Harmon v. Harmon

• Citation: 962 F.Supp.2d 873
• Decision Date: 02 August 2013
• Docket Number: Civil Action No. 3:12–CV–00153.
• Parties: Patricia Ann HARMON, et al., Plaintiffs, v. Legh Ann HARMON, et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

962 F.Supp.2d 873

Patricia Ann HARMON, et al., Plaintiffs,

v.Legh Ann HARMON, et al., Defendants.

Civil Action No. 3:12–CV–00153.

United States District Court,

S.D. Texas,

Galveston Division.

Aug. 2, 2013.

William J. Robertson, Attorney at Law, John C. Osborne, Law Offices of John C. Osborne, PLLC, Houston, TX, for Plaintiffs.

David W. Tang, Attorney at Law, Houston, TX, Michael Paul Fleming, Michael P. Fleming & Associates, P.C., Houston, TX, Linda G. Moore, Estes Okon Thorne & Carr PLLC, Dallas, TX, for Defendants.

MEMORANDUM AND ORDER

GREGG COSTA, District Judge.

This case arises from the payment of the late William Harmon's life insurance proceeds to his daughter, Defendant Legh Ann Harmon. The deceased's widow, Plaintiff Patricia Harmon, claims that Legh Ann and her boyfriend, Defendant Xavier Lee, deceived William into changing the primary beneficiary of the life insurance policy from Patricia to Legh Ann while William was incompetent to make such a decision. Patricia also claims that Defendant Metropolitan Life Insurance Company, the issuer of the policy, violated various ERISA provisions by distributing the proceeds to Legh Ann without the original paperwork showing the beneficiary change and with knowledge that William was incapacitated when the change was made. Defendants have moved for summary judgment. Having reviewed the parties' briefs, the facts, and the applicable case law, the Court GRANTS Defendants' motions.

I. Background

This lawsuit centers around two life insurance policies that William Harmon obtained while employed by Bayer Corporation. William participated in Bayer's employee benefit program, through which he funded and owned a $125,000 basic life insurance policy and a $125,000 optional supplemental life insurance policy. A beneficiary designation form shows that on April 19, 2000, William designated his wife, Patricia Harmon, as the primary beneficiary of the policies, and his daughter, Legh Ann Harmon, as the secondary beneficiary. Docket Entry No. 33–11 at 2.

William's health appears to have started deteriorating in 2000 because of “severe pancreatitis with pseudocyst.” Docket Entry No. 48–1 at 7. William grew physically weak and, in September 2001, began seeing a psychiatrist after suffering from “depression, anxiety, nightmares, and flashbacks.” Id. The Social Security Agency deemed him disabled in August 2002 due to “organic mental disorders and essential hypertension” and he seems to have quit his job around that time. Docket Entry Nos. 48–3 at 8; 13 at 4. A March 2003 report from the psychiatrist to a disability claims examiner notes that William's condition had “been generally downhill,” showing signs of ongoing deterioration of his cognitive abilities, vascular dementia, and difficulties with short-term memory. Docket Entry No. 48–1 at 7.

On November 22, 2004, Legh Ann was named the primary beneficiary of the insurance policies, but exactly how that happened is unclear. The evidence of the beneficiary change is limited and primarily contained in electronic records of Hewitt Associates—the administrative services provider and record keeper for the insurance plan until 2010. Those records include a computer screenshot documenting that the beneficiary change took place on that date. Docket Entry No. 38–7 at 71–73. The records also include a spreadsheet of Health Insurance Portability and Account Act (HIPAA) Notices, which has a November 22, 2004 entry for “Confirm PIN Reset”—presumably a notice confirming a change in William's personal identification number—and a November 23, 2004 entry for “HW Bene Confirm”—presumably a notice confirming the change in beneficiary. Id. at 74.¹

IMAGE

Figure 1. Screenshots showing November 22, 2004 beneficiary change. Docket Entry No. 38–7 at 73–74.

In the following years, William's health continued to deteriorate. After enduring a major stroke in 2008, he died on June 21, 2010 at the age of sixty-three. He was survived by Patricia and Legh Ann, as well as three of Patricia's children from a prior marriage whom he adopted when he married Patricia.

On June 28, 2010, the Bayer Benefits Center sent Legh Ann a letter advising her that she was the designated beneficiary of the insurance proceeds and enclosing a claim form. Docket Entry No. 40 at 49. On June 30, 2010, the Bayer Benefits Center faxed its Employer's Statement to MetLife, informing MetLife of William's death, details of his coverage, and that Legh Ann was the designated beneficiary. Docket Entry Nos. 40 at 46–50; 41 at 1–5. Legh Ann submitted her claim form and the death certificate to MetLife on July 8, 2010. Docket Entry No. 41 at 16–21.

Patricia alleges that the first time she learned of the beneficiary change was after William's death, when the funeral home advised her that the life insurance policy she provided them to cover the expenses had already been paid to Legh Ann. Phone logs show that Patricia called MetLife on July 6, 2010 to inquire about the beneficiary change and ask if she could change the named beneficiary, but the representative advised her that such action was not possible. Docket Entry No. 48–3 at 12. She called again two days later, stating that her daughter wanted to give up her rights and the proceeds, but the Benefits Center once again refused and informed her that it had to pay the most current beneficiary listed on file. Id. at 13. Though not documented in the phone logs, Patricia alleges that she told the representative that William did not have the mental capacity to change the beneficiary and that the change must have been a mistake. Compare id., with Docket Entry No. 48 at 4. She also states that the representative told her the beneficiary change was made online, but that too is not documented in the phone logs. Id. The parties also dispute whether, in a subsequent phone call on July 13, 2010, Patricia stated that she would not file a competing claim. Patricia is adamant that she “consistently asserted her claim,” Docket Entry No. 48 at 5, but the phone record states: “Isn't going to file a clm .... let Exmnr know not going to file clm, can proceed.” Docket Entry No. 48–3 at 15. MetLife paid the insurance proceeds to Legh Ann on July 15, 2010. Docket Entry No. 43 at 37.

Shortly thereafter, Patricia retained counsel in connection with her alleged interest in the life insurance proceeds. On July 23, 2010, her counsel wrote MetLife asserting claims on three bases: (1) the change of beneficiary was the result of Legh Ann's undue influence; (2) the decedent lacked the mental capacity to understand the effect of his conduct at the time of the beneficiary change; and (3) the life insurance premiums were paid with community property entitling Patricia to a 50% interest. Docket Entry No. 48–4 at 1. MetLife responded on August 12, 2010, denying the claim. Id. at 4. It reasoned that Patricia had advised on July 13 that she would not be filing a claim, and therefore it processed payment in good faith pursuant to the most recent beneficiary designation on file. Id. MetLife also informed Patricia's counsel that, under ERISA, he had sixty days to file a written appeal, which should include “the reason(s) you believe the claim was improperly denied, and [ ] any additional comments, documents, records or other [information].” Id. at 4–5.

Patricia hired new counsel who filed a formal appeal with MetLife on October 15, 2010. Docket Entry No. 42 at 8–9. The appeal letter argued that the payment was based on “insufficient and erroneous documentation provided by Bayer” and complained that no evidence was provided to Patricia regarding the beneficiary change. Id. at 8. It also urged that Patricia had “a good faith belief that there was an error made in the payment of the [ ] claim” and “a good faith belief that the designated beneficiary was changed by means of fraud,” but attached no evidence in support of those beliefs. Id. at 9. After receiving the appeal, MetLife's claim examiner referred the appeal to a “senior” who reviewed the entire file and advised that “[n]othing was provided that would prove that we paid the wrong Bene based on fraud” and thus that Metlife should uphold the paid-in-good-faith letter. Id. at 12. The examiner also requested that the Plan's third-party administrator provide the actual beneficiary designation on file for William Harmon. Id. at 13–14. Affiliated Computer Services—the company that replaced Hewitt as the third-party administrator in 2010—responded that it did not have any original beneficiary designation paperwork and that the only beneficiary designation information that it received from Hewitt was in the form of computer screenshots. Id. at 17–18. Nonetheless, “based on the record before” it, MetLife determined that the appeal was without merit and upheld the denial of the claim. Id. at 21–22.

Unsatisfied with MetLife's determination, Patricia filed suit in state court on April 20, 2012, naming both herself and the decedent's estate as plaintiffs. Defendants removed the action to this Court on May 21, 2012. In her latest pleading, Patricia names six Defendants: Legh Ann, Xavier Lee, MetLife, Hewitt, Affiliated Computer Services, and Bayer Corporate & Business Services, LLC. Docket Entry No. 13 ¶¶ 3–8.

Patricia alleges that Legh Ann and Lee moved in with her in August 2009 with the pretext of caring for William, but with actual intentions of stealing her money before fleeing to Maryland. Id. ¶ 16. She also alleges that Legh Ann either accessed William's life insurance policy information on MetLife's website and secretly changed the beneficiary designation or that Legh Ann unduly influenced William into changing the beneficiary designation. Id. ¶¶ 16–19. Based primarily on these allegations, Patricia brings causes of action against Legh Ann and Lee for fraud and misrepresentation; undue influence for the purpose of conversion; unjust enrichment and restitution; violation of the Texas Theft Liability Act; intentional...