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stating that under New York law, when the plaintiff “alleges a continuing wrong, a new cause of action accrues each time defendant commits the wrong”
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09 Civ. 10463 (LMM)
04-26-2011
DEBORAH SCHANDLER, on behalf of herself and a class of persons similarly situated, Plaintiff, v. NEW YORK LIFE INSURANCE COMPANY; UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK; and HADASSAH THE WOMEN'S ZIONIST ORGANIZATION OF AMERICA, INC., Defendants.
MEMORANDUM AND ORDER
Deborah Schandler ("Schandler") filed this action against New York Life Insurance Company ("New York Life"), United States Life Insurance Company ("U.S. Life"), and Hadassah, the Women's Zionist Organization of America ("Hadassah")(collectively, "Defendants"), asserting violation of N.Y. General Business Law, fraudulent misrepresentations, fraudulent concealment, breach of contract, breach of implied covenant of good faith and fair dealing, and unjust enrichment. Defendants move to dismiss Schandler's claims pursuant to Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure and Schandler moves for leave to file her First Amended Complaint pursuant to Rule 15(a) of the Federal Rules of Civil Procedure. For the foregoing reasons Defendant's motions are GRANTED and Schandler's motion is DENIED.
BACKGROUND
A.
Hadassah is a not-for-profit corporation registered and headquartered in New York, New York. (Compl. ¶ 29.) Its stated aims are to "enhance the quality of American and Jewish life through its education and Zionist youth programs, promote health awareness, and provide personal enrichment and growth for its members." (Id.) Hadassah sponsors a Group Catastrophic Major Medical Plan (the "Major Medical Plan" or the "Plan"), which is available to Hadassah members and spouses or children of Hadassah members. (Id. ¶¶ 4, 5, 9, 30.) Schandler alleges that Hadassah receives a fee for the license of its name and logo in connection with the Major Medical Plan and a portion of the premiums collected from each policyholder. (Id. ¶¶ 39, 40.)
U.S. Life is a Texas-based company that underwrites and sells insurance policies, and prior to November 2002, U.S. Life was the underwriter for the Major Medical Plan. (Id. ¶ 20.) New York Life, a New York-based company, also underwrites and sells insurance policies and since November 2002, New York Life has underwritten the Major Medical Plan. (Id. ¶¶ 22, 24.)
On November 1, 1990 or thereabouts, Schandler, a North Carolina resident and member of Hadassah, purchased the Major Medical Plan on behalf of herself, then 70 years old, and her husband, Jack Schandler, then 73 years old. (Id. ¶¶ 17, 18, 68, 69, 72.) Schandler renewed the Plan annually for 16 years thereafter. (Id. ¶ 19.)
Schandler alleges that she purchased and renewed the Major Medical Plan because of representations, made by Hadassah, U.S. Life, and New York Life, that the Plan would provide insureds with "home health care, private duty nursing, and broad convalescent facility care regardless of their age." (Id. ¶¶ 3, 6, 27, 69.) Schandler alleges that these representations were made in promotional literature that was distributed to Hadassah members. (Id. ¶¶ 9, 41.)
Specifically, Schandler points to a promotional letter dated October 1, 1991 (the "1991 Promotional Letter") that states:
AND don't worry about your age. You may apply for the Plan no matter how old you are. You may keep your insurance as long as you live, provided premiums are paid and the group policy remains in force. You can never be terminated because of your claims, your health or your age. That exceptionally broad eligibility - at these prices
- and continuance to any age makes your Hadassah Catastrophic Major Medical Plan one of the best insurance buys available anywhere.
(See e.g., id. ¶ 51.)
Schandler also points to a letter dated February 1994 (the "1994 Promotional Letter") that states:
HADASSAH'S $1,000,000
CATASTROPHIC MAJOR MEDICAL PLAN
WITH CONVALESCENT CARE AND HOME HEALTH CARE
AVAILABLE TO YOU AND YOUR SPOUSE
REGARDLESS OF YOUR AGE
(See e.g., id. ¶ 52.)
The above-referenced marketing literature bears Hadassah's name and logo, and at the time the letters were distributed, U.S. Life was the policy's underwriter. (Id. ¶¶ 21, 67.) Schandler alleges that "on information and belief each of the Defendants ratified and approved these and other materials promoting the Major Medical Plan as providing comprehensive convalescent care benefits to aging individuals." (Id. ¶ 67.) Schandler further alleges that after November 2002, New York Life "continued its predecessors' false promotion and marketing of the plan as providing comprehensive convalescent care . . . regardless of age", but Schandler does not point to any marketing claims or similar representations made by New York Life or Hadassah after November 2002. (See id. ¶ 27.)
B.
Schandler alleges that after an individual purchases the Major Medical Plan, a Group Catastrophic Major Medical Insurance Certificate (the "Insurance Certificate"), which is not provided prior to purchase, is sent to the individual. (Compl. ¶ 57.) The Insurance Certificate, Schandler alleges, "expressly contradicts" the claims in the above-referenced marketing materials and "reveals that the Major Medical Plan's benefits are not actually available 'regardless of age' and are specifically not available to insureds aged 65 or older." (Id. ¶¶ 58, 97, 107.).
Schandler specifically points to an Insurance Certificate underwritten by New York Life and dated September 2003 (the "2003 Insurance Certificate"), which included that following limitations on coverage:
For purposes of deciding the motions before the Court, Schandler provided this Court with a copy of the 2003 Insurance Certificate, which was attached to (1) a letter from Hadassah Member's Insurance Program dated September 26, 2003 and (2) an Individual Schedule of Benefits for Schandler and her spouse (the "2003 Schedule"). Although the Insurance Certificate has an effective date of November 1, 2002, it contains a prepared date of September 2, 2003. (See 2003 Schedule at 1.) Thus, the Court will refer to it as the "2003 Insurance Certificate", but notes that the policy terms outlined in the 2003 Insurance Certificate took effect in November 2002.
• Home health care coverage of 60 calendar visits per year, does not mean one visit per day but
one visit for every four hour increment. (Compl. ¶ 63; 2003 Insurance Certificate at 8.)
• Private duty nursing services are not covered unless rendered by "a registered professional nurse or graduate nurse ('R.N.'), a licensed practical nurse ('L.P.N')", or "a nurse, currently listed and certified by the First Church of Christ, Scientist, of Boston, Massachusetts." (Compl. ¶¶ 62, 65; 2003 Insurance Certificate at 23.)
• A charge by a nursing home will not be covered for any insured aged 65 or over on the day of confinement, and only certain, defined types of custodial care are covered. (Compl. ¶¶ 60, 97, 107, 123; 2003 Insurance Certificate at 10, 19.)
• Charges for a "nursing home" will not be covered if it is an assisted living facility, rest home, or home for care of the aged. (Compl. ¶ 61; 2003 Insurance Certificate at 22.)
Schandler alleges that similar limitations were contained in Insurance Certificates underwritten by U.S. Life and New York Life from 1990 through 2007, when Schandler was paying premiums. (Compl. ¶ 59.) Schandler also alleges, in the alternative, that in 2002, New York Life made amendments to the plan, including age restrictions on certain benefits, as outlined in the 2003 Insurance Certificate, without notifying Schandler of these changes. (Id. ¶ 74.)
C.
In 2003, Mr. and Mrs. Schandler became residents of an assisted living facility, the Wellspring Retirement Community ("Wellspring"), in Greenboro, North Carolina. (Compl. ¶ 71.)
In 2006, Mr. Schandler became ill with non-Hodgkin's lymphoma and moved to Wellspring's Skilled Care Center, which provided limited medical services and functioned like a nursing home. (Id. ¶¶ 76, 77.) As his health declined, his physician ordered more custodial care and Schandler retained services of various entities accordingly. (Id. ¶ 78.)
In January 2007, Schandler submitted claims for the custodial care and nursing services that Mr. Schandler had received during 2006. (Id. ¶ 79.) In March and May 2007, New York Life denied most of these claims, explaining that the primary reason for denial was that these services were not provided by a L.P.N. or R.N. (Id. ¶¶ 80-2.) Schandler alleges that these claims should have been covered as part of the "broad convalescent facility benefits" that were promised in the Major Medical Plan's promotional literature. (Id. ¶ 84.)
In October 2007, Schandler did not renew the Major Medical Plan. (Id. ¶ 19.)
On December, 23, 2009, Schandler filed this suit against New York Life, U.S. Life, and Hadassah, asserting violation of N.Y. General Business Law, fraudulent misrepresentations, fraudulent concealment, breach of contract, breach of implied covenant of good faith and fair dealing, and unjust enrichment.
Currently pending before this Court are Defendants' motions to dismiss Schandler's claims pursuant to Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure and Schandler's motion for leave to file her First Amended Complaint pursuant to Rule 15(a) of the Federal Rules of Civil Procedure.
DEFENDANTS' MOTIONS TO DISMISS
A. Legal Standard for Motions to Dismiss
When deciding a motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim, "the Court ordinarily accepts as true all well-pleaded factual allegations and draws all reasonable inferences in the plaintiff's favor." In re Parmalat Sec. Litig., 501 F. Supp. 2d 560, 572 (S.D.N.Y. 2007) (citing Levy v. Southbrook Int'l Invs., Ltd., 263 F.3d 10, 14 (2d Cir. 2001)).
To survive a 12(b)(6) motion to dismiss, "the plaintiff must provide the grounds upon which [the] claim rests through factual allegations sufficient 'to raise a right to relief above the speculative level.'" ATSI Comm'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). "[O]nce the claim has been adequately stated it may be supported by showing any set of facts consistent with the allegations in the complaint." Id. (citing Twombly, 550 U.S. at 562). Thus, "if it is clear that no relief could be granted under any set of facts that could be proved consistent with the" plaintiff's allegations then the complaint should be dismissed. Swierkiewicz v. Sorema N. A., 534 U.S. 506, 514 (2002)(internal quotation marks and citations omitted).
Additionally, "[w]here the dates in a complaint show that an action is barred by a statute of limitations", the claim should be dismissed pursuant to Rule 12(b)(6) for failure to state a claim. Ghartey v. St. John's Queens Hosp., 869 F.2d 160, 162 (2d Cir. 1989); see Pons v. People's Republic of China, 666 F. Supp. 2d 406, 415 (S.D.N.Y. 2009)(dismissing plaintiff's claim pursuant to 12(b)(6) because the statute of limitations had expired).
Fraud claims are subject to a heightened pleading requirement. Rule 9(b) of the Federal Rules of Civil Procedure requires that a party alleging fraud "state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). To satisfy Rule 9(b), a party alleging fraudulent misrepresentations must "(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent." Hirsch v. Columbia University, College of Physicians and Surgeons, 293 F. Supp. 2d 372, 381 (S.D.N.Y. 2003) (quoting Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir. 1993)).
Finally, where the plaintiff "has rel[ied] on the terms and effect of a document in drafting the complaint, and that document is thus integral to the complaint, [the Court] may consider its contents even if it is not formally incorporated by reference." Broder v. Cablevision Sys. Corp., 418 F.3d 187, (2d Cir. 2005)(quoting Chambers v. Time Warner, Inc., 282 F3d 147, 153 (2d Cir. 2002)(internal quotation marks omitted)). Here, Schandler has relied on three documents in drafting her complaint -- the 1991 Promotional Letter, the 1994 Promotional Letter, and the 2003 Insurance Certificate. (See e.g., Compl. ¶¶ 50-1, 60-3.) Accordingly, this Court will consider the contents of these documents in deciding the pending motions.
B. Violation of N.G.B.L. § 349
The Defendants move to dismiss Schandler's claim for violation of section 349 of New York's General Business Law, which prohibits deceptive acts or practices in the conduct of any business. See N.Y. Gen. Bus. Law § 349(a).
Private rights of action under section 349 are governed by a three-year statute of limitations. See C.P.L.R. § 214(2); Gaidon v. Guardian Life Ins. Co., 96 N.Y.2d 201, 209-10 (N.Y. 2001) (Gaidon II)(holding that the six-year statute of limitations for common law fraud does not apply to a claim under section 349 because it is a statutory cause of action); see also Gristede's Foods, Inc. v. Unkechauge Nation, 532 F. Supp. 2d 439, 452 (E.D.N.Y. 2007)("Since Gaidon II, New York courts have uniformly applied a three-year statute of limitations to section 349 and section 350 cases."). Accrual of a private right of action under section 349 "occurs when plaintiff has been injured by a deceptive act or practice violating section 349." Gaidon II, 96 N.Y.2d at 210.
Here, Schandler alleges that Defendants' promotional materials, which purportedly promised that the Major Medical Plan provided "broad convalescent facility benefits" regardless of an insured's age, were materially deceptive and misleading because in fact, the Major Medical Plan did not provide "broad convalescent facility benefits" regardless of age and specifically, the Plan restricted nursing home benefits based on the insured's age. (Compl. ¶¶ 96-7, 101.) In other words, Schandler alleges that she was injured because she purchased and received an insurance policy that was inferior to the policy that Defendants purportedly promised her. Based on the facts alleged in Schandler's complaint, the inferior policy was delivered to her at the latest in November 2002, when the policy outlined in the 2003 Insurance Certificate, which Schandler alleges "expressly contradicted" Defendants' marketing claims, took effect. (See Compl. ¶ 107; 2003 Schedule at 1.)
As noted above, while Schandler alleges that the Major Medical Plan included the contradictory restrictions since 1990 (see Compl. ¶ 59), she also alleges that in 2002, New York Life made amendments to the plan, including age restrictions on certain benefits. (Id. ¶ 74.) For purposes of determining when the injury occurred, the Court relies on the allegation most beneficial to Schandler -- that the policy was amended in November 2002 to include restrictive provisions.
Schandler argues that the injury did not occur until her claims were rejected in 2007 because that is when her expectations about the Major Medical Plan's benefits were not met. (Pl.'s Mem. in Opp'n to Defs.' Mot. to Dismiss ("Pl.'s Opp'n"), at 42-4.) Schandler relies on Gaidon II to support this argument. (Id.) In Gaidon II, plaintiffs alleged that because of defendant's marketing and sales practices, including personalized graphic illustrations, plaintiffs were led to believe that after a specified period of time, the insurance policy's premiums would vanish. (Gaidon II, 96 N.Y.2d at 211.) The court held that the gravamen of the plaintiffs' complaint was "not false guarantees of policy terms, but deceptive practices inducing unrealistic expectations of" vanishing premiums and thus, plaintiffs' injury occurred at the point in time when these unrealistic expectations were not met. (Id. at 211-12.) Here, to the contrary, the gravamen of Schandler's complaint is that she was falsely promised certain policy terms and thus, Schandler's injury occurred when she was delivered a policy without these terms. See e.g., Pike v. New York Life Ins. Co., 901 N.Y.S.2d 76, 81 (N.Y. App. Div. 2010)(holding that plaintiffs' injury occurred when plaintiffs, allegedly induced by defendants' false representations about the policy's terms, purchased the unsuitable insurance policies).
Schandler's contention that the statute of limitations should be tolled because Defendants fraudulently concealed the policy's terms is also unavailing. To toll the running of the statute of limitations because of fraudulent concealment, a plaintiff must show that (1) defendants concealed the existence of a cause of action, (2) plaintiff remained ignorant of the cause of action until after the statute of limitations expired, and (3) plaintiff's ignorance was not due to her lack of diligence. See State of N.Y. v. Hendrickson Bros., Inc., 840 F.2d 1065, 1083 (2d Cir. 1988). Here, although Schandler asserts that Defendants "concealed" the Major Medical Plan's limitations (see e.g., ¶¶ 82, 100), she makes no factual allegations to support such a claim. In fact, her allegation that the 2003 Insurance Certificate contained provisions that "expressly contradict[ed]" Defendants' marketing claims (see e.g., ¶ 97), supports the contrary conclusion. Schandler's argument that the continuing wrong doctrine applies here is likewise unpersuasive. Schandler does not allege any specific wrong that occurred each time she renewed the policy or paid a premium, other than having to pay the premium, that would warrant tolling the statute of limitations. See Pike, 901 N.Y.S.2d at 81 (holding that the continuing wrong doctrine did not toll the statute of limitations where plaintiff did not point to any specific wrong that occurred each time an insurance premium was paid).
Thus, accepting Schandler's factual allegations as true and drawing all reasonable inferences in her favor, Schandler's injury occurred, at the latest, in November 2002 when the allegedly inferior policy took effect and therefore, Schandler's section 349 claim is barred by the statute of limitations because she filed this complaint in December 2009, more than three years after the alleged injury had occurred. Accordingly, Schandler's section 349 claim is dismissed.
Schandler requests leave to replead under North Carolina's comparable statute. (Pl.'s Opp'n at 48.) This request is denied because such a claim would also be time-barred. See Grace v. Rosenstock, 228 F.3d 40, 53 (2d Cir. 2000) ("Amendment would likely be futile if, for example, the claims the plaintiff sought to add would be barred by the applicable statute of limitations.") Under North Carolina law, claims for unfair and deceptive trade practices are governed by a four-year statute of limitations period and the claims accrue when the violation occurs. N.C. Gen. Stat. § 75-16.2; Neugent v. Beroth Oil Co., 560 S.E.2d 829, 839 (N.C. Ct. App. 2002); see also Richardson v. Bank of America, N.A., 643 S.E.2d 410, 422 (N.C. Ct. App. 2007)(holding that where borrowers's unfair and deceptive trade practices claim was based on lenders' conduct before and during, not after, the closing, the borrowers' claim accrued at the closing).
C. Fraudulent Misrepresentations
Next, Defendants move to dismiss Schandler's claim for fraudulent misrepresentations.
To state a claim for fraudulent misrepresentations under New York law, a plaintiff must allege a false representation of material fact, scienter, expectation of reliance, justifiable reliance, and damage. See Congress Fin. Corp. v. John Morrell & Co., 790 F.Supp. 459, 469 (S.D.N.Y. 1992). Further, a plaintiff must state with particularity the contents and circumstances of the allegedly fraudulent misrepresentations. See Hirsch, 293 F. Supp. 2d at 381 (S.D.N.Y. 2003) (a party alleging fraudulent misrepresentations must "(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent") (quoting Mills, 12 F.3d at 1175).
While each party relies principally on New York law in their motions, New York Life argues that the substantive law of North Carolina applies to Schandler's tort and contract claims. (See New York Life's Mem. in Supp. of Its Mot. to Dismiss at 9.) This Court, however, does not need to determine which law governs because, as noted throughout, there are no relevant differences for purposes of deciding Defendants' motions to dismiss or Schandler's motion to amend.
Under North Carolina law, a plaintiff would have to allege similar elements. See Anderson v. Sara Lee Corp., 508 F.3d 181, 189 (4th Cir. 2007) (explaining that under North Carolina law, the elements of actual fraud are "(1) [f]alse representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made with intent to deceive, (4) which does in fact deceive, (5) resulting in damage to the injured party" (quoting Forbis v. Neal, 649 S.E.2d 382, 387 (N.C. 2007)). Additionally, Rule 9(b)'s heightened pleading standard would apply. Id.
Here, Schandler alleges that Defendants intentionally made false statements about the scope of the Major Medical Plan's coverage, and that relying on these statements, Schandler purchased and renewed the Major Medical Plan. (See Compl. ¶¶ 105-11.) As explained above, Schandler points to two allegedly fraudulent statements in the 1991 Promotional Letter and 1994 Promotional Letter (collectively the "Promotional Letters"). (Compl. ¶¶ 51-2.) Schandler alleges that Hadassah and U.S. Life were the source of these statements -- Hadassah's logo appeared on each letter and U.S. Life was the underwriter of the Major Medical Plan at the time. (Id.) Schandler alleges that these statements were fraudulent because they promised insurance benefits that were not actually contained in the policy that Schandler purchased. (Id. ¶ 107.)
As an initial matter, Schandler fails to state with particularity a fraudulent misrepresentation claim against New York Life. The allegedly fraudulent statements that Schandler points to in her complaint pre-date New York Life's involvement in the policy and her allegation that "on information and belief each of the Defendants ratified and approved these and other materials" is wholly insufficient to meet the pleading requirements of Rule 9(b). See Segal v. Gordon, 467 F.2d 602, 608 (2d Cir. 1972) ("Rule 9(b) pleadings cannot be based upon information and belief".) Schandler's allegation that after November 2002, New York Life "continued its predecessors' false promotion and marketing of the plan as providing comprehensive convalescent care . . . regardless of age" (Compl. ¶ 27) is likewise conclusory and lacks the specificity required by Rule 9(b). In fact, the only statements that Schandler attributes to New York Life are statements from the 2003 Insurance Certificate which, she alleges, "expressly contradicted" the false representations in the marketing materials. (See id. ¶ 107.) Thus, Schandler's claim against New York Life for fraudulent misrepresentations does not meet Rule 9(b)'s pleading requirements and is therefore dismissed.
Next, even if Schandler has sufficiently pled a claim for fraudulent misrepresentations as to Hadassah and U.S. Life, her claim is time-barred. Under New York law, a claim for fraud must be commenced within six years from the commission of the fraud or within two years from the date that the fraud was discovered, or could reasonably have been discovered, whichever is later. Guilbert v. Gardner, 480 F.3d 140, 147 (2d Cir. 2007) (citing C.P.L.R. §§ 203(g), 213(8)). The discovery rule does not apply here because Schandler filed this complaint in December 2009, more than two years after her insurance claims were rejected in March and May of 2007. (See Compl. ¶¶ 80-2.) Thus, Schandler's claim accrued on the date that the alleged fraud was committed.
Where a plaintiff alleges, as Schandler does here, that a defendant's fraudulent misrepresentations induced the plaintiff to purchase an unsuitable insurance policy, New York courts have held that the six-year limitations period begins to run on the date that the unsuitable policy is purchased. See Certain Underwriters at Lloyd's v. Milberg L.L.P., 2009 WL 3241489, *5 (S.D.N.Y. 2009)(collecting cases). Accepting all factual allegations in Schandler's complaint as true and drawing all reasonable inferences in her favor, Schandler purchased the allegedly unsuitable policy at the latest in November 2002 when the Major Medical Plan containing terms that "expressly contradicted" Hadassah's and U.S. Life's purportedly fraudulent misrepresentations took effect. (See 2003 Schedule at 1; Compl. ¶¶ 57-8; 107.)
Schandler argues that the statute of limitations should be tolled because an additional fraud occurred every time the policy was renewed. (See Pl.'s Opp'n at 44-6.) Schandler correctly notes that when there are a series of fraudulent misrepresentations, the statute of limitations period begins when the last misrepresentation is made. See In re Dynex Capital, Inc. Secs. Litigation, 2006 WL 314524, *5 (S.D.N.Y. Feb. 12, 2006) (holding that where plaintiff alleged that the defendant's initial misrepresentations were followed by additional materially false statements regarding the same subject matter, any claims arising from the initial statements were not barred by the limitations period). Schandler, however, points to no allegedly fraudulent misrepresentations other than the statements in the 1991 and 1994 Promotional Letters that would warrant tolling the statute of limitations.
Accordingly, Schandler's claim against Hadassah and U.S. Life for fraudulent misrepresentations is time-barred because she filed this complaint in December 2009, more than six years after the claim had accrued in November 2002 when the Major Medical Plan containing terms that "expressly contradicted" the allegedly fraudulent misrepresentations took effect. Her fraudulent misrepresentations claim against U.S. Life and Hadassah is therefore dismissed.
Schandler's fraudulent misrepresentations claim would also be time barred under North Carolina law. The North Carolina statute of limitations for fraud is three years from "when the aggrieved party discovered the facts constituting fraud, or when, in the exercise of reasonable diligence, such facts should have been discovered." Lynch v. Universal Life Church, 775 F.2d 576, 578 (4th Cir. 1985)(quoting Vail v. Vail, 63 S.E.2d 202, 207 (N.C. 1951)). Here, Schandler alleges that the Major Medical Plan provisions outlined in the 2003 Insurance Certificate "expressly contradicted" Hadassah's and U.S. Life's allegedly fraudulent misrepresentations. (See e.g., Compl. ¶¶ 57-8; 107.) Moreover, the 2003 Insurance Certificate expressly states that "the Policy is available at the Policyholder's office for inspection at any time." (2003 Insurance Certificate at 2.) Thus, based on the facts alleged in Schandler's complaint, in the exercise of reasonable diligence, she could have discovered the alleged fraud in September 2003, well more than three years before she filed this suit in December 2009.
D. Fraudulent Concealment
Defendants also move to dismiss Schandler's claim for fraudulent concealment.
Under New York law, to state a claim for fraudulent concealment, a plaintiff must allege, "a relationship between the [] parties that creates a duty to disclose, knowledge of the material facts by the party bound to disclose, scienter, reliance, and damage." Aetna Cas. and Sur. Co. v. Aniero Concrete Co., Inc., 404 F.3d 566, 582 (2d Cir. 2005) (citing Congress Fin. Corp., 790 F.Supp. at 472). A duty to disclose arises where "one party possesses superior knowledge, not readily available to the other, and knows that the other is acting on the basis of mistaken knowledge." Id. at 582 (quoting Aaron Ferer & Sons Ltd. v. Chase Manhattan Bank, 731 F.2d 112, 123 (2d Cir. 1984)).
Under North Carolina law, a plaintiff would have to allege similar elements and Rule 9(b)'s heightened pleading standard would apply. See Anderson, 508 F.3d at 189.
Here, Schandler alleges that the Defendants omitted material facts about the Major Medical Plan's coverage from their marketing materials and that Defendants had a duty to disclose these facts because Defendants had "special or superior knowledge of the true facts which were not available to" Schandler. (See Compl. ¶¶ 112-14.) Schandler points to several material facts that she alleges Defendants omitted from the Major Medical Plan's marketing materials. (See id. ¶ 113.) Schandler also alleges, however, that these material facts were contained in the 2003 Insurance Certificate. (See id. ¶¶ 60-4.) And in fact, each alleged omissions is contained in the 2003 Insurance Certificate. (See 2003 Insurance Certificate at 8, 10, 22, & 23.) Moreover, the 2003 Insurance Certificate expressly states that, "the Policy is available at the Policyholder's office for inspection at any time." (2003 Insurance Certificate at 2.)
Specifically, Schandler makes the following allegations: (1) "the [2003] Insurance Certificate reveals that nursing home benefits are, in fact, not available to persons aged 65 & over" (Compl. ¶ 60); (2) "despite claims of 'broad convalescent facility benefits' and 100 percent coverage 'IN and OUT of the hospital,' the [2003] Insurance Certificate provides that charges for a nursing home will not be covered if it is a 'rest home,' assisted living facility,' or a 'place for care of the aged'" (id. ¶ 61); (3) "the [2003] Insurance Certificate reveals that [private duty nursing] services are limited to those rendered by 'a registered professional nurse or graduate nurse ('R.N.'), a licensed practical nurse ('L.P.N.'),' or "a nurse currently listed and certified by the First Church of Christ, Scientist, of Boston, Massachusetts, while providing in-person services")(id. ¶ 62); and (4) "the dense [2003] Insurance Certificate reveals that 'up to four consecutive hours of home health care services rendered by a provider of home health will be considered one visit.'" (Id.)
Thus, Schandler could point to no set of facts consistent with the allegations in her complaint that would support a claim that Defendants failed to disclose the allegedly material facts or that Defendants had a duty to disclose these based on their "special or superior knowledge" because accepting all factual allegations in Schandler's complaint as true and drawing all reasonable inferences in her favor, the allegedly material facts were readily available to her in the 2003 Insurance Certificate. Schandler's fraudulent concealment claim is therefore dismissed.
Moreover, even if the alleged omissions had not been disclosed to Schandler prior to 2003, for the same reasons that her fraudulent misrepresentations claim is time-barred, her fraudulent concealment claim would also be time-barred. Under New York law, Schandler's fraudulent concealment claim would have accrued, at the latest, in November 2002 when she renewed the Major Medical Plan, which contained terms that Defendants' allegedly omitted from the marketing materials. See Guilbert, 480 F.3d at 147; C.P.L.R. §§ 203(g), 213(8). Schandler filed this complaint in December 2009, more than six years after any fraudulent concealment claim accrued. Similarly, under North Carolina law, the claim would have accrued in September 2003 more than three years before she filed this action when, in the exercise of reasonable diligence, she could have discovered the alleged omissions, which were all contained in the 2003 Insurance Certificate. See Lynch, 775 F.2d at 578.
E. Breach of Contract
Defendants next move to dismiss Schandler's claim for breach of contract.
Under New York law, a party asserting breach of contract must allege: "(1) a contract; (2) performance by the party seeking recovery; (3) breach of the contract by the other party; and (4) damages attributable to the breach." Alesayi Beverage Corp. v. Canada Dry Corp., 947 F.Supp. 658, 667 (S.D.N.Y. 1996) (citing Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522 (2d Cir. 1994)). "In pleading these elements, a plaintiff must identify what provisions of the contract were breached as a result of the acts at issue." Wolff v. Rare Medium, Inc., 171 F. Supp. 2d 354, 358-59 (S.D.N.Y. 2001)(dismissing breach of contract claim because plaintiffs failed to identify the contractual provisions that defendant had breached); see also Levy v. Bessemer Trust Co., 1997 WL 431079, *5 (S.D.N.Y July 30, 1997)(dismissing breach of contract claim because plaintiff had alleged only that defendant acted contrary to its purported representations and not that these representations were a part of the parties' agreement). Moreover, "stating in a conclusory manner that an agreement was breached does not sustain a claim of breach of contract." Berman v. Sugo L.L.C., 580 F. Supp. 2d 191, 202 (S.D.N.Y. 2008) (citing Posner v. Minnesota Mining & Mfg. Co., 723 F.Supp. 562, 563-64 (E.D.N.Y. 1989)).
Similarly, under North Carolina law, the elements of a claim for breach of contract are "(1) existence of a valid contract and (2) breach of the terms of that contract." Toomer v. Garrett, 574 S.E.2d 76, 91 (N.C. Ct. App. 2002)(quoting Poor v. Hill, 530 S.E.2d 838, 843 (N.C. Ct. App. 2000))(internal quotation marks omitted).
Schandler alleges that Defendant's representations in the 1991 and 1994 Promotional Letters that "home health benefits, private duty nursing benefits, and broad convalescent facility benefits would be available to [insureds] regardless of age" were "impliedly incorporated" into the Major Medical Plan. (Compl. ¶¶ 120-22.) Schandler further alleges that the Major Medical Plan, as outlined in the 2003 Insurance Certificate, contained provisions that "expressly contradict[ed]" these representations. (See id. ¶ 107.) She specifically points to the following provisions: (1) nursing home benefits are available only to insureds who enter a nursing home before turning 65 (id. ¶¶ 60, 123); (2) 60 home health visits are covered in each calendar year, but each visit is limited to 4 consecutive hours (id. ¶ 63); (3) private duty nursing services are only covered if rendered by a nurse with specified credentials (id. ¶ 62); and (4) nursing home charges are not covered if it is a rest home, assisted living facility or home for the aged. (Id. ¶ 61.) Schandler alleges that Defendants breached "their contract with Mrs. Schandler" by providing her insurance coverage in accordance with the above provisions. (Id. ¶¶ 125-26.)
Thus, based on the facts alleged in Schandler's complaint, the Defendants' conduct fully complied with the provisions of the Major Medical Plan, as outlined in the 2003 Insurance Certificate, and thus, Schandler has failed to identify any contractual provision that was breached by Defendants' conduct. Schandler's assertion that the statements in the Promotional Letters were "impliedly incorporated" into the Major Medical Plan does not salvage her claim. This Court is not bound to accept mere legal conclusions framed as factual allegations. See Berman, 580 F. Supp. 2d at 202. An advertisement does not constitute an offer, acceptance of which would form an enforceable contract, unless the advertisement is "clear, definite, and explicit, and leaves nothing open for negotiation." Leonard v. Pepsico, 88 F. Supp. 2d 116, 124 (S.D.N.Y. 1999) (quoting Lefowitz v. Great Minneapolis Surplus Store, 86 N.W.2d 689, 691 (Minn. 1957)). The Promotional Letters merely provide a general description of the Major Medical Plan's benefits and specifically note that the application is enclosed "along with a detailed explanation of all the benefits." (See 1991 Promotional Letter at 2; 1994 Promotional Letter at 2.) Thus, Schandler could point to no set of facts consistent with the allegations in her complaint that would suggest the Promotional Letters were part of an enforceable contract.
Further, any breach of contract claim would be time-barred. New York's statute of limitations for contract and quasi-contract, or implied contract, claims is six years and the claim accrues upon breach. Gutkowski v. Steinbrenner, 680 F. Supp. 2d 602 (S.D.N.Y. 2010)(citing N.Y. C.P.L.R. § 213(2))(holding that plaintiff's contract claim was time-barred because the conditions of defendant's purported oral promise were not met more than six years before the plaintiff filed suit). To the extent that the facts alleged by Schandler support any breach of contract claim at all, it is a breach of implied contract or quasi-contract claim -- she alleges that Hadassah and U.S. Life, through the Promotional Letters, promised Schandler a Major Medical Plan with "broad convalescent facility benefits [that] would be available to [her] regardless of age." (See Compl. ¶¶ 120-22.) An implied contract based on this promise was breached at the latest in November 2002, when the policy with expressly contradictory provisions took effect. (See Compl. ¶ 107; 2003 Schedule at 1.)
Under North Carolina law, a three-year statute of limitations applies to actions "[u]pon a contract, obligation or liability arising out of a contract, express or implied," and the claim accrues upon breach. Miller v. Randolph, 478 S.E.2d 668, 670 (N.C. Ct. App. 1996) (quoting N.C. Gen. Stat. § 1-52(1)).
It is worth noting that Schandler cannot sustain any claim against New York Life based on statements in the Promotional Letters because the statements were not made by New York Life and thus, there is no privity. See MBIA Ins. Corp. v. Royal Bank of Canada, 706 F. Supp. 2d 380, 396 (S.D.N.Y. 2009)("It is well established that, generally, a party who is not a signatory to a contract cannot be held liable for breaches of that contract."); Smith v. Fitzsimmons, 584 N.Y.S.2d 692, 695 (N.Y. Ct. App. 1992)("As a general rule, privity or its equivalent remains the predicate for imposing liability for nonperformance of contractual obligations.").
Schandler's argument that the statute of limitations should be tolled because the purported contract required Defendants' "continuing performance over a period of time," and "each successive breach beg[an] the statue of limitations running anew" is unavailing. (Pl.'s Opp'n at 46 (quoting Guilbert, 480 F.3d at 150).). In Guilbert, the contract-at-issue required defendants to contribute a specified amount to the plaintiff's pension fund each year and thus, the court held that the breach claim accrued the last day that defendants failed to make the obligatory contribution. 480 F.3d at 150. Here, in contrast, Schandler alleges that Hadassah and U.S. Life had one obligation -- to provide Schandler an insurance policy with "broad convalescent facility benefits" regardless of age. (See Compl. ¶¶ 120-21.)
Accordingly, Schandler's breach of contract claim is dismissed.
F. Covenant of Good Faith and Fair Dealing
Next, Defendants move to dismiss Schandler's breach of covenant of good faith and fair dealing claim.
Under New York law, a claim for breach of the implied covenant of good faith and fair dealing "should be dismissed if it is duplicative of an insufficient breach of contract claim". Blessing v. Sirius XM Radio Inc., 2010 WL 4642607, *12 (S.D.N.Y. Nov. 17, 2010)(quoting Jacobs Private Equity, L.L.C. v. 450 Park L.L.C., 803 N.Y.S.2d 14, 15 (N.Y. App. Div. 2005))(internal quotation marks omitted) (dismissing breach of covenant claim because it was duplicative of an insufficient breach of contract claim). A claim is duplicative where the "the conduct allegedly violating the implied covenant is also the predicate for a breach of covenant of an express provision of the underlying contract." Id. (quoting Harris v. Provident Life & Accident Ins. Co., 310 F.3d 73, 80 (2d Cir. 2002))(internal quotation marks omitted).
Likewise, "the weight of North Carolina authority holds [] that a claim for breach of the covenant of good faith and fair dealing based on facts identical to those supporting a breach of contract claim should not be pursued separately." B. Lewis Productions, Inc. v. Maya Angelou, Hallmark Cards, Inc., 2005 WL 1138474, *11 (S.D.N.Y. May 12, 2005) (collecting cases).
Here, Schandler alleges that the same conduct gives rise to her breach of implied covenant of good faith and fair dealing claim as gives rise to her insufficient breach of contract claim. (See Compl. ¶¶ 128-33.) Schandler argues that she should be able to plead an implied covenant claim in the alternative. (See Pl.'s Opp'n at 40.) Such an alternative pleading, however, is only proper where, unlike here, the plaintiff has alleged a viable breach of contract claim. See e.g., Paxi L.L.C. v. Shiseido Americas Corp., 2009 WL 3446204, *1 (S.D.N.Y. Oct. 26, 2009)(holding that it was premature to dismiss plaintiff's alternative implied covenant claim even though the court had concluded in its preliminary injunction decision that plaintiff was likely to prevail on its breach of contract claim).
Accordingly, Schandler's breach of implied covenant claim is dismissed.
G. Unjust Enrichment
Finally, Defendants move to dismiss Schandler's unjust enrichment claim.
To state a claim for unjust enrichment a plaintiff must allege "(1) that the defendant benefited; (2) at the plaintiff's expense; and (3) that equity and good conscience require restitution." Beth Israel Med. Ctr. V. Horizon Blue Cross & Blue Shield of N.J., Inc., 448 F.3d 573, 586 (2d Cir. 2006). The statute of limitations in New York for a claim of unjust enrichment is six years and an action for unjust enrichment accrues "upon the occurrence of the wrongful act giving rise to a duty of restitution." Golden Pacific Bancorp v. Fed. Deposit Ins. Corp., 273 F.3d 509, 518, 520 (2d Cir. 2001); N.Y. C.P.L.R. § 213(1).
Similarly, to establish a claim for unjust enrichment under North Carolina law, a plaintiff must show that "(1) it conferred a benefit on the defendant, (2) the benefit was not conferred officiously or gratuitously, (3) the benefit is measurable, and (4) the defendant consciously accepted the benefit." Metric Constructors, Inc. v. Bank of Tokyo-Mitsubishi, Ltd., 72 F.App'x. 916, 920 (4th Cir. 2003) (citing Booe v. Shadrick, 369 S.E.2d 554, 556 (N.C. 1988)).
North Carolina's statute of limitations for a claim of unjust enrichment is three years and the cause of action also accrues "when the wrong is complete even though the injured party did not then know the wrong had been committed." Housecalls Home Health Care, Inc. v. State, Dept. of Health and Human Servs., 682 S.E.2d 741, 744 (N.C. Ct. App. 2009); see also N.C. Gen. Stat. § 1-52(1).
Here, based on the facts alleged in Schandler's complaint, her unjust enrichment claim is time-barred. Schandler alleges that the Defendants profited at her expense by collecting premiums from her for a promise to provide her with "broad convalescent care coverage" when in reality, Defendants provided her with a policy that offered limited coverage. (See Compl. ¶¶ 134-37.) Thus, the alleged wrongdoing occurred when Schandler paid premiums to the Defendants for a policy that was not what she had been promised. Accepting all factual allegations in Schandler's complaint as true and drawing all reasonable inferences in her favor, this occurred at the latest in November 2002 when the Major Medical Plan, which contained terms that "expressly contradicted" Defendants' alleged promises, took effect. (See Schedule of Benefits at 1; Compl. ¶ 107.) Schandler filed this complaint in December 2009, more than six years after her cause of action accrued and thus, Schandler's unjust enrichment claim is time-barred.
Schandler's unjust enrichment claim is therefore dismissed.
SCHANDLER'S MOTION TO AMEND
A. Legal Standard for Motion to Amend
Rule 15(a) provides that leave to amend "shall be freely given when justice so requires." Fed. R. Civ. P. 15(a). Whether to allow a party to amend its complaint is within the discretion of the district court. Foman v. Davis, 371 U.S. 178, 182 (1962). A court may deny leave to amend if there is an apparent reason such as (1) the party seeking to amend has unduly delayed; (2) the party seeking to amend is acting with a dilatory motive; (3) the proposed amendment would cause undue prejudice to the opposing party; or (4) the proposed amendment would be futile. Id. An amendment is considered futile if it could not withstand a motion to dismiss pursuant to Rule 12(b)(6). Riccuiti v. N.Y.C. Transit Auth., 941 F.2d 119, 123-24 (2d Cir. 1991). Thus, as explained in more detail above, "if it is clear that no relief could be granted under any set of facts that could be proved consistent with the" allegations in the plaintiff's proposed amended complaint, then the amendment could not survive a motion dismiss and it is therefore futile. Swierkiewicz, 534 U.S. 506, 514 (2002)(internal quotations and citations omitted).
B. Breach of Fiduciary Duty Against Hadassah
Schandler seeks to add a claim for breach of fiduciary duty against Hadassah. (See Proposed Am. Compl. ¶¶ 139-47.)
Under New York law, to state a claim for breach of fiduciary duty, a plaintiff must allege that the duty existed and that it was breached. Muller-Paisner v. TIAA, 289 F.App'x 461, 465 (2d Cir. 2008)(citing Appleton Acquisition, LLC v. Nat'l Hous. P'ship, 10 N.Y.S.2d 522 (2008)). "A fiduciary relationship exists when one person is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation." Ciccone v. Hersh, 530 F. Supp. 2d 574, 577 (S.D.N.Y. 2008)(quoting Flickering v. Harold C. Brown & Co., 947 F.2d 595, 599 (2d Cir. 1991))(internal quotation marks omitted).
Similarly, under North Carolina law, a fiduciary duty arises when "there has been a special confidence reposed in one who in equity and good conscience is bound to act in good faith and with due regard to the interests of the one reposing confidence." Rizoti v. Plemmons, 91 F.App'x. 793, 798 (4th Cir. 2003) (quoting Curl v. Key, 316 S.E.2d 272, 275 (N.C. 1984))(internal quotation marks omitted).
New York courts apply a six-year statute of limitations period to breach of fiduciary duty claims where a party seeks equitable relief or where the cause of action is based on actual fraud and apply a three-year statute of limitations period to claims where a party seeks only money damages. See Kaufman v. Cohen, 760 N.Y.S.2d 157, 164 (N.Y. Ct. App. 2003). The six-year limitation period applies here because Schandler seeks equitable relief and her breach of fiduciary duty claim is based on allegations of actual fraud. (See Proposed Am. Compl. at p. 38; ¶¶ 140-44.)
Under North Carolina law, "[a]llegations of breach of fiduciary duty that do not rise to the level of constructive fraud are governed by the three-year statute of limitations applicable to contract actions." Toomer v. Branch Banking and Trust Co., 614 S.E.2d 328, 335 (N.C. Ct. App. 2005). A ten-year statute of limitations period applies to constructive fraud claims that are based on a breach of fiduciary duty. Id. To "maintain a claim for constructive fraud, plaintiffs must show that they and defendants were in a 'relation of trust and confidence ... [which] led up to and surrounded the consummation of the transaction in which defendant is alleged to have taken advantage of his position of trust to the hurt of plaintiff.'" Id. (quoting Barger v. McCoy Hillard & Parks, 488 S.E.2d 215, 224 (N.C. 1997)). "Constructive fraud differs from actual fraud in that it is based on a confidential relationship rather than a specific misrepresentation." Barger, 488 S.E.2d at 224 (quoting Terry v. Terry, 273 S.E.2d 674, 678-79 (N.C. 1981))(internal quotation marks omitted). Schandler has alleged no such confidential relationship here. She merely alleges that Hadassah promoted the Major Medical Plan as part of its mission to meet the needs of its members and that as a member, Schandler purchased the plan in part because it was "backed by [Hadassah,] a trusted and reliable source." (See Compl. ¶¶ 39-47.)
A claim for breach of fiduciary duty accrues on the date that the alleged breach occurred. Ciccone, 530 F. Supp. 2d at 579; Kaufman, 760 N.Y.S.2d at 167. Here, Schandler alleges that Hadassah acted as an insurance broker for the Major Medical Plan and that as such, Hadassah owed a fiduciary duty to the Plan's insureds, like Schandler. (Proposed Am. Compl. ¶¶ 140-44.) Hadassah breached this duty, Schandler alleges, "by failing to represent the Major Medical Plan's benefits truthfully and accurately to its insureds." (See id. ¶¶ 142, 146-47.) Based on Schandler's allegations, the purported breach occurred at the latest in November 2002, when the Major Medical Policy, which contained provisions that "expressly contradict[ed]" Hadassah's representations about the Plan, took effect. (See id. ¶ 107; 2003 Schedule at 1.) Schandler also alleges that Hadassah breached its fiduciary duty by failing to notify insureds of changes, terminations and the unavailability of certain key benefits, such as the broad convalescent facility benefits that were described in the Promotional Letters. (See id. ¶¶ 142, 146-47.) Once again, based on the facts alleged in Schandler's complaint, this breach occurred, at the latest, in November 2002, when Schandler alleges New York Life made amendments, including placing age restrictions on certain benefits, to the Plan. (See id. ¶ 74.)
Schandler's arguments that the statute of limitations should be tolled are unavailing. (Pl.'s Mem. In Supp. of Mot. to Am. ("Pl.'s Mem.") at 10-3.) Schandler first argues that because she is still a member of Hadassah, a fiduciary relationship still exists between the parties and accordingly, the statute of limitations should be tolled. (Id. at 12.) Schandler is correct that the statue of limitations may be tolled while a relationship of trust and confidence exists between the parties so that the beneficiary can continue to "rely upon a fiduciary's skill without the necessity of interrupting a continuous relationship of trust and confidence by instituting a suit." Ciccone, 530 F. Supp. 2d at 580 (quoting Golden Pac. Bancorp v. FDIC, 273 F3d 509, 518-19 (2d Cir. 2001))(internal quotation marks omitted). Schandler's continued membership in Hadassah, however, is not enough to show that the parties retained a continuous relationship of trust and confidence with respect to her health insurance needs. The only communications relating to the Major Medical Plan that Schandler alleges to have had with Hadassah since purchasing the policy in 1990, are Hadassah's statements in the 1991 and 1994 Promotional Letters. (See Compl. ¶¶ 51-2.) Thus, even if Schandler has sufficiently alleged that a fiduciary relationship existed with respect to her insurance needs, she has alleged no facts to suggest that this relationship continued after she received the 1994 Promotional Letter from Hadassah.
Next, Schandler argues that a continuing wrong occurred each time she paid her premiums and thus, her claim did not accrue until the last premium was paid in 2007. (Pl.'s Mem. at 11.) Schandler is correct that where a plaintiff alleges a continuing wrong, a new cause of action accrues each time defendant commits the wrong. Butler v. Gibbons, 569 N.Y.S.2d 722 (N.Y. App. Div. 1991)(tolling statute of limitations where plaintiff alleged that defendant continued to collect rent for jointly-owned property but failed to pay plaintiff his portion of the rent collected). Here, Schandler does not point to any specific wrong that occurred each time that she paid a premium. Based on the facts alleged in her complaint, the only alleged wrong occurred in November 2002 -- when either the Major Medical Plan containing provisions that "expressly contradict[ed]" Hadassah's representations took effect or, alternatively, when New York Life amended the plan to include age restrictions on certain benefits. (See Compl. ¶¶ 74, 107; 2003 Schedule at 1.)
The other cases Schandler cites to are likewise distinguishable. See Bice v. Robb, 324 F.App'x 79, 81 (2d Cir. 2009)(holding that where a contract obligated defendant to manage the business to enhance its value the statute of limitations was tolled during the entire time defendant allegedly poorly managed the business); Guilbert, 480 F.3d at 150 (holding that where a contract required defendants to contribute a specified amount to the plaintiff's pension fund each year, the breach claim accrued the last day that defendants failed to make the obligatory contribution); Merine on Behalf of Prudential-Bache Utility Fund, Inc. v. Prudential-Bache Utility Fund, Inc., 859 F.Supp. 715, 718 (S.D.N.Y. 1994) (holding that where defendant allegedly breached its fiduciary duty by charging plaintiff excessive fees, a continuing wrong occurred each time it charged the allegedly excessive fee).
Thus, accepting all factual allegations in Schandler's complaint as true, and drawing all reasonable inferences in her favor, Hadassah's alleged breach occurred at the latest in November 2002, more than six years before Schandler filed this complaint in December 2009. Accordingly, adding a claim for breach of fiduciary duty against Hadassah would be futile because the claim would be time-barred and leave to amend is therefore denied.
C. Breach of Fiduciary Duty Against Insurers
Next, Schandler seeks to add a claim against U.S. Life and New York Life for breach of fiduciary duty. (See Proposed Am. Compl. ¶¶ 148-53.)
Generally, "[u]nder New York law the relationship between an insurance company and a policyholder is a contractual relationship, not a fiduciary one." Freeman v. MBL Life Assur. Corp., 60 F. Supp. 2d 259, 266 (S.D.N.Y. 1999)(citing Gaidon v. Guardian Life Ins. Co. of Am., 679 N.Y.S.2d 611 (N.Y. Ct. App. 1998))(dismissing insured's claim against insurer for breach of fiduciary duty because the relationship was "wholly contractual"). Certainly "under the right circumstances, the relationship between insurer and insured may be imbued with elements of trust and confidence which render the relationship more than a mere arm's-length association." Dornberger v. Metro. Life Ins. Co., 961 F.Supp. 506, 546 (S.D.N.Y. 1997)(holding that a jury could find a fiduciary relationship existed where insured alleged that insurer had reached out to Americans abroad offering personalized services to handle legal questions and problems about the complexities of foreign taxation); see also, Hartford Accident and Indem. Co. v. Michigan Mutual Ins. Co., 462 N.Y.S.2d 175 (N.Y. App. Div. 1983)(holding that an insurer owes a fiduciary duty to its insured when the insurer is representing the insured in litigation involving third parties). However, such special circumstances "are the exception rather than the rule." Rabouin v. Metropolitan Life Ins. Co., 699 N.Y.S.2d 655, 657 (N.Y. Gen. Term 1999)(dismissing fiduciary duty claim against insured because insurer did not "allege facts or circumstances which would suggest that any relationship evolved out of the ordinary arm's-length relationship created by the payment of premiums"); Gaidon, 679 N.Y.S.2d at 612 (dismissing breach of fiduciary duty claim where insured allegations of reliance and trust necessary for a finding of fiduciary relationship were conclusory and finding that an insurer's superior knowledge is not enough to create such a relationship).
Under North Carolina law, Schandler would also have to show that she had a relationship of trust and confidence with the insureds. See Rizoti, 91 F.App'x. at 798.
Here, Schandler has alleged no facts that would suggest her relationship with U.S. Life or New York Life was "imbued with elements of trust and confidence" that would "render the relationship more than a mere arm's-length association." Dornberger, 961 F.Supp. at 546. Moreover, a breach of fiduciary duty claim would be time-barred. Schandler alleges that U.S. Life and New York Life breached their fiduciary duty "by failing to provide accurate and truthful information to their insureds and prospective insureds about the Major Medical Plan in the promotional materials." (Proposed Am. Compl. ¶ 152.) Specifically, Schandler points to statements in the Promotional Letters that were "expressly contradict[ed]" in the 2003 Insurance Certificate. (See e.g., Compl. ¶¶ 51-2, 58, 107.) Thus, based on the facts alleged in Schandler's complaint, the breach occurred in November 2002 when the insurance Major Medical Plan containing terms that "expressly contradict[ed]" the statements in the promotional materials took effect. (See id. 107; 2003 Schedule at 1.)
Accordingly, Schandler's claims against U.S. Life and New York Life for breach of fiduciary duty would not survive a motion to dismiss. Thus, an amendment adding such a claim would be futile and leave to amend is therefore denied.
As discussed above, the result would be the same under North Carolina's applicable statute of limitations.
D. Aiding and Abetting Breach of Fiduciary Duty
Finally, Schandler seeks to add a claim against U.S. Life and New York Life for aiding and abetting Hadassah's breach of fiduciary duty. (See Proposed Am. Compl. ¶¶ 155-59.)
Under New York Law, to state a claim for aiding and abetting a breach of fiduciary duty, a plaintiff must allege that there was "a breach by a fiduciary of obligations to" the plaintiff. Lerner v. Fleet Bank, N.A., 459 F. 3d 273, 294 (2d Cir. 2006) (quoting Kaufman, 760 N.Y.S.2d at 169)(internal quotation marks omitted). As discussed above, Schandler's claim for breach of fiduciary duty against Hadassah fails, and thus, her claim for aiding and abetting Hadassah's breach of fiduciary duty likewise fails.
Likewise, under North Carolina law, to state an aiding and abetting a breach of fiduciary duty claim, the plaintiff must allege "a breach of a fiduciary duty owed to the plaintiff." Future Group, II v. Nationsbank, 473 S.E.2d 45, 50 (S.C. 1996).
Accordingly, an amendment adding a claim against U.S. Life and New York Life for aiding and abetting Hadassah's breach of fiduciary duty would be futile and leave to amend is therefore denied.
CONCLUSION
For the above reasons, Defendants' motions to dismiss Schandler's claims are GRANTED and Schandler's motion for leave to file her First Amended Complaint is DENIED.
SO ORDERED. Dated: April 26, 2011
/s/_________
Lawrence M. McKenna
U.S.D.J.