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Bayer v. Fluor Corp.


July 12, 2010


The opinion of the court was delivered by: Dalzell, J.


Susan Bayer sues the defendants for money that she contends they should have paid to her after her husband, Herbert Bayer, died on September 18, 2004. The plaintiff filed her complaint in this case, which is her second lawsuit regarding these issues, on July 13, 2009.*fn1 On February 26, 2010, the Clerk of Court entered default against defendant Sinead Cooke Bayer, the woman who received the payments that Susan seeks. We previously dismissed or granted summary judgment on all of the other claims in Susan's complaint, except the one against Connecticut General Life Insurance Co. ("CGLIC") for the proceeds of one of Herbert's life insurance policies, the "CGLIC Policy."*fn2 Bayer v. Fluor Corp., 682 F. Supp. 2d 484, 498 (E.D. Pa. 2010).

Susan claims that under § 502(a)(1)(B) of ERISA, which is codified at 29 U.S.C. § 1132(a)(1)(B), she is entitled to the proceeds of the CGLIC Policy, which is worth about $223,000. CGLIC has filed a motion for summary judgment as to the CGLIC Policy, and the parties have submitted extensive briefs and exhibits regarding that motion.*fn3 For the reasons we discuss below, we will grant CGLIC's motion and, at long last, bring the curtain down on this dispute.

I. Factual Background

Susan claims, and no one has disputed, that she and Herbert were married in 1988 and never divorced. Herbert then "married" Sinead Cooke Bayer in Las Vegas in 1999, but viewing the facts in the light most favorable to Susan, we will assume that Herbert and Susan never divorced and that Herbert's "marriage" to Sinead was therefore invalid.*fn4 Herbert died on September 18, 2004, and Sinead contacted CIGNA Group Insurance, which is no longer a defendant in this case, regarding the CGLIC Policy. See Letter from Dan Shustock, CIGNA Life Claim Specialist, to Sinead Cooke Bayer (Oct. 6, 2004), Def. Ex. 17. Sinead submitted a Life Insurance Claim Statement, date-stamped October 14, 2004, in which she claimed that she was Herbert's "spouse." Life Insurance Claim Statement of Sinead Cooke Bayer (Oct. 14, 2004), Def. Ex. 18. She attached a copy of Herbert's Certificate of Death from Maine, which stated that Sinead was Herbert's most recent spouse. Id. In an October 21, 2004 letter, Shustock informed Sinead that he approved her claim for the CGLIC Policy. Letter from Dan Shustock to Sinead Cooke Bayer (Oct. 21, 2004), Def. Ex. 19.

More than nine months later, on June 23, 2005, Susan wrote to CGLIC and claimed that Herbert's death benefits were paid to the wrong woman. Susan stated that "the policy has always listed his wife as the sole beneficiary" but that "a claim was filed and funds were paid to an individual who is not his spouse." Letter from Susan Bayer to Dan Shustock (June 23, 2005), Def. Ex. 20. Shustock wrote to Susan on July 6, 2005 and informed her that although Herbert designated Susan as the beneficiary of the CGLIC Policy "at one time," he changed his beneficiary of record on July 9, 2001 and Susan would thus receive no money from the policy. Letter from Dan Shustock to Susan Bayer (July 6, 2005), Def. Ex. 21.

On January 4, 2006, Susan's attorney wrote to CIGNA regarding the CGLIC Policy and stated that Herbert's marriage to Sinead was invalid because Herbert and Susan never divorced. Letter from Wendy J. Ashby, Esq. to CIGNA Group Insurance (Jan. 4, 2006), Def. Ex. 22. Ashby explained that it was the plaintiff's "understanding that Mr. Bayer's policy named his wife as beneficiary" and demanded that the CGLIC Policy proceeds be paid to Susan. Id. Ashby included with her letter (1) Susan and Herbert's marriage license that confirmed they were married on December 31, 1988, (2) the Maine death certificate described above, (3) Sinead and Herbert's marriage license from Nevada, and (4) a "Marriage Certificate" for Sinead and Herbert from the Candlelight Wedding Chapel in Las Vegas. Id. Sinead and Herbert's marriage license stated that this was Herbert's second marriage and that he was divorced in 1986. There is no mention on this document of his 1988 marriage to Susan.

Shustock next wrote to Ashby and said he was "referring this matter to our Home Office to review the beneficiary issue." Letter from Dan Shustock to Wendy J. Ashby, Esq. (Jan. 5, 2006), Def. Ex. 23. On May 2, 2006, Beth Ann Miller, a Life Claim Examiner for CIGNA Group Insurance, wrote to Ron Miller --apparently one of Susan's attorneys -- and explained that the CGLIC Policy proceeds were paid to Sinead because she was the designated beneficiary on that policy. Letter from Beth Ann Miller to Ron Miller, Esq. (May 2, 2006), Def. Ex. 25. She stated that Herbert identified Sinead as his "spouse" when he designated her as the beneficiary, but that he also listed her "by name," and that even though their marital status "may now seem suspect," CGLIC "distributed the proceeds to the named beneficiary [Sinead] as designated on July 9, 2001 by Herbert Bayer." Id.*fn5

In December of 2007 yet another of Susan's lawyers contacted CIGNA regarding the LINA and CGLIC Policies. Letter from Debra Washington DeLain, Esq. to CIGNA Group Insurance (Dec. 14, 2007), Def. Ex. 26. She explained that Susan had been given Letters of Administration for Herbert's estate and demanded various documents. Id. Using much of the same language that Beth Ann Miller employed in her May 2, 2006 letter, Shustock told counsel that the CGLIC Policy proceeds were paid to Sinead because she was the beneficiary Herbert designated "by name," and this trumped the "suspect" marital status of Sinead and Herbert. Letter from Dan Shustock to Debra Washington DeLain, Esq. (Jan. 3, 2008), Def. Ex. 27. These letters and other communications between Susan, her several attorneys, and CGLIC or CIGNA failed to convince CGLIC that it should pay the money to Susan, and she then filed two lawsuits, the most recent of which is this matter.*fn6

The CGLIC Policy Certificate states that CGLIC "shall have the authority, in its discretion, to interpret the terms of the Plan, to decide questions of eligibility for coverage or benefits under the Plan, and to make any related findings of fact. All decisions made by [CGLIC] shall be final and binding on participants and beneficiaries to the full extent permitted by law." CGLIC Policy Certificate, Def. Ex. 12, at 62. That Certificate allowed Herbert to change the beneficiary at any time "on a form satisfactory to [CGLIC] and signed by the Owner." Id. at 44. To change the beneficiary, Herbert did not need to get consent from the previously designated beneficiary. Id.

Susan admits that "on the date of Herbert Bayer's[] death, a beneficiary designation on a CGLIC enrollment form dated 7/09/01 for Fluor Corporation and its Subsidiaries listed 'Sinead Cooke Bayer' as the primary beneficiary, 100%," but Herbert printed "SPOUSE" on that document (the "Form") next to the label "Relationship." Pl. Resp. at 12, ¶ 26. See also id. at 19-20, ¶¶ 44-46 ("It is admitted that Herbert Bayer[] submitted an enrollment form dated July 9, 2001, designating Sinead Cooke Bayer as the beneficiary" but arguing that Herbert did not strictly comply with the requirements to change a beneficiary because he filled out an "enrollment form" rather than a "beneficiary form"); Group Universal Life Enrollment Form of Herbert Bayer (July 9, 2001), Def. Ex. 13 at 2.

II. Analysis*fn7

Having canvassed the facts underlying the parties' sole remaining dispute over the CGLIC Policy, we now turn to CGLIC's motion for summary judgment. Given Susan's admissions regarding the authenticity of the Form and CGLIC's possession of it at the time of Herbert's death, no reasonable jury could conclude that the decision to pay the CGLIC Policy proceeds to Sinead was arbitrary and capricious. We will therefore grant CGLIC's motion for summary judgment.

A. CGLIC Was Not Arbitrary and Capricious

When an ERISA benefit plan gives its administrator "discretionary authority to determine eligibility for benefits or to construe the terms of the plan" -- as was the case with the CGLIC Policy -- "the administrator's interpretation of the plan will not be disturbed if reasonable." Mitchell v. Eastman Kodak Co., 113 F.3d 433, 437 (3d Cir. 1997) (internal quotations omitted) (interpreting language substantively similar to that in the CGLIC Policy). Because CGLIC had the discretionary authority to determine who was eligible to receive the proceeds of Herbert's CGLIC Policy, we review that decision "under an arbitrary and capricious standard." Id. at 439. We may overturn CGLIC's determination that Sinead was Herbert's intended beneficiary "only if it is without reason, unsupported by the evidence or erroneous as a matter of law." Id. (internal quotations omitted). In reviewing CGLIC's action, we may only review the facts that CGLIC had at the time it made that decision. Id. at 440.*fn8

Susan admits that CGLIC had the Form in its files at the time of Herbert's death. She does not claim that the document is fraudulent or that there is any reason to question its authenticity. There is no dispute that in a section of the Form titled "BENEFICIARY DESIGNATION," Herbert wrote "SINEAD COOKE BAYER" on the blank provided for "First Beneficiary," stated that she should receive a "100%" share, and claimed that Sinead was his "SPOUSE." Form, Def. Ex. 13 at 2. Susan also agrees with CGLIC that Herbert could change the beneficiary at any time, but she argues that his designation of Sinead as the beneficiary was not "on a satisfactory form." Pl. Resp. Br. at 16.

Susan asserts three main reasons that CGLIC should not have considered Sinead to be the CGLIC Policy beneficiary at the time that Herbert died. She contends that (1) Herbert should have used a beneficiary change form, rather than an enrollment form, to name his beneficiary, (2) because Herbert named Sinead on the form and then incorrectly stated that she was his spouse, his designation of Sinead by name as the beneficiary was confusing or invalid, and (3) records show that there was no beneficiary on file for the CGLIC Policy at the time that Herbert died.

As to Susan's first argument, the CGLIC Policy Certificate did not mandate that Herbert use any specific form to change the beneficiary. It required only that he change beneficiaries on a form that CGLIC found "satisfactory." CGLIC clearly found Herbert's Form to be "satisfactory" in its designation of Sinead as the "100%" beneficiary of the CGLIC Policy, and CGLIC acted reasonably in doing so. Susan's argument that Herbert's beneficiary designation is invalid because he submitted the wrong kind of form is therefore unavailing. In Susan's Sur-reply Brief she suggests that Herbert was required to use the beneficiary change form because "this was an existing policy for which there were already designated beneficiaries of record on file." Pl. Sur-reply Br. at 3. This is a specious argument.

Susan admits "that, as a rule, marital status does not trump a properly-completed, signed, dated, and submitted beneficiary designation form." Pl. Resp. at 8, ¶ 15. But she argues that (1) Herbert listed Sinead and his "SPOUSE" as the beneficiary, (2) Sinead and Herbert's legal spouse at the time of his death were not the same person, and (3) CGLIC therefore should have paid the proceeds to Susan because she was Herbert's legal spouse at the time of his death.

But we must defer to CGLIC's determination that Sinead was the proper beneficiary unless that decision was arbitrary and capricious, based on the information that CGLIC had at the time it made the decision. Given that Herbert listed Sinead as the beneficiary by name, CGLIC did not unreasonably pay the benefits to the individual Herbert specifically named, rather than Susan, who was technically Herbert's "spouse." Moreover, at the time that CGLIC paid the benefits to Sinead, it had no information regarding Susan's competing claim.

At another point in Susan's briefing, despite her admissions regarding the Form, she also contends that at the time of Herbert's death CGLIC had no beneficiary designation on file for the CGLIC Policy. In support of this argument, she cites a computer printout that includes the number for the CGLIC Policy and the phrase "NO BENEFICIARY INFORMATION ON FILE." Pl. Resp. Ex. D5. It is not clear what this printout is, when it was printed, or where it came from, and Susan acknowledges that it is undated. Pl. Resp. Br. at 22. But even if we assume that this is what CGLIC's computer system stated on the date of Herbert's death -- a generous assumption, since Susan has pointed to no facts to support that conclusion -- this does not trump her admission that CGLIC in fact had the Form in its files at the time that Herbert died. If CGLIC had an entry in its computer system that stated "NO BENEFICIARY INFORMATION ON FILE" and a form in its files that specified Sinead as the beneficiary, it did not act arbitrarily and capriciously when it paid the CGLIC Policy proceeds to Sinead.

In summary, Susan has produced no evidence from which a reasonable fact finder could conclude that CGLIC arbitrarily and capriciously determined that Herbert designated Sinead -- not Susan -- as the CGLIC Policy beneficiary. We will therefore grant CGLIC's motion for summary judgment.

B. Substantial Compliance

CGLIC argues in the alternative that the doctrine of substantial compliance would lead to the same result. We agree with CGLIC that Herbert strictly complied with the requirements to change the beneficiary of his CGLIC Policy, but even if he had not done so, we would grant CGLIC's motion for summary judgment under the doctrine of substantial compliance.

As we recently discussed in Teachers Ins. and Annuity Ass'n of America v. Bernardo, 683 F. Supp. 2d 344 (E.D. Pa. 2010), our Court of Appeals "decided that ERISA does not pre-empt state common law with regard to substantial compliance in determining the proper beneficiary under an ERISA plan." Id. at 354.*fn9 Under Pennsylvania law, because it is clear that Herbert intended Sinead to be his beneficiary and his attempt to comply with the beneficiary change requirements is also clear, we will carry out that intent. See id.*fn10

C. Susan's Irrelevant Contentions and Complaints

Susan also makes other arguments that have nothing to do with her claim to the CGLIC Policy proceeds. For example, she (1) argues that the LINA Policy proceeds were improperly distributed to Sinead, (2) references Herbert's 401(k) plan, (3) claims that CGLIC violated 29 U.S.C. § 1133 in its July 6, 2005 letter, and (4) contends that CGLIC should not have reinstated Herbert's life insurance plan because CGLIC did not follow its own procedures for doing so. We will swiftly set aside her claims as to § 1133 and the 401(k) and because they are not at issue in this matter. It is, furthermore, of no moment to Susan whether CGLIC correctly reinstated the CGLIC Policy. After all, if CGLIC had not done so, there would be no CGLIC Policy proceeds for Susan to seek. We will briefly discuss Susan's arguments regarding the LINA Policy because her LINA contentions are interwoven -- though mistakenly so -- with her claims to the CGLIC Policy.

1. The LINA Policy and CGLIC Policy Were Paid to Sinead for Different Reasons

Susan repeatedly argues in her Response and Sur-reply Briefs that there was no designated beneficiary for the LINA Policy and that the LINA proceeds were mistakenly paid to Sinead under that policy's default rules because the insurer thought Sinead was Herbert's spouse at the time of his death. The May 2, 2006 letter from Beth Ann Miller to Susan's attorney suggests that this may, indeed, have happened -- but only as to the LINA Policy. See Letter from Beth Ann Miller to Ron R. Miller, Esq. (May 2, 2006), Def. Ex. 25. Miller wrote that the LINA proceeds were paid "based on the preference beneficiary wording in the policy," which Susan argues looks to the payee's relationship with the insured. Id. at 1. Miller did not state that Herbert named a beneficiary for the LINA Policy. See id.

As to the CGLIC Policy, however, Miller stated that Herbert "designated Sinead Cook [sic] Bayer as the beneficiary." Id. Miller wrote that although Herbert's identification of Sinead as his spouse "may now seem suspect given Susan Bayer's claim that she was still married to Herbert Bayer when he 'married' Sinead Cooke . . . the beneficiary form nonetheless designates Sinead Cooke Bayer by name as the beneficiary. CGLIC distributed the proceeds to the named beneficiary as designated on July 9, 2001 by Herbert Bayer." Id. See also Letter from Dan Shustock to Debra Washington DeLain, Esq. (Jan. 3, 2008), Def. Ex. 27 (explaining the same information).

We dismissed Susan's claim to the LINA Policy on January 28, 2010 because she "did not file her complaint until after the three-year contractual time limit [for the LINA Policy] had run -- and because she [did] not provide[] any relevant legal support for her view that the time limit should have been tolled." Bayer, 682 F. Supp. 2d at 492. Susan's contentions regarding the distribution of the LINA Policy proceeds are therefore no longer at issue in this case.

Most passionately in Susan's Sur-reply Brief, she argues that Shustock made the decision to pay the CGLIC Policy proceeds to Sinead based on the preference beneficiary wording or affidavit -- i.e., because Sinead was purportedly Herbert's spouse, not because Sinead was named on the enrollment form as the beneficiary. See, e.g., Pl. Sur-reply Br. at 61-63. In support of this argument, she primarily relies on an internal communication between Dan Shustock and a woman named Athena Carnahan on July 5 and 6, 2005. Approval and Referral Sheet from Dan Shustock to Athena Carnahan (July 5 and 6, 2005), Pl. Sur-reply Br. Exs. at P000168-9. Shustock wrote to Carnahan that [t]his deceased [Herbert] had 2 claims (1 was for GUL and the other 1 was a Term Life). The Term claim [LINA Policy] was paid by Preference Affidavit to the surviving spouse, Sinead C. Bayer. The GUL claim was paid to the surviving spouse, Sinead C. Bayer, based on the beneficiary designation.

Recent correspondence dated June 23, 2005 is attached in which a Susan A. Bayer is inquiring how CIGNA paid the GUL claim to someone other than her. She was the Primary Beneficiary at one time. However, the most current beneficiary designation showed Sinead C. Bayer, spouse.

Id. Shustock asked Carnahan how to respond to Susan's letter, and Carnahan advised him that he could tell Susan that she "was designated at one time" but that Herbert changed the beneficiary to someone else and "no benefits are payable to her." Id. at P000169.

Susan quotes selectively from this exchange and claims that Shustock wrote that "'The GUL claim was paid to the surviving spouse...based on the beneficiary designation.'" Pl. Sur-reply Br. at 62 (emphasis and omission in original). She states that "the GUL claim was paid to the surviving spouse [Cooke] based on the beneficiary designation Spouse and not based on the 'beneficiary designation' of Sinead Cooke Bayer." Id. (emphasis in original). Susan admits that CGLIC paid the CGLIC Policy proceeds to Sinead based on a beneficiary designation, but she argues, without any supporting evidence, that CGLIC made that decision based on Herbert's statement on the Form that the beneficiary was his spouse, rather than his statement that the beneficiary was "SINEAD COOKE BAYER."

Susan selectively quotes from Shustock's communication with Carnahan, but we actually read the evidence on which parties rely. Unlike Susan, we do not turn a blind eye to Shustock's use of Sinead's name in his communication with Carnahan. Susan argues that Shustock's statements to Carnahan -- surgically altered to reflect Susan's perspective -- strike a fatal blow to CGLIC's claims. But we take the opposite view. Shustock's statement actually supports CGLIC's claim that it paid the CGLIC benefits to the beneficiary that Herbert named and did not rely on Sinead's "marriage" to Herbert to distribute the CGLIC Policy.

2. Susan's Discovery Request

Susan requests discovery so that she may review "the Plan," but she does not specify which "Plan" she would like to review or explain how that "Plan" relates to the CGLIC Policy or could change the outcome of this motion. See Pl. Resp. at 4-5. She quotes extensively from a document she labels "The Plan," so it is unclear whether she has a copy of the document she refers to as "the Plan." Id. (emphasis in original). CGLIC attached the CGLIC Policy and related documents to its motion for summary judgment, so as to this claim Susan should have had all of the "Plan" documents that she needed to prepare her response to the motion for summary judgment.

3. Susan's Other Requests For the Litigation to Continue

At the end of Susan's Response Brief she asks that "[i]f the Court should deny CGLIC's Motion for Summary Judgment," we grant her leave to file (1) "an application for the proper payout of [the CGLIC] life insurance benefits," (2) a motion for reconsideration regarding the dismissal of the LINA Policy because she "has new evidence," and (3) an amended complaint "regarding Fluor Corporation." Pl. Resp. Br. at 35. We are, of course, granting CGLIC's motion, and Susan only requests leave to file these documents if we deny it. But even if she had not placed that proviso in her request, the first topic is moot. The plaintiff does not need leave from us to file a motion for reconsideration, and in her filings thus far she has not established any of the reasons for which the Federal Rules of Civil Procedure would permit us to grant such a motion.

As to filing an amended complaint, we recognize that Fed. R. Civ. P. 15 mandates that we "freely give leave [to amend pleadings] when justice so requires." This is not a situation in which "justice . . . requires" us to give Susan leave to file an amended complaint. This is her second lawsuit regarding her claims to Herbert's policies, and she waited to request leave to file an amended complaint until this matter was at a procedurally advanced stage.*fn11 She has blanketed the Court with all of her arguments -- relevant and irrelevant -- and still fails to articulate what potentially valid claims she would make in yet another complaint. Under these circumstances, permitting Susan to file another complaint would award her game-playing and continue to place a heavy burden on the Court and the defendants. To borrow a phrase from Susan's Sur-reply Brief, "[e]nough is enough." Pl. Sur-reply Br. at 62.

D. CGLIC Motion for Attorney's Fees and Costs

CGLIC requests leave to file a motion for attorney's fees and costs pursuant to ERISA § 502(g)(1), which is codified at 29 U.S.C. § 1132(g)(1). Under that provision, "the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." 29 U.S.C. § 1132(g)(1). We will entertain such a motion from CGLIC if CGLIC still intends to file it, as long as CGLIC does so by July 26, 2010.*fn12

III. Conclusion

For the reasons we discuss above, we will grant CGLIC's motion for summary judgment. As this is the last active claim in this matter, we will also order the Clerk of Court to statistically close this case. We decline to grant Susan the opportunity to prolong this litigation any further.

Stewart Dalzell

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