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Hayes v. Dearborn National Life Insurance Co.

United States District Court, D. Idaho

July 22, 2014



CANDY W. DALE, Magistrate Judge.

Before the Court is Defendant Dearborn National Life Insurance Company's Motion to Dismiss Plaintiff April Hayes's Complaint (Dkt. 8), as well as Hayes's Motion to Strike Affidavit of Jade C. Stacey in Support of Motion to Dismiss (Dkt. 17). The Court heard oral argument on these matters during a hearing on June 23, 2014. Because the Court did not consider the extra-pleading materials attached to Mr. Stacey's affidavit, the motion to strike is moot. Further, the Court will grant in part Dearborn's motion to dismiss for failure to state a claim because Hayes's state-law causes of action are preempted by the Employee Retirement Income Security Act (ERISA). 29 U.S.C. § 1001, et seq. However, this action will not be dismissed in its entirety because the Court will grant Hayes 30 days to amend her Complaint.


The Court draws the following facts from allegations in Hayes's Complaint, (Dkt. 1-1), and assumes they are true for the purpose of deciding Dearborn's motion to dismiss. See, e.g., Skilstaf, Inc. v. CVS Caremark Corp., 669 F.3d 1005, 1014 (9th Cir. 2012).

April Hayes's husband, James Hayes, received a Term Life Insurance Policy (the Policy) issued by Dearborn as part of his benefit package when employed by the Life Care Center of the Treasure Valley. Mr. Hayes did not name his wife as a beneficiary of the Policy. Mr. Hayes passed away in July 2013. After reading about Mr. Hayes's death in the newspaper, April Hayes contacted Dearborn to request a proof of loss or death claim form to make a life insurance claim. Dearborn refused to provide the form, so Hayes obtained a form from the internet and submitted it to Dearborn, naming herself as a beneficiary on the form. Contending that life insurance policy proceeds are community property under Idaho law, Hayes repeatedly demanded payment of her community share to the proceeds of the Policy. Dearborn denied her claims because she is not a named beneficiary of the Policy.

Hayes filed an action in the Third Judicial District of the State of Idaho, pleading state-law causes of action for breach of contract and breach of the covenant of good faith and fair dealing. Hayes claims Dearborn breached a contract by failing to properly evaluate her policy claim and pay her the amount justly due. Additionally, Hayes alleges Dearborn breached the covenant of good faith and fair dealing by failing or refusing to pay her the amount justly due under the Policy. (Dkt. 1-1.)

Although the Complaint presently contains no cause of action under ERISA, Dearborn removed the case to federal court pursuant to 28 U.S.C. § 1331. Shortly after removing the case, Dearborn filed a Rule 12(b)(6) motion to dismiss on the grounds that Hayes's claims are preempted by ERISA. Although Hayes first received notice that the Policy was subject to ERISA when Dearborn removed the case to this Court, she concedes "the Policy at issue in this case is an employer-issued group life insurance Policy, governed by ERISA." (Dkt. 16 at 6.) Hayes further acknowledges that "federal preemption applies" and "the Policy at issue in this case must be administered according to the ERISA plan, and plan documents." ( Id. at 6-7.)

Dearborn's attorney, Jade Stacey, attached the following documents to his affidavit in support of the motion to dismiss: Hayes's Complaint filed in state court (Dkt. 8-3), the Policy issued by Dearborn to Mr. Hayes's employer, Life Care Centers of America, (Dkt. 8-4), the employer's application for the policy (Dkt. 8-5), and Mr. Hayes's insurance enrollment form (Dkt. 8-6). In response, Hayes moved to strike Stacey's affidavit pursuant to Rule 56(c)(4), claiming it is not premised on personal knowledge, does not set forth admissible facts, that Stacey could not competently testify on the matters stated in it, and that the affidavit contained inadmissible hearsay evidence.

According to Hayes, if the affidavit is not stricken, Dearborn's motion to dismiss must be converted to a motion for summary judgment because Dearborn presented matters outside the pleadings. Hayes further claims summary judgment should be denied because Dearborn failed to provide the Court and Hayes with the governing ERISA plan and to identify the fiduciary with authority to pay or otherwise administer the plan benefits. Dearborn claims courts may consider documents incorporated by reference in the complaint without converting motions to dismiss into motions for summary judgment. In the alternative, Dearborn argues summary judgment in Dearborn's favor would be appropriate because Hayes has not stated a claim under ERISA. Dearborn also argues the Court need only consider Hayes's Complaint to resolve the motion to dismiss.

Both parties expressly consented in writing to jurisdiction of the Magistrate Judge for all purposes. (Dkt. 24.)


To survive a motion to dismiss under Rule 12(b)(6), the complaint must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 570 (2007). The Court must accept the complaint's factual allegations as true and draw all reasonable inferences in a light most favorable to the non-moving party. Id. But the Court need not accept as true legal conclusions or conclusory factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Dismissal is proper "where there is... a lack of a cognizable legal theory." Gray v. I.B.E.W. Local 332 Pension Trust, 498 F.Appx. 831, 832 (9th Cir. 2012). Although the Court must convert a Rule 12(b)(6) motion to dismiss into a Rule 56 motion for summary judgment if it considers matters outside the pleadings, Fed.R.Civ.P. 12(d), the Court need not do so if its legal conclusion does not depend on the extra-pleading materials. Keams v. Tempe Technical Institute, Inc., 110 F.3d 44, 46 (9th Cir.1997).

1. Removal Jurisdiction

As a preliminary matter, the Court must determine whether it has subject matter jurisdiction over this case. Under the "well-pleaded complaint" rule, a defendant "may not generally remove a case to federal court unless the plaintiff's complaint establishes that the case arises under' federal law." Aetna Health Inc. v. Davila, 542 U.S. 200, 207 (2004). However, an exception to the well-pleaded complaint rule allows a state-law claim to be removed "[w]hen a federal statute wholly displaces the state-law cause of action through complete pre-emption." Id. at 207-208. For example, "the ERISA civil enforcement mechanism is one of those provisions with such extraordinary pre-emptive power' that it converts an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.'" Id. at 209 (quoting Metropolitan Life Ins. ...

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