Doug Gessford v. July Business Services, Inc.

Summary

The United States District Court for the Eastern District of Kentucky grants the plaintiff’s motion to remand a negligence action involving the delayed transfer of 401(k) funds. The court holds that the claim is not completely preempted by ERISA under the two-part Davila test because it seeks damages for alleged delay-related losses rather than denied plan benefits and is based on Kentucky’s independent duty of care. The court remands the case to Montgomery Circuit Court and denies the defendant’s motion for judgment on the pleadings for lack of jurisdiction.

Holdings

1. The negligence claim was not completely preempted by ERISA because July failed to satisfy either prong of the conjunctive Davila test; consequently, the action was not removable on the asserted federal-question basis.
2. Gessford did not seek recovery of benefits due under the ERISA plan; he sought monetary damages allegedly caused by July's delay in transferring existing retirement funds.
3. Gessford's negligence claim alleged an independent legal duty under Kentucky law and therefore satisfied neither the ERISA-dependent-duty requirement nor the second Davila prong.
4. The court denied the motion for judgment on the pleadings for lack of jurisdiction after remanding the case.

Questions Presented

1. Whether Gessford's state-law negligence claim was completely preempted by ERISA and therefore removable under federal-question jurisdiction.
2. Whether the claim satisfied the first prong of the Davila complete-preemption test by seeking recovery of benefits due under an ERISA plan.
3. Whether the claim satisfied the second prong of the Davila test by alleging only a duty dependent on ERISA or the terms of the ERISA plan.
4. Whether the court could rule on the defendant's motion for judgment on the pleadings after determining that it lacked jurisdiction.

Disposition

remanded