Ladson v. National Union Fire Insurance Company of Pittsburgh PA
Filing
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ORDER denying without prejudice 40 Motion to Dismiss / Motion for Summary Judgment and granting plaintiff leave to file an amended complaint. Signed by Honorable David C Norton on April 30, 2018.(cban, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
Isaac Ladson,
Plaintiff,
vs.
National Union Fire Insurance Company
of Pittsburgh PA,
Defendant.
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No. 2:16-cv-02401-DCN
ORDER
This matter comes before the court on defendant National Union Fire Insurance
Company of Pittsburgh PA’s (“National Union”) motion to dismiss or for summary
judgment, ECF No. 40. For the reasons set forth below, the court denies without
prejudice the motion to dismiss or for summary judgment and grants the plaintiff leave to
file an amended complaint.
I. BACKGROUND1
This case arises from a dispute over an insurance policy between Plaintiff Isaac
Ladson (“Ladson”) and National Union. In 2008, Ladson obtained a Blanket Accident
Insurance Policy (“Policy”) from National Union through his wife’s employer, Bank of
America. ECF No. 40 at 2. Ladson alleges that in July 2010 he was injured in a one car
accident, after which he claims to have developed “severe memory loss and severe
cognitive impairments with episodes of total loss of memory.” ECF No. 45 at 1. In
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As Ladson’s complaint is devoid of any helpful facts, the court relies mostly on
Ladson’s response to National Union’s motion, unless otherwise specified.
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December 2010, Ladson submitted a claim for disability benefits under the Policy, and
alleges that he only received the denial of his claim in July 2015. Id. at 1–2.
Ladson filed the instant action in the Charleston County Court of Common Pleas
on May 16, 2016, alleging causes of action for breach of contract and bad faith, and
requesting a declaratory judgment regarding his rights under the Policy. ECF No. 1-1.
National Union removed the case on July 1, 2016. ECF No. 1. On December 18, 2017,
National Union filed its motion to dismiss or motion for summary judgment, ECF No. 40,
having first raised a motion to dismiss based on Rule 12(b)(6) in its Answer, ECF No. 5 ¶
25. On January 23, 2018, Ladson filed his response to the motion, ECF No. 45, and on
March 22, 2018, he filed a supplement to this response, ECF No. 53. On February 6,
2018, National Union filed its reply to Ladson’s response, ECF No. 52, and on April 3,
2018, it filed its reply to Lasdon’s supplement, ECF No. 56. The court held a hearing on
April 25, 2018. The motion has been fully briefed and is now ripe for the court’s review.
II. STANDARD
A.
Motion to Dismiss
A Rule 12(b)(6) motion for failure to state a claim upon which relief can be
granted “challenges the legal sufficiency of a complaint.” Francis v. Giacomelli, 588
F.3d 186, 192 (4th Cir. 2009) (citations omitted); see also Republican Party of N.C. v.
Martin, 980 F.2d 943, 952 (4th Cir. 1992) (“A motion to dismiss under Rule 12(b)(6) . . .
does not resolve contests surrounding the facts, the merits of a claim, or the applicability
of defenses.”). To be legally sufficient, a pleading must contain a “short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.
8(a)(2). A Rule 12(b)(6) motion should not be granted unless it appears certain that the
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plaintiff can prove no set of facts that would support his claim and would entitle him to
relief. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). When
considering a Rule 12(b)(6) motion, the court should accept all well-pleaded allegations
as true and should view the complaint in a light most favorable to the plaintiff.
Ostrzenski v. Seigel, 177 F.3d 245, 251 (4th Cir.1999); Mylan Labs., Inc., 7 F.3d at 1134.
“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 Atlantic Corp. v. Twombly, 550 U.S. 544,
570 (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.
B.
Motion for Summary Judgment
Summary judgment shall be granted “if the pleadings, the discovery and
disclosure materials on file, and any affidavits show that there is no genuine dispute as to
any material fact and that the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(c). “By its very terms, this standard provides that the mere existence of some
alleged factual dispute between the parties will not defeat an otherwise properly
supported motion for summary judgment; the requirement is that there be no genuine
issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986).
“Only disputes over facts that might affect the outcome of the suit under the governing
law will properly preclude the entry of summary judgment.” Id. at 248. “[S]ummary
judgment will not lie if the dispute about a material fact is ‘genuine,’ that is, if the
evidence is such that a reasonable jury could return a verdict for the nonmoving party.”
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Id. “[A]t the summary judgment stage the judge’s function is not himself to weigh the
evidence and determine the truth of the matter but to determine whether there is a
genuine issue for trial.” Id. at 249. The court should view the evidence in the light most
favorable to the non-moving party and draw all inferences in its favor. Id. at 255.
III. DISCUSSION
National Union brings the following main arguments in its motion: (1) the
complaint should be dismissed because it does not allege facts sufficient to constitute a
cause of action, and (2) Ladson’s cognitive issue were pre-existing health conditions and
not the result of an injury as required by the Policy in order for him to obtain disability
benefits. ECF No. 40 at 9.
A. Failure to State a Claim
National Union argues that the “complaint contains only conclusory allegations
and lacks sufficient factual matter to state a plausible claim for relief under the policy.”
ECF No. 40 at 10. The very short complaint consists of only 23 sentences, the following
being the most pertinent:
4. That heretofore the Defendant issued a policy of insurance that purported
to be a Blanket Accident and Health Insurance Policy # 9540523-449798,
to Marissa Ladson, as Policy Holder Marissa Ladson and Plaintiff Isaac
Ladson, her spouse as can be seen on the exhibit A.
5. The policy so issued provided for benefits in the event the insured became
totally disabled as follows:
PERMANENT TOTAL DISABILITY BENEFIT LUMP SUM
BENEFIT, If, as a result of an injury, the insured Person is rendered
Permanently Totally Disabled within 90 days of the accident that
caused the Injury, the Company will pay 100% of the Maximum
Amount at the end of 12 consecutive months of such Permanent
Total Disability.
as can be seen on the exhibit A.
6. 100% of the Maximum Amount of the policy is $500,000.
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7. A Blanket Accident and Health Insurance policy is defined by S.C. Code
Ann. § 38-71-1010 to be that form of accident and health insurance covering
special groups of individuals as enumerated.
8. Blanket policies are [sic] not required to contain certain provisions
required of individual Accident and Health policies pursuant to S.C. Code
Ann. § 38-71-1020.
9. The policy issued by Defendant in this case was not issued to provide
coverage for any of the special groups as enumerated as provided for by
S.C. Code Ann. § 38-71-1010.
10. As a result, the policy issue by Defendant in this case does not qualify
for exemption from the certain provisions required of individual Accident
and Health policies.
11. At all times relevant hereto the Plaintiff is unable to perform the material
duties of his occupation or any occupation by reason of a condition due to
an injury or illness.
12. That at all times relevant hereto Plaintiff is totally disabled as defined
by S.C. Code Ann. § 38-71-340 and the regulations promulgated
thereunder.
13. Plaintiff is entitled to benefits under the policy issued by Defendant.
14. That despite repeated demands, the Defendant failed and refused, and
continues to fail and refuse to provide Plaintiff with full benefits for the
disability claim under the policy.
ECF No. 1-1. Following ¶ 14, Ladson lists his three causes of action—breach of
contract, bad faith, and a request for a declaratory judgment—in a very bare-bones
manner without adding any facts or legal arguments. Based on the above paragraphs, the
court cannot determine on what legal basis Ladson is bringing his claim. “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 Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim
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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.
Ladson clearly indicates that he believes he is entitled to benefits under the policy.
However, the only facts alleged in this complaint are that National Union issued the
policy to Marissa and Isaac Ladson, that Ladson is totally disabled, and that National
Union refuses to provide him benefits. Ladson then quotes a portion of the Policy before
making a few summary statements about S.C. statutes related to insurance policies and
concluding that he is entitled to benefits under the policies. There is no information
about the accident, about Ladson’s injuries that might support his claim for disability, the
content of his claim, or National Union’s reason for denying the claim. Most
significantly, Ladson makes no argument for why this court should overturn National
Union’s decision to decline his claim and now grant him benefits.
The only additional information in the complaint is found in paragraphs 7–10,
which summarize various sections of the South Carolina Code related to insurance
policies, before concluding that “the policy issued by Defendant in this case does not
qualify for exemption from the certain provisions required of individual Accident and
Health policies.” ECF No. 1-1 ¶ 10. Ladson does nothing to tie it to this particular
policy or explain why this reference to the state statutes should result in this court
granting him benefits under the policy.
It is only in Ladson’s response to the motion to dismiss that he elaborates on this
and actually posits an argument. Ladson first notes that National Union denied his claim
because his “condition of head injury does not qualify under the Permanent Total
Disability policy provision as [he] did not suffer from the following: Loss of both hands
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or feet; or loss of one hand and one foot; or loss of sight in both eyes; or Hemiplegia; or
Paraplegia; or Quadriplegia.” ECF No. 45 at 2 quoting 45-4 Ex. Denial Letter. Ladson
argues that, due to this being the only reason for denial of the claim, the only thing he
needed to challenge in his complaint was the “legality of the definition of total
disability.” Id. at 6. Ladson also argued that National Union’s
restrictive definition of disability is not authorized for use in Plaintiff’s
policy, it may only be used in ‘blanket insurance policies.’ Plaintiff’s policy
was not an authorized blanket policy. Plaintiff’s policy was issued by AIG
and National Union as part of a scheme which involved fraudulent
advertising, marketing, and sale of purported blanket disability insurance to
South Carolina residents who were not members of any group for which
such an insurance product was authorized. Thus, purported insurance
coverage was marketed and sold to customers of Bank of America, [Mrs.
Ladson’s employer,] despite Defendant’s knowledge that the product was
not authorized by South Carolina law.
Id. at 3. None of these arguments were raised or even hinted at in the complaint. Ladson
claims in his response that his complaint only needed to challenge the legality of National
Union’s definition of total disability in his complaint, and not any other potential grounds
for National Union’s denial of his claim for coverage, and yet he does not even raise this
challenge in the complaint.
The court cannot consider these arguments on a motion to dismiss if they or the
facts upon which they are based were not raised in the complaint, as “the complaint may
not be amended by the briefs in opposition to a motion to dismiss.” Mylan Labs., Inc. v.
Akzo, N.V., 770 F.Supp. 1053, 1068 (D. Md. 1991) (quoting Car Carriers, Inc. v. Ford
Motor Co., 745 F.2d 1101 (7th Cir. 1984)). The court in Marsh v. Virginia Dept. of
Transp., 2014 WL 6833927, at *8 (W.D. Va. Dec. 3, 2014) reasoned that to allow a
plaintiff to assert new claims by raising them in his brief in opposition to the motion to
dismiss “would mean that a party would unilaterally amend a complaint at will, even
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without filing an amendment, and simply by raising a point in a brief.” I agree. None of
the factual or legal allegations around this “definition of total disability” arguments found
in the original complaint. The court therefore cannot consider any of these allegations in
resolving the motion to dismiss.
While the court would be justified in granting the motion to dismiss, it prefers to
grant Ladson leave to file an amended complaint that fully incorporates the facts and
arguments he raises in his response to the motion to dismiss. This will give the court the
opportunity to properly analyze the substantive arguments that have been submitted by
both parties surrounding this motion to dismiss.
B. Definition of Injury under the Policy
National Union’s second basis for its motion is that Ladson did not suffer an
injury as defined by the policy, and thus was not entitled to disability benefits under those
terms. ECF No. 40 at 11. It contents that “[t]he policy at issue herein is not a disability
policy[, but] an accident policy,” and that “before the issue of disability can be
implicated, there must be a covered event – an accident which causes the disabling bodily
injury.” Id. Here, National Union argues that Ladson’s current medical state is not a
result of the car accident, but was a pre-existing condition—specifically, he had a history
of seizures and that an episode caused him to crash the car, rather than the accident
causing his current mental disabilities. Thus, under the terms of the policy, National
Union contends that Ladson’s current alleged disability does not qualify as a “disability
stemming from an accident,” and he is not entitled to benefits under the Policy. Id.
Ladson responds that he is not required to establish that his disability was caused
by an accident, because his claim is not about whether National Union incorrectly
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classified his disability as resulting from an accident or not. Rather, Ladson argues the
basis of his claim is that the policy’s definition of disability itself violates South Carolina
law. However, Ladson does argue in the alternative that, even if the court were to
consider National Union’s argument, there is a genuine issue of material fact as to what
caused Ladson’s disability. Id. at 7.
All of these legal arguments and factual allegations that Ladson raises in his
response and supplemental response to National Union’s motion to dismiss should have
been raised in the complaint.
IV. CONCLUSION
Based on the above, the court DENIES WITHOUT PREJUDICE the motion to
dismiss or for summary judgment and grants Ladson leave to file a new complaint.
AND IT IS SO ORDERED.
DAVID C. NORTON
UNITED STATES DISTRICT JUDGE
April 30, 2018
Charleston, South Carolina
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