Ford v. Freemen

• Decision Date: 21 May 2019
• Docket Number: CIVIL ACTION NO. 3:18-CV-3095-B
• Citation: 388 F.Supp.3d 692
• Parties: Rodney FORD, Plaintiff, v. Otis Norman FREEMEN, Prudential Insurance Company of America, and Bank of America, N.A., Defendants.
• Court: U.S. District Court — Northern District of Texas

388 F.Supp.3d 692

Rodney FORD, Plaintiff,

v.Otis Norman FREEMEN, Prudential Insurance Company of America, and Bank of America, N.A., Defendants.

CIVIL ACTION NO. 3:18-CV-3095-B

United States District Court, N.D. Texas, Dallas Division.

Signed May 21, 2019

Tom C. Clark, Clark, Malouf & White LLP, Dallas, TX, for Plaintiff.

Mark E. Schmidtke, Pro Hac Vice, Ogletree Deakins Nash Smoak & Stewart, P.C., Valparaiso, IN, Sam A. Moak, Pro Hac Vice, Moak & Moak P.C., Huntsville, TX, Monte K. Hurst, Hallett & Perrin, P.C., Collin Kneale Brodrick, Ogletree Deakins Nash Smoak & Stewart PC, Dallas, TX, for Defendant.

MEMORANDUM OPINION AND ORDER

JANE J. BOYLE, UNITED STATES DISTRICT JUDGE

Before the Court are: (1) Defendant Bank of America Corporation's (BoA) Motion to Dismiss (Doc. 32); and (2) Defendant Prudential Insurance Company of America's (Prudential) Motion to Dismiss (Doc. 36). Both Motions were filed under Federal Rule of Civil Procedure 12(b)(6) and seek dismissal of the respective claims brought against BoA and Prudential in Plaintiff's Fourth Amended Complaint (Doc. 26). For the reasons stated below, the Court GRANTS in part and DENIES in part BoA's Motion to Dismiss (Doc. 32) and DISMISSES Plaintiff's state-law negligent-misrepresentation claim as preempted by ERISA. However, the Court GRANTS Plaintiff leave to amend his Complaint against BoA and to assert the dismissed state-law claim under ERISA. Furthermore, the Court GRANTS Prudential's Motion to Dismiss (Doc. 36) and DISMISSES with prejudice Plaintiff's ERISA claim against Prudential.

I.BACKGROUND¹

A. Factual Background

This case involves a dispute over Prudential's payment of the life-insurance benefits of David Freemen (hereinafter the "Decedent") to Defendant Otis Norman Freemen.² Plaintiff alleges that he was the common-law spouse of the Decedent until the Decedent unfortunately passed away on October 23, 2016. Doc. 26, Pl.'s Fourth Am. Compl. (FAC), ¶ 11. The life-insurance policy (the "Policy") at issue was obtained in 1996 by the Decedent from his employer at the time, MBNA.³ Id. ¶ 12. On December 30, 1996, Plaintiff alleges that the Decedent executed a beneficiary form designating the Plaintiff as the 100% beneficiary on the Policy. Id. ¶ 12. The Decedent worked for MBNA until 2005, when he left active employment and was placed on long-term disability. Id. ¶ 13.

From 2005 to 2016, Plaintiff alleges that MBNA, BoA, and/or Prudential periodically sent the Decedent information confirming his status, the existence and amount of the Policy, and that Plaintiff was the sole beneficiary. Id. ¶ 15. However, Plaintiff does not currently have access to these documents because prior to the Decedent's death, Decedent "cleaned out" these documents, and thus, Plaintiff does not specifically allege which entity purportedly sent these documents. See id. After the Decedent's death, Plaintiff contacted Prudential and BoA to make claims for various survivor benefits, including a claim as the beneficiary under the Policy. Id. ¶ 16. Prudential told Plaintiff that there was no beneficiary designation on the Policy and advised Plaintiff to contact BoA to obtain the original records of the Policy since BoA had succeeded to MBNA's records. Id. ¶ 17.

Plaintiff then called BoA and spoke to a BoA employee, Kecia Atkins, requesting that she check the records to see if she could locate the form naming Plaintiff as the beneficiary on the Policy. Id. In response, Atkins allegedly confirmed that she "found [Plaintiff's] name, but could not (and would not) certify that the beneficiary designation applied to the Policy." Id. Atkins also allegedly "stated unequivocally that there was no beneficiary form showing [Plaintiff] as beneficiary of the Policy." Id. However, in October of 2018, in response to a subpoena Plaintiff served on BoA, BoA turned over records it had regarding the Policy, which allegedly showed Plaintiff as the sole 100% beneficiary of the Policy based on the 1996 designation. Id. ¶¶ 27–28.

Relying on the representations BoA made in 2016, Plaintiff proceeded to discuss with Prudential how the Policy proceeds would be paid without a beneficiary designee. Id. ¶¶ 17–18. Prudential allegedly stated that the proceeds would go to the Decedent's spouse, and if none existed, to his "heirs." Id. ¶ 18. Although Plaintiff alleges that he and the Decedent were common-law married, they never registered their marriage or applied for a marriage certificate after the Supreme Court's decision in Obergefell v. Hodges , ––– U.S. ––––, 135 S. Ct. 2584, 192 L.Ed.2d 609 (2015). Id. Thus, Prudential allegedly advised Plaintiff that he would have to make a claim for benefits and prove the elements of common-law marriage in court to obtain the Policy proceeds. Id.

Plaintiff then called Freemen expressing his concern that BoA and Prudential did not have record of his beneficiary designation and with having to go through the process of proving his marital status with the Decedent. Id. ¶ 19. Based on this concern, Freemen and Plaintiff allegedly agreed that Plaintiff was entitled to the Policy's proceeds and that instead of going through the "time consuming" process of proving up Plaintiff's marriage, Freemen would accept the proceeds as the Decedent's father and then send the money to Plaintiff. Id. Based on this alleged agreement, Plaintiff stopped pursuing his own claim for the funds with Prudential and allowed Freemen to complete the necessary paperwork to pay out the Policy's proceeds. Id. ¶ 20. Prudential paid Freemen the Policy proceeds, which at the time totaled $ 726,299.18. Id. ¶ 21. Despite their agreement, Freemen did not pay the Policy proceeds to Plaintiff, but instead allegedly used the money to pay off the title to his house and other third parties. Id. ¶ 24.

B. Procedural Background

On February 22, 2017, Plaintiff filed his Original Petition in state court bringing only state-law claims against Freemen based on his breach of the agreement. See generally Doc. 1-2, Ex. A-2, Original Pet. After almost two years of litigation in state court, Plaintiff filed a Third Amended Petition, adding state-law claims against Defendants BoA and Prudential. See generally Doc. 1-4, Ex. A-49, Third Am. Pet. On November 20, 2018, Defendants removed the state-court action to this Court invoking federal-question jurisdiction. See Doc. 1, Notice of Removal. Defendants argued that the Policy at issue was provided under an employee welfare benefit plan controlled by the Employee Retirement Income Security Act (ERISA), and thus, Plaintiff's state-law claims were preempted. Id. ¶ 4. Plaintiff did not dispute Defendants' removal on any grounds.

Then, on January 2, 2019, Plaintiff filed his now-operative Fourth Amended Complaint. Doc. 26, FAC. In this Complaint, Plaintiff brings a state-law claim against BoA for negligent misrepresentation based on its allegedly negligent handling of and communications regarding the Policy documents. Id. ¶¶ 43–46. Against Prudential, Plaintiff brings a federal claim under ERISA alleging that he was entitled to the Policy's proceeds, but was denied the proceeds in violation of ERISA § 502(a)(1)(B), codified at 29 U.S.C. § 1132(a)(1)(B). Id. ¶¶ 47–50.

On January 16, 2019, BoA filed its Motion to Dismiss arguing inter alia that Plaintiff's state law negligent-misrepresentation claim is preempted by ERISA and that Plaintiff's claim for benefits should otherwise be dismissed with prejudice for failure to exhaust administrative remedies. Doc. 33, BoA Mot. to Dismiss, 4–5, 10–11. Shortly thereafter, on January 22, 2019, Prudential filed its Motion to Dismiss making the same exhaustion argument and arguing that in any case, Prudential appropriately paid Freemen according to the Policy's terms, and thus, cannot be liable under ERISA. Doc. 36, Prudential's Mot. to Dismiss, 5–8. Having been fully briefed on both Motions, the Court now addresses the sufficiency of Plaintiff's claims as to both Defendants.

II.LEGAL STANDARD

Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint 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). Rule 12(b)(6) authorizes a court to dismiss a plaintiff's complaint for "failure to state a claim upon which relief can be granted." Id. 12(b)(6). In considering a Rule 12(b)(6) motion to dismiss, "[t]he court accepts all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff." In re Katrina Canal Breaches Litig. , 495 F.3d 191, 205 (5th Cir. 2007) (internal citations and quotations omitted). "The court's review [under 12(b)(6) ] is limited to the complaint, any documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint." Ironshore Europe DAC v. Schiff Hardin, L.L.P. , 912 F.3d 759, 763 (5th Cir. 2019) (emphasis added) (quoting Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC , 594 F.3d 383, 387 (5th Cir. 2010) (citation omitted)).

To survive a motion to dismiss, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). "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. "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. When well-pleaded facts fail to achieve this plausibility standard, "the complaint has alleged—but it has not shown—that the pleader is entitled to relief." Id. at 679, 129...