Blue Cross and Blue Shield of Maryland, Inc. v. Weiner

Citation868 F.2d 1550
Decision Date05 April 1989
Docket NumberNo. 88-5518,88-5518
Parties11 Employee Benefits Ca 1798 BLUE CROSS AND BLUE SHIELD OF MARYLAND, INC., Plaintiff-Appellant, Blue Cross and Blue Shield of Florida, Inc., Plaintiff-Intervenor, v. Robert WEINER, Sr., Margaret Weiner, Mark Weiner, and Robert Weiner, Sr., as Personal Representatives of the Estate of Steven Weiner, Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

Leonard E. Cohen, Frank, Bernstein, Conaway & Goldman, Baltimore, Md., Kendall B. Coffey, Greenberg, Traurig, Askew, Hoffman, Lipoff, Rosen & Quentel, P.A., Miami, Fla., for plaintiff-appellant.

Larry S. Stewart, James B. Tilghman, Miami, Fla., for defendants-appellees.

Appeal from the United States District Court for the Southern District of Florida.

Before KRAVITCH and HATCHETT, Circuit Judges, and MARKEY *, Chief Circuit Judge.

HATCHETT, Circuit Judge.

Blue Cross and Blue Shield of Maryland, Inc. (BCBS-Maryland) appeals the district court's denial of its motion for preliminary injunction and the court's abstention from its claims for permanent injunctive and declaratory relief. We affirm the district court's denial of preliminary injunction and its decision on abstention, but remand to the district court with instructions that it dismiss the request for permanent injunction for lack of subject matter jurisdiction.

FACTS

BCBS-Maryland provides health insurance coverage for Robert Weiner and his dependents, Margaret Weiner, Stephen Weiner, and Mark Weiner. In the summer of 1982, Stephen Weiner became seriously ill and Mark Weiner suffered permanent injuries in an automobile accident. Stephen and Mark Weiner incurred substantial medical expenses. BCBS-Maryland provided coverage for these expenses until August 8, 1983, when it concluded that the insurance plan no longer covered their expenses.

In September, 1983, the Weiners filed suit against BCBS-Maryland and Blue Cross and Blue Shield of Florida (BCBS-Florida) in a Florida state court, alleging a breach of the duties of good faith and fair dealing, a breach of fiduciary duties, fraud, and a statutory violation. Responding to In December, 1984, the Weiners amended the complaint to seek a declaration of their past, present, and future rights under the insurance contract. In addition, the amended complaint sought compensatory and punitive damages for breach of contract, breach of the duty of good faith, statutory violations, wrongful death, intentional infliction of emotional distress, and fraud. In December, 1985, the Weiners filed a second amended complaint alleging three tort claims: fraud, intentional infliction of mental distress, and negligence.

this action, BCBS-Maryland reinstated coverage in March, 1984, and paid all back claims to the Weiners. BCBS-Maryland has continued to pay all claims under the insurance policy since March, 1984.

The case proceeded to trial on the tort claims. After finding BCBS-Maryland liable for fraud, intentional infliction of mental distress, and negligence, the jury awarded the Weiners $500,000 in compensatory damages and $5,000,000 in punitive damages. The jury additionally found BCBS-Florida liable for fraud and intentional infliction of emotional distress. On these claims, the jury awarded the Weiners $200,000 in compensatory damages and $1.5 million in punitive damages. Based on the jury's liability determinations, the Florida court awarded the Weiners $1,411,600 in attorney's fees.

After the Florida court entered its judgment for the Weiners, the United States Supreme Court decided two cases which hold that the Employee Retirement Income Security Act (ERISA) preempts state common law claims alleging an improper processing of employee benefit plan claims. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987); Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). Arguing primarily that ERISA preempted the Florida causes of action, BCBS-Maryland and BCBS-Florida appealed the judgment and attorney's fees award in a Florida appellate court. The Florida appellate court heard oral argument on May 3, 1988, but has not rendered a decision.

PROCEDURAL HISTORY

On April 14, 1988, relying on Pilot Life and Metropolitan Life, BCBS-Maryland filed suit in the Southern District of Florida to enjoin the Weiners from further appealing or enforcing the Florida court's judgment and attorney's fees award. In addition, BCBS-Maryland requested that the district court declare the judgment void and unenforceable. BCBS-Florida intervened seeking the same relief. The Weiners moved the district court to dismiss BCBS-Maryland's and BCBS-Florida's complaint, or alternatively, to abstain from interfering with the state court proceedings.

The district court denied the preliminary injunction. The court concluded that BCBS-Maryland and BCBS-Florida did not demonstrate any irreparable harm because the Florida appellate court could decide the preemption issue. Furthermore, the district court found that a preliminary injunction would not serve the public interest, but rather would harm the public interest because interfering with the state court proceedings would disregard the principles of federalism and comity.

The district court deferred decision on the declaratory relief claims, staying all federal proceedings pending the Florida courts' resolution of the preemption issue. The district court abstained after concluding as follows: BCBS-Maryland's injunctive relief would enjoin ongoing state proceedings, BCBS-Maryland could present its federal claims in the Florida appellate court, and the Florida court's proceedings involved important state interests. See Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971) (federal courts should generally refrain from enjoining pending state proceedings); Browning Corp. Int'l. v. Lee, 624 F.Supp. 555, 557 (N.D.Tex.1986) (state courts must have ability to determine if ERISA governs particular employee benefit plan to effectively enforce state insurance laws).

CONTENTIONS

BCBS-Maryland contends that the district court abused its discretion in denying Turning to the permanent injunction and declaratory relief, BCBS-Maryland contends that the district court improperly abstained because this case does not involve a sufficiently vital state interest to warrant abstention. Furthermore, BCBS-Maryland contends that it properly collaterally attacked the Florida court's decision.

the preliminary injunction because it satisfied the four elements for obtaining a preliminary injunction: (1) BCBS-Maryland demonstrated a substantial probability of prevailing because ERISA preempts the Weiners' common law tort claims, and the Florida trial court lacked jurisdiction over the ERISA claims; (2) the denial will cause BCBS-Maryland irreparable harm because it will lose its right to have a federal court decide the preemption issue; (3) BCBS-Maryland's threatened harm outweighs the Weiners' harm because the Weiners will not incur any injury; and (4) the preliminary injunction would serve the public interest by promoting a national uniform interpretation of ERISA.

The Weiners contend that the district court must dismiss the action because BCBS-Maryland cannot collaterally attack the Florida court's judgment for two reasons: (1) the district court lacks subject matter jurisdiction under the Rooker-Feldman doctrine, and (2) res judicata precludes the district court from deciding the preemption issue. Alternatively, the Weiners contend that the district court properly denied the preliminary injunction because BCBS-Maryland failed to establish any of the four requirements for a preliminary injunction.

The Weiners further contend that the district court properly abstained from granting the requested permanent injunctive and declaratory relief. According to the Weiners, BCBS-Maryland's attempt to enjoin the enforcement of the Florida court's judgment and attorney's fees award implicates vital state interests.

ISSUES

The parties raise the following issues on appeal: (1) whether the district court lacked subject matter jurisdiction because BCBS-Maryland's claims require the district court to exercise appellate jurisdiction over the state court proceedings; (2) whether res judicata precludes BCBS-Maryland from collaterally attacking the state court judgment; (3) whether the district court improperly abstained from granting declaratory relief; and (4) whether the district court abused its discretion in denying the preliminary injunction.

DISCUSSION

The Weiners challenge the district court's subject matter jurisdiction over BCBS-Maryland's federal claims. The Weiners contend that the district court's decision necessarily entails reviewing the Florida trial court's judgment in violation of Supreme Court authority expressly prohibiting district courts from exercising such appellate review. We agree. **

I. The Rooker-Feldman Doctrine

The Supreme Court first prohibited a district court from reviewing a state court decision for alleged federal law errors in Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923). In Rooker, after the action proceeded through the Indiana courts, the unsuccessful party filed suit in federal district court arguing that the state courts relied on an unconstitutional statute. The Supreme Court held that the district court did not have jurisdiction to correct the alleged constitutional error in the Indiana Supreme Court's decision. Rooker, 263 U.S. at 415, 44 S.Ct. at 150. The Court found such review improper for two reasons: (1) district courts can only exercise original jurisdiction, and (2) the Supreme Court has the exclusive authority to review state supreme court decisions for alleged federal law errors. Rooker, 263 U.S. at 416, 44 S.Ct. at 150; see 28 U.S.C.A. Secs. 1257, 1331 (West 1966 & Supp.1988).

Sixty years later, the Supreme Court reaffirmed the Rooker holding in District...

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