Coonley v. Fortis Benefit Ins. Co., C 95-3077-MWB.
| Decision Date | 21 January 1997 |
| Docket Number | No. C 95-3077-MWB.,C 95-3077-MWB. |
| Parties | John E. COONLEY, as Trustee of the James E. Coonley II Trust, and ABCM Corporation, Plaintiffs, v. FORTIS BENEFIT INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Northern District of Iowa |
Mark L. Tripp, Cynthia A. Hurley, argued, Bradshaw, Fowler, Proctor & Fairgrave, P.C., Des Moines, IA, for Plaintiffs.
Paula Weseman Theisen, argued, Weseman Theisen Law Office, Minneapolis, MN, Kasey Kincaid, Faegre & Benson, Des Moines, IA, for Defendant.
TABLE OF CONTENTS
I. INTRODUCTION ...................................................... 843
II. STANDARDS FOR SUMMARY JUDGMENT .................................... 843
III. FINDINGS OF FACT .................................................. 845
IV. LEGAL ANALYSIS..................................................... 848
A. Principles of Interpretation of ERISA Plans .................... 848
1. Standard of review .......................................... 848
2. Applicable law .............................................. 849
3. Rules of interpretation ..................................... 850
B. Who Is Covered By This ERISA Plan? ............................. 851
1. Clear and unambiguous language .............................. 851
2. Dictionary meaning .......................................... 852
a. "Dictionary" definition .................................. 852
b. Ambiguity ................................................ 853
3. Common-law factors .......................................... 855
a. Applicability of the common-law test ..................... 855
b. The test and standard of review .......................... 857
c. Application of the common-law factors .................... 858
V. CONCLUSION ........................................................ 860
Who is trying to have it both ways in this ERISA benefits action pursuant to 29 U.S.C. § 1132? Is it the corporate policyholder of an employee life insurance policy that treated the corporation's secretary as a non-employee for tax purposes, but now wants life insurance benefits upon the death of the secretary on the ground that he was an "employee"? Or is it the insurance company that accepted premiums for employee life insurance coverage, but now denies that an obviously key individual in the corporation was an "employee" when he died? Can the court answer any of these questions as a matter of law on cross-motions for summary judgment? These are some of the vexing questions the court must resolve to rule on dispositive motions pending in this matter.
The plaintiffs in this action, John E. Coonley (the Trustee), the successor trustee of the James E. Coonley II Trust (the Trust) and ABCM Corporation (ABCM), an Iowa corporation with its principal place of business in Hampton, Iowa, filed their complaint in this matter on September 27, 1995, against defendant Fortis Benefits Insurance Company (Fortis). Count I of the complaint is a civil action claiming life insurance benefits pursuant to the civil enforcement provisions of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B). Count II is a civil claim for damages for breach of a life insurance contract between ABCM and Fortis. Fortis answered the complaint on October 26, 1995, denying both claims and asserting that the breach of contract claim is preempted by ERISA. This matter is currently set for a bench trial on May 28, 1997.
However, the parties contend that there is no need for a trial, because they have filed cross-motions for summary judgment which they assert will dispose of the entire action. At the extended deadline for dispositive motions requested by both sides, September 10, 1996, the plaintiffs and the defendant moved for summary judgment. On September 24, 1996, the Trustee and ABCM resisted Fortis's motion for summary judgment and Fortis resisted the plaintiffs' motion. The plaintiffs filed a reply brief in support of their motion for summary judgment on September 30, 1996. Each side asserts that there are no genuine issues of material fact and that, as a matter of law, its opponent's motion for summary judgment must be denied and its own motion granted.
The court heard oral arguments on the cross-motions for summary judgment on January 15, 1997. Plaintiffs ABCM Corporation and the Trustee of the James E. Coonley II Trust were represented by counsel Mark L. Tripp and Cynthia A. Hurley of Bradshaw, Fowler, Proctor & Fairgrave, P.C., in Des Moines, Iowa. Ms. Hurley presented the oral arguments on behalf of the plaintiffs. Defendant Fortis Benefits Insurance Company was represented by counsel Paula Weseman Theisen of the Weseman Theisen Law Office in Minneapolis, Minnesota, and by local counsel Kasey Kincaid of Faegre & Benson in Des Moines, Iowa. Ms. Weseman Theisen presented the oral arguments on behalf of the defendant. The court found both the briefs and oral arguments to be of an unusually high quality. The court was also impressed by the clarity and informativeness of the oral presentations and the cordiality with which counsel interacted with each other and with the court.
Although the plaintiffs concede that Coonley was paid for his work for ABCM through a professional corporation (PC), the theme of the plaintiffs' arguments for summary judgment is that Coonley was a "key" employee of ABCM in every respect, except possibly in form. The main thrust of Fortis's argument in resistance to the plaintiffs' motion for summary judgment and in support of its own motion for summary judgment, is that Coonley was not an "employee" under the applicable federal common law. Rather, applying federal common-law factors, Fortis asserts that Coonley was an independent contractor, not an employee, of ABCM and that Coonley was an "employee" only of his PC. Before it can address the merits of these arguments, the court must first consider the standards for summary judgment applicable in this case and the factual record upon which the motions for summary judgment are founded.
The Eighth Circuit Court of Appeals recognizes "that summary judgment is a drastic remedy and must be exercised with extreme care to prevent taking genuine issues of fact away from juries." Wabun-Inini v. Sessions, 900 F.2d 1234, 1238 (8th Cir.1990). On the other hand, the Federal Rules of Civil Procedure have authorized for nearly sixty years "motions for summary judgment upon proper showings of the lack of a genuine, triable issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265 (1986). Thus, "summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Wabun-Inini, 900 F.2d at 1238 (quoting Celotex, 477 U.S. at 327, 106 S.Ct. at 2555); Hartnagel v. Norman, 953 F.2d 394, 396 (8th Cir.1992).
The standard for granting summary judgment is well established. Rule 56 of the Federal Rules of Civil Procedure states in pertinent part:
Rule 56. Summary Judgment
(a) For Claimant. A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory judgment may, at any time after the expiration of 20 days from the commencement of the action or after service of a motion for summary judgment by the adverse party, move with or without supporting affidavits for a summary judgment in the party's favor upon all or any part thereof.
(b) For Defending Party. A party against whom a claim ... is asserted ... may, at any time, move for summary judgment in the party's favor as to all or any part thereof.
(c) Motions and Proceedings Thereon. ... The judgment sought shall be rendered forthwith 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.
Fed.R.Civ.P. 56(b) & (c) (emphasis added); see also Celotex, 477 U.S. at 322-23, 106 S.Ct. at 2552-53; Reliance Ins. Co. v. Shenandoah South, Inc., 81 F.3d 789, 791 (8th Cir.1996); Beyerbach v. Sears, 49 F.3d 1324, 1325 (8th Cir.1995); Munz v. Michael, 28 F.3d 795, 798 (8th Cir.1994); Roth v. U.S.S. Great Lakes Fleet, Inc., 25 F.3d 707, 708 (8th Cir.1994); Cole v. Bone, 993 F.2d 1328, 1331 (8th Cir. 1993); Woodsmith Publishing Co. v. Meredith Corp., 904 F.2d 1244, 1247 (8th Cir. 1990); Wabun-Inini, 900 F.2d at 1238 (citing Fed.R.Civ.P. 56(c)).
Ordinarily, analysis of a motion for summary judgment focuses on whether there are genuine issues of material fact that preclude summary judgment in the movant's favor,1 because they require submission of the case to a trier of fact. See, e.g., Celotex, 477 U.S. at 323, 106 S.Ct. at 2553 (); Woodsmith, 904 F.2d at 1247 (same). However, in the present case, both sides have moved for summary judgment on the ground that there are no genuine issues of material fact, although there may be some factual disputes, or disputes about the legal significance of undisputed facts, apparent from the cross-motions and the parties' statements of fact. Thus, the analysis in this case will focus on the final clause of the quoted portion of Rule 56(c), that is, whether "the moving party is entitled to judgment as a matter of law," Fed. R.Civ.P. 56(c) (emphasis added), until and...
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