Weaver v. Aegon United States, LLC

• Decision Date: 28 September 2015
• Docket Number: CIVIL ACTION NO. 4:14-cv-03436-RBH
• Court: U.S. District Court — District of South Carolina
• Parties: BECKY A. WEAVER and RODNEY WEAVER, individually and on behalf of all others similarly situated, Plaintiffs, v. AEGON USA, LLC, f/k/a AEGON USA, INC.; and TRANSAMERICA LIFE INSURANCE COMPANY, f/k/a LIFE INVESTORS INSURANCE COMPANY OF AMERICA f/k/a EQUITY NATIONAL LIFE INSURANCE COMPANY, Defendants.

BECKY A. WEAVER and RODNEY WEAVER, individually andon behalf of all others similarly situated, Plaintiffs, v. AEGON USA, LLC, f/k/a AEGON USA, INC.; and TRANSAMERICA LIFE

INSURANCE COMPANY, f/k/a LIFE INVESTORS INSURANCE COMPANY

OF AMERICA f/k/a EQUITY NATIONAL LIFE INSURANCE COMPANY, Defendants.

CIVIL ACTION NO. 4:14-cv-03436-RBH

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA FLORENCE DIVISION

September 28, 2015

ORDER

Plaintiffs Becky A. Weaver and Rodney Weaver filed this action on August 25, 2014 against Defendants Transamerica Life Insurance Company ("Transamerica") and AEGON USA, LLC ("Aegon"). Before the Court are the Motion to Dismiss filed by Defendant Transamerica (ECF No. 19) and the Motion to Dismiss filed by Defendant Aegon (ECF No. 20). Also before the Court are Plaintiffs' Motion for Leave to Amend the Complaint (ECF No. 27)¹ and Defendants' Motion for Notice of Filing and Request for Judicial Notice (ECF No. 47)². A hearing was held on the motions to dismiss and motion to amend on June 2, 2015 at 10:00 a.m.Present at the hearing were Patrick Knie, Susan Campbell, and Tony Gould on behalf of the plaintiffs and Brent Clinkscale and Michael Cashman on behalf of the defendants.

ALLEGATIONS OF THE COMPLAINT

The plaintiffs allege that they are owners of a supplemental cancer insurance policy issued by a predecessor-in-interest of Defendant Transamerica and serviced by Defendant Aegon. Plaintiffs bring this action on behalf of themselves and all others in the United States, or alternatively, South Carolina residents, who were not named plaintiffs in a class action formerly pending in the state circuit court of Pulaski County, Arkansas, referenced in the Complaint as the "Runyan suit", and who were insured under a supplemental cancer policy that was issued or administered by the defendants and measures some policy benefits by the medical providers' "actual charges". Plaintiffs allege that this Court has jurisdiction to decide whether the term "actual charges" in the policies means "the greater, 'billed' or 'pre-negotiated' charges or the reduced amount the provider agrees to accept from the patient's other, unrelated major medical insurance company in exchange for . . . 'discounted' or 'post-negotiated' charges." (Compl. ECF No. 1, ¶ 20a) Plaintiffs allege that this Court has jurisdiction to determine whether Defendants are precluded from taking the position that the term "actual charges" means the "discounted" or "post-negotiated" charges because three federal courts have already issued separate judgments against the defendants on that issue. Plaintiffs further allege that this Court has jurisdiction to decide whether the defendants are precluded from taking the position that the final judgment entered by the Arkansas court in Edison Runyan, et al. v. Transamerica Life Insurance Company, et al., No. CV-09-2066-3 (the "Runyan Judgment) is binding on the plaintiffs and the members of the proposed class, considering that a federal court in South Carolina has already entered a decision against the defendants on the same issue in Hege v.Aegon USA, LLC, et al., No.: 8:10-1578-GRA (D.S.C.). Finally, Plaintiffs allege that this Court has jurisdiction to decide whether the Runyan Judgment is entitled to Full Faith and Credit under the United States Constitution Art. IV, § 1 or whether the Runyan Judgment was rendered in violation of the due process clause of the Fourteenth Amendment to the United States Constitution and/or the First Amendment.

The theories of recovery contained in the Complaint are (1) declaratory relief; (2) fraud; (3) unjust enrichment; (4) breach of contract; and (5) bad faith. In the motion to amend, Plaintiffs seek permission of the Court to dismiss the claims for fraud and unjust enrichment and also to amend the complaint in other respects. Defendants consent to the dismissal of the fraud and unjust enrichment claims but oppose any other amendments. At the hearing, the plaintiffs requested the Court to hold the motion to amend in abeyance until a determination has been made regarding whether jurisdictional discovery will be needed regarding Defendant Aegon. The Court granted this request. In an effort to simplify the issues now before the Court, however, the Court grants the motion to amend insofar as it requests dismissal of the fraud and unjust enrichment claims. In this order, the Court will discuss the defendants' arguments that the remaining claims, i.e., those for declaratory relief, breach of contract, and bad faith should be dismissed. Defendants move for dismissal of all claims pursuant to Fed. R. Civ. P. 12(b)(1), lack of subject matter jurisdiction, and Fed. R. Civ. P. 12(b)(6), failure to state a claim³.

Legal Standard for Fed. R. Civ. P. 12(b)(1) Motion to Dismiss for Lack of Subject Matter Jurisdiction

Motions to dismiss for lack of subject-matter jurisdiction challenge a court's authority to hear a matter, and the plaintiff has the burden of proving subject matter jurisdiction. See Best Med. Belgium, Inc. v. Kingdom of Belgium, 913 F. Supp. 2d 230, 236 (E.D. Va. 2012), citing United States v. Hays, 515 U.S. 737, 743 (1995). "The district courts of the United States are courts of limited jurisdiction. Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552, 125 S. Ct. 2611, 162 L.Ed. 2d 502 (2005). They possess only the jurisdiction authorized them by the United States Constitution and by federal statute." U.S. ex rel. Vuyyuru v. Jadhav, 555 F.3d 337, 347 (4^th Cir. 2009). "A court may dismiss a case for lack of subject matter jurisdiction on any of the following bases: '(1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.' Norman v. Owens, No. 5:12-cv-01158-RBH, 2013 WL 4042038, at *3 (D.S.C. Aug. 7, 2013) (quoting Johnson v. United States, 534 F.3d 958, 962 (8^th Cir. 2008))." Bucksport Water Sys., Inc. v. Weaver Eng'g, Inc., No. 4:13-CV-02503-RBH, 2013 WL 5914410, at *2 (D.S.C. Oct. 31, 2013). "There are two critically different ways in which to present a motion to dismiss for lack of subject matter jurisdiction". Adams v. Bain, 697 F.2d 1213, 1219 (4^th Cir. 1982).

First, it may be contended that a complaint simply fails to allege facts upon which subject matter jurisdiction can be based. In that event, all the facts alleged in the complaint are assumed to be true and the plaintiff, in effect, is afforded the same procedural protection as he would receive under a Rule 12(b)(6) consideration. Second, it may be contended that the jurisdictional allegations of the complaint were not true. A trial court may then go beyond the allegations of the complaint and in an evidentiary hearing determine if there are facts to support the jurisdictional allegations.

Id.

Significantly, in considering a "facial challenge," the Court "may also consider matters of public record the parties do not dispute and certain other materials." See, e.g., L.K. ex rel. Henderson v. N.C. State Bd. of Educ., No. 5:08cv85, 2011 WL 861181, at *4 (E.D.N.C. Feb. 18, 2011); N.Y. Shipping Ass'n v. Waterfront Comm'n of N.Y. Harbor, No. Civ. A.10-5633, 2011 WL 1042771, at *2 (D.N.J. Mar. 18, 2011) ("In a facial attack .... [a] court may ... consider only the complaint, exhibits attached to the complaint, matters of public record, and undisputedly authentic documents if the plaintiff's claims are based upon those documents.") (emphasis added); Community Fin. Group, Inc. v. Republic of Kenya, — F.Supp.2d —, 2011 WL 915131, at *1 (D.Minn. Mar. 15, 2011) ("In a facial challenge under Rule 12(b)(1) .... [t]he court limits its inquiry to the pleadings. The pleadings, however, include matters of public record."); Paschal v. Univ. of Pittsburgh School of Dental Medicine, No. Civ. A. 10-502, 2010 WL 4854675, *3 (W.D.Pa. Nov. 22, 2010) (on "a facial challenge to the court's subject matter jurisdiction ... the court is not required to review evidence extrinsic to the pleadings, except matters of which the court may take judicial notice") (emphasis added); Bridgewater v. Double Diamond-Delaware, Inc., No. 3:09cv1758, 2010 WL 1875617, at *5 (N.D.Tex. May 10, 2010) ("In reviewing a facial attack, the Court may consider, in a light most favorable to the plaintiff, the allegations of the complaint and documents referenced therein, as well as matters of public record such as court records.").

Bland v. Fairfax Cnty., Va.

, No. 1:10CV1030 JCC/JFA, 2011 WL 2580343, at *2 (E.D. Va. June 29, 2011). See Fields v. Berman, 526 Fed. Appx. 287, 292, 2013 WL 2382304 at *5 (4^th Cir. 2013) ("Furthermore, we reject Field's contention that the district court erred in dismissing Counts II and III based upon the Rooker-Feldman doctrine without, as he alleges, the applicability of Rooker-Feldman appearing on the face of his complaint and without permitting him to conduct discovery or present evidence at an evidentiary hearing. The district court properly resolved the jurisdictional issues on the extensive record before it, which included, inter alia, Field's complaint, fourteen exhibits attached thereto, and other relevant documents from the parties' long litigation history.")

In the case at bar, the parties disagree as to whether a facial or a factual challenge to subject matter jurisdiction is being made. Plaintiffs assert that Defendants are engaging in a facial challenge, while Defendants assert that they are making a factual challenge.⁴ Plaintiffs argue that "Transamerica's Rule 12(b)(1) dismissal motion does not challenge the truthfulness(of) the Complaint's factual allegations in any real sense. On the contrary, Transamerica's jurisdictional motion challenges the 'sufficiency' of those allegations insofar as it suggests the due process violations alleged in the Complaint are not actionable even if true, because this federal court cannot make findings inconsistent with the...