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Harris v. Provident Life and Accident Insurance Co.

filed: June 7, 1994.

LAWRENCE C. HARRIS, JR.; MARY HARRIS, PLAINTIFFS-APPELLANTS,
v.
PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY, TENNESSEE CORPORATION; LINCOLN MEMORIAL PARK, INC., OREGON CORPORATION; SERVICE CORPORATION INTERNATIONAL, TEXAS CORPORATION, DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the District of Oregon. D.C. No. CV-91-575-HJF. Helen J. Frye, District Judge, Presiding.

Before: Thomas Tang, Cecil F. Poole, and Pamela Ann Rymer, Circuit Judges. Opinion by Judge Tang.

Author: Tang

TANG, Senior Circuit Judge:

Lawrence and Mary Harris (collectively the "Harrises") appeal the grant of summary judgment against them on their state law causes of action for misrepresentation and breach of contract, and their ERISA claim for breach of fiduciary duty. See Harris v. Provident Life & Accident Ins. Co., 776 F. Supp. 1450 (D. Or. 1991). The Harrises argue that the district court erred by (1) finding that their state law claims were preempted by ERISA, (2) failing to decide whether the Harrises had brought a claim for equitable estoppel under ERISA, and (3) finding that none of the defendants was a fiduciary. We have jurisdiction under 28 U.S.C. § 1291. Because we find that the district court lacked jurisdiction over this case, we vacate the district court's judgment and remand with instructions to dismiss.

BACKGROUND

Lincoln Memorial Park, Inc. ("Lincoln") hired Lawrence Harris to sell funeral service programs. Lincoln employees were generally covered by a benefit plan sponsored by Service Corporation International ("SCI"), Lincoln's parent corporation. The benefit plan was administered by Provident Life & Accident Insurance Company ("Provident"), but SCI would assist Provident in determining employee eligibility under the plan.

Carl Chadowski ("Chadowski"), Lincoln's manager and sales director, told the Harrises that they and their dependents were covered under Lincoln's medical insurance plan as of the date of Lawrence Harris' first sale. "Chadowski made these representations 1) with the knowledge that they were false or with reckless or negligent disregard for the truth; and 2) with the intent that [the Harrises] would rely upon them." Harris, 776 F. Supp. at 1452.

Lawrence Harris made his first sale on October 9, 1989. Shortly thereafter, on October 30, the Harrises sought medical coverage for their alcoholic son who needed either inpatient or outpatient treatment, inpatient treatment being more expensive. At that time, Chadowski again told the Harrises that they were covered under Lincoln's health plan.

To assure coverage, the Harrises called Provident. Although Provident could not find the Harrises in their system, Provident told the Harrises that they were covered up to $25,000 if Lincoln confirmed that they were eligible for benefits. Believing coverage existed, the Harrises obtained inpatient treatment for their son and incurred costs of $13,208.65. Thereafter, Provident refused to reimburse the Harrises because, under the benefit plan, coverage did not start until December 1, 1990.

The Harrises filed suit in state court against Lincoln and Provident, alleging state law claims of misrepresentation and breach of contract. Lincoln and Provident removed the case to federal court pursuant to 28 U.S.C. § 1441, contending that ERISA preempted the Harrises' claims.*fn1 The Harrises did not object to removal.

Subsequently, Lincoln and Provident argued that the Harrises failed to state a claim under ERISA and moved for judgment on this defense. Before the district court ruled on the motion, the Harrises filed an amended complaint adding Chadowski and SCI as defendants and alleging an additional claim of breach of fiduciary duty under ERISA against Lincoln, Provident, Chadowski, and SCI (collectively the "defendants"). The district court thereafter granted judgment in favor of the defendants. The Harrises timely appeal.

STANDARD OF REVIEW

Removal is a question of federal subject matter jurisdiction reviewed de novo. Gould v. Mutual Life Ins. Co., 790 F.2d 769, 771 (9th Cir.), cert. denied, 479 U.S. 987, 93 L. Ed. 2d 582, 107 S. Ct. 580 (1986). "The burden of establishing federal jurisdiction falls on ...


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