United States District Court, N.D. California
ORDER DENYING MOTION TO DISMISS Re: Dkt. No.
Haywood S. Gilliam, Jr. United States District Judge.
before the Court is Defendant DPR Construction's motion
to dismiss Plaintiffs' third cause of action for breach
of contract. See Dkt. No. 39. The Court held a
hearing on the motion on December 12, 2019, and denied the
motion on the record. See Dkt. No. 53. For the
reasons discussed during the hearing and as further detailed
below, the Court DENIES the motion to
dismiss the third cause of action.
Brenda Martin and the Estate of Bernard Martin filed this
ERISA action on June 10, 2019, seeking life insurance and
terminal illness benefits allegedly due to Mrs. Martin as Mr.
Martin's widow and sole beneficiary. See Dkt.
No. 1. Mr. Martin was a construction superintendent for
Defendant DPR Construction and filed claims for short- and
long-term disability when he developed terminal esophageal
cancer. See Dkt. No. 33 (“FAC”).
Plaintiffs allege that Defendants DPR Construction and Life
Insurance Company of North America (“LINA”), the
plan administrator, failed to provide Mr. Martin with notice
of how to keep his benefits under the plan while he was out
on leave with terminal cancer, despite their knowledge of his
illness. See Id. ¶¶ 1, 36-37, 59, 82.
Further, Plaintiffs allege that Defendant DPR Construction
misled Mr. and Mrs. Martin into believing that Mrs. Martin
would receive $391, 000 in life insurance benefits upon his
death. See Id. ¶¶ 1, 48-55. Following Mr.
Martin's death, Mrs. Martin as sole beneficiary filed a
claim for life insurance benefits. See Id. ¶
60. This claim was denied. Id. ¶¶ 61-63.
Following the appeals process, Plaintiffs further allege that
DPR Construction nonetheless entered into an agreement to pay
Mrs. Martin $391, 000 to avoid litigation. Id.
¶¶ 64-69, 122-125, 128. Mrs. Martin accepted the
offer, but DPR Construction did not pay her. See Id.
¶¶ 69, 123-125. Instead, DPR Construction later
offered just 27% of the agreed-upon amount. Id.
¶¶ 3, 69.
on the facts, Plaintiffs allege three causes of action for
(1) breach of fiduciary duty under ERISA § 502(a)(3);
(2) benefits under ERISA § 502(a)(1)(B); and (3) breach
of contract. See FAC ¶¶ 70-131.
Rule of Civil Procedure 8(a) requires that a complaint
contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.”
Fed.R.Civ.P. 8(a)(2). A defendant may move to dismiss a
complaint for failing to state a claim upon which relief can
be granted under Rule 12(b)(6). “Dismissal under Rule
12(b)(6) is appropriate only where the complaint lacks a
cognizable legal theory or sufficient facts to support a
cognizable legal theory.” Mendiondo v. Centinela
Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To
survive a Rule 12(b)(6) motion, a plaintiff need only plead
“enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). A claim is facially
plausible when a plaintiff pleads “factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
reviewing the plausibility of a complaint, courts
“accept factual allegations in the complaint as true
and construe the pleadings in the light most favorable to the
nonmoving party.” Manzarek v. St. Paul Fire &
Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).
Nevertheless, courts do not “accept as true allegations
that are merely conclusory, unwarranted deductions of fact,
or unreasonable inferences.” In re Gilead Scis.
Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008)
(quoting Sprewell v. Golden State Warriors, 266 F.3d
979, 988 (9th Cir. 2001)). //
DPR Construction's motion to dismiss is only as to
Plaintiff's third cause of action for breach of contract.
See Dkt. No. 39. Defendant urges that the
contractual claim is preempted by ERISA, characterizing the
breach of contract claim as one exclusively for ERISA
benefits. Id. And in the alternative, Defendant
contends that Plaintiffs have failed to allege all the
elements of a breach of contract claim under California law.
The Court disagrees.
the Court finds that the operative complaint contains
sufficient facts to state a plausible breach of contract
claim against DPR Construction. To prevail on a cause of
action for breach of contract, the plaintiff must prove
“(1) the contract, (2) plaintiff's performance or
excuse for nonperformance, (3) defendant's breach, and
(4) the resulting damage to plaintiff.” Careau
& Co. v. Sec. Pac. Bus. Credit, Inc., 222 Cal.App.3d
1371, 1388 (Cal.Ct.App. 1990), as modified on denial of
reh'g (Oct. 31, 2001). Here, the complaint alleges
that Mrs. Martin and DPR Construction entered into a contract
by which DPR Construction would pay Mrs. Martin $391, 000
“in exchange for not pursuing litigation against DPR
Construction or LINA.” See FAC ¶ 64. Mrs.
Martin did not pursue litigation as promised for
approximately a year, but DPR breached the contract by
failing to pay the agreed-upon amount. See Id.
¶¶ 3, 69, 123-125. Mrs. Martin, who was suffering
from her own health problems, alleges that she has been
damaged by this lack of payment, and only then filed this
action to enforce the parties' agreement. In doing so,
Mrs. Martin has also incurred attorneys' fees and costs.
See Id. ¶¶ 130-131. Accepting all of
Plaintiffs' allegations as true and construing them in
the light most favorable to Plaintiffs, as the Court must,
the complaint alleges each element of a breach of contract
the Court finds that this breach of contract claim is not
preempted by ERISA. Under ERISA § 514(a), a state law
cause of action is preempted if it “relates to”
an employee benefit plan. See 29 U.S.C. §
1144(a). In Pilot Life Ins. Co. v. Dedeaux, 481 U.S.
41 (1987), the Supreme Court gave the phrase “relate
to” its “broad, common-sense meaning.”
Id. at 47. A state law thus relates to an employee
benefit plan “if it has a connection with or reference
to a plan.” Shaw v. Delta Air Lines, Inc., 463
U.S. 85, 97 (1983). However, although ERISA preemption is
broad, the Supreme Court has cautioned that courts
“must go beyond the unhelpful text and the frustrating
difficulty of defining its key term, and look instead to the
objectives of the ERISA statute as a guide to the scope of
[preemption].” New York State Conference of Blue
Cross & Blue Shield Plans v. Travelers Ins. Co., 514
U.S. 645, 656 (1995).
Ninth Circuit has further clarified that “Congress
intended ERISA preemption to afford employers with uniform
regulation of the complex arena of benefit plan
administration.” Graham v. Balcor Co., 146
F.3d 1052, 1055 (9th Cir. 1998). In other words, preemption
is related to the plan, not the intended benefits. The
uniformity of plan administration is not at risk if an
employer voluntarily enters into a separate agreement
offering payment. The Ninth Circuit's opinion in
Graham v. Balcor is instructive. In Graham,
an employee received an unfavorable performance review and
faced termination. Id. at 1054-55. After contesting
the review and threatening litigation, the employee entered
into an agreement with her employer whereby the employee
promised not to pursue litigation in exchange for continued
health care benefits through the employer's plan.
Id. The Ninth Circuit held that the plaintiff's
state law claims for breach of contract, breach of the
covenant of good faith and fair dealing, and intentional
infliction of emotional distress were not preempted because
the agreement “was a settlement of legal claims which
does not relate to an employee benefit plan.”
Id. The Court reasoned that “ERISA does not
preempt the state claims arising from this legal settlement,
the subject matter of which is employee benefits, because it
does not implicate the administration of an employee benefit
plan.” Id. at 1055.
Graham, the alleged contract between DPR
Construction and Mrs. Martin is separate and distinct from
the ERISA policy and plan, and by its terms operates outside
the ERISA policy and plan administration. Plaintiffs'
breach of contract claim is therefore not preempted by ERISA
“because it does not implicate the administration of an
employee benefit plan.” Id. DPR Construction
may dispute the ...