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Nicole Cox, Miles Edwards, A Minor, Jaxden Edwards, A Minor, and Kyden Cox, A Minor, By Their Guardian Ad Litem v. Reliance Standard Life Insurance Company

May 16, 2013

NICOLE COX, MILES EDWARDS, A MINOR, JAXDEN EDWARDS, A MINOR, AND KYDEN COX, A MINOR, BY THEIR GUARDIAN AD LITEM,
ADMINISTRATOR
PLAINTIFFS,
v.
RELIANCE STANDARD LIFE INSURANCE COMPANY,
DEFENDANT.



ORDER GRANTING DEFENDANT'S NICOLE COX AS MOTION TO DISMISS PURSUANT OF THE ESTATE OF STEVEN MILES, TO FEDERAL RULE OF CIVIL DECEDENT, PROCEDURE 12(B)(6) ORDER DISMISSING COMPLAINT WITH LEAVE TO AMEND [Document #5]

BACKGROUND

On November 8, 2012, Plaintiffs' Nicole Cox, Jaxden Edwards, and Kyden Cox (collectively "Plaintiffs") filed complaint for damages in the California Superior Court against Defendant Reliance Standard Life Insurance Company ("Defendant"). Plaintiffs contend that Decedent Steven Mile Edwards ("Decedent") registered to obtain insurance products from Defendant, but Defendant did not make all required payments upon Decedent's death. Plaintiff filed a complaint in the California Superior Court raising a breach of contract claim and a breach of the duty of good faith and fair dealing claim. Defendants removed the action to this Court, contending that the complaint's state law claims are barred by the Employee Retirement Income Security Act ("ERISA").

On January 23, 2013, Defendant filed a motion to dismiss Plaintiffs' breach of contract claim and the breach the duty of good faith and fair dealing claim pursuant to ERISA preclusion. Plaintiffs have not opposed Defendant's motion to dismiss.

LEGAL STANDARD

A complaint must contain a short and plain statement showing that the pleader is entitled to relief. Fed. R. Civ. P. 8(a)(2). A court must take a complaint's allegations of material fact as true and construe them in the light most favorable to the nonmoving party. Id. A party may move to dismiss based on the failure to state a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). A motion to dismiss based on Rule 12(b)(6) challenges the legal sufficiency of the claims alleged. Parks School Of Business v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995).

In making a 12(b)(6) determination, district courts have followed a two-step approach. Bell Atlantic v. Twombly, 550 U.S. 544, 564-570 (2009). First, district courts should carefully examine the complaint to smoke out any "merely legal conclusions resting on the prior allegations." Id. at 564. If an allegation is deemed "conclusory," it is entitled to no weight in the 12(b)(6) calculus. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1951 (2009). Second, district courts should weigh the remaining facts and determine if they are sufficient to "nudge the claims across the line from conceivable to plausible." Bell Atlantic, 550 U.S.at 570. While a complaint "need not contain detailed factual allegations, it must plead enough facts to state a claim of relief that is plausible on its face." Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009).

Plausibility can be met even if a judge disbelieves a complaint's factual allegations. Aschroft, 129 S. Ct. at 1959 (stating that "no matter how skeptical the court may be . . . 'Rule 12(b)(6) does not countenance . . . dismissals based on a judge's disbelief of a complaint's factual allegations.'"). "A claim has facial plausibility," and thus survives a motion to dismiss, "when the pleaded factual content allows the court to draw a reasonable inference that the defendant is liable for the misconduct alleged." Id. at 1940. "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than sheer possibility that a defendant acted unlawfully." Id. at 1949. A Rule 12(b)(6) analysis is "not whether a plaintiff will ultimately prevail, but whether the claimant is entitled to offer evidence to support the claims" advanced in his or her complaint. Scheuer v. Rhodes, 414 U.S. 544, 555, (2007).

ALLEGED FACTS

The complaint alleges that Steven Miles Edward ("Decedent") was an employee of LKQ Corporation ("LKQ" or "Employer"). Decedent was eligible to apply for life insurance coverage under Group Policy No. GL 144260 ("Group Policy") with Defendant. See Complaint, 5-2, 3: 23-27. Under the terms of the policy, Decedent was an eligible employee who could enroll for life insurance with Defendant, but was required to complete a ninety (90) day waiting period prior to applying for the insurance. See Complaint, 5-2, 2:27-28. Decedent completed his life insurance enrollment form for the Group Policy on February 18, 2011, electing supplemental life insurance in the total sum of $310,000.00. See Complaint, 5-2, 3: 2-5. Decedent paid all premiums due and payable for the insurance. See Complaint, 5-2, 3: 5-6. Nicole Cox, Miles Edwards, a minor, Jackson Edwards, a minor, and Kyden Cox, a minor, were the named beneficiaries of the life insurance policy ("Plaintiffs"). See Complaint, 5-2, 3: 6-8.

The complaint alleges that under the terms of the life insurance policy, Decedent could elect supplemental coverage up to an amount of $200,000.00 without providing proof of good health; however, for the excess coverage of $110,000.00, proof of good health was required in some cases prior to the excess coverage becoming effective. See Complaint, 5-2, 3: 9-14.

On October 11, 2011, Decedent sustained fatal injuries in a motor vehicle collision and passed away. See Complaint, 5-2, 3: 16-18. After Decedent's death, Plaintiffs, who were the named beneficiaries of the insurance policy, filed a claim with Defendant for the amount of $310,000.00. See Complaint, 5-2, 3: 20-24. The complaint alleges that Defendant only paid Plaintiffs $200,000.00 and refused to pay Plaintiffs the remaining $110,000.00 because Decedent did not provide proof of good health as allegedly required by the terms of the policy. See Complaint, 5-2, 3: 25-28.

Plaintiffs allege that Decedent was not required to provide proof of good health for the additional benefit because Decedent applied for the supplemental life insurance within the thirty-one (31) day period as stated in the Group Policy. As quoted in the complaint, the Group Policy provides in pertinent part:

"If you pay the entire premium, the insurance for an eligible person will go into effect on the date stated on the Schedule of Benefits. Xxx he/she will become insured on the date stated in the Schedule of Benefits, except that the insurance will go into effect:

(2) On the date we approve any required proof of good health. We require proof of good health if a person applies:

(a) After thirty-one (31) days from the date he/she first becomes eligible"

Complaint, 5-2, 4: 3-11 (italics added).

The complaint alleges that Decedent was eligible to enroll for life insurance on February 15, 2011, and that Decedent applied for supplemental life insurance on February 18, 2011, well within the thirty-one (31) day period from the date Decedent first became eligible. See Complaint, 5-2, 4: 13-18. Because Decedent applied within the thirty-one (31) day period, the complaint alleges Decedent was not required to provide evidence of good health for the supplemental life insurance. See Complaint, 5-2, 5: 2-4. The parties do not dispute that Decedent applied for the insurance coverage within the thirty-one (31) day period.*fn1

The complaint alleges that "[D]ecedent has done all things necessary and required of him under the terms of said policy, and that Defendant, Reliance Standard Life Insurance ...


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