Court Opinion

ID: 14340
Source: CourtListenerOpinion
Date Created: 2010-04-25 06:34:48+00
Date Added: 2024-06-11T15:04:17.719770
License: Public Domain

UNITED STATES COURT OF APPEALS

                        FOR THE FIFTH CIRCUIT

                             No. 97-20544
                           Summary Calendar

                            CRAIG HOWARD,

                                                  Plaintiff-Appellant,

                                VERSUS

      THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES,

                                                   Defendant-Appellee.

             Appeal from the United States District Court
                  For the Southern District of Texas
                            (H-96-CV-3093)
                            March 4, 1998

Before JOLLY, BENAVIDES, and PARKER, Circuit Judges.

Per Curiam:*

       Appellant Craig Howard appeals the district court’s order

granting The Equitable Life Assurance Society of the United States

(hereinafter “Equitable”) summary judgment and awarding Equitable

$420,949.30 for repayment of benefits.       Finding error, we reverse

  *
   Pursuant to 5TH CIR. R. 47.5, the Court has determined that this
opinion should not be published and is not precedent except under
the limited circumstances set forth in 5TH CIR. R. 47.5.4.
and remand.

                                    BACKGROUND

     Howard    purchased      two    disability      insurance   policies   from

Equitable.    The first policy had an effective date of August 16,

1990.   The second policy which covered business overhead expenses

(BOE) had an effective date of December 19, 1991.             Before Equitable

would underwrite the BOE policy, it requested Howard to submit to

a medical exam.

     After both polices were in effect, Howard was involved in an

automobile accident on December 30, 1992, which caused serious

injury to his right knee.       As a result of this injury, Howard filed

a claim with Equitable requesting benefits under both policies.

Benefits were paid pursuant to the BOE policy for the contractually

specified period of two years.                Benefits were paid under the

disability policy until July 31, 1995, at which time Equitable

determined    that   Howard    no    longer    met   the   criteria   for   total

disability under the policy.            At that time, Howard’s treating

physician had not given him permission to return to work.

     Howard then sought residual disability benefits, to begin on

the date his physician gave him permission to return to work,

December 5, 1995.      Howard received written notice that his claim

for residual benefits was denied.

     Howard brought suit in state court seeking to recover benefits

for total disability from the period Equitable stopped paying him

benefits until he was released to return to work by his treating

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physician.    Howard further sought to recover benefits for partial

disability from December 5, 1995, to the present.           The lawsuit

alleged breach of contract, violations of the Texas Insurance Code

and the Deceptive Trade Practices Act, as well as breach of the

duty to deal fairly and in good faith.          Equitable denied these

claims and filed a counterclaim for overpaid benefits asserting

that Howard was never entitled to disability benefits he had

received under false pretenses.      Equitable removed the lawsuit to

federal court asserting diversity jurisdiction as well as federal

question    jurisdiction   under   the   Employment   Retirement   Income

Security Act, 29 U.S.C. §§ 1001, et seq. (“ERISA”).

      Equitable filed a motion for summary judgment on Howard’s

state law claims.      The district court conducted an abbreviated

hearing on the motion.       At the beginning of the hearing, the

district court asked Equitable about ERISA preemption.        Equitable

responded that it elected not to brief the ERISA issue in its

motion because it did not have sufficient discovery at that time to

do so.2    Equitable instead relied upon its argument that Howard was

not disabled to support its motion for summary judgment on the

state law claims.     At the conclusion of the hearing, the district

court made the following finding:

      I have looked at the evidence and found that you didn’t
      carry a sufficient weight of evidence to get past the
      claims adjustor stage. And so he owes the money he was

  2
   See Transcript of Summary Judgment Hearing, p.3.

                                    3
       erroneously paid back because he has complained that they
       paid him and that they didn’t keep paying him.3

No further order was entered except a final judgment awarding

Equitable $420,949.30 for repayment of benefits and a brief order

denying Howard’s motion for reconsideration.             Howard timely filed

a notice of appeal.

                                    ANALYSIS

       We review a district court’s grant of summary judgment de novo

using the same standard of review as the district court.                Exxon

Corp. v. St. Paul Fire and Marine Insur. Co., 129 F.3d 781, 784

(5th Cir. 1997). The summary judgment of the district court cannot

stand     because      it   was   granted    pursuant     to   its   diversity

jurisdiction.       Equitable removed this action on the basis of both

diversity jurisdiction and ERISA preemption. Whether Equitable can

prevail on the state law claims as a matter of law is irrelevant if

ERISA preempts Howard’s state law claims.           Cf. Hermann Hospital v.

MEBA Medical & Benefits Plan, 845 F.2d 1286 (5th Cir. 1988)

(affirming the district court finding that the plaintiff’s common

law    claims   were    preempted   by   ERISA,    and   therefore   diversity

jurisdiction could not be maintained).            Even if the district court

entertained Howard’s claims under its diversity jurisdiction, the

court would have to apply federal law to determine questions of

preemption.     See Hetzel v. Bethlehem Steel Corp., 50 F.3d 360, 363

  3
      Transcript of Summary Judgment Hearing, p.15.

                                         4
(5th Cir. 1995).    The preemption analysis necessarily must be

conducted first.

     On appeal, Equitable argues that even if we find a genuine

issue of material fact in dispute regarding Howard’s state law

claims, it can still prevail under ERISA.       Although urged by

Equitable to do so, we will not review this case under ERISA when

ERISA preemption was never adjudicated at the district court level.

Carrigan v. Exxon Co., 877 F.2d 1237, 1240 n.7 (5th Cir. 1989).

Indeed, at the summary judgment hearing, Equitable stated that it

had not conducted sufficient discovery to brief the ERISA issue.

Because removal jurisdiction was invoked pursuant to ERISA, the

district court must address the issue of ERISA preemption first.

                            CONCLUSION

     For the foregoing reasons, the judgment of the district court

is REVERSED and the cause is REMANDED for further proceedings.

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