Esposito v. Wal-Mart Stores, Inc. et al

Filing 32

MEMORANDUM ORDER AND OPINION re 27 Joint MOTION to Strike is DENIED as moot. Dfts' 19 MOTION to Dismiss (or alternatively, for Judgment on the Pleadings) as to Plaintiff's Third through Sixth Causes of A ction in Amended Complaint and 22 MOTION to Dismiss and to Strike Plaintiff's Jury Demand are DENIED as moot. Dft's 19 MOTION to Dismiss as to Plaintiff's Third through Sixth Causes of Action in Amended Complain t is GRANTED. 22 MOTION to Dismiss and to Strike Plaintiff's Jury Demand is GRANTED. Wal-Mart is TERMINATED. Dft's 20 MOTION to Strike Jury Demand in Plaintiff's Amended Complaint is GRANTED. Signed by District Judge Martin Reidinger on 8/19/2014. (klb)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
CIVIL CASE NO. 1:13-CV-98-MR

DOUGLAS ESPOSITO,

)
)
Plaintiff,
)
)
vs.
)
)
WAL-MART STORES, INC. and )
HARTFORD LIFE AND
)
ACCIDENT INSURANCE CO.,
)
)
Defendants.
)
___________________________ )

MEMORANDUM ORDER
AND OPINION

THIS MATTER is before the Court on Defendant Hartford’s Motion to
Dismiss as to Plaintiff’s Third through Sixth Causes of Action [Doc. 19];
Defendant Wal-Mart’s Motion to Dismiss [Doc. 22]; Defendants’ Joint
Motion to Strike Plaintiff’s Affidavit [Doc. 27]; and Defendant Hartford’s
Motion to Strike Plaintiff’s Jury Trial Demand [Doc. 20].
PROCEDURAL BACKGROUND
Plaintiff’s Amended Complaint was filed on June 14, 2013, setting
forth six causes of action, all pursuant to the Employee Retirement Income
Security Act (“ERISA”). [Doc. 17]. Plaintiff was an employee of Defendant
Wal-Mart Stores, Inc. (“Wal-Mart”). Defendant Hartford Life and Accident
Insurance Company (“Hartford”) issued a long-term disability insurance

policy to Wal-Mart to cover its employees, including Plaintiff. He contends
in this matter that he became totally disabled while working for Wal-Mart,
[Id.], and that Hartford wrongfully determined that Plaintiff was not totally
disabled. He asserts that Hartford’s determination was wrongful because it
had previously concluded that he was totally disabled and paid him shortterm benefits therefor. [Id.].
On July 1, 2013, Hartford moved to dismiss Plaintiff’s third through
sixth causes of action. [Doc. 19]. Additionally, Hartford moved to strike the
jury demand contained in Plaintiff’s Amended Complaint. [Doc. 20].

On

that same day, Wal-Mart moved to dismiss all of the claims against it
contained in Plaintiff’s Amended Complaint. [Doc. 22]. Like Hartford, WalMart moved to strike Plaintiff’s jury demand. [Id.].
Plaintiff responded to the Defendants’ motions to dismiss by
opposition memoranda and attachments filed July 19, 2013. [Docs. 23;
24].

One such attachment was an affidavit executed by the Plaintiff.

[Docs. 23-1; 24-1]. On July 29, 2013, Defendants filed a Joint Motion to
Strike the affidavit Plaintiff filed with his oppositional memoranda. [Doc.
27].

All of Defendants’ pending motions are now ripe for the Court’s

consideration.

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STANDARD OF REVIEW
To survive a Rule 12(b)(6) motion, a complaint's “[f]actual allegations
must be enough to raise a right to relief above the speculative level,” with
“enough facts to state a claim to relief that is plausible on its face.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007). Generally, when
ruling on a Rule 12(b)(6) motion, the Court must “accept as true all of the
factual allegations contained in the complaint.” Erickson v. Pardus, 551
U.S. 89, 94 (2007). The Court is not, however, required “to accept as true
allegations that are merely conclusory, unwarranted deductions of fact, or
unreasonable inferences” or “allegations that contradict matters properly
subject to judicial notice or by exhibit.” Veney v. Wyche, 293 F.3d 726, 730
(4th Cir. 2002) (internal quotation marks omitted).
DISCUSSION
The issues regarding Plaintiff’s first two causes of action can be
addressed summarily. These claims are, in substance, contract claims.
Plaintiff asserts that he was disabled and thus entitled to disability benefits
pursuant to the terms of the Plan. Defendant Hartford does not move to
dismiss these claims, conceding that they state a claim upon which relief
can be granted. Plaintiff concedes that these causes of action state no
claim against Defendant Wal-Mart, and consents to a dismissal thereof
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against Wal-Mart. [Doc. 24 at 1]. Therefore, these claims will be dismissed
as against Wal-Mart but not as to Defendant Hartford.
In his third cause of action, Plaintiff asserts a claim against both
Defendants for breach of fiduciary duty.

This and his remaining three

claims sound in equity. All of these claims are asserted pursuant to 29
U.S.C. § 1132(a)(3)(B) which states, in pertinent part, that a civil action
may be brought:
by a participant, beneficiary, or fiduciary to obtain other
appropriate equitable relief (i) to redress [any act or practice
which violates any provision of this subchapter or the terms of
the plan] or (ii) to enforce any provisions of this subchapter or
the terms of the plan[.]
Id., (emphasis added).
Turning to Plaintiff’s third cause of action, he alleges that:
39. Defendants have breached their fiduciary duty owed to
Plaintiff by failing to adequately investigate Plaintiff’s claim for
long term disability income benefits by not seeking diligently the
opinions of Plaintiff’s treating physicians and/or by failing to give
proper consideration of evidence produced in Plaintiff’s appeal
of Hartford’s wrongful denial of the long term disability income
benefits claim, thus depriving Plaintiff of an essential right under
subject policy.
[Id. at 7-8]. In short, Plaintiff has “repackaged” his denial of benefits claims,
alleged in his first two causes of action, into a breach of fiduciary duty claim
under count three. See Varity Corp. v. Howe, 516 U.S. 489, 513-15 (1996)
(discussing a beneficiary’s repackaging of his denial of benefits claim as a
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claim for breach of fiduciary duty).

The Supreme Court has cautioned

litigants against employing such pleading tactics, explaining that the
adjective “appropriate” appearing in § 1132(a)(3)(B) is intended to have
substantive meaning.

“[T]he statute authorizes ‘appropriate’ equitable

relief. … Thus, we should expect that where Congress elsewhere provided
adequate relief for a beneficiary's injury, there will likely be no need for
further equitable relief, in which case such relief normally would not be
‘appropriate.’” Varity Corp., 516 U.S. at 515; Korotynska v. Metropolitan
Life Ins. Co., 474 F.3d 101 (4th Cir. 2006). Plaintiff’s third claim is nothing
more than a redundant combination of his first and second causes of action
denominated as a breach of fiduciary obligation. In fact, Plaintiff concedes
this point in his brief, couching this claims as a refusal to pay “under the
plan.” [Doc.23 at 5]. Since Congress has provided Plaintiff avenues of
relief under 29 U.S.C. § 1132(a)(1)(B), it is not “appropriate” for him to seek
relief under § 1132(a)(3)(B) based upon the same core of operative facts.
Accordingly, the Court will grant Hartford’s Rule 12(b)(6) motion on this
claim.
Plaintiff’s breach of fiduciary claim against Defendant Wal-Mart fares
no better. Plaintiff asserts this claim as one for failing to follow the plan
documents. [Doc.23-2 at 7]. Of course, it is Hartford, not Wal-Mart, that
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Plaintiff claims is responsible for administering such claims.

Hence, in

addition to the reasons set out above, the Plaintiff’s basis for claiming a
fiduciary duty does not apply to Wal-Mart. For this reason the motion of
Defendant Wal-Mart to dismiss this claim will be granted, and Plaintiff’s
Third Cause of Action will be dismissed.
Plaintiff’s Fourth and Fifth Causes of Action, respectively, seek the
equitable remedies of reformation and estoppel. [Doc. 17 at 8-11]. Both
counts share a common theme: Plaintiff alleges the Defendants made
misrepresentations of fact to him. In relevant part, Plaintiff alleges:
55. Defendants informed Plaintiff that he would receive
disability benefits under subject policy so long as a doctor
determined he could not work due to disability. Defendant WalMart represented this to Plaintiff at open enrollment meetings
held periodically during his employment with Wal-Mart;
Defendant Hartford, through employee Travis Markle, made
similar representations to Plaintiff which Plaintiff relied upon to
form the belief that Plaintiff would continue to receive disability
income benefits during the time that a doctor determined he
was unable to work due to disability.
[Id. at 10-11] (emphasis added).1

1

The Plaintiff makes these same allegations in his Affidavit with slightly more detail.
[Docs. 23-1 at 1; 24-1 at 1]. As stated above, the Defendants have moved to strike
Plaintiff’s Affidavit. [Doc. 27]. The Plaintiff’s Affidavit is not an exhibit attached to any
pleading of record. The Court will not look beyond the pleadings filed in this case, and
therefore will not consider Plaintiff’s Affidavit, mindful that doing so would be to convert
Defendants’ Rule 12(b)(6) Motions into motions for summary judgment under
Fed.R.Civ.P. 56. Since the Court will not consider Plaintiff’s Affidavit, it will deny the
Defendants’ Motions to Strike Plaintiff’s Affidavit as moot.
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There are several problems with this claim. At the outset it must be
noted that Plaintiff has asserted this as a claim for misrepresentation, so it
must be pleaded with particularity as required by Rule 9.

Plaintiff’s

allegations are, however, bare bones. He alleges that it was represented
that he “would receive disability benefits.”

This, however, is not a

representation of fact, but rather a promise of what he would be provided in
the future. To succeed on a misrepresentation claim, Plaintiff would have
to show a false representation or concealment of a material past or present
fact. Forstmann v. Culp, 648 F.Supp. 1379, 1386 (M.D.N.C. 1986).
Therefore these allegations fail to state a claim and this cause of action
must fail.
Plaintiff also alleges that the Defendants made misrepresentations to
him that he “would continue to receive disability income benefits … so long
as a doctor determined he could not work due to disability.” [Doc. 17 at 1011]. As stated above, this is not a representation of a subsisting fact.
Moreover, it is not false, as far as it goes.

A doctor’s diagnosis of a

claimant’s disability (and all accompanying medical documentation
contained in the participant’s proof of loss) is the triggering event bringing
into play an insurance company’s obligation to provide disability benefits.
[Doc. 18-1 at 32]. In fact, Plaintiff discloses in his Amended Complaint that
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he understood and complied with this very process by applying for and
receiving total disability benefits from Hartford for some period of time.
[Doc. 17 at 4-5]. To the extent that Plaintiff may have been under the
misapprehension that his doctor’s diagnosis of total disability was
irrefutable by Hartford, Plaintiff has failed to allege any facts that any agent
of Hartford did or said anything to leave Plaintiff with such a belief. This
fails to meet Rule 9’s pleading standard. Moreover, where a complaint
pleads facts that may be “merely consistent with a defendant's liability, it
stops short of the line between possibility and plausibility of entitlement to
relief.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). It is in this way that
Plaintiff’s allegations surrounding his fourth and fifth claims are insufficient
“to raise a right to relief above the speculative level[.]” Twombly, 550 U.S.
at 555.
The crux of Plaintiff’s Fourth and Fifth Causes of Action is that he was
not provided with a copy of the insurance policy and with any summary
plan documents.2 [Doc. 17 at 9]. Pursuant to both the ERISA statute, 29
U.S.C. § 1002(16)(A)(i) and (ii), and the policy itself, [Doc. 18-1 at 36], the
ERISA framework provides a participant a remedy under 29 U.S.C. §
2

Conspicuously absent from Plaintiff’s allegations is an assertion that he reasonably
relied on the purported misrepresentations. [Doc. 17 at 9]. Since the plan documents
are statutorily available, any reliance on the spoken description of the plan could not be
reasonable.
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1132(a)(1)(A) when a plan administrator refuses to supply requested
documentation to a participant pursuant to § 1132(c). Plaintiff, however,
has failed to allege facts that would satisfy a necessary condition precedent
to his recovery under this “failure to furnish” claim. Before there is any
liability for the failure to provide documents, the participant must specifically
request from the administrator the documentation in question. Wesley v.
Monsanto Co., 710 F.2d 490, 491 (10th Cir. 1983) (because the participant
had not requested a copy of the plan, she could not recover damages for
defendant’s failure to provide a copy). Plaintiff makes several allegations
that he was not provided a copy of the summary documents or the policy.
[Docs. 17 at 9; 24 at 6; 24 at 10]. Conspicuously absent from Plaintiff’s
pleadings, however, is any allegation that Plaintiff ever requested copies.
For these reasons, Plaintiff’s Fourth and Fifth Causes of Action will be
dismissed.
Plaintiff’s Sixth Cause of Action is the equitable claim of unjust
enrichment seeking “restitution in the amount of all premium payments paid
to Defendants[.]” [Doc. 17 at 12]. Plaintiff concedes that this does not
state a claim against Defendant Wal-Mart. [Doc. 24 at 1]. In support of
bringing this claim against Hartford, Plaintiff cites to the Fourth Circuit
decision of McCravy v. Metropolitan Life Ins. Co., 690 F.3d 176 (4th Cir.
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2012), for the proposition “that a return of premiums for unjust enrichment
is an appropriate remedy if this Court deems fit.” [Doc. 23 at 13]. Plaintiff’s
reliance on McCravy is entirely misplaced.
In McCravy, defendant insurance company accepted premiums from
Ms. McCravy to provide life insurance coverage for her daughter under an
employee benefit plan up until the daughter’s death. The plan’s terms
excluded coverage for a participant’s child who has reached age 19 (age
24 if the child was still school). Id. at 177. Ms. McCravy’s daughter died at
age 25. Id. When plaintiff’s claim for the life insurance benefits was denied
by the defendant, she filed suit. Plaintiff had no available remedy under
ERISA, 29 U.S.C. § 1132(a)(1)(B), for plan benefits because the plan’s
terms clearly provided that the plaintiff’s daughter was not eligible for
coverage at the time of her death. Id. However, the Court held that the
defendant’s conduct in (erroneously) accepting the plaintiff’s premiums for
her daughter beyond the time when coverage was authorized created a set
of facts that could form the basis for an equitable relief claim under §
1132(a)(3). Id. at 182. There was no claim pursuant to the plan because
the plan provided no coverage. There was, however, a claim in equity
because of the wrongful acceptance of the premiums for which plaintiff
received no coverage.
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In the present matter, Plaintiff’s sixth claim fails for two reasons.
First, as discussed above, he has an appropriate denial of benefits remedy
under 29 U.S.C. § 1132(a)(1)(B). Second, Hartford has not been unjustly
enriched. Plaintiff has reaped the benefits of his contractual relationship
with Hartford: Plaintiff paid policy premiums to Hartford and Hartford, at
least for a period of time, paid disability benefits to Plaintiff. As pointed out
by Hartford, Plaintiff misunderstands the nature of disability insurance
coverage.
The concept that a covered participant is entitled to a premium
refund just because he never collects (or ceases to collect)
benefits is contrary to the basic insurance model, built upon the
premise that all participants pay a premium for coverage, which
creates a pool of resources available for the subset of
participants that have to bring a claim.
[Doc. 21 at 21 (footnote omitted)]. To adopt Plaintiff’s theory underlying his
unjust enrichment claim would be to stand insurance law on its head.
Unlike the plaintiff in McCravy, Plaintiff herein paid premiums for certain
specified coverage in accord with a contract of insurance. Either Plaintiff is
entitled to payment under the terms of the Plan or he is not. If he is not, he
is not entitled to reimbursement of the premiums, because he actually had
whatever coverage the Plan provided and that he had paid for.
Accordingly, the Court will grant Hartford’s Rule 12(b)(6) motion on this

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claim and Plaintiff’s Sixth Cause of Action shall be dismissed.

Plaintiff

makes no claim against Defendant Wal-Mart in this Sixth Cause of Action.
The Defendants also presented motions for judgment on the
pleadings. These are premature because the pleadings have not closed. 3
These are, however, the functional equivalent of the Defendants’ motions
to dismiss pursuant to Rule 12(b). Rule 12(b) defenses shall be made
before pleading if a further pleading is permitted, but Rule 12(h)(2) provides
that the defense of failure to state a claim upon which relief can be granted
may be raised by Rule 12(c) after the close of the pleadings. In light of the
Court’s ruling on the 12(b) motions, the 12(c) motions will be denied as
moot.
The Defendants have also moved to strike Plaintiff’s jury demand.
Plaintiff has presented only an abbreviated response to this motion. It is
well settled that an action pursuant to ERISA is to be addressed by the
Court without a jury. Berry v. Ciba–Geigy Corp., 761 F.2d 1003, 1006 (4th
Cir. 1985); Biggers v. Wittek Indus., 4 F.3d 291, 298 (4th Cir. 1993); Ford v.
Hartford Life Ins. Co., 2009 US Dist. LEXIS 29711 (W.D.N.C. 2009). Even
if Plaintiff’s claims under (a)(3) had survived, these would not entitled

3

The motion for judgment on the pleadings of Defendant Wal-Mart is particularly
curious in light of the fact that it is Wal-Mart that has not answered, thus making its own
motion premature.
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Plaintiff to a jury. Phelps v. C.T. Enterprises, Inc., 394 F.3d 213, 222 (4th
Cir. 2005). For these reasons the Defendants’ motion will be granted.
In closing, the Court will note that by pleading this straight forward
ERISA benefits case as set forth in the Plaintiff’s Complaint, and including
tenuous and unsupported claims, the Plaintiff has only served to bog down
and delay this matter. The parties are encouraged not to plead in this
manner.
ORDER
IT IS, THEREFORE, ORDERED that Defendants’ Joint Motion to
Strike Plaintiff’s Affidavit [Doc. 27] is DENIED as moot. Additionally,
Defendants’ Motions for Judgment on the Pleadings pursuant to
Fed.R.Civ.P. 12(c) [Docs. 19; 22] are DENIED as moot.
IT IS FURTHER ORDERED that Defendant Hartford’s Motion to
Dismiss as to Plaintiff’s Third through Sixth Causes of Action [Doc. 19] is
GRANTED and Plaintiff’s Third through Sixth Causes of Action are
DISMISSED as to Defendant Hartford. Additionally, Defendant Wal-Mart’s
Motion to Dismiss as to all allegations of Plaintiff’s Amended Complaint
[Doc. 22] is GRANTED and Plaintiff’s claims against Defendant Wal-Mart
are DISMISSED and Defendant Wal-Mart is TERMINATED as a party
defendant to this action.
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FINALLY, IT IS ORDERED that the Defendant Hartford’s Motion to
Strike Plaintiff’s Jury Trial Demand [Doc. 20] is GRANTED and Plaintiff’s
Jury Trial Demand is STRICKEN.
IT IS SO ORDERED.

Signed: August 19, 2014

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