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Purvis v. The Lutheran Homes of South Carolina, Inc.

United States District Court, D. South Carolina, Columbia Division

March 5, 2018

Mary Cathy Purvis, Plaintiff,
v.
The Lutheran Homes of South Carolina, Inc., Defendant.

          ORDER AND OPINION

         Plaintiff Mary Cathy Purvis has pending against her former employer, Defendant The Lutheran Homes of South Carolina, Inc. (“Defendant” or “LHSC”), state law claims for breach of contract, breach of contract/detrimental reliance and bad faith failure to pay insurance. (ECF No. 1 at 11 ¶ 95-14 ¶ 127.)

         This matter is before the court on Defendant's Renewed Motion for Summary Judgment asserting that the aforementioned state law claims are preempted by the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-1461. (ECF No. 30 at 1-2.) Alternatively, Defendant moves the court to amend its Order entered on March 30, 2017 (the “March Order, ” ECF No. 29), pursuant to Rule 54(b) of the Federal Rules of Civil Procedure. (ECF No. 30 at 2.) Plaintiff opposes Defendant's Motion in its entirety. (ECF No. 37.) For the reasons set forth below, the court DENIES Defendant's Renewed Motion for Summary Judgment[1] and GRANTS IN PART Defendant's Rule 54(b) Motion to Amend.

         I. LEGAL STANDARD AND ANALYSIS[2]

         In the March Order, the court made the following observations in denying Defendant summary judgment on Plaintiff's state law claims for breach of contract, breach of contract/detrimental reliance and bad faith failure to pay insurance:

In this matter, Plaintiff alleged state law claims for breach of contract, breach of contract/detrimental reliance and bad faith failure to pay insurance. (ECF No. 1 at 11 ¶ 95-14 ¶ 127.) Defendant moved for summary judgment as to these claims on the basis that they were preempted by ERISA. (ECF No. 17-1 at 33.) The Magistrate Judge agreed and recommended dismissal of the claims because they were “all preempted by ERISA.” (ECF No. 24 at 11.)
The court observes that “[i]n determining whether ERISA preempts a plaintiff's state law claims, the primary consideration [] requires applying the test the Fourth Circuit has adopted for determining whether ERISA completely preempts a state law claim.” Hendrix v. Res. Real Estate Mgmt., Inc., 170 F.Supp.3d 879, 887 (D.S.C. 2016) (citing Sonoco Prod. Co. v. Physicians Health Plan, Inc., 338 F.3d 366, 372 (4th Cir. 2003) (adopting the Court of Appeals for the Seventh Circuit's test for determining ERISA preemption); Tucci v. First Unum Life Ins. Co., 446 F.Supp.2d 473 (D.S.C. 2006) (considering Sonoco in the context of a long term disability insurance plan)). “[T]he test sets forth three requirements to establish complete preemption:” (1) the plaintiff must have standing under [ERISA] § 502(a) to pursue its claim; (2) its claim must fall[] within the scope of an ERISA provision that [it] can enforce via § 502(a); and (3) the claim must not be capable of resolution without an interpretation of the contract governed by federal law, i.e., an ERISA-governed employee benefit plan. Id. (quoting Sonoco, 338 F.3d at 372).
Upon review, the court observes that neither Defendant (ECF No. 17-1 at 33) nor the Magistrate Judge (ECF No. 24 at 10-11) addressed these factors before reaching the conclusion that Plaintiff's state law claims were preempted by ERISA. Without these factors having been addressed by the movant, the court is not persuaded that Defendant is entitled to judgment as a matter of law on this issue. As a result, the court denies the Motion for Summary Judgment on the basis of ERISA preemption as to Plaintiff's state law claims for breach of contract, breach of contract/detrimental reliance and bad faith failure to pay insurance without prejudice.

(ECF No. 29 at 12-13.)

         Thereafter, on April 11, 2017, Defendant filed the instant Renewed Motion for Summary Judgment “on the grounds that the Magistrate Judge's finding that Plaintiff's state law claims are preempted by ERISA is consistent with the Fourth Circuit's three-factor Sonoco test on this issue, despite LHSC's prior omission of a more complete discussion in that regard.” (ECF No. 30 at 1-2.) In the alternative, Defendant argues that the court should amend the March Order pursuant to Rule 54(b) because (1) “the denial of summary judgment on those claims based on LHSC's prior omission of a more complete discussion of the ERISA preemption issue would present a ‘manifest injustice' to LHSC, because the record supports the dismissal of Plaintiff's state law claims as a matter of law, irrespective of ERISA preemption” and (2) “the Court's denial of summary judgment based on the failure to address the Sonoco test amounts to clear error of law, because the Magistrate Judge's preemption conclusion was supported by a citation to a later Fourth Circuit decision with a different preemption test as Sonoco, indicating that a discussion of the Sonoco test was unnecessary under Fourth Circuit precedent to support a finding of ERISA preemption.” (Id. at 2 (citing Wilmington Ship. Co. v. New Eng. Life Ins. Co., 496 F.3d 326 (4th Cir. 2007)).)

         On May 16, 2017, Plaintiff filed a Response in Opposition to Defendant's Renewed Motion for Summary Judgment and Motion to Amend arguing that the court “correctly ruled that [] Defendant was not entitled to summary judgment on Plaintiff's Breach of Contract claims.” (ECF No. 37 at 4.)

         II. JURISDICTION

         This court has jurisdiction over Plaintiff's state law claims based on supplemental jurisdiction since they were “so related to claims in the action within such original jurisdiction that . . . it form[s] part of the same case or controversy . . . .” 28 U.S.C. § 1367(a). Even though it dismissed the federal claims against Defendant, the court has the authority to retain jurisdiction over the state law claims that were closely related to the original claims. Id.

         III. ...


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