Hansen v. Continental Ins. Co.
| Decision Date | 10 September 1991 |
| Docket Number | No. 90-2504,90-2504 |
| Citation | 940 F.2d 971 |
| Parties | , 20 Fed.R.Serv.3d 1348, 14 Employee Benefits Ca 1909 Martin HANSEN, Plaintiff-Appellant Cross-Appellee, v. The CONTINENTAL INSURANCE COMPANY and Commercial Insurance Company of Newark, New Jersey, Defendants-Appellees Cross-Appellants. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Douglas E. Hamel, Judson R. Wood, Kimberly Rick, Vinson & Elkins, Houston, Tex., for plaintiff-appellant cross-appellee.
Joseph M. Nixon, Houston, Tex., for defendants-appellees cross-appellants.
Appeals from the United States District Court for the Southern District of Texas.
Before POLITZ, JOHNSON, and GARWOOD, Circuit Judges.
This case calls upon this Court to determine once again whether a policy of insurance is covered by the Employee Retirement Income Security Act, 29 U.S.C. Secs. 1001 et seq. (ERISA). As in so many other cases, much hinges on this determination. If the policy at issue here falls within the purview of ERISA, then it was proper for this case to be decided by the federal district court. If, on the other hand, the policy at issue here was not an ERISA plan, then the federal courts have no jurisdiction of the case; it should not have been removed from the Texas state court where it was filed, and the judgment of the district court must be vacated and the case remanded to that state court. Because we conclude that the plan at issue here does fall within the purview of ERISA, we hold that it was properly removed. Moreover, we hold that the district court correctly resolved all of the issues before it and therefore affirm its judgment in all respects.
The facts of this case are largely uncontested. On September 4, 1988, Martin Hansen's wife died of injuries sustained in an automobile accident. At the time Hansen held a group accidental death and dismemberment insurance policy, issued by Continental. 1 The policy covered Hansen, his wife, and their two children. The policy had been made available to Hansen through a plan of group accident insurance for employees of Fairfield Industries. Participation in the plan was voluntary, and the employees paid all of the premiums themselves, by means of payroll deductions.
Although Fairfield employees were not required to participate in the plan, the summary judgment evidence demonstrates that Fairfield did endorse the plan. A booklet 2 entitled "Group Accident Insurance Plan for the employees of Fairfield Industries" and bearing Fairfield's corporate logo was given to "All Employees." The booklet informed Fairfield employees that
National Safety Council statistics show that over 100,000 people lost their lives in accidents last year. Daily newspaper stories tell us of tragedies involving people at work, play, in airline and automobile crashes and even in home activities that are considered safe.
Th[is] booklet explains our plan of Group Accident Insurance designed to help provide financial security if unexpected death or dismemberment occurs....
While participation is left to the decision of each employee, we ask that you give the program careful consideration. The insurance can be a valuable supplement to your existing coverages.
R. 115-16 (emphasis added). In addition to endorsing the plan to its employees and collecting their premiums and remitting them to Continental, Fairfield also employed a full time "employee benefits administrator" who accepted claim forms from Fairfield employees and submitted them to Continental.
Under the plan, the employee was able to choose the amount of coverage--called the "Principal Sum"--up to a limit of $500,000. Hansen chose a principal sum of $200,000; accordingly, the policy would pay that amount upon his accidental death and a portion of that amount upon the accidental death of his wife or either of his two children. The booklet described the benefits as follows:
You will be insured for the Principal Sum in the amount chosen. Your spouse will be insured as follows:
1. If there are eligible children, your spouse will be insured for an amount equal to 40% of the employee's benefit and an amount equal to 10% of the employee's benefit for each eligible child. Your amount is not reduced.
2. If there are no eligible children your spouse will be insured for an amount equal to 50% of your amount. Your amount is not reduced.
3. If there are eligible children but no spouse, the children will be insured for an amount equal to 15% of the employee's benefit for each eligible child, subject to a maximum of $25,000. Your amount is not reduced.
Upon the death of his wife, Hansen timely filed a claim with the Fairfield employee benefits administrator for $120,000, or 60% of his principal sum. The employee benefits administrator at Fairfield submitted the claim to Continental. In November 1988 Continental responded by tendering to Hansen a check for $80,000, or 40% of the principal sum. Accompanying the check was a letter from Continental stating that while the language of the policy might be "somewhat confusing," Hansen's wife was only insured for 40% of the principal sum. Hansen refused to cash the check, and demanded payment of $120,000. Continental denied the demand.
On March 17, 1989, Hansen filed suit against Continental in the 152nd District Court of Harris County, Texas, alleging various state law causes of action, including violations of Texas Insurance Code article 21.21, the Texas Deceptive Trade Practices Act, the common law duty of good faith and fair dealing, and a breach of contract. Continental removed the case to federal court on the basis of federal question jurisdiction. Continental contended that the group accident insurance plan of Fairfield Industries was an "employee welfare benefit plan" covered by the Employee Retirement Income Security Act of 1974, 29 U.S.C. Sec. 1001, et seq. (ERISA). Having removed the case, Continental moved for summary judgment on the basis of ERISA's preemption of state laws that relate to employee welfare benefit plans. Hansen responded in the alternative. He first argued that the Fairfield plan was not covered by ERISA, and moved to remand the case to state court for lack of federal subject matter jurisdiction. In the alternative Hansen argued that if the plan was covered by ERISA, that summary judgment should be granted in his favor.
The federal district court held that the Fairfield plan was an employee welfare benefit plan covered by ERISA, and therefore refused to remand the case to the state court. The federal district court went on to hold, however, that Continental in fact had violated certain ERISA provisions, and granted summary judgment in favor of Hansen, ordering Continental to pay Hansen $120,000 plus interest and attorney's fees. Continental appeals from that judgment. Hansen cross-appeals, 3 arguing that the district court erred in finding that the Fairfield plan was an employee welfare benefit plan within the meaning of ERISA.
Before turning to the merits of this ERISA dispute, the Court must first address a jurisdictional matter. The district court originally entered its judgment on May 18, 1990. Both parties filed timely notices of appeal. On May 24, 1990, Continental moved for reconsideration. The district court denied this request on June 22, and both parties again filed timely notices of appeal. On July 12 Hansen moved for modification of the judgment to allow additional interest on the judgment, and the district court granted the motion on August 13. Once again, both parties filed timely notices of appeal. On December 7, 1990, however, a panel of this Court determined that the district court had been divested of jurisdiction of this case before it entered its order of August 13. Accordingly, the panel ruled that the order of August 13 was null and void, and remanded the case for reentry of that order. The panel explicitly stated that this Court would retain jurisdiction of the case, holding it in abeyance until the order could be reentered.
The district court subsequently reentered its order modifying the judgment. The parties did not file new notices of appeal. Ordinarily, they would be required to do so. See Fed.R.App.P. 4(a)(4); Zapata Gulf Marine Corp. v. Puerto Rico Maritime Shipping Authority, 925 F.2d 812 (5th Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 2917, 115 L.Ed.2d 1080 (1991). However, since this Court explicitly retained jurisdiction of this case, no new notices of appeal were required to vest this Court with appellate jurisdiction. See Brown v. United Ins. Co. of America, 807 F.2d 1239, 1241 n. 1, 1243 (5th Cir.1987). Consequently, we perceive no jurisdictional defect and may proceed to the merits of the case.
This Court reviews a summary judgment under the same rules that prevail in the district court. Martin v. John W. Stone Oil Dist., Inc., 819 F.2d 547, 548 (5th Cir.1987). That is, this Court asks whether the pleadings, discovery, and affidavits, if any, show that there is no genuine issue as to any material fact, such that the moving party is entitled to judgment as a matter of law. Id. See also Fed.R.Civ.P. 56(c). In making this assessment, the Court must draw all factual inferences in favor of the party opposing summary judgment. Degan v. Ford Motor Co., 869 F.2d 889, 892 (5th Cir.1989).
"Congress enacted ERISA," Judge Godbold has written, "to protect working men and women from abuses in the administration and investment of private retirement plans and employee welfare plans." Donovan v. Dillingham, 688 F.2d 1367, 1370 (11th Cir.1982) (en banc). To that end, ERISA applies to any "employee benefit plan" if that plan is established or maintained by any employer or employee organization engaged in interstate commerce, or in any industry or activity affecting interstate...
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