La Mure v. Mutual Life Ins Co ( 1997 )

No. 95-2172, LaMure v. Mutual Life Ins. Co.
The attachment (district court’s Memorandum Opinion and Order) is not available
electronically.
UNITED STATES COURT OF APPEALS
Filed 1/14/97
TENTH CIRCUIT
DAVID S. LaMURE, Sr.,
Plaintiff-Appellant,
No. 95-2172
v.
(D.C. No. CIV 93-0767 SC/DJS)
(D. N.M.)
MUTUAL LIFE INSURANCE
COMPANY OF NEW YORK,
Defendant-Appellee.
ORDER AND JUDGMENT *
Before SEYMOUR, Chief Judge, ANDERSON and BRORBY, Circuit Judges.
Plaintiff David S. LaMure, Sr. appeals the district court's summary
judgment holding that the disability insurance policy of which he was the
beneficiary was part of an employee welfare benefit plan as defined in the
Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001-1461(1994). We affirm the district court's holding.
*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
Dr. LaMure was a beneficiary of a long-term disability insurance policy
issued by Defendant Mutual Life Insurance Company of New York ("Mutual
Life"). The policy was a group policy issued through the College of American
Pathologists Group Insurance Trust, and in order to be eligible for benefits under
the policy one had to be a member of the College, which Dr. LaMure was.
Dr. LaMure's employer was Pathology Consultants of New Mexico Ltd.
("Pathology Consultants"), a professional corporation of which Dr. LaMure was a
shareholder. Pathology Consultants paid both Dr. LaMure's dues for membership
in the College of American Pathologists and the semi-annual premiums for his
coverage under the disability policy. It also provided administrative functions
relating to the policy.
Dr. LaMure began receiving benefits under the policy in June of 1989.
Thereafter, he was incarcerated in a New Mexico prison, and Mutual Life
terminated all benefits. Dr. LaMure filed a complaint against Mutual Life seeking
resumption of the disability benefits, asserting state law claims for breach of
contract, bad faith failure to pay, and bad faith termination of benefits.
The district court found the disability policy was part of an employee
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welfare benefit plan as defined by the Employee Retirement Income Security Act,
and that that act preempted Dr. LaMure's state law claims. Accordingly, the court
dismissed Dr. LaMure's complaint, although it granted him leave to amend his
complaint to state a claim under the Employee Retirement Income Security Act.
In this appeal, Dr. LaMure contends the disability policy was not part of an
employee welfare benefit plan, and therefore the Employee Retirement Income
Security Act does not preempt his state law causes of action. Dr. LaMure
apparently concedes that if the disability policy is part of an employee welfare
benefit plan, the Employee Retirement Income Security Act preempts his state law
claims.
The determination of whether an insurance policy is governed by the
Employee Retirement Income Security Act is a mixed question of fact and law.
Peckham v. Gem State Mut. of Utah, 964 F.2d 1043, 1047 n.5 (10th Cir. 1992).
Because this mixed question essentially involves conclusions drawn from
undisputed facts, it is primarily a legal question which we review de novo. Id.Even if such were not the case, our standard of review would be de novo because
the district court issued its ruling on summary judgment. Kaul v. Stephan, 83
F.3d 1208, 1212 (10th Cir. 1996).
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Although normally as a corollary of de novo review of summary judgment
"we examine the factual record and reasonable inferences therefrom in the light
most favorable to the party opposing summary judgment," id., that favoritism is
greatly restricted in this case. Because Dr. LaMure failed to comply with District
of New Mexico Local Rule 56.1, which required him to specifically contest
Mutual Life's statement of undisputed facts, we depart from our "usual posture of
construing all facts in favor of the non-moving party" and accept as true all
material facts contained in Mutual Life's statement of undisputed facts. 1 See
Johnson v. Gudmundsson, 35 F.3d 1104, 1108 (7th Cir. 1994) (approving use of a
nearly identical local rule of the Northern District of Illinois); Waldridge v.
American Hoechst Corp., 24 F.3d 918 (7th Cir. 1994) (same); cf. Hagelin for
President Comm. of Kansas v. Graves, 25 F.3d 956, 959 (10th Cir. 1994)
("Because the state failed to submit any materials contradicting plaintiffs'
statement of facts in support of their motion for summary judgment, these facts
are deemed admitted."), cert. denied, 11 S. Ct. 934 (1995). However, we will
review facts other than those contained in Mutual Life's statement of undisputed
facts and reasonable inferences therefrom in the light most favorable to Dr.
LaMure. See Kaul, 83 F.3d at 1212.
1
Those facts are largely summarized in the second and third paragraphs of
this order and judgment.
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Dr. LaMure advances several arguments supporting his contention the
disability policy was not part of an employee welfare benefit plan. Perhaps the
most noteworthy is his claim that, to fall within the Employee Retirement Income
Security Act, an employee welfare benefit plan must provide benefits to at least
one employee who is not also an owner or employer; a plan whose sole
beneficiaries are the company's owners cannot qualify as an Employee Retirement
Income Security Act plan. Dr. LaMure claims the only persons entitled to
disability insurance were himself and his two fellow shareholders in Pathology
Consultants, and therefore the sole beneficiaries of the benefit plan were the
corporate owners, removing the plan from the scope of the Employee Retirement
Income Security Act.
We find Dr. LaMure's legal argument an interesting one, and indeed there is
some case law support for his thesis, albeit mostly in dicta or non-circuit
authority. See Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262, 264 (9th Cir. 1991)
(holding if the only beneficiaries of a benefit pension plan were the two
shareholders and owners of a corporation, the plan would not be governed by the
Employee Retirement Income Security Act because "a plan whose sole
beneficiaries are the company's owners cannot qualify as a plan under [the
Employee Retirement Income Security Act]") (citing Schwartz v. Gordon, 761
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F.2d 864, 867-69 (2d Cir. 1985)); Matinchek v. John Alden Life Ins. Co., 93 F.3d
96, 101 (3d Cir. 1996) (The Employee Retirement Income Security Act "does not
govern a 'plan' that is merely an insurance policy under which the only
beneficiaries are the company's owners.") (dicta); Fugarino v. Hartford Life &
Accident Ins. Co., 969 F.2d 178, 185 (6th Cir. 1992) (same) (dicta), cert. denied,
507 U.S. 966 (1993); Goutanis v. Mutual Group, No. 92-C-1689, 1995 WL 86588,
at *4-5 (N.D. Ill. Feb. 24, 1995); St. Martin v. Provident Life and Accident Ins.
Co., Civ. A. Nos. 92-2120, 92-4244, 1993 WL 262708, at *1-2 (E.D. La. July 2,
1993); Rich v. United States, 197 B.R. 692, 695-96 (Bankr. N.D. Okla. 1996).
However, contrary to Dr. LaMure's assertion in his reply brief, this claim
was not presented before the district court and therefore we will not hear it now
on appeal. See Singleton v. Wulff, 428 U.S. 106, 120 (1976). The language Dr.
LaMure points to as raising this claim before the district court most certainly did
not do so with the required specificity. "'[V]ague, arguable references to [a] point
in the district court proceedings do not ... preserve the issue on appeal.'" Lyons v.
Jefferson Bank & Trust, 994 F.2d 716, 721 (10th Cir. 1993) (quoting Monarch
Life Ins. Co. v. Elam, 918 F.2d 201, 203 (D.C. Cir. 1990)). Indeed, Dr. LaMure's
reliance on the same language to make a second distinct substantive argument on
appeal, discussed infra, illustrates the inadequacy with which he allegedly raised
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this argument before the district court.
Review of the rationales underlying the waiver rule, and the limited
exceptions to its exercise, support application of the rule to this claim. The
waiver rule is premised upon "considerations of fairness to both the district court
and the opposing party, avoidance of surprise on appeal necessitating remands for
additional findings, and the need for finality of litigation." Daigle v. Shell Oil
Co., 972 F.2d 1527, 1540 (10th Cir. 1992) (citing Hicks v. Gates Rubber Co., 928
F.2d 966, 970-71 (10th Cir. 1991)). Although we retain the discretion to hear
questions raised for the first time on appeal, we do so "only in the most unusual
circumstances." Lyons, 994 F.2d at 721. Such circumstances may include
instances where "proper resolution of the issue [is] beyond doubt and injustice
would otherwise result," id. (quotation marks and citation omitted) (citing Petrini
v. Howard, 918 F.2d 1482, 1483 n.4 (10th Cir. 1990)), or where the issue is
purely a question of law and other factors mitigate in favor of consideration. See
Trierweiler v. Croxton & Trench Holding Corp., 90 F.3d 1523, 1538-39 (10th Cir.
1996); Lyons, 994 F.2d at 721 (citing Grubb v. FDIC, 833 F.2d 222, 224 (10th
Cir. 1987)); Colorado Interstate Corp. v. CIT Group/Equip. Fin., Inc., 993 F.2d
743, 751 (10th Cir. 1993). The present case implicates no such circumstances.
Proper resolution of the issue is not "beyond doubt," and even assuming the issue
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to be purely legal, there is an absence of other factors favoring review.
In support of his request that we address this claim, Dr. LaMure notes
Mutual Life has fully briefed the substantive issue, thus asserting no harm or
surprise will inure to Mutual Life from our consideration. Although there is some
support for his line of reasoning, see, e.g., Colorado Interstate Corp., 993 F.2d at
751, we decline to embrace it. To review a claim not presented before the trial
court because the opposing party fully briefed it upon appeal would punish the
opposing party for the exercise of foresight and caution -- in essence, good
lawyering.
Dr. LaMure's second substantive argument on appeal is that his entitlement
to disability benefits does not stem from his "employee status in an employment
relationship," Donovan v. Dillingham, 688 F.2d 1367, 1371 (11th Cir. 1982),
cited with approval in Peckham, 964 F.2d at 1047, in that the benefits are
dependant upon his membership in the College of American Pathologists, rather
than his employment with Pathology Consultants. Therefore, he asserts, the
benefits are not part of an employee welfare benefit plan. 2 This argument is
2
Dr. LaMure raised this claim, albeit in a somewhat superficial and
desultory manner, before the district court with the same language by which he
alleges he presented his previously discussed "owner beneficiary" argument.
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meritless.
Pathology Consultants pays the semi-annual premiums to Mutual Life for
Dr. LaMure's policy coverage, and pays the dues to the College of American
Pathologists necessary for Dr. LaMure's membership in that organization.
Without these payments, Dr. LaMure would not be the beneficiary of the
insurance in question. Clearly then, his entitlement to the benefits results from
his employee status in an employment relationship. The requirement that Dr.
LaMure be a member of the College to be eligible for the policy, and the self-
employed status of other members of the College who participate in the College
group disability policy, do not change this result. See McDonald v. Provident
Indem. Life Ins. Co., 60 F.3d 234, 236 (5th Cir. 1995) (question was not whether
a multi-employer trust providing insurance coverage through association with an
insurance company was an employee welfare benefit plan, but whether the
employer's subscription to the trust constituted such a plan; focus was on the
employer and its involvement with the plan), cert. denied, 116 S. Ct. 1267 (1996);
Gahn v. Allstate Life Ins. Co., 926 F.2d. 1449, 1452 (5th Cir. 1991) (nexus
between the insurer and the policyholder, a group trust, was only marginally
relevant to the determination of whether an Employee Retirement Income Security
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Act plan existed; focus should be on the employer's involvement with the
administration of the plan). The cases Dr. LaMure cites in support of his
argument are inapposite.
Dr. LaMure's remaining contentions, that the necessary "plan, fund or
program" did not exist, that only a "bare purchase of insurance" took place
because Pathology Consultants did not perform requisite administrative activities,
and that Pathology Consultants did not intend to provide benefits to its
employees, were adequately refuted by the district court. Accordingly, we deny
the balance of Dr. LaMure's claims for substantially the reasons set forth by the
district court in its opinion, a copy of which is attached hereto. 3
AFFIRMED.
Entered for the Court
WADE BRORBY
United States Circuit Judge
3
In so doing, we do not endorse the district court's interpretation of
Brundage-Peterson v. Compcare Health Services Ins. Corp., 877 F.2d 509 (7th
Cir. 1989).
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