Allstate Ins. Co. v. Nowakowski

• Decision Date: 23 March 2012
• Docket Number: Case No. 1:11–cv–809.
• Citation: 861 F.Supp.2d 866
• Parties: ALLSTATE INSURANCE COMPANY, Plaintiff, v. Diana NOWAKOWSKI, Defendant/Third–Party Plaintiff, v. Pfizer, Inc., Third–Party Defendant.
• Court: U.S. District Court — Western District of Michigan

861 F.Supp.2d 866

ALLSTATE INSURANCE COMPANY, Plaintiff,

v.Diana NOWAKOWSKI, Defendant/Third–Party Plaintiff,

v.Pfizer, Inc., Third–Party Defendant.

Case No. 1:11–cv–809.

United States District Court,

W.D. Michigan,

Southern Division.

March 23, 2012.

Robert L. Goldenbogen, Garan Lucow Miller PC, Port Huron, MI, for Plaintiff.

Michael W. Thomsen, Nolan, Thomsen & Villas, PC, Eaton Rapids, MI, for Defendant/Third–Party Plaintiff.

Thaddeus E. Morgan, Fraser Trebilcock Davis & Dunlap PC, Lansing, MI, for Third–Party Defendant.

OPINION

JANET T. NEFF, District Judge.

Pending before the Court in this removed action is a Motion to Remand from Plaintiff Allstate Insurance Company (Allstate) (Dkt. 5). Defendant Diana Nowakowski (Nowakowski) filed a response in opposition (Dkt. 7), and Allstate filed a reply (Dkt. 8). The parties have also since filed supplemental briefing (Dkts. 25, 26 & 28). Having carefully considered the relevant facts and the parties' thorough arguments, the Court determines, for the reasons discussed herein, that Allstate's Motion to Remand is properly granted and Allstate's Complaint for Declaratory Judgment remanded to the state court from which it was removed.

I. BACKGROUND

This case arises from Nowakowski's April 21, 2007 automobile accident in Kalamazoo County, Michigan. At the time of the accident, Nowakowski, a Michigan resident, was insured under a no-fault automobile insurance policy issued by Allstate, a Michigan no-fault auto insurer (Dkt. 1, State Court Compl. ¶ 6). The policy was issued on a coordinated basis pursuant to Mich. Comp. Laws § 500.3109a ( id.).

At the time of her accident, Nowakowski was an eligible dependent for benefits under the medical plan of Pfizer, Inc. (Pfizer), a medical plan administered by United Healthcare Group, Inc. (Dkt. 1, State Court Compl. ¶ 7; Dkt. 29, Answer to Third–Party Compl. ¶ 12). The Pfizer medical plan is a self-funded welfare benefit plan established under the provisions of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. (Dkt. 1, State Court Compl. ¶ 13). The Pfizer medical plan expressly provides that its coverage is primary to Nowakowski's coverage under her no-fault automobile insurance policy from Allstate ( id. ¶ 8). The Pfizer medical plan also contains a contractual subrogation and/or reimbursement provision permitting the plan to recover from Nowakowski the sums she may receive in a claim against an at-fault driver and/or under an uninsured motorist policy ( id. ¶ 12).

The circumstances surrounding Nowakowski's automobile accident gave rise to a claim for non-economic damages from the at-fault driver, a claim that Nowakowski settled with the driver (Dkt. 1, State Court Compl. ¶¶ 10–11). The Pfizer medical plan, which has paid Nowakowski's expenses, asserted a subrogation lien against her to recover those expenses from the proceeds of the tort settlement, and Nowakowski requested that Allstate honor the lien, suggesting that Allstate is obligated to indemnify Nowakowski against the Pfizer medical plan's claim ( id. ¶ 15).

On or about June 8, 2011, Allstate filed a declaratory judgment action against Nowakowski in the circuit court for Kalamazoo County, Michigan, LC No. 2011–0291–CK, alleging that under Michigan law, Nowakowski is only entitled to excess benefits from Allstate (Dkt. 1, State Court Compl. ¶ 16). Allstate further alleges that under Michigan law, to the extent Nowakowski's claim against the at-fault driver or for benefits under an uninsured motorist policy results in a judgment or settlement and the Pfizer plan asserts a subrogation claim against those sums, Nowakowski is not entitled to seek indemnification from Allstate ( id. ¶ 17, citing Dunn v. Detroit Auto. Inter–Ins. Exch., 254 Mich.App. 256, 657 N.W.2d 153 (2002)). Allstate requested a declaratory judgment that Allstate is “not obligated to indemnify the Plaintiff nor any other party against a reimbursement or subrogation claim asserted by her primary health plan” ( id. ¶ 17–a).

On August 2, 2011, Nowakowski removed Allstate's Complaint for Declaratory Judgment to this Court, alleging that Allstate's claims are preempted by federal law and therefore fall within this Court's original jurisdiction pursuant to 28 U.S.C. § 1331 (Dkt. 1, Notice of Removal ¶ 3). ¹ Specifically, Nowakowski alleged that this action is subject to ERISA, 29 U.S.C. § 1132(a)(1)(b) ( id. ¶ 5).

On August 29, 2011, Allstate filed this Motion to Remand (Dkt. 5), contending that its declaratory judgment action makes no allegation seeking judgment or relief under the ERISA, or any federal law; that the state court has proper jurisdiction over this matter; and that Nowakowski improperly removed this action in an attempt to secure a more favorable forum ( id. ¶¶ 8, 11, 14). On October 14, 2011, Nowakowski filed a response in opposition to the motion to remand, emphasizing that Allstate's declaratory judgment action arises only because of the “Health Plan's right to reimbursement of benefits paid under ERISA, and any claims by Allstate that are dependent upon state law become relevant only as a consequence of the ERISA plan's principal claim” (Dkt. 7 at ¶ 10). Allstate filed a reply to the response (Dkt. 8).

In February 2012, Nowakowski filed a Third–Party Complaint, naming Pfizer as a Third–Party Defendant (Dkt. 18, Third–Party Compl.).² Nowakowski characterizes her Third–Party Complaint as one to declare her right to benefits and the priority of coverage under ERISA and Michigan's No–Fault Insurance Act and to “[e]njoin certain acts and practices” (Dkt. 18 at ¶ 1). Nowakowski thereafter moved for leave to supplement her briefing, proposing the argument that her Third–Party Complaint renders moot Allstate's Motion to Remand, because “there can be no genuine issue as to this Honorable Court having supplemental jurisdiction over Allstate's state law issues where now the Third–Party Defendant is a medical plan established under the provisions of the Employee Retirement Income Security Act 29 U.S.C. § 1001 et seq. which confers federal court jurisdiction” (Dkt. 19 at ¶ 8).

On March 2, 2012, this Court granted the parties leave to file their supplemental briefs (Dkt. 23). Pursuant to this Court's request, Allstate has also since filed a response in opposition to Nowakowski's argument that its motion was rendered moot (Dkt. 28). Allstate argues that a defendantcannot create federal jurisdiction to justify removal by bringing a third party claim—that justification for removal must be found, if at all, in the well-pleaded complaint, at the time of removal ( id. at 4–5).

II. ANALYSIS

Federal courts are courts of limited jurisdiction. “Unlike state trial courts, they do not have general jurisdiction to review questions of federal and state law, but only the authority to decide cases that the Constitution and Congress have empowered them to resolve.” Ohio ex rel. Skaggs v. Brunner, 549 F.3d 468, 474 (6th Cir.2008). “When a party opts to file a complaint in state court, the federal courts must honor that choice unless Congress has authorized removal of the case.” Id. (citing Rivet v. Regions Bank of La., 522 U.S. 470, 474, 118 S.Ct. 921, 139 L.Ed.2d 912 (1998); 28 U.S.C. § 1441(a)). “Absent diverse parties or absent one of the other express (though rarely relied upon) grounds for removal—none of which applies here—the defendant may take the dispute to federal court only if the plaintiff's claim ‘aris[es] under’ federal law, 28 U.S.C. § 1441(b).” Id. (citing Mikulski v. Centerior Energy Corp., 501 F.3d 555, 560 (6th Cir.2007) (en banc)).

“The party seeking removal bears the burden of demonstrating that the district court has original jurisdiction.” Eastman v. Marine Mech. Corp., 438 F.3d 544, 549 (6th Cir.2006). Further, “the removal statute should be strictly construed and all doubts resolved in favor of remand.” Id. at 550 (quoting Brown v. Francis, 75 F.3d 860, 864–65 (3d Cir.1996)).

Nowakowski's briefing addresses federal question jurisdiction, 28 U.S.C. § 1331, and supplemental jurisdiction, 28 U.S.C. § 1367, as potential sources of subject-matter jurisdiction.³ The Court determines that she has not demonstrated that either statute confers jurisdiction in this Court over the subject matter of the removed complaint.

A. Federal Question Jurisdiction

Federal district courts have original jurisdiction of all civil actions “arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. The mere presence of a federal issue in a lawsuit is, by itself, insufficient to confer jurisdiction. Shoshone Mining Co. v. Rutter, 177 U.S. 505, 507, 20 S.Ct. 726, 44 L.Ed. 864 (1900) (recognizing that a contrary rule would mean “every action to establish title to real estate (at least in the newer states) would be such a one, as all titles in those states come from the United States by virtue of its laws”). Rather, to determine whether a claim “arises under federal law, a court, under the ‘well-pleaded complaint’ rule, generally looks only to the plaintiff's complaint.” Palkow v. CSX Transp., Inc., 431 F.3d 543, 552 (6th Cir.2005) (citing Gully v. First Nat'l Bank, 299 U.S. 109, 57 S.Ct. 96, 81 L.Ed. 70 (1936); and Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908)). “If the complaint relies only on state law, the district court generally lacks subject-matter jurisdiction and the action is not removable.” Id. “ ‘By unimpeachable authority, a suit brought upon a state statute does not arise under an act of Congress or the Constitution of the United States because prohibited thereby.’ ” Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 12, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983) (citing Gully, 299 U.S. at 116, 57 S.Ct. 96).

Allstate's complaint seeks a declaratory judgment pursuant to Michigan's No–Fault Insurance Act, Mich. Comp. Laws § 500.3101 et seq., that it is “not obligated to indemnify [Nowakowski]...