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Lane v. Prudential Insurance Co.

United States District Court, D. Utah

February 27, 2018

DAWNA LANE, Plaintiff,
v.
PRUDENTIAL INSURANCE COMPANY, Defendant.

          MEMORANDUM DECISION AND ORDER

          DEE BENSON, UNITED STATES DISTRICT JUDGE.

         Before the court is Defendant's Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). (Dkt. No. 4.) Defendant argues that Plaintiff is judicially estopped from asserting her long-term disability benefits claim because she failed to disclose it as an asset in a 2016 bankruptcy proceeding. The motion has been fully briefed by both parties, and the court has considered the facts and arguments set forth in those filings. Pursuant to civil rule 7-1(f) of the United States District Court for the District of Utah Rules of Practice, the Court elects to determine the motion on the basis of the written memoranda and finds that oral argument would not be helpful or necessary. DUCivR 7-1(f).

         Factual Background

         The facts relevant to the motion are undisputed. In November 2015, Plaintiff's employment as a customer service representative for National Contact Center Management Group, LLC ended due to “several psychological conditions.” (Complaint ¶¶ 3, 11, 17-18.) In March 2016, Plaintiff filed a claim with Defendant, seeking long-term disability benefits pursuant to an ERISA plan. (Compl. at ¶¶ 1, 18, 21-23.)

         On April 18, 2016, while Plaintiff's claim for long-term disability benefits with Defendant was pending, Plaintiff filed a voluntary chapter 7 bankruptcy petition in the United States Bankruptcy Court for the District of Utah. (Case No. 16-23238 at Dkt. No. 1.) Plaintiff did not disclose her long-term disability claim as an asset in any of her bankruptcy filings, nor did she disclose the claim orally to the bankruptcy court. (Id., Dkt. No. 12.) Instead, on April 27, 2016, Plaintiff filed a lengthy Statement of Financial Affairs, responding “no” to questions asking if she had any: “[i]nterests in insurance policies” such as “disability…insurance”; “claims against third parties, whether or not you have filed a lawsuit or made a demand for payment” such as “insurance claims”; “[o]ther amounts someone owes you” such as “disability insurance payments” or “disability benefits”; and “other contingent and unliquidated claims of every nature.” (Id. at Questions 30-34.)

         On June 2, 2016, Defendant denied Plaintiff's claim for long-term disability benefits under the plan. (Compl. ¶¶ 19-21, 26.) Plaintiff filed an appeal with Defendant on June 6, 2016. (Compl. ¶ 28.) On July 7, 2016, Defendant affirmed its original denial. (Compl. ¶ 32.) The July denial letter informed Plaintiff that “[s]ince you have now completed the first level of appeal, you may file a lawsuit under the Employee Retirement Income Security Act (ERISA).” (Dkt. No. 4-5.)

         Plaintiff did not file an amendment to her Statement of Financial Affairs Form at any time before, during, or after the administrative review process of her long-term disability claim. (See Case No. 16-23238.) On October 4, 2016, Plaintiff received a no asset bankruptcy discharge, and her case was terminated on October 14, 2016. (Id.)

         On October 31, 2016, Plaintiff, through counsel, filed another appeal with Defendant. (Compl. ¶ 34.) By letter dated January 30, 2017, Defendant again informed Plaintiff that it had affirmed its denial of her long-term disability claim under the plan. (Compl. ¶¶ 34, 38.)

         Discussion

         To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In deciding a motion to dismiss, “courts must consider the complaint in its entirety, as well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007).

         The doctrine of judicial estoppel bars claims “to protect the integrity of the judicial process by prohibiting parties from deliberately changing positions according to the exigencies of the moment.” Eastman v. Union Pac. R. Co., 493 F.3d 1151, 1156 (10th Cir. 2007) (quoting New Hampshire v. Maine, 532 U.S. 742, 749-50 (2001)). Judicial estoppel “is intended to prevent improper use of judicial machinery.” Id. The Tenth Circuit has recognized three factors to inform the decision of whether to apply judicial estoppel in a particular case: 1) whether a party's subsequent position is “‘clearly inconsistent' with its former position”; 2) whether “the suspect party succeeded in persuading a court to accept that party's former position, ‘so that the judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or the second court was misled'”; and 3) whether “the party seeking to assert an inconsistent position would gain an unfair advantage in the litigation if not estopped.” Id.

         1) Clearly inconsistent positions

         First, the court analyzes whether Plaintiff took clearly inconsistent positions in her bankruptcy filings and the Complaint in this case. The Tenth Circuit has recognized that “[t]he bankruptcy code imposes a duty upon a debtor to disclose all assets, including contingent and unliquidated claims.” Eastman, 493 F.3d at 1159. Multiple questions on the voluntary Statement of Financial Affairs submitted by Plaintiff in her bankruptcy call for the disclosure of Plaintiff's long-term disability claim, including questions specifically asking about “[i]nterests in insurance policies” such as “disability…insurance”; “claims against third parties” such as “insurance claims”; and “[o]ther amounts someone owes you” such as “disability insurance payments” or “disability benefits.” (Case No. 16-23238 at Questions 30-34.) Plaintiff responded that the answer to each of those questions was “no.” Now Plaintiff asserts that she was and is owed long-term disability benefits from Defendant. Those positions are clearly inconsistent.

         2) Perception that a ...


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