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Davis v. The Prudential Insurance Co. of America

United States District Court, M.D. Alabama, Northern Division

June 22, 2018

CHARLES M. DAVIS, Plaintiff,



         Plaintiff Charles M. Davis filed suit in state court against defendant Prudential Insurance Company of America, claiming breach of contract and unjust enrichment based on Prudential's refusal to pay his insurance claim for disability benefits. Prudential removed the case to this federal court pursuant to 28 U.S.C. § 1441, and thereafter brought a motion to dismiss the case for failure to state a claim. The court granted the dismissal motion because Davis's state claims were preempted by the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001 et seq. See Davis v. The Prudential Ins. Co. of Am., 2015 WL 5719628 (M.D. Ala. 2015) (Thompson, J.). However, the court gave Davis leave to file a motion to vacate the judgment and amend his complaint if a viable ERISA claim exists.

         This case is now before the court on two motions Davis has timely filed: a motion to vacate the judgment granting Prudential's motion to dismiss and a motion to amend his complaint. This court has federal-question jurisdiction pursuant to 28 U.S.C. § 1331. For the reasons stated below, the motions will be granted with leave for Davis to file a further amended complaint.

         I. BACKGROUND

         This case arises out of Prudential's denial of Davis's workplace disability claim. Davis worked as a customer service representative at a bottling plant in southeast Alabama for some time before stopping due to severe headaches and visual dysfunction in mid-2012. Based on these conditions, he filed a disability claim with the insurance company under a benefits plan provided by his employer. After considering the medical records in Davis's file, the company denied his claim. Counsel for Davis wrote a letter to the company in response to the decision. Davis later filed suit against the company.

         Prudential argues that Davis's motion to amend his complaint should be denied because he did not exhaust his administrative remedies prior to filing suit and that his motion to vacate the judgment should be denied because no manifest injustice would result from its denial. Davis contends that the letter from his counsel qualified as an appeal sufficient to satisfy ERISA's exhaustion requirement and that denial of the motion to vacate would result in a manifest injustice.


         Federal Rule of Civil Procedure 59(e) authorizes a motion to alter or amend a judgment after its entry. “[T]he decision to alter or amend the judgment is committed to the sound discretion of the district judge.” American Home Assur. Co. v. Glenn Estess & Assocs., Inc., 763 F.2d 1237, 1238, 1238-1239 (11th Cir. 1985). There are four basic grounds for granting a Rule 59(e) motion: “(1) manifest errors of law or fact upon which the judgment was based; (2) newly discovered or previously unavailable evidence; (3) manifest injustice in the judgment; and (4) an intervening change in the controlling law.” Jacobs v. Elec. Data. Sys. Corp., 240 F.R.D. 595, 599 (M.D. Ala. 2007) (Thompson, J.) (citing 11 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 2810.1 (3d ed. 2012)). Further, a judgment will not be amended or altered if to do so would serve no useful purpose. See 11 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, supra, § 2810.1, at 128.

         Federal Rule of Civil Procedure 15(a) states that the court “should freely give leave [to amend a pleading] when justice so requires.” “Generally, ‘[w]here a more carefully drafted complaint might state a claim, a plaintiff must be given at least one chance to amend the complaint before the district court dismisses the action with prejudice.'” Bryant v. Dupree, 252 F.3d 1161, 1163 (11th Cir. 2001) (quoting Bank v. Pitt, 928 F.2d 1108, 1112 (11th Cir. 1991)). A “substantial ground” is required to deny leave, such as “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of amendment.” Reese v. Herbert, 527 F.3d 1253, 1263 (11th Cir. 2008) (quoting Burger King Corp. v. Weaver, 169 F.3d 1310, 1319 (11th Cir. 1999)).

         “[T]he[] ‘same standards [for granting a motion to amend] apply when a plaintiff seeks to amend after a judgment of dismissal has been entered by asking the district court to vacate its order of dismissal pursuant to Fed.R.Civ.P. 59(e).” Spanish Broad. Sys. Of Fla., Inc. v. Clear Channel Commc'ns, Inc., 376 F.3d 1065, 1077 (11th Cir. 2004) (quoting Thomas v. Town of Davie, 847 F.2d 771, 773 (11th Cir. 1988)).


         The resolution of Davis's motions to vacate the judgment and for leave to amend the complaint are obviously interrelated. Unless the proposed amended complaint states a viable claim, vacating the judgment would serve no purpose and cause no manifest injustice. Thus, the court will first determine whether the motion to amend should be granted, then will turn to the motion to vacate.

         A. Motion to Amend

         Prudential argues that the proposed amendment of Davis's complaint is futile because Davis never exhausted his administrative remedies by appealing the adverse determination, and because he cannot exhaust his administrative remedies since the time for doing so has passed. Davis responds that he did exhaust his administrative remedies because the letter sent by his counsel qualified as an appeal sufficient to exhaust, or at minimum there is a disputed issue of fact as to whether he exhausted that should be resolved at a later stage of litigation, after discovery.

         The standard for denying a motion to amend on the basis of futility is akin to that of granting a motion to dismiss. “A proposed amendment may be denied for futility when the complaint as amended would still be properly dismissed.” Coventry First, LLC v. McCarty, 605 F.3d 865, 870 (11th Cir. 2010)) (internal quotation marks omitted); see also Burger King Corp v. Weaver, 169 F.3d 1310, 1320 (11th Cir. 1999) (“This court has found that denial of leave to amend is justified by futility when the complaint as amended is still subject to dismissal.”) (internal quotation marks omitted). Thus, the court must assess whether the proposed amended complaint would survive dismissal.

         “The law is clear in this circuit that plaintiffs in ERISA actions must exhaust available administrative remedies before suing in federal court.” Counts v. Am. Gen. Life & Acc. Ins. Co., 111 F.3d 105, 108 (11th Cir. 1997).[1] However, the law is less clear as to what requirement governs when considering dismissal for failure to exhaust administrative remedies in an ERISA case. Federal Rule of Civil Procedure 12(b) does not enumerate exhaustion as a basis for dismissal. Which part of Rule 12(b) applies can have serious implications: the district court is empowered to act as the factfinder and determine disputed facts on certain types of dismissals, such as ...

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