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Sullivan v. O'Connor

United States District Court, D. New Hampshire

March 2, 2016

Dorothy A. Sullivan, Administrator of the Estate of Leonard L. Dobens
Kathleen M. O'Connor, New York Life Insurance Co., and Securian Life Insurance Co. Opinion No. 2016 DNH 045


          JOSEPH N. LAPLANTE, District Judge.

         This civil action, removed from state court, involves dueling claims to life insurance proceeds of a decedent who died intestate in December 2014. Leonard L. Dobens ("Dobens"), who, at the time of his death, was insured under a group policy issued by defendant Securian Life Insurance Co. through a plan sponsored by Dobens's former employer, defendant New York Life Insurance Co. ("the Securian policy"). His daughter, plaintiff Dorothy Sullivan is the Administrator of his estate. The other remaining defendant is Kathleen O'Connor, who was divorced from Dobens in 2004 after what the Complaint describes as a "short" marriage.[1] The Securian policy names ex-wife O'Connor as the primary beneficiary. Sullivan claims that the Dobens's divorce decree extinguished O'Connor's right to the policy's benefits - roughly $70, 000 - and that the proceeds should be distributed to Sullivan and her two brothers, Charles Dobens and Leonard Dobens, Jr., as equal beneficiaries.

         Together with answering the complaint, Securian filed a combined counterclaim and crossclaim against Sullivan and O'Connor, respectively, seeking interpleader relief with respect to the disputed policy proceeds. See 28 U.S.C. § 1335 and Fed.R.Civ.P. 22. Securian seeks to deposit the disputed funds with the Clerk of Court, Fed.R.Civ.P. 67, and reimbursement (from the policy proceeds) of the legal fees and costs associated with defending this lawsuit.

         There are two motions pending before the court. First, O'Connor moved to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), arguing that Sullivan's claims are pre-empted by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., and that Securian's interpleader action is thereby mooted. Both Sullivan and Securian timely objected. Shortly thereafter, Securian moved for judgment on the pleadings with respect to its interpleader claim, to which only O'Connor objected. See Fed R. Civ. P. 12(c).

         After review of the pleadings, motions, objections, the insurance policy at issue, and certain other documents[2] in the administrative record, the court grants O'Connor's motion to dismiss, but will allow Sullivan to seek leave amend her complaint to assert a viable ERISA claim. Securian's motion for judgment on the pleadings is denied, without prejudice to renewal should Sullivan file an amended complaint.

         I. Standard of review

         To survive a motion to dismiss under Rule 12(b)(6), the party bringing the claims must make "factual allegations that raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true.'" Simmons v. Galvin, 575 F.3d 24, 30 (1st Cir. 2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In ruling on such a motion, the court must accept as true all well-pleaded facts set forth in the complaint and must draw all reasonable inferences in the plaintiff's favor. See, e.g., Martino v. Forward Air, Inc., 609 F.3d 1, 2 (1st Cir. 2010). A motion for judgment on the pleadings under Rule 12(c) is evaluated under essentially the same standard as a Rule 12(b)(6) motion. See Perez-Acevedo v. Rivero-Cubano, 520 F.3d 26, 29 (1st Cir. 2008). With this standard in mind, the court turns to the Complaint.

         II. Background facts

         In August 2002, Dobens named "Kathleen O'Connor Dobens, " his then-wife, [3] as the first beneficiary on a life insurance policy offered by his employer, New York Life Insurance Co. The policy was issued by a Securian subsidiary. The policy required any beneficiary changes to be submitted in writing. Dobens and O'Connor were divorced in New Hampshire state court in August 2004 and had no relationship thereafter. One provision of the permanent stipulation that ended the divorce case is relevant here. Paragraph 11, captioned "Life Insurance, " provides that "[e]ach party is awarded all policies of life insurance standing in his/her own name, free of any claim or interest of the other and without restriction." The divorce notwithstanding, O'Connor remained as the first beneficiary in the Securian policy for the remainder of Dobens's life.

         Upon Dobens's death, Securian informed Sullivan and her siblings that O'Connor remained as the primary beneficiary on the Securian policy. The children, however, believe that Securian and New York Life acted in error, and that the beneficiary designation "should have been changed, pursuant to the wishes of Leonard Dobens, from Kathleen O'Connor to his three (3) children." (Complaint ¶ 23). They base this claim on the abovequoted language in the divorce stipulation. Plaintiff also alleges that Dobens "[a]ssured his children that Kathleen had been removed from all benefit plans and that the life insurance proceeds were to be paid to his children." (Id. at ¶ 27).

         Sullivan filed suit in New Hampshire Superior Court in April 2015. Securian timely removed the case to this court, citing 28 U.S.C. § 1331 (federal question jurisdiction) and ERISA.[4] Two counts remain following New York Life Ins. Co.'s dismissal: 1) a request that the court impose a constructive trust on the policy proceeds and designate the three Dobens children as trust beneficiaries; and 2) breach of contract (the divorce decree) against O'Connor.

         III. Legal analysis

         A. ERISA preemption

         ERISA provides for the "preemption of all state law causes of action insofar as they may now or hereafter relate to any employee benefit plan." McMahon v. Digital Equip. Corp., 162 F.3d 28, 36 (1st Cir. 1998); 29 U.S.C. § 1144(a). This provision is "conspicuous for its breadth" and serves to preempt state law claims even if their effect on ERISA is "indirect." Hampers v. W.R. Grace & Co., Inc., 202 F.3d 44, 49 (1st Cir. 2000). At the same time, ERISA does not preempt state law claims if those claims "affect employee benefit plans in too tenuous, remote or peripheral a manner ...

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