Miara v. First Allmerica Financial Life Ins. Co., No. CIV.A.,04-12188-WGY.

379 F.Supp.2d 20

Maria MIARA, Plaintiff, v. FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY, Joseph F. Bonasera, Baker Associates Insurance Agency, and Gary M. Baker Defendants.

No. CIV.A.,04-12188-WGY.

United States District Court, D. Massachusetts.

June 16, 2005.

COPYRIGHT MATERIAL OMITTED

William D. Chapman, Kerry D. Florio, Melick, Porter & Shea, LLP, Boston, MA, for Joseph F. Bonasera, Defendant.

Cherie M. Bosarge Dutton, Sullivan & Worcester LLP, Boston, MA, William T. Matlack, Sullivan & Worcester LLP, Boston, MA, for First Allmerica Financial Life Insurance Company, Defendant.

Shannon M. Fitzpatrick, Nathanson & Goldberg PC, Boston, MA, for Maria Miara, Plaintiff.

Richard L. Neumeier, Morrison Mahoney, LLP, Boston, MA, for Baker Associates Insurance Agency, Inc., Gary M. Baker, Defendants.

MEMORANDUM AND CERTIFICATION

YOUNG, Chief Judge.

I. INTRODUCTION

How's this for a problem on a first year torts or civil procedure exam?

Plaintiff A sues Defendant B in state court for misrepresentation and other state causes of action in the sale of a product that Plaintiff A alleges does not function in the manner represented. Misrepresentation claims have been recognized in common law courts in the United States and throughout the English-speaking world for centuries.

The product in question is a pension plan/profit sharing plan that falls within the ambit of the Employee Retirement Income Security Act ("ERISA"). Defendant B is the insurance agent and agency who sold Plaintiff A the policy.

Defendant B removes the case to federal court on the ground that ERISA preempts the jurisdiction of the state courts. What is more, Defendant B moves to dismiss the case on the ground that, notwithstanding Plaintiff A's viable misrepresentation and other state claims, ERISA provides no remedy for such claims and, in fact, extinguishes them in this context. Compare Andrews-Clarke v. Travelers Ins. Co. 984 F.Supp. 49 (D.Mass.1997) (ERISA extinguishes insurer's liability for otherwise viable state wrongful death claim). Plaintiff A moves to remand the case to state court where the claims will at least remain alive.

What ought the Court do?

A. Remand the case, it's only fair.

B. Remand the case, it does not "arise under" federal law.

C. Remand the case, Congress never intended ERISA preemption to sweep so broadly.

D. Remand the case, the Supreme Court never intended its preemption jurisprudence to reach so far and work such an unjust result.

E. All of the above.

The correct answer is "E." Maybe.

A. Facts

The following recitation of facts is taken from the Plaintiff's First Amended Complaint and Jury Demand ("Pl.'s First Am. Compl.") [Doc. No. 1, Attach. 1], Pl.'s Mem. in Supp. of Pl.'s Mot. to Remand ("Pl.'s Mem.") [Doc. No. 6], and Defendants Baker and Baker Associates Opp'n to Pl.'s Mot. to Remand ("Baker Opp'n") [Doc. No. 9]. The facts are largely uncontested. The Plaintiff Maria Miara ("Miara") and her husband Richard Miara (together, the "Miaras") owned a company called New England Chain Link Fence Co., Inc. Pl.'s Mem. at 1. In 1989, Miara contacted the defendant Gary Baker ("Baker") of the defendant company now known as Baker Associates Insurance Agency, Inc. ("Baker Associates"). Id. She "inquire[d] about establishing a pension plan or profit sharing plan for the company." Id. Baker brought in defendant Joseph Bonasera ("Bonasera") from what is now First Allmerica Financial Life Insurance Company ("First Allmerica," and collectively with Baker, Baker Associates, and Bonasera, the "Defendants") to discuss various plans with the Miaras. Id. Baker, Bonasera and the Miaras met on at least two occasions. Id. at 2. Miara claims that she "and her husband repeatedly explained that whatever plan they chose must have spousal survivor benefits, particularly for the [benefit] of [Miara], who was considerably younger than her husband." Id. at 2.

Baker and Bonasera suggested the Miaras use a Defined Benefits Plan. Id. Miara contends that "[t]hey represented that although the plan was more expensive to administer, it had a great advantage over alternative plans because the Pension Benefit Guaranty Corp (`[Pension Benefit]') guaranteed the plan." Id.; see also Baker Opp'n ¶ 2 (agreeing that Pension Benefit did "guarantee[] the plan"). Miara specifies that "[t]hey assured [her] and her husband that [Pension Benefit] guaranteed 100% spousal benefits in the event that anything were to happen to either [Miara] or her husband," without qualification. Pl.'s Mem. at 2. Miara claims that she relied on these representations and, accordingly, chose the recommended Defined Benefits Plan,¹ id., effective September 1, 1989. Baker Opp'n ¶ 1.

Unfortunately, Miara's husband died in an automobile accident on August 22, 1996. Pl.'s Mem. at 2; Baker Opp'n ¶ 3. Miara claims Bonasera told her "that in order to get the [Pension Benefit] survivor benefits, she would have to close the company and put it into bankruptcy." Pl.'s Mem. at 2. She asserts that, again relying on Bonasera's advice, she "liquidated the company's assets and filed for Chapter 7 bankruptcy protection." Id. Miara subsequently received several written notifications of the spousal death benefits available to her. See id. In an October 8, 1996 letter, First Allmerica informed Miara that she could collect $1,382.80 per month as of September 1, 1996, or $2,457.27 per month if she deferred her collection until February 1, 2002. Id.; Baker Opp'n ¶ 4. At this time, asserts Miara, Bonasera "reiterated that [Miara] would get the full spousal benefit regardless of which option she chose because of [Pension Benefit]'s guaranty." Pl.'s Mem. at 2. On December 4, 1996, Miara informed First Allmerica that she elected to defer the receipt of benefits until February 2002. Id.

The second notification, dated January 6, 1997, informed Miara "of an error in the October 8, 1996 death benefit information." Id. at 3. First Allmerica notified Miara that though the calculation of $1,382.80 per month as of September 1, 1996, remained the same, deferring payment until February 1, 2002 would result in a monthly benefit of $1,952.97, and deferring until February 1, 2006 would result in receipt of a monthly benefit of $2,664.35. Id.; Baker Opp'n ¶ 5. The letter further stated, according to Miara, that monthly benefit payments would begin "on February 1, 2006, unless written consent to commence payments as of an earlier date is received." Pl.'s Mem. at 3 (internal quotations omitted); Baker Opp'n ¶ 5. Miara elected to receive the benefits as of February 1, 2006 and, as such, expected she would receive $2,664.35 every month as of that date. Pl.'s Mem. at 3.

The third communication, dated more than five years later on June 12, 2002, yet again modified the amount Miara was to receive. Id."To her great shock and chagrin," Miara was informed "that she was entitled to a monthly survivor payment of just $531.76 a month if she deferred payment until February 1, 2006, and only $415.84 a month if she opted for an early retirement option — more than $2,000 less than what First Allmerica had assured her she would receive." Id.; Baker Opp'n ¶ 6. This was Miara's first notification that she would not receive the full spousal benefits Baker and Bonasera had allegedly promised her. Pl.'s Mem. at 3. Miara appealed Pension Benefit's determination, which was denied by letter dated June 12, 2003. Pl.'s First Am. Compl. ¶ 18; Pl.'s Mem. at 3; Baker Opp'n ¶ 7. Pension Benefit informed Miara that the reduction in benefits was due to the fact that "she and her husband were `substantial owners' of the company and the plan had terminated early."<sup>2</sup> Pl.'s First. Am. Compl. ¶ 18; Pl.'s Mem. at 3. Miara contends that "[Pension Benefit]'s `substantial owner' limitations were, or should have been, well known by Baker, Baker Associates, Bonasera and [First] Allmerica" and that "[e]ach of the defendants should have disclosed the limitations to [Miara] and her husband prior to their purchasing the plan, but did not." Pl.'s First. Am. Compl. ¶ 20. Miara contends she was repeatedly assured, even after her husband's death, that there were no limitations on her benefits, and that she purchased the plan "specifically in reliance upon the representations by Baker and Bonasera that they were guaranteed to receive full spousal benefits." Id. ¶¶ 21-22.

Miara's complaint, "consists of [seven] state-law claims, each of which targets Defendants' alleged misrepresentations in procuring the ... policy." See Giannetti v. Mahoney, 218 F.Supp.2d 8, 10 and n. 2 (D.Mass.2002)(Neiman, M.J.); Pl.'s First Am. Compl. ¶¶ 23-55. The state law claims are:

(1) promissory estoppel

(2) negligent misrepresentation

(3) malpractice

(4) breach of contract

(5) breach of guaranty

(6) breach of the covenant of good faith and fair dealing, and

(7) violation of Massachusetts General Laws chapter 93A.

Pl.'s First Am. Compl. ¶¶ 23-55. The Defendants raise affirmative defenses in their answers, one of which is that federal ERISA law preempts Miara's state claims. Accordingly, on October 19, 2004, Baker and Baker Associates removed this matter to federal court. Notice of Removal to the United States District Court [Doc. No. 1]. Arguing that her state law claims are not preempted by ERISA, Miara asks this court to remand the matter to the Massachusetts Superior Court on the ground that this Court lacks subject matter jurisdiction. Pl.'s Mot. to Remand [Doc. No. 5]. Parties have filed memoranda in support of their respective positions.³ See Pl.'s Mem.; Baker Opp'n; Def. Bonasera Opp'n to Pl.'s Mot. to Remand [Doc. No. 12] ("Bonasera Opp'n"). This Court must now decide whether it has jurisdiction over this matter or whether it ought remand the case to the courts of the Commonwealth.

II. DISCUSSION

A. Removal of State Cause of Action and Federal Jurisdiction

1. Removal

Defendants may remove from state court actions over which original jurisdiction is granted to...