Giannetti v. Mahoney

• Decision Date: 23 August 2002
• Docket Number: No. Civ.A. 02-30073-KPN.,Civ.A. 02-30073-KPN.
• Parties: Anthony P. GIANNETTI, D.D.S. and Sandee J. Giannetti, Plaintiffs, v. William E. MAHONEY, Jr., and Mahoney & Associates, Inc., Defendants.
• Court: U.S. District Court — District of Massachusetts

218 F.Supp.2d 8

Anthony P. GIANNETTI, D.D.S. and Sandee J. Giannetti, Plaintiffs, v. William E. MAHONEY, Jr., and Mahoney & Associates, Inc., Defendants.

No. Civ.A. 02-30073-KPN.

United States District Court, D. Massachusetts.

August 23, 2002.

Gary B. Liquori, Fennell, Liquori & Powers, West Springfield, MA, Angelo J. Puppolo, Jr., Fennell, Liquori & Powers, West Springfield, MA, for Plaintiffs.

Richard L. Neumeier, McDonough, Hacking & Neumeier, LLP, Boston, MA, for Defendants.

MEMORANDUM AND ORDER WITH REGARD TO PLAINTIFFS' MOTION TO REMAND (Docket No. 4)

NEIMAN, United States Magistrate Judge.

Anthony Giannetti, D.D.S. ("Dr.Giannetti") and his wife, Sandee Giannetti ("Mrs.Giannetti"), move to remand their complaint against William Mahoney ("Mahoney") and Mahoney & Associates, Inc. (collectively "Defendants") to the Hampden County Superior Court where it originated. Defendants oppose the motion, stating that the complaint filed by the Giannettis (collectively "Plaintiffs") was properly removed to this court insofar as it involves a federal statute, the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. For the reasons explained below, the court finds Defendants' position wanting and, therefore, will allow Plaintiffs' motion.¹

I. BACKGROUND

The background facts are drawn from the complaint. See Brawn v. Coleman, 167 F.Supp.2d 145, 146 (D.Mass.2001). In December of 1996, Dr. Giannetti purchased a group long term disability policy ("the policy") for his employees, including his wife who was a dental hygienist. (Complaint ¶¶ 6 and 12.) Dr. Giannetti intended to purchase the policy, in applicable part, to protect the income generated by Mrs. Giannetti for his small "Mom & Pop" business. (Id. ¶ 9.)

On at least two occasions, Mahoney discussed with Dr. Giannetti the implementation and specifics of coverage pertaining to Mrs. Giannetti. (Id. ¶ 10.) As a result, Plaintiffs assert, Mahoney understood the workings of Dr. Giannetti's business and the need to protect the income generated by Mrs. Giannetti. (Id.) Mahoney indicated that a certain policy underwritten by Reliance Standard Insurance Company ("Reliance") was best for Plaintiffs' needs and would cover the amount of revenue generated should Mrs. Giannetti become totally disabled. (Id. ¶¶ 11 and 13.) Thus, the policy underwritten by Reliance was purchased from Defendants. (Id. ¶¶ 7 and 13.)

The benefits of the Reliance policy were based on a "census" which included an analysis of the "maximum covered earnings" of employees. (Id. ¶ 8.) The census, evidently completed by Plaintiffs, listed Mrs. Giannetti's earnings as $74,000 annually. (Id.) The policy's premiums were also based on the census. (Id.)

As of May 4, 2000, Mrs. Giannetti became totally disabled and was no longer able to perform her duties as a dental hygienist. (Id. ¶ 12.) She timely presented a disability claim to Reliance based on the $74,000 annual figure. (Id. ¶ 13.) Instead of paying that amount, Reliance based its payments on Mrs. Giannetti's actual earnings of $26,000. (Id. ¶ 14.)

Plaintiffs' complaint, filed in the Superior Court on April 17, 2002, consists of eleven state-law claims, each of which targets Defendants' alleged misrepresentations in procuring the Reliance policy.² Although the complaint does not invoke ERISA, Defendants' notice of removal, filed on May 3, 2002 pursuant to 28 U.S.C. § 1441(b), asserts that "this court has original jurisdiction over this action as [it] involves a question of federal law under ERISA." (Docket No. 1 ¶ 5.) On May 16, 2002, Plaintiffs filed the present motion to remand. Defendants thereafter tendered an opposition and, on June 26, 2002, the court heard oral argument.

II. STANDARD OF REVIEW

Pursuant to 28 U.S.C. § 1441(b), a defendant may remove a civil action presenting "a claim or right arising under the Constitution, treaties or laws of the United States." The federal courts have interpreted this statutory grant of power narrowly. Therrien v. Hamilton, 881 F.Supp. 76, 78 (D.Mass.1995) (citation omitted). Accord Kingsley v. Lania, ___ F.Supp.2d ___, 2002 WL 1858039, at *1 (D.Mass. July 25, 2002). Thus, upon a motion to remand, the burden is upon the removing party to show that federal subject matter jurisdiction exists. See BIW Deceived v. Local S6, Indus. Union of Marine & Shipbuilding Workers of Am., 132 F.3d 824, 830-31 (1st Cir.1997); Bally v. Nat'l Collegiate Athletic Ass'n, 707 F.Supp. 57, 58 (D.Mass.1988). Doubts about the propriety of removing an action should be resolved in favor of remand. See Kingsley, 2002 WL 1858039, at *1 (citation omitted).

III. DISCUSSION

The "threshold issue" in removal matters such as this is subject matter jurisdiction. See Danca v. Private Health Care Sys., Inc., 185 F.3d 1, 4 (1st Cir.1999). Although the legal analysis in this regard is somewhat complex, the parties' respective positions can be summarized succinctly. Plaintiffs assert that this court has no original subject matter jurisdiction because their claims raise no federal question. Defendants, in contrast, assert that, because all of Plaintiffs' claims concern the purchase of a group disability plan, ERISA provides a sufficient basis for such jurisdiction. For the reasons described below, the court deems Plaintiffs to have the better argument.

A.

The Supreme Court has made clear that, in determining the propriety of removal, the court must normally "look only to [the] plaintiff's complaint to" determine whether his "claim to relief rests upon a federal right." Hernandez-Agosto v. Romero-Barcelo, 748 F.2d 1, 2 (1st Cir.1984) (emphasis in original) (citing, inter alia, Gully v. First Nat'l Bank, 299 U.S. 109, 112, 57 S.Ct. 96, 81 L.Ed. 70 (1936), Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 10-11, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983), and Taylor v Anderson, 234 U.S. 74, 75-76, 34 S.Ct. 724, 58 L.Ed. 1218 (1914)). See also Danca, 185 F.3d at 4. This "well pleaded complaint" rule has been described by the Court as follows:

[W]hether a case is one arising under the Constitution or a law or treaty of the United States, in the sense of the jurisdictional statute ..., must be determined from what necessarily appears in the plaintiff's statement of his own claim in the bill or declaration, unaided by anything alleged in anticipation of avoidance of defenses which it is thought the defendant may interpose.

Taylor, 234 U.S. at 75-76, 34 S.Ct. 724.

There is no question that, on its face, Plaintiffs' complaint fails to raise a federal claim. As described, the complaint sets forth only state-law causes of action which variously claim that Mahoney and his agency breached their promises to provide Plaintiffs a policy based on "income generated" by Mrs. Gianetti rather than her "earnings." Thus, Defendants' removal runs up against the well pleaded complaint rule which, generally, "prohibits the exercise of federal question jurisdiction if no federal claim appears within the four corners of the complaint." BIW Deceived, 132 F.3d at 831.

However, as the Supreme Court has explained with specific reference to ERISA, "Congress may so completely preempt a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). This "complete preemption" exception to the well pleaded complaint rule, the First Circuit has explained, means that "[w]here a claim, though couched in the language of state law, implicates an area of federal law for which Congress intended a particularly powerful preemptive sweep, the cause is deemed federal no matter how pleaded." Danca, 185 F.3d at 4. This explanation by the First Circuit came in the context of an ERISA case.³

To demonstrate complete preemption here, Defendants would have had to show that Plaintiffs' causes of action, though grounded only in state law, nonetheless fall within the scope of section 502(a) of ERISA, 29 U.S.C. § 1132(a), which sets forth its exclusive civil enforcement provisions. See Danca, 185 F.3d at 5.⁴ "For this to occur, the state law[s] must be properly characterized as ... `alternative enforcement mechanism[s]' of ERISA § 502(a) or the terms of an ERISA plan." Id. (citing New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 658, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995)) (footnote omitted).

Defendants, however, have not raised the complete preemption exception in their memorandum of law. Rather, they discuss the narrower concept of "ERISA preemption" under ERISA section 514, 29 U.S.C. § 1144, and, accordingly, rely only on First Circuit decisions where such preemption, not subject matter jurisdiction, was at issue. See, e.g., Carlo v. Reed Rolled Thread Die Co., 49 F.3d 790 (1st Cir.1995); Vartanian v. Monsanto Co., 14 F.3d 697 (1st Cir.1994). See also Wickman v. Northwestern Nat'l Ins. Co., 908 F.2d 1077 (1st Cir.1990).

It seems obvious to the court why Defendants have not pursued a "complete preemption" theory or otherwise invoked ERISA section 502(a). The state claims raised by Plaintiffs cannot be fairly "characterized as ... `alternative enforcement mechanism[s]' of ERISA § 502(a) or the terms of an ERISA plan." True, the complaint variously refers to the "group disability plan" bought by Dr. Giannetti, (Complaint ¶ 5), which presumably is an ERISA plan, and Defendants attempt to cast the complaint as alleging a miscalculation of benefits under "the plan," (see Defendants' Brief at 7). But what Plaintiffs really challenge in this action is not the plan itself — see emphasized portions of section 502(a) cited at note 4, supra — but the procurement of the plan by an insurance agent and his agency. (See, e.g., Complaint ¶¶ 19, 23, 26, 32, 38, 44, 50, 54, 59, 64 and 69.) This is a crucial distinction.

Moreover, Defendants' reliance on section 514 of ERISA as a...