DeMarle v. Videk, Inc.

678 F.Supp.3d 353

Ann DEMARLE, Plaintiff, v. VIDEK, INC., Defendant.

6:22-CV-06426 EAW

United States District Court, W.D. New York

Signed June 20, 2023

Thomas C. Nuovo, Esq., Bauer Gravel Farnham, Colchester, VT, for Plaintiff.

Elliot Aaron Hallak, Harris Beach PLLC, Albany, NY, Ross B. Hofherr, Harris Beach PLLC, New York, NY, Andrew D. Manitsky, Esq., Lynn, Lynn, Blackman & Manitsky, P.C., Burlington, VT, for Defendant.

DECISION AND ORDER

ELIZABETH A. WOLFORD, Chief Judge

INTRODUCTION

Plaintiff Ann DeMarle ("Plaintiff") brings this action against Defendant Videk, Inc. ("Videk" or "Defendant"), asserting claims for breach of contract and promissory estoppel, arising out of terminated life insurance coverage insuring the life of Plaintiff's deceased husband, James R. Reda. (Dkt. 1-1 at 4-8; see also Dkt. 7 (re-filed state court complaint)).

Presently before the Court is a motion to dismiss filed by Defendant. (Dkt. 38). For the following reasons, Defendant's motion is granted.

BACKGROUND

The following facts are taken from the complaint. As required on a motion to dismiss, the Court treats Plaintiff's factual allegations as true.

Plaintiff resides in Vermont and was married to James R. Reda ("Reda"). (Dkt. 7 at ¶¶ 1, 4). Reda was one of the founders of Videk, Inc. ("Videk"), and he died on July 12, 2020. (Id. at ¶ 5). Although Reda became disabled prior to his death, at all times prior to his death he was treated by Videk as an employee. (Id. at ¶ 6). Further, although Reda was disabled, he continued to believe he was employed by Videk, up until the time of his death. (Id. at ¶ 12).

Reda had a $250,000 group life insurance policy through Videk with Hartford Life. (Id. at ¶ 7). Videk was the policyholder, and the policy number was GL-362476. (Id.).

After he became disabled, on April 25, 2018, Reda received a letter from The Hartford informing him that he was required to convert his life insurance policy from a group policy to an individual policy. (Id. at ¶¶ 8, 11, 14). The letter stated that he was ineligible for a waiver of premiums because he was over the age of 64 when he became disabled. (Id. at ¶ 11). Specifically, the letter stated:

It is very important for you to note, that once your employee-sponsored coverage terminates under the Sickness or Injury Continuation provision, you will have 31 days from that date, or 15 days from the date your employer signs the form, whichever is later, to complete and submit a Notice of Conversion and/or Portability Rights form in order, at your own expense, to convert your Group Life Insurance to an Individual Life insurance policy.

(Id. at ¶ 14). Despite the language in the letter, Reda did not take action to convert the policy because "he was told that Videk would pay the policy premiums." (Id. at ¶ 8).

Plaintiff alleges that she was informed and believes that Videk continued to make payments on the policy until Reda's death, and Reda did not need to take any separate action to convert the policy. (Id. at ¶¶ 9, 13). Further, Plaintiff alleges that she is not aware of any correspondence from Videk or Hartford Life stating that Reda's policy was terminated or that there was a threat of it being terminated, or that Reda's employment was terminated. (Id. at ¶¶ 10, 13). Plaintiff also alleges that she believes that no forms as mentioned in the April 25, 2018 letter were sent to Reda and therefore that he was not required to submit the forms to convert his policy. (Id. at ¶ 15).

Plaintiff is the sole beneficiary of the life insurance policy, and she has not received a letter denying her coverage. (Id. at ¶ 16). Plaintiff has requested, but has not received, evidence of any communications other than the April 25, 2018 letter. (Id. at ¶ 17). Plaintiff alleges that she and Reda relied upon Videk's representations that it was continuing to pay the premiums on the life insurance policy and that the policy was still in effect. (Id. at ¶ 18).

In connection with her breach of contract claim, Plaintiff alleges that Videk had a contractual relationship with Reda, and as part of that agreement, it provided Reda with a $250,000 life insurance policy, for which Plaintiff was the known beneficiary. (Id. at ¶ 20). As part of that contractual relationship, Plaintiff believed she would receive the benefits under the life insurance policy. (Id. at ¶ 21). Plaintiff alleges that Videk prevented Reda from converting his life insurance policy by taking charge of the policy and letting Reda believe that it would continue to pay premiums on the policy, and that in doing so it breached its duty of good faith and fair dealing, which was implied in the contractual agreement that Videk had with Plaintiff, by allowing the life insurance policy to terminate. (Id. at ¶¶ 22-24). As a result of Videk's breach, Plaintiff has lost the benefits of Reda's life insurance policy of $250,000. (Id. at ¶ 25).

With respect to her promissory estoppel claim, Plaintiff alleges that Videk informed Reda that it would continue to pay the premiums for the policy, and led him to believe that he did not need to do anything more to make sure the policy remained in force. (Id. at ¶ 28). Reda was extremely ill at the time, and it was known that he would not have much time to live. (Id.). Neither Reda nor Plaintiff was aware that the policy could expire, since they relied on Videk's promise that it would pay the premiums and that nothing else was required to keep the policy in effect. (Id. at ¶ 29). Plaintiff alleges that her and Reda's reliance on this promise was reasonable and foreseeable, neither of them was aware they needed to take action to prevent termination of the life insurance policy, and they relied on the actions of Videk to their detriment, since payment by Videk of the premiums was not enough to maintain the policy, and it needed to be converted to a private policy. (Id. at ¶¶ 30-32).

PROCEDURAL HISTORY

Plaintiff filed her complaint on February 10, 2021, in the Superior Court of the State of Vermont, Chittenden Unit. (Dkt. 1 at ¶ 1; see also Dkt. 1-1). On March 31, 2021, Defendant filed a Notice of Removal, removing the case to the United States District Court for the District of Vermont on the basis of diversity of citizenship, pursuant to 28 U.S.C. §§ 1332 and 1441. (Dkt. 1 at ¶¶ 4, 10-16).

Thereafter, on April 21, 2021, Defendant filed a motion to dismiss the complaint based on failure to state a claim and for lack of personal jurisdiction, or in the alternative to transfer venue to the United States District Court for the Western District of New York. (Dkt. 11). On January 10, 2022, the Honorable William K. Sessions III, United States District Judge, granted Defendant's motion to transfer venue to the Western District of New York, and denied the motion to dismiss without prejudice. (Dkt. 30 at 15-16).

The case was transferred to the Western District of New York (Dkt. 31), and the Court directed Defendant to either refile its motion to dismiss based on failure to state a claim, which was previously denied without prejudice, or otherwise respond to the complaint, on or before November 10, 2022. (Dkt. 32). Defendant filed its motion to dismiss on November 7, 2022. (Dkt. 38). The Court set a scheduling order, and Plaintiff responded on December 27, 2022. (Dkt. 40).

DISCUSSION

I. Legal Standard

"In considering a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), a district court may consider the facts alleged in the complaint, documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint." DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir. 2010). A court should consider the motion by "accepting all factual allegations as true and drawing all reasonable inferences in favor of the plaintiff." Trs. of Upstate N.Y. Eng'rs Pension Fund v. Ivy Asset Mgmt., 843 F.3d 561, 566 (2d Cir. 2016). To withstand dismissal, a plaintiff must set forth "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "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." Turkmen v. Ashcroft, 589 F.3d 542, 546 (2d Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)).

"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (internal quotations and citations omitted). "To state a plausible claim, the complaint's '[f]actual allegations must be enough to raise a right to relief above the speculative level.' " Nielsen v. AECOM Tech. Corp., 762 F.3d 214, 218 (2d Cir. 2014) (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955).

Defendant has submitted two documents in support of its motion to dismiss, including the aforementioned April 25, 2018 letter (Dkt. 38-2) and the Declaration of Thomas Slechta, the President and Chief Executive Officer of Videk (hereinafter the "Slechta Declaration") (Dkt. 38-1). Plaintiff concedes that the Court may consider the April 25, 2018 letter, since it is incorporated into the complaint by reference. (See Dkt. 40 at 3 ("Since Plaintiff's Complaint relies upon th[e] letter, she does not object to its consideration by the Court.")). However, Plaintiff objects to consideration of the Slechta Declaration, given there is no basis for the Court to consider the declaration on a motion to dismiss, including to the extent it contains facts conflicting with those pled in the complaint. (Id.).

The Court agrees with Plaintiff. The complaint plainly incorporates by reference and quotes portions of the ...