Am. Elec. Power Serv. Corp. v. Fitch
| Docket Number | 22-3005 |
| Decision Date | 30 August 2022 |
| Parties | AMERICAN ELECTRIC POWER SERVICE CORPORATION, as fiduciary of the AMERICAN ELECTRIC POWER SYSTEM COMPREHENSIVE MEDICAL PLAN, Plaintiff-Appellant, v. JOHN K. FITCH, as administrator of the ESTATE OF JOHN D. FITCH; GLORI FITCH, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
NOT RECOMMENDED FOR PUBLICATION
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO
Before: GUY, MOORE, and CLAY, Circuit Judges.
A tragic automobile accident resulted in the death of John "Jack" D. Fitch and the payment of expenses for accident-related medical treatment by the American Electric Power System Comprehensive Medical Plan (Plan). Jack was enrolled as a beneficiary under the self-funded medical plan that his mother participated in as an employee of American Electric Power Service Corporation (AEP). In this action brought under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (ERISA), AEP, on behalf of the Plan, sought to impose "an equitable lien by agreement over identifiable [third-party settlement] funds in the possession and/or control of" Jack's father, John K Fitch, as the Administrator of the Estate, and/or Glori Fitch, Jack's mother as a Plan participant.
The district court dismissed the complaint without reaching the merits of the ERISA claims after concluding that the "probate exception" deprived the federal court of subject-matter jurisdiction. See Fitch v. Am. Elec. Power Sys. Comprehensive Med. Plan, No. 21-CV-576, 2021 WL 5711909, at *10-12 (S.D. Ohio Dec. 2, 2021). AEP appealed arguing that the district court erred in dismissing its complaint. The Fitches respond that AEP has forfeited any challenge to the district court's conclusion that federal courts lack jurisdiction to hear its claims. We agree with the Fitches and AFFIRM.
The facts of this case revolve around medical expenses. Glori Fitch was employed by AEP, enrolled in the Plan, and designated her son, Jack Fitch, as a beneficiary of that Plan. R. 1 (Compl. ¶ 9) (Page ID #2). On October 11, 2019, Jack was critically injured in an automobile accident, dying the next day. Id. ¶ 10. AEP alleges that the Plan paid benefits in the amount of $101,582.46 for Jack's accident-related medical treatment. Id. The Plan's terms contain a provision providing that, in the event that benefits paid on the beneficiary's behalf have not been repaid, the Plan has "a right to be repaid from [a] Recovery in the amount of the benefits paid on your behalf." R. 1-1 (Plan at 2) (Page ID #9).
As a result of Jack's death, the administrator of Jack's estate, John K. Fitch, (Administrator) obtained two settlements: (1) $500,000 from the "at-fault" driver's insurance on a wrongful-death liability claim; and (2) $100,000 from the Fitches' own automobile policy on a medical-payments claim. Fitch, 2021 WL 5711909, at *2-3. There seems to be no dispute that Anthem Blue Cross and Blue Shield (Anthem) asserted the Plan's right to subrogation and/or reimbursement by sending a letter to the Administrator. See id. at *2.
On October 12, 2020, the Administrator filed an "Application to Approve Settlement and Distribution of Wrongful Death and Survivor Claims" in the Probate Court of Franklin County, Ohio. R. 1-2 (Application) (Page ID #11-15). In it, the Administrator proposed that all $600,000 in settlement proceeds be allocated to the wrongful-death claims of Jack's surviving parents and other next of kin "who have suffered damages by reason of the wrongful death." Id. at 2 (Page ID #12). The Application was accompanied by a "Narrative Statement," which represented, in part: (1) that negotiations continued as to a claim against an umbrella policy; and (2) that Anthem had asserted a lien totaling $101,582.46 that would be disputed. Id. at 3 (Page ID #13). The probate court approved the settlement and distribution the same day, allocating $260,750 to John K. Fitch (father); $250,750 to Glori Fitch (mother); and $88,500 to Charles Fitch (brother). Id. at 4-5 (Page ID #14-15).
By all accounts, the Administrator did not send Anthem notice of the Application until ten days later. The Plan responded by asserting that it had a right to reimbursement from the settlement proceeds, while the Administrator contended that the settlement proceeds were not part of the Estate. Fitch, 2021 WL 5711909, at *3. The lien dispute resulted in two lawsuits, which were resolved by the district court in the single consolidated order before us now. See id. at *1.
Those lawsuits involved the following maneuvers. First, the Administrator sued the Plan in the Franklin County Court of Common Pleas seeking a declaration that the Plan was not entitled to reimbursement because the settlement proceeds had been allocated to the wrongful-death claims-not the survival claim. Id. at *3. The Plan then removed that action to federal court (No. 21-cv-576) and filed its separate ERISA action seeking reimbursement in federal court (No. 21- cv-682). Id. The district court's consolidated order (1) remanded the Administrator's declaratory judgment action and (2) dismissed the Plan's ERISA action for lack of subject-matter jurisdiction based on the probate exception. Id. at *15. The Plan filed-but abandoned-an appeal from the remand. App. R. 16 (No. 22-3004) (Order). The Plan has expressly limited the present appeal to the dismissal of its claim against the wrongful-death proceeds in the possession of Glori Fitch. See Appellant Br. at 5; Reply Br. at 1.
The district court recognized that the defendants' motion to dismiss the Plan's ERISA complaint for lack of subject-matter jurisdiction was a facial attack-not a factual attack-under Federal Rule of Civil Procedure 12(b)(1). See Am. Telecom Co. v. Republic of Lebanon, 501 F.3d 534, 537 (6th Cir. 2007). Because a facial attack is a challenge to the sufficiency of a complaint, the court examines the sufficiency of the pleading by taking the material allegations as true and viewing them in the light most favorable to the non-moving party. See Gentek Bldg. Prods., Inc. v. Steel Peel Litig. Tr., 491 F.3d 320, 330 (6th Cir. 2007); United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994). "When a defendant moves to dismiss for lack of subject matter jurisdiction 'the plaintiff has the burden of proving jurisdiction in order to survive the motion.'" Wisecarver v. Moore, 489 F.3d 747, 749 (6th Cir. 2007) (quoting Moir v. Greater Cleveland Reg'l Transit Auth., 895 F.2d 266, 269 (6th Cir. 1990)). This court's review of a dismissal for lack of jurisdiction based on a facial attack is de novo. Chase Bank USA, N.A. v. City of Cleveland, 695 F.3d 548, 553 (6th Cir. 2012).
The Supreme Court has recognized "a probate exception of distinctly limited scope," explaining that "a federal court may not exercise its jurisdiction to disturb or affect the possession of property in the custody of a state court." Marshall v. Marshall, 547 U.S. 293, 310 (2006) (quoting Markham v. Allen, 326 U.S. 490, 494 (1946)). This "longstanding limitation[] on federal jurisdiction otherwise properly exercised," is a "judicially created doctrine[] stemming in large measure from misty understandings of English legal history." Id. at 299 (citations omitted). Clarifying and curtailing the probate exception, Marshall reiterated that the courts "have no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not given." Id. 298-99 ).[1]
The Supreme Court in Marshall explained that, following Markham, federal courts "puzzled over the meaning of the words 'interfere with the probate proceedings'" and that "some [courts] have read those words to block federal jurisdiction over a range of matters well beyond probate of a will or administration of a decedent's estate." Id. at 311; see, e.g., Chevalier v. Est. of Barnhart, 803 F.3d 789, 800-01 (6th Cir. 2015) (). As the Supreme Court elaborated:
the probate exception reserves to state probate courts the probate or annulment of a will and the administration of a decedent's estate; it also precludes federal courts from endeavoring to dispose of property that is in the custody of a state probate court. But it does not bar federal courts from adjudicating matters outside those confines and otherwise within federal jurisdiction.
Marshall, 547 U.S. at 311-12. That is, the "interference" referred to in Markham was "essentially a reiteration of the general principle that, when one court is exercising in rem jurisdiction over a res, a second court will not assume in rem jurisdiction over the same res." Id. at 311; see also Chevalier, 803 F.3d at 800; Osborn v. Griffin, 865 F.3d 417, 434 (6th Cir. 2017).
Since Marshall was decided, we have applied its framework on numerous occasions. See, e.g., Osborn, 865 F.3d at 433-36; Chevalier, 803 F.3d at 799-804; Wisecarver, 489 F.3d at 74951. Notably, in Wisecarver we considered a plaintiff who sought, inter alia, an order enjoining the defendants from disposing of assets received from an estate. 489 F.3d at 751. We concluded that the probate exception barred jurisdiction in that case to the extent that granting the requested relief "would require the district court to dispose of property in a manner inconsistent with the state probate court's distribution of the assets." Id. We will return to Wisecarver and its application in the present dispute below.
The complaint before us, filed February 16, 2021, seeks to impose "an equitable lien by agreement over identifiable funds in the possession and/or control of" John Fitch,...
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