Foy v. Prudential Insurance Co. of America

MARVIN H. SMITH, Judge, Specially Assigned. We shall here hold that a trial judge erred when he entered summary judgment in favor of all defendants as to all counts of a complaint based on the fact that the subject matter was preempted by the Employee Retirement Income Security Act of 1974 (“ERISA”). Plaintiff had included a well-pleaded count in her complaint based specifically on ERISA. In the view we take of this case in the light of the way it reaches us procedurally we do not reach the interesting question of how the ERISA plan in question should be construed.

David Brian Fox, son of Mrs. Alice Joyce Foy, the appellant, died in a motorcycle accident on June 23,1985. At the time of his death Fox was an employee of appellee Locke Insulators, Inc. Included in Locke’s program of employee benefits was the opportunity to purchase various forms of insurance under the Insurance Plan for Hourly Employees. The insurance was underwritten by another appellee, The Prudential Insurance Company of America. It provided a group policy for Locke.

On January 15, 1985, Fox signed a form entitled “Locke Insulators, Inc. Personal Accident Insurance.” The amount of insurance he chose was $150,000. Mrs. Foy was named as the beneficiary of the policy. Locke and Prudential accepted insurance premiums on the policy from January, 1985, to June, 1985, when Fox died. Fox never received notice from Locke or Prudential of any irregularity in his insurance policy.

Upon Mrs. Foy’s application for death benefits after her son’s death, Prudential paid $100,000 to her, but refused to pay the remaining $50,000. It tendered a check for $15.18 which represented the amount of premiums for the additional $50,000 in insurance coverage. Mrs. Foy has never cashed the check which is now held by her attorney. ⁴²¹ Prudential and Locke assert that Fox was eligible for a maximum of $100,000 in personal accident insurance, and thus that the $150,000 policy was improperly issued. The maximum amount clause in question states in relevant part: “Maximum amount ... shall not exceed either “(a) The greater of (i) $100,000 and (ii) five times his annual earnings, or “(b) $250,000.” The salary of Fox was between $18,000 and $19,000 per year at the time of Ms death.

From this it is the contention of Mrs. Foy that the maximum amount of insurance was $100,000 plus five times the annual earnings, an amount in excess of $150,000. On the other hand, appellees contend that the maximum was $100,000 because the maximum was whichever was the greater, $100,000 or five times his annual earnings, with no more than $250,000 to be obtained in any event. Mrs. Foy sued Locke and Prudential in the Circuit Court for Baltimore City. The complaint sought damages for common law breach of contract.

Prudential asserted, among other defenses, that Mrs. Foy’s claim was preempted by ERISA. 1 After Mrs. Foy completed her discovery she filed a motion for summary judgment as well as a second amended complaint adding an ERISA count. In due season a third amended complaint was filed which added Locke Insurance Plan for Hourly Employees, another appellee here, as a defendant and asserted an ERISA claim against it. A hearing on the motion for summary judgment was held. Unfortunately, there appears to have been no court reporter present.

The ruling of the trial judge, made in writing, reads in its entirety: ⁴²² “Plaintiff’s Motion for Summary Judgment DENIED as to all counts. Subject matter preempted under federal ERISA statute. “Judgment entered in favor of all defendants as to all counts. Maryland Rule 2-501(e).” This appeal followed. We issued a writ of certiorari on our own motion prior to a hearing in the Court of Special Appeals.

Mrs. Foy concedes that ERISA preempts the original common law contract count. It is asserted that the presence of an ERISA count was brought to the attention of the trial judge who heard the motion. It appears not to have occurred to counsel that a motion might have been filed specifically noting this fact and asking the trial judge to clarify his ruling. Summary judgment procedure is not a substitute for a trial, but is merely a preview to determine whether there exists a factual controversy requiring a trial.

Metropolitan Mtg. Fd. v. Basiliko, 288 Md. 25, 28 , 415 A.2d 582, 584 (1980) (citing Impala Platinum v. Impala Sales, 283 Md. 296, 326 , 389 A.2d 887 (1978), and White v. Friel, 210 Md. 274, 285-86 , 123 A.2d 303 (1956)). Where the moving party has set forth sufficient grounds for summary judgment, the party opposing the motion must show with some precision that there is a genuine dispute as to a material fact. Liscombe v. Potomac Edison Co., 303 Md. 619, 633 , 495