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Brown v. Emmitsburg Glass Co.

United States District Court, Fourth Circuit

July 1, 2013

ROSEMARIE BROWN, Plaintiff,
v.
EMMITSBURG GLASS CO., et al., Defendants.

MEMORANDUM OPINION

TIMOTHY J. SULLIVAN, Magistrate Judge.

This Memorandum Opinion[1] addresses Defendant Emmitsburg Glass Company's ("Emmitsburg") Motion to Dismiss and/or for Summary Judgment ("Motion") (ECF No. 35) and Plaintiff Rosemarie Brown's Response (ECF No. 42). For the reasons stated herein, Emmitsburg's Motion to Dismiss and/or for Summary Judgment is DENIED. This Memorandum Opinion disposes of ECF Nos. 35 and 42.

I. BACKGROUND

A. Standard of Review

Emmitsburg has moved to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6), or in the alternative, for summary judgment under Fed.R.Civ.P. 56. When a court considers matters outside the pleadings, a motion to dismiss under Rule 12(b)(6) must be treated as a motion for summary judgment under Rule 56. See Fed.R.Civ.P. 12(d); Gadsby by Gadsby v. Grasmick, 109 F.3d 940, 949 (4th Cir. 1997); Paukstis v. Kenwood Golf & Country Club, Inc., 241 F.Supp.2d 551, 556 (D. Md. 2003). Because both Emmitsburg and Plaintiff present matters outside the pleadings in the form of attached materials, the Court will consider these materials and review the motion as one for summary judgment.

In reviewing the evidence related to a motion for summary judgment, the Court considers the facts in the light most favorable to the non-moving party. Ricci v. DeStafano, 557 U.S. 557, 586 (2009); George & Co., LLC v. Imagination Entm't Ltd., 575 F.3d 383, 391-98 (4th Cir. 2009); Dean v. Martinez, 336 F.Supp.2d 477, 480 (D. Md. 2004). Summary judgment is proper when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see Meson v. GATX Tech. Servs. Corp., 507 F.3d 803, 806 (4th Cir. 2007). The party moving for summary judgment bears the burden of demonstrating that no genuine dispute exists as to material facts. Pulliam Inv. Co. v. Cameo Props., 810 F.2d 1282, 1286 (4th Cir. 1987). A material fact is one that "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

B. Summary of the Case

The following facts are undisputed. Plaintiff's son, Kenneth Clarke ("Mr. Clarke"), worked for Emmitsburg and, through that employment, participated in a group life and disability insurance policy issued to Emmitsburg by co-defendant Guardian Life Insurance Company of America ("Guardian"). ECF No. 42-1 at 1. The life insurance policy ("the policy" or "the plan") was in the amount of $15, 000.00, and Mr. Clarke designated Plaintiff as the beneficiary under the policy. ECF No. 42-1 at 2. In early 2009, Mr. Clarke was diagnosed with cancer. Id. Within months of that diagnosis, he was unable to work, and Guardian began paying disability benefits to him in April 2009. ECF No. 42-1 at 2. On September 1, 2009, Emmitsburg terminated its group life insurance policy with Guardian and transferred to another carrier. ECF No. 35-1 at 2. Because Mr. Clarke was disabled and receiving disability benefits from Guardian, he was entitled to apply for an extension of group life insurance through Guardian. ECF No. 35-1 at 2. Mr. Clarke never filed the necessary paperwork to extend his insurance policy. ECF No. 35-1 at 3. He died on April 12, 2010. ECF No. 42-1 at 4. When Plaintiff submitted a claim to Guardian for the life insurance benefits, she was informed that there was no insurance policy in effect for Mr. Clarke at the time of his death. Id.

Emmitsburg and Plaintiff dispute the following facts. Emmitsburg contends that Guardian sent Mr. Clarke a letter, dated August 24, 2009, explaining his right to apply for an extension of group life insurance without premium payment due to disability. ECF No. 35-1 at 5-6. The letter explained the procedure for doing so and included the necessary forms for processing the extension. Id. Emmitsburg also contends that on August 27, 2009 it sent Mr. Clarke a letter informing him that, effective September 1, 2009, Emmitsburg would be transferring its group insurance policy, that he would not be covered under the new group plan because of his existing disability claim with Guardian, and that he was able to keep his insurance with Guardian if he completed the necessary forms. ECF No. 35-1 at 6. Emmitsburg contends that it included Guardian's August 24, 2009 letter with this letter, as well as additional copies of the required forms. Because Mr. Clarke never completed these forms, his insurance terminated on September 1, 2009. See ECF No. 35-2 at 2.

Plaintiff claims that Mr. Clarke never received these letters and that Emmitsburg repeatedly assured her son that his coverage under the policy remained in effect. ECF No. 42-1 at 2. Plaintiff claims that Emmitsburg had a contractual obligation to ensure that Mr. Clarke's coverage under the policy continued, consistent with Emmitsburg's assurances. ECF No. 42-1 at 8. Plaintiff also alleges that she and her son relied on Emmitsburg's assurances to their detriment, as they would have taken the appropriate steps to continue Mr. Clarke's coverage if they had been aware that it was in jeopardy of being cancelled. Id. Emmitsburg claims that it made no such assurances to Mr. Clarke or Plaintiff. ECF No. 35-2 at 2.

II. DISCUSSION

Emmitsburg's Motion argues that Plaintiff has failed to state a claim for breach of contract and that, accordingly, Emmitsburg is entitled to judgment as a matter of law. Plaintiff argues that a breach of contract has been established. In Emmitsburg's Motion and Plaintiff's Response, the parties assume that state contract law governs this action. For the reasons set forth below, however, the parties arguments about state contract law are immaterial to the resolution of Emmitsburg's Motion, because federal law governs this case.

This case, originally filed in the District Court of Maryland for Baltimore County, was removed to this Court pursuant to 28 U.S.C § 1331 and 29 U.S.C. § 1132, as an action pursuant to the Employee Retirement Income Security Act's ("ERISA") civil enforcement provision. See ECF Nos. 1 & 15. While neither party has addressed the federal preemption of the original state law claims in their Motion and Response, the doctrines of conflict preemption and complete preemption are significant in the context of ERISA and particularly important in this case. Section 514(a) of ERISA states that its provisions "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a). The Supreme Court and the Fourth Circuit have given the phrase "relate to" in § 514(a) its "broad common-sense meaning." Custer v. Sweeney, 89 F.3d 1156, 1166 (4th Cir. 1996) (citing Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739 (1985)). In Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983), the Supreme Court established that "[a] law relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan."

ERISA does not preempt "only state laws specifically designed to affect employee benefit plans" or "only state laws dealing with the subject matters covered by ERISA." Id. at 98. Rather, the scope of ERISA's preemption is "deliberately expansive" and designed to make regulation of employee benefit plans "exclusively a federal concern." See Wilmington Shipping Co. v. New England Life Ins. Co., ...


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