Hall v. Prudential Insurance Company of America et al

Filing 31

MEMORANDUM AND ORDER Accordingly, Plaintiffs objection 27 is OVERRULED IN PART AND SUSTAINED IN PART, whereby the Report and Recommendation 26 is ACCEPTED, and Defendants' motions to dismiss 9 , 11 , 23 are GRANTED to the extent that Plaintiff's claims for breach of contract, breach of fiduciary duty, misrepresentation, and specific performance under state law are hereby DISMISSED, with prejudice. Defendant Prudential's motion for extension of time to complete discovery 24 is DENIED as moot. Filing deadlines are set forth. Signed by District Judge Pamela L Reeves on 4/15/14. (ADA)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE

MELISSA HALL,
Plaintiff,
v.
THE PRUDENTIAL INS. CO. OF AMER.,
And SEARS HOLDING CORPORATION,
Defendants.

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No.: 3:13-CV-707-PLR-BHG

MEMORANDUM AND ORDER

On March 14, 2014, the Honorable H. Bruce Guyton, United States Magistrate
Judge, entered a Report and Recommendation (R&R) recommending that Defendants’
motions to dismiss be granted [R. 26]. This matter is presently before the Court on
Plaintiff’s objections to the Magistrate Judge’s R&R [R. 27]. Defendant Prudential has
responded to Plaintiff’s objections [R. 30]. As required by 28 U.S.C. § 636(b)(1), the
court has undertaken a de novo review of those portions of the R&R to which Plaintiff
objects.
Plaintiff filed the instant action in the Chancery Court for Knox County,
Tennessee, alleging that she is a third-party beneficiary of death benefits under a group
life insurance plan issued by Defendant Prudential Insurance Co. of America to
Defendant Sears Holdings Corporation. Plaintiff contends that the policy was in full

force and effect at the time the insured, Vincent Collins, died, and she maintains that
Defendants improperly denied her request that benefits be paid under the policy.
On December 18, 2013, Prudential filed a motion to dismiss Plaintiff’s Complaint
stating that ERISA provides the exclusive remedy for claims related to employee benefit
plans. Prudential states that Plaintiff’s claims for breach of contract, breach of fiduciary
duty, misrepresentation, and specific performance are preempted by ERISA. Defendant
Sears filed a motion to dismiss, or in the alternative, motion for more definite statement
stating Plaintiff’s claim of misrepresentation fails, as a matter of law, because Plaintiff
has not pled misrepresentation, or fraud, with particularity.
Plaintiff failed to respond to Defendants’ motions to dismiss, and in accordance
with Local Rule 7.1, Magistrate Judge Guyton deemed Plaintiff’s failure to respond to the
motions as a waiver of any opposition to the relief sought. Magistrate Judge Guyton
found that Plaintiff’s claims were preempted by ERISA and should be dismissed. Thus,
Magistrate Judge Guyton recommended that Defendants’ motions to dismiss be granted
and Plaintiff’s claims dismissed with prejudice.
Plaintiff objects to the R&R, stating that her Complaint contains allegations that
should be recharacterized as ERISA claims and the Magistrate Judge should have
recommended allowing the claims to move forward under the procedure for ERISA
litigation. Specifically, Plaintiff states the Complaint alleges that Prudential breached the
insurance contract by failing to pay benefits and that Sears breached its fiduciary duty to
advise Vincent Collins correctly.

Further, the Complaint alleges that Plaintiff is a

beneficiary of the policy and that Prudential has failed to pay benefits under the policy.
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Plaintiff argues that the allegations of her Complaint were clear enough to Defendants to
base removal upon grounds of ERISA preemption. Therefore, her allegations should be
recharacterized to state claims under ERISA, and she should be allowed to proceed with
her action in this Court.
Defendant Prudential argues that because Plaintiff failed to respond to the motion
to dismiss, the Court should adopt the Magistrate Judge’s recommendation and dismiss
the case with prejudice. Defendant states that in her response, Plaintiff does not offer any
reason for neglecting to abide by the Court’s local rules and for failing to respond to
Prudential’s motion to dismiss. Plaintiff had every opportunity to respond to Prudential’s
motion to dismiss, or to amend her Complaint, and she chose to do neither until faced
with the Magistrate Judge’s recommendation. Prudential further states that Plaintiff
alleged only state law claims in her Complaint, asserting claims for breach of contract,
specific performance, misrepresentation, and breach of fiduciary duty. Thus, Defendant
argues that Magistrate Judge Guyton correctly recommended dismissal of those claims as
preempted by ERISA.
Defendants seek to dismiss Plaintiff’s Complaint pursuant to Federal Rule of Civil
Procedure 12(b)(6), for failure to state a claim upon which relief can be granted.
Specifically, Defendants assert that, because Plaintiff’s claims relate to an employersponsored employee benefit plan, the claims are preempted by Section 514(a) of ERISA,
29 U.S.C. § 1144(a). Based on Plaintiff’s objection to the R&R, it appears that the
parties agree that the insurance policy at issue was part of an employer-sponsored
employee benefit plan, and was therefore governed by the terms of ERISA. Defendant
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Prudential’s motion to dismiss is based on the simple assertion that Plaintiff’s state law
claims are preempted by ERISA and must therefore be dismissed.
As noted by Magistrate Judge Guyton, ERISA’s preemption clause, Section
514(a), 29 U.S.C. § 1144(a), expressly provides that ERISA “shall supersede any and all
state laws insofar as they may now or hereafter relate to any employee benefit plan”
governed by ERISA. 29 U.S.C. § 1144. A plan, fund, or program is governed by ERISA
if it has been established or maintained by an employer for the purpose of providing
benefits to participants or their beneficiaries. 29 U.S.C. § 1002(1); see also Fugarino v.
Hartford Life and Acc. Ins. Co., 969 F.2d 178 (6th Cir. 1992). The Sixth Circuit has
specifically found that misrepresentation, breach of contract, and specific performance
claims are all preempted by ERISA. Cromwell v. Equicor-Equitable HCA Corp., 944
F.2d 1272, 1276 (6th Cir. 1991).
Here, it is evident from Plaintiff’s Complaint and her objection to the R&R, that
all of her state law claims relate to the employee benefit plan that Vincent Collins
participated in through his employer. Only if Plaintiff has a right to benefits under the
plan could a court or jury compensate her as she requests. Accordingly, because Plaintiff
essentially seeks a determination of her rights and payment of benefits due under an
employer-sponsored plan, her claims relate to activities exclusively regulated by ERISA,
and her state tort law claims must be dismissed.
Construing the Complaint in light of Plaintiff’s objection to the R&R, Plaintiff
does not appear to contest that her state tort claims are preempted by ERISA, but rather
contends that her claims should be recharacterized to state claims under ERISA. As such,
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the Court concludes that an ERISA claim is fairly presented here, pursuant to 29 U.S.C. §
1132(a)(1)(B), and that Plaintiff should be allowed to amend her complaint in order to
formally allege such a claim. See Fed. R. Civ. 15a(2) (The Court should freely give
leave to amend pleadings when justice so requires).
Accordingly, Plaintiff’s objection [R. 27] is OVERRULED IN PART AND
SUSTAINED IN PART, whereby the Report and Recommendation [R. 26] is
ACCEPTED, and Defendants’ motions to dismiss [R. 9, 11, 23] are GRANTED to the
extent that Plaintiff’s claims for breach of contract, breach of fiduciary duty,
misrepresentation, and specific performance under state law are hereby DISMISSED,
with prejudice.
In addition, the following action is taken:
1.

Plaintiff shall file an amended complaint restating her claims under ERISA

within fourteen (14) days of entry of this Memorandum and Order. Plaintiff is advised
that failure to comply with this Court’s order will result in dismissal of her Complaint,
with prejudice.
2.

Defendant Prudential’s motion for extension of time to complete discovery

[R. 24] is DENIED as moot.
3.

Plaintiff shall file her motion for summary judgment within sixty (60) days.

4.

The defendants shall file their cross-motion/response thirty (30) days after

plaintiff files her motion for summary judgment.
5.

In the event that the court feels that oral argument on the motions is

required, the parties will be notified.
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IT IS SO ORDERED.

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