Gorman v. Life Ins. Co. of North America

Decision Date27 March 1991
Docket NumberNo. C-7806,C-7806
Citation811 S.W.2d 542
PartiesPamela Chambers GORMAN, Individually and as Administratrix of the Estate of Dale Owen Gorman, Deceased, and as Next Friend of Amanda Marie Gorman, a Minor, Petitioners, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, and Tenneco, Inc., Respondents.
CourtTexas Supreme Court

GONZALEZ, Justice.

The opinion of January 30, 1991 is withdrawn and the following is substituted. Petitioners' motion for rehearing is granted in part and overruled in part. Respondent Life Insurance Company of North America's motion for rehearing is overruled.

The primary issue in this appeal involves determining the effect of the preemption provision of the federal Employee Retirement Income Security Act of 1974 ("ERISA"). 29 U.S.C. §§ 1001-1461 (1988). Beneficiaries under an accidental death policy that formed part of an employee benefit plan brought suit against the employer and the benefit plan insurer for various state After concluding that there was no evidence to support the jury question addressing the key issue of whether Gorman was working at the time of his accident, 2 the trial court granted the defendants' motion for judgment non obstante verdicto and ordered that plaintiffs take nothing. The court of appeals, reasoning that the trial court lacked subject-matter jurisdiction of the plaintiffs' state law claims, held that 1) the trial judge erred in entering the judgment n.o.v.; and 2) the plaintiffs failed to prove that they were entitled to recover under the provisions of ERISA. 3 Although the court of appeals reversed the judgment of the trial court, for different reasons it also rendered judgment that the plaintiffs take nothing. 752 S.W.2d 710. We reverse in part the judgment of the court of appeals and affirm in part.

law causes of action 1 after a claim for benefits was denied. After a trial before a jury, the plaintiffs were awarded substantial damages.


Dale Gorman was killed in an automobile collision in Houston. He was an employee of Tenneco, Inc., and was insured under an insurance policy issued by Life Insurance Company of North America ("LINA"); the policy was provided for Gorman by Tenneco. Pamela Chambers Gorman, his wife, and Amanda Marie Gorman, his minor daughter, the designated beneficiaries under this policy, claimed that Gorman's death was covered under the policy and sought benefits. LINA, acting upon Tenneco's recommendation, denied coverage. Thereafter, petitioners filed this lawsuit against both Tenneco and LINA alleging numerous causes of action. On appeal, based on the jury verdict, they seek judgment against Tenneco for breach of fiduciary duties and against LINA for breach of contract, violation of Texas Insurance Code article 3.62 and gross negligence. Among the items of damages they seek to recover are attorney's fees, prejudgment interest, mental anguish and exemplary damages for gross negligence.

Tenneco and LINA contend that petitioners' causes of actions are preempted by ERISA because they "relate to" an employee benefit welfare plan organized pursuant to the authority and requirements of ERISA. See 29 U.S.C. § 1144(a) (1988); Cathey v. Metropolitan Life Ins. Co, 805 S.W.2d 387, 389-90 (Tex.1991). In the event the court finds that petitioners' claims are not preempted, the respondents also argue that there was no evidence to support the jury finding that Dale Gorman was "in travel or sojourn on the business of Tenneco" at the time of his accident.

ERISA explicitly supersedes or "preempts" state laws to the extent that they "relate to" employee benefit plans not exempt from federal regulation. Id. This preemption provision is modified by a so-called "saving clause" which provides that state laws regulating insurance, banking, or securities are not preempted. See id. § 1144(b)(2)(A). Because ERISA's preemption and saving clauses "perhaps are not a model of legislative drafting," disputes as to the nature of their effect are becoming commonplace. Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739, 105 S.Ct. 2380, 2388, 85 L.Ed.2d 728 (1985). In the instant case, we are called upon to decide the nature of ERISA's preemptive effect.

At the heart of the present dispute is whether, given the facts of this case, ERISA preemption implicates the subject-matter jurisdiction of the court or merely affects which law is to be used in the case. A preemption argument that affects the choice of forum rather than the choice of law is not waivable and can be raised for the first time on appeal. See International Longshoremen's Ass'n v. Davis, 476 U.S. 380, 397, 106 S.Ct. 1904, 1915, 90 L.Ed.2d 389 (1986); Gilchrist v. Jim Slemmons Imports, Inc., 803 F.2d 1488, 1497 (9th Cir.1986); see also Dueringer v. General Am. Life Ins. Co., 842 F.2d 127, 130 (5th Cir.1988); Castillo v. Neely's TBA Dealer Supply, Inc., 776 S.W.2d 290, 292 (Tex.App.--Houston [1st Dist.] 1989, writ denied); Great N. Am. Stationers, Inc. v. Ball, 770 S.W.2d 631, 632 (Tex.App.--Dallas 1989, writ dism'd as moot).

LINA and Tenneco contend that the preemptive effect of ERISA in this case was invoked by their repeated objections in the trial court that petitioners' causes of action were preempted by ERISA, and that its invocation deprived the trial court of subject-matter jurisdiction over the case. Alternatively, both LINA and Tenneco maintain that, because ERISA's preemptive effect deprives the trial court of subject-matter jurisdiction, they need not have raised ERISA preemption at trial--matters going to the subject-matter jurisdiction of the court may be raised for the first time on appeal. See Texas Employment Comm'n v. International Union of Elec., Radio & Mach. Workers Local 782, 163 Tex. 135, 352 S.W.2d 252, 253 (1961).

Petitioners assert that ERISA preemption, to the extent that it is applicable, merely affects which law is to be used in the case; it does not deprive the court of subject-matter jurisdiction. They reason that unless the cause of action alleged is created by ERISA or contains a right or immunity created by ERISA as an element, the suit is not brought "under" ERISA 4 and thus is not within the exclusive jurisdiction of the federal courts. Accordingly, they maintain that ERISA must be pleaded and proved or it is waived.


Sections 1132(a)(1)(B) and (e) of ERISA provide that state courts of competent jurisdiction and district courts of the United States have concurrent jurisdiction of actions by a beneficiary: 1) to recover benefits due under the terms of the plan; 2) to enforce rights under the plan; or 3) to clarify rights to future benefits. Any other civil ERISA action is within the exclusive jurisdiction of the federal courts. 29 U.S.C. § 1132(e)(1) (1988). Accordingly, when a state court suit alleged in terms of a state common-law or statutory cause of action "relates to" an employee welfare benefit plan, ERISA may preempt the state law in favor of federal law. If, however, the state-law cause of action falls within

the scope 5 of one of the three aforementioned classes of actions that are not entrusted exclusively to federal court jurisdiction, the state court has concurrent jurisdiction over the action even in the face of a timely and successful assertion of ERISA preemption and, in the absence of removal to the federal courts, may properly decide the case under the provisions of ERISA. See Ames v. Ames, 776 S.W.2d 154, 157-58 (Tex.1989), cert. denied, 494 U.S. 1080, 110 S.Ct. 1809, 108 L.Ed.2d 939 (1990); Commercial Life Ins. Co. v. Superior Court, 47 Cal.3d 473, 253 Cal.Rptr. 682, 764 P.2d 1059 (Cal.1988), cert. denied sub nom. Juliano v. Commercial Life Ins. Co., 490 U.S. 1075, 109 S.Ct. 2087, 104 L.Ed.2d 651 (1989); Duffy v. Brannen, 148 Vt. 75, 529 A.2d 643, 649-50 (1987); Rodriguez v. Travelers Ins. Co., 54 Wash.App. 725, 775 P.2d 973, 974-75, review denied, 113 Wash.2d 1022, 781 P.2d 1323 (1989). An assertion of ERISA preemption in such a case would affect only the choice of law, not the choice of forum. See Gilchrist, 803 F.2d at 1497; Ames, 776 S.W.2d at 157-58.


Petitioners contend that ERISA preemption is an affirmative defense. Pleading an affirmative defense permits introduction of evidence which does not tend to rebut the factual propositions asserted in the plaintiff's case, but which seeks to establish an independent reason why the plaintiff should not recover. 2 R. MCDONALD, TEXAS CIVIL PRACTICE § 7.34.1 (1982); see also Moulton v. Alamo Ambulance Serv., Inc., 414 S.W.2d 444, 448 (Tex.1967); W.L. Moody & Co. v. Rowland, 100 Tex. 363, 99 S.W. 1112, 1115 (1907). In short, an affirmative defense is one of avoidance, rather than a defense in denial.

A number of federal courts have held that ERISA preemption, when it operates to displace state law in favor of federal law, is waived if not timely asserted as an affirmative defense. See In re HECI Exploration Co., 862 F.2d 513, 518-20 (5th Cir.1988); Dueringer v. Gen. Am. Life Ins. Co., 842 F.2d 127, 129-30 (5th Cir.1988); Gilchrist, 803 F.2d at 1497; Johnson v. Armored Transp., Inc, 813 F.2d 1041, 1043-44 (9th Cir.1987); Rehabilitation Inst. v. Equitable Life Assurance Soc'y of the U.S., 131 F.R.D. 99, 100-01 (W.D.Pa.1990); see also Castillo, 776 S.W.2d at 293; Hughes v. Blue Cross, 215 Cal.App.3d 832, 263 Cal.Rptr. 850, 861 (1989), cert. dismissed, 495 U.S. 944, 110 S.Ct. 2200, 109 L.Ed.2d 527 (1990); Hubred v. Control Data Corp., 442 N.W.2d 308, 310 n. 1 (Minn.1989). We are in accord and hold that, where ERISA's preemptive effect would result only in a change of the applicable law, 6 preemption is an affirmative defense 7 which must be set forth in the defendant's answer or it is waived. 8


We must now decide whether petitioners' state-law claim against Tenneco falls within the scope of section Pe...

To continue reading

Request your trial
128 cases
  • In re Acad., Ltd.
    • United States
    • Texas Supreme Court
    • June 25, 2021
    ..."would result only in a change of the applicable law" the court must utilize to resolve the dispute. See Gorman v. Life Ins. Co. of N. Am. , 811 S.W.2d 542, 546 (Tex. 1991). By contrast, the PLCAA tells the court when it is (and is not) available as a forum to decide certain disputes under ......
  • Missouri Pacific Railroad Company v. Limmer, No. 14-02-00688-CV (TX 10/5/2004)
    • United States
    • Texas Supreme Court
    • October 5, 2004
    ...jurisdiction depends on whether the particular claim falls under the exclusive jurisdiction provision. See Gorman v. Life Ins. Co. of N. Am., 811 S.W.2d 542, 546-47 (Tex. 1991). If the claim is under the exclusive jurisdiction provision, a state court has no subject matter jurisdiction to h......
  • TYCO Valves & Controls, L.P. v. Colorado
    • United States
    • Texas Court of Appeals
    • January 19, 2012
    ...federal law. Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63–67, 107 S.Ct. 1542, 1546–48, 95 L.Ed.2d 55 (1987); Gorman v. Life Ins. Co. of N. Am., 811 S.W.2d 542, 545 (Tex.1991); Ambulatory Infusion, 262 S.W.3d at 113. Thus, to determine whether a state law has the forbidden connection to E......
  • Kiefer v. Continental Airlines, Inc., 01-91-01286-CV
    • United States
    • Texas Court of Appeals
    • August 11, 1994
    ...court denied the Kiefers' motion, and this appeal followed. Federal preemption is an affirmative defense. See Gorman v. Life Ins. Co. of North America, 811 S.W.2d 542, 546 (Tex.), cert. denied, 502 U.S. 824, 112 S.Ct. 88, 116 L.Ed.2d 60 (1991) (preemption under Employee Retirement Income Se......
  • Request a trial to view additional results
4 books & journal articles
  • Initial Client Contacts (Plaintiff)
    • United States
    • James Publishing Practical Law Books Texas DTPA Forms & Practice
    • March 31, 2016
    ...employee benefit plan. Cathey v. Metropoli tan Life Ins. Co. , 805 S.W.2d 387 (Tex. 1991); see also Gorman v. Life Ins. Co. of No. Am. , 811 S.W.2d 542 (Tex. 1991); Pan Am. Life Ins. Co. v. Erbauer Con str. Co. , 805 S.W.2d 395 (Tex. 1991); Forbau v. Aetna Life Ins. Co. , 876 S.W.2d 132 (Te......
  • Appendix - Desk Book
    • United States
    • James Publishing Practical Law Books Texas DTPA Forms & Practice
    • March 31, 2016
    ...defense in this case was jurisdic tional and could be raised for the first time on appeal. Gorman v. Life Ins. Co. of North America, 811 S.W.2d 542 (Tex. 199 1). The Supreme Court held that when ERISA preemption is asserted as a de fense to a claim within the concurrent jurisdic tion of the......
  • Table of Cases
    • United States
    • James Publishing Practical Law Books Texas DTPA Forms & Practice
    • March 31, 2016
    ...836 S.W.2d 664, 671-672 (Tex. App.—Corpus Christi 1992), aff’d, 879 S.W.2d 47 (Tex. 1994), §1.02.15 Gorman v. Life Ins. Co. of No. Am. , 811 S.W.2d 542 (Tex. 1991), § Gormley v. Stover , 907 S.W.2d 448 (Tex. 1995), §2.02.1 Gourrier v. Joe Meyers Motors , 115 S.W.3d 570 (Tex. App.—Ho......
  • Chapter 13-5 Affirmative Defenses
    • United States
    • Full Court Press Texas Commercial Causes of Action Claims Title Chapter 13 Pleading Burdens*
    • Invalid date
    ...Tex. Tax Sols., LLC v. City of El Paso, 593 S.W.3d 903, 909 (Tex. App.—El Paso 2019, no pet.) (quoting Gorman v. Life Ins. Co. of N. Am., 811 S.W.2d 542, 546 (Tex. 1991)).[81] Simmons v. Compania Financiera Libano, S.A., 830 S.W.2d 789, 792 ((Tex. App.—Houston [1st Dist.] 1992, writ denied)......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT