2011 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

3-29-2011

Deborah Baldwin v. UPMC

Precedential or Non-Precedential: Precedential

Docket No. 10-1673

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1

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 10-1673

_____________

DEBORAH L. BALDWIN, 

as guardian of C.L.D., a minor, K.K.D., a minor,

and C.M.D., a minor,

 Appellant

v.

UNIVERSITY OF PITTSBURGH MEDICAL CENTER (UPMC); 

LIFE INSURANCE COMPANY OF NORTH AMERICA

_______________

On Appeal from the United States District Court

for the Western District of Pennsylvania

(Civil Action No. 09-cv-1220)

District Judge: Honorable Joy Flowers Conti

_______________

Argued

February 10, 2011

Before: JORDAN, GREENAWAY, JR., and GARTH, Circuit 

Judges

(Opinion filed: March 29, 2011)

Patrick W. Murray, Esq. (Argued)

Stewart, Murray & Associates

437 Grant Street

Frick Building, Suite 600

Pittsburgh, PA 15219

Counsel for Appellant

John G. Ferreira, Esq.

Stephanie R. Reiss, Esq. (Argued)
2

Morgan Lewis & Bockius, LLP

One Oxford Centre, 32nd Floor

Pittsburgh, PA 15219

Counsel for Appellee Life Insurance Company of North 

America

John J. Myers, Esq.

Andrew T. Quesnelle, Esq. (Argued)

Eckert, Seamans, Cherin & Mellott LLC

44th Floor, U.S. Steel Tower 

600 Grant Street

Pittsburgh, PA 15219

Counsel for Appellee University of Pittsburgh Medical 

Center (UPMC)

_______________

OPINION OF THE COURT

_______________

GARTH, Circuit Judge.

This appeal by the plaintiff-appellant Deborah L. Baldwin as 

the adoptive mother of three Trent children requires us to decide 

Baldwin‟s standing to claim the insurance proceeds of policies 

subject to the Employee Retirement Income Security Act (ERISA), 

29 U.S.C. §§ 1001-1461, which were purchased by the children‟s 

biologic mother. The District Court denied relief to Baldwin, 

holding that she, as the adoptive mother to Trent‟s three children, 

has no standing to receive the insurance proceeds on behalf of the 

children under ERISA. We hold that Baldwin is entitled to offer 

evidence as to Trent‟s intent, i.e., understanding of the terms of her 

insurance policies, in order to establish the facts she alleges in her 

complaint. As a consequence, we will reverse the District Court‟s 

judgment and remand to the District Court for further proceedings 

as directed in this opinion. 
3

I.

In 2001, Victoria Trent, biologic mother of three minor 

children, C.L.D., K.K.D., and C.M.D., began working for appellee 

University of Pittsburgh Medical Center (UPMC). On June 6,

2003, at Trent‟s urging, Trent‟s lifelong family friend, Deborah 

Baldwin, adopted the children and became their legal guardian. 

New birth certificates were issued for the children. 

Notwithstanding the adoption, Trent maintained a parental

relationship with the children, who still referred to her as “Mom”:

she lived with Baldwin and the children for three years after they 

were adopted by Baldwin, and Trent spent all holidays and festivals 

with Baldwin and the children.

Trent was employed at UPMC from 2001 to 2008. Trent 

enrolled in four insurance plans offered by UPMC for the year 

2008. The premiums for these were deducted from her salary each 

pay period: 1) a $25,000 basic life insurance policy; 2) a $25,000 

basic accidental death and dismemberment (AD&D) insurance 

policy; 3) a $100,000 supplemental group life insurance policy; and 

4) a $200,000 supplemental AD&D insurance policy. Trent 

designated a beneficiary -- Baldwin -- for the $25,000 basic life 

policy, but did not designate a beneficiary for the three remaining 

policies.

Each of the life policies, as distinct from the ERISA statute, 

contains the following language: 

If there is no named beneficiary or 

surviving beneficiary, Death Benefits 

will be paid to the first surviving class 

of the following living relatives: spouse; 

child or children; mother or father; 

brothers or sisters; or to the executors or 

administrators of the Insured‟s estate.

To similar effect, the AD&D policies provide:

If there is no named beneficiary or 

surviving beneficiary, or if the 

Employee dies while benefits are 

payable to him, We may make direct 
4

payment to the first surviving class of 

the following classes of persons:

1) spouse;

2) child or children;

3) mother or father;

4) sisters or brothers;

5) Estate of the Covered 

Person.

On December 23, 2008, Trent died in an accident at the age 

of thirty-four. Following Trent‟s death, Baldwin timely sought 

payment under each of Trent‟s insurance policies in accordance

with the applicable claims procedure. The insurer, Life Insurance

Company of North America (LINA), paid $25,000 due to Baldwin 

as the designated beneficiary of Trent‟s basic life policy. However,

LINA rejected Baldwin‟s claims on behalf of the children for the 

proceeds from the other three policies. LINA explained that as a 

result of the adoption, the children were no longer considered 

Trent‟s “children” for the purposes of the policies‟ defaultbeneficiary provisions. 

Baldwin appealed LINA‟s determination. In a May 15, 

2009, letter, LINA, using Cigna Group Insurance (CIGNA) as 

signatory, detailed the reasons why, after further review, it had 

again concluded that the insurance proceeds were “not payable” to 

the children: 

While Mrs. Trent may have maintained 

a relationship with her biological 

children, this would not supersede the 

fact that Ms. Trent waived all legal ties 

with the children. As a result of the 

adoption [C.L.D., K.K.D., and C.M.D.] 

became the legal children of Ms. 

Baldwin and would no longer be 

eligible for benefits under these 

policies as the children of Ms. Trent.

At the time of her death, there was no 

beneficiary named by Ms. Trent for the 

[$100,000 supplemental group life 

policy and accidental death policies]. 

Therefore, the benefits of these policies 
5

would be payable under the facility of 

payment wording contained in this 

policy. The facility of payment does 

not contain provisions that allow for 

payment of benefits to step-children or 

any other child which may be in a close 

familial relationship with the insured. 

Since [C.L.D., K.K.D., and C.M.D.] 

were not the children of Victoria Trent 

at the time of her death, no benefits 

were payable to them . . . . 

. . . .

This policy is a binding contract 

between Victoria Trent and the insuring 

company. Therefore, in an effort to 

provide equitable claims administration 

to our insureds we must honor all policy 

provisions. Since Ms. Trent did not 

designate [C.L.D., K.K.D., and C.M.D.] 

to receive any proceeds from this 

policy, we cannot honor payment to 

them or any other person not designated 

as beneficiary of record with the 

employer prior to Ms. Trent‟s death or 

the first class of surviving relatives.

Having exhausted all avenues of administrative review of her 

claim, Baldwin, as guardian of the children, filed a complaint in the 

District Court for the District of Western Pennsylvania against 

UPMC and LINA.

1

 In the two-count complaint, Count One alleged

that UPMC and LINA had breached their fiduciary duty to Trent 

and the children, in violation of ERISA, 29 U.S.C. § 1104(a)(1)(A) 

and (B), by failing to act for the exclusive purpose of providing 

benefits and inadequately managing the enrollment process; and 

 

1 Although CIGNA originally was also named as a 

defendant, it was removed by stipulation of the parties on 

November 12, 2009. CIGNA was utilized by LINA as a business 

name of LINA.

 

 
6

Count Two alleged that the two defendants had arbitrarily and 

capriciously denied the children benefits, which is a basis for 

recovery under ERISA, 29 U.S.C. § 1132(a)(1)(B). 

II.

The two defendants moved to dismiss the complaint for lack 

of both subject-matter jurisdiction and statutory standing. The 

District Court dismissed Baldwin‟s complaint for lack of subjectmatter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). 

A dismissal for lack of statutory standing is effectively the same as 

a dismissal for failure to state a claim. See Vaughn v. Bay Envtl.

Mgmt., Inc., 567 F.3d 1021, 1024 (9th Cir. 2009) (citing Lanfear v. 

Home Depot, Inc., 536 F.3d 1217, 1221-22 (11th Cir. 2008), and 

Harzewski v. Guidant Corp., 489 F.3d 799, 803-04 (7th Cir. 2007)). 

The standard for reviewing dismissals under Rules 12(b)(1) (for 

lack of subject matter jurisdiction) and 12(b)(6) (for failure to state 

a claim) “is the same: we accept as true plaintiffs‟ material 

allegations, and construe the complaint in the light most favorable 

to them.” Alston v. Countrywide Fin. Corp., 585 F.3d 753, 758 (3d 

Cir. 2009) (citation omitted).

In a March 16, 2010, opinion and order, the District Court 

granted defendants‟ motion to dismiss with prejudice, holding that 

Baldwin had neither statutory nor prudential standing to bring her 

claim under ERISA. ERISA does not specify who is a 

“beneficiary” beyond “one who is[,] or may become entitled to[,] a 

benefit,” 29 U.S.C. § 1002(8) -- a remarkably broad category. The 

District Court held that the category of default beneficiaries

provided in the insurance policies determined who was to obtain the 

benefits under the policies. The second category of default 

beneficiaries specified by the insurance plans is “child or children.” 

The definition of “child or children”2is relevant to this appeal 

because that phrase appears in the insurance plans at issue. 

To define the term “children” as used in the insurance plans, 

the District Court rejected Baldwin‟s request that it consult 

Pennsylvania contract law. Instead, the District Court sought 

elucidation from federal common law and the Pennsylvania 

Intestate Succession Law, 20 Pa. Cons. Stat. Ann. §§ 2103, 2108, 

 

2

For ease of reference in this opinion, we shorten “child or 

children” to “children.”
7

which the District Court concluded mandate that adoption severs 

the legal link between birth parent and child. Under this 

interpretation, the child becomes the child of the adoptive parent 

only. 

Importing that definition of “children” into the insurance 

plans‟ language, the District Court held that the adopted children 

were not entitled to benefits by default as Trent‟s “children.” Thus, 

inasmuch as the children could not make out a colorable claim of 

their entitlement to benefits, neither they, nor Baldwin, their 

guardian, had standing to bring suit under ERISA, and the District 

Court was therefore without subject-matter jurisdiction.

This appeal followed. 

III.

This Court has plenary review over an order dismissing an 

ERISA claim for lack of standing. See Leuthner v. Blue Cross & 

Blue Shield of Ne. Pa., 454 F.3d 120, 124 (3d Cir. 2006); Miller v. 

Rite Aid Corp., 334 F.3d 335, 340 (3d Cir. 2003). We must 

“„accept all factual allegations as true, construe the complaint in the 

light most favorable to the plaintiff, and determine whether, under 

any reasonable reading of the complaint, the plaintiff may be 

entitled to relief.‟” Pittsburgh Mack Sales & Serv., Inc. v. Int‟l 

Union of Operation Eng‟rs, Local Union No. 66, 580 F.3d 185, 192 

(3d Cir. 2009) (quoting McTernan v. City of York, Pa., 564 F.3d 

636, 646 (3d Cir. 2009)). “„A complaint may not be dismissed 

merely because it appears unlikely that the plaintiff can prove those 

facts or will ultimately prevail on the merits.‟” Id. (quoting 

McTernan, 564 F.3d at 646).

IV.

“To bring a civil action under ERISA, a plaintiff must have

constitutional, prudential, and statutory standing.” Leuthner, 454

F.3d at 125. To ensure that the latter two forms of standing are

satisfied in an ERISA case, a court must assure itself that the 

“„plaintiff‟s grievance . . . arguably fall[s] within the zone of 

interests protected or regulated by the statutory provision or 

constitutional guarantee invoked in the suit.‟” Miller, 334 F.3d at

340 & n.1 (3d Cir. 2003) (quoting Bennett v. Spear, 520 U.S. 154, 

162 (1997)); see also Leuthner, 454 F.3d at 126 (explaining that 
8

“ERISA‟s statutory standing requirements are a codification of the 

„zone of interest‟ analysis” typically used to determine prudential 

standing). 

ERISA § 502(a), 29 U.S.C. § 1132(a), entitles only “a 

participant or beneficiary” to institute a civil action for benefits 

against a plan administrator. Therefore, in the context of ERISA 

claims for benefits, the “zone of interests” inquiry “is inexorably 

tied to the question of whether a plaintiff can meet the definitions of 

either a participant or beneficiary.” Miller, 334 F.3d at 340-41. 

Because neither Baldwin nor the children she represents

were “participants” in the plans at issue, the only relevant definition 

is that of a “beneficiary” -- that is, “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). Alleged beneficiaries such as the children here must 

demonstrate that they “may become entitled to a benefit” by 

presenting “„a colorable claim that . . . [they] will prevail in a suit 

for benefits.‟” Leuthner, 454 F.3d at 124 (quoting Firestone Tire & 

Rubber Co. v. Bruch, 489 U.S. 101, 118 (1989)). The burden of 

persuasion for establishing a colorable claim is less exacting than 

that needed to establish a likelihood of success on the merits. Id.

(citing Daniels v. Thomas & Betts Corp., 263 F.3d 66, 78-79 (3d 

Cir. 2001)).

V.

Claims for benefits based on the terms of an ERISA plan are 

contractual in nature and are governed by federal common law 

contract principles. Burstein v. Ret. Account Plan for Emps. of 

Allegheny Health Educ. & Research Found., 334 F.3d 365, 381 (3d 

Cir. 2003) (citing Feifer v. Prudential Ins. Co. of Am., 306 F.3d 

1202, 1210 (2d Cir. 2002)); see also Kemmerer v. ICI Ams., Inc., 

70 F.3d 281, 287 (3d Cir. 1995) (noting that disputes arising out of 

ERISA plan documents are governed by “breach of contract 

principles, applied as a matter of federal common law”). 

Accordingly, where claims put at issue the meaning of plan terms, 

we apply the federal common law of contract to interpret those 

terms. See Burstein, 334 F.3d at 381. Since the claims asserted by 

Baldwin on behalf of C.L.D., K.K.D., and C.M.D. turn on the 

meaning of “children” in the subject insurance policies, our task is 

to interpret that term in accordance with the federal common law, 
9

which of course draws heavily on generally established principles 

of contract interpretation. See IUE AFL-CIO Pension Fund v. 

Barker & Williamson, Inc., 788 F.2d 118, 124 (3d Cir. 1986)

(citation omitted).

“The paramount goal of contract interpretation is to 

determine the intent of the parties.” Am. Eagle Outfitters v. Lyle & 

Scott Ltd., 584 F.3d 575, 587 (3d Cir. 2009) (citations and internal 

quotation marks omitted); see also Mellon Bank, N.A. v. Aetna 

Bus. Credit, Inc., 619 F.2d 1001, 1009 (3d Cir. 1980) (“In 

construing a contract, a court‟s paramount consideration is the 

intent of the parties.” (citation and internal quotation marks 

omitted)). Courts are to consider “not the inner, subjective intent of 

the parties, but rather the intent a reasonable person would 

apprehend in considering the parties‟ behavior.” Am. Eagle, 584 

F.3d at 582 (citations and internal quotation marks omitted); see 

also Mellon Bank, 619 F.2d at 1009 (“[C]ourts must eschew the 

ideal of ascertaining the parties‟ subjective intent and instead bind 

parties by the objective manifestations of their intent.”).

The strongest objective manifestation of intent is the 

language of the contract. Mellon Bank, 619 F.2d at 1009; see also

Am. Eagle, 584 F.3d at 587 (acknowledging “the „firmly settled‟ 

principle that „the intent of the parties to a written contract is 

contained in the writing itself‟” (citation omitted)). Thus, where the 

words of the contract clearly manifest the parties‟ intent, a court 

need not “resort to extrinsic aids or evidence.” Am. Eagle, 584 

F.3d at 587 (citation and internal quotation marks omitted). 

The words of the contract clearly manifest the parties‟ intent 

if they are capable of only one objectively reasonable interpretation. 

Tamarind Resort Assocs. v. Gov‟t of the Virgin Islands, 138 F.3d 

107, 110-11 (3d Cir. 1998) (“We have consistently embraced the 

basic common law principle that a contract is unambiguous if it is 

reasonably capable of only one construction.” (citing, e.g., 

Sumimoto Mach. Corp. of Am., Inc. v. AlliedSignal, Inc., 81 F.3d 

328, 332 (3d Cir. 1996), and Am. Flint Glass Workers Union, AFLCIO v. Beaumont Glass Co., 62 F.3d 574, 581 (3d Cir. 1995))). If 

the words of the contract are capable of more than one objectively 

reasonable interpretation, the words are ambiguous. Am. Eagle, 

584 F.3d at 587. Ambiguous terms that appear clear and 

unambiguous on their face, but whose meaning is made uncertain 

due to facts beyond the four corners of the contract, suffer from 
10

latent ambiguity. Duquesne Light Co. v. Westinghouse Elec. Corp., 

66 F.3d 604, 614 (3d Cir. 1995).

Courts have the responsibility to determine as a matter of 

law whether contract terms are clear or ambiguous. Mellon Bank, 

619 F.2d at 1011 (citation omitted); see also In re New Valley 

Corp., 89 F.3d 143, 149 (3d Cir. 1996) (“Whether a document is 

ambiguous presents a question of law properly resolved by this 

court.” (citing Stendardo v. Fed. Nat‟l Mortg. Ass‟n, 991 F.2d 

1089, 1094 (3d Cir. 1993))). To make that determination, a court 

must consider “the words of the contract, the alternative meaning 

suggested by counsel, and the nature of the objective evidence to be 

offered in support of that meaning.” Mellon Bank, 619 F.2d at 

1011; see also New Valley, 89 F.3d at 150 (applying common law 

contract principles in an ERISA context and noting that, to address 

potentially ambiguous contract terms, a court must “hear the proffer 

of the parties and consider extrinsic evidence to determine whether 

there is an ambiguity”). The objective, extrinsic evidence proffered

may include, for example, “the structure of the contract, the 

bargaining history, and the conduct of the parties that reflects their 

understanding of the contract‟s meaning.” New Valley, 89 F.3d at 

150 (citing Teamsters Indus. Emps. Welfare Fund v. Rolls-Royce 

Motor Cars, Inc., 989 F.2d 132, 135 (3d Cir. 1993)). Extrinsic 

evidence notwithstanding, “the parties remain bound by the 

appropriate objective definition of the words they use to express 

their intent.” Mellon Bank, 619 F.2d at 1013. 

The proper focus of the extrinsic evidence in resolving an 

instance of latent ambiguity is the parties‟ “objectively manifested 

„linguistic reference‟” regarding the ambiguous term, not their 

expectations. Bohler-Uddeholm Am., Inc. v. Ellwood Grp., Inc., 

247 F.3d 79, 94 n.3 (3d Cir. 2001) (quoting Duquesne Light, 66 

F.3d at 614). 

For example, if the evidence show[s]

that the parties normally meant to refer 

to Canadian dollars when they used the 

term “dollars,” this [is] evidence of the 

right type. Evidence regarding a party‟s 

beliefs about the general ramifications 

of the contract [is not] the right type to 

establish latent ambiguity.
11

Id. (citations omitted).

VI.

The issue here is whether the word “children” presents a 

latent ambiguity -- that is, whether “children,” from the objectively 

manifested linguistic reference point of the parties to the insurance 

contracts, is susceptible of more than one objectively reasonable 

meaning. More specifically, is it objectively reasonable to construe 

“children” to mean “biologic children,” or is it only objectively 

reasonable to construe “children” as “children recognized by state 

intestacy and adoption law”? On the record before us, we are 

unable to determine whether both of those interpretations are 

objectively reasonable, and it does not appear that the District Court 

attempted such a determination. Arguably, however, there is a 

latent ambiguity in the term “children.” To establish standing, 

Baldwin is only required to plead “enough fact to raise a reasonable 

expectation that discovery will reveal evidence” demonstrating that, 

regardless of any subsequent adoption, Trent and the defendants 

understood C.L.D., K.K.D., and C.M.D. would be considered to be 

Trent‟s “children” as that term is used in the subject contracts, even 

if it were to appear “that actual proof of those facts is improbable, 

and that recovery is very remote and unlikely.” Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 556 (2007) (citation and internal 

quotation marks omitted).

According to the allegations in the complaint, Trent took out 

four policies, which were set to pay out a total of $350,000 in the 

event of her death. Trent designated Baldwin, a lifelong family 

friend and guardian of Trent‟s biologic children, as beneficiary of 

the $25,000 basic life policy. Trent had lived together with 

Baldwin and the children for several years after Trent began 

working at UPMC. Until her death, Trent maintained a parental 

relationship with the children. Trent had no spouse and no living 

parents, yet continued to pay for life insurance more than five years 

after her children were legally adopted by Baldwin. At oral 

argument, we learned for the first time that Trent had a half-brother 

and/or half-sister who were not named as beneficiaries of any of the 

four insurance policies. 

Those allegations, while insufficient to resolve the potential

ambiguity of “children,” are sufficient to make out a colorable 

claim that such an ambiguity exists and that Trent‟s biologic
12

children are or may become entitled to benefits based on one 

arguably objectively reasonable meaning of the term.3 Thus, the 

children -- and Baldwin on their behalves -- have ERISA standing. 

In so concluding, we are guided by the principle that ERISA is a 

remedial statute that should be liberally construed to achieve its 

ends, which include protecting plan participants and beneficiaries. 

See Firestone, 489 U.S. at 113; Barker & Williamson, 788 F.2d at 

127.

We acknowledge the District Court‟s thoughtful approach to 

identifying and applying what it conceived to be the correct 

governing law. The District Court attempted to resolve the issue 

before it by seeking to interpret the term “children” in the subject 

insurance policies. It looked for guidance to La Bove v. 

Metropolitan Life Insurance Co., in which we examined state law to 

construe the meaning of “children” in a life insurance policy 

governed by the Federal Employees‟ Group Life Insurance Act of

1954. 264 F.2d 233, 234-36 (3d Cir. 1959). Nonetheless, when a 

contract term is reasonably argued to be ambiguous, the better 

approach, and the one that is consistent with the weight of 

controlling authority, is to allow the parties to proffer evidence in 

support of alternative interpretations of the term so that the court 

may properly address the purported ambiguity.4 That is the 

approach required by our precedent under ERISA, New Valley, 89 

F.3d at 150, and it should guide the District Court on remand. 

Because Baldwin has made out a colorable claim that the 

children are, or may become, entitled to a benefit under the ERISA 

plans at issue, we hold that she has prudential and statutory standing 

to bring this civil action. Accordingly, we will vacate the order of 

March 16, 2010, dismissing the complaint and remand to the 

District Court for further proceedings consistent with this opinion. 

 

3

The allegations are hence also sufficient to state a claim 

for relief and so can withstand a motion to dismiss pursuant to Rule 

12(b)(6) of the Federal Rules of Civil Procedure. 

4

 We recognize that this presents something of a conundrum, 

because one could say that there can be no standing unless there is 

actually an ambiguity, which has not yet been determined. We 

think, however, that this “which came first, the chicken or the egg” 

problem is best resolved by deciding that the potential ambiguity is 

sufficient to establish standing.