Gulf Coast Plastic Surgery v. Standard Ins. Co.

• Decision Date: 03 June 2008
• Docket Number: Civil Action No. 07-9363.
• Citation: 562 F.Supp.2d 760
• Parties: GULF COAST PLASTIC SURGERY, INC. and Dr. Edward M. Campbell v. The STANDARD INSURANCE COMPANY, Haywood Hillyer, and American International Specialty Lines Insurance Company.
• Court: U.S. District Court — Eastern District of Louisiana

562 F.Supp.2d 760

GULF COAST PLASTIC SURGERY, INC. and Dr. Edward M. Campbell v. The STANDARD INSURANCE COMPANY, Haywood Hillyer, and American International Specialty Lines Insurance Company.

Civil Action No. 07-9363.

United States District Court, E.D. Louisiana.

June 3, 2008.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

James Frederick Willeford, Jessica Michelle Vasquez, Reagan Levert Toledano, Willeford Law Firm, New Orleans, LA, for Gulf Coast Plastic Surgery, Inc. and Dr. Edward M. Campbell.

George Davidson Fagan, Margaret Frohn Swetman, Leake & Andersson, LLP, New Orleans, LA, Robert J. David, Jr., Michelle K. Buford, Juneau Law Firm, Lafayette, LA, for Haywood Hillyer, and American International Specialty Lines Insurance Company.

ORDER AND REASONS

SARAH S. VANCE, District Judge.

Before the Court is plaintiffs' motion to remand for lack of subject matter jurisdiction. At issue is whether the Employment Retirement Income Security ACT (ERISA), 29 U.S.C. § 1001, et seq., completely preempts plaintiffs' state law claims such that a federal question under ERISA exists. For the following reasons, the Court GRANTS plaintiffs' motion.

I. BACKGROUND

The plaintiffs in this action are Gulf Coast Plastic Surgery, Inc., a Louisiana medical practice, and Dr. Edward M. Campbell, Gulf Coast's sole shareholder and a Louisiana citizen. The defendants are Haywood Hillyer, a Louisiana citizen and plaintiffs' insurance agent, and American International Specialty Lines Insurance Company (AISLIC), Hillyer's professionally liability insurer (collectively "Hillyer"). . Plaintiffs initially also brought claims against a third defendant, Standard Insurance Company, but voluntarily dismissed their claims against Standard shortly after filing suit in state court and before Hillyer removed this case to federal court.

On November 1, 2000, Hillyer, acting as plaintiffs' insurance agent, procured a group, long-term disability insurance policy with limits of $6,000 per month from Standard for plaintiffs. A little less than a year later in October 2001, plaintiffs asked Hillyer to procure an increase in the policy limits from $6,000 to $10,000 per month. Hillyer conferred with plaintiffs on how to effect the increase and later advised plaintiffs that the policy limits had been increased. On October 21, 2005, Dr. Campbell suffered a disabling injury and later applied for full disability benefits under the policy. Standard determined that Dr. Campbell was disabled and entitled to full benefits under the plan but that he was entitled to a maximum of only $6,000 per month, not $10,000. The increase that Hillyer assured plaintiffs had taken effect had in fact not taken effect.

On October 25, 2007, plaintiffs sued Standard, Hillyer, and AISLIC in state court. Plaintiffs brought breach of contract claims against Standard, and against Hillyer they brought tort claims for failure to procure the requested increase in policy limits and negligent misrepresentation. Plaintiffs seek the difference between the coverage received under the disability plan and the coverage limits that Hillyer allegedly assured plaintiffs that he had procured. A month after bringing suit and before Hillyer and AISLIC removed this case to federal court, plaintiffs voluntarily dismissed their claims against Standard. Hillyer then removed this case on federal question grounds. Hillyer contends that the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq., preempts plaintiffs' state law claims. Plaintiffs now move to remand.

II. LEGAL STANDARDS

A. Removal

A defendant may generally remove a civil action filed in state court if the federal court has original jurisdiction over the action. See 28 U.S.C. § 1441(a). The removing party bears the burden of showing that federal jurisdiction exists. See Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir.1995). In assessing whether removal is appropriate, the Court is guided by the principle, grounded in notions of comity and the recognition that federal courts are courts of limited jurisdiction, that removal statutes should be strictly construed. See, e.g., Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir.2002); Neal v. Kawasaki Motors Corp., 1995 WL 419901, at *2 (E.D.La.1995). "[A]ny doubt as to the propriety of removal should be resolved in favor of remand." In re Hot-Hed Inc., 477 F.3d 320, 323 (5th Cir.2007). Though the Court must remand the case to state court if at any time before final judgment it appears that it lacks subject matter jurisdiction, the Court's jurisdiction is fixed as of the time of removal. 28 U.S.C. § 1447(c); Doddy v. Oxy USA Inc., 101 F.3d 448,456 (5th Cir.1996).

B. Federal Question Jurisdiction — ERISA Preemption

Federal district courts have jurisdiction over cases "arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Whether a claim arises under federal law must be determined by referring to the "wellpleaded complaint." Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 804, 808, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986) (citing Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 9-10, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983)). See also Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir.2001). The well-pleaded complaint rule means that the federal question must appear on the face of the complaint. See Torres v. Southern Peru Copper Corp., 113 F.3d 540, 542 (5th Cir.1997). A defendant who seeks removal bears the burden of demonstrating that a federal question exists. See Hot-Hed, 477 F.3d at 323. Because a defendant may remove a case to federal court only if the plaintiff could have brought the action in federal court from the outset, "the question of removal jurisdiction must also be determined by reference to the Svell-pleaded complaint.'" Merrell Dow, 478 U.S. at 808, 106 S.Ct. 3229 (citation omitted). "[A] defendant may not remove a case to federal court unless the plaintiffs complaint establishes that the case `arises under' federal law." Franchise Tax Bd., 463 U.S. at 10, 103 S.Ct. 2841 (emphasis in original). The mere presence of "[a] defense that raises a federal question is inadequate to confer federal jurisdiction." Merrell Dow, 478 U.S. at 808, 106 S.Ct. 3229 (citing Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126); Franchise Tax Bd., 463 U.S. at 12, 13-14, 103 S.Ct. 2841. Therefore, federal question jurisdiction does not exist unless the "vindication of a right under state law necessarily turn[s] on some construction of federal law." Merrell Dow, 478 U.S. at 809,106 S.Ct. 3229.

Here, plaintiffs assert only state law tort claims against non-diverse defendants. On the face of their complaint, a federal question does not exist. But there is an exception to the well-pleaded complaint rule: "`[W]hen a federal statute wholly displaces the state-law cause of action through complete preemption,'" the state claim can be removed. Aetna Health Inc. v. Davila, 542 U.S. 200, 207, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004) (quoting Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 8, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003)). Removal of such a claim is appropriate because "`[w]hen the federal statute completely [preempts] the state law cause of action, a claim which' comes within the scope of that cause of action, even if pleaded in terms of state law, is in reality based on federal law.'" Id. (quoting Beneficial Nat'l Bank, 539 U.S. at 8, 123 S.Ct. 2058.). See also Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 64-65, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) ("Congress may so completely preempt a particular area that any civil complaint raising this select group of claims is necessarily federal in character.") ERISA is one of these statutes. Davila, 542 U.S. at 207, 124 S.Ct. 2488.

ERISA may preempt state law claims in one of two ways. See Giles v. NYLCare Health Plans, Inc., 172 F.3d 332, 336 (5th Cir.1999) (citing McClelland v. Gronwaldt, 155 F.3d 507 (5th Cir.1998), overruled in part on other grounds by Arana v. Ochsner Health Plan, 338 F.3d 433, 440 n. 11 (5th Cir.2003)); Cotner v. Hartford Life and Annuity Ins. Co., Civ. A. No. 3:07-CV-0487-G, 2008 WL 59174, at *3 (N.D.Tex. Jan. 4, 2008). First, it may "occupy a particular field, resulting in complete preemption under [ERISA] § 502(a), 29 U.S.C. § 1132(a)." Giles, 172 F.3d at 336 (citing Met. Life Ins., 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55; McClelland, 155 F.3d at 516-17). See also Arana, 338 F.3d at 437. Even if a complaint does not refer to federal law, a federal statute that completely preempts a field effectively "`recharacterizes' preempted state law claims as `arising under' federal law for the purposes of making removal available to the defendant." McClelland, 155 F.3d at 516. See also Giles, 172 F.3d at 337 n. 7. "[C]omplete preemption exists when a remedy falls within the scope of or is in direct conflict with ERISA § 502(a), and therefore is within the jurisdiction of federal court." McGowin v. ManPower Int'l, Inc., 363 F.3d 556, 559 (5th Cir.2004). ERISA § 502(a) provides several causes of action that may be brought by an ERISA plan beneficiary, participant, the Secretary of Labor, or plan administrator or fiduciary. Relevant to this case is ERISA § 502(a)(1)(B), which provides that "[a] civil action may be brought by a participant or beneficiary ... to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). Any state cause of action that seeks the same relief as a cause of action authorized by ERISA § 502(a), "regardless of how artfully pleaded as a state action," is completely preempted. Giles, 172 F.3d at 337. Thus, if a plan beneficiary or participant seeks to recover benefits from an ERISA plan under a state law cause of action, those claims are completely...