Hayes v. Reliance Standard Life Ins. Co.

Decision Date17 March 2015
Docket NumberCivil Action No. 3:14–0714.
Citation92 F.Supp.3d 276
PartiesMartin J. HAYES, Plaintiff v. RELIANCE STANDARD LIFE INSURANCE COMPANY, et al., Defendants.
CourtU.S. District Court — Middle District of Pennsylvania

David J. Selingo, Law Offices of David J. Selingo, Kingston, PA, for Plaintiff.

Heather J. Austin, Wilson Elser Moskowitz Edelman & Dicker, LLP, Patricia Fecile–Moreland, Marks, O'Neill, O'Brien & Courtney PC, Christa A. Solfanelli, Marks, O'Neill, O'Brien, Doherty & Kelly, PC, Philadelphia, PA, for Defendants.

MEMORANDUM

MALACHY E. MANNION, District Judge.

Plaintiff is a self-employed, independent general contractor who is a member of the Pennsylvania Builders Association (“PBA”). The PBA offered members the opportunity to apply for short and long term disability (“STD” and “LTD”) insurance and life insurance through an advertisement it sent to its members. Defendant JRG Advisors LLC (“JRG”) was the broker for these insurance policies, and defendant Reliance Standard Life Insurance Company (Reliance) was the issuer/underwriter of these policies. Plaintiff submitted an application for benefits to JRG. He was issued policies for STD, LTD, and life insurance, and timely paid his premiums. Thereafter, plaintiff suffered a rotator cuff injury and became disabled. He received STD benefits, and applied for LTD benefits under his policy. Reliance determined that plaintiff was not eligible for LTD benefits under his policy because the policy covers only employees of the PBA and plaintiff did not submit proof that he was a PBA member. Plaintiff then brought suit for breach of contract, bad faith, and negligence in state court. Defendants, believing that the policies in question are covered by the Employee Retirement Income Security Act, (ERISA), 29 U.S.C. § 1001 et seq., removed the case to this court. At issue is whether ERISA applies to plaintiff's claims, and accordingly, whether the court has subject matter jurisdiction over the case.

I. BACKGROUND

Plaintiff Martin J. Hayes is a general contractor in the Scranton area. He is self-employed and a sole proprietor. He was a member of the PBA, (Doc. 1, at ¶ 8), a non-profit trade association affiliated with the National Organization of Home Builders.1 Plaintiff was not employed by PBA or any of its affiliates. The PBA is a network of local associations that represent the needs of the building industry. Sometime before April 2012, the PBA offered its members the opportunity to apply for STD, LTD, and life insurance policies through its local associations. JRG was the broker chosen to provide insurance benefits offered to the PBA members. Reliance was the insurance company offering the policies. The policies offered by Reliance for PBA members were issued to Builders Services, Inc., and not directly to the PBA. (Doc. 35, at 3). Employers participating in the PBA members policies (“PBA members Plan”) had to pay 100% of the premiums for all eligible employees and, for an employer to participate in the PBA members policies, all full-time employees had to enroll. (Doc. 21, Ex. A, ¶ 's 9–10).

Plaintiff contacted JRG to ask about the insurance benefits the PBA had advertised to its members. JRG had an agreement with the PBA to market and provide insurance products to members of the PBA. Plaintiff submitted an application for benefits to JRG on April 23, 2012. He was issued policies for STD, LTD, and life insurance by defendant Reliance, and timely paid all of his premiums for the policies.2 In July of 2013, plaintiff sustained a rotator cuff tear

in his left shoulder that totally disabled him from working. He made a claim for STD benefits and it was approved by Reliance. Before the STD benefits ended, he applied for LTD benefits. Reliance asked plaintiff to provide his most recent pay stubs, and plaintiff repeatedly informed Reliance that he was a self-employed contractor and could therefore not supply pay stubs. Plaintiff's STD benefits exhausted on October 15, 2013. Reliance advised plaintiff on December 9, 2013, that his LTD claim was denied because the LTD policy for the PBA only covered PBA employees. (Doc. 5, Ex. A). As plaintiff was not a PBA employee, Reliance informed plaintiff that he was not a member of the class eligible for the LTD plan, and that a separate policy issued to “Builders Services, Inc. covered PBA members. (Doc. 21, Ex. C). Plaintiff's claim for LTD benefits was also denied since “both plaintiff and [the] PBA failed to provide any proof that he was a member of the Association.” (Doc. 21, Ex.

A, ¶ 5). In short, plaintiff's claim was denied since Reliance did not receive documentation from the PBA that he was a member of an eligible class. (Doc. 5, Ex. A). The December 9, 2013 letter also advised plaintiff that he could request review of the decision denying his claim for LTD benefits by submitting a written request to Reliance and he was advised that his “written request for review must be submitted within 180 days of your receipt of this letter.” (Doc. 5, Ex. A). Further the letter notified plaintiff as follows:

In the event that your claim is subject to the Employee Retirement Income Security Act of 1974 (the Act), you have the right to bring a civil action under section 502(a) of the Act following adverse benefit determination on review. Your failure to request a review within 180 days of your receipt of this letter may constitute a failure to exhaust the administrative remedies available under the Act, and effect you ability to bring civil action under the Act.
(Id. ).

Since October of 2013, when his STD benefits ended, plaintiff has not had disability benefits and he has continued to be disabled and unable to work. Plaintiff then filed an action in state court against Reliance, JRG, and the PBA3 alleging breach of contract, bad faith, negligence, and detrimental reliance regarding the denial of his LTD claim. The two claims against Reliance are breach of contract and bad faith, Counts I and II, and they relate to the denial of plaintiff's claim for LTD benefits. Plaintiff seeks compensatory damages as well as punitive damages.

This action was removed from the Court of Common Pleas of Lackawanna County with the consent of all defendants. (Doc. 1). Defendant Reliance argues that the state law breach of contract claim asserted in plaintiff's complaint was actually a claim for the denial of benefits due to him under the terms of an employee benefits plan and, as such, was preempted by ERISA. Defendant Reliance filed a motion to dismiss the case, (Doc. 4), which has been briefed. (Docs. 5, 10, and 21). Plaintiff has filed a motion to remand his case to state court, (Doc. 6), which has also been briefed. (Docs. 7, 22, and 23). The court held oral argument on the issues surrounding the pending motions, and ordered supplemental briefing. (Docs. 33, 35, 39, and 41). Defendant JRG filed an answer to plaintiff's complaint with affirmative defenses, including the defense that plaintiff fails to state a claim upon which relief can be granted. (Doc. 20).

II. LEGAL STANDARDS
A. Motion to Remand

Under 28 U.S.C. § 1441(a), “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant ... to the district court of the United States.” Thus, a defendant may remove from state court to federal court any civil case arising under federal law. See 28 U.S.C. § 1441(b).

Upon a motion to remand a removed action, the removing party bears the burden of demonstrating that removal was proper. Scanlin v. Utica First Ins. Co., 426 F.Supp.2d 243, 246 (M.D.Pa.2006) (citing Boyer v. Snap–On Tools Corp., 913 F.2d 108, 111 (3d Cir.1990) ). “The party asserting jurisdiction bears the burden of showing the action is properly before the federal court.” Id.

In considering a motion to remand, the court must construe the statute governingremoval, 28 U.S.C. § 1441, strictly, and against removal. Id. (citing Sikirica v. Nationwide Ins. Co., 416 F.3d 214, 219 (3d Cir.2005) (citations omitted)). Moreover, ruling on the removal of any action is the prerogative of the federal courts. Id. (citing Harrison v. St. Louis & S.F.R. Co., 232 U.S. 318, 329, 34 S.Ct. 333, 58 L.Ed. 621 (1914) (“as the right given to remove by the United States law is paramount, it results that it is also of the essence of the right to remove, that when an issue of whether a prayer for removal was rightfully asked arises, a Federal question results which is determinable by the courts of the United States free from limitation or interference arising from an exertion of state power”)).

The Court in The Bachman Co. v. MacDonald, 173 F.Supp.2d 318, 322 (E.D.Pa.2001), summarized the removal standard as follows:

In general, a party is able to remove a civil action filed in state court to federal court if the federal court would have had original jurisdiction to hear the matter. Lumbermans Mut. Cas. Co. v. Fishman, No. 99–0929, 1999 WL 744016, at *1 (E.D.Pa. Sept. 22, 1999) (citing 28 U.S.C. § 1441(b) (1999) ; Boyer v. Snap–On Tools Corp., 913 F.2d 108, 111 (3d Cir.1990), cert. denied, 498 U.S. 1085, 111 S.Ct. 959, 112 L.Ed.2d 1046 (1991) ). Once the case has been removed, however, “the federal court may remand if there has been a procedural defect in removal.” Kimmel v. DeGasperi, No. 00–143, 2000 WL 420639, at *1 (E.D.Pa. Apr. 7, 2000) (citing 28 U.S.C. § 1447(c) (West 1994)). Remand is mandatory if the court determines that it lacks federal subject matter jurisdiction. Id. (citing 28 U.S.C. § 1447(c) (West 1994)). “When a case is removed from state court, the removing party bears the burden of proving the existence of federal subject matter jurisdiction.” Id. (citing Boyer, 913 F.2d at 111 ).

“Removal statutes are strictly construed by courts and all doubts are resolved in favor of remand.” Id. (citations omitted).

The court in Macias v. California Law Enforcement Ass'n, 2009 WL 1621303, *2 (N.D.Cal. June 5, 2009), considered removal in the...

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    ...federal jurisdiction, upon a motion to remand that same party must demonstrate why removal is proper. Hayes v. Reliance Standard Life Ins. Co., 92 F. Supp. 3d 276, 280 (M.D. Pa. 2015) (citing Scanlin v. Utica First Ins. Co., 426 F. Supp. 2d 243, 246 (M.D. Pa. 2006)). Wilkins opposed removal......
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