the Estate of Larry Glen Jones, and Judith Lynn Jones, Administratrix v. AIG Life Insurance Company ( 2002 )

Affirmed and Opinion filed November 14, 2002

Affirmed and Opinion filed November 14, 2002.

In The

Fourteenth Court of Appeals

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NO. 14-02-00056-CV

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JUDITH LYNN JONES, ADMINISTRATRIX WITH WILL ANNEXED OF THE ESTATE OF LARRY GLEN JONES, DECEASED, Appellant

V.

AIG LIFE INSURANCE COMPANY, Appellee

________________________________________________________

On Appeal from the Probate Court No. One

Harris County, Texas

Trial Court Cause No. 293,207-401

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O P I N I O N

            In this appeal from a judgment dismissing her cause of action, Judith Lynn Jones appeals a judgment in favor of AIG Life Insurance Company on the ground that the trial court had jurisdiction over her federal causes of action. We affirm.

Background

            Appellant’s husband, Larry Glen Jones, was injured in an automobile accident on October 24, 1994, which was covered by the terms of a group policy issued to Jones’s employer by AIG Life Insurance Company.  On September 21, 1995, AIG issued a check to Jones in the amount of $250,000 as payment of benefits under the policy.  Jones died on December 3, 1995 without having negotiated the check.

            Following Jones’s death, Judith Lynn Jones returned the check to AIG and requested a replacement check issued in the name of the Estate with Mrs. Jones as the administratrix.  Mrs. Jones also requested interest on the benefits from September 21, 1995.  AIG issued a replacement check with a letter addressed to Jones’s lawyer stating that AIG was not obligated to pay interest on the benefits.  Jones subsequently returned the second check and filed a lawsuit requesting the $250,000 in benefits, interest and attorney’s fees pursuant to article 21.55 of the Texas Insurance Code.

            AIG subsequently issued another check for $250,000, which Jones accepted without prejudice to her claim for interest and attorney’s fees.  She amended her petition to acknowledge payment of the benefits and assert her right to interest and attorney’s fees under section 302.002 of the Texas Finance Code.  AIG filed a motion for summary judgment, alleging, inter alia, that the causes of action brought under State law were preempted by the Employee Retirement Income Security Act (ERISA). In response to AIG’s motion for summary judgment, Jones amended her petition a second time to include a request for interest and attorney’s fees under ERISA. In her response to AIG’s motion for summary judgment, Jones admitted that ERISA preempted her claims under the Texas Insurance Code and the Texas Finance Code.

            In addition to its motion for summary judgment, AIG filed a motion to dismiss Jones’s claim under ERISA because the trial court lacked subject matter jurisdiction.  The trial court granted AIG’s motion for summary judgment on the issue of ERISA preemption and granted AIG’s motion to dismiss. In a single issue, Jones claims the trial court erred in granting the motion to dismiss because state courts have concurrent jurisdiction with federal courts under ERISA.

Standard of Review

            Subject matter jurisdiction is a legal question, and a plea to the jurisdiction is reviewed under a de novo standard of review.  Harris County v. Cypress Forest Public Utility Dist. of Harris County, 50 S.W.3d 551, 553 (Tex. App.—Houston [14th Dist.] 2001, no pet.).  In deciding a plea to the jurisdiction, a court may not weigh the merits of the claim, but must consider only the plaintiff’s pleadings and the evidence pertinent to the jurisdictional inquiry.  County of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002).  When we consider a trial court’s order on a plea to the jurisdiction, we construe the pleadings in the plaintiff’s favor and look to the pleader’s intent.  Id.

Subject Matter Jurisdiction under ERISA

            Section 1132(a)(1)(B) of ERISA allows a beneficiary to bring an action to recover benefits due under the terms of the plan, to enforce rights under the plan, or to clarify rights to future benefits.  29 U.S.C. § 1132(a)(1)(B).  Section 1132(a)(3)(B) permits a civil action by a participant, beneficiary, or fiduciary for other appropriate equitable relief to redress violations of ERISA or the plan, or to enforce provisions of ERISA or the plan. See 29 U.S.C. § 1132(a)(3)(B).  Under Section 1132(e), the district courts of the United States have exclusive jurisdiction over civil actions with the exception of those brought under section 1132(a)(1)(B).  State courts and federal district courts have concurrent jurisdiction over those actions brought under section 1132(a)(1)(B).  When a state court suit couched in terms of a state common law or statutory cause of action relates to an employee welfare benefit plan, ERISA may preempt state law in favor of federal law.  If, however, the state law cause of action falls within the scope of an action not entrusted exclusively to federal court jurisdiction, the state court has concurrent jurisdiction even in the face of a timely and successful assertion of ERISA preemption and, in the absence of removal to the federal courts, may properly decide the case under the provisions of ERISA.  Gorman v. Life Ins. Co. of North America, 811 S.W.2d 542, 545–46 (Tex. 1991). 

            Jones’s issue presents the question of whether her cause of action falls within the scope of section 1132(a)(1)(B).  Jones claims her suit falls under the exception to exclusive federal jurisdiction because it is a suit to recover benefits.  Jones, however, does not seek unpaid benefits.  It is undisputed that she received the benefits prescribed under the plan.  In her pleadings, Jones seeks prejudgment interest as provided by law under the insurance code and finance code; she does not assert that interest is included as a benefit under the plan. Jones seeks interest she could have earned had the benefits been paid in a timely fashion and invested.^[1]  The United States Supreme Court has held that section 1132(a)(1)(B) “says nothing about the recovery of extracontractual damages, or about the possible consequences of delay in the plan administrators’ processing of a disputed claim.”  Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 144, 105 S. Ct. 3085, 3091, 87 L. Ed. 2d 96 (1985).  Therefore, a claim for interest on benefits cannot be brought under section 1132(a)(1)(B).  See Clair v. Harris Trust and Sav. Bank, 190 F.3d 495, 497 (7th Cir. 1999).  Section 1132(a)(3)(B) is the appropriate vehicle for such a cause of action.  Fotta v. Trustees of United Mine Workers, 165 F.3d 209, 213 (3rd Cir. 1998).  Because Jones’s cause of action cannot be brought under section 1132(a)(1)(B), the federal district court has exclusive jurisdiction of her cause of action.

            Jones contends that the Texas Supreme Court held in Gorman that ERISA allows recovery of prejudgment interest in state or federal court.  The court in Gorman, however, came to that conclusion after finding the trial court had subject matter jurisdiction because the plaintiff’s suit was one for benefits, of which the state court had concurrent jurisdiction with the federal court.  Gorman, 811 S.W.2d at 549–50. Here, the trial court does not have subject matter jurisdiction, so it cannot award prejudgment interest.

            Jones further contends that because her original petition alleged a cause of action for benefits that the trial court maintained its subject matter jurisdiction despite the fact that her amended pleadings deleted that cause of action. Jones relies on the general rule that “where jurisdiction is once lawfully and properly acquired, no subsequent fact or event in the particular case serves to defeat that jurisdiction.” Flynt v. Garcia, 587 S.W.2d 109, 109–10 (Tex. 1979).  In spite of the general rule, however, a trial court has no jurisdiction to hear a claim that is not within its subject matter jurisdiction.  Color Tile, Inc. v. Ramsey, 905 S.W.2d 620, 623 (Tex. App.—Houston [14th Dist.] 1995, no pet.).  An amended pleading supersedes and completely replaces all previous pleadings, rendering the previous pleadings ineffective.  Wren v. Texas Employment Commission, 915 S.W.2d 506, 507 (Tex. App.—Houston [14th Dist.] 1995, no pet.). The trial court was bound to proceed on the last amended petition on file.  Id. at 509.  Because Jones’s last amended petition did not invoke subject matter jurisdiction, the court did not err in granting the motion to dismiss.

            Accordingly, we overrule Jones’s sole issue and affirm the judgment of the trial court.

                                                                        /s/        Charles W. Seymore

                                                                                    Justice

Judgment rendered and Opinion filed November 14, 2002.

Panel consists of Justices Edelman, Seymore, and Guzman.

Do Not Publish — Tex. R. App. P. 47.3(b).

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^[1]           This court expresses no opinion on whether the benefits were timely paid.