Miller v. Bruenger

• Decision Date: 13 February 2020
• Docket Number: No. 19-5763,19-5763
• Parties: Courtenay Ann MILLER, Plaintiff-Appellant, v. Donna Ruth BRUENGER, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

949 F.3d 986

Courtenay Ann MILLER, Plaintiff-Appellant,

v.Donna Ruth BRUENGER, Defendant-Appellee.

No. 19-5763

United States Court of Appeals, Sixth Circuit.

Decided and Filed: February 13, 2020

ON BRIEF: Stephen P. Imhoff, THE IMHOFF LAW OFFICE, Louisville, Kentucky, for Appellant. Kirk Hoskins, Louisville, Kentucky, for Appellee.

Before: SILER, GIBBONS, and READLER, Circuit Judges.

CHAD A. READLER, Circuit Judge.

Coleman Miller’s passing gave birth to a dispute over his life insurance proceeds. Coleman’s life insurance policy arose from his federal service and is governed by the Federal Employees’ Group Life Insurance Act of 1954. Because Coleman failed to designate a policy beneficiary, the federal government distributed Coleman’s life insurance proceeds to his only child, Courtenay Miller, in accordance with the statutorily directed federal distribution scheme. Coleman’s former spouse, however, claimed entitlement to the proceeds pursuant to a separation agreement signed at the time of the couple’s divorce.

Eventually, Courtenay filed a complaint in federal court for declaratory relief. Finding the absence of a substantial question of federal law, the district court dismissed the complaint for a lack of jurisdiction. We agree and AFFIRM the judgment of the district court.

I. BACKGROUND

The Policy . Enacted in 1954, the Federal Employees’ Group Life Insurance Act (FEGLIA) launched a group life insurance program for federal employees. See Hillman v. Maretta , 569 U.S. 483, 486, 133 S.Ct. 1943, 186 L.Ed.2d 43 (2013). The United States Office of Personnel Management (OPM), responsible for managing FEGLIA, entered into a contract with Metropolitan Life Insurance Company (MetLife) to provide insurance to federal employees. Id.

For policies purchased in accordance with FEGLIA, enrollees can select a beneficiary to receive the policy’s proceeds upon the policyholder’s death. 5 U.S.C. § 8705(a). In the absence of a valid beneficiary selection, FEGLIA provides an order of precedence for the proceeds, starting with the widow or widower of the policyholder. Id. Relevant for today’s purposes is the next level of distribution under FEGLIA: the children or other descendants of the policyholder. Id.

FEGLIA will not follow the statutory order of precedence, however, where there exists a "court decree of divorce, annulment, or legal separation, or ... any court order or court-approved property settlement agreement incident to any decree of divorce, annulment, or legal separation" that "expressly provides" for payment to someone other than the person otherwise entitled to the benefits under FEGLIA’s distribution scheme. 5 U.S.C. § 8705(e)(1). But to be effective for FEGLIA proceeds purposes, the relevant court decree, order, or approved agreement must be "received" by the policyholder’s "employing agency" or OPM prior to the policyholder’s death. 5 U.S.C. § 8705(e)(2).

The Parties. At the time of his death, Coleman Miller was a civilian federal service employee working at Tinker Air Force Base in Oklahoma. As a federal employee, Coleman, by virtue of FEGLIA, maintained a life insurance policy through MetLife.

Coleman was once married to Donna Bruenger. Their 27-year marriage ended in divorce in 2011. At the time of their divorce, the couple entered into a property settlement agreement (PSA). Among the many provisions in the PSA is a section explaining that "[Donna] shall remain the beneficiary of the life insurance policy in the name of [Coleman] to the extent of two (2) times the value of [Coleman]’s annual rate of income/salary." In its order approving of the PSA and granting the divorce, the state court instructed the parties, consistent with the PSA, that "[Coleman] is hereby ordered to assign his Federal Employee’s Group Life Insurance (FEGLI) benefits to [Donna]."

Upon Coleman’s death, his only child, Courtenay, was appointed administratrix of her father’s estate. At some point, Courtenay became aware of the PSA’s assignment language and the corresponding state court order. Not knowing how to proceed, she contacted Tinker Air Force Base. The Air Force informed Courtenay that the court order governing Coleman’s divorce had not been filed with Coleman’s employing office. On that basis, Courtenay was paid roughly $172,000 in insurance proceeds.

The Legal Proceedings. Disagreeing with the federal government’s beneficiary determination, Donna demanded that she be paid the life insurance proceeds. When Courtenay refused, Donna filed a claim against Coleman’s estate in Oklahoma Probate Court. But upon agreement of the parties, that suit was dismissed. Courtenay then filed a claim of her own, this one an action in federal court seeking a declaration that she is the rightful owner of the proceeds. Finding a lack of subject-matter jurisdiction, however, the district court dismissed the suit. This appeal followed.

II. ANALYSIS

Before a federal court takes up a case’s merits, it must assure itself of its jurisdiction over the case’s subject matter. Kroll v. United States , 58 F.3d 1087, 1092 (6th Cir. 1995). And on that score, a federal court’s subject-matter jurisdiction is restricted, both by operation of the Constitution, and by federal statutes. Estate of Cornell v. Bayview Loan Servicing, LLC , 908 F.3d 1008, 1011 (6th Cir. 2018). One area where Congress has authorized federal-court jurisdiction is in instances where the amount in controversy between the parties exceeds $75,000, and where there is "complete diversity" between the parties—meaning the parties are citizens of different states. 28 U.S.C. § 1332. Today’s case easily clears the first jurisdictional hurdle, with over $170,000 at issue. But it falls short of the second, as Donna and Courtenay are both residents of Kentucky.

That leaves one other potential basis for invoking federal subject-matter jurisdiction: cases that present a question of federal law. 28 U.S.C. § 1331. Federal-question jurisdiction exists when the cause of action arises under federal law. Estate of Cornell , 908 F.3d at 1011. Whether a cause of action arises under federal law must be apparent from the face of the "well-pleaded complaint." Metro. Life Ins. Co. v. Taylor , 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). This means that, for purposes of assessing whether federal-question jurisdiction exists, federal courts ignore any potential federal defenses that may arise in the course of the litigation. Beneficial Nat’l Bank v. Anderson , 539 U.S. 1, 6, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003).

Some fine-tuning of the well-pleaded complaint rule is necessary for declaratory judgment actions. See Chase Bank USA, N.A. v. City of Cleveland , 695 F.3d 548, 554 (6th Cir. 2012). Rather than examining the face of the declaratory judgment complaint, we instead "ask whether, absent the availability of declaratory relief, the case could have [been] brought in federal court." 15A James Wm. Moore et al., Moore’s Federal Practice – Civil § 103.44 (2019); see also Severe Records, LLC v. Rich , 658 F.3d 571, 580 (6th Cir. 2011) (quoting Stuart Weitzman, LLC v. Microcomputer Res., Inc. , 542 F.3d 859, 862 (11th Cir. 2008) ). To make that assessment, we look to the anticipated claim underlying the request for declaratory relief, in this case, Donna’s claim to recover the proceeds, to determine if the face of that claim could arise under federal law. Severe Records, LLC , 658 F.3d at 580 (quoting Stuart Weitzman, LLC , 542 F.3d at 862 ). With Courtenay putting at issue in the declaratory judgment action whether she is entitled to the life insurance proceeds, we must anticipate whether Donna’s hypothetical suit to recover those proceeds would be federal in nature. In other words, would her anticipated claim "arise under" federal law?

A claim arises under federal law, for purposes of federal-question jurisdiction, when the cause of action is (1) created by a federal statute or (2) presents a substantial question of federal law. Estate of Cornell , 908 F.3d at 1012–14. Neither is satisfied here.

FEGLIA does not create a cause of action for Donna to assert. A federal statute can create a cause of action in one of two ways, either expressly in the text of the statute, or as a direct implication of that text. Id. at 1013. Express actions exist when the statute "in so many words" allows an aggrieved party to bring suit in federal court. Ohlendorf v. United Food & Commer. Workers Int’l Union, Local 876 , 883 F.3d 636, 640 (6th Cir. 2018) (quoting Traverse Bay Area Intermediate Sch. Dist. v. Mich. Dep’t of Educ. , 615 F.3d 622, 627 (6th Cir. 2010) ). For example, federal law contains an express cause of action for disputes arising out of contracts between a union and an employer. 29 U.S.C. § 185(a) ("Suits for violation of contracts between an employer and a labor organization representing employees ... may be brought in any district court ...."); Ohlendorf , 883 F.3d at 642 (noting that 29 U.S.C. § 185(a) produces a cause of action).

FEGLIA does not contain an express cause of action authorizing Donna’s suit against Courtenay. At most, FEGLIA allows for hypothetical suits against the United States to be brought in federal court. 5 U.S.C. § 8715 ("The district courts of the United States have original jurisdiction, concurrent with the United States Claims Court [United States Court of Federal Claims], of a civil action or claim against the United States founded on this chapter [ 5 USCS §§ 8701 et seq. ]."). Because FEGLIA creates no express right of action for Donna to assert against Courtenay, federal jurisdiction does not arise from an express statutory cause of action.

Nor does FEGLIA create an implied cause of action for Donna to pursue. We proceed with caution before finding that a statute creates an implied cause of action. Ziglar v. Abbasi , ––– U.S. ––––, 137 S. Ct. 1843, 1855, 198 L.Ed.2d 290 (2017). Where an implied cause of action arises, it must be directly derived from Congress’s intent. Estate of Cornell , 908...