Manahan v. Meyer

• Decision Date: 19 August 1993
• Docket Number: No. 01-92-00146-CV,01-92-00146-CV
• Citation: 862 S.W.2d 130
• Parties: Scott Ian MANAHAN and Heather M. Manahan, By Their Next Friend, Pamela M. Manahan, Appellants, v. Kimberly Inez MEYER, Haworth, Inc., and Safeco Life Insurance Company, Appellees. (1st Dist.)
• Court: Texas Court of Appeals

Page 130

862 S.W.2d 130

Scott Ian MANAHAN and Heather M. Manahan, By Their Next

Friend, Pamela M. Manahan, Appellants, v. Kimberly Inez MEYER, Haworth, Inc., and Safeco Life

Insurance Company, Appellees.

No. 01-92-00146-CV.

Court of Appeals of Texas,

Houston (1st Dist.).

Aug. 19, 1993.

Rehearing Denied Oct. 21, 1993.

Bettye J. Lambert, Houston, for appellants.

C. David Towery, Ronald Scott, Susan B. Robertson, Sharon Hemphill, Dunn, Kacal, Adams, Pappas & Law, Robert L. Adams, Mary Hunnell Smith, Nancy Vassallo, Houston, for appellees.

Before OLIVER-PARROTT, C.J., and COHEN and MIRABAL, JJ.

OPINION

COHEN, Justice.

Thomas J. Manahan, the father of appellants Scott and Heather Manahan, was employed by Haworth, Inc. (Haworth). Safeco Life Insurance Company (Safeco) issued a group life insurance policy to Haworth covering its employees that insured Manahan's life for $67,000. While hospitalized two days before his death, Manahan changed the beneficiary of the policy. He removed his two minor children, appellants, as beneficiaries and designated his fiancee, Kimberly Meyer. Safeco paid the policy proceeds to Meyer.

Appellants sued Meyer, Haworth, and Safeco, alleging the change of beneficiary was invalid because Manahan lacked mental capacity and was unduly influenced by Meyer, and that Haworth acted with Meyer to change the beneficiary, breached its fiduciary duty by failing to investigate the change in beneficiary, and negligently processed the claim and delivered the proceeds to Meyer. Appellants alleged Haworth and Safeco had notice the change of beneficiary was invalid before paying Meyer. Further, appellants alleged Safeco mishandled the claim and that Haworth was Safeco's agent in processing and paying the claim. Alternatively, appellants alleged a cause of action under ERISA, ¹ claiming they were "beneficiaries" seeking recovery of money Haworth and Safeco had wrongfully paid Meyer.

The trial judge granted summary judgment for Haworth and Safeco, concluding that ERISA preempted appellants' claims. The claims against Meyer were tried, and the jury verdict favored appellants. The trial judge entered a judgment for appellants, but then entered a judgment n.o.v. for Meyer, based solely on ERISA preemption. This appeal followed.

In points of error one through eight, appellants contend their claims against Safeco and Haworth were not preempted by ERISA. ²

Is This an Employee Welfare Benefit Plan under ERISA?

Appellants argue neither Haworth nor Safeco proved this benefit plan was governed by ERISA. We disagree. Appellants' pleadings judicially admitted the facts necessary to establish ERISA's application.

ERISA applies to employee benefit plans maintained by employers engaged in activity affecting interstate commerce. 29 U.S.C. § 1003(a) (1988). Appellants pled that Haworth, a Michigan corporation with a home office in Michigan, bought insurance from Safeco, whose home office is in Washington, to cover Manahan and other Haworth employees working in Texas. Thus, interstate commerce by Haworth was admitted. An employee welfare benefit plan is "any plan, fund, or program ... established or maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment...." 29 U.S.C. § 1002(1) (1988). Appellants, in their third amended petition, asserted that: (1) Haworth furnished its employees a group life insurance policy issued by Safeco; (2) that Thomas Manahan was an employee of Haworth; (3) that Safeco's group policy insured his life; and (4) that after Manahan's death, Haworth processed the claim and the payment through its employees relations administrator. These facts establish an employee welfare benefit plan under ERISA. See 29 U.S.C. § 1002(1); Hansen v. Continental Ins. Co. 940 F.2d 971, 976-78 (5th Cir.1991).

Assertions of fact in live pleadings, not pled in the alternative, are formal judicial admissions. Houston First Am. Sav. v. Musick, 650 S.W.2d 764, 767 (Tex.1983). Summary judgment may be rendered on the pleadings when they contain judicial admissions. Daves v. State Bar of Texas, 691 S.W.2d 784, 790 (Tex.App.--Amarillo 1985, writ ref'd n.r.e.), appeal dism'd, 474 U.S. 1043, 106 S.Ct. 774, 88 L.Ed.2d 754 (1986).

The judicial admissions here distinguish this case from those relied on by appellants, Burghart v. Connecticut General Life Insurance Co., 806 S.W.2d 324, 325 (Tex.App.--Texarkana 1991, no writ) (finding genuine issue of material fact as to the application of ERISA where plaintiff presented evidence her employer did not purchase or administer the program at issue), and Nelson v. Dallas Independent School District., 774 S.W.2d 380, 384 (Tex.App.--Dallas 1989, writ denied) (reversing summary judgment where no summary judgment proof showed plan was employee benefit plan governed by ERISA or that payment was made pursuant to such a plan). The judicial admissions show this was an employee welfare benefit plan under ERISA. 29 U.S.C. § 1002(1) (1988).

Subject-Matter Jurisdiction of Claims Against Haworth and Safeco

Appellants next argue that even if this was an ERISA plan, summary judgment was improper because state and federal courts have concurrent jurisdiction under 29 U.S.C. § 1132(e)(1) of suits brought to recover ERISA benefits.

Sections 1132(a)(1)(B) and (e) of ERISA grant concurrent jurisdiction of suits by a beneficiary: 1) to recover plan benefits; 2) to enforce plan rights; or 3) to clarify rights to future benefits. Any other ERISA action is within the exclusive jurisdiction of the federal courts. 29 U.S.C. § 1132(e)(1); Gorman v. Life Ins. Co. of North America, 811 S.W.2d 542, 545 (Tex.1991), cert. denied, 502 U.S. 824, 112 S.Ct. 88, 116 L.Ed.2d 60 (1991).

Appellants pled state law causes of action against Haworth and Safeco seeking damages for the alleged negligence and breach of fiduciary duty in the handling, processing, and administration of Manahan's death benefits under the employee group plan. When a state law claim relates to an employee benefit plan, Texas courts will construe the petition as favorably as possible for the pleader and will retain jurisdiction over those claims that may be characterized as ERISA claims falling within the scope of the three categories in 29 U.S.C. § 1132(a)(1)(B) (1988). Gorman, 811 S.W.2d at 547-48. Courts, however, will examine the nature of the claim and will not retain jurisdiction over those state law claims relating to an employee benefit plan that do not fall within the three categories outlined in section 1132(a)(1)(B). Id.

Here, appellants' state law claims against Haworth and Safeco do not fall within the scope of section 1132(a)(1)(B). The claims do not seek to recover benefits under a plan, seek to enforce rights under a plan, or seek clarification of rights to future benefits. Instead, appellants' state law claims allege improper administration of an employee benefit plan. Thus, they are within the exclusive jurisdiction of the federal court. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56, 107 S.Ct. 1549, 1557, 95 L.Ed.2d 39 (1987) (holding state lawsuit asserting improper processing of claim for benefits under ERISA-regulated plan was preempted by federal law); Gorman, 811 S.W.2d at 547 (holding claims for breach of fiduciary duty, punitive damages, and mental anguish damages relating to an ERISA-regulated plan do not fall within section 1132(a)(1)(B) and are preempted); see also Petrolite Corp. v. Barnhouse, 812 S.W.2d 341, 345-46 (Tex.App.--Corpus Christi 1991, no writ) (holding state law claims for breach of fiduciary duty, quantum meruit, fraud, and breach of good faith and fair dealing of ERISA-regulated plan do not fall within section 1132(a)(1)(B) and are preempted).

For their concurrent jurisdiction claim, appellants rely on Burghart, 806 S.W.2d 324, and Carland v. Metropolitan Life Insurance Co., 727 F.Supp. 592 (D.Kan.1989), aff'd, 935 F.2d 1114 (10th Cir.), cert. denied, 502 U.S. 1020, 112 S.Ct. 670, 116 L.Ed.2d 761 (1991). Those cases are distinguishable. Both were actions to recover denied insurance proceeds. Burghart, 806 S.W.2d at 325; Carland, 727 F.Supp. at 595. Thus, concurrent jurisdiction there was proper under section 1132(a)(1)(B). Here, appellants never alleged that Haworth or Safeco denied coverage or withheld benefits.

A state lawsuit asserting improper processing under an ERISA-regulated plan is preempted by federal law. Pilot Life, 481 U.S. at 56, 107 S.Ct. at 1557. In their alternative claim under ERISA, appellants alleged that Haworth "in administering and controlling said insurance proceeds is liable to plaintiffs by virtue of having received the proceeds and delivering them to [Meyer] after notice of an adverse claim by plaintiffs." This alleges improper handling and processing of a claim for benefits. Whether pled under state or federal law, it does not fall within the three categories of section 1132(a)(1)(B) allowing concurrent jurisdiction. Even as pled under ERISA, the trial court did not have subject matter jurisdiction of appellants' claim against Haworth or Safeco. Summary judgment for Haworth and Safeco on this issue was proper.

Points of error one through eight are overruled.

Appellants' Claim Against Safeco under

Article 3.48 of the Texas

Insurance Code

In point of error nine, appellants claim their cause of action against Safeco under TEX.INS.CODE ANN. art. 3.48 (Vernon 1981) was not preempted by ERISA.

ERISA "preempts" state laws that "relate to" covered employee benefit plans. 29 U.S.C. § 1144(a) (1988). ERISA has a savings provision that excludes from preemption state laws that regulate insurance. 29 U.S.C. § 1144(b)(2)(A) (1988); Metropolitan Life Insurance Co, v. Massachusetts, 471 U.S. 724, 737, 105 S.Ct. 2380, 2388, 85 L.Ed.2d 728 (1985).

Appellants argue ...