Tingey v. Pixley-Richards West, Inc.
| Decision Date | 09 January 1992 |
| Docket Number | Nos. 89-15377,PIXLEY-RICHARDS,89-15402 and 89-15452,s. 89-15377 |
| Citation | 953 F.2d 1124 |
| Parties | 14 Employee Benefits Cas. 2445 Bradley D. TINGEY, husband; Amy E. Tingey, wife, Bradley D. Tingey, as guardian ad litem for Trevor F. Tingey, a minor, Plaintiffs-Appellants, v.WEST, INC., a Massachusetts corporation, Blue Cross & Blue Shield of Massachusetts, a foreign corporation, Defendants-Appellees. Bradley D. TINGEY, husband, Amy E. Tingey, wife, and Bradley D. Tingey, as guardian ad litem for Trevor F. Tingey, a minor, Plaintiffs-Appellees, v.WEST, INC., a Massachusetts corporation, Defendant-Appellant. Bradley D. TINGEY, husband, Amy E. Tingey, wife, Bradley D. Tingey, as guardian ad litem for Trevor F. Tingey, a minor, Plaintiffs-Appellees, v.WEST, INC., a Massachusetts corporation, Roland "Buzz" Mosher, and Jane Doe Mosher, husband and wife, John Does I through V, White Corporation; Black Corporation, Defendants, and Blue Cross and Blue Shield of Massachusetts, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
R. Kelly Hocker, Hocker & Axford, Tempe, Ariz., for plaintiffs-appellants-cross-appellees.
Robert L. Dysart, Bess & Dysart, Brian Holohan, Crampton, Woods, Broening & Oberg, Phoenix, Ariz., for defendants-appellees-cross-appellants.
Appeal from the United States District Court for the District of Arizona.
Before GOODWIN and SNEED, Circuit Judges, and TAYLOR, * District Judge.
The district court dismissed a number of counts of the complaint of the plaintiffs, the Tingeys, and remanded other such counts to the Arizona Superior Court of Maricopa County. The Tingeys appeal the dismissals and the defendants appeal the remands. We hold all such claims should have been dismissed, but in the interest of justice, remand the case to the district court to allow the plaintiffs a final opportunity to attempt to plead a federal cause of action.
I.
FACTS AND PROCEEDINGS BELOW
On November 13, 1987, the Tingey family filed in the Arizona court a wrongful termination case. In their complaint, they alleged the following facts.
Bradley Tingey, the father, began working at Pixley-Richards West, Inc. (Pixley) in March of 1982. The company had an employee manual which, along with oral statements, established that employees would only be terminated for cause and would be given "progressive discipline," including probation and resort to specified grievance procedures.
Tingey subscribed to the company's comprehensive medical plan issued by Blue Cross and Blue Shield of Massachusetts, Inc. (Blue Cross), which included health coverage for an employee's spouse and children. The plan provided that "if you leave your job, you will be given an opportunity to continue Blue Cross and Blue Shield coverage on a direct payment basis." The plan also provided maternity benefits covering complications of pregnancy, care of the newborn, and any life-endangering complication of the child.
In August of 1985, Amy Tingey gave birth to a boy, Trevor, who was born with spina bifida. In November of 1985, Blue Cross received a bill for $18,000 to cover the delivery and postnatal care costs. Blue Cross sent a copy of the bill to Pixley, which received it around November 13 or 14. On November 15, Pixley fired Tingey without either explanation, progressive discipline, or an exit interview. Blue Cross paid all benefits due under the policy up to the date of termination, but has refused to allow the Tingeys to convert the policy.
In their complaint, the Tingeys directed the Arizona court to provisions of the Arizona insurance code, A.R.S. §§ 20-831 B & 20-1408 A, which require group disability benefits to include coverage for the "care and treatment of medically diagnosed congenital defects and birth abnormalities." They described these provisions as further requiring that Blue Cross maintain coverage for Trevor so long as Bradley Tingey remained employed with Pixley. In addition, the Tingeys characterized other provisions of Arizona law as prohibiting insurance carriers and employers from "making any misrepresentations to any policy holder for the purpose of inducing or intending to lapse, forfeit, surrender, retain or convert any insurance policy," Original Complaint (citing A.R.S. §§ 20-443 5, 20-1404 A 2), and as prohibiting carriers from "unfairly discriminating between individuals of the same class and life and the rates charged for any contract," id. (citing A.R.S. § 20-448 C).
Based on the foregoing, the Tingeys' state court complaint alleged four claims for relief:
I. [Pixley and Blue Cross] breached its/their duty of good faith and fair dealing, implicit in every insurance contract by terminating, or causing Tingey to be terminated and not giving proper notice of conversion rights, with the intent of depriving Trevor of his rights under the group insurance contract, and thereby depriving Trevor Tingey of required and necessary coverage.
II. The termination of Tingey's employment by Pixley was made in bad faith and with the intent to deprive his son of his rights under the group insurance contract.
The termination of Tingey's employment by Pixley was bad cause and in violation of Arizona's public policy requiring children with congenital defects to be covered under group insurance plans.
III. The actions and representations of Pixley ... were implied-in-fact covenants and created a reasonable expectation in Tingey of continued employment, and that his employment would not be terminated without good cause, and that if cause were alleged, that he would be given the procedural protections in place at Pixley.
Pixley did not have cause to terminate Tingey's employment and Pixley did not follow its own internal procedures when it terminated Tingey.
Pixley breached the contract of employment and the covenant of good faith and fair dealing implicit in every employment contract by terminating IV. Roland "Buzz" Mosher made a decision to terminate Brad, for the reasons herein alleged, intentionally and willfully. The said acts interfered with an advantageous financial relationship between Pixley and Tingey.
Tingey without good cause.
By reason of Mosher's act, Tingey has been deprived of the increments of his employment with Pixley.
The remedies the Tingeys sought included damages for anxiety, emotional distress, loss of sleep, loss of benefits, loss of employment, loss of income, and damages suffered from the deprivation of their "rights for coverage" under the Blue Cross policy. The Tingeys also sought punitive damages and attorney's fees.
On February 4, 1988, Pixley filed a petition for removal of the state action to the federal district court. Pixley alleged that the Tingeys' claims arose under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461, and were therefore removable to the district court under 28 U.S.C. §§ 1331 & 1441. Relying on Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987), Pixley concurrently filed a motion to dismiss the Tingeys' entire complaint on ERISA preemption grounds. 1 The Tingeys opposed the motion to dismiss and moved the court to remand the entire case to the Arizona Superior Court.
At its initial hearing, the district court denied the Tingeys' request for a remand. The court did not, however, dismiss the case, but requested that the Tingeys amend their complaint by "indicating the section of ... ERISA" under which they might proceed.
The Tingeys declined to follow its directions. Instead, they submitted an amended complaint that largely recast and expanded the earlier one. The grounds for recovery now numbered ten. They were as follows:
I. Breach of Contract: [Pixley's actions] are express and implied-in-fact covenants which created a reasonable expectation in Tingey of continued employment, and that his employment would not be terminated without good cause, and that if cause were alleged, that he would be given procedural protections.
Pixley did not have cause to terminate Tingey and did not follow its own internal procedures when it terminated Tingey.
II. Breach of Covenant of Good Faith and Fair Dealing: Pixley breached the covenant of good faith and fair dealing existant [sic] in the employment agreement.
III. Tort Breach: [Tingey's] termination by Pixley constituted a tortious breach of the duty of good faith and fair dealing.
Tingey's termination by Pixley was for a bad cause and in violation of Arizona's public policy requiring children with congenital defects to be covered under group insurance plans.
IV. Intentional Infliction of Emotional Distress: [Roland Mosher] undertook to inflict severe emotional distress upon Tingey.
The means utilized and the objects and intent of the actions are outrageous and unconscionable.
V. Insurance Bad Faith: [Pixley and Blue Cross] breached its/their duty of good faith and fair dealing, implicit in every insurance contract by terminating, or causing Tingey to be terminated.
VI. Violation of Statute: [Blue Cross] unfairly discriminated against Tingey because of Trevor's condition in violation of A.R.S. § 20-448.
VII. Violation of Statute: [Blue Cross] violated A.R.S. § 20-1402 requiring group policies to provide coverage for children with congenital defects and birth abnormalities by participating in procuring or instituting Tingely's [sic] termination
of employment. Plaintiff further alleges that Blue Cross violated A.R.S. § 20-1408 by failing to offer conversion rights to Tingey after he was terminated
VIII. Insurance Bad Faith: Blue Cross acted in bad faith and breached its duty of good faith and fair dealing owed to Tingey.
IX. Intentional Interference: [Roland Mosher] undertook to interfere with the advantageous contractual relationship between Brad Tingey and Pixley and in that regard has interfered with, cause [sic] the breach of, or actually sought to deprive the...
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