United States District Court, D. Montana, Missoula Division
ESTATE OF KIRK ANTHONY FOSTER, through KELLY M. FOSTER, Personal Representative for the Estate of Kirk Anthony Foster, and KELLY M. FOSTER, as an individual, Plaintiffs,
AMERICAN MARINE SVS GROUP BENEFIT PLAN, UNITED OF OMAHA LIFE INSURANCE COMPANY, AMERICAN MARINE CORP., and JOHN DOES 1-3, Defendants.
L. Christensen, Chief Judge, United States District Court.
the Court is American Marine SVS Group Benefit Plan and
American Marine Corporation's ("American
Marine") Motion to Dismiss (Doc. 8), and Defendant
United of Omaha Life Insurance Company's
("United") Motion to Dismiss (Doc. 11). The Estate
of Kirk Anthony Foster and Kelly M. Foster ("Mr.
Foster" and "Ms. Foster," together
"Plaintiffs") bring this action pursuant to 29
U.S.C. § 1132(a), the Employee Retirement Income
Security Program's ("ERISA") civil enforcement
provision and 28 U.S.C. § 1331. Plaintiffs allege that
Defendants wrongfully denied Ms. Foster life insurance
benefits owed to her as Mr. Foster's named beneficiary.
For the reasons explained below, the Court denies American
Marine's Motion (Doc. 8) and grants in part and denies in
part United's Motion (Doc. 11).
Foster and the estate of Mr. Foster claim that United
wrongfully denied payment under Mr. Foster's life
insurance policy after his death in June of 2016. Mr. Foster
was an employee of American Marine and was enrolled in a
group benefits plan with United. (Doc. 4 at 3-4.) The Plan
provided Mr. Foster with both long term disability and life
insurance. (Id. at 4.) On February 1, 2016, Mr.
Foster became permanently disabled from esophageal cancer.
(Id. at 5.) United paid the long term disability
policy in full on February 15, 2016. Mr. Foster died at the
end of June and United subsequently denied to pay Ms.
Foster's claim. (Id. at 2, 13-14.)
contends that it denied Ms. Foster's claim because
American Marine terminated Mr. Foster's coverage and
ceased paying premiums as of May 1st. (Doc. 12 at 8.) In
early July, American Marine produced a document it claims to
have sent Mr. Foster on April 19, 2016, explaining Mr.
Foster's option to convert his group coverage into an
individual life insurance policy and an application for doing
so. Plaintiffs maintain that Mr. Foster never received any
word that his employment had been terminated or that his life
insurance policy would soon expire. (Doc. 4 at 7.) Nor did
Mr. Foster receive a copy of American Marine's April 26th
notification sent to United, terminating Mr. Foster's
coverage. (Doc. 4 at 8.)
United charged and received a premium payment for Mr.
Foster's life insurance on May 1st. (Doc. 4 at 8.)
Plaintiffs claim that through the month of June, United
recognized Mr. Foster as a participant in the Plan, but
sometime in June credited back payment to American Marine and
recorded a "retroactive change to 05/01/2016."
(Doc. 4 at 9.) United claims it is "standard
procedure" whenever it receives notice of cancellation
late in the billing cycle to charge the policyholder as
planned and then "credit back" any surplus payment.
(Doc. 12 at 10.) Plaintiffs claim that American Marine
unilaterally terminated his life insurance coverage without
explanation or notification, failed to inform Mr. Foster of
his right to convert his group policy into an individual
policy, and that United recognized his status as a plan
participant throughout the month of June. For these reasons,
Plaintiffs argue that United wrongfully denied payment of Ms.
12(b)(6) motions test the legal sufficiency of a pleading.
Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a
pleading must contain "a short and plain statement of
the claim showing that the pleader is entitled to
relief." Rule 8 "does not require detailed factual
allegations, but it demands more than an unadorned,
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(internal citations and quotations omitted). "To survive
a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to 'state a claim to
relief that is plausible on its face.'" Id.
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). A claim has facial plausibility when the court
can draw a "reasonable inference" from the facts
alleged that the defendant is liable for the misconduct
alleged. Id. On a Rule 12(b)(6) motion to dismiss,
the court must accept all factual allegations in the
complaint as true and construe the pleadings in the light
most favorable to the nonmoving party. Kneivel v.
ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005).
conclusions, on the other hand, are not entitled to the same
presumption of truth. Dismissal is proper where there is
either a "lack of a cognizable legal theory" or
"the absence of sufficient facts alleged under a
cognizable legal theory." Balistreri v. Pacifica
Police Dept., 901 F.2d 696, 699 (9th Cir. 1990);
Graehling v. Village of Lombard, III, 58 F.3d 295,
297 (7th Cir. 1995).
ruling on a motion to dismiss, a court generally cannot
consider material outside the complaint. Branch v.
Tunnell, 14 F.3d 449, 453 (9th Cir. 1994), overruled on
other grounds by Galbraith v. County of Santa Clara,
307 F.3d 1119 (9th Cir. 2002). Nevertheless, a court may
consider exhibits submitted along with the complaint where
the exhibits are: (1) specifically referred to in the
complaint; (2) central to the plaintiffs claim; and (3) no
party questions the authenticity of the attached documents.
Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006).
This rule is designed to prevent plaintiffs from
"deliberately omitting reference to documents upon which
their claims are based." Parrino v. FHP, Inc.,
146 F.3d 699, 706 (9th Cir. 1998).
Amended Complaint raises five claims. The first three allege
that Defendants failed to provide a benefit under the plan.
(Doc. 4 at 11-17.) Count V arises under a Hawaii statute that
regulates notice of a conversion right, and Count VI alleges
a breach of fiduciary duty. American Marine moves to dismiss
claims five and six, arguing that these claims arise under
Hawaii law and are therefore preempted by ERISA. (Doc. 9 at
8.) United moves to dismiss all claims, arguing that claims
one through three are contrary to the clear terms of the
policy and the latter two are preempted by ERISA. As
explained more fully below, the Court will dismiss claims one
and two, and will dismiss claim six as it applies to United.
The Court will discuss each count separately.
Count I: Failure to Provide a Plan Benefit-Waiver
argue that Mr. Foster's life insurance policy should not
have been terminated, because he was entitled to a
continuation of his life insurance benefits due to his total
disability, and that any nonpayment from American Marine is
irrelevant because he was entitled to the premium waiver.
(Doc. 4 at 12-13.) United argues that this claim should be
dismissed because Mr. Foster did not qualify for the premium
waiver because he did not complete the nine-month disability
elimination period, and because American Marine's
nonpayment terminated his coverage. (Doc. 20 at 3.) The Court
premium waiver is a benefit conditioned upon four predicate
requirements, one of which is the completion of a nine-month
disability elimination period. (Doc. 1-1 at 13.) A plan
participant gains the benefit of ongoing coverage during the
disability elimination period, "[s]ubject to continued
payment of premium." (Id. at 14.) Elsewhere,
the policy explains that coverage terminates "the day
any premium contribution for Your insurance is due and
unpaid." (Id. at 13.)
though the parties dispute whether Mr. Foster was covered for
the month of May, the parties agree that American Marine did
not pay a premium on Mr. Foster's behalf for the month of
June. Construing the facts in the light most favorable to Mr.
Foster, this indicates that his policy lapsed on June 1st at
the latest. According to the terms of the policy, at the time
of Mr. Foster's death he was not entitled to a premium
waiver, was no longer within his "disability elimination
period," and no longer held a valid insurance policy,
regardless of whether United recognized him as a plan
participant elsewhere in its record keeping. Therefore,
Plaintiffs' claim that United denied Mr. Foster a benefit
make two additional arguments-neither of which is persuasive.
Plaintiffs argue first that United's allegations that Mr.
Foster did not have coverage because American Marine stopped
paying Mr. Foster's premium does not preclude Mr. Foster
from coverage, rather, it gives rise to a crossclaim between
Defendants. This argument is foreclosed by the terms of the
Plan. (See Doc. 1-1 at 13.) Plaintiffs argue next that United
had a fiduciary duty to interpret the waiver clause in Mr.
Foster's best interests. United responds that its
fiduciary duties impose only an obligation to act "in
accordance with the documents and instruments governing the
plan." (Doc. 20 at 3 (quoting 29 U.S.C. § 1104).)
The Court agrees. The terms of the plan are clear: when
American Marine failed to make a June payment, Mr.
Foster's coverage lapsed. Accordingly, the Court will
dismiss this claim.
Count II: Failure to Provide a Plan Benefit-Grace Period
argue that United wrongfully denied Ms. Foster's claim in
June because the policy provides a 31-day grace period in the
event of nonpayment. (Doc. 4 at 14-15.) United argues that
the grace period is inapplicable to individual plan
participants because plan participants are under no
obligation to pay premiums. (Doc. 12 at 16.) The Court
summary plan description ("SPD") contains no
"grace period" provisions. (See Doc. 1-1.) The SPD
otherwise explains the rights and obligations of the insurer,
the policyholder, and the plan participant. (See, e.g., Doc.
1-1 at 13.) The SPD also contains no information about how
and when payments shall be made. (See Doc. 1-1.) However, the
Group Policy that exists between United and American Marine
does contain terms concerning payment of premiums and
contains a clause that offers a grace period in event of
nonpayment for the policy as a whole. (See Doc. 12-1 at 2-3.)
The Policy also provides that payments are made on behalf of
individual plan participants by American Marine as a single
monthly payment. (Id.) Therefore, United's
reading of the policy is correct. Because Mr. Foster had no
individual obligation to make a payment on his policy to keep
it active-only American Marine had this ...