Akers et al v. Minnesota Life Insurance Company

Filing 72

MEMORANDUM OPINION AND ORDER granting defendant Alpha Natural Resources, LLC's 52 MOTION to amend its cross-claim against Minnesota Life Insurance Company; directing the Clerk to file Alpha's proposed amended cross-claim; the amended cross-claim is subject to the court's 4/23/2012 12 bifurcation order; Counts I, II, III, and IV are held in abeyance pending resolution of the underlying coverage issue, except to the extent the parties are able to agree otherwise. Signed by Judge John T. Copenhaver, Jr. on 2/7/2013. (cc: attys) (taq)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
JUDY AKERS, individually,
and as Administrator of the
ESTATE OF WALTER AKERS, deceased,
Plaintiffs,
v.

Civil Action No. 2:12-cv-0667

MINNESOTA LIFE INSURANCE CO. and
ALPHA NATURAL RESOURCES, LLC,
Defendants.

MEMORANDUM OPINION AND ORDER
Pending is the motion by defendant Alpha Natural
Resources, LLC (“Alpha”) for leave to amend its cross-claim
against Minnesota Life Insurance Company (“Minnesota Life”),
filed November 28, 2012.
on December 14, 2012.

Minnesota Life responded in opposition

For reasons explained herein, the court

grants the motion.

I. Background
Judy Akers (“Ms. Akers”) is the surviving spouse of
Walter Akers (“Mr. Akers”) as well as the court appointed
administrator of Mr. Akers‟ estate.

She brings this action as

beneficiary of Mr. Akers‟ Life and Accidental Death and
Disability Plan (the “Plan”) to recover payment of Supplemental
Life Coverage.

She additionally alleges state law claims

arising from the nonpayment of Plan benefits.
Akers‟ employer and is the Plan Sponsor.

Alpha was Mr.

Alpha obtained a group

insurance policy (the “Policy”) from Minnesota Life to provide
coverage for benefits under the Plan, effective June 1, 2005.
Mr. Akers became an employee of Nicewonder
Contracting, Inc. (“Nicewonder”) in 2005.

Alpha later acquired

Nicewonder, and in 2007 Nicewonder adopted Alpha‟s employee
benefits plan.

Mr. Akers obtained Basic Life Coverage and

Accidental Death & Dismemberment (“AD&D”) Coverage effective
October 1, 2007, and Supplemental Life Coverage effective
November 1, 2007.

Alpha paid the full premium for Mr. Akers‟

Basic Life Coverage and AD&D Coverage.

Using a payroll

deduction, Alpha also remitted to Minnesota Life the premium for
Mr. Akers‟ Supplemental Life Coverage.

Each policy provided

$274,000 in potential benefits to Mr. Akers, for a total
coverage of $822,000.
On May 22, 2010, Mr. Akers was severely injured in a
fall at his home.

Alpha retained him on its payroll and

continued to pay him full wages.

From May 22, 2010 through

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December 31, 2010, Alpha continued to pay or remit to Minnesota
Life the full premiums for Mr. Akers‟ three life insurance
policies.

Minnesota Life never refunded premiums paid for Mr.

Akers during the period from May 22, 2010 through December 31,
2010.

Mot. Amend Ex 1.
Alpha found a new insurance provider and terminated

the Policy effective December 31, 2010.

Central to this dispute

is whether Minnesota Life was obligated to extend to Alpha‟s
employees a conversion privilege, by which employees could
continue their coverage.

Minnesota Life, following multiple

internal and external communications whose discovery
precipitated Alpha‟s need for the proposed amendment, determined
that no conversion privilege applied.
Mr. Akers died on January 25, 2011 at the age of 63.
Ms. Akers made a claim to Minnesota Life for benefits under the
three coverages.

In a May 10, 2011 letter, Minnesota Life

denied Ms. Akers‟ claim for benefits.

Mot. Amend Ex 3.

Alpha

believed that the denial was erroneous and paid to Ms. Akers
$548,000, the full benefits under the Basic Life Coverage and
AD&D Coverage.

As memorialized in an August 10, 2011 letter,

Ms. Akers in return agreed to pay to Alpha any funds which might
later be recovered from Minnesota Life under those policies.

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Minnesota Life represents that Alpha made the payment
to Ms. Akers without notice to or a request of Minnesota Life.
Opp‟n Mot. Amend ¶ 6.

It further states that Alpha did not

voice any opposition to the decision by Minnesota Life to deny
Ms. Akers‟ claims.

Alpha disputes that contention and has

produced a May 26, 2011 email in which its Health and Welfare
Supervisor notified Minnesota Life that Alpha planned to appeal.
Reply Supp. Mot. Amend Ex. 1.

The email also references a

previous phone message of the same nature.

Id.

Ms. Akers initiated this action against Minnesota life
in the Circuit Court of Mingo County, West Virginia on February
6, 2012, seeking to recover payment for the employee-paid
Supplemental Life Coverage.

Minnesota Life removed the case to

federal court on March 8, 2012.

In an April 23, 2012 order, the

court bifurcated the case such that the underlying coverage
issue would be decided first, with all other claims held in
abeyance pending the court‟s ruling on the coverage issue.
On July 3, 2012, Ms. Akers filed a first amended
complaint, which added Alpha as a defendant.
amended complaint on August 15, 2012.

She filed a second

In response, Alpha filed

an answer, counterclaim, and cross-claim on September 14, 2012.

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In the original cross-claim, Alpha made claims against Minnesota
Life based on contribution and indemnification.
On October 12, 2012, Alpha served discovery requests
on Minnesota Life.
14, 2012.

Minnesota Life served responses on November

Alpha filed the pending motion two weeks later,

asserting that Minnesota Life‟s discovery responses provided the
factual basis for newly added claims.

Mot. Amend 5.

The new

claims are 1) violations of the West Virginia Unfair Trade
Practices Act, 2) common law bad faith claim pursuant to
Hayseeds, 3) breach of contract, and 4) intentional and/or
negligent misrepresentation, and 5) reasonable expectation of
insurance coverage.

Id. at 8.

Minnesota Life stresses that while the second amended
complaint identifies the three coverages, Akers seeks recovery
of benefits only for the Supplemental Life Coverage, not the
Basic Life Coverage or the AD&D Coverage.

Minnesota Life argues

that the pending motion is untimely because Alpha moved to amend
1) 15 months after its payment of Basic Life Coverage and AD&D
Coverage benefits to Ms. Akers and 2) after the Court has
already bifurcated the insurance issue.
9.

Opp‟n Mot. Amend ¶¶ 8-

Alternatively, Minnesota Life asserts that the motion

presents claims contrary to the court‟s bifurcation order and

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should be held in abeyance pending adjudication of the insurance
issue.

Id. ¶¶ 12-13.
Alpha replies that Minnesota Life has not identified

any reason that the motion should be deemed untimely.
Respecting abeyance, Alpha asserts that Minnesota Life ignores
Count V of the proposed amended cross-claim.

Alpha argues that

Count V‟s claim for “Reasonable Expectation of Insurance
Coverage” must be considered with the coverage issue.

Alpha

further contends that Minnesota Life “fails to offer any
reasoned argument, much less law” supporting the position that
the cross-claim cannot be filed now.

II. The Governing Standard
Federal Rule of Civil Procedure 15(a)(2) provides that
a party who can no longer amend a pleading as of right can still
amend by obtaining “the opposing party‟s written consent or the
court‟s leave.”

Fed. R. Civ. P. 15(a)(2).

freely give leave when justice so requires.”

“The court should
Id. (emphasis

added).
“The law is well settled „that leave to amend a
pleading should be denied only when the amendment would be
prejudicial to the opposing party, there has been bad faith on

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the part of the moving party, or the amendment would be
futile.‟”

Edwards v. City of Goldsboro, 178 F.3d 231, 242 (4th

Cir. 1999) (quoting Johnson v. Oroweat Foods Co., 785 F.2d 503,
509 (4th Cir. 1986)).

The existence of prejudice to an opponent

“is reason sufficient to deny amendment,” and the “absence of
prejudice, though not alone determinative, will normally warrant
granting leave to amend.”

Davis v. Piper Aircraft Corp., 615

F.2d 606, 613 (4th Cir. 1980).

There is no prejudice where a

defendant “was from the outset made fully aware of the events
giving rise to the action.”

Id.

Amendment is futile if “the

proposed amended complaint fails to satisfy the requirements of
the federal rules,” such as Rule 12(b)(6).

United States ex

rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376
(4th Cir. 2008) (quoting United States ex rel. Fowler v.
Caremark RX, LLC, 496 F.3d 730, 740 (7th Cir. 2007)).

III. Discussion
Having reviewed the pending motion and the opposition
to it, the court finds that Alpha‟s motion for leave to amend
the cross-claim satisfies Rule 15(a)‟s “freely give leave”
standard.

None of the three exceptions to the liberal allowance

of amendment arise in this case.

First, the amendment will not

prejudice Minnesota Life since Minnesota Life was from the
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outset fully aware of the events giving rise to the amendment.
This is apparent given that the amendment pertains to the
central issue in this case -- Minnesota Life‟s determination to
deny Ms. Akers‟ claim -- and was prompted by discovery responses
that Minnesota Life provided to Alpha.

Further, Alpha filed the

pending motion promptly, only two weeks after Minnesota Life
served the discovery requests.

While Minnesota Life is correct

that Ms. Akers‟ claims concern only the Supplemental Life
Coverage, Alpha‟s original cross-claim sought recovery from
Minnesota Life for the Basic Life Coverage and AD&D Coverage.
Alpha has merely used newly discovered information from
Minnesota Life to further develop an already-asserted
entitlement to those funds.

There is no prejudice in that.

Second, the court finds no bad faith.

Minnesota Life

makes no express contentions respecting bad faith, but to the
extent other arguments might be relevant, they fail.

The court

sees no bad faith in the 15 month delay between Alpha making the
payment to Ms. Akers and asserting the claims in the proposed
amendment.

On the contrary, the claims‟ basis on recent

discovery and the commendable diligence with which Alpha
thereafter filed the motion to amend indicate good faith.

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Finally, the amendment does not fail due to futility.
As with bad faith, Minnesota Life does not expressly assert a
futility argument.

It does, however, state that Alpha‟s claims

might “raise preemption questions under ERISA.”

The argument is

too cursory to be considered properly before the court at this
time, and according to an accompanying footnote, Minnesota Life
is satisfied to have the issue addressed during the second stage
of the bifurcated litigation.

The bifurcation order itself in

no way suggests that the amendment would be futile or is
otherwise improper.
In sum, the amendment does not prejudice Minnesota
Life, is not shown to be in bad faith, and is not futile.
Absent these factors, it is in the interests of justice to
freely grant Alpha leave to amend its cross-claim.

IV.
It is, accordingly, ORDERED that Alpha‟s motion to
amend its cross-claim be, and it hereby is, granted.

The Clerk

is directed to file Alpha‟s proposed amended cross-claim, which
accompanies the motion.

The amended cross-claim is subject to

the court‟s April 23, 2012 bifurcation order.

Counts I, II,

III, and IV are therefore held in abeyance pending resolution of

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the underlying coverage issue, except to the extent the parties
are able to agree otherwise.
The Clerk is directed to forward copies of this
written opinion and order to all counsel of record.
ENTER:

February 7, 2013

John T. Copenhaver, Jr.
United States District Judge

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