Scott v. Regions Bank

• Decision Date: 11 March 2010
• Docket Number: No. 2:08-CV-296.,2:08-CV-296.
• Citation: 702 F.Supp.2d 921
• Parties: Mark A. SCOTT and Paul E. Scott v. REGIONS BANK, et al.
• Court: U.S. District Court — Eastern District of Tennessee

702 F.Supp.2d 921

Mark A. SCOTT and Paul E. Scott

v.REGIONS BANK, et al.

No. 2:08-CV-296.

United States District Court, E.D. Tennessee.

March 11, 2010.

COPYRIGHT MATERIAL OMITTED.

Arthur M. Fowler, Arthur M Fowler, III, Fowler & Fowler, PLLC, Johnson City, TN, for Plaintiff.

Michael S. Kelley, Kennerly, Montgomery & Finley, P.C., R. Brad Morgan, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Knoxville, TN, Michael L. Forrester, Hunter, Smith & Davis, Jack M. Vaughn, Alice Meade, Fuller & Vaughn, Kingsport, TN, for Defendant.

ORDER

RONNIE GREER, District Judge.

This matter is before the Court to consider the Report and Recommendation of the United States Magistrate Judge, [Doc. 149], dated January 26, 2009. In that Report and Recommendation the magistrate judge recommends that the Motion to Dismiss, [Doc. 110], filed by Defendant Helen Scott and joined by Defendant Andrea LaFollette be denied. The defendants have filed several objections to this report and recommendation.

After careful and de novo consideration of the record as a whole, and after careful consideration of the Report and Recommendation of the United States Magistrate Judge, and for the reasons set out in that Report and Recommendation, which are incorporated by reference herein, it is hereby ORDERED that the defendants' objections are OVERRULED, that this Report and Recommendation is ADOPTED and APPROVED, [Doc. 149], and that Defendants' Motion to Dismiss is DENIED, [Doc. 110]. It is further ORDERED that Defendant Helen Scott's “Motion for Hearing and Motion to Stay Proceedings,” [Doc. 138], is DENIED.

REPORT AND RECOMMENDATION

WILLIAM B. MITCHELL CARTER, United States Magistrate Judge.

I. Introduction:

Defendants Helen Scott and Andrea LaFollette (the Defendants) have filed a motion to dismiss Plaintiffs Mark Scott and Andrew Scott's claim brought under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132(a), seeking proceeds from two life insurance policies administered by defendant Metropolitan Life Insurance Company (MetLife). [Doc. 110]. This motion is before the undersigned Magistrate Judge having been referred for a report and recommendation by the District Court pursuant to 28 U.S.C. § 636(b)(1)(B) and (C). For the reasons stated herein, it is RECOMMENDED that the Defendants' motion to dismiss be DENIED.

II. Background

The basic allegations of the Plaintiffs' complaint are as follows: Plaintiffs, brothers Mark and Paul Scott, brought this action to recover life insurance proceeds from two policies administered by MetLife (the MetLife policies) and issued on the life of Herbert Andrew Scott, deceased. Mark and Paul Scott are the only children resulting from the marriage of Herbert Andrew Scott and his first wife, Sarah, who died in 1983. The MetLife policies were issued to Herbert Scott through his employment at Eastman Kodak Company and its subsidiary, Tennessee Eastman Kodak Company. Plaintiffs' father assigned these MetLife policies to an irrevocable trust (the Trust) to which Mark and Paul Scott, in 2006, were the sole beneficiaries. First National Bank of Sullivan County was originally designated as the trustee of the Trust. First National Bank of Sullivan County was succeeded by AmSouth Bank which was then succeeded by Regions Bank. Regions Bank is currently the trustee charged with administering the Trust. However, instead of paying the proceeds of the MetLife policies to the Trust upon Herbert Scott's death, MetLife paid the proceeds to Herbert Scott's second wife, Helen Scott. Mark and Paul Scott further allege:

Helen Scott and Defendant [Andrea] Lafollette [daughter of Helen Scott and stepdaughter of Herbert Scott], surreptitiously contacted MetLife claiming ownership of the MetLife insurance proceeds. Then, Defendant Lafollette or an employee of Defendant Edward Jones contacted an assistant branch manager of Defendant Regions Bank representing herself to be the daughter of Mr. Scott, and caused the assistant branch manager of [Regions Bank], not associated with the Trust Department, to prepare a letter addressed to “Whom It May Concern re H. Andrew Scott” advising

that there was not a current assignment in favor of [Regions Bank] on “the above referenced client.” This letter was then faxed to Defendant Edward Jones. ¹

(Plaintiffs' Amended Complaint ¶ 36, Doc. 108, May 5, 2009). Plaintiffs also allege that MetLife did not contact the trust department of Regions Bank and instead paid the proceeds to Helen Scott despite having notice that the Trust administered by Regions Bank was the beneficiary of the two MetLife policies. Plaintiffs allege that the proceeds from the MetLife policies are on deposit at defendant Edward Jones and Associates (Edward Jones) in Kingsport, Tennessee in the name of Helen Scott and/or Andrea LaFollette. Among other claims, Plaintiffs assert fraud and conversion against Helen Scott and Andrea LaFollette and a conspiracy among Helen Scott, Andrea LaFollette, and Edward Jones to engage in tortious interference with the contracts between Plaintiffs and Regions Bank and MetLife. Plaintiffs assert MetLife breached its fiduciary duty under ERISA to Plaintiffs and that Regions Bank breached its duty as trustee of the Trust by negligently administering the Trust.

Regions Bank has filed a cross-claim against MetLife and Helen Scott. Among other claims, Regions Bank asserts MetLife has arbitrarily and capriciously failed to pay the proceeds from the MetLife policies into the Trust, for which Regions Bank is the trustee, in violation of various sections of ERISA and that Helen Scott, with aid from Andrea LaFollette who was acting as her attorney-in-fact, engaged in a course of conduct to intentionally misrepresent to MetLife and Regions Bank their rights to the proceeds from the MetLife policies thereby converting those proceeds for Helen Scott.

Helen Scott has filed cross-claims against Regions Bank and MetLife asserting, inter alia, that if it is ultimately determined she is not entitled to the proceeds of the MetLife policies, then Regions Bank acted negligently in advising MetLife there was no trust and MetLife acted negligently for identifying her as the beneficiary of the two MetLife policies.

Andrea LaFollette has brought a cross-claim against Regions Bank which states in toto that she “hereby incorporates Defendant Helen Scott's Amended Cross Claim against Regions Bank, previously filed in this cause.” (LaFollette's Answer and Cross-Claim at 8, Doc. 116).

Plaintiffs originally brought this action on September 16, 2008 in the Chancery Court of Sullivan County, Tennessee seeking a declaratory judgment pursuant to Tennessee law that they are the rightful beneficiaries of proceeds of the MetLife policies. MetLife, Regions Bank, and Helen Scott, as well as others who have since been dismissed, were named as defendants. Subsequently, on November 3, 2008, MetLife removed the action from the Chancery Court of Sullivan County, Tennessee to this Court. As the basis for removal, MetLife contended that ERISA preempted the Plaintiffs' action brought under state law against MetLife. Plaintiffs moved on November 25, 2008 for the Court to remand the case back to the Chancery Court of Sullivan County on the ground that not all defendants consented to removal. Regions Bank also moved, on December 2, 2008, for the Court to remand the case back to the Chancery Court of Sullivan County for the reasons asserted by the Plaintiffs and because MetLife “has not pled facts which would demonstrate that the case is preempted by or even subject to ERISA.” (Regions Bank's Memorandum in Support of Removal at 1, Doc. 22). Part of MetLife's response included the argument that ERISA did indeed pre-empt the Plaintiffs' claims against it because the proceeds Plaintiffs sought came from an employee welfare benefit plan and MetLife was the administrator and fiduciary under that plan. Further, “ERISA completely preempts any state law claim to recover benefits under an employee welfare benefit plan.” (MetLife's Response at 2-3, Doc. 30). Helen Scott joined in MetLife's opposition to the motion to remand. (Helen Scott's Response, Doc. 35). The District Court denied Regions Bank's and the Plaintiffs' motions to remand finding that (1) “this action falls directly under the scope of [ERISA], 29 U.S.C. § 1132(a)(1)(B) because it is a suit brought by a beneficiary to recover benefits from a covered plan,” and (2) the Plaintiffs' ERISA claims against MetLife are separate and independent from the Plaintiffs' otherwise nonremovable, state law claims brought against the other defendants, thus consent to removal by all defendants is not required. (January 1, 2009 Memorandum and Order at 6, 8, Doc. 44).

III. Discussion

A. Standard of Review

A motion to dismiss brought pursuant to Fed.R.Civ.P. 12(b)(6) is meant to test the sufficiency of the complaint; it does not resolve the facts of the case. Thielen v. GMAC Mortg. Corp., 671 F.Supp.2d 947, 950-51 (E.D.Mich.2009); Cox v. Shelby State Community College, 48 Fed.Appx. 500, 503 (6th Cir.2002) (unpublished); Metz v. Supreme Court of Ohio, 46 Fed.Appx. 228, 233 (6th Cir.2002). In determining whether a party has set forth a claim in his complaint for which relief can be granted, all well-pleaded factual allegations contained in the complaint must be accepted as true. Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (per curiam). This tenet does not apply to legal conclusions set forth in a complaint. Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 129 S.Ct. at 1949. More than “unadorned, the-defendant-unlawfully-harmed me accusation[s]” are required to state a claim. Id. at 1949. “Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual...