Villescas v. CNA Ins. Companies

• Decision Date: 24 November 1993
• Docket Number: No. 23805,23805
• Citation: 109 Nev. 1075,864 P.2d 288
• Parties: Amelia VILLESCAS, as Special Administratrix of the Estate of Billie Villescas, Deceased, Appellant, v. CNA INSURANCE COMPANIES, a Foreign Corporation, Respondent.
• Court: Nevada Supreme Court

Page 288

864 P.2d 288

109 Nev. 1075

Amelia VILLESCAS, as Special Administratrix of the Estate of Billie Villescas, Deceased, Appellant, v. CNA INSURANCE COMPANIES, a Foreign Corporation, Respondent.

No. 23805.

Supreme Court of Nevada.

Nov. 24, 1993.

Albert D. Massi and Patricia Bowling, Las Vegas, for appellant.

Rawlings, Olson & Cannon, Las Vegas, for respondent.

OPINION

PER CURIAM:

Billy Villescas ("decedent") purchased a policy of long term disability insurance through his employer, Marshall Industries. Respondent CNA Insurance Companies ("CNA") issued the policy to decedent's employer, Marshall Industries. Appellant, Amelia Villescas ("Villescas"), in her capacity as administratrix of decedent's estate, brought suit against CNA alleging breach of the covenant of good faith and fair dealing, breach of fiduciary duties, common law fraud, and breach of NRS 686A.310 because CNA allegedly failed to pay all the benefits owed to decedent under the policy.

CNA filed an answer which generally denied Villescas' allegations. CNA then filed a motion for summary judgment on October 9, 1986, which Judge Mendoza denied. On December 8, 1987, CNA filed a renewed motion for summary judgment, which Judge Mendoza again denied. Prior to CNA's filing its third motion for summary judgment, Judge Sobel replaced Judge Mendoza following a judicial election. CNA again renewed its motion for summary judgment on January 15, 1992, and Judge Sobel granted the motion, finding that the Employment Retirement Income Security Act ("ERISA") ¹ preempted Villescas' suit. We agree that this matter is preempted by ERISA.

Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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." NRCP 56(c). On appeal from summary judgment, all evidence favorable to the party against whom summary judgment was entered will be accepted as true. Jackson v. State Farm Fire & Casualty, 108 Nev. 504, 835 P.2d 786 (1992); Walker v. American Bankers Ins., 108 Nev. 533, 836 P.2d 59 (1992).

Judge Sobel granted CNA's motion for summary judgment because he found that there was "simply no evidence adduced to combat the evidence of Defendant [CNA] that the insurance here involved was part of an ERISA plan." The crucial issue then is whether Villescas came forward with any evidence which, if taken as true, would raise a genuine issue of material fact as to whether decedent's plan was covered by ERISA. Villescas also raised another, less-significant issue which we will discuss first: whether decedent was a "participant" as that term is used in ERISA.

ERISA only applies to persons who are participants or beneficiaries under an ERISA plan. 29 U.S.C. § 1132(a)(1)(B) (1988); Turnbow v. Pacific Mut. Life Ins., 104 Nev. 676, 679, 765 P.2d 1160, 1162 (1988), cert. denied, 490 U.S. 1102, 109 S.Ct. 2458, 104 L.Ed.2d 1012 (1989) ("if [appellant] is not a 'participant' or 'beneficiary,' [she] may sue under and seek the broader relief provided by state tort law"). A participant is defined as:

[a]ny employee or former employee of an employer, or any member or former member of an employee organization who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, or whose beneficiaries may be eligible to receive any such benefit.

29 U.S.C. § 1002(7) (1988).

Villescas asserts that since decedent "was not employed by Marshall Industries and had no prospects of returning," he does not fit the above definition. This contention is inapposite because ERISA applies also to former employees as long as they are "eligible to receive a benefit." Id. In addition, Villescas asserts that decedent paid premiums after he left Marshall Industries and that this fact also precludes a finding that decedent was a "participant." This contention is really a repeat of the major issue presented in this case, whether the plan in question falls within the purview of ERISA. If decedent merely purchased a separate policy from CNA, then the policy is not an ERISA plan.

Villescas relies upon this court's opinion in Turnbow, which held that plaintiff's claim was not preempted by ERISA because she was not an employee "participant" or "beneficiary" under an ERISA plan. We note, however, that the plaintiff in Turnbow was the sole owner and employee of an unincorporated business, and therefore, this court held that she could not be an employee under an ERISA plan. Id. 104 Nev. at 679, 765 P.2d at 1162. In the instant case, decedent was not self-employed; therefore, Turnbow is of no help to Villescas on this issue.

Villescas also argues that decedent was not a "participant" because "the term 'participant' encompasses only those former employees who are owed vested benefits," Yancy v. American Petrofina, Inc., 768 F.2d 707, 709 (5th Cir.1985), or who have a "reasonable expectation of returning to covered employment." Kuntz v. Reese, 785 F.2d 1410, 1411 (9th Cir.1986), cert. denied, 479 U.S. 916, 107 S.Ct. 318, 93 L.Ed.2d 291 (1986). It is certainly true that decedent will not return to covered employment. But the second prong of Villescas' argument is circular: Villescas argues that she seeks not "vested benefits," but rather, damages under state tort law, and therefore decedent is not a participant as that term is defined by Yancy and Kuntz. But the real issue here is whether those state causes of action are preempted by ERISA. Accordingly, we conclude that this argument lacks merit.

Furthermore, both Yancy and Kuntz are standing cases, and it seems rather odd for Villescas to assert that she has no standing to sue under ERISA. More importantly, Kuntz and Yancy both involved plaintiffs who had received all of their benefits upon retirement in a lump sum, thus they were not " 'eligible to receive a benefit,' and were not likely to become eligible to receive a benefit, at the time that they filed suit." Kuntz, 785 F.2d at 1411 (quoting 29 U.S.C. § 1002(7) (1988)); see also Yancy, 768 F.2d at 708-09. For these reasons, we conclude that Villescas' assertion that decedent was not a "participant," as that term is defined by ERISA, is not well-taken.

"ERISA comprehensively regulates, among other things, employee welfare benefit plans that, 'through the purchase of insurance or otherwise,' provide medical, surgical, or hospital care, or benefits in the event of sickness, accident, disability, or death." Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 44, 107 S.Ct. 1549, 1551, 95 L.Ed.2d 39 (1986) (quoting 29 U.S.C. § 1002(1) (1988)). ERISA states that except as provided in the so-called "savings clause" (discussed below), ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a); Pilot Life, 481 U.S. at 44-45, 107 S.Ct. at 1551. In place of these state law causes of action ERISA provides "appropriate remedies, sanctions, and ready access to the Federal courts." 29 U.S.C. § 1001(b); Pilot Life, 481 U.S. at 44, 107 S.Ct. at 1551.

Villescas properly points out that "the existence of an ERISA plan is a question of fact, to be answered in the light of all the surrounding circumstances from the point of view of a reasonable person." Ellington v. Metropolitan Life Ins. Co., 696 F.Supp. 1237, 1240 (S.D.Ind.1988); see also Credit Managers Ass'n v. Kennesaw Life & Acc. Ins., 809 F.2d 617, 625 (9th Cir.1987).

Villescas cites various regulations of the Department of Labor which describe those plans which are not covered by ERISA, ² but offers no evidence to show the existence of a genuine issue of fact as to this plan. On the contrary, there is ample evidence in the record that Marshall Industries enrolled its employees in the plan, performed payroll deductions where necessary, and filed appropriate forms with the IRS and the Department of Labor as required under ERISA. Marshall Industries also contributed to the plan on the employee's behalf, and issued annual summaries to its employees as required by ERISA. Furthermore, CNA offered the testimony of Everett T. Allen, Jr. (an expert and author of no-small-renown in the field), who testified after reviewing these materials that the plan in question was undoubtedly a valid plan under ERISA and that Villescas' claims were thereby preempted. We agree with Judge Sobel's conclusion that "[t]here is simply no evidence adduced to combat the evidence of [CNA] that the insurance here involved was part of an ERISA plan."

In the face of this overwhelming evidence, we conclude that Villescas has failed to show a genuine issue of material fact sufficient to preclude summary judgment against her on this issue.

Villescas also argues that even if the plan at issue is covered by ERISA, her claim falls within ERISA's "savings clause." As the United States Supreme Court noted, "the savings clause excepts from the pre-emption clause laws that 'regulat[e] insurance.' " Pilot Life, 481 U.S. at 45, 107 S.Ct. at 1552 (quoting 29 U.S.C. § 1144(b)(2)(A) (1988)). Villescas concedes that Pilot Life conclusively establishes that her state common law causes of action (fraud, breach of the covenant of good faith and fair dealing, and breach of fiduciary duties) must give way to ERISA preemption if it is determined that she is seeking to claim under an ERISA plan. The sole question she raises then is whether ERISA also preempts her statutory cause of action--breach of NRS 686A.310. Specifically, Villescas asserts that this statute is designed to regulate insurance companies and therefore is "saved" from preemption under ERISA.

The United States Supreme Court in Pilot Life set up the framework in which such a claim must be analyzed. First, "a law must not just have an impact on the insurance industry,...