Murphy v. Am. Gen. Life Ins. Co.

74 F.Supp.3d 1267

Timothy D. MURPHY

v.AMERICAN GENERAL LIFE INSURANCE COMPANY.

No. ED CV14–00486 JAK SPx.

United States District Court, C.D. California.

Signed Jan. 15, 2015.

Timothy D. Murphy, Riverside, CA, pro se.

Edward J. Valdespino, Raymond J. Tittmann, Jodi Krystyn Swick, Edison McDowell and Hetherington LLP, Oakland, CA, for American General Life Insurance Company.

Proceedings: (IN CHAMBERS) ORDER RE DEFENDANT'S MOTION TO DISMISS PLAINTIFF'S SECOND AMENDED COMPLAINT (DKT. 57)

JOHN A. KRONSTADT, District Judge.

Andrea Keifer Deputy Clerk

I. Introduction

Timothy E. Murphy (“Plaintiff”) brought this action against American General Life Insurance Company (“AGL”) and DOES 1–100 in the Riverside Superior Court on February 25, 2014. Complaint (“Compl.”), Dkt. 1, Ex. 1 at 8. Plaintiff, who is self-represented and an attorney, claims to be a beneficiary of a $5,000,000 life insurance policy (“Policy”) purchased by his parents from AGL. Id. The Complaint alleges a breach of contract based on the failure of AGL to pay benefits to Plaintiff after the death of his parents. Id. In response, AGL claimed that, because Plaintiff was never a beneficiary of the Policy, no benefits were owed or payable to him. E.g., Answer, Dkt. 1, Ex. 1 at 14; Dkt. 14–1, Ex. A–G. AGL removed the action based on diversity jurisdiction. Dkt. 1.

Plaintiff moved to remand the action on the ground that the amount in controversy requirement was not satisfied. Dkt. 11. While the motion to remand was pending, Plaintiff filed a First Amended Complaint (“FAC”) without first seeking leave as required under Fed.R.Civ.P. 15(a)(2). Dkt. 21. The FAC sought to add a non-diverse party, Shane Murphy (“Shane”),¹ who is Plaintiff's brother. Id. Plaintiff also named 19 new, diverse defendants in the FAC. Id. The claim for breach of contract was not amended. The Motion for Remand was denied. Dkt. 26.² The FAC was stricken on October 14, 2014, for failure to comply with Fed.R.Civ.P. 15(a)(2). Dkt. 52.³ The underlying Complaint was also stricken at that time for failure to comply with Fed.R.Civ.P. 10(b). Id. In order to maintain the action, Plaintiff was required to file an amended complaint that conformed to this rule on or before October 28, 2014. Id.

Plaintiff filed a Second Amended Complaint (“SAC”) on October 23, 2014. Dkt. 53. The SAC does not present a claim for breach of contract. Id. Instead, the SAC advances six causes of action against AGL, Shane, American International Group (“AIG”), 18 other named defendants and DOES 1–100, (collectively “Defendants”): (1) breach of fiduciary duty and conspiracy; (2) conversion and conspiracy; (3) money had and received, conspiracy, constructive trust and resulting trust; (4) constructive fraud; (5) tortious intentional interference with expectancy and conspiracy; and (6) an accounting. Id. AGL and AIG moved to dismiss the SAC pursuant to Fed.R.Civ.P. 12(b)(6) on November 10, 2014. Motion to Dismiss (“Motion”), Dkt. 57. Plaintiff filed an opposition. Dkt. 59. AGL and AIG filed a reply. Dkt. 66. The Motion was set for hearing on December 15, 2014. However, the Court determined that the matter was one that could be addressed without a hearing pursuant to Local Rule 7.15, and took the Motion under submission. Dkt. 73.

For the reasons set forth in this Order, Shane Murphy is DISMISSED as a defendant pursuant to 28 U.S.C. § 1447(e), and the Motion is GRANTED without prejudice as to defendants AGL and AIG.

II. Factual Background

A. General Allegations

The SAC alleges that Defendants conspired to deprive Plaintiff of his share of the proceeds from the sale of the Policy prior to the death of his parents. SAC ¶ 36. Plaintiff alleges that his parents— Robert H. and Shirley S. Murphy (“Robert” and “Shirley”)—purchased the Policy from AGL on September 20, 2005. Id. ¶ 31. Plaintiff alleges that the policy was underwritten by AIG. Id.

The SAC alleges that, as of November 1, 2005, the beneficiary of the Policy was The Robert and Shirley Murphy Survivorship Trust (“RSMS Trust”). Id. ¶ 32. Plaintiff alleges that Gerald Morlitz (“Morlitz”)⁴ was its Trustee, and that he maintained an office in the same space as Rai Premium Finance, LLC (“RPF”).⁵ Id. ¶ 32. The SAC also alleges that, with the assistance of Morlitz, the RSMS Trust was formed on November 1, 2005.Id. ¶ 34. Plaintiff alleges that Fred. C. Cohen (“Cohen”)⁶ and Cohen, Norris, Wolmer, Ray, Telepmann and Cohen (the “Firm”),⁷ were also involved in the creation of the RSMS Trust. Id.

The SAC alleges that the beneficiaries of the RSMS Trust were the six children of Robert and Shirley. Id. ¶¶ 34, 35. Plaintiff alleges that on or about November 9, 2005, Morlitz, acting on behalf of the RSMS Trust, assigned its interest in the Policy to RPF “in return for financing some of the premium due thereon.” Id. ¶ 37. The SAC also alleges that Plaintiff's siblings have refused to provide to him a copy of the “indenture” of the RSMS Trust. Id. ¶ 35.⁸ Plaintiff alleges that they did so to further the conspiracy to deny him from receiving his “beneficial interest” in the RSMS Trust. Id. ¶ 36.

The SAC also alleges that, in December of 2007, Mitchell K. Smith (“Smith”),⁹ who is the managing partner of Gaines & Smith Financial Group (“GSFG”),¹⁰ along with Rai Insurance Group, Inc. (“RIG”),¹¹ Morlitz, Cohen and Plaintiff's brother, Mark Murphy (“Mark”),¹² “conceived of a scheme and design to sell [the Policy] on the secondary market for cash.” Id. ¶ 39. Plaintiff alleges that Smith, Mortliz and Mark “intended to receive cash commissions and/or compensation for their participation in the scheme.” Id.

The SAC alleges that, in July 2008, RIG offered Morlitz $810,000 in exchange for the interest in the Policy held by the RSMS Trust. Id. ¶ 41. It also alleges that Morlitz breached his fiduciary duty to Plaintiff by “failing to disclose the offer to [P]laintiff and/or to act to [P]laintiff's advantage regarding the offer.” Id. ¶ 41. The SAC then alleges that Morlitz disclosed RIG's offer to Cohen and the Firm (id. ¶ 42), and that they breached their respective duties to Plaintiff by failing to disclose the offer to him or otherwise to act for his benefit. Id.

The SAC next alleges that, on July 7, 2008, CNF II, LLC (“CNF”)¹³ agreed to purchase the Policy for $716,865. Id. ¶ 43. It also alleges that the purchase required the parties to sign certain documents. Id. The SAC alleges that Mark signed these documents as “attorney in fact” for Shirley without the authority to do so. Id. It also alleges that the purchase required consent from all six of the beneficiaries of the RSMS Trust. Id. ¶ 44. The SAC then alleges that Smith, GSFG, Cohen and the Firm sought Plaintiff's consent to the transaction. Id. It then alleges that Plaintiff requested more information from Smith and GSFG about the terms, but never received a response. Id. Consequently, Plaintiff alleges that he did not consent. Id.

The SAC alleges that, without the consent of Plaintiff, the Policy was sold to CNF. Id. ¶ 46. This sale was not revealed to Plaintiff immediately. Id. It is alleged that the sale was part of the conspiracy among Morlitz, Cohen, the Firm, Smith, GSFG, RPF, RIG, AIG, AGL, CNF, Mark, Plaintiff's sister—Claudia Semplenski (“Semplenski”),¹⁴ the estate of Robert (the “Robert Estate”),¹⁵ the estate of Shirley (the “Shirley Estate”),¹⁶ the Robert H. Murphy Trust (the “Robert Trust”),¹⁷ the Shirley S. Murphy Trust (the “Shirley Trust”),¹⁸ the Murphy Family Trust (the “Murphy Trust”)¹⁹ and the RSMS Trust (collectively, the “Conspirators”). Id. ¶¶ 46–47. The SAC also alleges that the Conspirators concealed the proceeds of the sale from Plaintiff and that he did not receive any portion of them. Id. It also alleges that the Conspirators communicated, wrote documents and withheld information from Plaintiff to further their plan to deprive him of his interest in the Policy.Id. ¶ 48.

The SAC alleges that in May 2009, Cohen made a false representation to Plaintiff, i.e., that Cohen represented Robert in various matters, including as to the Policy and his general financial affairs. Id. ¶ 45. It also alleges that Cohen stated the Policy had been sold, but did not disclose his role in that transaction. Id.

B. Claims and Allegations as to AGL and AIG

The SAC alleges that AGL and AIG are co-conspirators with respect to the allegations in the following causes of action: the First, which is for “breach of fiduciary duty and conspiracy”; the Second, which is for “conversion and conspiracy”; the Third, which is for “money had and received, conspiracy, constructive trust and resulting trust”; and the Fifth, which is for “intentional interference with expectancy and conspiracy.” The SAC also seeks an accounting against AIG and AGL. It also alleges that AGL wrote or underwrote the Policy (SAC ¶ 4) and that AIG underwrote the Policy. Id. ¶ 5.

The SAC alleges that AGL and AIG “organized, implemented, assisted, aided and/or abetted the sale of the policy(s) to which this complaint pertains and beneficiary entitlements therein so as to deprive [P]laintiff of his entitlements.” Id. It also alleges that staff of AIG and AGL participated in the conspiracy when, after the sale of the Policy to CNF, a new Policy was issued in which CNF is listed as the “owner.” Id. ¶ 46. Further, the SAC alleges that AGL refused to produce a copy of the Policy or disclose the named beneficiaries under the Policy in response to Plaintiff's January 2010 demand for this information. Id. ¶ 50. It also alleges that this request was denied again in April 2013. Id. ¶ 51. The SAC alleges that AGL informed Plaintiff that, because he was not a beneficiary under the Policy, it would not disclose the “existence of his beneficial interest” under the RSMS Trust indenture. Id. ¶¶ 50–51.

C. Specific Claims and Allegations against Shane

The SAC brings the following causes of action against Shane: the Second, which is for “conversion;” the Third, which is for “money had and received, constructive trust and resulting...