Court Opinion

ID: 9755756
Source: CourtListenerOpinion
Date Created: 2023-08-28 20:49:28.488004+00
Date Added: 2024-06-11T09:55:45.633706
License: Public Domain

MAURICE E. AMIDEI, Justice, Assigned.
I respectfully dissent. Smith v. Texas Children’s Hosp., 84 F.3d 152 (5th Cir.1996), relied on by Greathouse, supports his claim on the facts and the law. The majority tries to distinguish Smith by erroneously concluding Greathouse is claiming benefits under the Glidden plan because he was not seeking benefits under the Grow Group’s agreement.1 Great-house knew he could not recover any severance benefits under the Glidden Plan because he voluntarily resigned. He does not claim any benefits under the Glidden plan. Actually, Greathouse is claiming under the letter of September 11,1995, which superceded the change in control agreement, and the representations inducing him to sign the letter. This letter, the change in control agreement, and the representations were not shown to have been filed with the Department of Labor or made part of the plan that was so filed.
Greathouse did what he thought was necessary to make sure he did not lose his vested severance benefits if he went to work for Glidden. This is exactly what happened in Smith v. Texas Children’s Hospital, where Smith, an employee of St. Lukes Hospital, who had qualified for insurance and disability benefits, was persuaded to go to work for the Texas Children’s Hospital on promises of a better job, and the transfer of all benefits, including her long-term disability benefits. Greathouse claims that Glidden, like TCH in Smith, induced him to relinquish his guaranteed Devoe Paint Company/Grow Group severance pay and accept employment on the basis that he would not forfeit any right to severance pay.2 The only reference to the Glidden plan, which is not *572necessary to establish Greathouse’s state law claims, is the formula for calculating the amount of the severance pay. It is of no consequence that the formula for such calculation was the same under Grow Group’s plan as under Glidden’s plan. Glidden argues that because the calculations are the same, then Greathouse is actually claiming benefits under Glidden’s plan. To the contrary, Greathouse’s pleadings and testimony do not amount to a claim against Glidden’s ERISA plan. Rather, the guaranteed benefits that Greathouse is claiming are pursuant to the representations that induced him to sign the September 11, 1995 letter. This letter was substituted for and superceded the change in the control agreement. In his counterclaim, Greathouse specifically seeks “to recover the full value of his severance pay” on his breach of contract claim. He seeks the same amount for his fraudulent inducement claim.
The $141,000 that Greathouse seeks is the same amount as would be calculated for severance pay under Glidden’s plan, which as pointed out by the majority, was demonstrated at trial upon Greathouse’s questioning of Cahoon. Therefore, the amount of damages or benefits Greathouse is seeking are measured by an inconsequential reference to Glidden’s severance plan and his state law claims do not “relate to” Glidden’s employee welfare benefit plan. Accordingly, Greathouse’s state law claims for severance pay are not preempted, and the trial court erroneously concluded Greathouse’s state law claim were preempted. Even if Glidden’s plan were subject to ERISA, Greathouse’s state law claims are not preempted by ERISA because the misrepresentations regarding the circumstances under which he would be eligible to receive severance pay were made prior to the commencement of his employment relationship with Glidden.
ERISA “shall supercede any and all state laws in so far as they may now or hereafter relate to any employee benefit plan.” 29 U.S.C. § 1144(a) (1999). However, the broad “pre-emptive” reach of ERISA has been narrowed by the United States Supreme Court. “[Ajpplying the ‘relate to’ provision [of ERISA] according to its terms was a project doomed to failure, since, as many a curbstone philosopher has observed, everything is related to everything else.” California Div. of Labor Stds. Enforcement v. Dillingham Constr., 519 U.S. 316, 335, 117 S.Ct. 832, 843, 136 L.Ed.2d 791 (1997) (J. Scalia, concurring). The Supreme Court recognized that the “relate to” language of the statute was too expansive and led to unnecessarily broad interpretations. Travelers—De Buono v. NYSA—ILA Med. and Clinical Serv. Fund, 520 U.S. 806, 813-14, 117 S.Ct. 1747, 1751, 138 L.Ed.2d 21 (1997). Instead, the proper analysis to determine preemption under ERISA begins with the assumption that Congress in general does not intend to preempt state law, and in the areas of “traditional state regulation” courts should assume that the police powers of the State are not superceded unless that was the clear purpose of Congress. Dillingham, 519 U.S. at 325, 117 S.Ct. at 838. As further observed by the Supreme Court:
[To] read the pre-emption provision as displacing all state laws affecting costs and charges on the theory that they indirectly relate to ERISA plans .... would effectively read the limiting language in § 514(a) out of the statute, a conclusion that would violate basic principles of statutory interpretation and could not be squared with our prior pronouncement that “[p]re-emption does not occur ... if the state law has only a tenuous, remote or peripheral connection with covered plans, as in the case *573with many laws of general applicability.”
New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 661, 115 S.Ct. 1671, 1679-80, 131 L.Ed.2d 695 (1995) (emphasis supplied) (quoting District of Columbia v. Greater Washington Bd. of Trade, 506 U.S. 125, 130 n. 1, 113 S.Ct. 580, 583, 121 L.Ed.2d 513 n.1., (1992)). Furthermore,
[O]ne might be excused for wondering at first blush, whether the words of limitation (“insofar as they ... relate”) do much limiting. If “relate to” were taken to extend to the furthest stretch of its indeterminacy, then for all practical purposes pre-emption would never run its course, for “[r]eally, universally, relations stop nowhere.”
Id. at 655, 115 S.Ct. at 1677 (emphasis supplied) (quoting H. James, Roderick Hudson xli (New York ed., World’s classics 1980)).
The First Court of Appeals, in Gulf Coast Alloy Welding v. Legal Sec. Life Ins. Co., 981 S.W.2d 239 (Tex.App.—Houston [1st Dist.] 1998, pet. dism’d), recognizing the foregoing trend of the Supreme Court, held that state law claims based on contract law, the Texas Insurance Code, and the DTPA, which arose out of an insurance company’s misrepresentations were not pre-empted by ERISA, even though the policy in question was an employee welfare benefit plan as defined by ERISA, because the potential impact the suit had on the ERISA plan was indirect and insignificant. Gulf Coast was seeking damages as a result of the insurance company’s refusal to reinstate a workplace accident insurance policy.
The suit and misrepresentations alleged by Greathouse were neither directed to nor would result in any direct impact on the administration of Glidden’s ERISA plan. The severance pay had been earned, and the claimed misrepresentations were made, before any ERISA plan went into effect as to Greathouse. The severance pay Greathouse seeks originated from his employment by Devoe Paint Company, owned by the Grow Group. On April 27,-1995, Greathouse, and presumably other key management personal of Devoe and/or Grow Group, entered into a change in control agreement to induce these employees to remain in the employment of Grow Group in the event of a change of control of Grow Group. The consideration for entering into this agreement was the assurance that Greathouse would receive severance benefits as defined therein in the event his employment with the company were terminated for any reason, even upon voluntarily resignation.
This agreement, in effect, was a settlement of Greathouse’s severance pay benefits and, therefore, superceded any previous plan regarding severance pay. It dedicated a fixed amount of funds for Greathouse. No administration of these benefits was necessary. A mathematical calculation was all that was necessary to determine the amount of a one-time payment that was due at the time Greathouse went to work for Glidden. See Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987) (a onetime compensation requiring no more than a simple arithmetic calculation does not require an administrative program and does not qualify as an “employee benefits plan” under ERISA); Fontenot v. N.L. Industries, Inc., 953 F.2d 960 (5th Cir.1992) (a one time obligation of the employer to provide a severance payment to departing employees did not require creation of an ongoing administrative scheme and therefore did not implicate ERISA); Wells v. General Motors, 881 F.2d 166 (5th Cir.1989) (a unilateral one-time lump sum payment for voluntary termination of *574employment was held not pre-empted by ERISA). Any severance benefits he acquired from his employment by Glidden would be under Glidden’s ERISA plan. Instead, Greathouse is seeking vested benefits which he acquired while working for Devoe Paint Company but relinquished in reliance upon Glidden’s misrepresentations.
At the time Greathouse was asked to accept employment with Glidden, he was entitled to receive $141,000 from the Grow Group for severance pay even if he voluntarily resigned. At that point, these benefits were not Glidden severance pay plan benefits. Greathouse is not seeking any of Glidden’s severance pay plan benefits. He would not be eligible under the Glidden ERISA plan because he voluntarily resigned from Glidden. Because Glidden bought out the Grow Group, it was to Glidden’s advantage not to pay Greathouse $141,000 at that time and to delay paying as long as possible. This was tantamount to a no-interest loan from Greathouse to Glidden.
Therefore, the unpaid $141,000, and the other assets and obligations of the Grow Group, were assumed by Glidden when it bought the Grow Group. The Glidden ERISA plan was established only on funding from its operations, not from the Grow Group. The $141,000 should have been, and probably was, kept in a separate account from the Glidden ERISA plan. Even if it was not kept separate, the impact on the ERISA plan if Greathouse recovers the $141,000 would be remote and insignificant because the money should not have been commingled with the ERISA plan funds, and the withdrawal of that money would not affect the benefits of the other employees in the plan. Greathouse would only be entitled to recover the amount he earned and bargained for before he went to work for Glidden. He cannot recover any funds from the Glidden plan pursuant to that plan, but his claimed severance pay can be considered separately from any reference to that plan.
For above reasons, the judgment of the trial court should be reversed and the case remanded for a trial on Greathouse’s state law causes of action.

. Greathouse knew he couldn’t claim under the Grow Group agreement because it had been superceded by the September 11, 1995 letter agreement.

. Contrary to the majority, the damages or benefits Greathouse seeks are not measured only by reference to Glidden’s severance plan.