Opinion
Case No. 04-4052-JAR.
November 9, 2004
MEMORANDUM ORDER AND OPINION DENYING DEFENDANT'S MOTION TO DISMISS
Plaintiff Donald Irwin seeks insurance benefits from defendant Principal Life Insurance Company as the beneficiary of a life insurance policy that his deceased father obtained through the father's employer. Defendant moves to dismiss this action (Doc. 8), for failure to state a claim upon which relief can be granted. For the following reasons, the Court denies defendant's motion to dismiss.
I. Rule 12(b)(6) Standards
A court may dismiss a complaint for "failure to state a claim upon which relief can be granted." Dismissal is appropriate "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." "The purpose of Rule 12(b)(6) is to allow a defendant to test whether, as a matter of law, the plaintiff is entitled to legal relief even if everything alleged in the complaint is true."
Hishon v. King Spalding, 467 U.S. 69, 73 (1984) (citation omitted).
Mounkes v. Conklin, 922 F.Supp. 1501, 1506 (D. Kan. 1996) (quotation omitted).
On a Rule 12(b)(6) motion, the court judges the sufficiency of the complaint, accepting as true the well-pleaded factual allegations and drawing all reasonable inferences in favor of the plaintiff. The court construes the allegations in the light most favorable to the plaintiff. These deferential rules, however, do not allow the court to assume that a plaintiff "can prove facts that it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged." "[I]f the facts narrated by the plaintiff `do not at least outline or adumbrate' a viable claim, his complaint cannot pass Rule 12(b)(6) muster." Dismissal is a harsh remedy to be used cautiously so as to promote the liberal rules of pleading while protecting the interest of justice.
Shaw v. Valdez, 819 F.2d 965, 968 (10th Cir. 1987).
Hall v. Bellmon, 935 F.2d 1106, 1109 (10th Cir. 1991).
Associated General Contractors v. California State Council of Carpenters, 459 U.S. 519, 526 (1983) (footnote omitted).
Mounkes, 922 F.Supp. at 1506 (citing Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir. 1988) (quotation omitted)).
Id.
II. Facts as Alleged in Plaintiff's Complaint
According to the Complaint, plaintiff's father, Stephen Irwin, owned insurance policies with defendant through Raytheon Aircraft Company, his employer. Stephen Irwin died on December 17, 2003. Plaintiff is named as the beneficiary for the life insurance policies in issue. On May 2, 2004, plaintiff made a formal demand upon defendant for payment. Plaintiff alleges that defendant refused to pay him the proceeds in bad faith and in violation of K.S.A. § 40-256, because defendant refused to pay plaintiff without reasonable grounds; and payments are overdue. Plaintiff states this entitles him to recover costs and attorneys fees for filing this action.
III. Analysis
Defendant argues that plaintiff's Complaint does not state a claim on which relief can be granted because plaintiff's alleged state law claims for breach of contract and bad faith refusal to pay are preempted by the Employee Retirement Income Security Act of 1974 (ERISA). Plaintiff concedes that ERISA preempts his state law claims. But plaintiff argues that he has set forth a valid claim for benefits due under the ERISA analysis in his Complaint; and that he can prove a set of facts that would entitle him to relief. Plaintiff also concedes that the bad faith provision in K.S.A. 40-256 is inapplicable to a life insurance contract issued under ERISA. But plaintiff argues that this Court has discretion under ERISA to award attorney's fees, based on a number of factors, including whether defendant acted in bad faith.
While plaintiff's state law claims for breach of contract and bad faith are preempted by ERISA, dismissal is not necessarily warranted. The Court must nevertheless "determine whether plaintiff's allegations state a claim for relief under one of ERISA's civil enforcement provisions." Even though plaintiff did not specifically allege an ERISA violation in his Complaint, nor articulate such in his responsive pleading, the Court nevertheless assesses whether plaintiff alleged enough facts in his Complaint to proceed with the cause of action.
See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54 (1987); Allison v. UNUM Life Inc. Co. of America, 381 F.3d 1015, 1024-25 (10th Cir. 2004).
See Tabron v. Colgate-Palmolive Co., 881 F. Supp. 512 (D. Kan. 1995); Arocho v. Goodyear Tire Rubber Co., 88 F. Supp. 2d 1175, 1179 (D. Kan. 2000) (finding that plaintiff's claim was preempted by ERISA, but "[t]he procedural dispute [that remained was] whether the complaint should be dismissed, whether the plaintiff's complaint should be construed to allege proper actions under ERISA, or whether the plaintiff should be allowed leave to amend her complaint." The court held that plaintiff's complaint did state at least one ERISA cause of action.).
Arocho, 88 F. Supp. 2d at 179 (quoting Caldwell v. W. Atlas Int'l., 871 F. Supp. 1392, 1395 (D. Kan. 1994).
See Id. (citing Evans v. McDonald's Corp, 936 F.2d 1087, 1090-91 (10th Cir. 1991)) (stating the fact that the complaint did not refer to any ERISA provision was not fatal in itself).
Section 502(a)(1)(B) of ERISA states that a plan participant or beneficiary may bring a civil action "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." A beneficiary is "a person designated by a participant . . . who is or may become entitled to a benefit" under the plan. Accepting as true the well-pleaded factual allegations and drawing all reasonable inferences in favor of the plaintiff, the Complaint states a claim under this statute. Plaintiff claims he is a beneficiary of an ERISA covered plan, and he is suing to recover benefits due to him under the plan. Therefore this claim will not be dismissed.
Carland v. Metropolitan Life Ins. Co., 935 F.2d 1114, 1119 (10th Cir. 1991) (quoting 29 U.S.C. § 1002(2)(8)).
Moreover plaintiff's claim for costs and fees based on defendant's bad faith refusal to pay, is cognizable under ERISA; 29 U.S.C. § 1132(g)(1) states, "In any action under this subchapter . . . by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." Courts must apply a five part test when determining whether attorneys fees should be awarded under ERISA. These factors, which include the degree of the opposing party's culpability or bad faith, are merely guidelines, so the court need not consider them all; however, no single factor is considered dispositive. Therefore, if it turns out that plaintiff wins the lawsuit, the court will use its discretion to decide whether to award costs and attorney's fees.
McGee v. Equicor-Equitable HCA Corp., 953 F.2d 1192, 1209 n. 17 (10th Cir. 1992) (citing Gordon v. U.S. Steel Corp., 724 F.2d 106, 109 (10th Cir. 1983)).
Id.
IT IS THEREFORE ORDERED BY THE COURT that defendant's motion to dismiss (Doc. 8) is DENIED.
IT IS SO ORDERED.