Seneca Beverage Corp. v. Healthnow New York, Inc.

• Citation: 383 F.Supp.2d 413
• Decision Date: 22 July 2005
• Docket Number: No. 04-CV-6081 CJS.,04-CV-6081 CJS.
• Parties: SENECA BEVERAGE CORPORATION, Plaintiff, v. HEALTHNOW NEW YORK, INC., RMTS Associates, LLC and Trustmark Insurance Company, Defendants.
• Court: U.S. District Court — Western District of New York

383 F.Supp.2d 413

SENECA BEVERAGE CORPORATION, Plaintiff, v. HEALTHNOW NEW YORK, INC., RMTS Associates, LLC and Trustmark Insurance Company, Defendants.

No. 04-CV-6081 CJS.

United States District Court, W.D. New York.

July 22, 2005.

Scott D. Moore, Esq., Moore, Woodhouse & Pawlak LLP, Elmira, for the Plaintiff.

Frank V. Balon, Esq., Webster Szanyi LLP, Buffalo, for the Defendant Healthnow New York, Inc.

DECISION AND ORDER

SIRAGUSA, District Judge.

INTRODUCTION

This State law breach of contract case, with additional claims under Federal law, is before the Court under federal question jurisdiction to decide defendant HealthNow New York's ("HealthNow") motion (# 20) for summary judgment and plaintiff's application (# 24) for discovery pursuant to Federal Rule of Civil Procedure 56(f). For the reasons that follow, the Court denies plaintiff's motion, grants HealthNow's application, and dismisses this case.

PROCEDURAL HISTORY

Plaintiff commenced its action in New York State Supreme Court, Chemung County, by filing a summons and complaint and serving the same on all defendants. The State court complaint alleged two common law claims of breach of contract against all defendants. Defendant HealthNow filed a notice of removal in this Court contending that plaintiff's State contract claims were preempted by the Federal Employee Retirement Income Security Act (ERISA), Pub.L. 93-406, Title I, § 2, Sept. 2, 1974, 88 Stat. 832. (Notice of Removal (Mar. 2, 2004)). HealthNow then filed an answer in this Court to the original complaint, alleging ERISA as a defense to the State claims. Subsequently, plaintiff filed an amended complaint ("complaint"), that alleged four causes of action against defendants: (1) breach of contract against RMTS¹ and Trustmark; (2) an ERISA breach of fiduciary duty claim against RMTS and Trustmark; (3) an ERISA breach of fiduciary duty claim against HealthNow; and (4) a breach of contract claim against HealthNow. In an earlier decision (# 16) the Court granted RMTS's and Trustmark's motion to dismiss the first and second causes of action.

Now before the Court is HealthNow's motion (# 20) seeking summary judgment on the third and fourth causes of action. In response to HealthNow's motion, plaintiff filed a cross-motion seeking, "[a]n Order granting Plaintiff time to conduct discovery prior to answering Motion for Summary Judgment of Defendant HealthNow New York, Inc." (Pl.'s Notice of Mot. (Dec. 3, 2004) (# 24)) and supported by a declaration from plaintiff's counsel in which he stated, "[n]o discovery has been conducted to date and at the conference set for establishing a discovery schedule, counsel for Defendant HealthNow advised the Magistrate that a motion for summary judgment was going to be filed" (Moore Decl. (# 25) ¶ 2).

Defendant opposed the cross-motion for discovery, and the Court heard oral argument on both motions on December 21, 2004. At oral argument, plaintiff's counsel asserted that the written contract between Seneca Beverage and HealthNow had been orally modified with respect to the point at contention in this lawsuit: whether HealthNow was obligated to provide certain claims information to Seneca Beverage's stop-loss insurer. The Court granted plaintiff additional time to file an affidavit in support of its position.

On December 28, 2004, plaintiff's counsel filed two affidavits and a declaration. The two affidavits were by Debra Maurey ("Maurey") and John Holleran ("Holleran"). At the time of the formation of the Stop Loss contract, Maurey was an employee of Seneca Beverage, and Holleran was an employee of Perry & Carroll, Inc.² Both Maurey and Holleran said they had been involved in discussions between plaintiff and defendant regarding the Stop Loss contract. (Maurey Aff. ¶ 1-2; Holleran Aff. ¶ 1-2.) Additionally, plaintiff's counsel filed a declaration containing a summary of his conversation with Kraus, Sales Manager of HealthNow. Kraus refused to sign his name to the statements that he made to counsel (Moore Decl. (# 32) ¶¶ 2, 5 & 7), and counsel's recitation is not evidentiary proof in admissible form necessary to raise an issue of fact in opposition to a summary judgment motion, FED. R. CIV. P. 56(e).

On February 10, 2005, the Court heard further oral argument with respect to plaintiff's motion for discovery under Federal Rule of Civil Procedure 56(f) and whether there was any proof of an oral modification to the written contract between HealthNow and Seneca Beverage.

FACTUAL BACKGROUND

Though the Court views the facts in the light most favorable to the non-moving party, plaintiff did not file any document contesting HealthNow's statement of facts filed pursuant to Local Rule.³ Although plaintiff did file a motion for discovery pursuant to Rule 56(f), as indicated above and discussed below, the Court is denying the motion due to plaintiff's failure to make the requisite showing.

Since plaintiff has not opposed⁴ any of the asserted facts in HealthNow's statement, then by operation of Local Rule 56.1(c), HealthNow's assertions are deemed admitted and are incorporated herein in their entirety:

1. Plaintiff Seneca Beverage Corporation and Defendant HealthNow New York, Inc. entered into an Administrative Services Agreement, in 1999, whereby HealthNow agreed to perform certain administrative functions including determining eligibility for benefits and processing claims for Plaintiff's self-funded employee benefit plan. (See Exhibit A annexed to Declaration of Frank V. Balon, Esq.)

2. HealthNow did not have ultimate authority with respect to the determination of benefit claims made under Plaintiff's employee benefit plan. Instead, HealthNow determined eligibility for benefits and processed claims in accordance with the rules and criteria established by Plaintiff. (See id.; Exhibit B annexed to Declaration of Frank V. Balon, Esq.). In this regard, Section 7.7 of the Administrative Services Agreement unambiguously provides that "HealthNow shall have no power to add to, subtract from or modify any terms of the Plan, or to change or add any benefit provided under the Plan or to waive or fail to apply any requirements for eligibility for a benefit under the Plan...." (Exhibit A annexed to Declaration of Frank V. Balon, Esq.)

3. Plaintiff, which is designated by Section 1.5 of the Administrative Services Agreement as the "plan administrator" and "named fiduciary" of its employee benefit plan, expressly retained final discretionary authority with respect to contested benefit claims pursuant to Section 3.3 of the Agreement and sole responsibility for the payment of all claims pursuant to Section 1.3 of the Agreement. (Id.)

4. At approximately the same time that Plaintiff and HealthNow entered into the Administrative Services Agreement, HealthNow assisted Plaintiff in obtaining stop loss insurance coverage through Co-Defendant Trustmark Insurance Company in order to insure Plaintiff against costs associated with benefit claims that exceeded a certain dollar amount. (See Exhibit B annexed to Declaration of Frank V. Balon, Esq.; Dkt.# 4.)

5. While HealthNow assisted Plaintiff in obtaining stop loss insurance coverage through Trustmark Insurance Company, HealthNow was not a party to the stop-loss insurance contract ultimately entered into between Plaintiff and Trustmark. (See Exhibit B annexed to Declaration of Frank V. Balon, Esq.; Exhibit A to Dkt.# 4; Dkt.# 16.)

6. Rather, only Plaintiff and Trustmark were parties to the stop-loss insurance contract. (See Exhibit B annexed to Declaration of Frank V. Balon, Esq.; Exhibit A to Dkt.# 4; Dkt.# 16). As such, contrary to Plaintiff's allegations, HealthNow was not required by the terms of the stop-loss insurance contract to provide information and/or reports to the stop-loss insurance carrier.

7. Additionally, the Administrative Services Agreement, which controlled the relationship of Plaintiff and HealthNow during the relevant period, did not require HealthNow to provide any information and/or reports to the stop-loss insurance carrier. (See Exhibits A and B annexed to Declaration of Frank V. Balon, Esq.)

(HealthNow's Statement of Undisputed Material Facts Pursuant to Federal Rules of Civil Procedure, Local Rule 56.1 (Nov. 11, 2004).)

STANDARDS OF LAW

Summary Judgment Standard

The standard for granting summary judgment is well established. Summary judgment may not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). A party seeking summary judgment bears the burden of establishing that no genuine issue of material fact exists. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). "[T]he movant must make a prima facie showing that the standard for obtaining summary judgment has been satisfied." 11 MOORE'S FEDERAL PRACTICE, § 56.11[1][a] (Matthew Bender 3d ed.). That is, the burden is on the moving party to demonstrate that the evidence creates no genuine issue of material fact. See Amaker v. Foley, 274 F.3d 677 (2d Cir.2001); Chipollini v. Spencer Gifts, Inc., 814 F.2d 893 (3d Cir.1987) (en banc). Where the non-moving party will bear the burden of proof at trial, the party moving for summary judgment may meet its burden by showing the evidentiary materials of record, if reduced to admissible evidence, would be insufficient to carry the non-movant's burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Once that burden has been met, the burden then shifts to the non-moving party to demonstrate that, as to a material fact, a genuine issue exists. FED. R. CIV. P. 56(e); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" only if the...