The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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P AUL DAUS and TRACI DAUS,
Plaintiffs,
MEMORANDUM AND ORDER
-against-
Case No. 2:19-cv-06341-FB-RER
JANOVER, LLC, et al.,
Defendants.
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Appearances:
For the Plaintiffs: For the Defendants:
WAYNE J. SCHAEFER, ESQ. RICHARD J. BABNICK, JR., ESQ.
Schaefer Law Group, P.C. THOMAS McEVOY
186 West Main Street Sichenzia Ross Ference LLP
Smithtown, New York 11787 1185 Avenue of the Americas
31st Floor
New York, New York 10036
BLOCK, Senior District Judge:
Plaintiff Paul Daus (“Daus”) and his wife, Traci Daus, bring this suit arising
out of the lapse of a life insurance policy Daus was provided in connection with his
employment by non-movant defendant Janover, LLC (“Janover”). The Dauses
allege various violations of the Employee Retirement Income Security Act of 1974,
29 U.S.C. § 1001 et seq. (“ERISA”). Defendant Security Mutual Life Insurance
Company of New York (“Security Mutual”) moves for dismissal of the Complaint
as against it pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons
that follow, the motion to dismiss is granted in part and denied in part: Count 6 is
dismissed as against Security Mutual, Count 7 is dismissed against all defendants,
and the motion is denied in all other respects. The Dauses’ request for leave to amend
is denied.
I.
The following facts are taken from the Complaint. For present purposes, the
Court accepts them as true and draws all reasonable inferences in favor of the
plaintiff. See, e.g., Gamm v. Sanderson Farms, Inc., 944 F.3d 455, 458 (2d Cir.
2019).
From 2011 to 2016, Daus was employed by Janover. In connection with his
employment, Daus and his wife, Traci, were beneficiaries of a group life insurance
policy offered by Janover (the “Policy”) as part of the Janover LLC Cafeteria Plan,
a set of benefits available to employees of Janover. Attached to the Dauses’
Complaint is the Janover LLC Cafeteria Plan Document (the “Plan Document”),
which “constitutes the written plan document required by ERISA § 402[.]” Compl.
Ex. A at 2.
After an extended period of convalescence, Daus’s employment with Janover
was terminated November 8, 2016. Though the document governing the Policy gave
Daus the right to convert his coverage to an individual policy within 31 days of
termination, no one informed Daus of this right, and the option lapsed. After
attempting to exercise his conversion option late, Daus brought this suit, claiming
breach of fiduciary duty (Count 1); reinstatement of benefits (Count 2); recovery of
benefits (Counts 3 and 4); clarification of future benefits (Count 5); failure to furnish
information (Count 6); state law breach of contract (Count 7); and attorney’s fees
(Count 8).
II.
A.
“To survive a motion to dismiss [under Rule 12(b)(6)], a complaint must
contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when
“the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id. (citing
Twombly, 550 U.S. at 556). The pleading must offer more than “bare assertions,”
“conclusory” allegations, and a “formulaic recitation of the elements of a cause of
action.” Iqbal, 556 U.S. at 678.
A complaint is “deemed to include any written instrument attached to it as an
exhibit, materials incorporated in it by reference, and documents that, although not
incorporated by reference, are ‘integral’ to the complaint.” Sierra Club v. Con-Strux,
LLC, 911 F.3d 85, 88 (2d Cir. 2018) (quoting Sira v. Morton, 380 F.3d 57, 67 (2d
Cir. 2004)).
B.
Counts 1 through 5 and 8 stand or fall based upon whether Security Mutual is
a fiduciary for the purposes of the Dauses’ suit. “In every case charging breach of
ERISA fiduciary duty . . . the threshold question is . . . whether that person was
acting as a fiduciary (that is, was performing a fiduciary function) when taking the
action subject to complaint.” Coulter v. Morgan Stanley & Co. Inc., 753 F.3d 361,
366 (2d Cir. 2014) (quoting Pegram v. Herdrich, 530 U.S. 211, 226 (2000)). A
person may be a fiduciary with respect to some matters but not others. Coulter, 753
F.3d at 366. Even if plan documents do not designate a person as a fiduciary, he or
she might still be a “de facto” fiduciary to the extent that:
(i) he exercises any discretionary authority or discretionary control
respecting management of such plan or exercises any authority or
control respecting management or disposition of its assets, (ii) he
renders investment advice for a fee or other compensation, direct or
indirect, with respect to any moneys or other property of such plan, or
has any authority or responsibility to do so, or (iii) he has any
discretionary authority or discretionary responsibility in the
administration of such plan.
29 U.S.C. § 2001(21)(A). The question of whether a person or entity is a fiduciary
is fact-intensive and, therefore, typically not a question appropriate for resolution on
a motion to dismiss. See Bernhard v. Cent. Parking Sys. of New York, Inc., 282
F.R.D. 284, 288 (E.D.N.Y. 2012) (collecting cases); see also Rispler v. Sol Spitz Co.,
No. 04-CV-1323 DLI ARL, 2007 WL 1926531, at *4 (E.D.N.Y. June 6, 2007).
Security Mutual argues that its role with respect to the Plan was limited to
“provid[ing] component benefits (i.e. insurance policies) to the Plan,” and therefore
its fiduciary status did not extend to the transmittal of the conversion notice to Daus.
Def. Mem. at 11. But the notice pertained to one of Security Mutual’s policies, and
in any event, the question of whether Security Mutual was a de facto fiduciary is a
factual one. Therefore, Security Mutual’s motion on this ground is denied.
C.
Count 6 alleges that the defendants, including Security Mutual, failed to
furnish the information requested by § 1024(b)(4) of ERISA. That provision
provides that:
The administrator shall, upon written request of any participant or
beneficiary, furnish a copy of the latest updated summary, plan
description, and the latest annual report, any terminal report, the
bargaining agreement, trust agreement, contract, or other instruments
under which the plan is established or operated.
29 U.S.C. § 1024(b)(4). For the purposes of ERISA, “administrator” is defined to
mean the person designated administrator by the plan documents. 29 U.S.C.
§ 1002(16)(A).
The Complaint alleges that Security Mutual “at all relevant times herein, was
designated as a ‘claims administrator by the Plan.’” Compl. at ¶ 30. But the attached
Plan Document does not back up that assertion: to the contrary, it provides simply
that “‘Plan Administrator’ means Janover LLC.” Compl. Ex. A at 4.
As a general matter, the Court is constrained to credit all factual assertions
made by the Complaint. Perry v. NYSARC, Inc., 424 F. App’x 23, 25 (2d Cir. 2011).
“However, there is a narrow exception to this rule for factual assertions that are
contradicted by the complaint itself [or] by documents upon which the pleadings
rely[.]” Id. Where an attached document contradicts the Complaint, the attachment
controls. And that is the case here: while the Dauses allege that the Plan Document
designates Security Mutual as an administrator, the document itself designates only
Janover. Accordingly, the duty imposed by § 1002(16)(A) runs only to Janover, not
to Security Mutual, and Count 6 must be dismissed as against Security Mutual.
D.
Count 7 alleges a New York State contract claim. ERISA expressly preempts
state law. It provides that federal law “shall supersede any and all State laws insofar
as they may now or hereafter relate to any employee benefit plan.” 29 U.S.C. §
1144(a). “[A]ll common law causes of action that ‘relate to’ an employee benefit
plan fall under ERISA’s express preemption clause.” Watson v. Consol. Edison of
N.Y., 594 F. Supp. 2d 399, 408 (S.D.N.Y. 2009). A claim is preempted if it is
“brought (i) by an individual [who] at some point in time, could have brought his
claim under ERISA § 502(a)(1)(B), and (ii) under circumstances in which “there is
no other independent legal duty that is implicated by a defendant’s actions.”
Montefiore Med. Ctr. v. Teamsters Loc. 272, 642 F.3d 321, 328 (2d Cir. 2011)
(internal quotations and citation omitted).
Here, the state-law contract claim leveled by Count 7 is preempted. The
conversion of a policy is a matter governed by ERISA. See, e.g., Dillon v. Metro.
Life Ins. Co., 832 F. Supp. 2d 355, 361 (S.D.N.Y. 2011). The two-prong test is
satisfied. First, because the Dauses’ dispute is grounded in arguments about the
administration of the Policy, it is appropriately brought as a ERISA claim.1 Second,
there is no independent legal duty implicated by the actions of Security Mutual: the
Dauses’ claim entirely derives from its performance under the Policy. Accordingly,
the Dauses’ state law contract claim is preempted.
Although only Security Mutual has moved to dismiss, the Court may dismiss
a count with respect to nonmovant defendants where the issue presented is
substantially the same across defendants and the party against whom dismissal is
entered had notice and an opportunity to be heard. Hecht v. Com. Clearing House,
Inc., 897 F.2d 21, 26 n.6 (2d Cir. 1990). That test is met here, and it is apparent to
the Court that, unlike dismissal of Count 6, which addresses a pleading deficiency
specific to Security Mutual, dismissal of Count 7 across the board would streamline
1 Indeed, that is what happened here: Counts 1 through 5 are ERISA claims, which
the Dauses correctly argue were properly pleaded.
the action and serve the interests of clarity and judicial economy. Therefore, Count
7 is dismissed as against all defendants.
Accordingly, Security Mutual’s motion to dismiss is granted in part and
denied in part: Count 6 is dismissed as against Security Mutual, Count 7 is dismissed
as against all defendants, and the motion is denied in all other respects. The Dauses’
request for leave to amend is denied.2
SO ORDERED.
_/S/ Frederic Block___________
FREDERIC BLOCK
Senior United States District Judge
Brooklyn, New York
February 22, 2022
2 The Daus’s request for leave to amend the Complaint is a cryptic, generalized
application devoid of any specific factual basis. It is within the Court’s discretion to
deny leave to amend in such circumstances. See, e.g. Pickett on behalf of Teladoc
Health, Inc. v. Teladoc Health, Inc., No. 1:19-CV-5875-GHW, 2021 WL 4239176,
at *3 (S.D.N.Y. Sept. 17, 2021) (vague request for leave to amend is not a fallback
position in response to a dispositive motion); Gause v. Suffolk Cty., No.
02CV4600(SJF)(WDW), 2007 WL 330241, at *1 (E.D.N.Y. Jan. 25, 2007) (Leave
to amend may be denied where the movant knew or should have known of existing
facts and failed to include them in the original pleading).