United States District Court, D. Colorado
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO
DISMISS, GRANTING IN PART AND DENYING IN PART MOTION TO
AMEND, AND SUA SPONTE GRANTING PARTIAL LEAVE TO
AMEND
William J. Martinez United States District Judge
Plaintiff
Eladio Villalobos (“Villalobos”) was severely
injured in a motorcycle accident while not wearing a helmet.
Allegedly, he learned only after the accident that his
employer-sponsored health plan does not cover injuries
incurred in motorcycle accidents where the injured person was
not wearing a helmet. Villalobos sues:
• his employer, Vision Graphics, Inc.
(“Vision”),
• his employer-sponsored health plan, known as the
Vision Graphics, Inc./Eagle:xm Benefit Plan
(“Plan”), and
• another entity associated with Vision and the Plan,
called Eagle:xm, LLC (“Eagle”), [1]
under
the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. §§ 1001 et
seq., claiming various breaches of duty as to the
no-helmet exclusion. Vision has, in turn, asserted
third-party claims against two entities allegedly responsible
for the formulation and administration of health benefits
under the Plan, Cypress Benefit Administrators (LHS), LLC
(“Cypress LHS”) and Cypress Benefit
Administrators, LLC (“Cypress BA”). Broadly
speaking, Vision alleges that the two Cypress entities are
responsible for creating the problem that led to
Villalobos's lawsuit. (ECF No. 15.)
Currently
before the Court is Cypress LHS's Motion to Dismiss the
Amended Complaint (“Motion to Dismiss”). (ECF No.
43.) Cypress LHS addresses its motion to “the Amended
Complaint”-as opposed to any third-party
complaint-because, at the time Cypress LHS filed the Motion
to Dismiss, the dispute between Vision and the Cypress
entities was separate from the dispute between Villalobos,
Vision, the Plan, and Eagle. Therefore, Vision was the
plaintiff and the Cypress entities were the defendants. The
Court has since consolidated the dispute and re-aligned the
parties, as reflected in the caption, above. (ECF No. 46.)
Cypress
LHS's primary argument in the Motion to Dismiss is a Rule
12(b)(1) argument that the dispute, as originally filed by
Vision, is unripe while the at-that-time-separate lawsuit
brought by Villalobos remained to be adjudicated. (ECF No.
43-1 at 4- 6.) One week later, however, the Court issued its
consolidation order. (ECF No. 46.) Apparently for this
reason, Cypress LHS's reply brief says nothing about an
unripe dispute, and focuses entirely on Rule 12(b)(6)
arguments asserted alternatively in the Motion to Dismiss.
(ECF No. 63.) As to those Rule 12(b)(6) arguments, Vision
responded (ECF No. 58) but also filed a Motion for Leave to
File Amended Third-Party Complaint (“Motion to
Amend”) (ECF No. 59), which is also currently before
the Court. Vision argues that the Court should deny as moot
the Motion to Dismiss if it grants the Motion to Amend. (ECF
No. 58 at 2.)
The
Court finds that the portion of the Motion to Dismiss
claiming that the dispute is unripe is mooted by
consolidation. As to the Rule 12(b)(6) arguments, the Court
agrees that the Motion to Amend, if granted, moots the Motion
to Dismiss. Accordingly, the primary question before the
Court is whether to grant the Motion to Amend. For the
reasons explained below, the Court finds that it should be
granted as to Vision's claims for breach of fiduciary
duty, breach of contract, and declaratory judgment. As to its
claim for negligence, the Court finds that both the proposed
amended version and the currently operative version fail to
state a claim, so the Motion to Amend will be denied as to
the proposed negligence claim and the Motion to Dismiss will
be granted as to the current negligence claim. However, the
Court will sua sponte grant leave to Vision to
include a re-pleaded version of this claim in the amended
third-party complaint otherwise authorized by this order.
I.
LEGAL STANDARD
Under
Rule 15(a), a court should allow a party to amend its
pleadings “when justice so requires.”
Fed.R.Civ.P. 15(a). “[T]he grant or denial of an
opportunity to amend is within the discretion” of the
Court, but an “outright refusal to grant the leave
without any justifying reason” is an abuse of
discretion. Foman v. Davis, 371 U.S. 178, 182
(1962). “Refusing leave to amend is generally only
justified upon a showing of undue delay, undue prejudice to
the opposing party, bad faith or dilatory motive, failure to
cure deficiencies by amendments previously allowed, or
futility of amendment.” Frank v. U.S. West,
Inc., 3 F.3d 1357, 1366 (10th Cir. 1993).
Cypress
LHS primarily argues that amendment would be futile. (ECF No.
62 at 2.)[2] Proposed amendments are futile when the
amended complaint “would be subject to dismissal for
any reason.” Watson ex rel. Watson v. Beckel,
242 F.3d 1237, 1239-40 (10th Cir. 2001). “The futility
question is functionally equivalent to the question whether a
complaint may be dismissed for failure to state a
claim.” Gohier v. Enright, 186 F.3d 1216, 1218
(10th Cir. 1999). Accordingly, the Court will “assume
the truth of [Vision's] well-pleaded [proposed] factual
allegations and view them in the light most favorable to
[Vision].” Ridge at Red Hawk, LLC v.
Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007).
II.
BACKGROUND
The
Court assumes the following to be true for purposes of the
Motion to Amend. The Court derives this narrative from
Villalobos's complaint (ECF No. 47) and Vision's
proposed amended complaint (ECF No. 59-1).
Vision
is a Wyoming corporation with its principal place of business
in Denver. (ECF No. 59-1 at 1.) It sponsors, and is the
designated administrator of, the Plan, which provides health
benefits to Vision's employees and is governed by ERISA.
(Id. at 2, 6.) Vision contracted with Cypress BA in
May 2015 to help Vision administer the Plan. (Id. at
6-7.) Cypress BA helped to design the Plan, evaluated claims,
paid approved claims, and communicated required information
to Plan participants. (Id. at 7.)
In May
2016, Cypress BA created a new governing document for the
Plan, which excluded medical coverage for injuries sustained
in a motorcycle accident while not wearing a helmet, or in a
car accident while not wearing a seatbelt (“Vehicle
Accident Exclusion”). (Id. at 8.) This was a
new exclusion. (Id.) Vision did not request it,
Cypress BA did not call Vision's attention to it, and
Cypress BA did not notify, or ensure that Vision notified,
Vision's employees about the exclusion. (Id. at
8-9.)
Villalobos,
a Vision employee and Plan participant, was in a motorcycle
accident on July 23, 2016. (ECF No. 47 ¶ 11.) He
sustained multiple severe injuries. (Id. ¶ 14.)
Cypress BA rejected coverage for these injuries in light of
the Vehicle Accident Exclusion. (Id. ΒΆ ...