Court Opinion

ID: 9678811
Source: CourtListenerOpinion
Date Created: 2023-08-24 06:33:03.305217+00
Date Added: 2024-06-11T18:17:08.065173
License: Public Domain

COHEN, Justice,
dissenting on appellee’s motion for rehearing.
I respectfully dissent. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990), is still good law, as recognized in California Division of Labor Standards Enforcement v. Dillingham Construction N.A., Inc., 519 U.S. 316, 117 S.Ct. 832, 837-38, 136 L.Ed.2d 791 (1997). The Ingersoll-Rand, Court held unanimously and “without difficulty” that ERISA preemption barred an employee’s wrongful discharge suit against his employer for damages. Ingersoll-Rand, 498 U.S. at 135-36, 140, 111 S.Ct. at 481, 483. The present suit is by one ERISA entity (the employer, Gulf Coast) against another (the insurer/administrator, LSLI) for policy benefits, a situation that certainly “relates to” an ERISA plan more directly than the suit in Ingersoll-Rand. If that suit was preempted, this one seems even more clearly preempted. While the United States Supreme Court has cut back its prior holdings that ERISA preempts almost anything, see cases cited in majority opinion, I doubt that it has gone as far as the majority holds. What De Buono, Travelers, and Dill-ingham have in common is that in each case, the Supreme Court refused to preempt state tax and regulatory statutes that were not specifically directed at ERISA plans. See De Buono v. NYSA-ILA Med. & Clinical Serv. Fund, 520 U.S. 806, 117 S.Ct. 1747, 1749, 138 L.Ed.2d 21 (1997) (state tax on hospital receipts); Dillingham, 117 S.Ct. at 835 (prevailing wage law); New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 649, 115 S.Ct. 1671, 1673, 131 L.Ed.2d 695 (1995) (tax on hospital patients). In the spirit of federalism, these decisions show respect for “traditional state regulation” that involves “historic police powers.” Dillingham, 117 S.Ct. at 838; Travelers, 514 U.S. at 655, 115 S.Ct. at 1676. This case does not involve that. It is a contract suit between two private ERISA participants. If this is not preempted, little is. I would hold that this case is controlled by Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987), which held that a common law tort and contract action seeking damages for failure to provide policy benefits was preempted. 481 U.S. at 47-57, 107 S.Ct. at 1553-58.1 In my opinion, that closely resembles this case.
I now think we were right in our original opinion of March 5, 1998. I vote to affirm the judgment for the reasons there stated. (Opinion attached as Appendix).
APPENDIX
MARCH 5, 1998 OPINION
Gulf Coast Alloy Welding, Inc. (Gulf Coast), appellant and plaintiff below, appeals from summary judgment in favor of Legal Security Life Insurance Co. (LSLI), appellee and defendant below. We affirm.
Facts
Gulf Coast was insured by LSLI under a workplace accident insurance policy. Both parties agree the policy was an “employee welfare benefit plan,” as defined by the Employment Retirement Income Security Act of 1975 (ERISA).1
On April 1, 1993, the policy lapsed because Gulf Coast did not make a timely premium payment. The policy had, on at least one other occasion, lapsed and had been reinstated by the defendant upon receipt of a premium payment. Gulf Coast claims it spoke with LSLI in April 1993, and LSLI agreed to reinstate the lapsed policy upon receipt of the premium. Gulf Coast sent LSLI a check for the due premium and asked that the *245policy be reinstated. LSLI returned the check and refused to reinstate the policy.
Gulf Coast sued LSLI, claiming it suffered damages as a result of LSLI’s refusal to reinstate the policy. It claimed breach of contract, negligent misrepresentation, fraud, violations of express and implied warranties with respect to the policy’s reinstatement, violations of the Texas Deceptive Trade Practices Act (DTPA),2 and violations of the Texas Insurance Code. LSLI moved for summary judgment, claiming Gulf Coast’s statutory and common law claims were preempted by ERISA. Gulf Coast responded that its claims were not preempted by ERISA because it did not make claims under federal law or for federal relief and its claims did not relate to areas of exclusive federal concern or involve a relationship among traditional ERISA entities. The trial court granted summary judgment in favor of LSLI.
Standard of Review
A defendant is entitled to summary judgment if it establishes, as a matter of law, there is no genuine issue of material fact as to one or more of the essential elements of each of the plaintiff’s causes of action. Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 474 (Tex.1995); Keifer v. Spring Shadows Glen, 934 S.W.2d 785, 787 (Tex.App.—Houston [1st Dist.] 1996, writ denied). The movant bears the burden of showing there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985); Keifer, 934 S.W.2d at 787. If a defendant moves for summary judgment based on an affirmative defense, it must prove each element of its defense as a matter of law. Montgomery v. Kennedy, 669 S.W.2d 309, 310-11 (Tex.1984); Keifer, 934 S.W.2d at 787.
Analysis
The question is whether ERISA preempts Gulf Coast’s state law claims as involving an employee welfare benefit plan under ERISA. ERISA preempts state laws that “relate to” employee benefit plans under ERISA. 29 U.S.C. 1144(a) (1998). In evaluating whether a state law is preempted, courts use the normal meaning of the phrase, “relates to.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983); Keifer, 934 S.W.2d at 787. ERISA’s preemption clause is deliberately expansive and gives federal courts the exclusive right to regulate pension plans. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45-46, 107 S.Ct. 1549, 1552, 95 L.Ed.2d 39 (1987); Keifer, 934 S.W.2d at 787.
As broad as ERISA’s preemption clause is, it is not unlimited. Keifer, 934 S.W.2d at 787. State law is not preempted if its effect on, or relation to, ERISA plans is too tenuous or remote. Shaw, 463 U.S. at 100 n. 21, 103 S.Ct. at 2901. Our determination of ERISA’s preemptive scope must be guided by traditional principles of federalism and respect for the separate branches of governmental authority. Keifer, 934 S.W.2d at 787.
The Fifth Circuit has developed a two-prong test to help determine if a state law is preempted. A claim under state law is preempted if the claim (1) concerns an area of exclusive federal concern, such as the right to benefits under an ERISA plan, and (2) directly affects the relationship between traditional ERISA entities, such as plan administrators or fiduciaries, employers, plan participants, or beneficiaries. Hook v. Morrison Milling Co., 38 F.3d 776, 781 (5th Cir.1994); see Keifer, 934 S.W.2d at 788; 29 U.S.C. §§ 1002(5), (7), (8), (21)(A) (1998).3
In this case, employer Gulf Coast sued LSLI, the insurer and fiduciary, satisfying the second prong of the test. The critical issue is whether the first prong is satisfied, that is, whether Gulf Coast’s state law claims *246address areas of exclusive federal concern. We hold they do.
Gulf Coast sued LSLI for refusing to reinstate the policy, which is a suit alleging improper administration of an ERISA plan. Claims alleging improper administration of an ERISA plan are within the exclusive jurisdiction of the federal courts and are preempted by ERISA. Manahan v. Meyer, 862 S.W.2d 130, 134 (Tex.App.—Houston [1st Dist.] 1993, writ denied); see Cathey v. Metropolitan Life Ins. Co., 805 S.W.2d 387, 390 (Tex.1991) (claims for coverage misrepresentation relate to ERISA plan and are preempted).
The San Antonio Court of Appeals addressed a similar issue in Cadillac Insurance Co. v. L.P.C. Distributing Co., 770 S.W.2d 892, 893-94 (Tex.App.—San Antonio 1989, writ denied). There, the employer and three employees sued the agents for their insurance plan for wrongful cancellation of an ERISA plan. Id. at 893. The suit alleged claims under the DTP A, under Tex. Ins.Code art. 21.21, and for breach of the duty of good faith and fair dealing. Id. at 894. The San Antonio Court held the claims related to an ERISA plan and were preempted. Id.
The Eighth Circuit Court of Appeals addressed a ease with facts even closer to ours than those in the Cadillac Insurance case. In Robinson v. Linomaz, 58 F.3d 365, 370 (8th Cir.1995), the insurer terminated an insurance policy after one year, according to the terms of the contract of insurance. Id. at 367. The plaintiffs sued the insurer for wrongful termination of the policy. Id. The district court granted the insurer’s motion to dismiss the complaint on the grounds that the state law claims were preempted by ERISA. Id. The plaintiffs argued that the case was a simple contract case, and was not preempted by ERISA. Id. at 370. The Eighth Circuit Court of Appeals disagreed:
In most if not all cases [involving the termination of a contract], an examination of the termination of a plan governed by ERISA will require reference to the various provisions of the statute and the terms of the plan itself. Accordingly, we hold that appellants’ claims of wrongful termination of the policy do “relate to” an “employee benefit plan” and are therefore preempted by ERISA.

Id.

We agree with the Cadillac Insurance and Robinson courts. We hold that Gulf Coast’s claims relate to an ERISA plan and are preempted.
We overrule point of error one.
We affirm the trial court’s judgment.

. Pilot Life was cited as good law in Travelers. 115 S.Ct. at 1683. So was Ingersoll. Id.

. ERISA exempts from coverage a state worker’s compensation plan only if " ‘such [a] plan is maintained solely for the purpose of complying with applicable workmen’s compensation laws...’” U.S.C. § 1003(b)(3) (1998). There is no evidence in this case that Gulf Coast’s plan was purchased for the sole purpose of complying with Texas’ workers’ compensation laws.

. Tex Bus. & Com. § 17.41 (1998).

. A plan participant is an employee or former employee who is or may be eligible for ERISA plan benefits. 29 U.S.C. § 1002(7) (1998). A beneficiary is a person designated by a participant or a plan’s terms to receive plan benefits. 29 U.S.C. § 1002(8) (1998). A person is a fiduciary if he exercises discretionary control or authority over the management or administration of a plan or its assets. 29 U.S.C. § 1002(21 )(A) (1998).