Central Reserve Life Insurance Company v. Marello, CIVIL ACTION No. 00-3344 (E.D. Pa. 2001)

• Decision Date: 01 January 2001
• Docket Number: CIVIL ACTION No. 00-3344.
• Parties: CENTRAL RESERVE LIFE INSURANCE COMPANY, v. DOROTHY A. MARELLO.
• Court: U.S. District Court — Eastern District of Pennsylvania

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CENTRAL RESERVE LIFE INSURANCE COMPANY, v. DOROTHY A. MARELLO.

CIVIL ACTION No. 00-3344.

United States District Court, E.D. Pennsylvania.

January __, 2001.

MEMORANDUM AND ORDER

JAMES McGIRR KELLY, Judge.

Presently before the Court is a Motion to Amend and Correct this Court's Order of October 3, 2000, filed by the Defendant, Dorothy A. Marello ("Marello"). Marello has health insurance coverage through the Plaintiff, Central Reserve Life Insurance Company ("Central Reserve"). Marello sought medical treatment that Central Reserve refused to cover. Marello subsequently filed suit in state court to compel Central Reserve to cover the cost of her treatment. Central Reserve filed suit in federal court to compel Marello to arbitrate her claims pursuant to an arbitration clause contained in her insurance policy. The Court granted Central Reserve's motion on October 3, 2000. Marello now asks the Court to amend and correct that Order pursuant to Federal Rule of Civil Procedure 59(e). For the following reasons, Marello's motion is denied.

I. BACKGROUND

Central Reserve, an Ohio corporation registered to transact business in Pennsylvania, sells medical insurance policies to individuals and small groups. Central Reserve issued an individual preferred provider medical indemnification policy ("Insurance Policy") to Marello, a Pennsylvania citizen who resides in Lancaster, Pennsylvania. Marello filled out an application for insurance that stated, directly above her signature, that "[a]ny disputes arising under the Policy are subject to an appeals procedure, including arbitration, which may be binding, depending on state law." The Insurance Policy issued to Marello contained an arbitration provision that reads:

After exhaustion of the Appeal of Decision procedures, any dispute arising out of or related to the Policy that remains shall be settled by arbitration in accordance with applicable federal or state laws and the Insurance Dispute Resolution Procedures, as amended, and administered by the American Arbitration Association . . . .

Marello signed the Insurance Policy below the arbitration clause. Marello asserts, however, that Central Reserve neither told her to read the clause nor instructed her as to its effect.

In April of 1999, Marello was diagnosed with primary amyloidosis. Marello underwent chemotherapy, which Central Reserve covered. Marello then sought treatment at the Mayo Clinic in Rochester, Minnesota. In December, 1999, Marello's doctors proposed treating her with high dose chemotherapy with peripheral stem cell rescue. Central Reserve considered this treatment experimental and notified Marello that the Insurance Policy did not cover it.

Marello disagreed with Central Reserve and proceeded through an administrative appeal process. Despite the arbitration clause in her Insurance Policy, Marello filed a complaint in the Court of Common Pleas of Lancaster County, Pennsylvania on June 6, 2000.¹ Marello sought an injunction ordering Central Reserve to pay for her proposed medical treatment and also alleged, among other things, fraud and bad faith. On June 30, 2000, Central Reserve filed with this Court a Complaint and Motion to Compel Arbitration and Stay State Court Proceedings, which contended that the Insurance Policy, pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq. (1994), required Marello to arbitrate rather than litigate her claims. While this Court considered the merits of that Motion to Compel, Central Reserve filed its Preliminary Objections to Marello's state court Complaint on July 5, 2000. Central Reserve raised these objections after invoking the FAA in its federal suit before this Court. Those objections raised, in part, the arbitrability of Marello's claims under the FAA. The state court judge assigned to that case overruled Central Reserve's Preliminary Objections on September 20, 2000. On October 4, 2000, however, this Court granted Central Reserve's Motion to Compel Arbitration. Marello then filed a Motion to Amend and Correct this Court's Order of October 3, 2000, which the Court will now consider.

II. STANDARD OF REVIEW

Federal Rule of Civil Procedure 59(e) and Local Civil Rule 7.1(g) of the United States District Court for the Eastern District of Pennsylvania allow parties to file motions for reconsideration or amendment of a judgment. These motions should be granted sparingly. A motion should only be granted if: (1) there has been an intervening change in controlling law; (2) new evidence has become available; or (3) there is a need to correct a clear error or prevent manifest injustice. See, e.g., General Instrument Corp. v. Nu-Tek Electronics, 3 F. Supp.2d 602, 606 (E.D.Pa. 1998), aff'd, 197 F.3d 83 (3d Cir. 1999); Environ Prods., Inc. v. Total Containment, Inc., 951 F. Supp. 57, 62 n. 1 (E.D.Pa. 1996). A change of law is considered controlling on a district court when the change comes from the United States Supreme Court or the United States Court of Appeals that contains that district. North River Ins. v. CIGNA Reins. Co., 42 F.3d 1194, 1219-20 (3d Cir. 1995). Dissatisfaction with the Court's ruling is not a proper basis for reconsideration. See Burger King Corp. v. New England Hood and Duct Cleaning Co., 2000 U.S. Dist. LEXIS 1022 (E.D.Pa. Feb. 4, 2000).

III. DISCUSSION

Marello points to no changes in controlling law since the Court's Order of October 3, 2000.² Nor does Marello point to any relevant new evidence that has since become available.³ Accordingly, Marello's motion turns on whether the Court committed clear error.

To show clear error, Marello invokes several arguments she already made in opposition to Central Reserve's Motion to Compel. None of these arguments is persuasive. For example, Marello asks the Court to reconsider its reading of Shadduck v. Christopher J. Kaclik, Inc., 713 A.2d 635 (Pa.Super. Ct. 1998) and Younger v. Harris, 401 U.S. 37 (1971), and suggests that Marello's state court Complaint did indeed specifically allege fraud in the inducement regarding the arbitration clause of the Insurance Policy. Marello has failed to convince the Court that its reading of Shadduck was clearly erroneous,⁴ that Younger abstention is appropriate,⁵ or that her state court Complaint alleged fraud in the inducement of the arbitration clause itself.⁶ Marello's Motion to Amend does, however, present two interesting arguments, which the Court will examine at length. First, Marello suggests that no federal court has the authority to issue an arbitral antisuit injunction. Second, Marello contends that, under the Rooker-Feldman doctrine, this Court lacked subject matter jurisdiction to issue such an injunction.

A. Arbitral Antisuit Injunctions

Marello contends that federal courts may not issue injunctions that stay court proceedings pending arbitration, so called "arbitral antisuit injunctions."⁷ The authority of federal courts' to issue injunctions derives from the All Writs Act, 28 U.S.C. § 1651(a) (1994), which states, "The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law." The federal courts' seemingly broad power to issue writs is limited, however, by the Anti-Injunction Act ("AIA"), 28 U.S.C. § 2283 (1994), which states "A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments."

In the instant case, the Court enjoined a state court proceeding pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1-307 et seq. (1994). That Act of Congress does not expressly authorize the issuance of arbitral antisuit injunctions. Nevertheless, such injunctions are necessary in aid of a federal court's jurisdiction, promote the federal policy favoring arbitration, and preserve the integrity of arbitration. See, e.g., Specialty Bakeries, Inc. v. RobHal, Inc., 961 F. Supp. 822, 829-31 (E.D.Pa. 1997), aff'd as modified and remanded sub nom. Speciality Bakeries, Inc. v. HalRob, 129 F.3d 726 (3d Cir. 1997). But see Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n. 32 (1983) (reserving the question of whether AIA precludes federal courts from issuing arbitral antisuit injunctions). Indeed, allowing a state court suit to proceed on these facts "would eviscerate the arbitration process and make it a `hollow formality,' with needless expense to all concerned." Specialty Bakeries, 961 F. Supp. at 830 (citing United States v. District of Columbia, 654 F.2d 802, 810 (D.C. Cir. 1981)). Accordingly, this Court has the authority under the FAA to stay state court proceedings pending arbitration. See generally Great W. Mortgage Corp. v. Peacock, 110 F.3d 222 (3d Cir. 1997) (affirming without discussion court's issuance of arbitral antisuit injunction). This Court's issuance of an arbitral antisuit injunction was not in error.

B. The Rooker-Feldman Doctrine

Marello also contends that, under the Rooker-Feldman doctrine, this Court lacked subject matter jurisdiction to impose such an injunction even if it otherwise had the statutory power to do so. Although Marello failed to raise the Rooker-Feldman doctrine prior to the instant Motion to Amend, she may nonetheless raise it now because it calls into question the subject matter jurisdiction of this Court.⁸ Doctor's Assocs., Inc. v. Distajo, 107 F.3d 126, 137 (2d Cir. 1997); Moccio v. New York State Office of Court Admin., 95 F.3d 195, 198 (2d Cir. 1996); Ritter v. Ross, 992 F.2d 750, 752 (7th Cir. 1993).

Federal law vests the United States Supreme Court with exclusive subject matter jurisdiction to review the decisions of the highest state courts for compliance with the United States Constitution. 28 U.S.C. § 1257 (1994) ("Final judgments or decrees rendered by the highest court...