Weber v. Life Ins. Co. of N. Am.

• Decision Date: 28 December 2011
• Docket Number: Case No. 6:11–cv–00032.
• Citation: 836 F.Supp.2d 427
• Court: U.S. District Court — Western District of Virginia
• Parties: Catherine W. WEBER, Plaintiff, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant.

836 F.Supp.2d 427

Catherine W. WEBER, Plaintiff,

v.LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant.

Case No. 6:11–cv–00032.

United States District Court,

W.D. Virginia,

Lynchburg Division.

Dec. 28, 2011.

George Edgar Dawson, III, Petty Livingson Dawson & Richards, Lynchburg, VA, for Plaintiff.

Brian Allen Calub, William C. Wood, Jr., Zoe Sanders, Nelson Mullins Riley & Scarborough, LLP, Columbia, SC, for Defendant.

MEMORANDUM OPINION

NORMAN K. MOON, District Judge.

This action arises out of the decision by Defendant Life Insurance Company of North America (“Defendant” or “LINA”) to deny benefits claimed by Plaintiff Catherine Weber (“Plaintiff” or “Ms. Weber”) under two Accidental Death and Dismemberment (“AD & D”) policies of insurance issued by LINA and carried by her deceased husband, Carl Weber (“Mr. Weber”). Plaintiff originally filed her complaint in this matter in the Circuit Court for the City of Lynchburg on August 10, 2011. Subsequently, on August 29, 2011, Defendant removed the case to this Court on the basis of both federal question jurisdiction and diversity jurisdiction. Plaintiff concedes that this Court has subject matter jurisdiction over her case. On November 15, 2011, Plaintiff filed a motion for declaratory judgment pursuant to Federal Rule of Civil Procedure 57. In turn, Defendant filed a motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). For the reasons that follow, I will deny Plaintiff's motion and grant Defendant's motion.

I. Background

The factual allegations of Ms. Weber's complaint, which the court must accept as true, are as follows. Prior to his death, Mr. Weber was employed by AREVA NP, Inc. (“AREVA”) in Lynchburg, Virginia. On August 21, 2010, Mr. Weber was riding as a passenger in a light-sport aircraft ¹ registered to and piloted by John Milhous (“Mr. Milhous”), having taken off from a private airstrip for a pleasure flight. At approximately 6:49 P.M., the aircraft crashed in a pasture in Amherst County, killing both Mr. Weber and Mr. Milhous instantly. Mr. Weber, as an employee of AREVA, was a policyholder of two AD & D policies (“the Policies”) issued by LINA. Ms. Weber claims that together, the Policies provide $250,000 in accidental death benefits payable to her as the surviving beneficiary. One policy (the “Basic” policy) was made available to Mr. Weber by AREVA paying the premium for the AD & D benefit. It provided an AD & D benefit of $150,000. The other policy (the “Supplemental” policy) had the premiums paid by a payroll deduction from Mr. Weber's salary. It provided an AD & D benefit of $100,000.

Following Mr. Weber's demise, Ms. Weber filed the requisite claim form with AREVA, requesting benefits as the surviving beneficiary under the Policies. On September 24, 2010, LINA completed its investigation and denied Ms. Weber's claim. Thereafter, Ms. Weber retained counsel to appeal LINA's denial of benefits. After an administrative review in accordance with the Policies' terms, LINA again denied Ms. Weber's request for benefits on or about March 23, 2011.² According to Ms. Weber, LINA's denial of benefits is based on an exclusion contained in the “Common Exclusions” sections of both policies. Specifically, Common Exclusion 6(a) states that benefits under the policy will not be paid for any “Covered Injury” or “Covered Loss” which is caused by or results from:

6. flight in, boarding or alighting from an Aircraft or any craft designed to fly above the Earth's surface:

a. except as a passenger on a regularly scheduled commercial airline;

In her complaint, Ms. Weber alleges that the remaining terms in paragraph 6 of the Common Exclusions—that is, subparagraphs (b) through (g)—render that paragraph ambiguous. Further, Ms. Weber contends that this ambiguity should be resolved against LINA, the drafter of the Policies, and in favor of coverage rather than denial of benefits. Accordingly, in her complaint, Ms. Weber seeks an order pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, declaring that the language in the Common Exclusions is ambiguous and that the internal conflicts it produces be construed in favor of coverage. In that vein, Ms. Weber also seeks an order requiring LINA to pay her the AD & D benefit under each of the Policies. Finally, Ms. Weber requests an award of costs and attorney's fees. After filing an answer, LINA filed a motion for judgment on the pleadings in which it seeks an order granting judgment in its favor on the ground that coverage is unambiguously excluded under Common Exclusion 6 found in both of the Policies.

II. Motion for Judgment on the Pleadings Standard

A motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) requires the Court to apply the same standard that is applied when ruling on a motion to dismiss pursuant to Rule 12(b)(6). Burbach Broad. Co. v. Elkins Radio Corp., 278 F.3d 401, 405–06 (4th Cir.2002); Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir.1999). In considering a motion to dismiss under Rule 12(b)(6) or Rule 12(c), the Court must assume that the allegations in the non-moving party's pleadings are true and construe all facts in the light most favorable to the non-moving party. Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir.1992). Legal conclusions in the guise of factual allegations, however, are not entitled to a presumption of truth. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1950–51, 173 L.Ed.2d 868 (2009). Although a complaint “does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of a cause of action's elements will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citations and quotations omitted). Thus, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Id.

In sum, a plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Id. at 570, 127 S.Ct. 1955. Consequently, “only a complaint that states a plausible claim for relief survives a motion to dismiss.” Iqbal, 129 S.Ct. at 1950 (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). If, after accepting all well-pleaded allegations in the plaintiff's favor, it appears that the plaintiff cannot prove any set of facts in support of his claim entitling him to relief, a motion to dismiss—or, in this case, a motion for judgment on the pleadings—should be granted. Edwards, 178 F.3d at 244.

III. Discussion

A. ERISA and the Applicable Standard of Review

Prior to oral argument in this matter, there was a dispute between the parties with respect to whether the Policies at issue qualify as employee welfare benefit plans and, as a result, whether they fall within the reach of the Employee Retirement Income Security Act of 1974 (“ERISA”). ³ Similarly, before the hearing that was held on the parties' motions, there was disagreement about whether LINA's denial of AD & D benefits should be reviewed de novo or instead merely for an abuse of discretion. However, at oral argument, these two disputes became effectively moot. First, LINA retracted its argument that the denial of benefits should be reviewed under an abuse-of-discretion standard and conceded that de novo review was proper. Accordingly, I will review the denial de novo. Second, as will be discussed in further detail in the following section, it became apparent that whether ERISA applies is irrelevant because it does not change the basic rules of construction that guide my analysis of the Policies' exclusionary language.

B. Choice of Law

As mentioned, it is ultimately irrelevant whether ERISA applies because the rules of construction that must be employed are not appreciably different.

1. If ERISA Does Not Apply

If the Policies are not governed by ERISA, state common law must be applied in order to interpret any alleged ambiguities in their language. Of course, that conclusion simply begets the question of which state's law would apply. It is well-established that the choice-of-law analysis to be applied in a given case is that of the state in which the forum court resides. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496–97, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Generally, the choice-of-law doctrine in Virginia provides that “where parties to a contract have expressly declared that the agreement shall be construed as made with reference to the law of a particular jurisdiction, [the courts] will recognize such agreement and enforce it, applying the law of the stipulated jurisdiction.” Paul Business Sys., Inc. v. Canon USA, Inc., 240 Va. 337, 342, 397 S.E.2d 804, 807 (1990). In the case at hand, the Policies both state: “The laws of the State of Issue shown above govern this Policy.” Both Policies list Delaware as the state of issue. Thus, if state law is applicable here, it is the law of Delaware.

It has long been settled in Delaware that “[a]ll written contracts ... are to be read, understood, and interpreted according to the plain meaning and ordinary import of the language employed in them.” Neary v. Phila., W. & B.R. Co., 9 A. 405, 407 (Del.1887); see also NBC Universal v. Paxson Commc'ns Corp., No. Civ.A. 650–N, 2005 WL 1038997, at *9 (Del.Ch. April 29, 2005) (“Words in a contract are interpreted using their common and ordinary meaning, unless the contract clearly shows that the parties' intent was otherwise.”). Further, under Delaware law, ambiguity exists “if the terms of the contract are inconsistent, or when there is reasonable difference of opinion as to the meaning of words or phrases.” Mell v. New Castle County, No. Civ.A. 03M–06–030, 2004 WL 1790140, at *3 (Del.Super.Ct. Aug. 4, 2004). Any such ambiguities are construed against the drafter. Twin City Fire Ins. Co. v. Del. Racing Ass'n, 840 A.2d 624, 630 (Del.2003). “[I]f the...