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Vest v. Resolute Forest Products Us, Inc.

United States District Court, E.D. Tennessee

December 13, 2017

MEAD DELLANEGRA VEST, Plaintiff,
v.
RESOLUTE FOREST PRODUCTS US, INC., Defendant.

          MEMORANDUM OPINION

          THOMAS W. PHILLIPS SENIOR UNITED STATES DISTRICT JUDGE

         Plaintiff Mead Dellanegra Vest claims that defendant Resolute Forest Products US, Inc. (“Resolute”) breached its fiduciary duty under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq. [Doc. 1]. Specifically, Ms. Vest claims that Resolute failed to provide her late husband with a notice of his conversion rights under a group life insurance policy when his employment ended.

         Resolute has filed a motion to dismiss the instant case [Doc. 7] with supporting briefs [Docs. 8, 18], and plaintiff has responded in opposition [Doc. 14]. For the reasons set forth herein, the defendant's motion [Doc. 7] will be GRANTED.

         I. Relevant Facts[1]

         Plaintiff is the widow of Arthur Vest, and the beneficiary of his life insurance plan underlying this action [Doc. 1 at ¶ 3]. From October 1976 through September 2015, Arthur Vest worked for defendant in its Calhoun, Tennessee location [Id. at ¶ 6]. In his final job title as occupational health and safety manager, Mr. Vest earned approximately $100, 000 per year [Id. at ¶ 7].

         Resolute provided group life insurance benefits for its employees through the Resolute FP U.S. Inc. Life Insurance Program (the “Plan”)[2] and Mr. Vest was a participant in this Plan [Id. at ¶ 8-10]. The Plan provided basic coverage in an amount equal to the participant's salary, or $100, 000 for Mr. Vest, paid for by Resolute [Id. at ¶ 11]. Further, participants could purchase optional coverage in the amount of 1, 2, 3, 4, or 5 times the participant's salary [Id. at ¶ 12]. Mr. Vest purchased optional coverage in the amount of 3 times his salary [Id. at ¶ 13]. The Plan provided that in the event some or all of a participant's optional coverage ends, such as when an employee begins receiving long-term disability benefits, he may either convert the amount that ends to an individual policy or port the amount that ends to another group policy [Id. at ¶ 14-15]. Either converting or porting requires an application to the insurance company within 31 days and payment of applicable premiums [Id.]. The Plan's summary plan description (“SPD”) states, “[i]f all or part of your coverage ends, you may convert the amount that ends to an individual Life Insurance policy” [Id. at ¶¶ 25, 30; Doc. 8-1 at p. 21].[3]

         Around September 23, 2015, Mr. Vest ceased working due to a disability caused by complications from diabetes [Doc. 1 at ¶ 16]. Mr. Vest applied for, and was awarded short-term and then long-term disability benefits [Id. at ¶ 17]. By letter dated April 27, 2016, Resolute's long-term disability carrier informed Mr. Vest that his long-term disability claim was approved effective March 23, 2016 [Id. at ¶ 18]. At this time, Resolute switched Mr. Vest's life insurance coverage to the basic coverage amount of $100, 000, and ended his optional life insurance coverage [Id. at ¶ 19]. Resolute provided Mr. Vest with a summary of his benefits as of May 23, 2016, which showed that he was currently covered by the basic life insurance and his optional life insurance coverage expired on May 18, 2016 [Id. at ¶ 20]. It is undisputed that Resolute did not provide Mr. Vest with any information at this time concerning his right to port or convert the optional coverage that had ended [Id. at ¶ 21].

         After Mr. Vest died on October 11, 2016, Resolute paid plaintiff $100, 000 for Mr. Vest's basic life insurance coverage [Id. at ¶¶ 22-23]. By an October 19, 2016 email to plaintiff, Resolute confirmed that the optional coverage stopped when Mr. Vest began long term disability and he did not port or convert within 31 days [Id. at ¶ 24-25].

         Plaintiff has sued for equitable relief under ERISA § 502(a)(3), 29 U.S.C.§ 1132(a)(3), alleging that the SPD was insufficient to advise participants of their right to convert or port life insurance coverage and that Resolute's failure to provide an additional notice of conversion rights was a breach of its fiduciary duties [Id. at ¶¶ 32-34].

         II. Standard of Review

         Federal Rule of Civil Procedure 8(a)(2) sets out a liberal pleading standard, Smith v. City of Salem, 378 F.3d 566, 576 n.1 (6th Cir. 2004), requiring only “‘a short and plain statement of the claim showing that the pleader is entitled to relief, ' in order to ‘give the [opposing party] fair notice of what the . . . claim is and the grounds upon which it rests, '” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Detailed factual allegations are not required, but a party's “obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions.” Twombly, 550 U.S. at 555. “[A] formulaic recitation of the elements of a cause of action will not do, ” nor will “an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         In deciding a Rule 12(b)(6) motion to dismiss, a court must construe the complaint in the light most favorable to the plaintiff, accept all factual allegations as true, draw all reasonable inferences in favor of the plaintiff, and determine whether the complaint contains “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007) (citation omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “Determining whether a complaint states a plausible claim for relief will [ultimately] . . . be a context-specific task that requires th[is Court] to draw on its judicial experience and common sense.” Id. at 679.

         III. Analysis

         ERISA obligates a fiduciary to discharge its duties with respect to a plan “solely in the interests of the participants and beneficiaries” with the care, skill, prudence, and diligence a prudent person would use and in accordance with documents and instruments governing the plan. 29 U.S.C. § 1104(a)(1). ERISA permits plan participants and beneficiaries to sue for equitable relief for a breach of fiduciary duty, including where plan fiduciaries make materially misleading misrepresentations regarding the extent or availability of benefits under the plan. 29 U.S.C. § 1132(a)(3)(B); James v. Pirelli Armstrong Tire Corp., 305 F.3d 439, 449 (6th Cir. 2002), cert. denied, 538 U.S. 1033 (2003); Krohn v. Huron Mem'l Hosp., 173 F.3d 542, 547 (6th Cir. 1999); Drennan v. Gen. Motors Corp., 977 F.2d 246, 251 (6th Cir. 1992), cert. denied, 508 U.S. 940 (1993). “[A] misrepresentation is material if there is a substantial likelihood that it would mislead a reasonable employee in making an ...


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