Martin v. DPR Construction

Background

Brenda Martin and the Estate of Bernard Martin brought an action under the Employee Retirement Income Security Act (ERISA) seeking life-insurance and terminal-illness benefits allegedly owed to Brenda Martin as Bernard Martin’s widow and sole beneficiary. The complaint alleged that Bernard Martin worked as a construction superintendent for DPR Construction, developed terminal esophageal cancer, and filed short- and long-term disability claims.

The plaintiffs alleged that DPR Construction and Life Insurance Company of North America, identified as the plan administrator, failed to provide Bernard Martin with notice of how to keep his benefits while he was on leave. After Bernard Martin died, Brenda Martin filed a claim for life-insurance benefits, which was denied. The plaintiffs further alleged that, after the appeals process, DPR Construction agreed to pay Brenda Martin $391,000 in exchange for her not pursuing litigation against DPR Construction or LINA. Brenda Martin accepted the offer and did not pursue litigation for approximately a year, but DPR Construction did not pay the agreed amount and later offered 27% of that amount.

The complaint asserted three causes of action: breach of fiduciary duty under ERISA § 502(a)(3), benefits under ERISA § 502(a)(1)(B), and breach of contract. DPR Construction moved to dismiss only the third cause of action, the breach-of-contract claim.

Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a claim for failure to state a legally sufficient claim. At this stage, the court accepts factual allegations as true and views them favorably to the nonmoving party, but does not accept conclusory allegations or unreasonable inferences. A complaint must contain enough facts to make the claim plausible.

Analysis

The court held that the complaint alleged the elements of a breach-of-contract claim under California law: a contract, the plaintiffs’ performance or excuse for nonperformance, DPR Construction’s breach, and resulting damages. The alleged contract was DPR Construction’s promise to pay $391,000 in exchange for Brenda Martin’s agreement not to pursue litigation. The complaint alleged that she honored her promise, DPR Construction failed to pay, and she was damaged by that failure.

The court also rejected DPR Construction’s argument that ERISA preempted the claim. ERISA preemption generally applies when a state-law claim has a connection with or refers to an employee-benefit plan, but the court explained that the relevant concern is the uniform administration of benefit plans. Relying on Ninth Circuit precedent, the court reasoned that an agreement settling legal claims and operating separately from the benefit plan does not implicate plan administration. The court found that the alleged agreement between DPR Construction and Brenda Martin was separate from and outside the ERISA policy and plan administration.

The court noted that DPR Construction might dispute whether the contract existed, but said that issue was not for resolution on a motion to dismiss.

Disposition

The court DENIED DPR Construction’s motion to dismiss the third cause of action for breach of contract. During the hearing, the court also directed the parties to file a stipulated proposed scheduling order by January 6, 2020.