1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 BRENDA MARTIN, et al., Case No. 19-cv-03254-HSG
8 Plaintiffs, ORDER DENYING MOTION TO DISMISS 9 v. Re: Dkt. No. 39 10 DPR CONTRUCTION, et al., 11 Defendants.
12 13 Pending before the Court is Defendant DPR Construction’s motion to dismiss Plaintiffs’ 14 third cause of action for breach of contract. See Dkt. No. 39. The Court held a hearing on the 15 motion on December 12, 2019, and denied the motion on the record. See Dkt. No. 53. For the 16 reasons discussed during the hearing and as further detailed below, the Court DENIES the motion 17 to dismiss the third cause of action. 18 I. BACKGROUND 19 Plaintiffs Brenda Martin and the Estate of Bernard Martin filed this ERISA action on June 20 10, 2019, seeking life insurance and terminal illness benefits allegedly due to Mrs. Martin as Mr. 21 Martin’s widow and sole beneficiary. See Dkt. No. 1. Mr. Martin was a construction 22 superintendent for Defendant DPR Construction and filed claims for short- and long-term 23 disability when he developed terminal esophageal cancer. See Dkt. No. 33 (“FAC”). Plaintiffs 24 allege that Defendants DPR Construction and Life Insurance Company of North America 25 (“LINA”), the plan administrator, failed to provide Mr. Martin with notice of how to keep his 26 benefits under the plan while he was out on leave with terminal cancer, despite their knowledge of 27 his illness. See id. ¶¶ 1, 36–37, 59, 82. Further, Plaintiffs allege that Defendant DPR Construction 1 insurance benefits upon his death. See id. ¶¶ 1, 48–55. Following Mr. Martin’s death, Mrs. 2 Martin as sole beneficiary filed a claim for life insurance benefits. See id. ¶ 60. This claim was 3 denied. Id. ¶¶ 61–63. Following the appeals process, Plaintiffs further allege that DPR 4 Construction nonetheless entered into an agreement to pay Mrs. Martin $391,000 to avoid 5 litigation. Id. ¶¶ 64–69, 122–125, 128. Mrs. Martin accepted the offer, but DPR Construction did 6 not pay her. See id. ¶¶ 69, 123–125. Instead, DPR Construction later offered just 27% of the 7 agreed-upon amount. Id. ¶¶ 3, 69. 8 Based on the facts, Plaintiffs allege three causes of action for (1) breach of fiduciary duty 9 under ERISA § 502(a)(3); (2) benefits under ERISA § 502(a)(1)(B); and (3) breach of contract. 10 See FAC ¶¶ 70–131. 11 II. LEGAL STANDARD 12 Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain 13 statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A 14 defendant may move to dismiss a complaint for failing to state a claim upon which relief can be 15 granted under Rule 12(b)(6). “Dismissal under Rule 12(b)(6) is appropriate only where the 16 complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” 17 Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 18 12(b)(6) motion, a plaintiff need only plead “enough facts to state a claim to relief that is plausible 19 on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible 20 when a plaintiff pleads “factual content that allows the court to draw the reasonable inference that 21 the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 22 In reviewing the plausibility of a complaint, courts “accept factual allegations in the 23 complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” 24 Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Nevertheless, 25 courts do not “accept as true allegations that are merely conclusory, unwarranted deductions of 26 fact, or unreasonable inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 27 2008) (quoting Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001)). 1 III. ANALYSIS 2 Defendant DPR Construction’s motion to dismiss is only as to Plaintiff’s third cause of 3 action for breach of contract. See Dkt. No. 39. Defendant urges that the contractual claim is 4 preempted by ERISA, characterizing the breach of contract claim as one exclusively for ERISA 5 benefits. Id. And in the alternative, Defendant contends that Plaintiffs have failed to allege all the 6 elements of a breach of contract claim under California law. The Court disagrees. 7 First, the Court finds that the operative complaint contains sufficient facts to state a 8 plausible breach of contract claim against DPR Construction. To prevail on a cause of action for 9 breach of contract, the plaintiff must prove “(1) the contract, (2) plaintiff’s performance or excuse 10 for nonperformance, (3) defendant’s breach, and (4) the resulting damage to plaintiff.” Careau & 11 Co. v. Sec. Pac. Bus. Credit, Inc., 222 Cal. App. 3d 1371, 1388 (Cal. Ct. App. 1990), as modified 12 on denial of reh’g (Oct. 31, 2001). Here, the complaint alleges that Mrs. Martin and DPR 13 Construction entered into a contract by which DPR Construction would pay Mrs. Martin $391,000 14 “in exchange for not pursuing litigation against DPR Construction or LINA.” See FAC ¶ 64. Mrs. 15 Martin did not pursue litigation as promised for approximately a year, but DPR breached the 16 contract by failing to pay the agreed-upon amount. See id. ¶¶ 3, 69, 123–125. Mrs. Martin, who 17 was suffering from her own health problems, alleges that she has been damaged by this lack of 18 payment, and only then filed this action to enforce the parties’ agreement. In doing so, Mrs. 19 Martin has also incurred attorneys’ fees and costs. See id. ¶¶ 130–131. Accepting all of Plaintiffs’ 20 allegations as true and construing them in the light most favorable to Plaintiffs, as the Court must, 21 the complaint alleges each element of a breach of contract claim. 22 Second, the Court finds that this breach of contract claim is not preempted by ERISA. 23 Under ERISA § 514(a), a state law cause of action is preempted if it “relates to” an employee 24 benefit plan. See 29 U.S.C. § 1144(a). In Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987), the 25 Supreme Court gave the phrase “relate to” its “broad, common-sense meaning.” Id. at 47. A state 26 law thus relates to an employee benefit plan “if it has a connection with or reference to a plan.” 27 Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97 (1983). However, although ERISA preemption is 1 frustrating difficulty of defining its key term, and look instead to the objectives of the ERISA 2 statute as a guide to the scope of [preemption].” New York State Conference of Blue Cross & Blue 3 Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 656 (1995).
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 BRENDA MARTIN, et al., Case No. 19-cv-03254-HSG
8 Plaintiffs, ORDER DENYING MOTION TO DISMISS 9 v. Re: Dkt. No. 39 10 DPR CONTRUCTION, et al., 11 Defendants.
12 13 Pending before the Court is Defendant DPR Construction’s motion to dismiss Plaintiffs’ 14 third cause of action for breach of contract. See Dkt. No. 39. The Court held a hearing on the 15 motion on December 12, 2019, and denied the motion on the record. See Dkt. No. 53. For the 16 reasons discussed during the hearing and as further detailed below, the Court DENIES the motion 17 to dismiss the third cause of action. 18 I. BACKGROUND 19 Plaintiffs Brenda Martin and the Estate of Bernard Martin filed this ERISA action on June 20 10, 2019, seeking life insurance and terminal illness benefits allegedly due to Mrs. Martin as Mr. 21 Martin’s widow and sole beneficiary. See Dkt. No. 1. Mr. Martin was a construction 22 superintendent for Defendant DPR Construction and filed claims for short- and long-term 23 disability when he developed terminal esophageal cancer. See Dkt. No. 33 (“FAC”). Plaintiffs 24 allege that Defendants DPR Construction and Life Insurance Company of North America 25 (“LINA”), the plan administrator, failed to provide Mr. Martin with notice of how to keep his 26 benefits under the plan while he was out on leave with terminal cancer, despite their knowledge of 27 his illness. See id. ¶¶ 1, 36–37, 59, 82. Further, Plaintiffs allege that Defendant DPR Construction 1 insurance benefits upon his death. See id. ¶¶ 1, 48–55. Following Mr. Martin’s death, Mrs. 2 Martin as sole beneficiary filed a claim for life insurance benefits. See id. ¶ 60. This claim was 3 denied. Id. ¶¶ 61–63. Following the appeals process, Plaintiffs further allege that DPR 4 Construction nonetheless entered into an agreement to pay Mrs. Martin $391,000 to avoid 5 litigation. Id. ¶¶ 64–69, 122–125, 128. Mrs. Martin accepted the offer, but DPR Construction did 6 not pay her. See id. ¶¶ 69, 123–125. Instead, DPR Construction later offered just 27% of the 7 agreed-upon amount. Id. ¶¶ 3, 69. 8 Based on the facts, Plaintiffs allege three causes of action for (1) breach of fiduciary duty 9 under ERISA § 502(a)(3); (2) benefits under ERISA § 502(a)(1)(B); and (3) breach of contract. 10 See FAC ¶¶ 70–131. 11 II. LEGAL STANDARD 12 Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain 13 statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A 14 defendant may move to dismiss a complaint for failing to state a claim upon which relief can be 15 granted under Rule 12(b)(6). “Dismissal under Rule 12(b)(6) is appropriate only where the 16 complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” 17 Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 18 12(b)(6) motion, a plaintiff need only plead “enough facts to state a claim to relief that is plausible 19 on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible 20 when a plaintiff pleads “factual content that allows the court to draw the reasonable inference that 21 the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 22 In reviewing the plausibility of a complaint, courts “accept factual allegations in the 23 complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” 24 Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Nevertheless, 25 courts do not “accept as true allegations that are merely conclusory, unwarranted deductions of 26 fact, or unreasonable inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 27 2008) (quoting Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001)). 1 III. ANALYSIS 2 Defendant DPR Construction’s motion to dismiss is only as to Plaintiff’s third cause of 3 action for breach of contract. See Dkt. No. 39. Defendant urges that the contractual claim is 4 preempted by ERISA, characterizing the breach of contract claim as one exclusively for ERISA 5 benefits. Id. And in the alternative, Defendant contends that Plaintiffs have failed to allege all the 6 elements of a breach of contract claim under California law. The Court disagrees. 7 First, the Court finds that the operative complaint contains sufficient facts to state a 8 plausible breach of contract claim against DPR Construction. To prevail on a cause of action for 9 breach of contract, the plaintiff must prove “(1) the contract, (2) plaintiff’s performance or excuse 10 for nonperformance, (3) defendant’s breach, and (4) the resulting damage to plaintiff.” Careau & 11 Co. v. Sec. Pac. Bus. Credit, Inc., 222 Cal. App. 3d 1371, 1388 (Cal. Ct. App. 1990), as modified 12 on denial of reh’g (Oct. 31, 2001). Here, the complaint alleges that Mrs. Martin and DPR 13 Construction entered into a contract by which DPR Construction would pay Mrs. Martin $391,000 14 “in exchange for not pursuing litigation against DPR Construction or LINA.” See FAC ¶ 64. Mrs. 15 Martin did not pursue litigation as promised for approximately a year, but DPR breached the 16 contract by failing to pay the agreed-upon amount. See id. ¶¶ 3, 69, 123–125. Mrs. Martin, who 17 was suffering from her own health problems, alleges that she has been damaged by this lack of 18 payment, and only then filed this action to enforce the parties’ agreement. In doing so, Mrs. 19 Martin has also incurred attorneys’ fees and costs. See id. ¶¶ 130–131. Accepting all of Plaintiffs’ 20 allegations as true and construing them in the light most favorable to Plaintiffs, as the Court must, 21 the complaint alleges each element of a breach of contract claim. 22 Second, the Court finds that this breach of contract claim is not preempted by ERISA. 23 Under ERISA § 514(a), a state law cause of action is preempted if it “relates to” an employee 24 benefit plan. See 29 U.S.C. § 1144(a). In Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987), the 25 Supreme Court gave the phrase “relate to” its “broad, common-sense meaning.” Id. at 47. A state 26 law thus relates to an employee benefit plan “if it has a connection with or reference to a plan.” 27 Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97 (1983). However, although ERISA preemption is 1 frustrating difficulty of defining its key term, and look instead to the objectives of the ERISA 2 statute as a guide to the scope of [preemption].” New York State Conference of Blue Cross & Blue 3 Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 656 (1995). 4 The Ninth Circuit has further clarified that “Congress intended ERISA preemption to 5 afford employers with uniform regulation of the complex arena of benefit plan administration.” 6 Graham v. Balcor Co., 146 F.3d 1052, 1055 (9th Cir. 1998). In other words, preemption is related 7 to the plan, not the intended benefits. The uniformity of plan administration is not at risk if an 8 employer voluntarily enters into a separate agreement offering payment. The Ninth Circuit’s 9 opinion in Graham v. Balcor is instructive. In Graham, an employee received an unfavorable 10 performance review and faced termination. Id. at 1054–55. After contesting the review and 11 threatening litigation, the employee entered into an agreement with her employer whereby the 12 employee promised not to pursue litigation in exchange for continued health care benefits through 13 the employer’s plan. Id. The Ninth Circuit held that the plaintiff’s state law claims for breach of 14 contract, breach of the covenant of good faith and fair dealing, and intentional infliction of 15 emotional distress were not preempted because the agreement “was a settlement of legal claims 16 which does not relate to an employee benefit plan.” Id. The Court reasoned that “ERISA does not 17 preempt the state claims arising from this legal settlement, the subject matter of which is employee 18 benefits, because it does not implicate the administration of an employee benefit plan.” Id. at 19 1055. 20 As in Graham, the alleged contract between DPR Construction and Mrs. Martin is separate 21 and distinct from the ERISA policy and plan, and by its terms operates outside the ERISA policy 22 and plan administration. Plaintiffs’ breach of contract claim is therefore not preempted by ERISA 23 “because it does not implicate the administration of an employee benefit plan.” Id. DPR 24 Construction may dispute the existence of this contract, but that is not a matter for the Court’s 25 consideration at the motion to dismiss stage. 26 IV. CONCLUSION 27 Accordingly, the Court DENIES the motion to dismiss. During the hearing, the Court also 1 No. 53. The Court DIRECTS the parties to file this stipulated proposed scheduling order by 2 January 6, 2020. 3 IT IS SO ORDERED. 4 || Dated: 12/19/2019 ° ate S. GILLIAM, JR. / 6 United States District Judge 7 8 9 10 11 12
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