Stonewall Jackson Memorial v. American United Life, Civil Action No. 1:96-CV-160.
| Decision Date | 30 April 1997 |
| Docket Number | Civil Action No. 1:96-CV-160. |
| Citation | 963 F.Supp. 553 |
| Court | U.S. District Court — Northern District of West Virginia |
| Parties | STONEWALL JACKSON MEMORIAL HOSPITAL, a non-profit West Virginia Corporation, Plaintiff, v. AMERICAN UNITED LIFE INSURANCE COMPANY, a Qualified Foreign Corporation, Gardner & White Corporation, a non-qualified foreign corporation, Gardner & White, Inc., a non-qualified foreign corporation, Gardner & White Consulting Services, Inc., a non-qualified foreign corporation and Harry D. Jackson, an individual, Defendant. |
Robert G. Steele, Steptoe & Johnson, Clarksburg, WV, for Plaintiff.
David K. Schwirian, Pauley, Curry, Sturgeon & Vanderford, Charleston, WV, Phillip R. Scaletta, Ice Miller Donadio & Ryan, Indianapolis, IN, for Defendant American United Life Ins. Co.
Stephen R. Brooks, Furbee, Amos, Webb & Critchfield, Fairmont, WV, for Defendants Gardner & White Corp., Gardner & White, Inc., Gardner & White Consulting Services, Inc. and Harry D. Jackson.
This matter is before the Court on the motion of the plaintiff, Stonewall Jackson Memorial Hospital, to remand the case to the Circuit Court of Lewis County, West Virginia. The legal issues underlying this motion have been fully briefed in accordance with Local Rule of Civil Procedure 4.01 and the Court, therefore, finds them ripe for review. For the reasons that follow, the motion of the plaintiff is GRANTED and the case is REMANDED to the Circuit Court of Lewis County, West Virginia.
Sometime in the mid-1970s, plaintiff Stonewall Jackson Memorial Hospital ("Stonewall") adopted a purchase money pension plan ("the Plan") for the benefit of its employees. The Plan's purpose was to provide eventual retirement benefits to hospital employees, through funds generated by cash contributions made by Stonewall at regular intervals and the resulting investment income earned on these contributions. Under the terms of the Plan, each qualified participant is assigned a pro rata portion of the employer's lump sum annual contribution. To this portion, an amount representing the annual investment earnings or loss on the lump sum is either added or subtracted. This amount is calculated by applying an annual interest rate, which represents the annual rate of return earned on the Plan assets in aggregate, to the principal amount contained in the Plan accounts of the individual participants. It is undisputed that this pension Plan is covered by the provisions of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA").
The plaintiff alleges that the Plan it adopted was based on proposals submitted to both Stonewall and the West Virginia Hospital Association ("Association") by defendant insurance agent Harry D. Jackson ("Jackson")2 on behalf of defendants Gardner & White Corporation, Gardner & White, Inc., and Gardner & White Consulting Services, Inc. (collectively "Gardner & White") and American United Life Insurance Company ("AUL").
The Plan's governing document, which Stonewall alleges was drafted by Gardner & White and AUL, originally provided for the investment of all Plan assets through an annuity contract issued by AUL, that had previously been executed between AUL and the West Virginia Hospital Association ("annuity contract"). The terms of the Plan, however, do not limit Stonewall's authority to decide how and where to invest the Plan's assets on behalf of participants and beneficiaries. The AUL annuity contract therefore was only one of a myriad of investment possibilities under the Plan, the only requirement being that the investment medium chosen be a prudent one. Despite these other options, however, Stonewall elected to become a party to the AUL annuity contract which, thus, became the Plan's chosen investment medium.
To effect this investment scheme, at roughly the same time the Plan was adopted, Stonewall and AUL executed a joinder agreement under which all Plan assets were invested through the annuity contract and were, therefore, held by AUL.
Stonewall alleges that the contract it adopted set out only two procedures by which its terms could be amended. The first of these allowed AUL to unilaterally amend the contract, but only after giving the Association thirty days notice, and only to the extent that the changes did not affect contributions made prior to the amendment's effective date. The second procedure provided for amendment through written agreement between the Association and AUL, and further required the consent of the employee participants of the pension plan regarding amendments whose adoption would adversely affect benefits provided by pre-amendment contributions.
In April of 1995, Stonewall, for reasons unknown to the Court, decided to change investment media. This decision prompted Stonewall to request that AUL transfer the existing Plan assets into the alternative medium. Although AUL apparently completed such a transfer, Stonewall alleges that it refused to do so until Stonewall had executed a written waiver of all potential legal claims relating to the transfer. The Hospital further alleges that AUL improperly reduced the total amount transferred by 4.6%, claiming entitlement to certain surrender charges and liquidation fees. Both of these actions were apparently taken in conformance with the terms of the annuity contract, which had, by this time, been amended at least twice by agreement between AUL and the Association. Stonewall asserts that it never consented to these amendments and that the defendants led it to believe that they would apply only to the Association.
On September 4, 1996, Stonewall filed suit against AUL, Gardner & White and Jackson in the Circuit Court of Lewis County, West Virginia. The complaint alleges that AUL applied the 4.6% reduction and written waiver requirement to the transfer of the Plan's assets pursuant to amendments to the annuity contract which were effected by AUL and the Association in October 1993. Stonewall further asserts that the effective application of these amendments to its Plan's assets is in derogation of the contract's original terms. Specifically, Stonewall alleges that since it never consented to the amendments in question, they constitute unilateral amendments to the contract and that AUL was therefore required to provide it with thirty (30) days notice before effecting the amendments, and to limit their application to contributions and investment returns which accrued after the amendments' effective dates. Stonewall asserts that none of these contractual obligations was honored. The complaint also alleges that, at the time the amendments were executed, all defendants misrepresented the nature, scope and practical effect of the amendments to Stonewall.
The complaint includes four separate counts, each nominally grounded in state law. Count I alleges that the actions of AUL in imposing the liquidation and surrender fees and "compelling" Stonewall to execute a written waiver of potential claims constitutes a breach of the terms of the annuity contract. Count II charges all of the defendants with breach of the annuity contract as well as violation of the duty of good faith and fair dealing in connection with this breach and the attendant representations. Count III charges all the defendants with professional negligence in connection with expert advice offered to Stonewall concerning the Plan. Finally, Count IV alleges that all defendants engaged in unfair and deceptive trade practices in connection with the amendment of the annuity contract, the reduction of the monies transferred, and the attempted resolution of the dispute that subsequently arose.
On October 10, 1996, a document styled "Notice of Filing of Defendants' Joint Notice of Removal" was filed with the Court. Addressed to the plaintiffs' counsel, the document reflects that the case had been removed to the United States District Court for the Northern District of West Virginia on October 9, 1996. The Notice is signed by Stephen R. Brooks, Esquire, as counsel for defendants Gardner & White and Jackson, and by Heather LaFollette, an attorney associated with Brooks' firm, for David Schwirian, Esquire, counsel for AUL.3
As to the jurisdictional basis for removal, the Notice asserts that this Court has federal question jurisdiction over the case because the state-based causes of action asserted by the plaintiff all "relate to" the administration of a pension benefit plan which is governed by ERISA and, as such, are preempted by its § 514(a).
On November 8, 1996, Stonewall filed a Motion to Remand the case to the Circuit Court of Lewis County. In its memorandum in support of its motion, it first contends that the joint notice of removal violates the so-called "rule of unanimity" because it lacks independent verification of AUL's consent to the removal. Secondly, Stonewall asserts that its claims are not preempted by § 514(a) of ERISA and that the Court, therefore, lacks original jurisdiction over its claims, thereby making their removal improper.
On November 11, 1996 (33 days after the case was purportedly removed), after reviewing Stonewall's remand motion, Attorney David Schwirian signed the Joint Notice of Removal, directly above Ms. LaFollette's signature, and resubmitted the same to the Clerk of Court for filing. Then, on November 21, 1996, Schwirian executed an affidavit attesting to his participation in the drafting of the joint notice, his authorization of Ms. LaFollette to sign the notice on his behalf, his client's consent to the removal, and his subsequent attempt to personally sign the notice. This affidavit was attached as Exhibit B to the defendants' memoranda opposing plaintiff's motion to remand which was submitted to the Court on November 22, 1996.
The plaintiff has offered two arguments in support of its motion to remand. The first alleges a defect in...
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