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HORTON v. CIGNA INDIVIDUAL FIN. SERVS. CO.

June 23, 1993

PHYLLIS T. HORTON, individually and as assignee of Horton Publishing Company, Plaintiff,
v.
CIGNA INDIVIDUAL FINANCIAL SERVICES COMPANY, a Delaware corporation and PENSION RESOURCES, INC., an Illinois corporation, Defendants.


HOLDERMAN


The opinion of the court was delivered by: JAMES F. HOLDERMAN

JAMES F. HOLDERMAN, District Judge:

 Plaintiff Phyllis Horton ("plaintiff") moves to remand this case to Illinois state court pursuant to 28 U.S.C. ยง 1447(c). Defendants Cigna Individual Financial Services Company ("Cigna") and Pension Resources, Inc. ("PRI") move to dismiss plaintiff's complaint as preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"). Plaintiff's motion to remand is granted, and defendants' motion to dismiss is denied.

 BACKGROUND

 Horton Publishing (the "Company") adopted a pension plan ("Plan") for its employees in 1987. The assets of the Plan were invested in insurance contracts issued by an affiliate of Cigna. PRI was retained by the Company to provide administrative and actuarial services to the Plan. Plaintiff succeeded her husband as principal shareholder and president of the Company after his death in July 1989. Her husband had attended to all matters relating to the Plan, a task which fell to plaintiff after his death. Plaintiff alleges that, due to her inexperience in such matters, she relied heavily upon PRI and Cigna's agents. (Plaintiff's Memorandum in Support of Remand, p. 2-3.)

 Plaintiff began trying to sell the Company via a stock transaction in 1990. Plaintiff alleges that defendants were aware of the sales effort, and Cigna's agent wrote a letter to plaintiff confirming that the Plan was adequately funded. (Id. at p.3.) In May 1991, PRI informed plaintiff that a change in the law required an amendment to the Plan; Cigna's agent confirmed this conclusion. (Id.) Plaintiff authorized the changes, and Cigna's agent announced the amendment to Plan participants verbally and in writing. (Id.)

 Plaintiff alleges that change was not legally necessary and caused the Plan, despite Cigna's representation that a surplus existed, to become underfunded. (Id.) The shortage was not discovered until a purchaser detected it, and refused to close the stock transaction until the underfunding was corrected. (Id. at 4.) Plaintiff personally paid $ 205,000 to remedy the deficiency; the Plan is consequently solvent, and no participant or beneficiary has been denied a benefit. (Id.)

 Plaintiff filed suit in the Circuit Court of Cook County, maintaining that she and the Company were damaged as a result of the defendants' alleged misconduct. Plaintiff asserted claims for breach of contract, negligent misrepresentation, breach of state law fiduciary duty, and violations of the Illinois Consumer Fraud Act against both defendants. Plaintiff is seeking damages for herself, not on behalf of the Plan. Defendants removed the action to this court.

 The issues raised in the supporting memoranda for the motion to remand and motion to dismiss are substantially identical.

 Plaintiff maintains that defendants' motion to dismiss must be denied and plaintiff's motion to remand must be granted for several reasons:

 
1. there is no federal jurisdiction for plaintiff's claim (Plaintiff's Memorandum in Support of Remand, p. 4-5);
 
2. there is no ERISA jurisdiction, as the plaintiff is not a beneficiary or participant in an ERISA plan, plaintiff is not suing as a fiduciary in such a plan, and, because defendants are not ERISA fiduciaries, plaintiff has no standing to sue under ERISA (Id. at 6-7);
 
3. plaintiff's claim is not preempted by ERISA, as the claim does not "relate to" an ERISA plan (Id. at 11);
 
4. the case should be remanded to state court because it is purely a matter of state law and not "related to" an ERISA plan (Id. at 8);
 
5. if plaintiff's claims are deemed preempted, plaintiff would be unable to obtain redress for defendants' wrongful acts (Plaintiff's Memorandum in Opposition to Dismissal, pp. 4, 10);
 
6. the ruling defendants wish this court to make would immunize nonfiduciary plan advisors from any legal accountability. (Id.)

 Defendants make several arguments that remand is inappropriate, and that plaintiff's claim should be dismissed in its entirety:

 
1. removal was proper as the claims arise under ERISA (Cigna's Memorandum in Opposition to Remand, pp. 3-5);
 
2. plaintiff's claims are preempted under ERISA as they "relate to" an ERISA plan and require resolution of ERISA issues (Cigna's Memorandum in Support of Dismissal, pp. 3-6; PRI's Memorandum in Support of Dismissal, pp. 2-4);
 
3. plaintiff has no valid claim under ERISA, as plaintiff lacks standing and defendants are not ERISA "fiduciaries" (Cigna's Memorandum at pp. 12-13);
 
4. the Supreme Court and Seventh Circuit take a broad view of preemption, and the fact plaintiff has no alternate remedy is irrelevant (Cigna's ...

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