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Prince v. Sears Holdings Corp.

United States District Court, N.D. West Virginia

December 21, 2002

BILLY E. PRINCE, Plaintiff,



         The plaintiff, Billy E. Prince ("Prince"), filed a complaint on August 16, 2017, in which he alleged that the defendants had breached certain fiduciary duties owed to him under ERISA (Dkt. No. 1). Now pending is the motion to dismiss filed by the defendants, Sears Holdings Corporation ("Sears"), Sears Holdings Corporation Administrative Committee (the "Committee"), and Prudential Insurance Company of America ("Prudential")(Dkt. No. 8). For the reasons that follow, the Court GRANTS the motion and DISMISSES Prince's complaint WITH PREJUDICE.

         I. BACKGROUND

         A. Factual Background

         The Court's recitation of the facts is taken from Prince's complaint (Dkt. No. 1), which the Court construes in the light most favorable to Prince. See De'Lonta v. Johnson, 708 F.3d 520, 524 (4th Cir. 2013) .

         Sears is the sponsor of an employee welfare benefit plan (the "Plan") governed by the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et sea. The Plan provides certain employee benefits, including dependent life insurance benefits (the "benefit") to eligible participants. Prince, a Sears employee, was a participant in the Plan, and was eligible to enroll in the benefit.[1] Sears and the Committee administer the life insurance plan through Prudential.

         On or about November 1, 2010, Prince submitted an application to Sears, for $150, 000 in optional life insurance coverage for his wife, Judith Prince ("Mrs. Prince"). On May 23, 2011, Sears sent a "Health and Group Benefits Confirmation of Coverage" to Prince, and, in June 2011, it began withholding premiums from his paychecks.

         In late 2011, Mrs. Prince learned that she had Stage IV liver cancer. In October 2012, almost a year after Mrs. Prince's initial diagnosis, Prince accessed his online Sears benefits summary, which confirmed his election to purchase life insurance coverage for his wife in the amount of $150, 000.

         Another year passed, and in September 2013, Sears sent Prince an "Account Update Notice" advising him that Mrs. Prince's coverage had never become effective because no "Evidence of Insurability" questionnaire had been submitted. Sears explained that Prudential had sent a letter to Prince in January 2011 advising that it would terminate his application for life insurance coverage unless a completed insurability questionnaire was submitted. Prince claims that he has no record of receiving that letter, nor any correspondence advising that his application for life insurance was incomplete or had been denied, until receipt of the September 2013 notice.

         On May 26, 2014, Mrs. Prince died, and on November 3, 2014, Prudential denied Prince's claim for life insurance benefits.

         B. Procedural Background

         Prince filed a complaint against Sears in the Circuit Court of Marion County, West Virginia, on December 8, 2014. The complaint asserted one count of "constructive fraud/negligent representation" and one count of "intentional/reckless infliction of emotional distress" based on Sears's alleged misrepresentations regarding the optional life insurance policy. Prince sought payment of $150, 000 and other damages.

         On January 16, 2015, Sears removed the case to the Northern District of West Virginia and subsequently moved to dismiss the complaint, arguing that ERISA completely preempted Prince's state law claims. Prince opposed the motion and moved to remand the case. On December 21, 2015, the Northern District granted the motion, holding that ERISA completely preempted Prince's claim. Accordingly, the Court denied Prince's motion to remand and dismissed the complaint without prejudice to refile an ERISA claim after exhausting administrative remedies available to him (Dkt. No. 8-4). Specifically, the Court concluded that Prince's claims were "enforceable under section 502(a) of ERISA." Id. at 12.

         Prince timely appealed, and on January 27, 2017, the Court of Appeals for the Fourth Circuit affirmed, finding that ERISA completely preempted Prince's state law claims and that Prince's claims were "enforceable under section 502(a)." (Dkt. No. 8-5).

         Prince then filed this lawsuit against the defendants on August 16, 2017, seeking relief pursuant to ERISA section 502(a)(3), based on the defendants' alleged breaches of fiduciary duty (Dkt. No. 1). Prince alleges that, by letter dated February 22, 2017 and received on March 6, 2017, Prudential denied his second appeal and request for reconsideration of its decision to deny his claim, and that he therefore has exhausted his administrative remedies under ERISA.

         Prince's complaint alleges a cause of action for breach of fiduciary duty under ERISA against all defendants. He alleges that the defendants, as ERISA fiduciaries, pursuant to section 1104, had the duty to provide him with accurate information regarding his wife's life insurance policy, to administer the policy in the best interests of Mr. and Mrs. Prince, and to discharge their fiduciary responsibilities regarding the policy with the requisite care, skill, prudence, and diligence.

         Prince further alleges that the defendants breached the duties owed to him by misrepresenting the status of Mrs. Prince's life insurance coverage for over two years, by withholding from Prince's paycheck premiums for life insurance coverage which did not exist, by failing to promptly advise Prince that his wife's application for life insurance was deficient, and by failing to administer the life insurance plan in the best interest of Mr. and Mrs. Prince.

         Prince contends that he does not have an adequate remedy pursuant to the terms of the life insurance plan as he did not receive notice of any deficiency with his wife's application and therefore did not submit the evidence of insurability questionnaire in 2011. He thus seeks equitable relief sufficient to make him whole, pursuant to ERISA section 502(a) (3), 29 U.S.C. § 1132(a) (3) .

         On November 8, 2017, the defendants moved to dismiss Prince's complaint with prejudice, arguing that his claim is time barred by the applicable statute of limitations (Dkt. No. 8). The motion is fully briefed, and argument was heard on December 15, 2017.


         Fed. R. Civ. P. 12(b) (6) allows a defendant to move for dismissal on the grounds that a complaint does not "state a claim upon which relief can be granted." When reviewing the sufficiency of a complaint, a district court "must accept as true all of the factual allegations contained in the complaint." Anderson v. Sara Lee Corp., 508 F.3d 181, 188 (4th Cir. 2007) (quoting Erickson v. Pardus, 551 U.S. 89, 94 (2007)). "While a complaint . . . 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." Bell Atl. Corp. v. Twomblv, 550 U.S. 544, 555 (2007) ...

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