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Apryl Allen (F/K/A Apryl Smith), Freddrick Smith, and Michael Bryant v. Jackson National Life Distributors

April 30, 2013

APRYL ALLEN (F/K/A APRYL SMITH), FREDDRICK SMITH, AND MICHAEL BRYANT,
PLAINTIFFS,
v.
JACKSON NATIONAL LIFE DISTRIBUTORS, LLC, A DELAWARE LIMITED LIABILITY COMPANY, D/B/A
JACKSON NATIONAL LIFE INSURANCE COMPANY,
DEFENDANT.



The opinion of the court was delivered by: Hon. Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Plaintiffs Apryl Allen, Freddrick Smith and Michael Bryant filed a three-count complaint against Defendant Jackson National Life Distributors alleging that the Defendant failed to pay them death benefit proceeds owed them under the terms of an annuity purchased by Thomas Shafter, deceased. Defendant has now moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Alternatively, Defendant moved to stay the action so that necessary parties may be joined pursuant to Federal Rule of Civil Procedure 19. For the reasons set forth below, the motion to dismiss is granted in part and denied in part. The motion to stay is denied.

BACKGROUND

The following facts are taken from the Plaintiffs' Complaint and are assumed to be true for purposes of the Motion to Dismiss. See Voelker v. Porsche Cars North America, Inc., 353 F.3d 516, 520 (7th Cir. 2003); Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995). On September 25, 1990, Defendant Jackson Life issued a "Single Premium Deferred Annuity" (the "Policy") to Thomas Shafter. (See Doc. 1, Compl. at ¶ 7.) The Policy allowed Shafter to change the beneficiary designations by submitting a written request to Defendant's Home Office. (Id. at ¶ 8.) On May 13, 2009, Shafter elected to change the beneficiaries to the Policy. (Id. at ¶ 11.) As part of this election, he designated Mary King, Tomaka Ranson, Gregory Armstrong, Chrisean White, Robin German, April Shafter, Shonterie Copeland McKever, Tiffinay C. Marshall, Janice Copeland, Apryl Smith, Julia Campbell and Channel Davis as the beneficiaries who would receive the death benefit proceeds under the Policy. (Id. at ¶ 25.) Defendant executed this change on August 2009. (Id. at ¶ 12.)

Subsequently, Shafter decided to change the beneficiaries to the Policy again. (Id. at ¶ 14.) This time he designated Apryl Smith, Chrisean White, Jonathon Shafter, Deidra Shafter, Freddrick Smith, Kyle Hoffman and Michael Bryant as primary beneficiaries of the Policy. (Id. at ¶ 15.) He did not designate any contingent beneficiaries. (Id.) On September 27, 2011, the Defendant sent Shafter a letter confirming the change in designation. (Id. at ¶ 16.) The September 27, 2011 letter stated that Shafter's "request has been recorded and placed on file with [Defendant]. Please place this confirmation with your policy for future reference." (Id.) The letter also identified the new beneficiaries as well as their interest in the annuity. (Id. at ¶¶ 15-16.) According to the September 27, 2011 letter, Jonathan Shafter, Deidra Shafter, Freddrick Smith and Kyle Hoffman had a beneficial interest of $10,309.75 each. (Id. at ¶ 15.) Michael Bryant had a beneficial interest of $11,750. (Id.) Apryl Smith's interest was defined as an "equal share." (Id.) Finally, Chrisean White's interest was defined as "equal share" minus $5,000. (Id.) According to the Complaint, the value of the "equal share" is $76,731.56. (Id. at ¶ 31.)

Shafter died on April 10, 2012. (Id. at ¶ 21.) He never attempted to change the beneficiary designations in the Policy after September 27, 2011. (Id. at ¶ 22.) On April 19, 2012, Defendant sent a letter to Crystal Bryant acknowledging Shafter's death and requesting that Ms. Bryant complete a claim form and submit a certified copy of Shafter's final death certificate. (Id. at ¶ 24.) This letter also identified the May 13, 2009 beneficiaries as the beneficiaries of the Policy. (Id. at ¶ 25.) Subsequently, Bryant discovered the September 27, 2011 confirmation letter. (Id. at ¶ 27.) She contacted the Defendant and told them that the beneficiaries they identified were incorrect. (Id.) In response, on June 29, 2012, Defendant sent Bryant a letter stating that the September 27, 2011 letter had been sent in error. (Id. at ¶ 28.) Defendant refused to pay the death benefit proceeds in accordance with the September 27, 2011 letter. (Id. at ¶ 29.) Instead, it disbursed the death benefit proceeds in accordance with the May 13, 2009 designations. (Id. at ¶ 30.)

Plaintiffs then filed a three-count complaint in the Chancery Division for the Circuit Court of Cook County, Illinois. (Doc. 1.) Defendant removed the case to this Court on November 26, 2012 on the basis of diversity jurisdiction as provided in 28 U.S.C. § 1332. (Id.) Defendant has now moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) or, in the alternative, to stay the case while additional parties are joined pursuant to Federal Rule of Civil Procedure 19. (Doc. 21.)

LEGAL STANDARD

When considering a motion to dismiss under Rule 12(b)(6) the Court accepts as true all of the well-pled facts alleged in the complaint and construes all reasonable inferences in favor of the nonmoving party. See Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 619 (7th Cir. 2007) (citing Savory v. Lyons, 469 F.3d 667, 670 (7th Cir. 2006)); accord Murphy, 51 F.3d at 717. To state a claim upon which relief can be granted a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). "Detailed factual allegations" are not required, but the plaintiff must allege facts that, when "accepted as true . . . state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)) (internal quotations omitted). In analyzing whether a complaint meets this standard the "reviewing court [must] draw on its judicial experience and common sense." Iqbal, 556 U.S. at 678. When the factual allegations are well-pled the Court assumes their veracity and then determines if they plausibly give rise to an entitlement to relief. See id. at 679. A claim has facial plausibility when the factual content pled in the complaint allows the Court to draw a reasonable inference that the defendant is liable for the misconduct alleged. See id. at 678.

DISCUSSION

I. Plaintiffs' Breach of Contract Claim Is Pled Sufficiently

The elements of a claim for breach of an insurance contract under Illinois law are: (1) the existence of a valid, enforceable contract; (2) performance by the plaintiff; (3) breach of contract by the defendant; and (4) resultant injury to the plaintiff. See TAS Distributing Co. v. Cummins Engine Co., 491 F.3d 625, 631 (7th Cir. 2007); Henderson-Smith & Assocs. v. Nahamani Fam. Serv. Ctr., 752 N.E.2d 33, 43 (2001) (citing Gallagher Corp. v. Russ, 3721 N.E.2d 605, 611 (1999)).*fn1 If the contract is established for the benefit of a third-party, the third party may sue for breach of that contract in his or her own name. See Olson v. Etheridge, 686 N.E.2d 563, 566 (1997) (citing Joslyn v. Joslyn, 54 N.E.2d 475 (1944)).

Here, the Complaint alleges the existence of a valid, enforceable contract, namely the Policy. There is no dispute that Shafter performed his obligations under the Policy. The Complaint further alleges that Defendant breached the contract by refusing to distribute the death benefit proceeds according to the designations identified in the September 27, 2011 letter. Plaintiffs were injured because they were designated as beneficiaries under the September 27, 2011 letter. Since the Plaintiffs allege that they were expressly designated as beneficiaries, Plaintiffs may bring a claim to assert their rights under the contract. Accordingly, Plaintiffs have sufficiently stated a claim for breach of contract under Federal Rule of Civil Procedure 8(a).

Defendant does not dispute this. However, Defendant contends that because Illinois law generally requires strict compliance with the terms of an annuity or insurance policy to change beneficiaries*fn2 , Plaintiffs must affirmatively plead that Shafter complied with the terms of the Policy in making his designation changes. Defendant argues that Plaintiffs failed to do this. However, this allegation is necessarily contained in Plaintiffs' allegation that prior to September 27, 2011, Shafter changed the beneficiary designations in the policy to include the Plaintiffs. (See Compl. at ΒΆΒΆ 14-15). In other words, it is implicit in an allegation that Shafter changed the beneficiary designations that he complied with all necessary requirements in effecting that change. While the Plaintiffs may be unable to eventually prove that Shafter strictly or substantially complied with the terms of the Policy in changing ...


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