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Kent Ng v. Prudential Insurance Co. of America

United States District Court, D. Massachusetts

March 24, 2016

KENT NG and SOPHIA NG, Plaintiffs,
v.
PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant/Third-Party Plaintiff,
v.
CYNTHIA NG, Third-Party Defendant.

MEMORANDUM OF DECISION AND ORDER

TIMOTHY S. HILLMAN DISTRICT JUDGE.

Introduction

Kent Ng and Sophia Ng (“Kent” and “Sophia” or, collectively, “Plaintiffs”) have filed an action against The Prudential Insurance Company of America (“Prudential”) seeking a declaratory judgment that they are the rightful beneficiaries of Kin Fai Ng (“Kin, ” or “Insured”) under a group life insurance policy issued to Xerox Corporation (“Xerox”) pursuant to the Xerox Corporation Salaried Plan (G-9790). That plan is a regulated employee benefit welfare plan under the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. (“ERISA”). Plaintiffs have also asserted claims against Prudential for breach of contract and breach of fiduciary duty.

Prudential has filed a third-party complaint against Cynthia Ng (“Cynthia”), who was married to Kin at the time of his death on January 10, 2010 and was originally named the beneficiary of Kin’s life insurance policy. Prudential has determined that Cynthia was Kin’s designated beneficiary at the time of his death and has deposited the full amount of the death benefit into an interest bearing account in her name. By its third-party complaint against Cynthia, Prudential seeks appropriate equitable relief from her pursuant to ERISA Section 502(a)(3), 29 U.S.C. §1132(a)(3), i.e., reimbursement, should it be determined that that Plaintiffs are the proper beneficiaries of Kin’s life insurance policy.

Prudential has filed a motion for summary judgment (The Prudential Insurance Company Of America’s Motion For Summary Judgment, Docket No. 60) on Counts One (ERISA Section 502(a)(1)(B) claim for benefits) and Three (breach of fiduciary duty claim) of the Amended Complaint. As grounds Prudential asserts that Plaintiffs were not Kin’s designated beneficiaries under the Plan because Kin never submitted a fully completed, signed form to Prudential naming them his beneficiaries, and on Count Three of the Amended Complaint (Plaintiffs’ breach of fiduciary duty claim). Plaintiffs have filed a cross-motion for summary judgment (Plaintiff’s Motion For Summary Judgment, Docket No. 63) on both claims asserting that they are Kin’s designated beneficiaries under his life insurance policy and Prudential failed to pay them any benefit upon Kin’s death, failed to provide them with a written notice of denial and right to appeal, and failed to provide them with copies of the Plan documents.[1] Plaintiffs request that they each be awarded attorneys’ fees and costs 29 U.S.C. §1132(g)(1) and a per diem penalty of $110 per day as the result of Prudential’s failure to provide them a copy of the ERISA Statement within thirty (30) days of their request for such information.[2]

Standard of Review

Summary Judgment Standard

Summary Judgment is appropriate where, “the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Carroll v. Xerox Corp., 294 F.3d 231, 236 (1st Cir. 2002) (citing Fed.R.Civ.P. 56(c)). “‘A “genuine” issue is one that could be resolved in favor of either party, and a “material fact” is one that has the potential of affecting the outcome of the case.’” Sensing v. Outback Steakhouse of Florida, LLC, 575 F.3d 145, 152 (1st Cir. 2009) (quoting Calero-Cerezo v. U.S. Dep’t. of Justice, 355 F.3d 6, 19 (1st Cir. 2004)).

When considering a motion for summary judgment, the Court construes the record in the light most favorable to the nonmoving party and makes all reasonable inferences in favor thereof. Sensing, 575 F.3d at 153. The moving party bears the burden to demonstrate the absence of a genuine issue of material fact within the record. Id., at 152. “‘Once the moving party has pointed to the absence of adequate evidence supporting the nonmoving party’s case, the nonmoving party must come forward with facts that show a genuine issue for trial.’” Id. (citation to quoted case omitted). “‘[T]he nonmoving party “may not rest upon mere allegations or denials of the [movant’s] pleading, but must set forth specific facts showing that there is a genuine issue of material fact as to each issue upon which [s/he] would bear the ultimate burden of proof at trial.” Id. (citation to quoted case omitted). The nonmoving party cannot rely on “conclusory allegations” or “improbable inferences”. Id. (citation to quoted case omitted). “‘The test is whether, as to each essential element, there is “sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” ’ ” Id. (citation to quoted case omitted). “Cross-motions for summary judgment require the district court to ‘consider each motion separately, drawing all inferences in favor of each non-moving party in turn.’ “ Green Mountain Realty Corp. v. Leonard, 750 F.3d 30, 38 (1st Cir. 2014)(citation to quoted case omitted).

“However, in an ERISA case where review is based only on the administrative record before the plan administrator and is an ultimate conclusion … to be drawn from the facts, summary judgment is simply a vehicle for deciding the issue. This means the non-moving party is not entitled to the usual inferences in its favor. When there is no dispute over plan interpretation, the use of summary judgment in this way is proper regardless of whether our review of the ERISA decision maker's decision is de novo or deferential. Orndorf v. Paul Revere Life Ins. Co., 404 F.3d 510, 517 (1st Cir. 2005)(internal citations omitted).

Facts

The Plan

Kin was an employee of Xerox and was covered by a Xerox sponsored group life insurance plan, the Employee Term Life Coverage Plan, Group Contract No. X-09790 (“Plan”), which is a regulated employee benefit welfare plan governed by ERISA. The benefits provided by the Plan are insured by Prudential through a group insurance contract (“Group Contract”) issued to Xerox. Prudential acts as the claim administrator for the Plan. Prudential is given the discretion to interpret the Plan, and to administer and decide claims for benefits thereunder. More specifically, the Plan provides, in relevant part:

The Prudential Insurance Company of America as Claims Administrator has the sole discretion to interpret the terms of the Group Contract, to make factual findings, and to determine eligibility for benefits. The decision of the Claims Administrator shall not be overturned unless arbitrary and capricious.

Additionally, Prudential is mandated to interpret the Plan “prudently and in the interest of” the “[P]lan participants and beneficiaries.”

For purposes of the Plan, a “Beneficiary” is defined as “a person chosen, on a form approved by Prudential, to receive the insurance benefits.” Furthermore, the Plan allows a participant to name a beneficiary who will receive the plan benefit upon the participant’s death.The Plan also allows a participant to change the person named as the designated beneficiary. Specifically, the Plan provides:

You may change the Beneficiary at any time without the consent of the present Beneficiary. The Beneficiary change form must be filed through the Contract Holder. The change will take effect on the date the form is signed. But it will not apply ...

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