Bates v. Bankers Life & Cas. Co.

• Decision Date: 27 January 2014
• Docket Number: No. 3:13–CV–580–PK.,3:13–CV–580–PK.
• Citation: 993 F.Supp.2d 1318
• Court: U.S. District Court — District of Oregon
• Parties: Lorraine BATES, Charles Ehrman Bates, Eileen Burk, David Youngbluth, Dolores Marier, Thomas Marier, David Castagno, and Darla Castagno, Plaintiffs, v. BANKERS LIFE AND CASUALTY COMPANY and CNO Financial Group, Inc., Defendants.

993 F.Supp.2d 1318

Lorraine BATES, Charles Ehrman Bates, Eileen Burk, David Youngbluth, Dolores Marier, Thomas Marier, David Castagno, and Darla Castagno, Plaintiffs,

v.BANKERS LIFE AND CASUALTY COMPANY and CNO Financial Group, Inc., Defendants.

No. 3:13–CV–580–PK.

United States District Court, D. Oregon.

Jan. 27, 2014.

Christopher L. Cauble, Rachele R. Selvig, Cauble & Cauble, LLP, Grants Pass, OR, Leslie W. O'Leary, Michael L. Williams, Williams O'Leary, LLC, Portland, OR, for Plaintiffs.

Adam J. Kaiser, Jeffrey J. Amato, John M. Aerni, Kelly Librera, Winston & Strawn LLP, New York, NY, Vicki L. Smith, Lane Powell, PC, Portland, OR, for Defendants.

OPINION AND ORDER

PAPAK, United States Magistrate Judge.

Named plaintiffs Eileen Burk, David Youngbluth, Charles Ehrman Bates, and Lorraine Bates filed this putative class action against their insurer Bankers Life and Casualty Company (“Bankers”), Bankers' intermediate and ultimate parent companies CDOC, Inc. (“CDOC”), and CNO Financial Group, Inc. (“CNOFG”), individual defendant James Peterson, and ten corporate Doe defendants on April 4, 2013. On May 31, 2013, plaintiffs amended their complaint, abandoning their claims against Peterson and the corporate Doe defendants, adding Bankers' intermediate parent company Conesco Life Insurance Company of Texas (“CLIC”) as an additional defendant, and adding David Castagno, Darla Castagno, Thomas Marier, and Dolores Marier as additional named plaintiffs. Effective October 23, 2013, plaintiffs amended their complaint a second time, abandoning their claims against Bankers' intermediate parent companies CDOC and CLIC. The parties' dispute arises out of the remaining defendants' alleged conduct in connection with the issuance of long-term health-care insurance policies to the plaintiffs, with raising plaintiffs' insurance premiums owed under those policies without commensurate increase in the benefits available thereunder, and with the handling and disposition of claims filed under the policies. By and through their second amended complaint, plaintiffs allege Bankers' and CNOFG's liability for elder abuse in violation of Oregon statutory law, breach of contract and of the implied covenant of fair dealing, fraudulent inducement to enter into the subject insurance agreements, and a tort styled as “intentional misconduct.” Plaintiffs argue both that CNOFG may be found directly liable on each of their claims and, alternatively, that CNOFG may be found vicariously liable on their claims either on an alter ego or an agency theory. This court has subject-matter jurisdiction over plaintiffs' claims pursuant to 28 U.S.C. § 1332, based on the complete diversity of the parties and the amount in controversy.

Now before the court are CNOFG's motion (# 29) to dismiss for failure to state a claim and for lack of personal jurisdiction,¹ defendants' motion (# 32) to strike plaintiffs' class action allegations from their pleading, and defendants' motion (# 39) to dismiss plaintiffs' elder abuse, fraud, and intentional misconduct claims in their entirety and to dismiss plaintiffs' breach claim in part. I have considered the motions, oral argument on behalf of the parties, and all of the pleadings and papers on file. For the reasons set forth below, CNOFG's motion (# 29) to dismiss is granted on personal jurisdictional grounds as to plaintiffs' fraud in the inducement claim to the extent alleged against CNOFG, and otherwise denied (in part as moot and in part on its merits, as discussed below), defendants' motion (# 32) to strike class allegations is granted, and defendants' motion (# 39) to dismiss is granted with prejudice as to plaintiffs' elder abuse and intentional misconduct claims in their entirety, with prejudice as to plaintiffs' fraud claim to the extent premised on a theory of fraudulent inducement to continue paying policy premiums pursuant to pre-existing insurance contracts, without prejudice as to plaintiffs' fraud claim to the extent premised on a theory of fraudulent inducement to enter into the insurance policies in the first instance, with prejudice as to the breach claims brought by the Castagno plaintiffs in their entirety and as to the breach claims brought by plaintiffs Charles Ehrman Bates and Dolores Marier to the extent premised solely on those plaintiffs' concern regarding possible future breach, and with prejudice as to the breach claims brought by plaintiffs Charles Ehrman Bates, David Youngbluth, and Dolores Marier to the extent brought on those plaintiffs' own behalf rather than on behalf of those plaintiffs' family members who sought benefits under their Bankers policies, and is otherwise denied.

LEGAL STANDARDS

I. Motion to Dismiss for Lack of Personal Jurisdiction

A motion to dismiss for lack of personal jurisdiction is governed by Federal Civil Procedure Rule 12(b)(2). SeeFed.R.Civ.P. 12(b)(2). “In opposition to a defendant's motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing that jurisdiction is proper.” Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir.2008), citing Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir.1990). In evaluating the defendant's motion, “[t]he court may consider evidence presented in affidavits to assist it in its determination and may order discovery on the jurisdictional issues.” Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir.2001), citing Data Disc, Inc. v. Systems Technology Assoc., Inc., 557 F.2d 1280, 1285 (9th Cir.1977). If the court decides the motion based on the pleadings and affidavits submitted by the parties without conducting an evidentiary hearing, “the plaintiff need make only a prima facie showing of jurisdictional facts to withstand the motion to dismiss.” Id., quoting Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir.1995). In the absence of such an evidentiary hearing, the court accepts uncontroverted allegations contained within the plaintiff's complaint as true, and resolves conflicts between statements contained within the parties' affidavits in the plaintiff's favor. See id.

II. Motion to Dismiss for Failure to State a Claim

To survive dismissal for failure to state a claim pursuant to Rule 12(b)(6), a complaint must contain more than a “formulaic recitation of the elements of a cause of action;” specifically, it must contain factual allegations sufficient to “raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). To raise a right to relief above the speculative level, “[t]he pleading must contain something more ... than ... a statement of facts that merely creates a suspicion [of] a legally cognizable right of action.” Id.,quoting5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235–236 (3d ed.2004); see alsoFed.R.Civ.P. 8(a). Instead, the plaintiff must plead affirmative factual content, as opposed to any merely conclusory recitation that the elements of a claim have been satisfied, that “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). “In sum, for a complaint to survive a motion to dismiss, the non-conclusory ‘factual content,’ and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. United States Secret Serv., 572 F.3d 962, 970 (9th Cir.2009), citing Iqbal, 129 S.Ct. at 1949.

“In ruling on a 12(b)(6) motion, a court may generally consider only allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice.” Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir.2007). In considering a motion to dismiss, this court accepts all of the allegations in the complaint as true and construes them in the light most favorable to the plaintiff. See Kahle v. Gonzales, 474 F.3d 665, 667 (9th Cir.2007). Moreover, the court “presume[s] that general allegations embrace those specific facts that are necessary to support the claim.” Nat'l Org. for Women v. Scheidler, 510 U.S. 249, 256, 114 S.Ct. 798, 127 L.Ed.2d 99 (1994), quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). The court need not, however, accept legal conclusions “cast in the form of factual allegations.” Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir.1981).

III. Motion to Strike Class Allegations

In conducting an action under [Federal Civil Procedure Rule 23], the court may issue orders that:

* * *

(D) require that the pleadings be amended to eliminate allegations about representation of absent persons and that the action proceed accordingly; or

(E) deal with similar procedural matters.

Fed.R.Civ.P. 23(d).

FACTUAL BACKGROUND

I. The Parties

A. Defendants

Defendant Bankers is a Delaware corporation with its principal place of business in Illinois, engaged in the business of issuing and selling insurance policies, including elder disability care and long-term health-care policies such as those purchased from it by some of the named plaintiffs. Bankers is a wholly-owned indirect corporate subsidiary of defendant CNOFG.

CNOFG is a Delaware corporation with its principal place of business in Delaware. Plaintiffs allege that CNOFG (and/or its immediate corporate predecessor entity) at all material times oversaw Bankers' activities in marketing long-term health-care policies to older Oregonians, and played a direct role in reviewing and processing claims filed under such policies. Plaintiffs further allege that in the ordinary course of business CNOFG exercises “day-to-day management and control over Bankers,” including by providing all human resources, public relations, legal affairs, product development, and employee training services and functionality to Bankers. Moreover, plaintiffs allege that it was William Kirsch, the CEO of CNOFG,...