Neuma Incorp. v. AMP Incorp.
| Decision Date | 07 August 2001 |
| Docket Number | No. 00-2544,00-2544 |
| Citation | 259 F.3d 864 |
| Parties | (7th Cir. 2001) NEUMA, INCORPORATED, an Illinois corporation, Plaintiff-Appellant, v. AMP, INCORPORATED and PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY, Defendants-Appellees |
| Court | U.S. Court of Appeals — Seventh Circuit |
Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 98 C 6616-Paul E. Plunkett, Judge. [Copyrighted Material Omitted]
[Copyrighted Material Omitted] Before RIPPLE, KANNE and WILLIAMS, Circuit Judges.
Neuma, Inc. ("Neuma") filed this suit against AMP, Inc. ("AMP"). It alleged four causes of action arising from AMP's failure to maintain group life insurance benefits for Stanley Larsen, a former AMP employee.1 Larsen previously had assigned all of the rights to his life insurance benefits to Neuma. The district court rejected Neuma's claim for benefits under Section 502(a) (1)(B), 29 U.S.C. sec. 1132(a)(1)(B), of the Employee Retirement Income Security Act, 29 U.S.C. sec. 1001, et seq., ("ERISA"), because it found that AMP's actions were justified based on an unambiguous provision of the Summary Plan Description that governed Larsen's life insurance policy. The court also denied Neuma's claim under Section 502(c) of ERISA, 29 U.S.C. sec. 1132(c), which alleged that AMP had failed to provide documents relating to an employee welfare benefit plan within a required thirty-day statutory period. It found that Neuma was not entitled to the documents because it did not have a "colorable claim" for the life insurance benefits at issue. The court also dismissed Neuma's state law negligent misrepresentation claim without prejudice to its right to refile in state court. The district court refused to exercise supplemental jurisdiction over this claim because it had dismissed all federal claims. For the reasons set forth in the following opinion, we affirm the judgment of the district court regarding Neuma's claim for benefits under Section 502(a)(1)(B). We reverse and remand with respect to the claim that AMP failed to provide plan documents in a timely manner under Section 502(c). Lastly, we also reverse the district court's dismissal of the negligent misrepresentation claim and remand that claim to the district court for further proceedings.
On March 31, 1987, Larsen was hired by AMP to work in its AMP Circuits Division. AMP provides its workers with benefits that include medical, dental and life insurance coverage. During 1996 and 1997, the life insurance coverage that AMP provided for its employees was issued by Provident Life & Accident Insurance Company ("Provident") and was funded through Group Policy No. N-377 (). On January 1, 1996, Larsen enrolled in AMP's life insurance program for benefits in the amount of $81,600. The contours of these life insurance benefits were described in greater detail in a booklet provided to AMP employees, entitled "Group Benefits Program for Employees of AMP Circuits, an AMP Division." R.42, Ex.6. This booklet (the "Summary Plan Description") contained the following clause pertaining to disabled employees (the "Disability Clause"):
Insurance During Disability Before Age 60
If you become disabled before age 60, and while insured, [AMP] will keep your life insurance in force by paying the appropriate premium as long as you are disabled, provided proofs of disability are furnished as required. In no event, however, will such insurance be continued beyond the date the life insurance provisions of the Plan terminate.
Id. at 19 (emphasis added). Another provision in the Summary Plan Description gave AMP the "right to terminate, suspend, withdraw, amend or modify the Plan at any time." Id. at 9.
On March 14, 1996, Larsen was placed on disability status by AMP. At some point thereafter, Neuma began negotiating with Larsen to purchase the rights to his group life insurance benefits. As a part of this process, Neuma requested and received some basic information from AMP regarding the details of Larsen's life insurance coverage. On September 5, 1996, Larsen assigned all of his rights, title and interest in his group life insurance coverage to Neuma, an assignment acknowledged and accepted by AMP. Then, on March 14 1997, one year after Larsen became disabled, he was terminated by AMP pursuant to company policy.
By the end of 1997, AMP had decided to change its group life insurer. On December 31, 1997, AMP cancelled the Provident Policy and purchased group life insurance with MetLife Insurance Company ("MetLife") that went into effect on January 1, 1998. The life insurance coverage provided in the MetLife policy was identical to that provided by Provident in all material respects. AMP did not enroll Larsen for coverage under the MetLife policy. When the Provident Policy was discontinued, Larsen's group life insurance coverage with AMP was terminated.
On August 6, 1998, Neuma requested that AMP provide it with copies of various documents relating to the Provident Policy and any larger employee benefit plan of which the Policy was a part, pursuant to 29 U.S.C. sec. 1024(b)(4) of ERISA. On October 20, 1998, Neuma filed suit against the defendants, seeking penalties under ERISA Section 502(c) for AMP's failure to respond to this document request and seeking a declaratory judgment to declare the rights and obligations of the parties under the insurance policy. AMP did not reply to Neuma's request for plan information until December 10, 1998, when it provided Neuma with a copy of what Neuma claims was an outdated version of the Summary Plan Description. On February 17, 1999, AMP, through its attorneys, provided more information regarding Larsen's group life insurance benefits to Neuma, including an updated version of the Summary Plan Description in force at the time when Larsen's coverage was ended.
On January 18, 2000, Neuma filed a first amended complaint (the "complaint") against the defendants, alleging four causes of action relating to AMP's failure to maintain group life insurance benefits for Larsen after the Provident Policy was terminated on December 31, 1997. Count I of the complaint sought, pursuant to ERISA Section 502(a)(1)(B), the full recovery of Larsen's life insurance benefits in the amount of $81,600 if Larsen was deceased, or, if Larsen was living, an order for AMP to purchase and maintain a policy in that amount on his life. Neuma alleged that AMP should not have discontinued these benefits under the terms of the Summary Plan Description. Count II alleged an Illinois state law cause of negligent misrepresentation, due to alleged omissions and false statements of fact made by AMP during its correspondence with Neuma prior to Neuma's purchase of Larsen's benefits. Neuma claimed that these misrepresentations caused it to suffer damages by purchasing benefits that were less valuable than what it had anticipated. Count IV of the complaint again alleged a claim under Section 502(c) of ERISA, based on AMP's failure to respond to Neuma's requests for plan documents within the thirty-day time limit mandated by that section of the Act.2
On January 18, 2000, Neuma filed a motion for summary judgment as to Count I of its complaint. In response, AMP filed a cross-motion for summary judgment on that count, as well as a motion for summary judgment on the other remaining counts.
In its order of May 18, 2000, the district court ruled on these motions. With respect to Count I, Neuma's request to recover benefits, the court found in favor of AMP. AMP had argued that any dispute on this point was resolved by the language of the Disability Clause in the Summary Plan Description, which stated that "[i]n no event . . . will [life insurance for disabled employees] be continued beyond the date the life insurance provisions of the Plan terminate." R.42, Ex.6 at 19. AMP claimed that the language of the Summary Plan Description clearly identified the "Plan" as the Provident Policy, and that because it had the right to and did terminate that Policy on December 31, 1997, it no longer had any obligation to pay Larsen's life insurance premiums after that date. In contrast, Neuma maintained that AMP's life insurance program was one part of a more comprehensive employee benefit plan that also included medical and dental insurance (the "Benefit Plan"). It contended that, when the Disability Clause referred to the "Plan," this reference was not to the Provident Policy, but to a larger Benefit Plan as a whole, and it claimed that extrinsic evidence it presented had established that fact conclusively. Therefore, because AMP continued to provide some form of life insurance to its employees (through the MetLife policy) after it cancelled the Provident Policy, Neuma argued that the "life insurance provisions of the Plan" had not terminated when the Provident Policy was cancelled and that AMP should have continued to pay Larsen's premiums after that date. In ruling for AMP on this issue, the district court held that the unambiguous language of the Summary Plan Description showed that the "Plan" referred to in the Disability Clause was the Provident Policy, not a more comprehensive Benefit Plan run by AMP. The key piece of evidence for the district court was that, at the beginning of the Summary Plan Description, it explicitly stated that any usage of the term "Plan" in that document referred to Provident Policy No. N-377. The court then found that, because the Summary Plan Description allowed AMP to terminate the "Plan" at any time, and, because the Disability Clause explained that disabled employees will not continue to receive life insurance benefits after the "life insurance provisions of the Plan terminate," AMP's obligation to pay Larsen's life insurance premiums ended when the Provident Policy was cancelled....
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