Filed: Dec. 03, 2012
Latest Update: Feb. 12, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 11-1750 JUDY L. MOON, individually; JUDY L. MOON, Executor of the Estate of Leslie W. Moon, Plaintiffs - Appellants, v. BWX TECHNOLOGIES, INCORPORATED; MCDERMOTT INTERNATIONAL, INCORPORATED; THE BABCOCK & WILCOX COMPANY; BABCOCK & WILCOX POWER GENERATION GROUP, INCORPORATED, Defendants – Appellees. Appeal from the United States District Court for the Western District of Virginia, at Lynchburg. Norman K. Moon, Senior District J
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 11-1750 JUDY L. MOON, individually; JUDY L. MOON, Executor of the Estate of Leslie W. Moon, Plaintiffs - Appellants, v. BWX TECHNOLOGIES, INCORPORATED; MCDERMOTT INTERNATIONAL, INCORPORATED; THE BABCOCK & WILCOX COMPANY; BABCOCK & WILCOX POWER GENERATION GROUP, INCORPORATED, Defendants – Appellees. Appeal from the United States District Court for the Western District of Virginia, at Lynchburg. Norman K. Moon, Senior District Ju..
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 11-1750
JUDY L. MOON, individually; JUDY L. MOON, Executor of the
Estate of Leslie W. Moon,
Plaintiffs - Appellants,
v.
BWX TECHNOLOGIES, INCORPORATED; MCDERMOTT INTERNATIONAL,
INCORPORATED; THE BABCOCK & WILCOX COMPANY; BABCOCK & WILCOX
POWER GENERATION GROUP, INCORPORATED,
Defendants – Appellees.
Appeal from the United States District Court for the Western
District of Virginia, at Lynchburg. Norman K. Moon, Senior
District Judge. (6:09-cv-00064-NKM)
Argued: September 20, 2012 Decided: December 3, 2012
Before MOTZ, AGEE, and THACKER, Circuit Judges.
Affirmed in part, vacated in part, and remanded by unpublished
per curiam opinion.
Sidney Harold Kirstein, Lynchburg, Virginia, for Appellants.
Joseph Michael Rainsbury, LECLAIRRYAN, PC, Roanoke, Virginia,
for Appellees.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Judy L. Moon (“Appellant”), executor of the estate of
Leslie W. Moon, appeals the district court’s denial of her
motion to remand and the subsequent order dismissing her suit.
Appellant argues that her purported “state law” claims merely
seek a one-time recovery from Appellees based on an alleged
independent contract for benefits and thus do not fall under the
Employee Retirement Income Security Act of 1974 (“ERISA” or the
“Act”), 29 U.S.C. § 1001 et seq. This argument cannot succeed.
Because Appellant’s claims, which were initially brought in
state court, are essentially mislabeled federal claims that fall
within the broad scope of ERISA’s civil enforcement provision,
29 U.S.C. § 1132(a), her suit was properly removed to federal
court and the motion to remand to state court was properly
denied. We also conclude the district court was correct in
deciding that the life insurance plan language at issue
unambiguously bars Appellant’s claim for benefits on its terms.
However, because the district court relied on a now-
superseded opinion of this court, McCravy v. Metropolitan Life
Insurance Co., 650 F.3d 414 (4th Cir. 2012) (McCravy I),
superseded by McCravy v. Metropolitan Life Insurance Co.,
690
F.3d 176 (4th Cir. 2012) (McCravy II), in addressing Appellant’s
claims based on equitable estoppel and breach of fiduciary duty,
and particularly in light of CIGNA Corp. v. Amara, ___ U.S. ___,
2
131 S. Ct. 1866,
179 L. Ed. 2d 843 (2011), we vacate the order of
dismissal and entry of final judgment and remand for further
proceedings.
I.
Mr. Moon, now deceased, had been a full-time employee
of Appellee BWX Technologies, Inc. (“BWX”) and its predecessor
corporations from 1969 until June 2005. Beginning June 1, 2005,
Mr. Moon was medically unable to continue working due to a
severe heart condition and went on short term disability, the
payments of which lasted until November 30, 2005. He later
applied for long-term disability, which was approved on December
1, 2005, and Mr. Moon retired from employment with BWX as of
that date.
At some point during his employment in 2005, BWX
offered Mr. Moon a selection of employee group benefits,
including life insurance, which would be effective at the start
of 2006. The enrollment period occurred in the fall while Mr.
Moon’s application for long-term disability benefits was
pending. He elected to enroll in various employee benefits by
completing a “FlexChoice Decision Worksheet” (“2005 Decision
3
Worksheet”), dated October 17, 2005. 1 Relevant here, Mr. Moon
opted for “employee life insurance” valued at $200,000 -- the
same amount he had elected the previous year. The coverage was
to become effective January 1, 2006. BWX verified Moon’s
selection in a November 29, 2005, Confirmation Statement (“2005
Confirmation Statement”).
The 2005 Confirmation Statement, issued only days
before Mr. Moon went on long-term disability and retired,
identifies the relevant coverage as “Employee Life Insurance”
under the heading “Plan Name.” The overall group insurance plan
used by BWX, titled “Group Insurance Plan for Employees of
McDermott Incorporated and Participating Subsidiary and
Affiliated Companies,” incorporates by reference certain other
insurance policies, including a life insurance plan (“Plan”)
issued by Metropolitan Life Insurance Company (“MetLife”), which
is the policy at issue in this case. The Plan is an ERISA-
qualified life insurance plan for BWX employees administered by
MetLife.
On January 13, 2006, BWX printed, and Mr. Moon
sometime thereafter received, a second benefits confirmation
1
The 2005 Decision Worksheet was printed on October 17,
2005. It is unknown when Mr. Moon completed the form, though it
must be assumed that he did so prior to the creation of the 2005
Confirmation Statement that verified his selections on November
29, 2005.
4
statement (“2006 Confirmation Statement”) confirming Mr. Moon
had chosen benefits effective January 2, 2006, including a
$200,000 life insurance benefit. 2 Of note, the 2006 Confirmation
Statement incorrectly states that Mr. Moon was not disabled and
appears to refer to him as an “employee,” despite the fact that
Mr. Moon retired from BWX and went on long term disability as of
December 1, 2005.
Mr. Moon and his family paid some, though not all, of
the premiums set forth in the 2006 Confirmation Statement. The
Moons paid the premiums directly to BWX during 2006. BWX
accepted the payments without objection.
On November 18, 2006, Mr. Moon passed away. The 2006
premium payments at the time of Mr. Moon’s death were in
arrears: On November 29, 2006, Appellant sent a letter to BWX
and enclosed a check for $1,173.36, paying the entire balance
due on Mr. Moon’s benefits.
Following the death of her husband, Appellant made a
claim directly to BWX requesting payment of the $200,000 life
insurance benefit. BWX denied her claim by letter dated April
2
BWX suggested that the 2006 Confirmation Statement was
sent due to a change in the amount of the premium since the time
the 2005 Confirmation Statement had been issued. The 2006
Confirmation Statement indicated a net cost to Mr. Moon for all
benefits of $3,269.76. This reflected an increase of $2.52 from
the 2005 Confirmation Statement. Relevant here, the cost for
the life insurance coverage remained unchanged at $804.
5
12, 2007, which stated Mr. Moon had lost his employee group life
insurance benefit when he became unable to work after November
2005. BWX further contended that Mr. Moon failed to convert his
group employee policy with MetLife after he ceased working for
BWX as required by the Plan. 3
On November 10, 2009, Appellant filed this action in
Lynchburg City Circuit Court. She alleged in the original
complaint that Mr. Moon and Appellees made an independent post-
employment contract for life insurance benefits by way of the
2006 Confirmation Statement, and that Appellees, not MetLife,
had an obligation to pay the $200,000. Appellees timely
removed, asserting federal question jurisdiction under ERISA.
Appellant moved to remand. The district court referred the
motion to a magistrate judge, who issued a report and
recommendation (“R&R”) advising that remand be denied. The
district court agreed and adopted the R&R in part, concluding,
“the record makes clear that plaintiff’s claim under the
3
As explained below, the Plan states that if the insured
becomes totally disabled, he “may continue life insurance
coverage . . . by making payment directly to the insurance
company.” J.A. 194-95. Citations to the “J.A.” refer to the
Joint Appendix filed by the parties in this appeal.
6
allegedly independent benefits agreement is in substance an
attempt to recover under the group life plan.” (J.A. 143). 4
In support of its conclusion, the district court found
(1) the benefits were of the sort offered by an acknowledged
benefits plan; (2) the claimed benefits amount was identical to
that offered under the employee life insurance plan; and (3) the
document on which plaintiff relied for her independent agreement
argument -- the 2006 Confirmation Statement -- actually
undermines her claims, as it clearly relates to various employee
plan benefits. The district court thus concluded, “although the
form of the pleadings suggests otherwise, the substance of
Moon’s claim is revealed as an attempt to vindicate rights under
the group life plan.” (J.A. 143-44). Therefore, the district
court found federal jurisdiction proper.
After the district court denied remand, Appellant
filed an amended complaint containing four counts, styled 1)
“breach of contract,” 2) “breach of implied or quasi-contract,”
3) “estoppel,” and 4) “negligent breach of ERISA duties.” (J.A.
147-57). Appellees moved to dismiss the amended complaint
4
The district court rejected the magistrate judge’s R&R to
the extent that it found that the 2006 Confirmation Statement
constituted an “informal plan” and thus any action to enforce it
fell under ERISA. Instead, as noted above, the district court
rested its holding on the basis that the alleged independent
benefits agreement was “related to” the group plan and was thus
preempted.
7
pursuant to Rule 12(b)(6). The district court heard oral
argument, and on July 7, 2011, dismissed the amended complaint.
The district court rejected Appellant’s contract claim because
the MetLife Plan unambiguously excluded coverage where, as here,
the decedent was not engaged in active work during the month in
which he died. It rejected the quasi-contract claim because
ERISA already provided a mechanism for Appellant to recover any
benefits to which she was entitled. It rejected Appellant’s
estoppel claim, as equitable estoppel generally is unavailable
to modify the terms of an ERISA plan -- even where, as here, the
employer accepted premium payments. And it rejected the
negligent breach-of-ERISA-duties claim because, among other
things, the remedy sought was essentially a request for contract
damages and was not available in equity. See Moon v. BWX
Technologies, Inc., No. 6:09-cv-00064, 2011 WL 2670075 (W.D. Va.
July 7, 2011). Moon now appeals.
II.
We review de novo questions of subject matter
jurisdiction, “including those relating to the propriety of
removal.” Mayes v. Rapoport, 198 F.3d 457, 460 (4th Cir. 1999).
The burden of demonstrating jurisdiction resides with “the party
seeking removal.” Mulcahey v. Columbia Organic Chems. Co.,
Inc.,
29 F.3d 148, 151 (4th Cir. 1994). We also review de novo
8
a Rule 12(b)(6) dismissal for failure to state a claim.
Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008).
III.
A. Motion to Remand
In Appellant’s view, the 2006 Confirmation Statement
was an offer of benefits unrelated to any ERISA plan that BWX
made directly to Mr. Moon in his post-employment capacity, and
which was accepted by his subsequent payment of premiums. As
Moon’s argument goes, this alleged independent contract for
benefits is not an employee benefit plan and thus cannot be
preempted by ERISA. However, Appellant has blurred crucial
distinctions between the two types of preemption contemplated by
ERISA: ordinary conflict preemption and complete preemption.
1.
Ordinary conflict preemption under ERISA § 514 is set
forth in 29 U.S.C. § 1144(a): state laws are superseded insofar
as they “relate to” an ERISA plan. Id. 5 “Thus, when presented
5
Section 1144(a) reads as follows: “[T]he provisions of
this subchapter and subchapter III of this chapter shall
supersede any and all State laws insofar as they may now or
hereafter relate to any employee benefit plan described in
section 1003(a) of this title and not exempt under section
1003(b) of this title.”
“A state law claim ‘relates to’ an ERISA plan . . . ‘if it
has a connection with or reference to such a plan. . . .’”
Stiltner v. Beretta U.S.A. Corp., 74 F.3d 1473, 1480 (4th Cir.
(Continued)
9
with claims under state law that are said to implicate ERISA, a
court (be it state or federal) must determine whether the claims
are preempted by ERISA § 514.” Darcangelo v. Verizon
Communications, Inc., 292 F.3d 181, 187 (4th Cir. 2002). “But
‘ERISA pre-emption [of a state claim], without more, does not
convert a state claim into an action arising under federal
law.’”
Id. (quoting Metropolitan Life Ins. Co. v. Taylor,
481
U.S. 58, 64 (1987)). In short, “when ERISA is simply asserted
as a defense to a state law claim, the state claim is not
converted into a federal claim, and there is no federal question
giving rise to removal jurisdiction.”
Darcangelo, 292 F.3d at
187.
In contrast, “complete preemption” does give rise to
removal jurisdiction. Properly understood as a jurisdictional
doctrine, complete preemption arises only when plaintiff’s state
law claims come within the scope of ERISA’s civil enforcement
provision, found at § 502(a) of the Act and codified at 29
U.S.C. § 1132(a). See Taylor, 481 U.S. at 65-66. Thus, if
Appellant’s claims are essentially § 502(a) claims brought under
the guise of state law, ERISA completely preempts the purported
state law claims and converts them into what they actually are:
1996) (en banc) (quoting Shaw v. Delta Air Lines, Inc.,
463 U.S.
85, 97 (1983)).
10
federal claims. See Taylor, 481 U.S. at 65-66. 6 Section 1132(a)
authorizes plan participants or beneficiaries “to file civil
actions to, among other things, recover benefits, enforce rights
conferred by an ERISA plan, remedy breaches of fiduciary duty,
clarify rights to benefits, and enjoin violations of ERISA.”
Marks v. Watters,
322 F.3d 316, 323 (4th Cir. 2003); see 29
U.S.C. §§ 1132(a)(1)-(4).
2.
Appellant contends the district court should have
ordered remand because her claims are not completely preempted
by the ERISA civil enforcement provision, § 502(a). See 29
U.S.C. 1132(a). Our circuit has recognized three “essential
requirements” for complete preemption:
(1) the plaintiff must have standing under § 502(a) to
pursue its claim; (2) its claim must “fall[ ] within
the scope of an ERISA provision that [it] can enforce
via § 502(a)”; and (3) the claim must not be capable
of resolution “without an interpretation of the
contract governed by federal law,” i.e., an ERISA-
governed employee benefit plan.
6
“In cases of complete preemption, . . . it is misleading
to say that a state claim has been ‘preempted’ as that word is
ordinarily used. In such cases, in actuality, the plaintiff
simply has brought a mislabeled federal claim, which may be
asserted under some federal statute.” King v. Marriott Int’l.,
Inc., 337 F.3d 421, 425 (4th Cir. 2003). In this way, “the
doctrine of complete preemption serves as a corollary to the
well-pleaded complaint rule: because the state claims in the
complaint are converted into federal claims, the federal claims
appear on the face of the complaint.”
Darcangelo, 292 F.3d at
187 (citing
Taylor, 481 U.S. at 63-65).
11
Sonoco Products Co. v. Physicians Health Plan, Inc., 338 F.3d
366, 372 (4th Cir. 2003) (adopting test from Jass v. Prudential
Health Care Plan, Inc.,
88 F.3d 1482, 1487 (7th Cir. 1996)).
a.
We turn first to the issue of statutory standing under
ERISA. Aside from the types of claims that may properly be
pursued under ERISA, § 502(a) also specifies the parties
entitled to assert those claims. In particular, “participants”
and “beneficiaries” are among the classes of persons entitled,
under § 502(a), to bring several causes of action permitted
under ERISA. A beneficiary is defined as “a person designated
by a participant, or by the terms of an employee benefit plan,
who is or may become entitled to a benefit thereunder.” 29
U.S.C. § 1002(8). The parties do not dispute that Mr. Moon
designated Appellant as the recipient of his alleged life
insurance benefits. However, a party such as Appellant can
demonstrate that she “may become entitled to a benefit,” and
therefore be considered a “beneficiary” for jurisdictional
purposes, only if she can show that at the time she filed suit
she had a colorable claim to benefits. See Firestone Tire and
Rubber Co. v. Bruch, 489 U.S. 101, 116-18 (1989).
We have previously said, “[w]hether an employee has
standing as a ‘participant’ depends, not on whether he is
12
actually entitled to benefits, but on whether he has a colorable
claim that he will prevail in a suit for benefits.” Davis v.
Featherstone, 97 F.3d 734, 736 (4th Cir. 1996) (quoting Abraham
v. Exxon Corp.,
85 F.3d 1126, 1129 (5th Cir. 1996)); see also In
re Mutual Funds Investors Litig.,
529 F.3d 207, 214 (4th Cir.
2008). The test for a colorable claim is “‘not a stringent
one.’”
Featherstone, 97 F.3d at 737 (quoting Panaras v. Liquid
Carbonic Indus. Corp.,
74 F.3d 786, 790 (7th Cir. 1996)). A
claim is colorable if it is “arguable and nonfrivolous, whether
or not it would succeed on the merits.”
Id. at 737-38 (citing
Kennedy v. Conn. Gen. Life Ins. Co.,
924 F.2d 698, 700-01 (7th
Cir. 1991)). We find that because Appellant’s claims are
plainly arguable and nonfrivolous, she has statutory standing
under ERISA § 502(a).
b.
The second requirement for complete preemption is that
at least one of Appellant’s claims must fall within the scope of
ERISA’s civil enforcement provision, § 502(a). See Sonoco
Products, 338 F.3d at 372. Appellant’s claim for benefits
undoubtedly falls within this ambit inasmuch as she seeks, in
the main, to recover benefits allegedly owed to her based on the
disputed coverage documents. See 29 U.S.C. § 1132(a)(1)(B)
(providing that a civil enforcement action under ERISA may be
13
brought, for among other reasons, “to recover benefits due to
him under the terms of his plan”).
c.
The final requirement for complete preemption is
likewise easily met: Appellant’s claim must not be capable of
resolution without an interpretation of the ERISA-governed
employee benefit plan. See Sonoco Products, 338 F.3d at 372.
Despite Appellant’s assertion that her claims arise from an
independent contract for life insurance benefits, the entirety
of the record makes clear that if Mr. Moon were eligible for
life insurance coverage at all, it would be according to the
terms of the employee-sponsored plan that he selected upon
completing the 2005 Decision Worksheet.
Accordingly, the district court did not err in
determining that Appellant’s purported state law claims are
actually disguised federal claims arising under ERISA’s civil
enforcement provision. Removal jurisdiction was thus proper.
B. Motion to Dismiss
We now turn to Appellant’s contention that the
district court erred by dismissing her claims based on Federal
Rule of Civil Procedure 12(b)(6).
1.
As noted above, Appellant rests many of her arguments
on the inaccurate premise that her claims arise from an
14
independent contract for benefits made between her deceased
husband and BWX, as purportedly demonstrated by the 2006
Confirmation Statement and her payment of “premiums” made
directly to BWX during 2006. In fact, Mr. Moon selected
employee benefits, including the disputed life insurance
coverage, while still an employee at some point prior to
November 29, 2005, the date on which BWX confirmed Mr. Moon’s
selected coverage. Far from indicating an independent, post-
employment contract for benefits, the documents on which
Appellant relies all plainly demonstrate that her claims stem
from nothing more than Mr. Moon’s enrollment in a run-of-the-
mill employee benefit plan weeks before his retirement.
Accordingly, Appellant’s claims for an entitlement to benefits
are governed by the language of the Plan.
It is undisputed that life insurance coverage under
the Plan continued only while the employee remained in “Active
Work.” (J.A. 238). The plan language then states, “All of your
benefits will end on the last day of the calendar month in which
your employment ends. Your employment ends when you cease
Active Work as an employee.” (J.A. 238). The Plan defines
“Active Work” as “performing all of the material duties of your
job with the Employer where those duties are normally carried
out.” (J.A. 238). An employee like Mr. Moon who was on total
disability was thus ineligible for benefits under the Plan as of
15
the date of his retirement on December 1, 2005. The Summary
Plan Description relates this fact in straightforward language.
Under the heading, “If You Become Disabled,” it states that an
employee loses life insurance coverage when he ceases to be an
active employee due to a disability: “If, while insured, you
become totally disabled and are unable to work, your life
insurance coverage will end. However, you may continue life
insurance coverage for you and your covered dependents by making
payment directly to the insurance company . . . .” (J.A. 195).
In this way, a disabled employee who wished to continue his life
insurance under the Plan was required to convert to an
individual plan and to arrange to pay MetLife directly. Mr.
Moon failed to do so.
At the latest, Mr. Moon ceased any involvement in
“Active Work” when he retired on December 1, 2005 -- at least a
month before the disputed coverage purportedly went into effect.
Because Mr. Moon was clearly never eligible for benefits under
the Plan during 2006, Appellant cannot recover under the Plan’s
plain terms.
2.
The merits of Appellant’s equitable estoppel and
breach of fiduciary duty claims are less clear. Under ERISA, 29
U.S.C. § 1132(a)(3) empowers beneficiaries “to obtain other
appropriate equitable relief” to redress violations of ERISA or
16
ERISA plans. In this regard, the United States Supreme Court in
CIGNA Corp. v. Amara, ___ U.S. ___, 131 S. Ct. 1866,
179 L. Ed. 2d
843 (2011), has “clarified that remedies beyond mere premium
refunds -- including the surcharge and equitable estoppel
remedies . . . are indeed available to ERISA plaintiffs suing
fiduciaries under Section 1132(a)(3).” McCravy
II, 690 F.3d at
182-83 (internal quotation marks and citation omitted). 7
Amara was decided on May 16, 2011. On the same day,
and without the guidance of Amara, our court decided McCravy I,
650 F.3d 414. In McCravy I, we affirmed a decision that had
foreclosed a plaintiff’s available remedies under ERISA, finding
that § 1132(a)(3) did not allow for surcharge and equitable
estoppel. We reversed ourselves in McCravy II in light of the
Amara decision. See McCravy
II, 690 F.3d at 181-83.
In this case, the district court’s memorandum opinion
and order, entered July 7, 2011 (after Amara and McCravy I, but
before McCravy II), dismissed Appellant’s claims for recovery
based on, among other things, “estoppel” and “negligent breach
of ERISA duties.” (J.A. 154-55). In so doing, the district
court heavily relied on language from the now-superseded McCravy
I as well as several cases whose holdings may require
7
Surcharge is defined as “[t]he amount that a court may
charge a fiduciary that has breached its duty.” Black’s Law
Dictionary 1579 (9th ed. 2009).
17
reexamination in light of Amara. See e.g., Moon, 2011 WL
2670075, at *4-5 (explicitly relying on McCravy I in holding,
“[d]efendants’ acceptance of premium payments does not change
the analysis” as to equitable estoppel and observing that the
“reasoning [from McCravy I] applies with equal force here”); see
also
id. at *5-6 (concluding that Appellant may not recover plan
benefits as “other appropriate equitable relief” for breach of
fiduciary duty, citing McCravy I).
In view of the district court’s substantial reliance
on McCravy I, we believe the better course is to remand the case
to permit the district court to address anew Appellant’s claims
of equitable estoppel and breach of fiduciary duty in light of
Amara and McCravy II. Whether these claims will ultimately
succeed in the circumstances of this case are questions
appropriately resolved in the first instance before the district
court.
IV.
For the foregoing reasons, we affirm the district
court’s order denying Appellant’s motion to remand, vacate the
district court’s memorandum opinion and order entered July 7,
18
2011, and remand the case to the district court for further
proceedings consistent with this opinion.
AFFIRMED IN PART,
VACATED IN PART,
AND REMANDED
19
