Sullivan-Mestecky v. Verizon Commc'ns Inc.
| Decision Date | 07 July 2016 |
| Docket Number | 14-CV-1835 (SJF)(AYS) |
| Parties | KRISTINE SULLIVAN-MESTECKY, individually and as the beneficiary of the life insurance policy of Kathleen Sullivan, deceased Plaintiff, v. VERIZON COMMUNICATIONS INC., PRUDENTIAL INSURANCE COMPANY OF AMERICA, WELLS FARGO BANK, XEROX COMPANY, and AON HEWITT COMPANY, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
On or about February 7, 2014, plaintiff Kristine Sullivan-Mestecky ("plaintiff"), individually and as the beneficiary of the life insurance policy of Kathleen Sullivan ("Sullivan"), deceased, commenced this action against defendants Verizon Communications Inc. ("Verizon"), the Prudential Insurance Company of America ("Prudential"), Wells Fargo Bank ("Wells Fargo"), Xerox Company ("Xerox") and Aon Hewitt Company ("Hewitt") (collectively, "defendants"), in the Supreme Court of the State of New York, County of Nassau ("the state court") seeking to recover damages under the doctrine of promissory estoppel and for defendants' purported breach of contract, breach of a third-party beneficiary contract, tortious interference with contractual relations, fraud, breach of fiduciary duty, "illegal evasion of insurance claims," negligent misrepresentation, breach of the covenant of good faith and fair dealing and violations of New York Insurance Law § 4226 and New York General Business Law § 349. On or about March 21, 2014, Verizon, with the consent of all of the other named defendants, removed the action to this Court pursuant to 28 U.S.C. §§ 1441(a) and 1446 on the basis, inter alia, that this Court has original jurisdiction under 28 U.S.C. § 1331 and the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132. On September 10, 2014, plaintiff filed an amended complaint against defendants asserting claims pursuant to Sections 404(a)(1), 502 and 503 of ERISA, 29 U.S.C. §§ 1104(a)(1), 1132 and 1133, and state law and/or federal common law seeking damages under the doctrine of promissory estoppel, and for defendants' alleged breach of contract, breach of third-party beneficiary contract, tortious interference with contractual relations, fraud and negligent misrepresentation.
Pending before the Court are defendants' motions to dismiss plaintiff's claims against them pursuant to Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure.1 Prudential also seeks to strike certain allegations from the amended complaint as immaterial pursuant to Rule 12(f) of the Federal Rules of Civil Procedure. For the reasons set forth below, Prudential's motion, and the joint motion of Verizon and Wells Fargo, are granted in part and denied in part; and the motions of Xerox and Hewitt are granted to the extent set forth herein.
Sullivan was employed by New York Telephone Company from approximately 1970 until approximately 1978, , and, thus, was entitled to certain employee benefits, including health insurance, dental insurance and life insurance. (Id., ¶¶ 39, 44, 115).
From in or about November 1977 until on or about November 14, 1984, Sullivan received long-term disability ("LTD") benefits under the New York Telephone Long Term Disability Plan (the "LTD Plan"), (Am. Compl., ¶¶ 41, 42, 49, 55, 58, 62, 64, 70), which was administered by Prudential. (Id., ¶ 45).
In or about 1984 or 1985, New York Telephone became part of NYNEX. (Am. Compl., ¶ 79). In or about October 1992, "the NYNEX Director of Qualified Benefits Plan" sent Sullivan correspondence, inter alia, advising her that as a "a long tem disability recipient and participant in a qualified benefits plan[,] . . . she was entitled to the NYNEX Medical Expense [P]lan ["NYNEX ME Plan"] (at no cost) or an HMO[,] . . . ." (Id., ¶ 92). Correspondence sent by NYNEX to Sullivan between 1993 and 1997 also indicated that Sullivan was entitled to benefits under the NYNEX ME Plan at no cost. (Id., ¶¶ 93-95, 97). In addition, correspondence sent by NYNEX to Sullivan in or about April 1996 advised Sullivan "that she was eligible to use theNYNEX mail service prescription plan." (Id., ¶ 96).
In or about 1997, NYNEX was acquired by Bell Atlantic, (Am. Compl., ¶ 98), which "sent Ms. Sullivan a 1998 Personal Fact Sheet and annual enrollment for long-term disability benefits, and advised that [she] was entitled to [benefits under the NYNEX ME Plan] at no cost." (Id., ¶ 99). However, in or about December 1997, Bell Atlantic sent a letter to Sullivan indicating, inter alia, without reference to any plan documents, "that she received benefits in error and that her medical insurance would stop as of January 31, 1998." (Id., ¶ 100). Although the letter "did not provide for appeal procedures," Sullivan nonetheless appealed the denial of benefits. (Id., ¶¶ 101, 102). "[I]n or about February 1998 Ms. Sullivan was advised that her appeal was granted and that her benefits, including, but not limited to, health insurance, dental coverage and life insurance would be reinstated." (Id., ¶ 103). However, plaintiff does not allege that Sullivan received any employee benefits under her own name between 1998 and 2011.
In or about 1999 or 2000, Bell Atlantic acquired GTE to form Verizon. (Am. Compl., ¶ 106). "[F]rom February 1998 to 2005 Ms. Sullivan received health insurance and other benefits from NYNEX/Bell Atlantic and/or Verizon under a family plan in the name of Joseph Sullivan prior to his death."3 (Id., ¶ 104). "Upon the death of Joseph Sullivan in January 2005, Verizon unilaterally ended the family health insurance plan and other benefits Ms. Sullivan received." (Id., ¶ 108). Nonetheless, after Sullivan "requested Summary Plan documents for her entitlement to health insurance, dental insurance, life insurance and other employee benefits," "her insurance and benefits continued at no cost until July 2005." (Id., ¶ 109).
By letter dated October 9, 2005, which "was prepared and/or delivered by Hewitt," Verizon notified Sullivan that "her coverage was being terminated because she did not pay the premiums." (Am. Compl., ¶ 110). The letter did not reference the plan documents under which her claim for benefits was denied, but it did reference an appeals procedure. (Id.) In or about 2005, Ms. Sullivan filed a claim with Verizon "for denial of employee benefits and/or eligibility for benefits, including life insurance, health insurance, dental insurance and other employee benefits."4 (Id., ¶ 111).
"From 2005 through 2011, Ms. Sullivan continued her claim with Verizon regarding the company's improper unilateral termination of her health insurance, life insurance and other benefits." (Am. Compl., ¶ 113) (emphasis added). (id., ¶ 114), at no cost, (id., ¶ 118), "in settlement of [her] claim that [it] improperly, unilaterally terminated her health insurance, life insurance and other employee benefits after the death of her husband in January 2005."5 (Id., ¶ 116).
Plaintiff alleges, inter alia, (1) that "Hewitt and/or Verizon failed to secure a life insurance policy for Ms. Sullivan as represented[,]" (Am. Compl., ¶ 125); and (2) that Hewitt (a) "failed to maintain and/or incorrectly reported that Ms. Sullivan had a life insurance policy in the amount of $679,700.00 and $35,000.00[,]" (id., ¶ 180; see also id., ¶ 198), (b) "failed to maintain accurate employee records relative to [her] eligibility for employee benefits[,]" (id., ¶ 123), (c) "negligently inputted information and/or maintained records related to [her] eligibility for life insurance benefits[,]" (id., ¶ 124), and (d) "caused a breach of" the life insurance policy and/or settlement agreement "by destroying and/or failing to maintain records of such agreement." (Id.,¶ 179).
On or about June 20, 2011, Sullivan received a Verizon "Retirement Enrollment Worksheet" (the "Worksheet") that was prepared and delivered by Hewitt. (Am. Compl., ¶ 132; see also id., ¶ 134). The Worksheet indicates, inter alia, (a) that Sullivan had two (2) options with respect to "Retiree Life" insurance, i.e., "Option 1 is a '1 x Pay' with a coverage amount of $679,700 at a price of $ 0.00[,] [and] Option 3 [sic] is '$50,000' with a coverage amount of $35,000 and a price of $0.00[,]" (id., ¶¶ 132, 134); and (b) that "[i]f your life insurance coverage is more than $50,000, an amount of taxable imputed income will appear on your paycheck statements and W-2 earnings statement at the end of the year." (Id., ¶ 132; see also (Declaration of April A. Otterberg in Support of Hewitt's Motion to Dismiss ["Otterberg Decl."], Ex. 2 at 4).
The Worksheet also indicates, in relevant part:
(Otterberg Decl., Ex. 2 at 1). In addition, the Worksheet indicates: "Call the Plan Administrator (in care of the Verizon Benefits Center . . .) for more information[,]" (id., Ex. 2 at 5), thus indicating that the life insurance benefits were being provided to Sullivan, upon her enrollment therefor, as part of an employee benefits plan.
According to plaintiff, Sullivan selected both options for life insurance benefits "and paid taxes based upon th[e] taxable imputed income." (Am. Compl., ¶ 133). Specifically, "Verizon, through its agent Wells Fargo" sent Sullivan W-2s for the years 2011 and 2012 reporting the cost of the group-term life insurance as taxable income in the amount of four thousand seven hundred...
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