Gabner v. Metropolitan Life Ins. Co.

• Decision Date: 27 August 1996
• Docket Number: No. 1:95-CV-927.,1:95-CV-927.
• Citation: 938 F. Supp. 1295
• Parties: William GABNER, et al. v. METROPOLITAN LIFE INS. CO., et al.
• Court: U.S. District Court — Eastern District of Texas

938 F. Supp. 1295

William GABNER, et al. v.METROPOLITAN LIFE INS. CO., et al.

No. 1:95-CV-927.

United States District Court, E.D. Texas, Beaumont Division.

August 27, 1996.

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Ethan L. Shaw, Moore Landrey Garth Jones Burmeister & Jones, Beaumont TX, David L. Sheller, Houston, TX, for plaintiffs.

Robert J. King, Liddell Sapp Zivley Hill & LaBoon, Houston, TX, for defendants.

MEMORANDUM RE: PLAINTIFFS' MOTION TO REMAND

HINES, United States Magistrate Judge.

This suit was filed originally in the 136th Judicial District Court, Jefferson County, Texas on September 29, 1995, and removed to this court on October 16, 1995.Pending is plaintiff's motion to remand.

The motion to remand was referred to the undersigned United States Magistrate Judge by United States District JudgeThad Heartfield for determination by order dated December 7, 1995.A hearing on plaintiffs' motion to remand was set for early February 1996, but was continued after leave was granted to the Secretary of Labor to file a brief as amicus curiae in support of plaintiffs' motion to remand.A hearing was thereafter convened on March 4, 1996.The motion only recently has become ripe for decision.¹

I.Factual Background

William Gabner("Gabner"), a Texas resident, resides in Humble.Gabner was employed by Amoco and participated in Amoco's employee welfare benefit plan.Amoco offered its employees life insurance coverage through a group policy issued by Metropolitan Life Insurance Company("MetLife").Amoco provided basic coverage at no cost, and employees could opt to purchase supplemental insurance.While employed by Amoco, Gabner received $53,000 basic coverage, and elected for supplemental coverage of $53,000, bringing the face amount of the policy to $106,000.

The policy provided that within 31 days of cessation of the employee's life insurance policy due to termination of employment, the employee could apply to convert the policy to an individual policy of life insurance at a face amount less than or equal to the amount previously obtained under the group policy.The conversion provision allowed terminated employees to obtain policies without medical examination.Further, premiums were specific to the conversion policies and were set at levels more favorable than those available to persons seeking life insurance without the benefit of a conversion right.Amoco paid for administrative costs in connection with conversion rights.

After his termination from Amoco on August 15, 1991, plaintiff within 31 days filed an application for conversion with MetLife's central head office in Tulsa, Oklahoma.He was referred to a local agent in Humble, Texas, defendantBarbara Patterson("Patterson").Patterson met with Gabner and his wife and explained available options.Gabner and his wife were shown at least three individual policies, one of which was the conversion policy.Gabner purchased the conversion policy, with an annual premium of $2493.90, and made payments in 1991, 1992, and 1993.He allowed the policy to lapse in 1994.

Gabner now claims defendants fraudulently induced him to purchase the conversion policy by representing that its qualities were superior to the qualities of the other policies presented, and that it was less expensive than the other policies.Specifically, he claims he was fraudulently induced by representations of MetLife agents and MetLife advertising that the policy he purchased would be paid up in 10 years.He then learned after purchase that the policy would not be paid for in ten years, and that, in fact, at least one nonconversion policy was cheaper.Gabner has never made a claim for benefits under the policy.²

Gabner's original petition in state court asserts causes of action under the Texas Deceptive Trade Practices-Consumer Protection Act (DTPA)³andArticle 21.21 of the Texas Insurance Code.The petition also alleges common law causes of action, viz., violation of the duty of good faith and fair dealing, fraud and fraudulent inducement against MetLife and agents Patterson and Pamela Carroll.⁴Gabner seeks to obtain either the product he alleges he contracted for, or rescission of the individual life insurance contract and return of funds paid.In addition, he seeks punitive damages, statutory trebling of damages under the DTPA, and attorney's fees.

II.The Motion to Remand

Plaintiffs moved to remand the case, arguing that because Gabner makes no claim for benefits under an employee benefit plan governed by ERISA⁵ but only brings state law claims the dispute does not affect relations among principal ERISA entities and is not preempted.

The Secretary of Labor was granted leave to file a brief as amicus curiae.The Secretary argued that whether Gabner's claims are "preempted" under ERISA § 514,29 U.S.C. § 1144, because they"relate to" an ERISA plan, is irrelevant to determination of the motion to remand.Rather, the proper focus, the Secretary argued, is whether the claims fall within ERISA's civil enforcement provisions, ERISA § 502(a),29 U.S.C. § 1132(a).The Secretary argues that Gabner's claims fall within none of the civil enforcement provisions.

While acknowledging the correctness of the Secretary's focus on the civil enforcement provisions, defendants disagree that none of those provisions is applicable.

III.Ordinary and Complete Preemption Under ERISA

A.Preemption Generally

Under the Supremacy Clause of the United States Constitution,U.S. CONST. art. VI, cl. 2, state laws that interfere with or are contrary to federal law are invalidated.Gibbons v. Ogden,22 U.S. (9 Wheat.) 1, 6 L.Ed. 23(1824).Under the Supremacy Clause, Congress may preempt a field — and supersede any state regulation in that area — in one of three ways.First, Congress may expressly state that it intends to preempt a field.Second, preemption of a whole field will be inferred when the domain is one in which the scheme of federal regulation is comprehensive and "`the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject.'"Hillsborough County, Fla. v. Automated Med. Labs., Inc.,471 U.S. 707, 713, 105 S.Ct. 2371, 2375, 85 L.Ed.2d 714(1985)(quotingRice v. Santa Fe Elevator Corp.,331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447(1947));California Fed. Savings & Loan Ass'n v. Guerra,479 U.S. 272, 280-81, 107 S.Ct. 683, 689, 93 L.Ed.2d 613(1987).Finally, when Congress has not completely displaced all systems of state regulation, federal preemption will be found on those specific issues for which there is an actual conflict between state and federal law and for which compliance with both is an impossibility.Florida Lime & Avocado Growers, Inc. v. Paul,373 U.S. 132, 142-43, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248(1963).

ERISA preempts virtually all state laws relating to employee benefit plans.⁶ERISA contains an express preemption provision, ERISA § 514(a), which is broadly worded: "The provisions of this subchapter ... shall supersede any and all State laws insofar as they may now or hereafter relate to an employee benefit plan...."A state law "relates to" an employee benefit plan "`if it has connection with or reference to such a plan.'"Fort Halifax Packing Co. v. Coyne,482 U.S. 1, 8, 107 S.Ct. 2211, 2215, 96 L.Ed.2d 1(1987)(quotingShaw v. Delta Air Lines, Inc.,463 U.S. 85, 96-97, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490(1983)).The breadth of the preemption provision was designed to supplant all state regulation of employee benefit plans in favor of a uniform federal system.FMC Corp. v. Holliday,498 U.S. 52, 58, 111 S.Ct. 403, 407, 112 L.Ed.2d 356(1990).Only certain state criminal laws and state laws regulating insurance, banking, or securities are exempted from the virtual wholesale preemption.29 U.S.C. § 1144(b)(2)(B)(4), (b)(2)(A).

B.Removal and the Well-Pleaded Complaint Rule

It does not follow, however, that any state court petition which alleges state law violations but which implicates, at some level, an employee benefit plan is removable from state to federal court.Removal and preemption are separate concepts.

Removal of an action involving an ERISA-governed plan turns on the application of the well-pleaded complaint doctrine and its corollary, the complete preemption exception.Under the well-pleaded complaint doctrine, a cause of action arises under federal law, and is properly removable, only if a federal question is presented on the face of the complaint as an essential element of the claim.See, e.g., Metropolitan Life Ins. Co. v. Taylor,481 U.S. 58, 63, 107 S.Ct. 1542, 1546, 95 L.Ed.2d 55(1987);Franchise Tax Bd. v. Construction Laborers Vacation Trust,463 U.S. 1, 10-11, 103 S.Ct. 2841, 2846-47, 77 L.Ed.2d 420(1983).Even if a defense to a state law action implicates federal law, as does preemption, the action is not removable, because the defense generally does not appear as an element of the complaint.Gully v. First Nat'l Bank,299 U.S. 109, 115-18, 57 S.Ct. 96, 98-100, 81 L.Ed. 70(1936).⁷"Put another way, federal preemption that merely serves as a defense to a state law action (sometimes called `conflict preemption') does not confer federal question jurisdiction."Rice v. Panchal,65 F.3d 637, 639(7th Cir.1995).

However, a narrow exception to the well-pleaded complaint rule exists when Congress has evinced an intent to so completely preempt a particular area that any civil complaint raising that select group of claims is to be viewed as arising under federal law and, therefore, is necessarily federal in character.Taylor,481 U.S. at 63-64, 107 S.Ct. at 1546."If a state law claim has been `displaced' and therefore completely preempted by § 502(a), then a plaintiff's state law claim is properly `recharacterized' as one arising under federal law.⁸ ...Thus, complete preemption under § 502(a) creates federal question jurisdiction whereas...