United States District Court, D. Maryland
JEFFREY F. HIGDON, AS TRUSTEE OF THE LIFE INSURANCE TRUST DATED NOVEMBER 1, 1991 Plaintiff,
LINCOLN NATIONAL INSURANCE COMPANY, et al. Defendants.
ELLEN LIPTON HOLLANDER, District Judge.
In this case, plaintiff Jeffrey F. Higdon, as Trustee of the Life Insurance Trust Dated November 1, 1991 ("Trust"), seeks to recover the death benefits he claims are payable on a life insurance policy issued to John J. Germenko ("Policy"), which is the corpus of the Trust. Higdon alleges that defendants Lincoln National Insurance Company ("Lincoln") and ING Life Insurance and Annuity Company ("ING") have breached the Policy by refusing to pay the benefits due as a result of Mr. Germenko's death. The issue currently before the Court is whether the Court has subject matter jurisdiction over the case.
As detailed, infra, the original Complaint in this action (ECF 2) was not filed by Mr. Higdon. Rather, it was filed by Mr. Germenko's two daughters, Barbara Germenko Wright and Deborah Ann Germenko Tharp (individually and as personal representative of the estate of Winifred M. Germenko) (collectively, "the Germenkos"). In defendants' answer to the original Complaint, they claimed that the Germenkos were not the beneficiaries of the Policy and therefore did not have standing to sue. In response, an Amended Complaint (ECF 10) was filed naming Mr. Higdon as the plaintiff and removing the Germenkos from the case caption.
Defendants then filed a Motion to Dismiss the Amended Complaint for Lack of Subject Matter Jurisdiction ("Motion, " ECF 11), supported by a memorandum of law ("Memo, " ECF 11-1). Plaintiff opposed the Motion (ECF 18), and filed a memorandum in opposition to ("Opp., " ECF 18-1), with exhibits. Defendants replied ("Reply, " ECF 19). No hearing is necessary to resolve the motions. See Local Rule 105.6. For the reasons that follow, I will deny the Motion, without prejudice to its renewal after the parties submit supplemental briefing to the Court.
On January 10, 1985, John J. Germenko of Howard County, Maryland purchased the Policy. See Am. Comp. ¶ 8. The Policy is a flexible premium adjustable life policy with an initial specified amount of $300, 000.00. Id. At the time the Policy was purchased, Mr. Germenko was the owner of the Policy. His wife, Winifred M. Germenko, and his two daughters, Barbara Wright and Deborah Tharp, were the named beneficiaries on the Policy. Id.
On November 1, 1991, Mr. Germenko created the Trust and appointed Mr. Higdon as trustee. See Trust Agreement, ECF 18-4. The initial corpus of the Trust was the Policy. See Trust Agreement at 36. According to plaintiff, "Mr. Germenko wanted to create an irrevocable life insurance trust' for the Original Plaintiffs and Winifred M. Germenko, his daughters and former wife respectively." Opp. at 3 (quoting Trust Agreement at 1). After the Trust was created, Mr. Germenko changed the named beneficiary of the Policy from his wife and daughters to the Trust. See ECF 18-5.
Mr. Germenko died on June 16, 2010. Am. Comp. ¶ 13. In July 2010, an attorney for Mr. Germenko's estate, notified Lincoln of the death and requested payment of the policy proceeds. Id. Although plaintiff maintains that "Mr. Germenko always paid the Policy premiums, " id. ¶ 9, Lincoln refused to pay the policy proceeds, citing nonpayment of premiums. Id. ¶ 13.
This action was filed by the Germenkos on July 25, 2013. ECF 2. The original Complaint alleged that the Germenkos "are named beneficiaries" of the Policy, and that defendants breached the Policy by refusing to pay death benefits to the named plaintiffs. Id. ¶¶ 1-2. After defendants denied that the plaintiffs were the named beneficiaries on the Policy, see Answer (ECF 9), an Amended Complaint was filed; it listed only Mr. Higdon as a plaintiff. See Am. Comp. at 1. The Amended Complaint lodges the same substantive breach-of-contract claim as the original Complaint, but it alleges that the Trust, rather than Mr. Germenko's wife and daughters, is the "sole beneficiary" of the policy. Id. ¶ 1.
Standard of Review
Defendants' Motion is styled as a motion to dismiss under Fed.R.Civ.P. 12(b)(1). Under Fed.R.Civ.P. 12(b)(1), a motion to dismiss for lack of subject matter jurisdiction raises the issue of "whether the court has the competence or authority to hear and decide the case." Davis v. Thompson, 367 F.Supp.2d 792, 799 (D. Md. 2005). Upon a challenge to jurisdiction, the plaintiff bears the burden of proving, by a preponderance of evidence, the existence of subject matter jurisdiction. Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir.1999); see also United States ex. rel . Vuyyuru v. Jadhau, 555 F.3d 337, 347 (4th Cir. 2009).
A challenge to subject matter jurisdiction under Rule 12(b)(1) may proceed "in one of two ways": either a facial challenge, asserting that the allegations pleaded in the complaint are insufficient to establish subject matter jurisdiction, or a factual challenge, asserting "that the jurisdictional allegations of the complaint [are] not true.'" Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009) (citation omitted); see also Buchanan v. Consol. Stores Corp., 125 F.Supp.2d 730, 736 (D. Md. 2001). Here, defendants make both types of challenges to subject matter jurisdiction.
In a facial challenge, "the facts alleged in the complaint are taken as true, and the motion must be denied if the complaint alleges sufficient facts to invoke subject matter jurisdiction." Kerns, 585 F.3d at 192; see also Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997). In a factual challenge, on the other hand, "the district court is entitled to decide disputed issues of fact with respect to subject matter jurisdiction." Kerns, 585 F.3d at 192. In that circumstance, the court "may regard the pleadings as mere evidence on the issue and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment." Velasco v. Gov't of Indonesia, 370 F.3d 392, 398 (4th Cir.2004); Evans, 166 F.3d at 647. That is, "the court may look beyond the pleadings and the jurisdictional allegations of the complaint and view whatever ...