Kenney v. Indep. Order of Foresters

• Decision Date: 27 March 2013
• Docket Number: CIVIL ACTION NO. 3:12-CV-123
• Court: U.S. District Court — Northern District of West Virginia
• Parties: AUDREY DIANNE KENNEY, Plaintiff, v. THE INDEPENDENT ORDER OF FORESTERS, Defendant.

AUDREY DIANNE KENNEY, Plaintiff,

v.THE INDEPENDENT ORDER OF FORESTERS, Defendant.

CIVIL ACTION NO. 3:12-CV-123

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF WEST VIRGINIA MARTINSBURG

DATED: March 27, 2013

(JUDGE GROH)

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S MOTION TO

DISMISS BASED ON VIRGINIA LAW

PlaintiffAudrey Dianne Kenney brings a claim under the West Virginia Unfair Trade Practices Act.This matter is currently before the Court on Defendant The Independent Order of Foresters' Motion to Dismiss Based on Virginia Law[Doc. 16], filed on December 20, 2012.Plaintiff filed her Response on December 27, 2012.Defendant filed its Reply on January 3, 2013.For the following reasons, this CourtGRANTS the Defendant's Motion to Dismiss Based on Virginia Law.¹

I.Factual Background

PlaintiffAudrey Dianne Kenney("Plaintiff") is a resident of Martinsburg, Berkeley County, West Virginia.Plaintiff is the widow of Ronald Lee Kenney("Insured").Defendant The Independent Order of Foresters ("Defendant") is a fraternal insurance company with its principle place of business at 789Don Mills Road, Toronto, Canada M3C 1T9.Defendant has a United States mailing address of P.O. Box 179, Buffalo, New York 14201-0179.Plaintiff alleges that Defendant was authorized to transact business in the State of West Virginia, and Plaintiff sold life insurance policies and collected premiums from the citizens of the State of West Virginia.Plaintiff contends that Defendant and its employees are responsible for the handling, adjustment, and settlement of claims presented under insurance policies issued by Defendant and its affiliated companies to West Virginia residents.Defendant's employees include sales agents, which are sometimes referred to as Deputies.

On November 14, 1984, Defendant issued Plaintiff's late husband, Insured, a "Forester Flexible Premium Adjustable Life Certificate,"CertificateNo. 371033, with a face amount of $80,000.Plaintiff was the designated beneficiary of the policy.During 1994, Plaintiff alleges that she and her husband were induced by Defendant and its Deputies to increase the policy's face value from $80,000 to $130,000.Plaintiff contends that Defendant and its Deputies represented to Plaintiff and her husband that an increase in the policy's face value would be beneficial for tax purposes.

On or about May 25, 1994, Plaintiff's husband completed an "Application For: Change" form, which was one of Defendant's documents.A Defendant's Deputy filled out the form, and Plaintiff's husband signed it.Section II of the form states a "FULI"request to increase the Policy's face amount to $130,000.On or about May 25, 1994, the form was signed by Defendant's Deputy Mark Ruth.On May 31, 1994, Defendant marked the submitted form as received by its underwriting department.

On or about January 3, 1995, Richard J. Lyles, Defendant's Deputy, presented Ronald Kenney with a document entitled "Acceptance of Change in Application (Change #4529)," and Richard Lyles counter-signed the document as a "witness."The "Acceptance of Change in Application" indicated that "an additional $50,000.00 (Fifty Thousand Dollars) is issued on the member [Kenney, Ronald L.] with an extra rate."Richard Lyles solicited Plaintiff's husband's signature on the "Acceptance of Change in Application," and he represented that the documented needed to be signed for the additional $50,000 coverage to go into effect.Richard Lyles did not advise Plaintiff's husband or Plaintiff that the "Acceptance of Change in Application" may be ineffective because it had not been timely received at Defendant's headquarters before the October 18, 1994 expiration date, printed in the lower right corner of the application.Defendant received the submitted "Acceptance of Change in Application" on January 5, 1995.

Plaintiff contends that in reliance upon Defendant's Deputies' "superior knowledge of the insurance products and the representations made by the Deputies, Plaintiff alleges she and her husband had a reasonable expectation that the face amount of his life insurance policy had in fact been increased from $80,000 to $130,000.Plaintiff also argues that her reasonable expectation was confirmed "by an increase in the Policy premium that was being directly deducted from the Kenney's joint checking account in an amount previously indicated by Deputy Richard J. Lyles as thenew premium" and the Defendant's Annual Statements "reflected that premiums which were being directly deducted from the Kenneys' joint checking account were being applied to 'Premiums Paid.'"Also, Defendant issued a "Specification of Certificate Changes" to Insured indicating a "Schedule of Benefits of "$130,000 Flexible Premium Adjustable Li[sic] Effective Date 14 Aug 1994."

On September 19, 2011, Plaintiff's husband passed away due to complications associated with lung cancer.Plaintiff alleges that the policy was in force on September 19, 2011.On September 21, 2011, Plaintiff, as the listed beneficiary, made her claim under her late husband's life insurance policy for the $130,000 policy proceeds.Defendant denied Plaintiff the policy's full benefits, and Defendant offered her $80,000 of the $130,000 policy in settlement of her claim.

As a result of Defendant's denial of the $130,000, Plaintiff alleges she had to obtain a loan to pay for the costs of her husband's funeral.Also, Plaintiff stated she filed a complaint with the West Virginia Insurance Commissioners' Office on November 1, 2011, and she consulted and retained an attorney.Defendant never informed Plaintiff in any written document of her option to contact the West Virginia Insurance Commissioners' Office if she did not agree with Defendant's coverage decision.On July 20, 2012, Defendant stated in a letter to Plaintiff that "[T]here were some inconsistencies within the file that lead us to the conclusion that Mr. Kenney would have assumed the face amount of the insurance certificate remained at the increases coverage amount of $130,000."Thus, Defendant finally paid Plaintiff $130,000.As a result, Plaintiff argues she substantially prevailed in obtaining all of the coverage to which she was lawfully entitled to as a beneficiary under the Policy.Plaintiff seekscompensatory damages for Defendant's bad faith conduct, improper denial of Plaintiff's claim under the Policy, violations of the West Virginia Unfair Trade Practices Act and the regulations promulgated by the West Virginia Insurance Commissioner pursuant to that Act, and breach of the implied covenant of good faith and fair dealing, as well as punitive damages and attorney's fees and costs.

II.Procedural Background

Plaintiff filed this action in the Circuit Court of Berkeley County, West Virginia on September 27, 2012.The West Virginia Secretary of State received a copy of the Summons and Complaint on September 21, 2012, and Defendant was served on September 27, 2012.Defendant filed its Notice of Removal on October 16, 2012, within thirty days of service, pursuant to this Court's diversity jurisdiction.On October 18, 2012, Plaintiff filed a Motion to Remand to State Court.On December 11, 2012, this Court denied Plaintiff's Motion to Remand after determining that it had jurisdiction over the case.

On December 11, 2012, Defendant filed its Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.Plaintiff filed her Response on December 20, 2012.Defendant filed its Reply on December 27, 2013.On December 20, 2012, Defendant filed a second Motion to Dismiss Based on Virginia Law.Plaintiff filed her Response on December 27, 2012.Defendant filed its Reply on January 3, 2013.Therefore, the Defendant's motions are ripe for this Court's review as they have been fully briefed.Because the second motion to dismiss is dispositive of all the issues, the Court's Order addresses only that motion.

III.Legal Standard

When reviewing a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court must assume all of the allegations to be true, must resolve all doubts and inferences in favor of the plaintiff, and must view the allegations in a light most favorable to the plaintiff.Edwards v. City of Goldsboro, 178 F.3d 231, 243-44(4th Cir.1999).But, a complaint must be dismissed if it does not allege "enough facts to state a claim to relief that is plausible on its face."Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1974(2007)(emphasis added)."A complaint need only give 'a short and plain statement of the claim showing that the pleader is entitled to relief.'"In re Mills, 287 Fed. Appx. 273, 280(4th Cir.2008)(quotingFED. R. CIV. P. 8(a)(2))."Specific facts are not necessary; the statement need only give the defendant fair notice of what the . . . claim is and the grounds upon which it rests."Id.(internal quotations and citations omitted).However, "[t]he pleading standard Rule 8 announces does not require detailed factual allegations, but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do.Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancements."Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949(2009).

When rendering its decision, the Court may also consider facts derived from sources beyond the four corners of the complaint, including documents attached to the complaint, documents attached to the motion to dismiss"so long as they are integral to the complaint and authentic," and facts subject to judicial notice under Federal Rule of Evidence 201.Philips v. Pitt Cnty. Mem'l Hosp., 572 F.3d 176, 180(4th Cir.2009)(citingBlankenship v. Manchin, 471 F.3d 523, 526 n. 1(4th Cir.2006));see alsoKatyle v. Penn Nat'l Gaming, Inc., 637 F.3d 462, 466(4th Cir.2011).

IV.Discussion

A...