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Lee v. AXA Financial, Inc.

United States District Court, E.D. Tennessee

June 20, 2019

MARY LEE, Plaintiff,
v.
AXA FINANCIAL, INC., AXA EQUITABLE LIFE INSURANCE COMPANY, LARRY GEORGE, and WILL EVANS, Defendants.

          MEMORANDUM OPINION

         Mary Lee brings this action against AXA Financial, Inc. (“AXA Financial”), AXA Equitable Life Insurance Company (“AXA Equitable”), Larry George, and Will Evans (collectively “Defendants”) alleging negligence, breach of fiduciary duty, breach of contract, and respondeat superior. This case arises from a meeting held on October 23, 2014 between Ms. Lee, her now-deceased husband, Mr. George, and Mr. Evans regarding her husband's variable annuity IRA and the changing of the beneficiary on that IRA from Mr. Lee's brother to Mrs. Lee.

         Before the court are three motions: Mr. Evans and Mr. George's Motion to Strike Plaintiff's First Amended Complaint (ECF. 37), AXA Equitable's Motion to Dismiss for Failure to State a Claim (ECF. 39), and Plaintiff's Second Motion to Amend/Revise Amended Complaint (ECF. 42). Plaintiff's Second Motion to Amend/Revise Amended Complaint has been opposed by Defendants as “futile”. ECF. 47; ECF. 48.

         Based on the facts as presented in the complaint, Plaintiff's Second Motion to Amend (ECF. 42) is GRANTED as sufficient to overcome the motions to dismiss as described in Foman v. Davis. Accordingly, Defendants' Motions to Dismiss (ECF. 37; ECF. 39) is DENIED.

         I. Background

         Mr. Dalen Lee was a customer of AXA Equitable and owned at least three different accounts and/or financial products with the company. On March 4, 2013, Mr. Lee created variable annuity IRA #313008923 (“the IRA”) with AXA Equitable.

         During 2014, Mr. Lee discovered that he had a terminal illness, and on October 24, 2014, Mr. Lee married Mrs. Mary Lee. One day before their marriage, Mr. Lee and the soon-to-be Mrs. Lee met with Mr. Larry George and Mr. Will Evans, both employees of AXA Financial and AXA Equitable. According to Mrs. Lee, the intent of this meeting was to change the beneficiary on each of Mr. Lee's accounts from Mr. Lee's brother to Mrs. Lee, including the IRA. Mrs. Lee also alleges that an oral promise was made by Mr. George and Mr. Evans to change the beneficiary on these accounts through whatever forms were required to be created and submitted. Two of the financial products that Mr. Lee owned with AXA Equitable were updated to reflect Mrs. Lee as the beneficiary, but the IRA was not.

         Mr. Lee died on June 27, 2015 after moving to Florida with Mrs. Lee. The value of the IRA on the date of Mr. Lee's death was $135, 373.76. After Mr. Lee's death, Mrs. Lee received mail from AXA Equitable indicating that she was not the beneficiary on Mr. Lee's IRA and that she would not be receiving the payment as she had expected.

         On June 26, 2018, Mrs. Lee filed a complaint against Mr. George, Mr. Evans, AXA Equitable, and AXA Financial, which wholly owns AXA Equitable as a subsidiary corporation. ECF. 1. On September 27, 2018, Mr. George and Mr. Evans properly filed a motion to dismiss for failure to state a claim under Fed. R. Civ. Proc. 12(b)(6) (ECF. 18) to which Mrs. Lee responded on October 1, 2018 with a motion to amend her complaint under Fed. R. Civ. Proc. 15(a)(2) (ECF. 23), which the court granted on October 10, 2018 (ECF. 28) after receipt of the Stipulation allowing the filing of the amended complaint (ECF. 27). Mrs. Lee filed her First Amended Complaint (“FAC”) the same day the order was granted, October 10, 2018 (ECF. 29). AXA Financial then filed a joint motion for extension of time to file an answer on October 15, 2018 (ECF. 32), and the court issued a scheduling order on October 29, 2018 setting a trial date for January 28, 2020 (ECF. 36). On October 31, 2018, Mr. George and Mr. Evans filed a 12(b)(6) motion to dismiss the FAC (ECF. 37). AXA Equitable and AXA Financial filed a 12(b)(6) motion making similar arguments and citing similar authorities on November 2, 2018 (ECF. 39). Mrs. Lee then responded on November 14, 2018 with a second motion to amend her complaint attaching her proposed Second Amended Complaint (“SAC”). (ECF. 42). All defendants then filed responses on November 29, 2018 (ECF. 45; ECF. 46; ECF. 47), arguing that the SAC did not overcome the defects of the FAC.

         II. Analysis

         a. Procedural Analysis

         Plaintiff's Second Motion to Amend (ECF. 42) was filed fourteen days after the earlier of the two Defendants' Motions to Amend (ECF. 37; ECF. 39). Despite not raising the argument in her responses or motions, Plaintiff has a legal basis to assert that she preserved her one-time right to amend as of course under Fed. R. Civ. Proc. 15(a)(1)(B) because her first amendment was made by stipulation rather than as a matter of course. This amendment was also timely under the rule because it was made within 21 days of a 12(b)(6) motion.

         Based on the decisions of the Sixth Circuit[1], the District Court for the Eastern District of Tennessee[2], other District Courts within the Sixth Circuit[3], and other appellate courts[4], a simple order granting the Second Motion to Amend (ECF. 42) and holding the Motions to Dismiss (ECF. 37; ECF. 39) as moot on these procedural grounds would be valid. However, that order would likely lead to further delay and the filing of redundant motions. Determining whether leave should be granted to amend as well allows the court to resolve these motions on the merits. As the Supreme Court wrote in the landmark case on Fed. R. Civ. Proc. 15(a), “It is too late in the day and entirely contrary to the spirit of the Federal Rules of Civil Procedure for decisions on the merits to be avoided on the basis of such mere technicalities.” Foman v. Davis, 371 U.S. 178, 181- 82 (1962).

         b. Standard of Review

         The court must decide whether the motion to amend and the attached proposed SAC meet the standard from Foman for granting leave to amend. The enumerated reasons for denying such a motion to amend include “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, ” but the most important to evaluate in this case is whether ...


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