May v. National Guardian Life Insurance Company (Ngl) et al

BRIEF in Opposition re Motion to Dismiss for Failure to State a Claim

W.D. Pa.June 23, 2017

IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF PENNSYLVANIA LESLEY N. MAY, ) ) Plaintiff, ) ) v. ) CIV. ACTION NO. 2:17-cv-00638 ) NATIONAL GUARDIAN LIFE ) INSURANCE COMPANY (NGL); ) FILED ELECTRONICALLY PROTECTED HOME MUTUAL ) LIFE INSURANCE COMPANY, ) ) Defendants. ) MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT NATIONAL GUARDIAN LIFE INSURANCE COMPANY’S MOTION TO DISMISS COUNT II OF THE COMPLAINT STATEMENT OF FACTS Plaintiff incorporates the facts set forth within the first four paragraphs of the Defendant’s FACTUAL ALLEGATIONS section of its Memorandum of Law. Plaintiff adds the following additional facts. Defendant’s requirement of monthly medical examinations by the plaintiff at the plaintiff’s own expense were not included in the Agreement of Release. Compl.¶12. Moreover, defendants refused to make the required $2,000.00 monthly payment unless this onerous term was met. Id. Plaintiff had to spend substantial amounts of money over many years to meet this requirement. Id. Defendants made a false and deceptive promise at the time of the Agreement knowing that they would not pay past age 65. Compl. ¶ 20-21. -1- Case 2:17-cv-00638-JFC Document 13 Filed 06/23/17 Page 1 of 7 LEGAL STANDARD In deciding a rule 12(b)(6) motion to dismiss for failure to state a claim, the court “must accept all factual allegations in the complaint as true, construe the complaint in the light favorable to plaintiff, and ultimately determine whether Plaintiff may be entitled to relief under any reasonable reading of the complaint.” Mayer v. Belichick, 605 F.3d 223, 229 (3d Cir.2010) (internal citations and quotations omitted). “In a rule 12(b)(6) motion, the Court evaluates the merits of the claims by accepting all allegations in the complaint as true, viewing them in the light most favorable to the plaintiffs, and determining whether they state a claim as a matter of law.” Gould Elec. Inc. v. U.S., 220 F.3d 169,178 (3d Cir. 2000). “The defendant bears the burden of showing that no claim has been presented.” Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). A rule 12(b)(6) motion must be assessed according to the “plausibility standard” articulated by the Supreme Court, which “requires the complaint to allege enough facts to state a claim to relief that is plausible on its face. A complaint satisfies the plausibility standard when the factual pleadings allow the Court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Burtch v. Milberg Factors, Inc., 662 F.3d 212, 220-21 (3d Cir. 2011) (citing Bell Atlantic v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009)) (internal citations and quotations omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the Court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id., at 225. “[D]ismissal is appropriate only if, accepting all of the facts alleged in the complaint as true, the plaintiff has failed to plead enough facts to state a claim to relief that is -2- Case 2:17-cv-00638-JFC Document 13 Filed 06/23/17 Page 2 of 7 plausible on its face. The facts alleged must be sufficient to raise a right to relief above the speculative level.” United States v. Bogart, No. 4:12-CV-347, 2014 WL 7507260, at *2 (M.D. Pa. Dec. 8, 2014) (internal citations and quotations omitted). ARGUMENT I. PLAINTIFF HAS PROPERLY PLEAD A CLAIM UNDER THE PENNSYLVANIA UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION LAW, 73 P.S. §201-1, et seq. It is well established that misfeasance, which involves the improper performance of a contractual obligation raises a cause of action under the UTPCPL. See Stephens v. State Farm, 2014 WL 5312682 (M.D. Pa. 2014); Horowitz v. Fedreal Kemper Life Assurance Co., 57 F.3d 300, 307 (3d Cir. 1995). Moreover, as specifically alleged in Plaintiff’s complaint, fraudulent inducement to enter a contract or insurance policy is actionable under the UTPCPL. See Krisa v. Equitable Life Assur. Soc., 113 F. Supp.2d 694 (M.D. Pa. 2000); Schroeder v. Accleration Life Ins., 972 F.2d 41, 46 (3d Cir. 1992). In Lites v. Great Am. Ins. Co., 2000 WL 875698 at *4 (E.D. Pa. June 23, 2000), the Court undertook a thorough analysis of case law examples of conduct constituting misfeasance. The Lites Court reviewed five different cases involving misfeasance: In Stepanuk, the plaintiffs were a group of health care providers who had rendered accident-related health care services to several insureds of the defendant. Stepanuk, 1993 U.S. Dist. LEXIS 4674, at *3. The defendant refused to pay the claims and the plaintiffs filed suit alleging, among other counts, that defendant violated the UTPCPL. Id. at *4. Specifically, the complaint alleged that the defendant had unreasonably challenged invoices and demanded records and notes, maintained secret criteria, unreasonably refused to settle litigation, and made known throughout the community its belief that plaintiff’s bills were unreasonable. Id. at *5. Despite -3- Case 2:17-cv-00638-JFC Document 13 Filed 06/23/17 Page 3 of 7 the argument to pay claims, the Court concluded that the conduct “clearly exceeds nonfeasance.” Id. at *48. In Abramson, a defendant automobile insurer refused reimbursement for the plaintiffs’ stolen car according to the terms of the insurance policy. Abramson, 1993 U.S. Dist. LEXIS 5157, at *2. The plaintiffs filed suit, alleging among other counts, a violation of the UTPCPL. Id. The plaintiffs alleged that unfair and deceptive business practices conducted by the defendant included failing to promptly resolve their claim, failing to objectively and fairly evaluate the claims, “concocting a frivolous defense,” and “unnecessarily and unreasonably compelling plaintiffs to file suit.” Id. at *7-8. Again, the defendant argued that the allegations amounted to no more than non-payment of a claim and, therefore, did not constitute misfeasance. Id. at *14. The Court disagreed, concluding that the allegation that the defendant had acted “affirmatively and in bad faith to frustrate” the plaintiff’s claim was sufficient to withstand a motion to dismiss. Id. at *16. More recently, Judges Kauffmann and Pollak, both of this district, addressed allegations of misfeasance in a similar manner. See Bohinic v. State Farm Mut. Auto. Ins. Co., No. 98-CV-2278, 1999 U.S. Dist. LEXIS 4104 (E.D. Pa. Mar. 25, 1999); Carlucci v. Maryland Cas. Co., No. 98-DV-3294, 1999 U.S. Dist. LEXIS 3156 (E.D. Pa. Mar. 15, 1999). In Carlucci, the defendant argued that the plaintiff only alleged a failure to process her claim in a timely manner, and, therefore, did not allege misfeasance. Id. at *2. In denying the defendant’s motion to dismiss the UTPCPL violation, Judge Kauffman concluded that if the plaintiff could establish facts to support her allegation that the defendant failed to “investigate, evaluate, negotiate and otherwise handle her claim properly,” she might be entitled to relief. Id. at *2. (emphasis in original). *5 In Bohinick, the plaintiffs alleged breach of contract and violation of the UTPCPL, asserting that an improper ex parte contract between the defendant and the neutral arbitrator had tainted arbitration proceedings between the two parties. Bohinick, 1999 U.S. Dist. LEXIS 4104 at *8. Judge Pollak dismissed the breach of contract claim, but did not dismiss the UTPCPL allegation, holding that alleged impropriety could not be characterized as mere nonfeasance. Id. -4- Case 2:17-cv-00638-JFC Document 13 Filed 06/23/17 Page 4 of 7 With the criteria set forth in the above cases in mind, it is clear that for purposes of a rule 12(b)(6) motion to dismiss, plaintiff has alleged sufficient facts to state a plausible claim under the UTPCPL. It has been specifically alleged that the defendant made a deceptive promise to the plaintiff that he would continue to receive disability benefits until his disability ceased when in fact they knew an age criteria not in the agreement was to be added. It is further alleged that plaintiff relied on this promise. This conduct has been alleged to be fraudulent and deceptive. It is further alleged that, even though there was no mention of age as a criteria for terminating benefits in the Agreement of Release, the defendants nonetheless used age as the criteria for unilaterally terminating benefits. The inclusion of these unilateral conditions that did not exist in the Agreement is clear evidence of malfeasance. Further evidence of malfeasance was the unilateral enforcement of the condition of monthly medical examinations. The requirement of monthly medical examinations or for that matter (any medical examinations) was never included in the Agreement of Release. After the Agreement of Release was entered into, the defendant made monthly medical examinations at plaintiff’s own expense a unilateral condition of the Agreement. If the plaintiff did not attend the monthly medical examination and if the plaintiff did not pay for the monthly medical examination, the defendant would have terminated his benefits. Clearly, such unilateral unreasonable tactics go far beyond the issue of whether a defendant reasonably denied a claim. Here, the disabled plaintiff was put in a position of either complying with this unwritten unilateral requirement of the defendant or losing benefits altogether. Month after month, the plaintiff had to expend his own monies for these medical examinations, cutting into the disabled plaintiff’s net disability benefit which -5- Case 2:17-cv-00638-JFC Document 13 Filed 06/23/17 Page 5 of 7 had already been reduced by $600.00 from the original policy that the plaintiff believed had been in place. Considering the relative position of the disabled plaintiff versus the defendant insurance carrier, the defendant’s conduct as alleged in the complaint states a valid claim for malfeasance. Plaintiff has alleged that the defendant made material misrepresentations to the plaintiff at the time of the Agreement of Release. The first misrepresentation was with respect to the issue of the plaintiff’s obligation for the monthly medical exams and the plaintiff’s responsibility to pay for the monthly medical exams. Plaintiff has also alleged that the defendant misrepresented to the plaintiff at the time of the Agreement of Release its intention to terminate the agreement at age 65 whether or not the plaintiff’s disability had terminated. Taken as a whole, these allegations certainly state a claim for relief that is plausible on its face. The Agreement of Release giving rise to this claim was prepared by the defendant. The Agreement of Release made no effort to incorporate the terms of the underlying disability policy. There is certainly no mention of medical examinations in the Agreement and, while the requirement of the occasional reasonable medical examination relating to disability could be inferred, this Court would be challenged to cite an instance where a claimant was forced to obtain at his own expense a separate medical examination on a monthly basis as a condition of his receiving benefits. In fact, the reasonable inference to be drawn from this behavior is that the defendant was attempting through its behavior to make it so difficult for the plaintiff to receive his rightful benefits that he would simply give up. -6- Case 2:17-cv-00638-JFC Document 13 Filed 06/23/17 Page 6 of 7 CONCLUSION Plaintiff’s complaint alleges enough facts to state a claim for relief that is plausible on its face. Plaintiff should be allowed to proceed with his Pennsylvania Unfair Trade Practices and Consumer Protection Law count. Respectfully submitted, /s/ Ned J. Nakles, Jr., Esquire Attorney for Plaintiff Nakles and Nakles 1714 Lincoln Avenue Latrobe, PA 15650 PA I.D. No. 36886 -7- Case 2:17-cv-00638-JFC Document 13 Filed 06/23/17 Page 7 of 7