Miller v. Deloitte Servs. LP, Case No. 3:18-cv-00581

• Decision Date: 22 January 2019
• Docket Number: Case No. 3:18-cv-00581
• Parties: JACKSON MILLER, Plaintiff, v. DELOITTE SERVICES LP, Defendant.
• Court: U.S. District Court — Middle District of Tennessee

JACKSON MILLER, Plaintiff, v. DELOITTE SERVICES LP, Defendant.

Case No. 3:18-cv-00581

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION

January 22, 2019

Judge Aleta A. Trauger

MEMORANDUM

Plaintiff Jackson Miller, by and through his "Next Friend" Wanda Padgett, has filed suit against Deloitte Services LP ("Deloitte"), asserting claims under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. Now before the court is Deloitte's Motion to Dismiss the Amended Complaint (Doc. No. 19), arguing that (1) the Amended Complaint fails to allege sufficient facts to support the plaintiff's claim of entitlement to the recovery of life insurance benefits; (2) the ERISA claim for breach of fiduciary duty is barred by the statute of limitations; and (3) the plaintiff failed to exhaust administrative remedies required to pursue his claim under 29 U.S.C. § 1132(a)(1)(B).

For the reasons set forth herein, the motion will be denied.

I. Factual Allegations and Procedural Background

According to the allegations in the First Amended Complaint, the plaintiff was born in 1987 to Melissa Underwood Miller ("Underwood") and Wayne Lawrence Miller (the "decedent"). Underwood and the decedent divorced in 2005. The decedent died on June 3, 2013 in Wayne County, Michigan. (Doc. No. 15 ¶¶ 4, 5, 7.) The plaintiff, who lives with his mother, suffers from severe physical health problems and intellectual deficits. He has an IQ of 54, is unable to live independently, and remains—and is likely to remain—legally incompetent. (Id. ¶ 6.)

Phyllis Frevik is the decedent's widow. She resides in Wayne County, Michigan. (Id. ¶ 8.)

The Final Decree of Divorce between Underwood and the decedent incorporated Underwood's proposed Parenting Plan, which required the decedent to name the plaintiff as the beneficiary of a life insurance policy in the amount of $500,000. (Id. ¶¶ 11, 13; Permanent Parenting Plan, Doc. No. 15-1 § III.E.)

The decedent was an employee of defendant Deloitte at the time he obtained life insurance through an ERISA welfare benefit plan (the "Plan") offered by Deloitte. The life insurance policy ("Policy") was issued by MetLife Insurance Company ("MetLife"). (Doc. No. 15 ¶¶ 14, 15.) Although the decedent obtained the Policy through MetLife, the defendant acted as the Plan Administrator or intermediary between MetLife and the decedent and was designated as a "'named fiduciary' within the meaning of Section 402(a) of ERISA." (Id. ¶ 15.)

The plaintiff asserts that he was designated by the decedent as a beneficiary under the Policy. The factual basis for that assertion is that, in March 2018, his Next Friend found a copy of a Designation of Beneficiary Form dated January 15, 2007, which had evidently been mailed by decedent to Underwood around that time. (Id. ¶¶ 16, 17; Doc. No. 15-5.) The Next Friend found the copy of the Designation of Beneficiary Form in a folder with Underwood's medical records dating from November 2006 through June 2007. (Doc. No. 15 ¶¶ 18, 19.) From November 2006 through June 2007, Underwood was receiving medical care as a result of a stroke and cerebral hemorrhage suffered in November 2006. (Id. ¶ 20.) Throughout that time period, she was physically and mentally incapacitated. (Id. ¶¶ 21-27.) When asked about the Designation of Beneficiary Form after the plaintiff's Next Friend found it in 2018, Underwood did not recall ever having seen it and had not previously known of its existence. The plaintiff himself lacked the capacity to search for or understand the form. (Id. ¶¶ 29, 30.)

The Designation of Beneficiary Form references Optional Life Insurance and Basic Life Insurance totaling $560,000. (Id. ¶ 31; Doc. No. 15-5.) The decedent's then-wife, Anne Mokrzec, was named as the beneficiary of the basic life insurance policy in the amount of $50,000. (Doc. No. 15 ¶ 32; Doc. No. 15-5.) The plaintiff was to receive $350,000 of the Optional Life Insurance. (Doc. No. 15 ¶ 33; Doc. No. 15-5.)

The decedent divorced Anne Mokrzec in 2012. (Doc. No. 15 ¶ 34.) Per the divorce decree, Mokrzec forfeited all rights to any insurance policy naming her as the decedent's beneficiary. (Id. ¶ 35.)

The plaintiff contends that "[a]dditional MetLife documents establish that Decedent amended his coverage after the Beneficiary Designation Change form." (Id. ¶ 36.) Specifically, in June 2007, the decedent changed the Supplemental/Optional Life coverage amount to $524,100. (Id. ¶ 37; Doc. No. 15-8.) That sum, combined with Dependent Life Insurance in the amount of $10,000 and Basic Life Insurance in the amount of $50,000, meant that the value of the decedent's life insurance policies at that time was $584,100. (Doc. No. 15 ¶¶ 38-40.) In addition, the decedent ceased working for Deloitte on April 18, 2008 and was placed on disability leave. (Id. ¶ 43.) He obtained a premium waiver from MetLife, due to his disability, on May 27, 2009. (Id. ¶ 44' Doc. No. 15-10.) The letter from MetLife to Deloitte approving the disability waiver states, in pertinent part: "[I]t is our opinion that the medical information submitted supports total disability as defined in your group plan. Therefore, we are recommending approval of the claim effective April 20, 2009." (Doc. No. 15-10.)

Upon the decedent's death in June 2013, Underwood, who has never been appointed as the plaintiff's legal representative, made a claim on behalf of the plaintiff for the MetLife life insurance proceeds, based upon the divorce decree requiring the decedent to maintain life insurance to benefit the plaintiff in the amount of $500,000. (Doc. No. 15 ¶ 45.) MetLife denied the claim, notifying Underwood that "[t]he Decedent did not have a beneficiary on file with the Plan. When there is no eligible, designated beneficiary on file with the Plan, benefits are paid in accordance with the line of succession provision in the Plan as stated above." (Id. ¶ 46; Doc. No. 15-12.) In accordance with the Plan's line of succession, MetLife distributed life insurance proceeds in the amount of $576,598.67 to the decedent's widow, Phyllis Frevik. (Doc. No. 15 ¶ 48; Doc. No. 15-13.)¹

MetLife's denial of the claim was based on information provided to it by Deloitte. In August 2013, Deloitte sent to MetLife a Life Insurance Claim Form stating that the decedent's "most recent beneficiary designation" was not available and that he had life insurance coverage with a total value of $575,000 with an effective date of April 30, 2009. (Doc. No. 15 ¶¶ 41, 42; Doc. No. 15-9.) The plaintiff points out that the Life Insurance Claim Form does not indicate that the decedent had Dependent Life Insurance coverage in the amount of $10,000, despite the confirmation in the April 9, 2009 Statement of Review (Doc. No. 15-8) that such coverage was still in effect at least as of that date. He argues that, "[g]iven that the values of Decedent'spolicies were modified at this time, in April of 2009, it is more than plausible that Deloitte breached its fiduciary duties and destroyed or otherwise misplaced the January 15, 2007 Beneficiary Designation Form." (Doc. No. 15 ¶ 94.)

Based on these allegations, the plaintiff brings two substantive, ERISA-based claims in this case. In Count I, he makes a claim based on his entitlement to recover plan benefits and enforce rights under an ERISA plan pursuant to 29 U.S.C. § 1132(a)(1)(B). In support of this claim, he asserts that the January 2007 Designation of Beneficiary form identifying the plaintiff as a beneficiary of the Policy should have been in Deloitte's files, that the Designation of Beneficiary Form was sufficient to name the plaintiff as a beneficiary of the Policy, and that Deloitte failed to honor the decedent's Designation of Beneficiary, either because it did not identify by percentage the amount each beneficiary was to receive or because Deloitte lost, misplaced, or otherwise deleted the Designation of Beneficiary Form. (Doc. No. 15 ¶¶ 56-62.) He argues that, although the decedent had post-disability coverage in the amount of $585,000, including $10,000 in dependent coverage, "MetLife paid only the Supplemental/Optional Life policy and Basic Life based on the information sent by Deloitte [in] Exhibit I." (Id. ¶ 65.) The plaintiff asserts that the decedent complied with all conditions precedent to entitle the plaintiff to receive benefits under the Policy, but MetLife denied his claim as a result of Deloitte's acts and omissions. The plaintiff also asserts that, based on the facts alleged, the defendant cannot establish that his claim is barred by failure to exhaust or the statute of limitations. He seeks damages in the amount of $575,000 plus attorney's fees.

In Count II, the plaintiff asserts a claim of gross negligence and breach of fiduciary duty by Deloitte under 29 U.S.C. § 1132(a)(3), based on essentially the same facts alleged in support of Count I, specifically that Deloitte breached its fiduciary duty either by rejecting the Designation of Beneficiary Form without notifying the decedent that it was doing so or by losing, misplacing or otherwise disregarding the Form and failing to provide it to MetLife. (Doc. No. 15 ¶¶ 92, 93.) He seeks damages in the minimum amount of the value of the Policy plus attorney's fees.²

The original Complaint initiating this action was filed on June 25, 2018. (Doc. No. 1.) The Amended Complaint was filed on August 30, 2018. On October 4, 2018, Deloitte filed its Motion to Dismiss and supporting Memorandum (Doc. Nos. 19, 20), to which the plaintiff filed a Response (Doc. No. 22). Deloitte filed a Reply. (Doc. No. 23.) In its motion, Deloitte asserts that (1) both Counts I and II in the Amended Complaint fail to state a claim for which relief may be granted and are subject to dismissal under Rule 12(b)(6); (2) the claim for breach of fiduciary duty, Count II, is time-barred; and (3) the plaintiff failed to exhaust administrative remedies required for Count I.

The plaintiff...