King v. King

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ILLINOIS

SHAUNICE KING, Administrator of the

ESTATE OF SHAUN P. KING, Deceased,

Plaintiff,

v.

Case No. 3:23-CV-355-NJR

ANGELA KING, and

LINCOLN NATIONAL LIFE

INSURANCE CO.,

Defendants.

MEMORANDUM AND ORDER

ROSENSTENGEL, Chief Judge:

Pending before the Court is a Motion to Remand filed by Plaintiff Shaunice King

(“Shaunice”). (Doc. 12). Defendants Angela King (“Angela”) and Lincoln National Life

Insurance Co. (“Lincoln”) responded in opposition. Also pending are Defendants’ Motions

to Dismiss. (Docs. 17, 20). For the reasons set forth below, the Motion to Remand is denied,

and Defendants’ Motions to Dismiss are denied.

BACKGROUND

Shaunice’s father, Shaun King (“Shaun”), was employed by Wieland North America,

Inc. (“Wieland”). (Doc. 16, p. 3). “Lincoln issued to Wieland a Group Policy to fund group

life insurance benefits under Wieland’s Plan.” (Id.). “Wieland sponsored an employee welfare

benefit plan and, as part of its employee welfare benefit plan, maintained the Group Policy

insuring life and accidental death benefits.” (Id.)

Angela, Shaun’s then-wife, was named as his beneficiary to the Group Policy. By 2021,

Shaun and Angela divorced—and on June 18, 2021, the Madison County Circuit Court

entered a Judgment of Dissolution of Marriage. (Doc. 1-1, pp. 165-174). The Dissolution

included the following provision:

In addition, as to any asset assigned to a party by this agreement, if evidence

by an instrument naming the non-owning party a beneficiary, a successor in

interest, or giving any rights of survivorship, such interest is hereby

specifically revoked by the non-owning party, as if revoked on the face of the

instrument. The waiver shall include, but is not limited to, annuities, life

insurance policies, certificates of deposit, bonds, bills, notes, etc.

(Id. at p. 173).

On October 6, 2021, Shaun died without changing the beneficiary of the Group Policy.

(Doc. 13, p. 4; Doc. 1-1, p. 188). Later in October 2021, Shaunice “sent written notice to Lincoln

National’s home office that Angela King was not the designated beneficiary on Shaun King’s

life insurance policy . . . .” (Doc. 13, p. 4; Doc. 1-1, p. 71). But in November 2021, Lincoln paid

approximately $263,000 in death benefits to Angela. (Doc. 13, p. 4; Doc. 1-1, p. 68).

In February 2022, Shaunice filed a Petition for Letters of Administration of the Estate

of Shaun, Proof of Death, and Proof of Heirship in St. Clair County Circuit Court. (Doc. 1-1,

pp. 185-189). On February 22, 2022, the St. Clair County Court appointed Shaunice as legal

representative of Shaun’s estate. (Id. at p. 183). On April 1, 2022, Lincoln was subpoenaed to

provide the “[c]laim [f]ile regarding claim no. 11923073 on the life of Shaun [ ] [ ], Dec’d.” (Id.

at pp. 177-178).

On May 11, 2022, Shaunice filed a Petition for Citation to compel the appearance of

Angela. (Doc. 1-1, p. 157). “In the citation petition, [Shaunice] contends Angela [ ] is not the

proper party to possess the proceeds of [Shaun’s] life policy because she effectively waived

her beneficial rights to it, and Shaun [ ] did not thereafter re-designate her as beneficiary.”

(Doc. 13, p. 4). On August 17, 2022, Angela moved to dismiss and quash the petition for

citation. (Doc. 1-1, pp. 137-141).

In September 2022, Shaunice moved to amend the Petition for Citation to include “a

request for imposition of constructive trust to prevent her unjust enrichment relating to

circumstances by which she is in possession of assets which properly belong to the Estate of

Shaun [ ] [ ].” (Id. at pp. 118-119). Again, on October 18, 2022, Angela moved to dismiss and

quash the petition for citation. (Id. at p. 43). In December 2022, Shaunice filed a Second

Amended Petition for Citation to “include a claim against the insurer, [Lincoln], for its

unlawful failure and withholding of payment of the policy proceeds to the Estate.” (Id. at pp.

7-16). Lincoln was served with the petition on January 3, 2023. (Doc. 1, p. 2).

On February 1, 2023, Lincoln and Angela removed the case to this district court,

asserting that the Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1132,

and 1367. (Id.). Defendants assert that this Court has federal-question jurisdiction under

28 U.S.C. § 1331 because certain claims are preempted by the Employee Retirement Income

Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. Defendants also allege “this Court has

supplemental jurisdiction over any claims not within the scope of ERISA § 1132(a) because

such claims are so related to claims in the action within the Court’s original jurisdiction that

they form part of the same case or controversy under Article III of the United States

Constitution.” (Id. at p. 3). On February 9, 2023, Shaunice moved to remand the case back to

state court. (Doc. 12). Defendants filed a response in opposition to Shaunice’s Motion to

Remand on March 13, 2023. (Docs. 16, 19). Defendants also filed Motions to Dismiss, arguing

that the complaint fails to state a claim under Federal Rule of Civil Procedure 12(b)(6). (Docs.

17, 20).

DISCUSSION

I. Motion to Remand

A plaintiff may challenge removal by moving to remand the case back to state court.

Remanding to state court is appropriate for (1) lack of district court subject matter jurisdiction

or (2) a defect in the removal process. 28 U.S.C. §§ 1446, 1447(c); GE Betz, Inc. v. Zee Co., 718

F.3d 615, 625–26 (7th Cir. 2013). Indeed, federal courts “possess only that power authorized

by Constitution and statute.” Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (7th

Cir. 2005) (quoting Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994)).

District courts have subject matter jurisdiction only in cases that raise a federal-question and

cases in which there is diversity of citizenship among the parties. See 28 U.S.C. §§ 1331–32.

Unless Shaunice’s case falls into one of these two categories, the Court must remand.

A. Complete Preemption

“In enacting ERISA, Congress included two distinct and powerful preemption

provisions: complete preemption under ERISA § 502, 29 U.S.C. § 1132, and conflict

preemption under ERISA § 514, 29 U.S.C. § 1144.” Halperin v. Richards, 7 F.4th 534, 540 (7th

Cir. 2021). As Lincoln notes, “complete preemption is a jurisdictional doctrine and provides

a basis for removal.” (Doc. 16, p. 9). Indeed, “[a]rtful pleading on the part of a plaintiff to

disguise federal claims by cleverly dressing them in the clothing of state-law theories will not

succeed in keeping the case in state court.” Franciscan Skemp Healthcare, Inc. v. Cent. States Joint

Bd. Health & Welfare Tr. Fund, 538 F.3d 594, 596 (7th Cir. 2008).

To determine whether a claim is completely preempted by ERISA, courts use the

following two-part analysis:

[I]f an individual, at some point in time, could have brought his claim under ERISA

§ 502(a)(1)(B), and where there is no other independent legal duty that is implicated

by a defendant’s actions, then the individual’s cause of action is completely pre-

empted by ERISA § 502(a)(1)(B).

Aetna Health Inc. v. Davila, 542 U.S. 200, 210 (2004). Before analyzing Davila’s first step, the

Court must determine whether Wieland created an ERISA employee welfare benefit plan

and, if so, whether Shaun was a participant in that plan. See Studer v. Katherine Shaw Bethea

Hosp., 867 F.3d 721, 724 (7th Cir. 2017) (noting that “to analyze Davila’s first step, we must

initially determine whether the hospital had created an ERISA employee welfare benefit plan

and, if so, whether Studer was a participant in that plan”). Lincoln contends that the Group

Policy is an ERISA employee welfare benefit plan. ERISA defines an “employee welfare

benefit plan” as the following:

[A]ny plan, fund, or program which was heretofore or is hereafter established

or maintained by an employer or by an employee organization, or by both, to

the extent that such plan, fund, or program was established or is maintained

for the purpose of providing for its participants or their beneficiaries . . .

medical, surgical, or hospital care or benefits, or benefits in the event of

sickness, accident, disability, death or unemployment . . . .

ERISA § 3(1), 29 U.S.C. § 1002(1). The following elements must be shown for ERISA to cover

an employee welfare plan:

(1) a plan, fund, or program,

(2) established or maintained,

(3) by an employer or by an employee organization, or by both,

(4) for the purpose of providing medical, surgical, hospital care, sickness,

accident, disability, death, unemployment or vacation benefits,

apprenticeship or other training programs, day care centers, scholarship

funds, prepaid legal services or severance benefits,

(5) to participants or their beneficiaries.

Postma v. Paul Revere Life Ins. Co., 223 F.3d 533, 537 (7th Cir. 2000) (quoting Ed Miniat, Inc. v.

Globe Life Ins. Grp., Inc., 805 F.2d 732, 738 (7th Cir. 1986). Lincoln has shown these elements—

and Shaunice does not dispute that ERISA covers the Group Plan.

i. Ability to Bring Claims Under ERISA § 502

“Only participants, beneficiaries or fiduciaries (and the Secretary of Labor) may sue

under ERISA [§ 502], 29 U.S.C. § 1132(a) . . . .” Riordan v. Commonwealth Edison Co., 128 F.3d

549, 551 (7th Cir. 1997). ERISA defines “participant” as “any employee or former employee

of an employer, or any member or former member of an employee organization, who is or

may become eligible to receive a benefit of any type from an employee benefit plan which

covers employees of such employer or members of such organization, or whose beneficiaries

may be eligible to receive any such benefit.” 29 U.S.C. § 1002(7). It further defines

“beneficiary” as “a person designated by a participant, or by the terms of the employee

benefit plan, who is or may become entitled to a benefit thereunder.” 29 U.S.C. § 1002(8).

While Shaunice does not fit neatly within ERISA’s definition of beneficiary, “ERISA

was not designed to protect merely those beneficiaries already receiving benefits, but also

‘putative beneficiaries.’” Sladek v. Bell Sys. Mgmt. Pension Plan, 880 F.2d 972, 976 (7th Cir. 1989)

(citing Smart v. State Farm Ins. Co., 868 F.2d 929, 933 (7th Cir. 1989)). “Jurisdiction in a case

like this one depends on whether [a] [plaintiff] has at least an ‘arguable claim,’ [ ], and taking

her theory of the case in a light most favorable to her . . . .” Riordan, 128 F.3d at 552.

“To the extent doubt remains, Firestone [Tire & Rubber Co. v. Bruch, 489 U.S. 101, 117–

18 (1989)] tells [courts] to treat as a ‘participant’ for jurisdictional purposes anyone with a

colorable claim to benefits . . ., an approach equally applicable when a person claiming to be

a ‘beneficiary’ files suit.” Id. (quoting Kennedy v. Connecticut General Life Ins. Co., 924 F.2d 698,

700 (7th Cir. 1991)). To determine whether a plaintiff has a colorable claim, courts first look

to see whether a plaintiff seeks to strike a participant’s election based on a theory that the

election was invalid or void. If striking the election means the plaintiff receives the policy

proceeds, then courts look to see if the claim requires an interpretation or application of the

terms of the plan. See e.g., Sladek, 880 F.2d 972; Riordan, 128 F.3d 549. 1 Finally, if the claim then

requires an interpretation of the plan, the plaintiff has a colorable claim.

Shaunice is attacking Shaun’s election of Angela as the beneficiary of the Group

Policy. The Second Amended Petition for Citation refers to Shaun’s “group life insurance

policy with Lincoln National Life Insurance Company, d/b/a Lincoln Financial Group,

having policy number SA3-840-444435-01.” (Doc. 1-1, p. 11). The Second Amended Petition

also alleges the following:

- At the time Lincoln paid death benefits on account of the death of Shaun [ ] to

Angela [ ], his ex-wife, Lincoln was or should have been aware that Shaun [ ]

had not effectively redesignated Angela [ ] as beneficiary on the Lincoln Policy after

their divorce;

- Angela [ ] was not entitled to receive the proceeds of the [Group] Policy

because she knowingly and voluntarily waived any and all interest in those

proceeds prior to his death, and she was aware of the superior claim to the life

insurance proceeds by the Estate of Shaun [ ] before she accepted them;

- The Estate of Shaun [ ] was entitled to receive the proceeds of the [Group]

Policy because there was no effective designation of beneficiary by Shaun [ ] as of the

time of his death;

1 Sladek and Riordan are distinguishable on multiple fronts. But like the plaintiff in Sladek, 880 F.2d at

978, who “was a beneficiary under the Plan in the absence of a valid election[,]” here “[i]f, at the death

of a Covered Employee, there is no named or surviving beneficiary, Lincoln will pay the benefits to

the executor or administrator of the Covered Employee’s estate.” (Doc. 16-1, p. 46). In other words,

Shaunice, the administrator of Shaun’s estate, would be a beneficiary under the Group Policy in the

absence of a valid designation of beneficiary. Similarly, like the plaintiff’s theory in Riordan, where the

last election the participant made was invalid or void because the decedent’s first designation was

irrevocable, here Shaunice’s theory challenges the last election Shaun made as invalid or void because

“Shaun [ ] had not effectively redesignated Angela [ ] as beneficiary on the Lincoln Policy after their

divorce.” (Doc. 1-1, p. 13).

- Lincoln is liable to this Estate, as a matter of law, for payment of the proceeds

of the [Group] Policy, as herein above set forth.

(Id. at pp. 13-14) (emphasis added). Thus, to determine whether there was an effective

designation of beneficiary by Shaun as of the time of his death, the Court then must review

the Group Policy. In other words, Shaunice could have brought her claims under ERISA

§ 502(A)(1)(B).

ii. Duty Outside ERISA

Shaunice has two separate claims. First, Shaunice “asserts that retention of the

proceeds by Angela [ ] constitutes an unjust enrichment to her.” (Doc. 13, p. 4). Second,

Shaunice “contends that Lincoln [ ] is liable to the estate by operation of law, under Section

503(b-5) of the Illinois Marriage and Dissolution of Marriage Act, 750 ILCS 5/503(b-5)(4).”

(Id.).

Shaunice’s unjust enrichment claim is premised on the existence of the Group Policy.

Shaunice seeks proceeds under the Group Policy. Shaunice also challenges the designation

of Angela as the beneficiary under the Group Policy. Thus, her unjust enrichment claim is

completely preempted by ERISA. See Di Joseph v. Standard Ins. Co., 776 F. App’x 343, 347–48

(7th Cir. 2019) (finding that plaintiff’s state-law claims, including unjust enrichment, were

completely preempted by ERISA); see also Maatman v. Lumbermens Mut. Cas. Co., 2010 WL

415384, at *5 (N.D. Ill. Jan. 28, 2010) (collecting cases).

Shaunice’s claim that Lincoln is liable under Section 503(b-5) of the Illinois Marriage

and Dissolution of Marriage Act is also premised on the existence of the Group Policy.2 To

2 According to Shaunice’s later filings, she has “always maintained that the claim she was asserting to

Lincoln [ ] is predicated on [Angela’s] [ ] conduct which constituted her waiver of benefits payable to

her under [Shaun’s] [ ] beneficiary designation.” (Doc. 22, p. 7).

determine whether Lincoln is liable under Section 503(b-5) of the Act, the Court needs to

interpret the Group Policy. See Rice v. Panchal, 65 F.3d 637, 644 (7th Cir. 1995) (“[C]omplete

preemption is required where a state law claim cannot be resolved without an interpretation

of the contract governed by federal law.”).

Accordingly, both of Shaunice’s claims meet Davila’s second step—and are completely

preempted.

B. The Probate Exception

“[T]he probate exception reserves to state probate courts the probate or annulment of

a will and the administration of a decedent’s estate; it also precludes federal courts from

endeavoring to dispose of property that is in the custody of a state probate court.” Marshall

v. Marshall, 547 U.S. 293, 311–12 (2006). “But it does not bar federal courts from adjudicating

matters outside those confines and otherwise within federal jurisdiction.” Id. at 312. The

exception applies to both federal-question and diversity suits. Jones v. Brennan, 465 F.3d 304,

306–07 (7th Cir. 2006).

Shaunice argues that “[b]ecause of the nature of a citation proceeding is both

summary and in rem, a party seeking a citation for the benefit of the estate need not set forth

a straight-forward legal or equitable claim.” (Doc. 13, p. 7). Shaunice then cites a number of

cases in support of the following proposition: “[t]he probate court’s jurisdiction extends to

all property of a decedent, no matter where or when it may be found.” (Id. at p. 8).

The problem is the life insurance benefits are not in the custody of the state probate

court. See Marshall, 547 U.S. at 311-12 (“the probate exception reserves to state probate courts

the probate or annulment of a will and the administration of a decedent’s estate; it also

precludes the federal court from endeavoring to dispose of property that is in the custody of a

state probate court”) (emphasis added). The Second Amended Petition for citation requests

the Court to “[d]irect[ ] Angela [ ] to immediately restore all assets concealed, converted,

embezzled or unjustly retained by her upon payment to her on or about November 9, 2021

by Lincoln [ ] [ ] of Two Hundred Sixty-Three Thousand Dollars ($263,000.00) on account of

the death of Shaun [ ].” (Doc. 1-1, p. 15). Indeed, “[t]he judgment sought would just add assets

to the decedent’s estate; it would not reallocate the estate’s assets among contending

claimants or otherwise interfere with the probate court’s control over and administration of

the estate.” Gustafson v. zumBrunnen, 546 F.3d 398, 400 (7th Cir. 2008).

Put differently, Shaunice seeks an in personam judgment against Angela and Lincoln—

“not the probate or annulment of a will.” Marshall, 547 U.S. at 312. “In fact, Shaun died

intestate and the insurance benefits at issue were paid to Angela over three months before

the Estate was even created, passing entirely outside of the Estate and never into the probate

court’s control.” (Doc. 16, p. 15). Accordingly, the probate exception does not apply.

C. Impact of Ancillary Proceeding

Shaunice also argues that “[t]he removal statute only allows for removal of

independent suits, and not for ancillary or supplementary proceeding.” (Doc. 13, p. 8).

According to Shaunice, “the citation proceeding itself, filed by Plaintiff in order to discover

information about and to recover assets belonging to the decedent’s estate, is supplementary

to the state court’s probate jurisdiction to determine the estate’s right to a res.” (Id. at p. 9).

The Court disagrees. “[W]here the supplemental proceeding is not merely a mode of

execution or relief, but where it, in fact, involves an independent controversy with some new

and different party, it may be removed into the federal court.” Travelers Prop. Cas. v. Good,

689 F.3d 714, 724 (7th Cir. 2012) (quoting Buford v. Strother, 10 F. 406, 407 (C.C.D. Iowa 1881)).

Here, the ancillary proceeding involves an independent controversy with Lincoln—a new

and different party. Accordingly, the ancillary proceeding argument is rejected.

II. Motions to Dismiss

The purpose of a Rule 12(b)(6) motion is to decide the adequacy of the complaint, not

to determine the merits of the case or decide whether a plaintiff will ultimately prevail. Gibson

v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). To survive a Rule 12(b)(6) motion to

dismiss, a plaintiff only needs to allege enough facts to state a claim for relief that is plausible

on its face. Twombly, 550 U.S. at 570. A plaintiff need not plead detailed factual allegations,

but must provide “more than labels and conclusions, and a formulaic recitation of the

elements.” Id. For purposes of a motion to dismiss under Rule 12(b)(6), the Court must accept

all well-pleaded facts as true and draw all possible inferences in favor of the plaintiff.

McReynolds v. Merrill Lynch & Co., Inc., 694 F.3d 873, 879 (7th Cir. 2012).

A. Considering the Group Policy at the Motion to Dismiss Stage

Courts may consider documents attached to the pleadings without converting a

motion to dismiss into a motion for summary judgment, as long as the documents are

referred to in the complaint and central to the plaintiff’s claims. Adams v. City of Indianapolis,

742 F.3d 720, 729 (7th Cir. 2014); see Geinosky v. City of Chicago, 675 F.3d 743, 745 (7th Cir. 2012)

(noting that “[a] motion under Rule 12(b)(6) can be based only on the complaint itself,

documents attached to the complaint, documents that are critical to the complaint and

referred to in it, and information that is subject to proper judicial notice”). Here, the Second

Amended Petition for Citation refers to Shaun’s “group life insurance policy with Lincoln

National Life Insurance Company, d/b/a Lincoln Financial Group, having policy number

SA3-840-444435-01.” (Doc. 1-1, p. 11). A review of the allegations in the Second Amended

Petition also reveals that the Group Policy is central to Shaunice’s claims. Thus, the Court

will consider the Group Policy at this stage of the litigation.

B. Conflict Preemption

i. Affirmative Defenses and Rule 12(b)(6)

“Preemption under section 1144(a) of ERISA is a federal defense to state-law claims,

otherwise known as ‘conflict preemption,’ as opposed to ‘complete preemption’ under

section 1132(a), which creates federal jurisdiction.” Smith v. Lutheran Life Ministries, 2021 WL

5937789, at *2 (N.D. Ill. Dec. 16, 2021); see also Franciscan Skemp Healthcare, Inc. v. Cent. States

Joint Bd. Health & Welfare Tr. Fund, 538 F.3d 594, 601 (7th Cir. 2008) (“[c]onflict preemption,

unlike complete preemption, actually is a true preemption doctrine . . . .”).

The Seventh Circuit has noted:

Preemption, however, is “an affirmative defense upon which the defendants

bear the burden of proof.” Fifth Third Bank ex rel. Tr. Officer v. CSX Corp., 415

F.3d 741, 745 (7th Cir. 2005). “Affirmative defenses do not justify dismissal

under Rule 12(b)(6).” Doe v. GTE Corp., 347 F.3d 655, 657 (7th Cir. 2003). Moving

for judgment on the pleadings under Rule 12(c) is the more appropriate way

to address an affirmative defense. Bausch v. Stryker Corp., 630 F.3d 546, 561 (7th

Cir. 2010). This is not one of those cases in which the plaintiff has pleaded

herself out of court, and so the difference between Rules 12(b)(6) and 12(c)

cannot be disregarded. See, e.g., Logan v. Wilkins, 644 F.3d 577, 582–83 (7th Cir.

2011); Brooks v. Ross, 578 F.3d 574, 579 (7th Cir. 2009). The district court thus

erred by penalizing [plaintiff] for failing to anticipate an affirmative defense in

her complaint and dismissing the action based on FDCA preemption.

Benson v. Fannie May Confections Brands, Inc., 944 F.3d 639, 645 (7th Cir. 2019).

Not only is preemption an affirmative defense, but recently, the Seventh Circuit

acknowledged that “[i]t follows from this structure and from the plain language of Rule

8(c)(1) that an affirmative defense must be raised in the answer, not by motion.” Luna Vanegas

v. Signet Builders, Inc., 46 F.4th 636, 640 (7th Cir. 2022) (citing Vasquez v. Indiana Univ. Health,

Inc., 40 F.4th 582, 588 (7th Cir. 2022)).

Dismissals based on affirmative defenses may be appropriate when the pleadings and

matters subject to judicial notice clearly prove that a plaintiff’s claim is barred as a matter of

law. Indeed, the Seventh Circuit has acknowledged:

With a narrow and pragmatic exception for a plaintiff who has pleaded herself

out of court, the appropriate vehicle for resolving an affirmative defense is a

motion for judgment on the pleadings under Rule 12(c), not a Rule 12(b)(6)

motion. Benson, 944 F.3d at 645; see also Burton v. Ghosh, 961 F.3d 960, 964–65

(7th Cir. 2020) (collecting cases); cf. Brooks v. Ross, 578 F.3d 574, 579 (7th Cir.

2009) (example of pragmatic exception where complaint unambiguously set

forth dates establishing statute-of-limitations defense). “Observing the

distinction is necessary to allocate correctly the burdens of pleading and

proof,” H.A.L. N.Y. Holdings, LLC v. Guinan, 958 F.3d 627, 632 (7th Cir. 2020),

and serves an important notice function. Burton, 961 F.3d at 965, citing Blonder-

Tongue Labs., Inc. v. Univ. of Illinois Found., 402 U.S. 313, 350, 91 S.Ct. 1434, 28

L.Ed.2d 788 (1971), among others.

Gunn v. Cont’l Cas. Co., 968 F.3d 802, 806–07 (7th Cir. 2020).

Notably, a year after Benson, 944 F.3d 639, the Court in Bell v. Publix Super Markets,

Inc., 982 F.3d 468, 483 (7th Cir. 2020), resolved defendants’ preemption defense at the motion

to dismiss stage, but clarified that it was to “head off another round of appeals in the

multidistrict litigation.” The Court in Bell did not overrule Benson—and accordingly, the

Court will not dismiss Shaunice’s claims based on Defendants’ preemption defense.

ii. Merits of Preemption Defense

Even if the Court considers Defendants’ preemption defense on a 12(b)(6) motion to

dismiss, their arguments are unconvincing.3 Lincoln argues that “[Shaunice’s] state law

3 While the Court specifically addresses Lincoln’s preemption argument, Angela’s preemption

argument is similar—and also fails for the reasons discussed herein.

claims ‘relate to’ an ERISA Plan and are preempted.” (Doc. 18, p. 6).4 In doing so, Lincoln

discusses Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141 (2001), and Kennedy v. Plan Adm’r for

DuPont Sav. & Inv. Plan, 555 U.S. 285 (2009), to argue that “the Supreme Court [ ] [has]

emphasized the importance of plan documents and decidedly held that a spouse could not

waive plan life insurance benefits through a divorce decree.” (Doc. 18, p. 8). Lincoln also

discusses Melton v. Melton, 324 F.3d 941 (7th Cir. 2003) noting that the “case involv[ed]

essentially the same fact scenario as this case, the Seventh Circuit, relying on Egelhoff,

concluded that ERISA preempted Illinois state law with respect to determining the rightful

beneficiary of proceeds from an ERISA-regulated life insurance policy.” (Id. at p. 9).

Notably, Egelhoff, Kennedy, and Melton all addressed motions for summary judgment,

not motions to dismiss. Courts have “urge[d] litigants to rely on cases that were decided in

the same procedural posture.” DeJaynes v. Powell, 2022 WL 2657194, at *2 (N.D. Ill. July 8,

2022). “In memoranda supporting or opposing a motion to dismiss, cases that were decided

on summary judgment (or on appeal of summary judgment) are not particularly helpful

because of the differing standards.” Id. (citations omitted). “Indeed, the Court is on

dangerous ground when it relies on summary judgment opinions when it is deciding motions

to dismiss.” Id. (citations omitted).

Besides the procedural posture of Egelhoff, Kennedy, and Melton—this case is also a

post-distribution suit. Lincoln has tried to frame the issue differently by arguing that “[t]he

4 The Court rejects Lincoln’s other argument that “Plaintiff’s state law claims are also preempted

because they are exclusively governed by ERISA’s civil enforcement provision.” (Doc. 18, p. 10). See

Connecticut Gen. Life Ins. Co. v. Grand Ave. Surgical Ctr., Ltd., 2014 WL 151755, at *2 (N.D. Ill. Jan. 14,

2014) (acknowledging that “even when ERISA completely preempts a state claim, it does not follow

that the claim should be dismissed”).

Supreme Court and every Circuit to have considered Plaintiff’s waiver argument, has

unequivocally rejected it in favor of Kennedy’s plan documents rule.” (Doc. 23, p. 2). But the

Court questions the application of the plan documents rule in this post-distribution suit

against a named beneficiary and a non-plan administrator.5 In Est. of Kensinger v. URL Pharma,

Inc., 674 F.3d 131 (3d Cir. 2012), the Third Circuit noted:

The District Court relied heavily on Kennedy’s statement that the plan

documents rule promotes “simple administration, avoid[s] double liability,

and ensur[es] that beneficiaries get what’s coming quickly, without the folderol

essential under less-certain rules.” 555 U.S. at 301, 129 S.Ct. 865 (quoting Fox

Valley & Vicinity Constr. Workers Pension Fund v. Brown, 897 F.2d 275, 283 (7th

Cir.1990) (Easterbrook, J., dissenting) (emphasis added)). The emphasized

portion of this statement should not, however, be read in a vacuum or divorced

from the context in which it arose. Both Kennedy and Fox Valley involved suits

against plan administrators who had yet to distribute benefits. When read with

that in mind, the goal of ensuring that beneficiaries “get what’s coming

quickly” refers to the expeditious distribution of funds from plan administrators,

not to some sort of rule providing continued shelter from contractual liability

to beneficiaries who have already received plan proceeds. In this case, when URL

pays the benefits to Adele, as it must, she will “get what’s coming” under the

plan. If, after distribution, her right to these funds is challenged because of her

common law waiver, that challenge will be litigated as an ordinary contract

dispute. Accordingly, to the extent that ERISA is concerned with the

expeditious payment of plan proceeds to beneficiaries, permitting suits against

beneficiaries after benefits have been paid does not implicate any concern of

expeditious payment or undermine any core objective of ERISA.

Id. at 136–37.

Indeed, “Kennedy left open the question whether a common law waiver has any effect

on what should happen after the funds are distributed to the designated beneficiary.”

Cunningham v. Hebert, 2016 WL 6442180, at *4 (N.D. Ill. Nov. 1, 2016) (citing Kennedy, 555 U.S.

5 In Kennedy and Melton, the plan administrators were parties. Here, Lincoln asserts that Wieland is

the Plan Administrator—and Wieland is not a party. (Doc. 16, p. 4). Also, the Group Policy’s 2021

Form 5500 refers to Amy Kuhn as the plan administrator. (Doc. 16-2, p. 2). Amy Kuhn appears to be

the Manager of Employee Benefits at Wieland. (Doc. 21-1, p. 1).

at 299 n.10) (“Nor do we express any view as to whether the Estate could have brought an

action in state or federal court against [the ex-wife] to obtain the benefits after they were

distributed”). Here, Shaunice is suing Angela, Shaun’s ex-wife, to obtain benefits after they

were distributed. See e.g., Andochick v. Byrd, 709 F.3d 296, 301 (4th Cir. 2013); Metlife Life &

Annuity Co. of Connecticut v. Akpele, 886 F.3d 998, 1007 (11th Cir. 2018) (“a party who is not a

named beneficiary of an ERISA plan may not sue the plan for any plan benefits. A party,

however, may sue a plan beneficiary for those benefits, but only after the plan beneficiary

has received the benefits.”); Gelschus v. Hogen, 47 F.4th 679, 685 (8th Cir. 2022) (“[l]ater state

and federal appellate court cases consistently hold that ERISA does not preempt post-

distribution suits against recipients”). While Shaunice is also suing Lincoln, and ERISA may

ultimately resolve the claim against Lincoln—the Court need not resolve this issue on a

12(b)(6) motion to dismiss. For these reasons, Defendants’ preemption arguments are rejected

at this stage of the litigation.

C. Angela’s Remaining Arguments6

i. Redesignation

Angela argues that Shaunice “fails to establish a cognizable legal claim because the

decedent redesignated and reaffirmed Angela [ ] as the designated beneficiary post-divorce

pursuant to Illinois law.” (Doc. 21, p. 11). Angela argues that Shaun “redesignated and

reaffirmed Angela [ ] as the beneficiary of his life insurance policy after the divorce.” (Id.). To

make this argument, Angela notes that “[w]hen the Manager of Employee Benefits reminded

6 According to Shaunice, Angela’s motion to dismiss remains pending in state court. (Doc. 13, p. 4).

Shaunice responded to Angela’s motion to dismiss in state court, but has not responded to Angela’s

Motion to Dismiss filed in this Court. Despite Shaunice’s lack of response, “Rule 12(b)(6) prevents

courts from granting unopposed motions solely because there is no response.” Marcure v. Lynn, 992

F.3d 625, 633 (7th Cir. 2021).

the Decedent of his right to change the beneficiary of his ERISA Life Insurance in light of his

divorce, he again intentionally chose not to do so, affirmatively choosing instead to

redesignate Angela [ ] as his beneficiary.” (Id. at p. 12). Angela also points to a “text message

just one week prior to his untimely death when he stated that Angela [ ] would still receive

his insurance benefits if he died.” (Id.).

Not only is this argument better presented and resolved at summary judgment, but

also Angela relies on Section (b-5)(2) of the Illinois Marriage and Dissolution of Marriage Act.

That provision, in relevant part, states:

(2) If a judgment of dissolution of marriage is entered after an insured has

designated the insured’s spouse as a beneficiary under a life insurance policy

in force at the time of entry, the designation of the insured’s former spouse as

beneficiary is not effective unless:

* * *

(B) the insured redesignates the former spouse as the beneficiary after entry of

the judgment;

750 Ill. Comp. Stat. 5/503. The problem is this provision does not apply “to life insurance

policies subject to regulation under [ERISA], the Federal Employee Group Life Insurance Act,

5 U.S.C. 8701 et seq., or any other federal law that preempts the application of those

paragraphs.” Id. Thus, whether the provision applies depends on whether ERISA preempts

the redesignation provision—an item that has not been briefed.

Finally, Angela relies on at least one exhibit that Shaunice argues is an “anecdotal

hearsay conversation.” (Doc. 1-1, p. 37). If district courts “cannot consider inadmissible

hearsay, over proper objections, in deciding summary judgment[,]” Lewandowski v. City of

Milwaukee, 823 F. App’x 426, 429 (7th Cir. 2020), then the court cannot consider potentially

inadmissible hearsay in deciding motions to dismiss. For these reasons, the redesignation

argument is also rejected.

ii. Unjust Enrichment

Next, Angela argues that “it cannot be said that Angela King was ‘unjustly’ enriched

when she retained a benefit which the law mandated that she receive, nor can such an

outcome be deemed to violate fundamental principles of justice, equity and good conscience

since this very same outcome is expressly provided for under applicable state and federal

law.” (Doc. 21, p. 17). The problem is it is disputed whether the outcome is expressly provided

for under state and federal law. Angela also argues that a “claim for unjust enrichment cannot

lie where a contract already governs the relationship of the parties.” (Id. at p. 18). According

to Angela, “the [Group] Policy is a contract which governs the relationship of the parties, and

which dictates that the benefits be paid to the designated beneficiary.” (Id.). This argument

fails as Shaunice is not a party to the Group Policy—and the Group Policy does not govern

her relationship with Angela.

iii. Equitable Defense of Laches

Finally, Angela argues that the action must be dismissed based on the equitable

defense of laches. (Doc. 21, p. 19). The problem is the equitable defense of laches is an

affirmative defense. Suggs v. United States, 256 F. App’x 804, 805 (7th Cir. 2007); see also

Topping v. Fry, 147 F.2d 715, 718 (7th Cir. 1945). “[D]ismissal based on an affirmative defense

is appropriate only where the validity of the defense is apparent from the face of the

complaint and so unmistakable that the action is frivolous.” Suggs, 256 F. App’x at 805; see

also Jeffries v. Chicago Transit Auth., 770 F.2d 676, 679 (7th Cir. 1985) (“[l]aches is generally a

factual question not subject to summary judgment”).

Here, Angela’s equitable defense of laches is premature as it is not apparent from the

pleadings that Shaunice unreasonably delayed her decision to bring the action.

CONCLUSION

For these reasons, the Motion to Remand (Doc. 12) filed by Plaintiff Shaunice King is

DENIED. Additionally, the Motions to Dismiss filed by Defendants (Docs. 17, 20) are

DENIED. Plaintiff shall have until June 8, 2023, to amend her complaint consistent with the

Federal Rules of Civil Procedure.

IT IS SO ORDERED.

DATED: May 10, 2023 Tl

wtp AM oettigl

NANCY J. ROSENSTENGEL

Chief U.S. District Judge

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