Moon v. Bwx Technologies Inc.

• Decision Date: 27 September 2010
• Docket Number: Civil No. 6:09cv00064.
• Citation: 742 F.Supp.2d 827
• Parties: Judy L. MOON, individually and as Executor of the Estate of Leslie W. Moon, Plaintiffv.BWX TECHNOLOGIES, INC., et al., Defendants.
• Court: U.S. District Court — Western District of Virginia

742 F.Supp.2d 827

Judy L. MOON, individually and as Executor of the Estate of Leslie W. Moon, Plaintiff

v.BWX TECHNOLOGIES, INC., et al., Defendants.

Civil No. 6:09cv00064.

United States District Court,W.D. Virginia,Lynchburg Division.

Sept. 27, 2010.

Sidney H. Kirstein, Lynchburg, VA, for Plaintiff.Kevin Philip Oddo, Joseph M. Rainsbury, LeClair Ryan, A Professional Corporation, Roanoke, VA, for Defendants.

MEMORANDUM OPINION

NORMAN K. MOON, District Judge.

This matter is before the court on plaintiff's motion to remand (docket no. 21), Magistrate Judge Michael F. Urbanski's Report and Recommendation (“R & R”) (docket no. 30), and plaintiff's objections thereto (docket nos. 33 and 37).

Under 28 U.S.C. § 636(b)(1), the parties may file a written objection to the magistrate judge's report. Upon timely objection, the court must review de novo those portions of the R & R to which the objecting party has raised specific objections, but the court has the authority to accept, reject, or modify the R & R in whole or in part.¹ 28 U.S.C. § 636(b)(1). General objections that merely reiterate arguments presented to the magistrate judge lack the specificity required under Rule 72, and have the same effect as a failure to object, or as a waiver of such objection. See Veney v. Astrue, 539 F.Supp.2d 841, 845 (2008). The responsibility for a final determination remains with the district court. Mathews v. Weber, 423 U.S. 261, 270–271, 96 S.Ct. 549, 46 L.Ed.2d 483 (1976).

For the reasons set forth below, the magistrate judge's recommendations will be ADOPTED in part and plaintiff's motion to remand will be DENIED in an accompanying Order.

I.

Plaintiff Judy L. Moon, individually and as executor of the estate of Leslie W. Moon (collectively, “Moon” or “plaintiff”), brings this action to recover on a life insurance policy that she claims was or should have been issued to her late husband, Leslie W. Moon.² Leslie Moon was a long time employee of BWX Technologies, Inc. (a subsidiary of defendant McDermott International, Inc.) and its predecessor companies (collectively, “BWX” or “defendants”). During open benefits season in the fall of 2005, Mr. Moon selected a benefits package that included $200,000 in life insurance through BWX's FlexChoice Benefits Program (“FlexChoice”). His benefits selection was confirmed in a statement prepared on November 29, 2005. Subsequently, on December 1, 2005, Leslie Moon was approved for long term disability.³ At that point, according to FlexChoice's Summary Plan Description, he became ineligible for group life insurance coverage and had to contact Metropolitan Life Insurance Company (“MetLife”) within thirty-one days to continue his coverage, which required converting to a personal policy and paying premiums directly to MetLife. There is a factual dispute as to whether Leslie Moon was advised by BWX that he had to contact MetLife directly in order to continue his life insurance coverage as a disabled employee. Leslie Moon did not contact MetLife, convert to a personal policy, or make any premium payments to MetLife. Instead, he continued to pay premiums to BWX for his FlexChoice benefits package.⁴ On January 13, 2006, he received a second confirmation of his benefits package, which again listed $200,000 in life insurance benefits. The only change to this statement was a $2.52 increase in the cost of long term disability benefits, bringing his total annual cost for all benefits to $3,269.76. Eight hundred and four dollars of that amount was allocated to the annual cost of life insurance.

Leslie Moon died on November 18, 2006. His wife paid BWX $1,173.36, the balance owed on the annual premiums for his FlexChoice benefits package, following his death. BWX accepted the premium payments but did not pay Moon the $200,000 in life insurance benefits, stating that Leslie Moon was ineligible for life insurance coverage through the group plan and failed to convert his active employee life insurance benefit to that of a disabled employee by contacting MetLife as instructed.

In this action initially filed in the Circuit Court for the City of Lynchburg, Moon claims defendants contracted with Leslie Moon to provide benefits, which included $200,000 in death benefits, in exchange for an annual payment of $3,269.76. Moon asserts what she calls “garden variety” state law claims for breach of contract, quasi-contract, estoppel and breach of fiduciary duty. ⁵ Defendants removed this case pursuant to 28 U.S.C. § 1441, asserting this action is preempted by the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq., thereby creating a federal question under 28 U.S.C. § 1331. Defendants also filed a motion to dismiss, claiming the confirmation statement Moon relies on does not impose obligations on defendants, Moon has not sued the proper defendants, and that her quasi-contract, estoppel, and breach of fiduciary duty claims are not appropriate in the ERISA context. Moon moved to remand, arguing the court lacks subject matter jurisdiction over this action because this is not a claim for benefits against an ERISA plan, and Leslie Moon was ineligible to participate in an ERISA-governed life insurance plan at the time of the alleged contract.

Pursuant to Fed.R.Civ.P. 72(b), the magistrate judge entered a report and recommendation concluding that this court should deny plaintiff's motion to remand. We now review the plaintiff's objections to that report.

II.

Part II of the R & R correctly and thoroughly sets forth the law governing complete preemption under ERISA, and plaintiff has not raised any specific objections thereto. I therefore adopt part II of the R & R in full and incorporate it here by reference.

It bears repeating that ERISA provides two related, but distinct preemption provisions. State law claims that “relate to” an ERISA plan are preempted under § 514. The effect of preemption under § 514 is not to provide the federal court with jurisdiction, but merely to invalidate state law claims. Sonoco Products Co. v. Physicians Health Plan, Inc., 338 F.3d 366, 370–71 (4th Cir.2003). Only those state law claims that are “completely preempted” because they fall within the civil enforcement provision of § 502 are removable. Id. Therefore, “every state claim completely preempted by § 502 is, a fortiori, related to ERISA, but not every state claim related to ERISA under § 514 is completely preempted.” Lancaster v. Kaiser Found. Health Plan of Mid–Atl. States, Inc., 958 F.Supp. 1137, 1144 (E.D.Va.1997).

While §§ 502 and 514 of ERISA are distinct, they both further Congress' desire to “provide a uniform regulatory regime over employee benefit plans.” Aetna Health Inc. v. Davila, 542 U.S. 200, 208–09, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004). Section 514 is an “expansive preemption provision [ ] which [is] intended to ensure that employee benefit plan regulation would be exclusively a federal concern.” Id. at 208, 124 S.Ct. 2488 (internal quotations omitted). Section 502 is “essential to accomplish Congress' purpose ...” Id.; See also Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 52, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987). This court must interpret the law in accordance with Congress' intent. See Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 8, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987) (“as in any pre-emption analysis, the purpose of Congress is the ultimate touchstone”) (citing Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 747, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985); Malone v. White Motor Corp., 435 U.S. 497, 504, 98 S.Ct. 1185, 55 L.Ed.2d 443 (1978)) (internal quotations omitted). With this in mind, we turn to the plaintiff's objections.

III.

As the magistrate judge observes, the threshold issue in this case is whether an ERISA plan exists. “In litigation under ERISA, ‘[t]he existence of a plan is a prerequisite to jurisdiction.’ ” Bulls v. Norton Cmty. Hosp., Inc., 76 F.Supp.2d 710, 713 (W.D.Va.1999). The word “plan” cannot be read out of the statute. Fort Halifax, 482 U.S. at 8, 107 S.Ct. 2211. ERISA preemption applies when a state cause of action is premised upon the existence of a plan such that “ ‘in order to prevail, a plaintiff must plead, and the court must find, that an ERISA plan exists,’....” Griggs v. E.I. DuPont de Nemours & Co., 237 F.3d 371, 378 (4th Cir.2001) (quoting Ingersoll–Rand Co. v. McClendon, 498 U.S. 133, 140, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990)).

The R & R identifies “two plans” which could potentially give rise to the court's subject matter jurisdiction. First is the group life insurance plan in which Leslie Moon enrolled in the fall of 2005 (the “group plan”). The parties agree that the group plan is an ERISA governed plan, although plaintiff's complaint scrupulously avoids the appearance of making claims under that plan. The second is the plan allegedly established (the “benefits agreement”) from certain promises defendants made to Leslie Moon, which are outlined in a document styled “2006 Confirmation Statement.”

In finding that the benefits agreement is governed by ERISA, the magistrate judge relied on two theories. Under the first theory, as described in part III.A of the R & R, defendants' alleged promises constituted an “informal plan” under the Eleventh Circuit's test set forth in Donovan v. Dillingham, 688 F.2d 1367, 1373 (1982) ( en banc ), and endorsed by a number of courts, including the Fourth Circuit. See Elmore v. Cone Mills Corp., 23 F.3d 855, 861 (4th Cir.1994); Custer v. Pan Am. Life Ins. Co., 12 F.3d 410, 417 (4th Cir.1993); Madonia v. Blue Cross & Blue Shield of Va., 11 F.3d 444, 447 (4th Cir.1993); Bulls, 76 F.Supp.2d at 713. Donovan holds that a plan under ERISA is established if from the surrounding circumstances, a reasonable person could ascertain (1) the intended benefits, (2) beneficiaries, (3) the source of financing, and (4) procedures for receiving benefits. 688 F.2d 1367, 1373 (11th Cir.1982).

Under the second...