                                                                                                                           Opinions of the United
2007 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


3-22-2007

Early v. US Life Ins Co NY
Precedential or Non-Precedential: Non-Precedential

Docket No. 05-4696




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                                                           NOT PRECEDENTIAL


  UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT


                                 No. 05-4696



                              ROY W. EARLY,
                                         Appellant

                                       v.

         THE UNITED STATES LIFE INSURANCE COMPANY
                  IN THE CITY OF NEW YORK



                On Appeal from the United States District Court
                   for the Western District of Pennsylvania
                            (D.C. No. 05-cv-01010)
                 District Judge: Honorable Arthur J. Schwab


                  Submitted Under Third Circuit LAR 34.1(a)
                               March 5, 2007

Before: SLOVITER and AMBRO, Circuit Judges, and BRODY,* District Judge

                           (Filed: March 22, 2007)

                                  OPINION




            *
              Hon. Anita B. Brody, United States District Court for the
      Eastern District of Pennsylvania, sitting by designation.
SLOVITER, Circuit Judge.

       Roy W. Early appeals from the District Court’s dismissal under Rule 12(b)(6) of

the Federal Rules of Civil Procedure of his action alleging breach of contract when

defendant insurance company denied his claim for benefits under the life insurance policy

he purchased for his now-deceased ex-wife. We will affirm.

                                             I.

       After United States Life Insurance Company (“US Life”) denied Early’s claim for

life insurance proceeds following the death of his former wife, Danielle Burkett-

McKrisky, Early filed a complaint against appellee US Life in Pennsylvania state court,

alleging breach of contract, bad-faith denial of his claim for proceeds under the policy,

and what he later conceded to be an unactionable claim brought directly under

Pennsylvania’s Unfair Insurance Practices Act (“UIPA”), 40 Pa. Stat. Ann. §§ 1171.1 et

seq. Later that month, US Life removed the action to federal court based on diversity of

citizenship between the parties1 and on the Employee Retirement Income Security Act

(“ERISA”), 29 U.S.C. §§ 1001 et seq. It asserted that “this case is removable because the

allegations contained in plaintiff’s complaint deal exclusively with rights conferred or

alleged to be conferred under an employer-provided benefit plan [governed by ERISA.]”

Notice of Removal at 1, Early v. United States Life Ins. Co. in the City of New York, No.

05-1010 (W.D. Pa. July 25, 2005). Early did not challenge this removal.


                   1
                   Early’s complaint avers that he is a resident of
            Pennsylvania and that US Life is headquartered in New York.

                                             2
       US Life subsequently filed a motion to dismiss under Rule 12(b)(6). However, its

motion “did not request dismissal of the complaint due to its claims being preempted by

ERISA[.]” Feb. 28, 2007 Supp. Letter Br. at 2. Rather, it challenged Early’s claims

under Pennsylvania state law. Specifically, with regard to Early’s breach-of-contract

claim, US Life argued that the fact that Early had divorced his wife before her death

meant that coverage was unambiguously barred under the language of the policy. The

District Court agreed, ruling that the undisputed fact of Early’s divorce2 defeated his

breach-of-contract claim as a matter of contract interpretation, that he thus could not

establish a bad-faith denial of his claim under Pennsylvania law, and that Early’s claim

under the UIPA provides no private cause of action.

                                             II.

       ERISA is designed “to provide a uniform regulatory regime over employee benefit


                    2
                       The fact of Early’s divorce goes unreferenced in his
            complaint. However, he does not dispute this fact in his brief
            before this court, and reference to the divorce appears in the denial
            letter attached to US Life’s motion to dismiss. Indeed, Early noted
            in his response to US Life’s motion to dismiss that he “failed to
            attach a copy of the denial letter,” App. at 46, apparently
            inadvertently, and that he intended to amend his complaint to do so
            as it supported one of his claims. See Pension Ben. Guar. Corp. v.
            White Consol. Inds., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993)
            (“We now hold that a court may consider an undisputedly authentic
            document that a defendant attaches as an exhibit to a motion to
            dismiss if the plaintiff's claims are based on the document.
            Otherwise, a plaintiff with a legally deficient claim could survive
            a motion to dismiss simply by failing to attach a dispositive
            document on which it relied.”) (internal citations omitted).


                                             3
plans. To this end, ERISA includes expansive pre-emption provisions, see ERISA § 514,

29 U.S.C. § 1144, which are intended to ensure that employee benefit plan regulation

would be exclusively a federal concern.” Aetna Health Inc. v. Davila, 542 U.S. 200, 208

(2004) (internal quotation marks and citation omitted). We have held that claims, such as

the instant claim, “challenging the quantum of benefits due under an ERISA-regulated

plan are completely preempted under § 502(a)’s civil enforcement scheme.” Pryzbowski

v. U.S. Healthcare, Inc., 245 F.3d 266, 272 (3d Cir. 2001).

       State law claims of bad faith and breach of contract, such as those Early asserts,

would ordinarily fall within the scope of ERISA preemption, if such claims relate to an

ERISA-governed benefits plan.3 See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54-57

(1987) (holding that state law tort of bad-faith claim denial was preempted under

ERISA); Pryzbowski, 245 F.3d at 278 (holding that suits against insurance companies for

denial of benefits, “even when the claim is couched in terms of common law negligence

or breach of contract,” are preempted). Because neither party discussed the applicability

of ERISA in its briefs, we instructed them to prepare to discuss at oral argument whether

Early’s claims were preempted by ERISA and invited them to submit supplemental



                   3
                     An employee welfare benefit plan is defined under ERISA
            as “any plan, fund, or program which was . . . established or
            maintained by an employer or by an employee organization, or by
            both, to the extent that such plan, fund, or program was established
            or is maintained for the purpose of providing for its participants or
            their beneficiaries, through the purchase of insurance or otherwise
            . . . benefits in the event of . . . death.” 29 U.S.C. § 1002(1).

                                             4
briefing on the issue. However, Early moved to waive oral argument and failed to submit

a supplemental brief. Thus, although Early’s complaint avers that he, an airline pilot,

purchased the policy through his pilots’ union and his opening brief states that the policy

was “offered through his work,” Br. at 4, he has offered no position on the question of

ERISA’s applicability here.

       In any event, Early’s claim for breach of contract fails as a matter of law under

Pennsylvania law, and would fail even if his claim were to be recharacterized as arising

under Section 502(a)(1)(B), ERISA’s civil enforcement provision.4 The terms of the

policy are clear and unambiguous. The policy states that only “full-time employees of a

Participating Employer” and “[a]ll those under age 70 who are lawful spouses” of

full-time employees are eligible for coverage. Supp. App. at 6.5 It plainly provides that

insurance will end “for a spouse” on “the date her marriage ends by divorce or



                   4
                    Aside from a passing reference at 4, Early’s brief makes no
            argument as to why the District Court’s dismissal of his claim for
            bad-faith denial of benefits under Pennsylvania law was in error.
            “It is well settled that an appellant's failure to identify or argue an
            issue in his opening brief constitutes waiver of that issue on
            appeal.” United States v. Pelullo, 399 F.3d 197, 222 (3d Cir.
            2005). Therefore, we limit our consideration to the breach of
            contract claim but note that because we hold that claim fails, any
            claim for bad-faith denial of benefits necessarily would also fail.
                   5
                    US Life has moved this court for costs incurred in
            conjunction with its submission of a supplemental appendix.
            Apparently Early neglected to consult with US Life on the creation
            of the appendix to this appeal, which failed to include a copy of the
            relevant policy. This motion is denied.

                                              5
annulment.” Id.

         Nevertheless, Early asserts that he continued to pay premiums on the policy,6

and refers to the provision of the policy which provides: “If insurance ends for all other

reasons (for employees or lawful spouses)[, a] person may continue their [sic] insurance

for as long as they [sic] wish by continuing to pay premiums.” Supp. App. at 7. He

argues that his reasonable expectations as an insured would be frustrated were he not

entitled to recover the insurance benefit. The policy language establishes that only

employees and lawful spouses can continue their coverage via such payments. It is well-

settled that parties cannot invoke Pennsylvania’s reasonable expectation doctrine to create

an ambiguity where the policy language itself is unambiguous, as it is in the instant case.

Canal Ins. Co. v. Underwriters at Lloyd's London, 435 F.3d 431, 440 (3d Cir. 2006);

Liberty Mut. Ins. Co. v. Treesdale, Inc., 418 F.3d 330, 344-45 (3d Cir. 2005); see also

Matcon Diamond, Inc. v. Penn. Nat’l Ins. Co., 815 A.2d 1109, 1114 (Pa. Super. Ct.

2003).




                     6
                       Although Early makes this argument in his brief and,
              strangely, asserts via citation that his complaint and the transcript
              of oral argument before the District Court support the fact of such
              payments, Br. at 3, there are in fact no allegations regarding these
              payments in the complaint in this action. We decline to consider
              whether Early is entitled to any such premium payments that he
              may have made on his ex-wife’s policy following his divorce, as
              that issue is not before us.

                                               6
       Moreover, assuming Early’s policy is governed by ERISA,7 the unambiguous

language in this policy would lead to the same result. “[B]reach of contract principles,

applied as a matter of federal law, govern claims for benefits due under an ERISA plan,”

Hooven v. Exxon Mobil Corp., 465 F.3d 566, 572 (3d Cir. 2006), and straightforward

language in an ERISA plan document “should be given its natural meaning.” Bill Gray

Enters., Inc. Employee Health & Welfare Plan v. Gourley, 248 F.3d 206, 220 n.13 (3d

Cir. 2001) (internal quotation marks and citations omitted). Likewise, to the extent that

the doctrine of reasonable expectations applies under ERISA as a matter of federal

common law, see, e.g., Vitale v. Latrobe Area Hosp., 420 F.3d 278, 284 n.4 (3d Cir.

2005) (dicta); Lifson v. INA Life Ins. Co. of New York, 333 F.3d 349, 353 (2d Cir.

2003), application of the reasonable expectations doctrine would require as a “predicate

fact that the contract be ambiguous,” as “[g]eneral ERISA principles simply do not permit

us to re-write the terms of the insurance contract.” Pirkheim v. First Unum Life Ins., 229

F.3d 1008, 1011 (10th Cir. 2000) (internal citation to Colorado case law and quotation

marks omitted). We agree with the District Court that the language of the insurance

contract was clear and unambiguous.



                   7
                      Although US Life’s denial letter to Early appears to
            reference a procedure for further administrative review of his claim
            denial, the parties have not addressed whether Early has met any
            such requirement that may have existed as part of any plan.
            Exhaustion of plan remedies is required in claims to enforce the
            terms of an ERISA benefit plan. D’Amico v. CBS Corp., 297 F.3d
            287, 293 (3d Cir. 2002).

                                             7
                                    III.

For the foregoing reasons, we will affirm the judgment of the District Court.




                                     8
