Lynch v. Filice

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

FORT MYERS DIVISION

MAUREEN LYNCH, individually,

Plaintiff,

v. Case No.: 2:24-cv-340-SPC-NPM

RANDAZZO FILICE, MARCELA

FILICE, TRACEY MORGANELLI,

ANNE DOWDELL, ADAM

MCKAY, THOMAS HAAS,

COURTNEY TURNEY, CAREN

SNEAD WILLIAMS, JM

FAMILIES ENTERPRISES, INC.,

THE NEWPORT GROUP, INC.,

ANNE MCTIGUE, JOSHUA

SHERIDAN, MARTHA

ARISTIZABAL, and BUSCIGLIO &

SHERIDAN LAW GROUP, P.A.,

Defendants.

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OPINION AND ORDER

Before the Court are Defendants The Newport Group, Inc. and Anne

McTigue’s (“Newport Defendants”) Motion to Dismiss (Doc. 42),1 Plaintiff

Maureen Lynch’s Motion to Remand (Doc. 100), and Newport Defendants’

1 Defendants JM Family Enterprises, Inc., Caren Snead Williams, and Courtney Turney (“JM

Family Defendants”) filed a notice joining Newport Defendants’ motion to dismiss and

incorporating by reference the arguments made therein. (Doc. 56). This practice is generally

forbidden by local rule. See Local Rule 3.01(f) (prohibiting incorporation by reference of

arguments made in another motion). But the Court temporarily suspended this local rule

during the Rule 16 conference to accommodate the many parties and overlapping arguments

in this case. See Local Rule 1.01(b) (allowing a judge to temporarily suspend the application

of a local rule if reasonably necessary to achieve the purpose of the rules).

Motion to Strike (Doc. 126). The parties responded (Docs. 68, 111, 127) and

replied (Docs. 81, 124). They also provided supplemental briefing on remand

(Docs. 112, 123). The central issue presented in these motions is whether the

Employment Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C.

§§ 1001 et seq completely preempts Plaintiff’s claims. For the reasons below,

the Court finds that ERISA preempts Plaintiff’s claims, denies the motion to

remand, and grants the motion to dismiss.

Background

This action arises from competing claims to life insurance proceeds. The

amended complaint alleges as follows.2 JM Family Enterprises, Inc. employed

John Lynch. (Doc. 5 ¶ 20). JM Family agreed to purchase Mr. Lynch life

insurance as part of its Executive Enhanced Life Insurance Plan (“EELIP”).

(Doc. 5 ¶ 26). To carry out this plan, the parties entered a Split Dollar

Agreement (“SDA”) in which JM Family agreed to purchase a Prudential Life

Insurance policy insuring Mr. Lynch and designating his wife, Maureen Lynch,

as the beneficiary. (Id. ¶ 26, 27). The agreement gave Mr. Lynch the right to

provide JM Family with a beneficiary change form during his life. (Id. ¶¶ 29–

31). Then JM Family, as owner of the policy, would notify the insurance

2 The Court “accept[s] the allegations in the complaint as true and constru[es] them in the

light most favorable to” Plaintiffs. Belanger v. Salvation Army, 556 F.3d 1153, 1155 (11th

Cir. 2009).

broker, Newport Defendants, who would provide an executed change of

beneficiary form to Prudential. (Id. ¶ 30).

During the final years of Mr. Lynch’s life, he suffered from physical and

cognitive decline. (Id. ¶¶ 33–39, 65–66). Days after Mr. Lynch was released

from a hospital—where he had undergone heart surgery and been diagnosed

with dementia—Randazzo Filice tried to change the beneficiary of the policy

from Ms. Lynch to Filice and Anne Dowdell. (Id. ¶¶ 62, 67). But on December

30, 2022, Prudential notified Newport Defendants that it could not accept the

form, as it did not include a company or policy number. (Id. ¶ 71). And, given

Mr. Lynch’s intervening death on December 8, 2022, Prudential also informed

Newport Defendants that it could not accept a change in beneficiary form after

his death. (Id. ¶¶ 71, 124).

Plaintiff claims that JM Family Defendants and Newport Defendants

withheld this information from her. According to her, they believed that they

might be liable to Filice and Dowdell due to the ineffective form. (Id. ¶ 259).

So they misled Plaintiff and planned to redirect the proceeds to Filice and

Dowdell. (Id. ¶ 259). They disclosed to Plaintiff that there was an effort to

change the named beneficiary but intentionally withheld the relevant

documents and that the effort failed. (Id. ¶¶ 262–64). Ultimately, JM Family

Defendants and Newport Defendants’ actions caused Plaintiff to incur

unnecessary attorney’s fees. (Id. ¶¶ 268–70). So Plaintiff sued them in state

court for “Count XII: Attempt to Defraud” and “Count XIII: Conspiracy to

Commit Fraud in the Concealment.” (Id. ¶¶ 253–73).

Dowdell sued in state court, too, claiming that the beneficiary change

form was effective. She seeks a declaration that she is entitled to a portion of

the life insurance benefits. (Doc. 6 ¶¶ 69–100). Alternatively, she sues for

breach of contract, claiming that any defect in the beneficiary change was the

fault of JM Family. (Id. ¶¶ 101–10). The state court consolidated the Dowdell

and Lynch actions. (Doc. 1-4).

Newport Defendants removed the action arguing Plaintiff’s claims are

completely preempted by ERISA and therefore removable under 28 U.S.C.

§ 1441(c)(1). (Doc. 1).

Analysis

Before diving into ERISA preemption, the Court must determine what

matters are before it. To start, the Lynch matter does not involve only the

claims against JM Family Defendants and Newport Defendants. The

operative complaint includes twelve counts against fourteen defendants. But

the other claims do not involve the life insurance dispute or a potential ERISA-

preemption issue. As the parties agree, the Court lacks subject-matter

jurisdiction over those claims (which primarily involve disputes over an IRA).

So even if the Court has subject-matter matter jurisdiction over the claims

against JM Family Defendants and Newport Defendants, it must nonetheless

sever and remand the other claims. See 28 U.S.C. § 1441(c).

Next, the Court must determine whether Newport Defendants removed

the Dowdell matter. As discussed above, the state court consolidated Lynch

and Dowdell. The Newport Defendants are defendants only in the Lynch

matter and filed the notice of removal. Yet they assert that they successfully

removed both matters because they were consolidated in state court for all

purposes. (Doc. 112 at 9-14).

Whether both actions were removed turns on the effect of consolidation

under Florida law. See, e.g., Carruth v. Moore, No. 7:16-cv-1935-LSC, 2017 WL

11510375, *3 (N.D. Ala. May 26, 2017) (“However, because the consolidation

occurred in state court under state law, the effect of the consolidation is

determined by state law.”). The ultimate question is whether under Florida

law the consolidation destroyed the identity of each suit and merged them into

one. Id.

Newport Defendants argue that the Lynch and Dowdell matters were

merged into one because the trial court consolidated them for all purposes. But

this view of consolidation is at odds with Florida law. Under Florida law,

“[c]onsolidation does not merge suits into a single cause or change the rights of

the parties, or make those who are parties in one suit parties in another.

Rather, each suit maintains its independent status with respect to the rights

of the parties involved.” Anderson v. Epstein, 202 So. 3d 893, 898 (Fla. Dist.

Ct. App. 2016); see also OneBeacon Ins. v. Delta Fire Sprinklers, Inc., 898 So.

2d 113, 115–16 (Fla. Dist. Ct. App. 2005); CDI Contractors, LLC v. Allbrite

Elec. Contractors, Inc., 836 So.2d 1031, 1033 (Fla. Dist. Ct. App. 2002); Wagner

v. Nova Univ., Inc., 397 So. 2d 375, 377 (Fla. Dist. Ct. App. 1981). Because the

consolidation did not merge the matters into one action under Florida law,

Newport Defendants only removed the Lynch matter to this Court.

So the Court is left with whether ERISA completely preempts the claims

against JM Family Defendants and Newport Defendants in the Lynch action.

Ordinarily, the well-pleaded complaint rule prevents a federal defense—such

as preemption—from supplying subject-matter jurisdiction and supporting

removal. Aetna Health Inc. v. Davila, 542 U.S. 200, 207 (2004). But ERISA

creates two kinds of preemption: complete and conflict. Connecticut State

Dental Ass’n v. Anthem Health Plans, Inc., 591 F.3d 1337, 1343 (11th Cir.

2009). Complete preemption is not limited by the well-pleaded complaint rule.

Davila, 542 U.S. at 209. As the Supreme Court has explained, “the ERISA civil

enforcement mechanism is one of those provisions with such ‘extraordinary

pre-emptive power’ that it ‘converts an ordinary state common law complaint

into one stating a federal claim for purposes of the well-pleaded complaint

rule.’” Id. (quoting Metro. Life Ins. v. Taylor, 481 U.S. 58, 65 (1987)).

Complete preemption turns on “(1) whether the plaintiff could have

brought its claims under § 502(a); and (2) whether no other legal duty supports

the plaintiff’s claims.” Connecticut State Dental Ass’n, 591 F.3d at 1345.

“The removing party bears the burden of demonstrating complete

preemption and, where jurisdiction is not absolutely clear, the Eleventh Circuit

favors remand.” Lee Mem’l Health Sys. v. Blue Cross & Blue Shield of Fla.,

Inc., 248 F. Supp. 3d 1304, 1310 (M.D. Fla. 2017). To determine whether

Newport Defendants have met their burden, the Court “may consider the

evidence in and outside the petition for removal and motion to remand.” Id.

To satisfy the first step, “(1) the plaintiff’s claim must fall within the

scope of ERISA; and (2) the plaintiff must have standing to sue under ERISA.”

Id. at 1350. For a claim to fall within the scope of ERISA, there must be an

ERISA plan. Garcon v. United Mut. of Omaha Ins., 779 F. App’x 595, 597 (11th

Cir. 2019). An ERISA plan exists if “from the surrounding circumstances a

reasonable person could ascertain the intended benefits, beneficiaries, source

of financing, and procedures for receiving benefits.” Id.

Under ERISA, an employee benefit plan may be a welfare benefit plan,

a pension benefit plan, or both. See 29 U.S.C. § 1002(3). Newport Defendants

claim that a welfare benefit plan is at issue. An employee welfare benefit plan

is defined as (1) “any plan, fund, or program,” (2) “established or maintained,”

(3) “by an employer,” (4) “for the purpose of providing for its participants or

their beneficiaries,” (5) “through the purchase of insurance or otherwise . . .

benefits in the event of . . . death” (or other enumerated benefits). 29 U.S.C.

§ 1002(1). This definition appears to describe the life insurance arrangement

here. Plaintiff’s employer established a plan to provide employees’

beneficiaries a benefit in the event of death, that is, life insurance. This ought

to be the end of the inquiry.

A closer look confirms this reading. First, there is a plan, fund, or

program. That’s because a reasonable person could ascertain the intended

benefits, beneficiaries, source of financing, and procedures for receiving

benefits. Plaintiff concedes that a reasonable person could ascertain the

intended benefits and beneficiaries. The Court agrees.

Plaintiff weakly contests whether a reasonable person could ascertain

the source of financing. The SDA states that the “Corporation” (JM Family)

“shall pay the full amount of the premium to the insurance company providing

the insurance coverage.” (Doc. 111-1 ¶ 2). Plaintiff cites this language and

argues “the actual source of funding is not identified.” (Doc. 100 at 9). What

Plaintiff appears to be arguing is that the source of financing may be JM

Family’s general assets. But whether an employer pays benefits out of its

general assets is not dispositive of whether a plan exists. See Williams v.

Wright, 927 F.2d 1540, 1544 (11th Cir. 1991) (“Therefore, we conclude that the

payment of benefits out of an employer’s general assets does not affect the

threshold question of ERISA coverage.”). At best, this is only one of the many

factors “from the surrounding circumstances.” Donovan, 688 F.2d at 1373; see

also Stern v. Int’l Bus. Machs. Corp., 326 F.3d 1367, 1373 (11th Cir. 2003)

(“[A]lthough the Williams court found that an employer cannot circumvent

ERISA by paying from its general assets that which the statute requires be

paid from a separate trust . . . the court did not conclude that the payment of

benefits from general assets is never relevant to the question of whether an

ERISA plan exists[.]”).

Plaintiff also contests whether a reasonable person could ascertain the

procedures for receiving benefits. The SDA contains a section titled “Claims

Procedure.” (Doc. 111-1 ¶ 13). That section provides that JM Family “shall

make all determinations” concerning a claim. (Id.). Its determinations “shall

be in writing” and made “within 90 days of [JM Family’s] receipt of the

Executive’s claim for benefits.” (Id.). The paragraph also details an appeals

process. It provides that the “[a]n Executive who has been completely or

partially denied a benefit” may appeal the denial “by filing a written

statement” with JM Family no later than 60 days after receipt of the denial.

(Id.). JM Family must “schedule an opportunity for full and fair review” within

30 days of the appeal. (Id.). JM Family must provide a written decision of the

appeal within 60 days (or 120 with an extension). (Id.).

Plaintiff cherry-picks the SDA’s references to the “Executive”—here, Mr.

Lynch. She argues that the SDA’s text provides procedures only for the

Executive to file a claim, not his beneficiaries. But considering the SDA’s

language in context shows that it provides the procedures for beneficiaries to

make a claim.

The SDA states that “[a]ny controversy or claim” must be filed with JM

Family and that JM Family shall decide “such claim.” (Doc. 111-1 ¶ 13). It

adds that any decision “denying such claim” shall be “delivered to all parties

in interest.” (Id.). This broad language encompasses claims made by a

beneficiary, not just Executive Mr. Lynch.

Newport Defendants have also provided a declaration from Courtney

Turney, the person charged with managing JM Family’s retirement benefit

programs. (Doc. 111-3). Turney states that “JM Family, as fiduciary,

interprets the terms of the [SDA] as allowing a beneficiary (or person claiming

to be a beneficiary) to assert a claim to the death benefit, and to

administratively appeal an adverse determination.” (Id. ¶ 9). The declaration

describes a purported beneficiary doing just that—Dowdell requested payment

of the death benefit and proceeded through the claim and appeal process. (Id.

at 4–6.).

Plaintiff’s narrow reading of the SDA is also nonsensical. According to

Plaintiff’s interpretation, the SDA provides that only Mr. Lynch can make a

claim for his own death benefit, after he has died. This is absurd. Considering

the surrounding circumstances, a reasonable person would not read the SDA

so narrowly and could ascertain the procedures a beneficiary must follow to

receive benefits.

At times, Plaintiff seems to argue that the claim procedures are also too

simple. This argument must fail. See Williams, 927 F.2d at 1545 (approving

procedures simpler than those here). In sum, there is a plan, fund, or program

here.

Next, JM Family established or maintained the plan. Plaintiff’s

argument that JM Family does not maintain the plan with an “ongoing

administrative scheme” does not withstand scrutiny. Under a line of cases

following Fort Halifax Packing Co. v. Coyne, courts have required more than

“a one-time, lump-sum payment triggered by a single event” to constitute an

ERISA plan because such arrangement “requires no administrative scheme

whatsoever to meet the employer’s obligation.” 482 U.S. 1, 12 (1987); see also

Avera v. Airline Pilots Ass’n Int’l, 436 F. App’x 969, 979 (11th Cir. 2011)

(relying on Fort Halifax to affirm the dismissal of an ERISA claim for lack of

an ERISA plan).

Newport Defendants have sufficiently shown that JM Family engages in

an administrative scheme beyond simply issuing a lump-sum payment. Under

the language of the SDA, JM Family serves as the “Fiduciary” and

“Administrator” of the plan. (Doc. 111-1 ¶ 12). The SDA was entered into as

part of a broader plan to provide executives at JM Family life insurance—the

EELIP. (Doc. 111-3 ¶ 2). The EELIP has had up to 150 participating

employees. (Id. ¶ 4). JM Family tracks and pays the premiums on all the

executives’ policies, reports the premiums as taxable income, tracks the values

of each policy’s benefit, and satisfies IRS reporting requirements. (Id. ¶ 6). As

the facts of this case illustrate, JM Family is also involved in the claims-

handling process when a beneficiary requests payment under the policy.

Further, Plaintiff’s caselaw on this point is not as expansive as it seems.

The seminal case for the “ongoing administrative scheme” requirement is Fort

Halifax. In that opinion, the Supreme Court acknowledged the argument that

providing death benefits often requires minimal administration from the

perspective of the beneficiaries. According to the Supreme Court, however,

this view “misunderstands what it is that makes a plan a plan.” Fort Halifax,

482 U.S. at 15 n.9. The Supreme Court went on:

While death benefits may represent a one-time payment

from the perspective of the beneficiaries, the employer

clearly foresees the need to make regular payments to

survivors on an ongoing basis. The ongoing, predictable

nature of this obligation therefore creates the need for an

administrative scheme to process claims and pay out

benefits, whether those benefits are received by

beneficiaries in a lump sum or on a periodic basis.

Id. That is exactly the ongoing administrative scheme JM Family has in place.

Based on ERISA’s plain text and the caselaw interpreting it, JM Family has

established or maintained the plan.

And it is indisputable that the plan was created for purpose of providing

death benefits to participant’s beneficiaries. So the arrangement here satisfies

the definition of a welfare benefit plan.

Plaintiff also has standing under ERISA. That’s because she asserts that

she is the rightful beneficiary under the plan. (Doc. 5 ¶ 26). In her complaint,

Plaintiff claims JM Family Defendants and Newport Defendants withheld

information from her in an attempt to redirect the death benefit to others. Her

claims, no matter how they are labeled, are essentially claims “by a participant

or beneficiary . . . to recover benefits due to [her] under the terms of [the] plan,

to enforce [her] rights under the terms of the plan, or to clarify [her] rights to

future benefits under the terms of the plan.” 29 U.S.C. § 1132. And that this

case “involves a dispute over a change of beneficiary form in no way defeats

ERISA preemption.” Unum Life Ins. Co. of Am. v. Burton, No.

8:05CV1423T23MAP, 2006 WL 69068, at *1 (M.D. Fla. Jan. 11, 2006); see also

Brown v. Connecticut Gen. Life Ins., 934 F.2d 1193, 1196 (11th Cir. 1991)

(finding completely preempted a “claim for an order declaring [the plaintiff]

the rightful beneficiary and requiring [the defendant] to pay her the benefits

of the policy”); Brown v. Cemex, Inc., No. CIV.A. 205CV552C, 2005 WL

3133778, at *2 (S.D. Ala. Nov. 22, 2005) (same).

Lastly, Plaintiff argues that regardless of the existence of an ERISA

plan, she could not have brought her claims under ERISA because she seeks

extracontractual relief. (Doc. 68 at 19–20). But this argument cannot defeat

complete preemption. See Amos v. Blue Cross-Blue Shield of Alab., 868 F.2d

430, 431 (11th Cir. 1989) (holding that ERISA preemption completely

eliminates state causes of action seeking extracontractual or punitive

damages).

Because Plaintiff’s claims fall within the scope of ERISA, and she has

standing to sue, she could have brought her claims under § 502(a). Step one of

the test to determine whether ERISA completely preempts Plaintiff’s claims

has been satisfied.

The Court next turns to step two to determine “whether no other legal

duty supports the plaintiff’s claims.” Connecticut State Dental Ass’n, 591 F.3d

at 1345. Plaintiff does not seriously challenge this step in either her remand

motion or her opposition to dismissal. (Docs. 68, 100). The Court finds that it

is satisfied. Plaintiff claims JM Family Defendants and Newport Defendants

concealed from her that the change in beneficiary form was ineffective based

on “the express terms of the Lynch Life Insurance Policy” and nonetheless tried

to redirect those benefits. (Doc. 5 ¶¶ 27–31, 62–70, 253–73). Accordingly,

Plaintiff’s claims directly turn on the implementation of the ERISA-governed

plan and do not arise out of an independent duty. See, e.g., Gables Ins.

Recovery, Inc. v. Blue Cross & Blue Shield of Fla., Inc., 813 F.3d 1333, 1338

(11th Cir. 2015) (holding claims that “necessarily depend upon a breach of the

ERISA plan . . . do not arise out of a separate duty independent of the plan”).

In short, Plaintiff’s claims satisfy both steps of the complete preemption

test. Plaintiff could have brought her claims under § 502(a). Her claims fall

within the scope of ERISA, the life insurance arrangement at issue is an

employee welfare benefit plan, and she has standing under ERISA. And no

other legal duty supports Plaintiff’s claims. So her claims are completely

preempted by ERISA.

One last thing about complete preemption—Plaintiff requests a

certification of appealability. Under 28 U.S.C. § 1292(b), the Court may certify

that its Order “involves a controlling question of law as to which there is

substantial ground for difference of opinion and that an immediate appeal from

the order may materially advance the ultimate termination of the litigation[.]”

Rather than provide argument and authority to show there is a substantial

ground for difference of opinion regarding the application of complete

preemption in this case, Plaintiff points out that other courts have certified

appeals in cases involving ERISA preemption. (Doc. 100 at 22–23). Given this

inadequate showing, the Court, in its discretion, will not grant this relief. See

Jenkins v. BellSouth Corp., 491 F.3d 1288, 1291 (11th Cir. 2007) (“Under

section 1292(b), both the district court and the court of appeals exercise

discretion about granting interlocutory review[.]”).

With federal jurisdiction secured, Newport Defendants argue the Court

should dismiss the amended complaint as conflict-preempted. (Doc. 42). In

addition to complete preemption, ERISA creates conflict preemption (also

referred to as defensive preemption). Conflict preemption is a “substantive

defense to preempted state law claims” and “arises from ERISA’s express

preemption provision, § 514(a), which preempts any state law claim that

‘relates to’ an ERISA plan.” Connecticut State Dental Ass’n, 591 F.3d at 1344.

Conflict preemption is broader than complete preemption. So “if the plaintiff's

claims are completely preempted, then they are also defensively preempted.”

Cotton v. Massachusetts Mut. Life Ins., 402 F.3d 1267, 1281 (11th Cir. 2005)

(cleaned up).

Because Plaintiff’s claims are completely preempted, they are also conflict

preempted. The Court dismisses Plaintiff’s Amended Complaint (Doc. 5) and

grants her request for leave to amend to re-plead under ERISA. (Doc. 68 at

20).

Accordingly, it is now

ORDERED:

1. Plaintiff’s Motion to Remand (Doc. 100) is DENIED. Only the Lynch

matter was removed to this Court. Further, the Court SEVERS and

REMANDS all claims from the Lynch matter other than “Count XII:

Attempt to Defraud” and “Count XIII: Conspiracy to Commit Fraud

in the Concealment.”

2. Newport Defendants’ Motion to Dismiss (Doc. 42) is GRANTED.

3. Newport Defendants’ Motion to Strike (Doc. 126), JM Family

Defendants’ Motion to Dismiss (Doc. 84), and the remaining motion

involving remanded claims (Doc. 88) are DENIED as moot.

4. Busciglio Defendant’s Motion to Dismiss (Doc. 73) is also DENIED as

moot.3

5. The Clerk is DIRECTED to transmit a certified copy of this Order to

the Clerk of the Twentieth Judicial Circuit in and for Lee County,

Florida.

6. On or before March 10, 2025, Plaintiff must file a second-amended

complaint consistent with this Order.

3 Plaintiff filed a Rule 21 motion to drop Defendants Busciglio & Sheridan Law Group, P.A.,

Joshua Sheridan, and Martha Aristazabal as improperly joined. (Doc. 93). The Court denied

the motion on procedural grounds. (Doc. 94). Plaintiff is now directed to drop those

Defendants from her second-amended complaint.

DONE and ORDERED in Fort Myers, Florida on February 24, 2025.

tite POLSTER otal

UNITED STATES DISTRICT JUDGE

Copies: All Parties of Record

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