Bellisario v. Lone Star Life Ins.
| Decision Date | 22 December 1994 |
| Docket Number | No. CV 94-1177-RAP.,CV 94-1177-RAP. |
| Citation | 871 F. Supp. 374 |
| Parties | Giuseppe BELLISARIO, Plaintiff, v. LONE STAR LIFE INSURANCE, a company; Crown Life Insurance, a company, Defendants. |
| Court | U.S. District Court — Central District of California |
Allan A. Sigel, Sigel & Boothe, Los Angeles, CA, for plaintiff.
Hugh H. Helm, Galton & Helm, Los Angeles, CA, for defendants.
AMENDED MEMORANDUM AND ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY ADJUDICATION
The Memorandum and Order Granting Defendant's Motion for Summary Adjudication filed on September 13, 1994, is hereby amended. This Amended Memorandum and Order shall supersede the Memorandum and Order of September 13, 1994.
Defendants' motion for partial summary adjudication came on regularly for hearing before this Court on July 15, 1994. The Court took the matter under submission. After reviewing the materials submitted by the parties, arguments of counsel, and all other matters presented to the Court, it is hereby ORDERED that defendants' motion is GRANTED.
On March 4, 1994, plaintiff filed this action to recover benefit payments pursuant to defendants' disability insurance policy. The complaint contains two state causes of action: bad faith termination of insurance benefits and breach of contract.
On June 17, 1994, defendants filed a motion for summary adjudication on the grounds that plaintiff's state law claims are preempted by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001, et seq. Defendants contend that the disability insurance policy is part of an employee benefit plan governed by ERISA.
Plaintiff filed objections to certain evidence submitted by defendants.
Subject matter jurisdiction is proper under 28 U.S.C. § 1332.
This motion presents no genuine issues of material fact, and defendants are entitled to summary adjudication as a matter of law. The only issue before the Court is whether plaintiff, who is an owner and shareholder of a closely-held corporation, is limited to ERISA remedies in contesting termination of his disability insurance benefits.
The plaintiff, Giuseppe Bellisario, was the president, joint owner, and shareholder of Giuseppe, Inc. ("the company"). The company operated a restaurant called "Ciao Giuseppe."
In November 1986, the company purchased a disability insurance policy from defendant Crown for plaintiff. At the time this policy was purchased, plaintiff and defendant Crown signed memoranda of understanding stating that the disability insurance policy was "part of a formal Wage Continuation plan." See Exhibit B, attached to Defendants' Motion. The disability insurance policy did not cover any employees.
The company also purchased a group health insurance policy from Principal Insurance Company for plaintiff and some of the company's employees. See Bellisario Declaration, attached to Plaintiff's Opposition, at ¶ 7.
In August 1992, plaintiff became disabled and started receiving disability payments from Crown under the disability insurance policy. In 1993, Defendant Lone Star assumed Crown's responsibility for the disability insurance policy and payments. In January 1994, Lone Star informed plaintiff that it was discontinuing disability payments.
Rule 56(c) of the Federal Rules of Civil Procedure provides for summary judgment if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." In a trilogy of 1986 cases, the Supreme Court clarified the standard for summary judgment. See Celotex Corporation v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact for trial. Anderson, 477 U.S. at 256, 106 S.Ct. at 2514. Whether a fact is material is determined by looking to the governing substantive law; if the fact may affect the outcome it is material. Id. at 248, 106 S.Ct. at 2510. If the moving party seeks summary adjudication with respect to a claim or defense upon which it bears the burden of proof at trial, its burden must be satisfied by affirmative admissible evidence. By contrast, when the non-moving party bears the burden of proving the claim or defense, the moving party can meet its burden by pointing out the absence of evidence from the non-moving party. The moving party need not disprove the other party's case. See Celotex, 477 U.S. at 325, 106 S.Ct. at 2553-54; see also Schwarzer, Tashima & Wagstaffe, Federal Civil Procedure Before Trial §§ 14:123-141 (1993).
When the moving party meets its burden, the "adverse party may not rest upon the mere allegations or denials of the adverse party's pleadings, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e).
In assessing whether the non-moving party has raised a genuine issue, its evidence is to be believed, and all justifiable inferences are to be drawn in its favor. Anderson, 477 U.S. at 255, 106 S.Ct. at 2513-14 (citing Adickes v. S.H. Kress and Company, 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970)). Nonetheless, "the mere existence of a scintilla of evidence" is insufficient. Id. at 252, 106 S.Ct. at 2512. As the Court explained in Matsushita, 475 U.S. at 586-87, 106 S.Ct. at 1355-56:
When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts.... Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no "genuine issue for trial."
While ordinarily "the existence of an ERISA plan is a question of fact, to be answered in light of all the surrounding facts and circumstances from the point of view of a reasonable person," Harper v. American Chambers Life Ins. Co., 898 F.2d 1432, 1433 (9th Cir.1990), where no genuine issues of material fact exist, as here, summary judgment should be granted.
ERISA contains a strong federal preemption clause:
Except as otherwise provided in subsection (b) of this section, the provision of this subchapter and subchapter III of the chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.
29 U.S.C. § 1144(a) (West Supp.1994). It is well established that ERISA preempts any state law claims that "relate to any employee benefit plan." See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987) (). Therefore, in deciding whether plaintiff's state law claims are preempted by ERISA, the first step is to determine whether the disability insurance policy purchased by the company for plaintiff is part of an employee benefit plan governed by ERISA.
The ERISA statute defines an "employee benefit plan" as:
any plan, fund, or program ... established or maintained by an employer or an employee organization, or by both ... for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance.... for medical, surgical, or hospital care benefits or benefits in the event of sickness, accident disability, death, or unemployment....
29 U.S.C.A. § 1002(1) (West Supp.1994).
The regulations by the Department of Labor further clarify the statutory definition of an "an employee benefit plan." 29 C.F.R. § 2510.3-3(c)(1) provides:
(b) Plans without employees. For purposes of Title I of ERISA and this chapter, the terms "employee benefit plan" shall not include any plan, fund or program, other than an apprenticeship or other training program, under which no employees are participants covered under the plan.... For example, a so-called "Keough" or "H.R. 10" plan under which only partners or only a sole proprietor are participants covered under the plan will not be covered under Title I. However, a Keough plan under which one or more common law employees, in addition to the self-employed individuals, are participants covered under the plan, will be covered under Title I....
The Ninth Circuit in Harper v. American Chambers Life Insurance Company, 898 F.2d 1432, 1433 (9th Cir.1990) recently stated that where "an ERISA plan exists, then only ERISA remedies are potentially available." "The existence of an ERISA plan is a question of fact, to be answered in light of all the surrounding facts and circumstances from the point of view of a reasonable person." Id. at 1433, citing to Kanne v. Connecticut Gen. Life Ins. Co., 867 F.2d 489, 492 (9th Cir.1988), cert. denied, 492 U.S. 906, 109 S.Ct. 3216, 106 L.Ed.2d 566 (1989).
In this case, plaintiff stresses that the company purchased the disability insurance policy solely for him and that it never covered any of the company's employees. According to plaintiff, the disability insurance policy was not part of any employee benefit plan or program. Defendants contend that the company maintained an employee benefit plan when it provided disability insurance to plaintiff and group medical insurance to plaintiff and its employees. Therefore, according to defendants, the two policies cannot be treated separately for ERISA purposes.
The Court agrees with defendants that the plan at issue here is comprised of both the disability insurance policy and the group medical...
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