Opinion
No. 01-2040-GTV
July 2, 2001
MEMORANDUM AND ORDER
Pending before the Court is Plaintiff's Motion for Leave to File Amended Complaint (doc. 9). More specifically, Plaintiff's proposed Amended Complaint seeks to revise the original complaint and add two additional counts against defendant. Defendant has no objections to Plaintiff's proposed amendment to correct Defendant's name, to add an allegation that certain individuals were acting within the course and scope of their employment, or to add Count V — failure to provide Plan document. Defendant, however, opposes Plaintiff's proposed Count IV, negligent misrepresentation, on the ground the claim is preempted by ERISA and is thereby futile.
Rule 15 of the Federal Rules of Civil Procedure allows one amendment of the pleadings, before a responsive pleading is served or within twenty days after service. Subsequent amendments are allowed "only by leave of court or by written consent of the adverse party." Fed.R.Civ.P. 15(a). Subsequent amendments should be "freely given when justice so requires." Woolsey v. Marion Labs., Inc., 934 F.2d 1452, 1462 (10th Cir. 1991). "The decision to grant leave to amend a complaint, after the permissive period, is within the trial court's discretion, Fed.R.Civ.P. 15(a), and will not be disturbed absent an abuse of that discretion." Id. The district court should deny leave to amend only when it finds "undue delay, undue prejudice to the opposing party, bad faith or dilatory motive, failure to cure deficiencies by amendments previously allowed, or futility of amendment." Frank v. U.S. West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1993).
A court may deny a motion to amend as futile if the proposed amendment would not withstand a motion to dismiss or otherwise fails to state a claim. Ketchum v. Cruz, 961 F.2d 916, 920 (10th Cir. 1992). Accepting the well-pleaded allegations of the complaint as true and construing them in the light most favorable to the plaintiff, the district court may appropriately dismiss a complaint only when it appears that plaintiff can prove no set of facts in support of the claims that would entitle him to relief. Pedro v. Armour Swift-Eckrich, 118 F. Supp.2d 1155, 1158 (D.Kan. 2000) (citing Grossman v. Novell, Inc., 120 F.3d 1112, 1118 (10th Cir. 1997)). The issue in resolving a motion to dismiss is not whether the plaintiff will ultimately prevail, but whether plaintiff is entitled to offer evidence to support the claims. Baumann v. Hall, No. 98-2126-JWL, 1998 WL 513008, *1 (D.Kan. July 15, 1998).
In this case, Defendant contends that Plaintiff's proposed Count IV, negligent misrepresentation, is futile as the claim is preempted by ERISA. Plaintiff argues that the negligent misrepresentation claim is not preempted by ERISA because the count seeks, in the alternative, "other actual damages." These "other actual damages" refer to money or claims for money from other sources that plaintiff gave up as part of the family settlement in reliance on defendant's allegedly negligent misrepresentations that Plaintiff would receive survivor income benefits. Plaintiff contends these "other actual damages" do not represent a claim for denial of plan benefits and thus are not preempted by ERISA.
ERISA Preemption Under section 514 of ERISA, state laws are preempted if they "relate to" an ERISA plan. § 29 U.S.C. § 1144(a); Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96, 103 S.Ct. 2890, 2899-2900, 77 L.Ed.2d 490 (1983). The preemption clause is conspicuous for its breadth, and the words "relate to" are given a broad meaning. FMC Corp. v. Holliday, 498 U.S. 52, 58, 111 S.Ct. 403, 407-08, 112 L.Ed.2d 356 (1990); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 46, 107 S.Ct. 1549, 1552, 95 L.Ed.2d 39 (1987); Shaw, 463 U.S. at 98, 103 S.Ct. at 2900-2901. A law "relates to" an ERISA plan "if it has a connection with or reference to such a plan." Shaw, 463 U.S. at 96-97, 103 S.Ct. at 2900; accord FMC Corp., 498 U.S. at 58, 111 S.Ct. at 407-08. A law relates to an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such plan. Wilcott v. Matlack, Inc., 64 F.3d 1458, 1462 (10th Cir. 1995). There is no simple test for determining when a law relates to a plan. Id. The Tenth Circuit has recognized four categories of laws which have been held preempted because they relate to ERISA plans: (1) laws that regulate the type of benefits or terms of ERISA plans, (2) laws that create reporting, disclosure, funding, or vesting requirements for ERISA plans, (3) laws that provide rules for the calculation of the amount of benefits to be paid under ERISA plans, and (4) laws and common-law rules that provide remedies for misconduct growing out of the administration of the ERISA plan. Id. For the fourth category of laws, the preemption analysis turns on the factual basis of plaintiff's state law claims. Id.; Settles v. Golden Rule Ins. Co., 927 F.2d 505, 509 (10th Cir. 1991) ("[u]nder the standard applied in this circuit, `common law tort and breach of contract claims are preempted by ERISA if the factual basis of the cause of action involves an employee benefit plan.'")
Several analogous cases have held that an employee's state law misrepresentation claims based on their employer's alleged representation as to plan benefits are preempted by ERISA. See Penyak v. UNUM Life Ins. Co. of America, No. CIV. 97-2117-EEO, 1998 WL 171213 (D.Kan. Mar. 12, 1998) (employer's alleged negligent misrepresentations that plaintiff was covered under the disability policy as part of her compensation was preempted by ERISA); Wilcott, 64 F.3d at 1463-64 (employer's alleged misrepresentations that utilizing disability leave benefits would not jeopardize his job related to an ERISA plan and thus were preempted); Straub v. Western Union Tel. Co., 851 F.2d 1262 (10th Cir. 1988) (employer's alleged negligent failure to inform retiree that his pension benefits might be affected by his transfer to a subsidiary were preempted by ERISA); Van Hoove v. Mid-America Bldg. Maint., Inc., 811 F. Supp. 609 (D.Kan. 1993) (former spouse's employer's alleged misrepresentations as to plaintiff's insured status were preempted by ERISA).
In her proposed negligent misrepresentation claim, Plaintiff alleges that Defendant's agent made certain representations that she would be entitled to survivor benefits as a common law spouse of the deceased insured. Based upon those representation, Plaintiff entered into a family settlement agreement with her deceased spouse's family in which she relinquished her rights to certain other benefits and funds in exchange for the family relinquishing its claim on the survivor income benefits. She alleges that but not for the representations of Defendant's agent as to her eligibility to receive survivor benefits, she would not have relinquished her rights to other benefits and funds in the family settlement agreement.
Plaintiff's negligent misrepresentation claim is based upon alleged negligent misrepresentations as to whether she was entitled to receive survivor benefits as the common law spouse for the deceased insured. Defendant's alleged misrepresentations relate directly to the nature of Plaintiff's rights under the plan — — whether Plaintiff has a right to receive survivor benefits under the plan. Further, to establish Defendant's liability, Plaintiff would have to show the reasonableness of her reliance on the alleged misrepresentation. This would require inquiring into the terms of the ERISA plan. As the factual basis of Plaintiff's claim involves alleged misrepresentations as to eligibility to receive benefits under an employee benefit plan, the Court determines that Plaintiff's negligent misrepresentation claim "relates to" an ERISA plan and is thus preempted by ERISA. Accordingly, since this state law claim is preempted by ERISA, amending the pleadings to add the negligent misrepresentation claim would be futile.
Based upon the foregoing reasons, the Court grants in part and denies in part Plaintiff's Motion for Leave to File Amended Complaint (doc. 9). Plaintiff may amend her complaint to correct Defendant's name, to add an allegation that certain individuals were acting within the course and scope of their employment, and to add a claim against Defendant for failure to provide Plan document. The Court, however, denies Plaintiff's Motion for Leave to Amend to add proposed Count IV, negligent misrepresentation. Plaintiff shall file her Amended Complaint within ten (10) days of this Order and shall serve the amended pleading within ten (10) days after the Amended Complaint is filed. See D.Kan. Rule 15.1(a).
IT IS SO ORDERED.