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West Chester University Foundation v. Metlife Insurance Co. of Connecticut

United States District Court, E.D. Pennsylvania

April 13, 2017

WEST CHESTER UNIVERSITY FOUNDATION Plaintiff
v.
METLIFE INSURANCE CO. OF CONNECTICUT Defendant

          MEMORANDUM

          C. Darnell Jones, II J.

         Defendant MetLife Insurance Company is an insurance provider from which Plaintiff West Chester University Foundation purchased two variable life insurance policies. Plaintiff alleges that Defendant fraudulently represented that after making six out of pocket payments on each policy, Plaintiff would never have to make another payment. Defendant allegedly assured Plaintiff that investments associated with the policies would yield sufficient returns to cover the cost of all future premiums. Plaintiffs made the six out of pocket payments on each policy, but the investments associated with the policies did not perform as projected, and were insufficient to cover the remaining payments owed. Based on the foregoing, Plaintiff brings suit against Defendant for fraud, fraud in the inducement, negligent misrepresentation, promissory estoppel, bad faith, and unjust enrichment. Pursuant to Federal Rule of Civil Procedure 12(b)(6), Defendant moves to dismiss each count of the Amended Complaint. For the reasons that follow, Defendant's Motion to Dismiss is GRANTED IN PART and DENIED IN PART.

         BACKGROUND

         The court accepts Plaintiff's allegations as true at the motion to dismiss stage and therefore recites the facts as alleged by Plaintiff.

         Plaintiff is a Pennsylvania based nonprofit corporation that, as part of its charitable purpose and through fundraising activities, donates resources to prospective contributors. (Am. Compl. ¶ 5, 9.) Defendant developed a vanishing premium scheme for flexible premium variable life insurance policies and advanced the scheme through misleading and false representations. (Am. Compl. ¶ 10, 13) Specifically, Defendant represented that future premium payments would vanish after the “out of pocket” payment of a limited number of premiums, because investments made in connection with the accounts would yield returns sufficient to cover the future payments. (Am. Compl. ¶ 12). Plaintiff relied on such representations and thus procured two MetLife Flexible Premium Variable Life Insurance policies (“Policies”) with the Foundation as the owner and beneficiary of the Policies. (Am. Compl. ¶ 24-25.) The Policies have not delivered in accordance with MetLife's projections, representations, and warranties, or in accordance with the reasonable expectations of the Foundation. (Am. Compl. ¶ 31.) The annual premiums never vanished and as such, the Policies will lapse unless Plaintiff continues to pay the annual premium for each. (Am. Compl. ¶ 32-33). Plaintiff therefore brings suit against Defendant under Pennsylvania law for fraud, fraud in the inducement, negligent misrepresentation, promissory estoppel, bad faith, and unjust enrichment. (Am. Compl.¶ 36-72). Presently before this Court is Defendant's Motion to Dismiss each of Plaintiff's claims, Plaintiff's Response in Opposition, and Defendant's Reply.

         LEGAL STANDARD

         In deciding a motion to dismiss pursuant to Rule 12(b)(6), courts must “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (internal quotation marks omitted). After the Supreme Court's decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007), “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “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 678 (citing Twombly, 550 U.S. at 556). This standard, which applies to all civil cases, “asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. at 678; accord Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (“[A]ll civil complaints must contain more than an unadorned, the-defendant-unlawfully-harmed-me accusation.”) (internal quotation marks omitted).

         Because Counts I and II of the Amended Complaint allege fraud, they are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). United States ex rel. Whatley v. Eastwick Coll., 657 F. App'x. 89, 94 (3d Cir. 2016). “In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge and other conditions of a person's mind may be alleged generally.” Fed.R.Civ.P. 9(b). The aim of this heightened pleading standard is to “place the defendants on notice of the precise misconduct with which they are charged, and to safeguard defendants against spurious charges of immoral and fraudulent behavior.” Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 7742 F.2d 786 (3d Cir. 1984). “Rule 9(b) requires, at minimum, that plaintiffs support their allegations of…fraud with all of the essential background facts that would accompany the first paragraph of any newspaper story - that is the who, what, when, where, and how, of the events at issue.” In re Rockefeller Ctr. Props. Sec. Litig., 311 F.3d 198, 217 (3d Cir. 2002) (internal citations omitted).

         DISCUSSION

         In its Response to Defendant's Motion to Dismiss, Plaintiff alleges that Defendant's Motion was filed out of time, and should consequently be denied as time barred. (Resp., 2). Plaintiff filed the Amended Complaint on June 20, 2016 and Defendant filed its Motion to Dismiss on July 7, 2016. Despite Plaintiff's contentions to the contrary, Defendant's Motion was timely, as Federal Rule of Civil Procedure 6(d) afforded Defendant a total of seventeen days to file any responsive pleading, if said pleading would be filed electronically - as the present Motion was. Having established the timeliness of Defendant's Motion, the court now considers each ground upon which Defendant contends that Plaintiff's Amended Complaint should be dismissed.

         Pursuant to Federal Rule of Civil Procedure 12(b)(6), Defendant moves to dismiss each claim advanced in Plaintiff's Amended Complaint. Defendant argues that all of Plaintiff's claims are procedurally barred by the applicable statutes of limitations and that each count of the Amended Complaint fails to substantively state a claim upon which relief can be granted. In the sections that follow, the court considers Defendant's procedural challenge to the Amended Complaint, and each of Defendant's substantive challenges to the Amended Complaint in turn.

         I. Plaintiff's Claims are not Procedurally Barred by the Applicable Statutes of Limitations

         As a procedural matter, Defendant argues that all of Plaintiff's claims are time barred by the applicable statutes of limitations. (Mot., 3). Pursuant to 42 Pa.C.S. § 5524, Plaintiff's fraud, fraud in the inducement, and negligent misrepresentation claims are subject to a two-year statute of limitations; pursuant to 42 Pa.C.S. § 8371, Plaintiff's bad faith claim is also subject to a two-year statute of limitations; and pursuant to 42 Pa.C.S. § 5525, Plaintiff's promissory estoppel and unjust enrichment claims are subject to a four-year statute of limitations. According to Defendant, the Policies at the heart of this action were executed in November of 2002 and March of 2003. (Mot., 3). As Plaintiff was entitled to annual policy statements - each of which outlined the cash value of each policy, the premiums paid in the previous year, and the total loan account value - Defendant argues that Plaintiff should have known in 2009 and 2010 respectively, that Plaintiff's six out of pocket payments had not yielded sufficient returns to cover the remaining payments owed on the Policies. (Mot., 5). Upon consideration of all the applicable statutes of limitations, Defendant argues that Plaintiff's fraud, fraud in the inducement, negligent misrepresentation, and bad faith claims were barred as of 2011 for the November 2002 Policy, and 2012 for the March 2003 Policy, and that Plaintiff's promissory estoppel and unjust enrichment claims were procedurally barred as of 2013 and 2014, respectively. (Mot., 3-5).

         Statutes of limitations require “aggrieved individuals to bring their claims within a certain time of injury so that the passage of time does not damage the defendant's ability to adequately defend against the claims made.” Dalrymple v. Brown701 A.2d 164, 167 (Pa. 1997). The applicable statute of limitations begins to run as soon as the right to initiate and maintain a suit arises. Id. But the discovery rule is an exception to the requirement that a complaining party must file suit within the statutory period. Id. “The discovery rule provides that where the existence of the injury is not known to the complaining party and such knowledge cannot reasonably be ascertained within the prescribed statutory period, the limitations period does not begin to run until the discovery of the injury is reasonably possible.” Baselice v. Franciscan Friars Assumption BVM Province, 879 A.2d 270, 276 (Pa. Super. Ct. 2005). (internal citations omitted). The Pennsylvania Supreme Court has held that the discovery rule applies to toll the statute of limitations in any case where a party neither knows nor reasonably should have known of his injury and its cause at the time his right to initiate suit arises, regardless of whether the underlying injury was discoverable before the end of the prescribed limitations period. Id. Under the discovery rule, ...


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