Flinn v. Minn. Life Ins. Co.

• Decision Date: 14 November 2018
• Docket Number: CIVIL ACTION NO. 18-10868-WGY
• Parties: Eugene FLINN, Plaintiff, v. MINNESOTA LIFE INSURANCE COMPANY, Securian Life Insurance Company, and Securian Financial Group, Inc., Defendants.
• Court: U.S. District Court — District of Massachusetts

353 F.Supp.3d 110

Eugene FLINN, Plaintiff,

v.MINNESOTA LIFE INSURANCE COMPANY, Securian Life Insurance Company, and Securian Financial Group, Inc., Defendants.

CIVIL ACTION NO. 18-10868-WGY

United States District Court, D. Massachusetts.

Filed November 14, 2018

Christina A. Madek, Peter J. Riordan, Jantzen & Associates, Boston, MA, for Plaintiff.

Joan O. Vorster, Kevin Kam, Mirick, O'Connell, DeMallie & Lougee, LLP, Worcester, MA, for Defendants.

MEMORANDUM & ORDER

WILLIAM G. YOUNG, DISTRICT JUDGE

I. INTRODUCTION

Eugene Flinn ("Mr. Flinn") filed suit in Massachusetts Superior Court, seeking damages from Minnesota Life Insurance ("Minnesota"), Securian Life Insurance Company, and Securian Financial Group (individually¹ and collectively, the "Insurers")to recover life insurance benefits due to him under a policy that his late wife, Joyce Flinn ("Mrs. Flinn"), bought through her employer. Notice of Removal ¶¶ 1, 4, ECF No. 1 ("Notice"). Although Mr. Flinn's complaint raised only state law claims, Compl. ¶¶ 83-233, the Insurers timely removed the case to this Court based on federal question jurisdiction. Notice ¶¶ 3, 8. The Insurers insisted that federal question jurisdiction obtained because Mr. Flinn's "claims ar[o]se out of an employee welfare benefit plan within the meaning of, subject to and regulated by the Employee Retirement Income Security Act ("ERISA"), 29. U.S.C. § 1001 et seq." Notice ¶ 7. Shortly after removing the case, the Insurers moved to dismiss Mr. Flinn's complaint as preempted by ERISA. Defs.'s Mem Support Mot. Dismiss Compl. ("Defs.'s Mem."), ECF No. 9. Mr. Flinn opposed the motion and moved to remand this case to Massachusetts Superior Court. Pl.'s Mem. Law Support Opp'n Defs.'s Mot. Dismiss and Cross Mot. Remand ("Pl.'s Mem."), ECF No. 15.

As a threshold matter, this Court DENIES Mr. Flinn's remand request, ECF No. 16, because it has diversity jurisdiction even though it lacks federal question jurisdiction. This Court also DENIES the Insurers' motion to dismiss, ECF No. 8, because Mr. Flinn's claims do not "relate to" his late wife's ERISA-covered plan.

A. Factual Background

In considering a motion to dismiss for failure to state a claim, this Court "take[s] the complaint's well-pleaded facts as true." See Barchock v. CVS Health Corp., 886 F.3d 43, 48 (1st Cir. 2018). Mrs. Flinn passed away intestate on April 13, 2009. Compl. ¶¶ 17-18. Unbeknownst to Mr. Flinn, Mrs. Flinn had purchased a life insurance plan (the "Plan") through her employer, Fidelity Investments, in the amount of $250,000, which was administered by the Insurers. Id. at ¶¶ 29-31.

After Mrs. Flinn passed away, Mr. Flinn and Mrs. Flinn's sister, Joan Oliveira ("Oliveira"), had several conversations about Mrs. Flinn's affairs. Id. at ¶ 21. Oliveira, an attorney, caused Mr. Flinn to (falsely) believe that Mrs. Flinn had died with a valid last will and testament, which named Oliveira as its sole beneficiary. Id. While Mrs. Flinn had not named a beneficiary to the Plan, per the Plan's undisputed terms, Mr. Flinn was the preference beneficiary. Id. at ¶¶ 42-43. About six months after Mrs. Flinn's passing, Oliveira contacted the Insurers and directed them to deal directly with her instead of Mr. Flinn. Id. at ¶ 45. Oliveira presented a forged power of attorney for Mr. Flinn to the Insurers and claimed to be his attorney. Id. at ¶ 41. Mr. Flinn, however, had no knowledge of and did not authorize the power of attorney. Id. at ¶ 27.

Oliveira repeatedly -- but unsuccessfully -- attempted to convince the Insurers to pay the Plan's benefits to someone other than Mr. Flinn. Id. at ¶¶ 46-49. After her second attempt, Minnesota requested that Oliveira provide them with a "letter of authority from the probate court as well as the tax ID for the estate, to demonstrate her authority to act on the estate's behalf." Id. at ¶ 50. Oliveira never produced any such proof to the Insurers. Id. at ¶ 51.

Subsequently, in 2011, Oliveira informed Minnesota that Mr. Flinn did want to claim the Plan's benefits and requested documentation to begin the process. Id. at ¶ 53. Ultimately, Minnesota sent a check payable to Mr. Flinn in the amount of $275,277.77 -- for the face value of the plan plus interest -- to Oliveira's business address. Id. at ¶¶ 54-59. Up to this point, the Insurers had discussed this matter only with Oliveira and had never contacted Mr. Flinn directly. Id. at ¶¶ 60-69.

Mrs. Flinn's probate proceeding commenced on April 22, 2015, at which time the probate court appointed Mr. Flinn as the personal representative of Mrs. Flinn's estate. Id. at ¶¶ 19, 35. Over the following months, Mr. Flinn discovered a number of assets -- including the Plan -- that were designated to pass to him. Id. at ¶ 37. To Mr. Flinn's dismay, Oliveira had already diverted them from the estate for her use. Id. Mr. Flinn thus filed suit in Massachusetts Superior Court to recover the pilfered assets from Oliveira. Id. at ¶ 38. Oliveira then filed for bankruptcy, which stayed Mr. Flinn's Superior Court suit. Chapter 7 Voluntary Pet., In re Oliveira, No. 15-11599 (Bankr. D.N.H. Oct. 13, 2015), ECF No. 1.

Mr. Flinn sent a demand letter to the Insurers on February 23, 2018 requesting the Plan's benefit amount, plus interest, and attorney's fees as damages for "wrongfully release[ing]" the benefits to Oliveira. Compl. ¶¶ 77-78 & Ex. A. The Insurers declined to offer to settle with Mr. Flinn, and, on March 29, 2018, he commenced this action in Massachusetts Superior Court. Id. at ¶¶ 79-82.

B. Procedural History

Mr. Flinn filed this complaint alleging that the Insurers violated Massachusetts law by mishandling the ministerial task of transferring to him the funds to which he was undisputedly due. Specifically, Mr. Flinn alleged that the Insurers were liable for negligence; constructive trust/breach of fiduciary duty; and violating Massachusetts General Laws chapter 106, section 4-401, chapter 176D, and chapter 93A. Id. at ¶¶ 83-233. The Insurers removed the case to this Court on the basis of federal question jurisdiction on May 3, 2018. Notice ¶¶ 3, 8. A week later, the Insurers moved to dismiss Mr. Flinn's complaint for failure to state a claim, arguing that ERISA preempted his claims. Defs.'s Mot. Dismiss, ECF No. 8. In June 2018, Mr. Flinn not only opposed the Insurers' motion to dismiss, but also filed a cross motion to remand the case for lack of subject matter jurisdiction. Pl.'s Opp'n Mot. Dismiss, ECF No. 14; Pl.'s Mot. Remand, ECF No. 16. After the parties filed reply briefs, this Court held a hearing on both motions in September and took the matter under advisement. Electronic Clerk's Notes, ECF No. 25.

II. ANALYSIS

The Insurers contend that this Court has subject matter jurisdiction over Mr. Flinn's complaint and that ERISA preempts it. While this Court does have diversity jurisdiction over this action, ERISA neither provides the true basis of Mr. Flinn's claims nor does it preempt his claims.

A. Motion to Remand

Because Mr. Flinn questions this Court's subject matter jurisdiction, this Court begins with his motion to remand. The Insurers argue that this Court has subject matter jurisdiction over this case because ERISA completely preempts the complaint's causes of action. Defs.'s Mem. 6. Although the Court concludes that Mr. Flinn correctly points out that this Court lacks federal question jurisdiction, his complaint alleges facts sufficient for this Court to determine that it has diversity jurisdiction over this action. Compl. ¶¶ 1, 3-8, 199. For those reasons, further discussed below, this Court DENIES Mr. Flinn's motion to remand.

1. Standard of Review

Section 1441(a) of chapter 28 of the United States Code allows defendants to remove a case from state court to federal district court so long as the federal district court has original jurisdiction over the action. Where a plaintiff moves to remand a case back to state court for lack of subject matter jurisdiction, the defendant must "make a ‘colorable’ showing that a basis for federal jurisdiction exists[ ] ... from the face of the state court complaint" for the case to remain in federal court. See Danca v. Private Health Care Sys., Inc., 185 F.3d 1, 4 (1st Cir. 1999) (quoting BIW Deceived v. Local S6, Indus. Union of Marine and Shipbuilding Workers of Am., IAMAW District Lodge 4, 132 F.3d 824, 831 (1st Cir. 1997) ). Accordingly, courts apply the "well-pleaded complaint" rule, which requires defendants who base removal on federal question jurisdiction to demonstrate that the plaintiff's "well-pleaded complaint" relies on a federal right to relief, even if federal law may preempt the complaint. See 28 U.S.C. § 1331 ; Franchise Tax Bd. v. Construction Laborers Vacation Tr., 463 U.S. 1, 10, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983).

An exception to this rule exists where the defendant contends that Congress has completely preempted the complaint's state law claims such that the plaintiff's claims are "necessarily federal in character." See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 64–67, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) (holding that federal courts have exclusive subject matter jurisdiction over state law claims falling "within the scope of [ERISA section] 502(a)" (citing 29 U.S.C. §§ 1132(a)(1)(B), 1144(a), (b)(2)(A) ) ). Where defendants invoke this exception in the ERISA context, the Court does not focus on whether the defendants met their burden of proof, but instead analyzes whether or not the complaint falls within the scope of the private right of action created by ERISA. See Danca, 185 F.3d at 5 (citing 29 U.S.C. § 1132(a)(1)(B) ); Nadworny v. Shaw's Supermarkets, Inc., 405 F. Supp. 2d 124, 129 (D. Mass. 2005) (citing Belanger v. Wyman–Gordon Co., 71 F.3d 451, 453 (1st Cir. 1995) ).

2. Analysis

The Insurers contend that ERISA completely preempts Mr. Flinn's claims and thus invite this Court to ground jurisdiction in the presence of a federal question. Defs.'s Mem. 6. The Insurers' reading of ERISA, however, sweeps far...