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Evans v. Poms & Associates Insurance Brokers, Inc.

United States District Court, C.D. California

January 26, 2015

SUSAN P. EVANS
v.
POMS & ASSOCIATES INSURANCE BROKERS, INC., ET AL

For Susan P. Evans, Plaintiff: Daniel J Veroff, Michael James Munoz Quirk, LEAD ATTORNEYS, Pillsbury and Coleman LLP, San Francisco, CA; Ryan Hideki Opgenorth, Ryan Hideki Opgenorth, LEAD ATTORNEYS, Pillsbury and Levinson LLP, San Francisco, CA.

For Poms & Associates Insurance Brokers, Inc., Defendant: Elise D Klein, Lewis Brisbois Bisgaard and Smith LLP, Los Angeles, CA.

Honorable CHRISTINA A. SNYDER, J.

CIVIL MINUTES - GENERAL

Proceedings: DEFENDANT'S MOTION TO DISMISS (Dkt. No. 9, filed December 24, 2014) PLAINTIFF'S MOTION TO REMAND (Dkt. No. 13, filed December 29, 2014)

I. INTRODUCTION

On November 13, 2014, plaintiff Susan P. Evans filed this lawsuit in Los Angeles County Superior Court against defendant Poms & Associates Insurance Brokers, Inc. (" Poms") and Does 1 through 20. Dkt. No. 1. Plaintiff alleges that defendant, the employer of her late husband, failed to maintain life insurance coverage for plaintiff's husband as promised in his employment contract. See generally Compl. The complaint asserts claims for (1) breach of contract, (2) negligent or intentional misrepresentation, (3) negligence, (4) professional negligence, (5) fraud, (6) breach of fiduciary duty, and (7) intentional infliction of emotional distress. Id. On December 17, 2014, defendant removed the action to federal court on the basis of federal question jurisdiction, asserting that all of plaintiff's claims are preempted by the Employment Retirement Income Security Act of 1974 (" ERISA"), 29 U.S.C. § § 1001 et seq . Dkt. No. 1.

On December 24, 2014, Poms filed a motion to dismiss the complaint on the ground of ERISA preemption. Dkt. No. 9. On December 29, 2014, plaintiff filed a motion to remand the action to state court on the basis that she has no standing to sue under ERISA, and that ERISA's preemption provisions are therefore inapplicable. Dkt. No. 13. Each party filed an opposition to the other's motion on January 5, 2015, and each party filed a reply on January 12, 2015. Dkt. Nos. 14, 15, 18, 19. On January 26, 2015, the Court held a hearing at which counsel for both parties appeared and argued. For the reasons that follow, the Court GRANTS the motion to remand and DENIES AS MOOT the motion to dismiss.

II. FACTUAL BACKGROUND

The complaint alleges the following facts. Poms is an insurance broker licensed to transact business on behalf of insurers. Compl. ¶ 2. On or about November 29, 2012, plaintiff's late husband, John Evans (" John"), accepted an offer of employment in Poms' West Los Angeles office. Id. ¶ 5. Poms agreed to provide John with various forms of insurance, including life insurance. Id. Plaintiff alleges that a promise to provide life insurance coverage was part of John's employment agreement with Poms. Id. ¶ 22. When John began work, he enrolled in group basic life insurance coverage in the amount of $300, 000, and group voluntary life insurance coverage in the additional amount of $150, 000. Id. ¶ ¶ 5-6. Both policies were offered as an employment benefit by Poms, and procured through Lincoln National Life Insurance Company (" Lincoln"), one of the insurers on whose behalf Poms was authorized to transact business. Id. ¶ 6. Both the basic and voluntary life insurance policies named plaintiff as the sole beneficiary. Id. Plaintiff alleges that Poms promised to keep the life insurance coverages in effect through the duration of John's employment with them. Id. ¶ 7.

On or about October 25, 2013, while John's basic and voluntary life insurance policies with Lincoln were still in effect, John fell ill and became disabled due to renal failure secondary to symptoms of cognitive impairment. Id. ¶ 8. On or about October 29, 2013, Poms informed John and plaintiff that John would be placed on a temporary leave of absence until he recovered from his illness, but that he would retain his status as a Poms employee and would continue to receive all benefits of employment, including the aforementioned life insurance benefits. Id. ¶ 9.

Plaintiff alleges that on October 29, 2013, Poms applied to switch its life insurance provider from Lincoln to Guardian Life Insurance Company of America (" Guardian"), another insurer with whom Poms regularly transacted business. Id. ¶ 10. Plaintiff contends that, in that application, Poms represented that all of its employees, including John, were actively at work. Id. According to plaintiff, three Poms employees certified that the application and all statements made therein were " true and complete to the best of [their] knowledge and belief." Id. Plaintiff alleges that Poms knew this representation was false because Poms had put John on a leave of absence that same day, but never informed Guardian of that fact or otherwise corrected the misrepresentation. Id. Poms provided John and plaintiff with a summary of life insurance benefits with Guardian, and advised them that they would only have to enroll in voluntary life insurance if John had not already done so. Id. ¶ 11. Plaintiff alleges that John did not elect any additional coverage because he was " already enrolled for such benefits." Id.

On or about December 1, 2013, Lincoln's coverage terminated and Guardian's coverage became effective for Poms employees. Id. ¶ 12. The Guardian policy, however, contained an " active work" requirement providing that coverage would only begin for employees who were actively at work on the day the policy became effective. Id. Because John was on a leave of absence at this time, he did not meet the " active work" requirement. Id. Plaintiff alleges that the inclusion of the " active work" requirement was the " direct result of Poms' intentional misrepresentation and concealment of the fact that it had employees who were not actively at work, " and that Poms knowingly obtained a policy that would not cover all of its policies, in " direct contravention of its promise to provide life insurance coverage to its employees and their beneficiaries." Id. Plaintiff alleges that Poms made and failed to correct the false statement that all of its employees were actively at work in order to obtain life insurance coverage at a lower premium than would have been available if Guardian knew that some of Poms' employees were not actively at work. Id. ¶ 10.

Plaintiff contends that Poms never disclosed to her or John that the Guardian policy did not cover them. Id. ¶ 12. Plaintiff avers that Poms continued to pay John's life insurance premiums and led the couple " to believe that both the basic and voluntary life insurance coverages which they had enrolled in remained in full force and effect and that they would be covered in the event of John's death regardless of whether he returned to work." Id. Plaintiff alleges that Poms never explained that John's life insurance coverage was ineffective because of the " active work" requirement, or that his coverage had in fact terminated. Id. ¶ 15. Plaintiff alleges that Poms instead " continued to maintain" that John's life insurance coverage was " in full force and effect." Id.

John never returned to work, and died on April 24, 2014. Id. ¶ 13. Plaintiff alleges that John was still a Poms employee at the time of his death. Id. ¶ 16. When John died, Guardian's policy was still in effect for Poms employees. Id. ¶ 13. As John's sole beneficiary, plaintiff applied for benefits first to Lincoln, and then to Guardian. Id. ¶ 14. Lincoln denied coverage, contending that its policy was not in force at the time of John's death because his insurance had been switched to Guardian on December 1, 2013. Id. Guardian denied coverage because it contended that John was never " actively at work" while its policy was in effect. Id.

Plaintiff asserts that the aforementioned conduct breached Poms' employment contract with John, through which Poms agreed to provide him with life insurance. Id. PP 22-25. Plaintiff also contends that Poms breached duties to notify her and John of the lack of coverage. Id. ¶ ¶ 28-29. Plaintiff alleges that Poms breached ordinary and professional duties of care as well as fiduciary duties owed to her and John, id. ¶ ¶ 33-40, 45-48, fraudulently induced her and John to thinking they had ...


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