurisdiction over “all civil actions arising under the
Constitution, laws, or treaties of the United States.” 28 U.S.C.

§ 1331. Ordinarily, an action does

not arise from the laws of the United States unless a plaintiffs well-pleaded complaint, on its face,
raises issues of federal law.

Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987).

However, “causes of action within the scope of the civil enforcement provisions of [29 U.S.C.

§

1132(a), are] removable to federal court” because Congress, through ERISA, has so completely
preempted state law governing employee benefit plans that “any civil complaint raising this select

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group of claims is necessarily federal in character.” Id. at 63-64, 66; accord Dukes v. U.S.
Healthcare, Inc., 57 F.3d 350, 355 (3d Cir. 1995) (“[T]he Supreme Court has recognized a limited
exception to the well-pleaded complaint rule for state law claims which fit within the scope of [29
U.S.C.

§ 1132.]”). Therefore, Plaintiffs claims against Prudential are removable if they fall within

the scope of 29 U.S.C.
29 U.S.C.
beneficiary.

.

.

§ 1132(a).

§ 1132(a) provides that “[a] civil action maybe brought (1) by a participant31 or

(B) to recover benefits due to him under the terms of his plan, to enforce his rights

under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.”
Here, Plaintiff seeks to recover from Prudential the $164,375.00 from the Account that he claims
he lost when Prudential improperly distributed his assets to Liu. Therefore, Plaintiffs claims
against Prudential are “necessarily federal in character” and are thus removable.

Metropolitan

Life Ins. Co., 481 U.S. at 63-64.
2.

Claims against Liu

Liu argues the Court lacks supplemental jurisdiction over Plaintiffs state law claims
against her. (Liu’s Br. at 10-1 1). Liu further argues that Plaintiff has failed to effect proper
service of process on her. (Id. at 10). However, as explained below, the Court herein dismisses
all claims that are federal in character. See

a Part W.B-C. Therefore, the Court need not reach

these issues because the Court declines to exercise whatever supplemental jurisdiction it may or

A “participant” is “any employee or former employee of an employer, or any member or
former member of an employee organization, who is or may become eligible to receive a benefit
of any type from an employee benefit plan which covers employees of such employer or members
of such organization, or whose beneficiaries may be eligible to receive any such benefit.” 29
U.S.C. § 1002(7). Plaintiff appears to fit this definition.
Prudential’s Notice of Removal also makes this argument (ECf No. 1
Prudential does not move to dismiss on these grounds.
5

¶J 14-30), but

may not have over the remaining state law claims against Liu.
B.

28 U.S.C.

§ 1367(c).

Preemption of State Law Claims

A state law is preempted by ERISA if it “relates to employee benefit plans[,j” unless it is
based on a state law regulating insurance. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45 (1987)
(citing 29 U.S.C.

§ 1144(a)) (internal quotations and alterations omitted). “{R]elates to” is

interpreted “in the normal sense of the phrase,” meaning “if it has a connection with or reference
to” an employee benefit plan. Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739
(1985) (internal citation and quotation omitted).

Plaintiffs claims against Prudential center on Prudential’s alleged disbursement of the
Account’s assets to Liu. Therefore, the Court finds the alleged state law claims relate to employee
benefit plans, and are preempted by ERISA. See also Estate of Jennings v. Delta Air Lines, Inc.,
126 F. Supp. 3d 461 (D.N.J. 2015) (“[$]tate law causes of action, such as negligence for failure to
pay benefits under the plan ‘relate to’ the plan and are preempted by ERISA.”).
C.

The Court Does Not Construe ERISA Claims

The Court is mindful of its obligation to construe p ç complaints liberally and determine
whether Plaintiff has pleaded sufficient factual content to state claims under laws other than the
ones he has mentioned by name. See Mala, 704 F.3d at 244. However, the Third Circuit appears
to discourage district courts from recasting state law claims as ERISA claims rather than
dismissing them outright as preempted. In Carducci v. Aetna U.S. Healthcare, the district court
declined to dismiss state law claims it found to be preempted by ERISA, electing to “treat the
complaints as alleging state claims now transformed into federal ERISA claims[.]” 247 F. Supp.
2d 596, 607 (D.N.J. 2003).

The Third Circuit reversed, noting that it found “persuasive”

defendants’ arguments that “the District Court should have dismissed the claims entirely[.]”

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Levine v. United Healthcare Corp., 402 F.3d 156 (3d Cir. 2005). Thus, courts within the Third
Circuit typically dismiss the preempted state law claims and grant leave to amend the complaint
to plead ERISA claims, so as to provide defendants with proper notice ofthe nature of these claims.
See, e.g., Estate of Jennings v. Delta Air Lines, Inc., 126 F. Supp. 3d at 471 (collecting cases;
rejecting Plaintiffs request to convert preempted state law claims into ERISA claims and granting
leave to amend the complaint). This approach has been followed even when a plaintiff was acting
pse. Martellacci v. Guardian Life Ins. Co. of Am., No. 08-2541, 2009 WL 440289, at *4 (E.D.
Pa. Feb. 19, 2009).
With repleading, Plaintiff may or may not be able to assert claims “to recover benefits due
to [Plaintiff] under the terms of his plan, to enforce his rights under the terms of the plan, or to
clarify his rights to future benefits under the terms of the plan” pursuant to 29 U.S.C.

§ 1 132(a)(1)(B); and/or claims based on Prudential’s alleged violation of fiduciary duties under
29 U.S.C.

§ 1104(a). For this reason, the Court dismisses the state law claims against Prudential

and allows Plaintiff to replead claims under ERISA. Accordingly, Counts One and Two are
dismissed as preempted.

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V.

CONCLUSION
For the reasons above, Defendants’ motions to dismiss are GRANTED without prejudice.

However, the Court grants Plaintiff 30 days from the date of this Opinion to file an amended
complaint to address the pleading deficiencies described herein.
In light of Plaintiffs failure to oppose the present motions, Plaintiff is reminded of his
continuing obligation to pursue this case diligently, and is advised that failure to do so may result
in his case being dismissed with prejudice for failure to prosecute. See Fed. R. Civ. P. 41(b).
An appropriate order accompanies this Opinion.

CLAIRE C. CECCHI, U.S.D.J.
Dated:

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