Colbert et al v. Prudential Insurance Company of America
Filing
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Opinion and Order. Defendant's Motion to Dismiss (Related doc # 7 ) is granted in part and denied in part. The Court grants Plaintiff leave until 11/22/2013 to amend the Complaint for Count I to conform with ERISA. Judge Christopher A. Boyko on 11/14/2013. (H,CM)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
THE ESTATE OF WARREN
V. COLBERT JR., et al.,
Plaintiffs,
vs.
THE PRUDENTIAL INS. CO.
OF AMERICA,
Defendants.
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CASE NO. 1:13CV00423
JUDGE CHRISTOPHER A. BOYKO
OPINION AND ORDER
CHRISTOPHER A. BOYKO, J.:
This matter comes before the Court on Defendant The Prudential Insurance Company
of America’s (hereinafter “Defendant Prudential”) Motion (ECF DKT # 7) to Dismiss
Pursuant to FRCP 12(B)(6). Defendant Prudential asserts that Plaintiff Estate of Warren V.
Colbert’s (hereinafter “Plaintiff”) claims are preempted by ERISA. Defendant Prudential’s
Motion is granted in part and denied in part.
I. BACKGROUND
According to Plaintiff’s Complaint, Warren Colbert (“Colbert”) had a group life
insurance policy, paid for by his employer, that was terminated on April 1, 2010. (ECF DKT
# 1, Exhibit A at ¶¶ 6-7). On or about April 8, 2010, Colbert was notified by Prudential that
his group life insurance policy was terminated. (ECF DKT # 1, Exhibit A at ¶ 7). Plaintiff
alleges that Prudential then made Colbert an offer to convert his former policy into a new and
separate “Prudential Individual Life Insurance Policy” which was to be paid for solely by
Colbert. (ECF DKT #1, Exhibit A at ¶ 8). The April 8, 2010 letter also notified Colbert that
he must contact Prudential within 31 days of termination of coverage or 15 days from the date
of the letter. (ECF DKT # 1, Exhibit A at ¶ 8).
Allegedly, after contacting Prudential, Colbert learned the amount of the monthly
premium payment for the new policy and sent “conversion documents” and a check for the
first month’s payment to Prudential on May 7, 2010. One day later, on May 8, 2010, Colbert
passed away. (ECF DKT # 1, Exhibit A at ¶ 16).
In a letter dated May 17, 2010, Prudential acknowledged that Colbert had contacted
Prudential at some time to inquire about the conversion process. (ECF DKT # 1, Exhibit A at
¶ 11). The May 17 letter also stated in part that Colbert’s conversion right would expire 92
days from April 1, 2010, and that Colbert would have until June 1, 2010, to return the
conversion application and payment to convert his policy. (ECF DKT # 1, Exhibit A at ¶¶ 1314). Plaintiff asserts that Colbert had complied as instructed because the conversion
application and first month’s payment had been sent on May 7, 2010, well before the June 1,
2010 deadline. (ECF DKT # 1, Exhibit A at ¶ 18).
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In a letter dated June 4, 2010, Prudential informed Plaintiff that because they had not
received the conversion forms in time, they had denied Colbert his right to convert to the new
policy. (ECF DKT # 1, Exhibit A at ¶ 19). Further, Plaintiff alleges that when Prudential sent
the check back, Prudential knew that Colbert had passed away on May 8, 2010. (ECF DKT #
1, Exhibit A at ¶¶ 20-21).
On January 15, 2013, Plaintiff filed a Complaint in the Cuyahoga County Court of
Common Pleas, alleging Breach of Contract, Promissory Estoppel, Negligent
Misrepresentation, Bad Faith, and Bad Faith for Failure to Investigate against Defendant
Prudential. (ECF DKT # 1, Exhibit A at pp. 4-5). On February 27, 2013, Defendant
Prudential filed its Notice of Removal with the Court. (ECF DKT #1).
II. LAW AND ANALYSIS
A. Legal Standard
In deciding a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the court must accept as
true all factual allegations contained in the complaint. Erickson v. Pardus, 551 U.S. 89, 93-94
(2007). The court need not, however, accept conclusions of law as true:
Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and
plain statement of the claim showing that the pleader is entitled to relief.” As the
Court held in [Bell Atlantic v.] Twombly, 550 U.S. 544, 127 S.Ct. 1955 [(2007)], the
pleading standard Rule 8 announces does not require “detailed factual allegations,”
but it demands more than an unadorned, the-Defendant-unlawfully-harmed-me
accusation. Id. at 555. A pleading that offers “labels and conclusions” or “a formulaic
recitation of the elements of a cause of action will not do.” Id. at 555. Nor does a
complaint suffice if it tenders “naked assertion[s]” devoid of “further factual
enhancement.” Id. at 557.
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.” Id. at 570. 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
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alleged. Id. at 556. The plausibility standard is not akin to a “probability
requirement,” but it asks for more than a sheer possibility that a Defendant has acted
unlawfully. Id. Where a complaint pleads facts that are “merely consistent with” a
Defendant’s liability, it “stops short of the line between possibility and plausibility of
‘entitlement to relief.’” Id. at 557.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
According to the Sixth Circuit, the standard described in Twombly and Iqbal “obliges
a pleader to amplify a claim with some factual allegations in those contexts where such
amplification is needed to render the claim plausible.” Weisbarth v. Geauga Park Dist., 499
F.3d 538, 541 (6th Cir.2007) (quoting Iqbal v. Hasty, 490F.3d 143, 157-58 (2nd Cir.2007)).
The Court should disregard conclusory allegations, including legal conclusions
couched as factual allegations. Twombly, 550 U.S. at 555; J & J Sports Prods. V. Kennedy,
No.1:10CV2740, 2011 U.S. Dist. LEXIS 154644, *4 (N.D.Ohio Nov. 3, 2011).
B. Plaintiff’s Claims and ERISA Preemption
The threshold inquiry is whether Colbert’s group life insurance coverage, which he
sought to convert, is governed by ERISA. Given the language in Plaintiff’s Complaint and
the subsequent briefs filed by both parties, no one disputes that Colbert’s group life insurance
coverage, sponsored by his former employer, CIT Group, was an employee welfare benefit
plan governed by ERISA. (ECF DKT # 1, Exhibit A at ¶ 7). In Plaintiff’s Opposition to
Defendant’s Motion to Dismiss, the Plaintiff affirms this fact, stating that, “the former ERISA
governed life insurance policy was converted . . . .” (ECF # 11, p. 6). However, Plaintiff
argues that his state common-law claims are based, not on his previous ERISA group plan,
but rather, on a converted individual policy. (ECF DKT # 1, Exhibit A at ¶ 22). According to
Plaintiff, because a conversion took place and the newly converted individual policy is not
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governed by ERISA, the state common-law claims against Defendant are not preempted.
Although the Court views the facts alleged by Plaintiff in the most favorable light, the
Court cannot summarily accept the conclusion that a conversion took place and a new
individual policy was actually in force. See Weaver v. Prudential Ins. Co. of America, 763
F.Supp.2d 930, 939 (M.D.Tenn. 2010) (stating that “[t]he question of whether Plaintiff’s
[actions] effected a conversion of her policy from a Group Plan to an individual contract is a
question of law, not fact.”). Because Colbert allegedly complied with all the terms Defendant
required of him, Plaintiff contends that a conversion occurred immediately upon Defendant
receiving the conversion application and the check for the first month’s payment. However,
Plaintiff failed to provide any of the letters sent by Prudential cited in Plaintiff’s filings, as
well as any documentation that a new individual policy existed.
Further, the language in Plaintiff’s Complaint indicates that a new individual policy
was never formed. Paragraph 18 of Plaintiff’s Complaint states that “[u]pon Prudential’s
receipt of these items, Warren’s policy should have been converted . . . .” (ECF DKT # 1 at ¶
18) (emphasis added). Additionally, paragraph 19 alleges that “Prudential improperly denied
Warren’s right to convert . . . .” (ECF DKT # 1 at ¶ 19) (emphasis added). This language
illuminates the fact that a new individual policy was never actually created, because
Plaintiff’s claims allege that Prudential should have converted Colbert’s group policy and did
not because they improperly denied Colbert’s right to convert.
Because a new plan was never actually created, Defendant contends that the real
question in this case is “whether Colbert properly and timely converted his group insurance
plan into an individual policy.” (ECF DKT # 7 at ¶ 6). The Tennessee Court in Weaver found
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that “[t]he question of whether conversion has actually occurred is governed by ERISA.” 763
F.Supp.2d at 936. Adopting the Weaver Court’s rationale, the Court agrees with Defendant
and finds that the issue here is governed by ERISA.
Although this case is governed by ERISA, the Court must still determine the
appropriate type of ERISA preemption applicable to each of Plaintiff’s claims. “ERISA can
preempt state-law claims in two ways: complete preemption under 29 U.S.C. § 1132(a) and
express preemption under 29 U.S.C. § 1144.” Loffredo v. Daimler AG, 500 Fed.Appx. 491,
500 (6th Cir. 2012) (Moore, J., concurring). “[A] completely preempted state-law claim
arises under federal law and thus vests the district court with federal-question jurisdiction.”
Id. (internal quotation marks omitted). A claim is completely preempted if the Plaintiff
“could have brought his claim under ERISA and there is no other independent legal duty
implicated by a defendant’s actions.” Id. (internal quotation marks omitted). “By contrast,
express preemption . . . is grounds for dismissal, but not for removal.” Id. Claims that attempt
to create “alternate enforcement mechanisms” are expressly preempted under ERISA. Id. at
501.
Applying the distinction between complete and express preemption to this case, the
Court finds that Plaintiff’s claim of Breach of Contract is completely preempted, because
Plaintiff could have brought the claim under ERISA as a denial of benefits claim pursuant to
29 U.S.C. § 1132. Conversely, Plaintiff’s claims of Promissory Estoppel, Negligent
Misrepresentation, Bad Faith, and Bad Faith for Failure to Investigate are expressly
preempted by ERISA because they seek the same relief that the Breach of Contract claim
seeks through alternate enforcement mechanisms. (ECF DKT # 1, p. 4-7). Those claims are,
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in effect, subsumed by Plaintiff’s Breach of Contract claim and thus, expressly preempted and
dismissed.
When a Plaintiff’s claim is completely preempted, he has the opportunity to amend his
federal complaint to re-plead the claim to conform with ERISA. Loffredo, 500 Fed.Appx. at
500. Accordingly, the Court grants Plaintiff leave to amend the Complaint for Count I to
conform with ERISA, by November 22, 2013.
III. CONCLUSION
For these reasons, Defendant’s Motion to Dismiss Pursuant to FRCP (12)(B)(6) is
denied for Count I and granted for Counts II, III, IV, and V.
IT IS SO ORDERED.
s/ Christopher A. Boyko
CHRISTOPHER A. BOYKO
United States District Judge
Dated: November 14, 2013
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