Lamberty v. Premier Millwork and Lumber Co., Inc.

• Decision Date: 05 August 2004
• Docket Number: No. 2:04CV336.,2:04CV336.
• Citation: 329 F.Supp.2d 737
• Parties: Tammie Sanford LAMBERTY, Plaintiff, v. PREMIER MILLWORK AND LUMBER CO., INC., George Melnyk, Sr., and Carol Melnyk, Defendants.
• Court: U.S. District Court — Eastern District of Virginia

329 F.Supp.2d 737

Tammie Sanford LAMBERTY, Plaintiff, v. PREMIER MILLWORK AND LUMBER CO., INC., George Melnyk, Sr., and Carol Melnyk, Defendants.

No. 2:04CV336.

United States District Court, E.D. Virginia, Norfolk Division.

August 5, 2004.

COPYRIGHT MATERIAL OMITTED

Walton Everett Lupton, Esquire, The Joynes & Gaidies Law Group, PC, Virginia Beach, VA, for Plaintiff.

Philip L. Russo, Jr., Esquire, Virginia Beach, VA, for Defendants.

OPINION AND ORDER

REBECCA BEACH SMITH, District Judge.

This matter is before the court on defendants' motion to dismiss for failure to state a claim. For the reasons set forth below, the motion is GRANTED in part and DENIED in part.

I. Factual and Procedural History

In August 1999, plaintiff Tammie Sanford Lamberty entered into an employment agreement with defendant Premier Millwork and Lumber Co., Inc. ("Premier"). (Compl.¶ 5.) At all times relevant to this litigation, Premier was owned by defendant George Melnyk, Sr., who also served as Premier's president. (Id. ¶ 3.) Defendant Carol Melnyk was at all relevant times an employee and agent of Premier. (Id. ¶ 4.) Plaintiff was employed by Premier from approximately September 1999 through June 2000. (Id. ¶ 10.)

As part of plaintiff's employment agreement, defendant Premier promised to provide health care insurance for plaintiff during the term of her employment. (Id. ¶ 5.) Plaintiff's health care was to be provided by Optima Health Plan ("Optima"). (Id. ¶ 6.) Premier withheld specific amounts of monies from plaintiff's pay, which were to be paid to Optima in consideration for plaintiff's health coverage. (Id. ¶ 7-8.) For the period from December 1, 1999, through January 31, 2000, Premier withheld approximately $7.68 per week from plaintiff's pay. (Id. ¶ 9.) For the period from January 31, 1999, through June 26, 2000, Premier withheld approximately $14.85 per week from plaintiff's pay. (Id.)

Throughout plaintiff's term of employment, defendant Premier represented to plaintiff that the amounts withheld were being paid to Optima, and that plaintiff was covered by an Optima health insurance policy. (Id. ¶ 11-12.) In fact, however, defendant Premier had terminated plaintiff's coverage with Optima, and instructed Optima to give plaintiff's withheld pay for May and June 2000 to Premier. (Id. ¶ 14-15.) Thus, although defendant Premier continued to represent to plaintiff that she had valid health coverage with Optima through June 2000, plaintiff in fact had no health coverage beginning in May 2000. (Id. ¶ 19.) Neither Optima nor Premier has refunded to plaintiff the withheld pay from May and June 2000. (Id. ¶ 9.)

On or about February 2, 2000, plaintiff suffered an unspecified injury. (Id. ¶ 17.) Plaintiff sought medical treatment for this injury in May, June, July, and August, 2000. (Id. ¶ 18.) Because defendant Premier had terminated plaintiff's insurance coverage with Optima, plaintiff's medical treatment in the summer of 2000 was not covered by the Optima insurance plan, and plaintiff incurred numerous expenses. (Id. ¶ 20-22.)

On May 17, 2004, plaintiff filed a Motion for Judgment ("complaint") in the Circuit Court for the City of Virginia Beach. Plaintiff's complaint states three causes of action: breach of contract, in violation of Virginia common law; fraud, in violation of Virginia common law; and breach of fiduciary duty, in violation of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. On June 3, 2004, defendants removed the case to this court on the basis of federal question jurisdiction. On June 7, 2004, defendants filed the instant motion to dismiss. On June 21, 2004, plaintiff filed a response. Defendants filed a reply on July 16, 2004.¹ On July 26, 2004, the court heard argument from the parties on the issues presented by the instant motion. Accordingly, the motion is now ripe for review.²

II. Analysis

A complaint should not be dismissed pursuant to Rule 12(b)(6) for failure to state a claim unless it appears to a certainty that the nonmoving party cannot prove any set of facts in support of its claim that would entitle it to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). The court must accept the complaint's factual allegations as true and view all allegations in a light most favorable to the nonmoving party. Leatherman v. Tarrant County Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 164, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993).

Plaintiff's complaint states three counts. Counts I and II allege breach of contract and fraud, respectively, in violation of Virginia common law. Count III alleges breach of fiduciary duty, in violation of ERISA. Defendants purport to seek dismissal on four bases: (1) the state law claims alleged in Counts I and II are preempted by ERISA; (2) any ERISA claims are barred by the statute of limitations; (3) plaintiff does not have a right to a jury under ERISA; and (4) Count III does not properly allege a cause of action for fraud. Defendants' second and fourth bases for dismissal, the statute of limitations and the sufficiency of fraud allegations, are logically related and will be addressed together. Defendants' third basis, however, is not properly a motion to dismiss at all, and will instead be considered as a motion to strike plaintiff's jury demand pursuant to Federal Rule of Civil Procedure 39(a)(2).

A. Preemption of Plaintiff's State Law Claims

ERISA § 514(a) provides that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a). The phrase "relates to" has been given a broad, common-sense meaning: "[a] law `relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). Accordingly, the Fourth Circuit has held that when a plaintiff's state law claims "amount to a demand for past ... health care benefits from an ERISA plan," those state law claims are preempted. Custer v. Pan Am. Life Ins. Co., 12 F.3d 410, 418 (4th Cir.1993); see also Stiltner v. Beretta U.S.A. Corp., 74 F.3d 1473, 1480 (4th Cir.1996) (en banc) (suggesting in dicta that the plaintiff's state law claims were preempted because he sought "to recover benefits of a sort which are already provided by an ERISA plan").

Although broad and far-reaching, ERISA's preemptive power is not without limits. A state law claim is not preempted by ERISA merely because the claim makes some incidental reference to an ERISA plan. Some state law claims affect employee benefit plans in "too tenuous, remote, or peripheral a manner" to be preempted as "related to" an ERISA plan. Shaw, 463 U.S. at 100 n. 21, 103 S.Ct. 2890. Although a substantial number of decisions have attempted to clarify the distinction between claims which "relate to" an ERISA plan and those which are incidental to an ERISA plan, the court will specifically address three such decisions, two of which were extensively discussed by plaintiff in her brief in opposition.

In Pizlo v. Bethlehem Steel Corporation, cited and discussed by plaintiff, the Fourth Circuit held that under the circumstances presented, state law claims for breach of contract, promissory estoppel, and negligent misrepresentation were not preempted by ERISA. 884 F.2d 116, 120 (4th Cir.1989). Pizlo concerned whether former Bethlehem Steel employees were wrongfully terminated from employment after an alleged oral contract of employment for a term. Id. Although the damages claimed included lost health and pension benefits, these issues were incidental to the alleged unlawful termination, and insufficient to preempt claims which were at essence unrelated to an ERISA plan.

Similarly, in Hand v. Church & Dwight Company, the court sought to distinguish between state law claims which are and are not preempted by ERISA. 962 F.Supp. 742, 746-48 (D.S.C.1997). Hand concerned a separation agreement made in light of the plaintiff's termination from employment with Church & Dwight Company. Id. at 743. The agreement provided in part that the plaintiff, Mrs. Hand, would continue to be covered by Church & Dwight's employee benefit plans for a specified period. Id. In exchange, Hand agreed to release any legal claims she may have asserted against Church & Dwight. Id. When Church & Dwight discontinued Hand's coverage under the benefits plans, Hand sued under theories of fraud and negligent misrepresentation. Id. The court held that, to the extent Hand was seeking plan benefits, her state law claims were preempted by ERISA, and were in fact ERISA claims. Id. at 747. However, to the extent Hand was seeking damages for having relinquished her legal claims against Church & Dwight, the claims were not "related to" an ERISA plan, and therefore not subject to preemption. Id. at 747-48.

Finally, Smith v. Cohen Benefit Group, also cited and discussed in plaintiff's brief in opposition, concerned state law claims against a plan administrator for having fraudulently induced the plaintiff to participate in an ERISA plan which did not include promised coverage. 851 F.Supp. 210, 212 (M.D.N.C.1993). Specifically, the plan administrator had told plaintiff Smith that his severely handicapped daughter would be covered under Smith's new health care plan to the same extent that she had been covered under Smith's former plan. Id. In fact, however, the new plan denied claims for Smith's daughter, stating that her medical bills were the result of a preexisting condition which precluded coverage. Id. Because Smith was not suing to recover a benefit under the plan, but was instead seeking damages for a promised benefit which was not part of the ERISA plan, the claim did not "relate to" an ERISA plan, and was not preempted. See id. at 214 ("Should Plaintiffs prevail on any of their state law claims ... they will not be entitled to...