Lain v. Unum Life Ins. Co. of America

• Decision Date: 22 October 1998
• Docket Number: No. Civ.A. H-97-3560.,Civ.A. H-97-3560.
• Citation: 27 F.Supp.2d 926
• Parties: Ellen LAIN, Plaintiff, v. UNUM LIFE INSURANCE COMPANY OF AMERICA, Defendant.
• Court: U.S. District Court — Southern District of Texas

27 F.Supp.2d 926

Ellen LAIN, Plaintiff, v. UNUM LIFE INSURANCE COMPANY OF AMERICA, Defendant.

No. Civ.A. H-97-3560.

United States District Court, S.D. Texas, Houston Division.

October 22, 1998.

Paul D. Clote, Paul D. Clote and Associates, Houston, TX, Marc E. Grossberg, Schlanger Mills Mayer & Grossberg, Houston, TX, Michael D. Stein, Schlaper Mills Mayer & Grossberg, Houston, TX, for Ellen Lain.

Doug K. Butler, Figari and Davenport, Dallas, TX, for UNUM Life Insurance of America.

MEMORANDUM OPINION AND ORDER

LAKE, District Judge.

Pending before the court are Plaintiff's Motion for Partial Summary Judgment (Docket Entry No. 16) and Defendant's Motion to Strike Jury Demand (Docket Entry No. 21). For the reasons explained below plaintiff's motion will be denied and defendant's motion will be granted.

I. BACKGROUND

Plaintiff Ellen Lain is a former partner in the law firm of Schlanger, Mills, Macer & Grossberg (formerly known as Schlanger, Cook, Cohn, Mills & Grossberg).¹ As a partner Lain had the authority to act on behalf of the firm in furtherance of its business in the same manner as the other partners in the firm, and she shared in the firm's profits and losses. Lain withdrew from the partnership on October 30, 1995.

Sometime in 1988 or 1989 the law firm selected defendant UNUM Life Insurance Company of America ("UNUM") as the firm's long-term disability insurance carrier. As a partner in the firm Lain participated in the firm's decisions to select UNUM, to insure all employees, and to make insurance for partners optional at their choice and cost, and the firm's choices of the length of the waiting period, the benefit levels under the policy, minimum requirements for coverage, and the definition of disability for each class covered by the policy. Lain specifically recalls discussions in the firm's conference room regarding the proposed UNUM policy and the final vote to adopt the plan.² The long-term disability plan did not automatically cover partners; however, partners could become covered by paying their own premiums.³ Lain enrolled in the plan as a partner in the law firm.

Lain submitted a claim for benefits to UNUM in September of 1995.⁴ UNUM denied it. On September 29, 1997, Lain filed suit against UNUM in the 164th District Court of Harris County. UNUM removed the action to this court on October 28, 1997, and filed an answer and counterclaim on November 6, 1997. On July 15, 1998, Lain filed an amended complaint asserting seven causes of action:

(1) breach of contract,

(2) equitable or promissory estoppel,

(3) common-law fraud and intentional mis-representation,

(4) violation of the Texas Deceptive Trade Practices Act,

(5) violation of article 21.21 of the Texas Insurance Code,

(6) breach of fiduciary duty and breach of the duty of good faith and fair dealing, and

(7) in the event that these claims are preempted, denial of benefits and breach of fiduciary duty under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461.

On August 19, 1998, Lain filed a motion for partial summary judgment asking this court to declare that ERISA does not preempt her state-law claims against UNUM. On September 24, 1998, UNUM filed a motion to strike Lain's jury demand. Because the court's ruling on the motion to strike depends upon whether ERISA preempts Lain's state law claims, the court first will evaluate Lain's motion for partial summary judgment.

II. SUMMARY JUDGMENT STANDARD

Rule 56 of the Federal Rules of Civil Procedure governs the propriety of summary judgment. Summary judgment should be granted if the record, taken as a whole, "together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); New York Life Ins. Co. v. Travelers Ins. Co., 92 F.3d 336, 338 (5th Cir.1996); Rogers v. International Marine Terminals, Inc., 87 F.3d 755, 758 (5th Cir. 1996). The Supreme Court has interpreted the plain language of Rule 56(c) as mandating "the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); see Gunaca v. Texas, 65 F.3d 467, 469 (5th Cir.1995).

A party moving for summary judgment "must `demonstrate the absence of a genuine issue of material fact,' but need not negate the elements of the nonmovant's case." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc) (quoting Celotex, 106 S.Ct. at 2553). "The movant accomplishes this by informing the court of the basis for its motion, and by identifying portions of the record which highlight the absence of genuine factual issues." Rizzo v. Children's World Learning Ctrs., Inc., 84 F.3d 758, 762 (5th Cir.1996) (citing Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir. 1992)). If the moving party "fails to meet this initial burden, the motion must be denied, regardless of the nonmovant's response." Little, 37 F.3d at 1075.

If, however, the moving party meets this burden, Rule 56(c) requires the nonmovant to go beyond the pleadings and to show by affidavits, depositions, answers to interrogatories, admissions on file, or other admissible evidence that specific facts exist over which there is a genuine issue for trial. EEOC v. Texas Instruments Inc., 100 F.3d 1173, 1180 (5th Cir.1996); Wallace v. Texas Tech Univ., 80 F.3d 1042, 1046-47 (5th Cir.1996). The nonmovant's burden may not be satisfied by conclusory allegations, unsubstantiated assertions, metaphysical doubt as to the facts, or a mere scintilla of evidence. Wallace, 80 F.3d at 1047; Little, 37 F.3d at 1075.

Factual controversies are to be resolved in favor of the nonmovant, "but only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." Wallace, 80 F.3d at 1047; accord, S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 494 (5th Cir.1996). The court will not, "in the absence of any proof, assume that the nonmoving party could or would prove the necessary facts." McCallum Highlands Ltd. v. Washington Capital Dus, Inc., 66 F.3d 89, 92 (5th Cir.), as modified, 70 F.3d 26 (5th Cir.1995). Unless there is sufficient evidence for a reasonable jury to return a verdict in the nonmovant's favor, there is no genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986); Texas Instruments Inc., 100 F.3d at 1179.

When affidavits are used to support or oppose a motion for summary judgment they "shall be made on personal knowledge, shall set forth facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." Fed.R.Civ.P. 56(e); Beijing Metals & Minerals Import/Export Corp. v. American Bus. Ctr., Inc., 993 F.2d 1178, 1182 (5th Cir.1993). Affidavits that are not based on personal knowledge or that are based merely on information and belief do not satisfy the requirements of Rule 56(e), and those portions of an affidavit that do not comply with Rule 56(e) are not entitled to any weight and cannot be considered in deciding a motion for summary judgment. Richardson v. Oldham, 12 F.3d 1373, 1378-79 (5th Cir.1994). Neither shall conclusory affidavits suffice to create or negate a genuine issue of fact. McCallum Highlands, Ltd., 66 F.3d at 92; Travelers Ins. Co. v. Liljeberg Enters., Inc., 7 F.3d 1203, 1207 (5th Cir.1993); Salas v. Carpenter, 980 F.2d 299, 305 (5th Cir.1992).

III. DISCUSSION

Lain asks the court to declare that the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461, does not preempt her state-law claims. When defendants assert a preemption defense, they must overcome a presumption against preemption. See California Div. of Labor Standards Enforcement v. Dillingham Constr., N.A., Inc., 519 U.S. 316, 117 S.Ct. 832, 838, 136 L.Ed.2d 791 (1997). ERISA § 514(a) provides:

Except as provided in subsection (b)⁵ of this section, the provisions of this subchapter [ERISA subch. I, §§ 2-515, 29 U.S.C. §§ 1001-1145] and subchapter III [ERISA §§ 4001-4402, 29 U.S.C. §§ 1301-1461] shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title....

29 U.S.C. § 1144(a). To prevail on the issue of ERISA preemption a defendant must establish that the plan at issue is an employee benefit plan covered by ERISA and that the state-law claims involved in the lawsuit "relate to" that plan. See Vega v. National Life Ins. Servs., Inc., 145 F.3d 673, 675-76 (5th Cir.1998) (explaining that ERISA would not preempt unless "there exist[ed] a valid ERISA plan"); Weaver v. Employers Underwriters, Inc., 13 F.3d 172, 175-76 (5th Cir. 1994) (explaining that even if ERISA covered the plan at issue, ERISA does not preempt state-law claims unless they relate to the ERISA plan). Thus, the court must first determine whether the long-term disability plan provided by UNUM for Lain's law firm qualifies as an employee benefit plan.

A. Employee Benefit Plans Under ERISA

ERISA only preempts those claims that relate to employee benefit plans. See ERISA § 514(a), 29 U.S.C. § 1144(a). An "employee welfare benefit plan" is an employee benefit plan covered by ERISA. See id. § 3(3); 29 U.S.C. § 1002(3). Under ERISA an employee welfare benefit plan is defined in relevant part as

[A]ny plan, fund, or program which was heretofore or is hereafter established or maintained by an employer ... to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries,...