NGUYEN v. AMERICAN UNITED LIFE INSURANCE COMPANY
Filing
13
MEMORANDUM OPINION AND ORDER signed by CHIEF JUDGE WILLIAM L. OSTEEN JR. on 02/10/2015. For the reasons set forth herein, IT IS HEREBY ORDERED that Defendant's Motion to Dismiss (Doc. 8 ) is GRANTED in that Plaintiff 9;s state law claims are preempted by ERISA and therefore dismissed. FURTHER that entry of judgment on this dismissal is stayed for a period of twenty days from the filing of this Memorandum Opinion and Order to allow Plaintiff to file an amended complaint asserting her allegations as ERISA claims. If no amended complaint is filed within this time frame, judgment will be entered for Defendant.(Taylor, Abby)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
PHONEPHET NGUYEN,
Plaintiff,
v.
AMERICAN UNITED LIFE
INSURANCE COMPANY, doing
business as ONE AMERICA,
Defendant.
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1:14CV687
MEMORANDUM OPINION AND ORDER
OSTEEN, JR., District Judge
Plaintiff Phonephet Nguyen (“Plaintiff”) filed the present
action in the General Court of Justice, Superior Court Division,
Guilford County, North Carolina, against Defendant American
United Life Insurance Company (“Defendant”).
Defendant removed
the action to this court on August 14, 2014, based on both
federal question and diversity jurisdiction.1 (Pet. for Removal
(Doc. 1).) Presently before this court is Defendant’s Motion to
Dismiss (Doc. 8). This court has carefully considered
Defendant’s Motion, Defendant’s Supporting Brief (Def.’s Br.
1
The federal question stems from ERISA preemption and the
parties in the present action are completely diverse. Plaintiff
is a North Carolina resident and Defendant, a corporation, is a
citizen of Indiana. The amount in controversy exceeds the
statutory minimum for diversity. (Pet. for Removal (Doc. 1).)
(Doc. 9)), Plaintiff’s Response (Pl.’s Resp. (Doc. 10)), and
Defendant’s Reply (Def.’s Reply (Doc. 11)), and concludes that
Plaintiff’s Complaint asserts only state law claims which are
preempted by the Employee Retirement Security Act of 1974
(“ERISA”). Defendant’s motion is now ripe for adjudication, and
for the reasons stated fully below, this court will grant
Defendant’s motion in part and grant Plaintiff’s request for
leave to amend her complaint.
I.
BACKGROUND
Plaintiff’s mother was employed by Medi Manufacturing, Inc.
(“Medi”) in Whitsett, North Carolina. (Complaint (“Compl.”)
(Doc. 5) ¶ 6.) Medi offered life insurance to its employees
through Defendant as an employee benefit. (Id. ¶ 7.)
Plaintiff’s mother purchased this life insurance and premiums
were deducted from Plaintiff’s mother’s paycheck. (Id. ¶ 8.)
Plaintiff is beneficiary of this policy.2 (Id. ¶ 9.)
Plaintiff’s
mother, as the insured party, was able to apply for a conversion
2
Group policy 612440. (Compl. (Doc. 5) ¶ 10.)
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from the group policy to an individual life insurance plan
within thirty-one days of termination of employment.3 (Id.)
Plaintiff’s mother’s last day of work (her termination of
employment) for Employer was October 31, 2013. (Id. ¶ 12.)
Defendant received Plaintiff’s mother’s conversion application
on November 27, 2013, within the thirty-one days allowed to
apply for conversion. (Id. ¶ 13.) Defendant denied the
application based on timeliness stemming from Medi reporting to
Defendant a termination date of October 7, 2013.
(Id. ¶ 14.)
Medi mailed a letter to Defendant on January 14, 2014, in an
attempt to correct the error in date of termination. (Id. ¶ 15.)
Plaintiff’s mother passed away on January 24, 2014. (Id. ¶ 17.)
To date, Defendant has not corrected the termination date.
Plaintiff filed this action in an effort to force Defendant to
correct the application error, effectuate the life insurance
policy, and pay the death benefit. (Id. at 3.) Plaintiff alleges
Defendant’s actions in failing to correct the date on the life
3
Courts are split on whether or not a converted policy is
covered by ERISA when the original group policy was covered by
ERISA. This court does not need to address this issue, because
in the present action, the issue is not a converted policy but
the right to covert. “ERISA governs the right of conversion to
an individual policy.” White v. Provident Life & Acc. Ins. Co.,
114 F.3d 26, 28 (4th Cir. 1997).
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insurance application constitute breach of contract and unfair
and deceptive trade practices.4 (Id. ¶ 29.)
II.
LEGAL STANDARD
“To survive a 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 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)).
A claim is facially plausible
provided the plaintiff provides enough factual content to enable
the court to reasonably infer that the defendant is liable for
the misconduct alleged.
Id.
The pleading setting forth the
claim must be “liberally construed” in the light most favorable
to the non-moving party, and allegations made therein are taken
as true.
Jenkins v. McKeithen, 395 U.S. 411, 421 (1969).
However, the “requirement of liberal construction does not mean
that the court can ignore a clear failure in the pleadings to
4
Plaintiff uses the word neglect in her Complaint (Compl.
(Doc. 5) ¶ 24). Because under the alleged facts, a negligence
claim would be preempted by ERISA, this court will not parse out
whether or not Plaintiff intended to state a separate tort claim
or simply a contract breach and unfair and deceptive trade
practice claim. See e.g., Pilot Life Ins. Co. v. Dedeaux, 481
U.S. 41 (1987) (holding that common law causes of action based
on alleged improper processing of a benefit claim under an
employee benefit plan, “relate to” an employee benefit plan and
fall under ERISA's preemption clause).
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allege any facts [that] set forth a claim.”
Estate of Williams-
Moore v. Alliance One Receivables Mgmt., Inc., 335 F. Supp. 2d
636, 646 (M.D.N.C. 2004).
In ERISA litigation, the law is clear that a state law
claim that is completely preempted by ERISA does state a claim
upon which relief can be granted.
[T]he doctrine of complete preemption serves as a
corollary to the well-pleaded complaint rule: because
the state claims in the complaint are converted into
federal claims, the federal claims appear on the face
of the complaint. The Supreme Court has determined
that ERISA's civil enforcement provision, § 502(a),
completely preempts state law claims that come within
its scope and converts these state claims into federal
claims under § 502. Thus, when a complaint contains
state law claims that fit within the scope of ERISA's
§ 502 civil enforcement provision, those claims are
converted into federal claims, and the action can be
removed to federal court.
Darcangelo v. Verizon Commc'ns, Inc., 292 F.3d 181, 187 (4th
Cir. 2002)(internal citations omitted).
III. ANALYSIS
Congress enacted ERISA to provide a uniform federal
regulatory regime over employee benefit plans. Aetna Health Inc.
v. Davila 542 U.S. 200, 208 (2004). To ensure such uniformity,
Congress included an expansive preemption provision within
ERISA.
Id.
Specifically, Congress enacted that ERISA “shall
supercede any and all State laws insofar as they may now or
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hereafter relate to any employee benefit plan . . . .” 29 U.S.C.
¶ 1144(a). In addition, the United States Supreme Court and the
Fourth Circuit have consistently held that common law claims
stemming from employee benefit claims are preempted by ERISA.5
Under ERISA, a civil action may be brought
(1)
by a participant or beneficiary—
(A) for the relief provided for in subsection
(c) of this section, 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.
29 U.S.C. § 1132.
Plaintiff’s claims stem from Defendant’s
failure to correct her mother’s termination date which is
integral to a successful life insurance conversion for Plaintiff
as her mother’s beneficiary. In essence, Plaintiff is suing to
recover benefits due under Medi’s life insurance plan. Defendant
alleges that Medi’s life insurance offering is governed by ERISA
and Plaintiff does not contest this assertion. (Def.’s Br. (Doc.
9) at 1; Pl.’s Resp. (Doc. 10) at 1.) The record supports the
contention that Plaintiff’s state law claims are “to recover
5
See, e.g., Pilot Life, 481 U.S. 41 (1987) (state common
law breach of contract, fraud, and bad faith claims preempted by
ERISA); Powell v. Chesapeake & Potomac Tel. Co., 780 F.2d 419,
422 (4th Cir. 1985) (state law claims based on the
maladministration of employee benefits preempted by ERISA).
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benefits due to him under the terms of the plan,” and are,
therefore, completely preempted by ERISA.
The Supreme Court has explicitly stated that:
[T]he ERISA civil enforcement mechanism is one of
those provisions with such extraordinary pre-emptive
power that it converts an ordinary state common law
complaint into one stating a federal claim for
purposes of the well-pleaded complaint rule.6
Aetna Health, 542 U.S. at 209 (internal quotations and citations
omitted). Under the Aetna analysis, this court finds it
appropriate to convert Plaintiff’s state law claims to federal
claims under ERISA. Thus, this court will grant Defendant’s
Motion to Dismiss (Doc. 8) and dismiss Plaintiff’s state law
claims because they are preempted by ERISA. However, this
court’s analysis does not end there.
In Plaintiff’s response (Doc. 10) to Defendant’s Motion to
Dismiss, Plaintiff requests that this court either order or
allow an amendment in the pleadings instead of dismissal.
Defendant concurs that Plaintiff should be “permitted to explore
‘potential redress’” and allowed leave to amend her complaint to
6
“The presence or absence of federal-question jurisdiction
is governed by the ‘well-pleaded complaint rule,’ which provides
that federal jurisdiction exists only when a federal question is
presented on the face of the plaintiff's properly pleaded
complaint.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392
(1987).
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state only ERISA causes of action. (Def.’s Reply (Doc. 11) at
2.) This court agrees with Defendant and finds Plaintiff’s
request appropriate in the present action. The decision to grant
a party leave to amend its pleadings rests with the sound
discretion of the district court. See, Sandcrest Outpatient
Servs. v. Cumberland Cnty. Hosp. Sys., 853 F.2d 1139, 1148 (4th
Cir. 1988).
This court therefore finds that Defendant’s motion to
dismiss should be granted as Plaintiff’s claims as presently
alleged are all asserted pursuant to state law which is
preempted by ERISA.
This court will stay entry of judgment as
to the Complaint for a period of twenty days, during which time
Plaintiff may file an amended complaint asserting such claims as
may be appropriate under ERISA.
If Plaintiff files an amended
complaint, Defendant may file an answer or other responsive
pleading as appropriate.
If Plaintiff fails to file an amended
complaint, this action will be dismissed.
IV.
CONCLUSION
For the reasons set forth herein, IT IS HEREBY ORDERED that
Defendant’s Motion to Dismiss (Doc. 8) is GRANTED in that
Plaintiff’s state law claims are preempted by ERISA and
therefore dismissed.
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IT IS FURTHER ORDERED that entry of judgment on this
dismissal is stayed for a period of twenty days from the filing
of this Memorandum Opinion and Order to allow Plaintiff to file
an amended complaint asserting her allegations as ERISA claims.
If no amended complaint is filed within this time frame,
judgment will be entered for Defendant.
This the 10th day of February, 2015.
_______________________________________
United States District Judge
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