Sankey v. Metro. Life Ins. Co.
| Decision Date | 19 June 2012 |
| Docket Number | CIVIL ACTION NO: 12-1135 |
| Parties | YONG OK SANKEY v. METROPOLITAN LIFE INSURANCE COMPANY, et al. |
| Court | U.S. District Court — Eastern District of Louisiana |
Before the Court are Plaintiff Yong Ok Sankey's Motion to Remand and to Award Attorney's Fees (Rec. Doc. 11) and Defendant Metropolitan Life Insurance Company's opposition to same (Rec. Doc. 13). The motion is set for submission on supporting memoranda and with oral argument held on June 20, 2012.
In this civil action, Plaintiff sues under a life insurancepolicy under which she was the named beneficiary and her deceased husband was the named insured. Plaintiff's husband, Donald Franklin Sankey, Jr., was employed by Textron, Inc. ("Textron") and had life insurance coverage through a group policy with Metropolitan Life Insurance Company ("MetLife") during his employment. Plaintiff alleges that after Mr. Sankey terminated his employment, Mr. Sankey converted his group policy into an individual life insurance policy. Plaintiff alleges that the policy was worth $188,000 and was issued for a premium of $638.56. After Mr. Sankey passed away on April 12, 2011, Plaintiff submitted a claim to MetLife under the individual life insurance policy, and she alleges that on June 21, 2011, she received a letter from MetLife informing her that MetLife had made a mistake in issuing the policy and would not honor the death coverage benefits of $188,000. She alleges that MetLife only agreed to pay a lesser amount of $55,200, unilaterally canceling the original policy and issuing a new policy pursuant to which the limited death benefit was paid.
Plaintiff commenced this action in state court against MetLife and the insurance agent who allegedly procured the individual policy on behalf of MetLife. Her petition alleges that MetLife breached its obligation to her in refusing to paythe full amount of the policy, failing to act upon her application within a reasonable amount of time, and retroactively amending coverage. She alleges that MetLife is liable for the additional contractual amount representing the difference between $188,000 and the $55,200 she was paid. She also claims that she is entitled to penalties, damages, and attorney's fees. MetLife filed its notice of removal with this Court on May 3, 2012, and Plaintiff subsequently filed the instant motion to remand.
Plaintiff argues that the Court lacks subject matter jurisdiction and therefore moves that her case be remanded to state court. She argues that MetLife's removal based on alleged federal question jurisdiction was improper because the policy in question is an individual life policy not covered by the Employee Retire Income Security Act ("ERISA"). Plaintiff avers that her claim does not involve a group policy procured on behalf of her husband through his former employer, but rather an individual policy that was converted from a group policy. She asserts that her husband terminated his employment with Textron and converted some of the coverage in the employer's group plan to a new, separate individual policy based on conversion rights; that thecontract is between MetLife and her husband; that her husband did direct pay of premiums from his bank to MetLife; that the individual policy did not require ongoing administration by Textron; and that the individual policy was issued its own policy number. Therefore, Plaintiff argues that her claim is not based upon a group employer plan regulated by ERISA, and federal question jurisdiction is lacking. Plaintiff also asserts that complete diversity is lacking and was not the basis for MetLife's removal. Thus, she argues that this matter should be remanded to state court.
Plaintiff further requests attorney's fees and costs. She avers that "[c]ounsel for MetLife in this case are no strangers to the lack of application of ERISA to a policy that had already been converted from a group plan to an individual policy and the law regarding same."1 Plaintiff asserts that prior to filing the instant motion to remand, her counsel gave MetLife's counsel the opportunity to voluntarily remand, which offer MetLife's counsel declined. Accordingly, Plaintiff requests that the defendants be cast in judgment for the amount of time her counsel spent preparing the motion and supporting memorandum.
Defendant MetLife argues that the Court has federal questionjurisdiction over this action. MetLife argues that ERISA provides the exclusive federal remedy for resolution of claims regarding the right to convert group life insurance to an individual policy, and therefore this case is removable due to the presence of federal question jurisdiction. MetLife argues that the issue of whether Plaintiff's husband was entitled to an individual conversion policy is dependent upon the terms of the ERISA plan that provided him with the right to convert. Therefore, MetLife argues that Plaintiff's claims relate to an ERISA plan, and thus ERISA preempts Plaintiff's state law claims and provides the exclusive federal remedy for their resolution. MetLife requests that the Court deny Plaintiff's motion to remand, but if the Court remands the case, to deny Plaintiff's request for attorney's fees because MetLife had a good faith basis for its removal.
Generally, a defendant may remove a civil action filed in state court if a federal court would have had original jurisdiction. See 28 U.S.C. § 1441(a). Original diversity jurisdiction exists where the matter in controversy exceeds $75,000 and is between citizens of different states. 28 U.S.C. §1332(a)(1). Original federal question jurisdiction exists for civil actions arising under the Constitution, laws, or treaties of the United States. 28 U.S.C. § 1331. A defendant bears the burden of proving by a preponderance of the evidence that jurisdiction exists. De Aguilar v. Boeing Co., 47 F.3d 1404, 1412 (5th Cir. 1995). The jurisdictional facts supporting removal are examined as of the time of removal. Gebbia v. Wal-Mart Stores, Inc., 233 F.3d 880, 883 (5th Cir. 2000). The removal statute should be strictly construed in favor of remand. Manguno v. Prudential Prop. and Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002).
"It is long settled law that a cause of action arises under federal law only when the plaintiff's well-pleaded complaint raises issues of federal law." Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987). However, where Congress clearly manifests the intent to make causes of action within the scope of the civil enforcement provisions of ERISA removable to federal court, a case bringing such causes of action is removable regardless of whether federal preemption is obvious at the time a petition is filed. Id. at 66. ERISA's civil enforcement provision "completely preempts any state cause of action seeking the same relief, regardless of how artfully pled as a stateaction." Copling v. Container Store, Inc., 174 F.3d 590, 594 (5th Cir. 1999), overruled on other grounds by Arana v. Ochsner Health Plan, 338 F.3d 433 (5th Cir. 2003). Thus, a civil action brought to enforce rights under an ERISA plan invokes federal jurisdiction. 29 U.S.C. § 1132(f); Copling, 174 F.3d at 594 (). Where complete ERISA preemption of a state law claim occurs, the claim is within the jurisdiction of the federal court. Day v. Lockheed Martin Corp., 428 F. App'x 275, 278 (5th Cir. 2011).
To determine whether Plaintiff's claims are completely preempted by ERISA, the Court must determine whether the claims fall within the scope of ERISA § 502(a)(1).2 Aetna Health Inc. v. Davila, 542 U.S. 200, 210 (2004). A claim falls within thescope of § 502(a)(1) when the claimant is entitled to coverage only because of the terms of an ERISA-regulated employee benefit plan, and where no legal duty independent of ERISA or the plan terms is violated. Aetna Health, 542 U.S. at 210. "In other words, if an individual, at some point in time, could have brought his claim under ERISA § 502(a)(1)(B), and where there is no other independent legal duty that is implicated by a defendant's actions, then the individual's cause of action is completely pre-empted by ERISA § 502(a)(1)(B)." Id. Section 502(a)(1) permits a plan participant or beneficiary to sue to (1) recover benefits due under the plan, (2) enforce his or her rights under the plan, or (3) clarify his or her rights to future benefits under the plan. 29 U.S.C. § 1132(a)(1)(B). Thus, to determine where complete preemption exists, so as to create federal jurisdiction, the Court considers whether Plaintiff's claims are claims to recover benefits under or to enforce her rights under a plan regulated by ERISA.
The parties do not appear to dispute that the life insurance policy Mr. Sankey had while he worked at Textron was an ERISA-regulated plan. However, Plaintiff does not sue under that plan, but rather under the individual life insurance policy allegedly created when Mr. Sankey exercised conversion rights under theERISA group plan. MetLife argues that Plaintiff's claim arises under federal law because resolution of the claim requires interpretation of the group plan funded by MetLife to determine whether conversion from the plan to an individual life policy was proper. Mr. Sankey was a participant in Textron's group plan, which provided life insurance benefits, and the plan was funded and administered by MetLife.3 Mr. Sankey applied to convert his supplemental group life coverage to an individual policy, which MetLife avers that it then erroneously issued.4 MetLife cites language in the Textron group plan explaining that the appropriate conversion amount is decreased by the amount of the accelerated benefit paid.5
Thus, MetLife argues that although the law is unclear...
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