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Estate of Lutz v. Lutz

United States District Court, E.D. Pennsylvania

February 23, 2017

SANDRA LUTZ, et al. Defendants.


          GERALD J. PAPPERT, J.

         The Estate of Richard Lutz and Sheree Nordall sued Sandra Lutz and the Standard Insurance Company, among others, to recover life-insurance benefits Sandra received as the sole beneficiary of her late ex-husband Richard's ERISA-governed life insurance policy.[1] Before the Court is Standard's Motion for Summary Judgment. (ECF No. 53.) For the reasons that follow, the Court grants the motion.


         Richard and Sandra Lutz were married on May 18, 1985. (Pl.'s Stmt. of Facts (“Pl.'s Stmt.”), ¶ 32, ECF No. 54.) The marriage eventually deteriorated and in March 2012 Richard hired an attorney to file a divorce complaint against Sandra in the Berks County Court of Common Pleas. (Id. ¶ 39.) The couple entered into a Marriage Settlement Agreement (“the Agreement”) on August 28, 2012 to divide their marital assets. (Id. ¶ 41.) The Agreement provides that “[t]he parties agree that each may maintain or dispose of any existing life insurance policies and may choose beneficiaries to any such policies as they see fit.” (Admin. R., at 00005, ECF No. 53-1.) A divorce decree was entered in the Common Pleas Court on September 6, 2012. (Pl.'s Stmt. ¶ 41.) Richard died on September 26, 2012. (Id. ¶ 46.)

         At the time of his death, Richard had a life insurance policy governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). (Id. ¶ 35.) The ERISA Plan was an employee welfare benefits plan sponsored by Cargill Inc., the parent company of Richard's employer, the Wilbur Chocolate Company. (Def.'s Stmt. of Undisputed Facts (“Def.'s Stmt.”), ¶¶ 1, ECF No. 53.) The benefits under the Plan were funded by a group life insurance policy issued by Standard to Cargill. (Id. ¶¶ 2-4.) The Plan provides that benefits “will be paid to the Beneficiary you name” and according to established Plan procedures. (Id. ¶ 13; Admin. R., at 00225-26, ECF No. 53-3.) Sandra Lutz was the sole beneficiary listed on Richard's policy; Richard never removed her or added any other beneficiaries. See (id. ¶¶ 10-11; Admin. R., at 000072.)

         The Plan procedures require a claimant seeking benefits to submit a “proof of loss” form-written proof that a loss for which the policy provides benefits-to Standard within ninety days of the date of the loss. (Admin. R., at 000222.) The procedures also provide for administrative review of any denial of a claim for benefits. (Id. at 000224.) On October 5, 2012 Standard received a “proof of loss” by way of a “Proof of Death Claim Form” stating that Richard died on September 26, 2012. (Id. at 000071.) Standard corresponded with Sandra about her “claim for Life Insurance benefits” by October 8, 2012. See (id. at 000070). Standard requested Richard's certified death certificate from Sandra, which her attorney provided on January 16, 2013.[2] (Id. at 000053.) On February 19, 2013, Standard issued to Sandra the $44, 819.55 death benefit under Richard's policy. (Def.'s Stmt. ¶ 17.)

         That payment is at the heart of the Plaintiffs' claim against Standard. Ms. Nordall called Standard on December 20, 2013 claiming that she believed Sandra was not the proper beneficiary of Richard's policy. (Admin. R., at 000005.) On November 18, 2014 Standard received a letter from the Estate's attorney also stating that Sandra should not have received the benefits under Richard's policy. (Def.'s Stmt., ¶¶ 19; Admin. R., at 000021.) The letter noted that Richard and Sandra were divorced at the time of his death, (Def.'s Stmt., ¶ 20; Admin. R., at 000021), though Standard already had notice of that fact, (Admin. R., at 000058). Because the ninety-day window to submit a claim had closed, and because Standard already paid the policy benefits to Sandra, the Plaintiffs neither submitted a claim for benefits nor requested an administrative review of Standard's decision to pay the benefits to Sandra. See (Def.'s Stmt. ¶ 21; Pl.'s Stmt. of Facts, ¶ 21-22).

         The Estate and Nordall sued Standard and others in the Lancaster County Court of Common Pleas on March 7, 2016.[3] (ECF No. 1-1.) The defendants removed the case to this Court on March 30, 2016, (ECF No. 1). Standard filed its motion for summary judgment on December 29, 2016, (ECF No. 52), the Plaintiffs responded on January 19, 2017, (ECF No. 54), and Standard filed its reply on January 26, 2017, (ECF No. 55). The Court held oral argument on the motion on February 13, 2017, (ECF No. 57), and has thoroughly reviewed the administrative record.


         Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A dispute is genuine if the evidence is such that a reasonable factfinder could return a verdict for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254 (1986). Summary judgment is granted where there is insufficient record evidence for a reasonable factfinder to find for the plaintiff. Id. at 252. “The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.” Id.

         In a case concerning an ERISA plan administrator's benefits determination, the Court's review must be based on the administrative record. See Howley v. Melon Fin. Corp., 625 F.3d 788, 793 (3d Cir. 2010) (holding that courts must decide ERISA summary judgment motion based on “the materials that were before the administrator when it made the challenged decision”). Though it was not the case here, to the extent that a claim for breach of a fiduciary duty necessarily implicates evidence extrinsic to the administrative record, the Court may consider relevant admissible evidence outside the administrative record. Creelman v. Carpenters Pension & Annuity Fund of Phila. & Vicinity, 945 F.Supp.2d 592, 594 (E.D. Pa. 2013).

         Courts review a denial of benefits in ERISA cases “under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan, ” in which case courts review a denial of benefits for abuse of discretion. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); Doroshow v. Hartford Life and Acc. Ins. Co., 574 F.3d 230, 234 (3d Cir. 2009). The administrator here had discretionary authority to determine eligibility for benefits. See (Admin. R., at 000224). This abuse of discretion standard in the ERISA context is “essentially identical” to an arbitrary and capricious standard. Miller v. Am. Airlines, Inc., 632 F.3d 837, 845 n.2 (3d Cir. 2011). Thus, a court may overturn a plan administrator's denial of benefits only if it is without reason, unsupported by substantial evidence or erroneous as a matter of law. Doroshow, 574 F.3d at 234. A decision is supported by substantial evidence if “there is sufficient evidence for a reasonable person to agree with the decision.” Courson v. Bert Bell NFL Player Ret. Plan, 214 F.3d 136, 142 (3d Cir. 2000).


         ERISA's civil enforcement provisions are found at 29 U.S.C. § 1132(a). Two subsections of § 1132(a) are relevant here: First, § 1132(a)(1)(B) permits a participant or beneficiary to bring a civil suit “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” Id. § 1132(a)(1)(B). Second, § 1132(a)(2) permits civil suits “by the Secretary, or by a participant, beneficiary or fiduciary for appropriate relief under [§ 1109].” Id. § 1132(a)(2) (emphasis added).

         Section 1109 establishes a fiduciary's personal liability:

Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter shall be personally liable to make good to such plan any losses to the plan resulting from each such breach, and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary, and shall be subject to such other ...

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