Life Ins. Co. of North America, In re

Citation857 F.2d 1190
Decision Date22 September 1988
Docket NumberNo. 88-2033,88-2033
Parties10 Employee Benefits Ca 1084 In re LIFE INSURANCE COMPANY OF NORTH AMERICA, Petitioner.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

Richard N. Bien, Kansas City, Mo., for petitioner.

Joseph K. Lewis, Kansas City, Mo., for Willie Lewis.

John D. Dunbar, Kansas City, Mo., for Milgram Food Stores.

Before LAY, Chief Judge, and McMILLIAN and FAGG, Circuit Judges.

McMILLIAN, Circuit Judge.

Life Insurance Company of North America (LINA) petitions for a writ of mandamus regarding an order entered in the District Court for the Western District of Missouri remanding to Missouri state court a vexatious refusal to pay claim brought against LINA by plaintiff Willie L. Lewis. Lewis v. Life Insurance Co., No. 86-0763-CV-W-6 (W.D.Mo. July 18, 1988). LINA contends that the writ should issue because the district court's remand was based on an erroneous conclusion that Lewis's claim was not preempted by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Sec. 1001 et seq., and because the district court's error will be effectively unreviewable except by writ of mandamus. For the reasons discussed below, the writ of mandamus will issue.

I

Lewis was employed by Milgram Food Stores, Inc. (Milgram), as a warehouse worker until May 1981, when he suffered a disabling work-related injury. Lewis was a member of Teamsters Local No. 955, which was party to a collective bargaining agreement with Milgram. This agreement required Milgram to provide long-term disability benefits to union employees. Lewis applied for and received disability payments from LINA, Milgram's insurance carrier, beginning in August 1981. In January 1982 LINA required Lewis to submit to a physical examination by a physician selected by LINA. On the basis of that examination, LINA advised Lewis later that month that he was not totally disabled as defined in his contract and discontinued his disability benefits.

On May 5, 1986, Lewis filed a three-count complaint against LINA and Milgram. Count I charged LINA with both breach of the insurance contract and vexatious refusal to pay insurance benefits under Mo.Rev.Stat. Sec. 375.420. Count II alleged that Milgram had tortiously interfered with the contract of insurance between Lewis and LINA. The final count alleged that LINA had tortiously interfered with the labor contract between Lewis and Milgram. LINA and Milgram removed the case to the District Court for the Western District of Missouri, alleging federal question jurisdiction because Lewis's complaint was preempted by ERISA and the Labor Management Relations Act, 29 U.S.C. Secs. 141-187 (LMRA). The district court accepted removal jurisdiction pursuant to Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) (Taylor ) (state law causes of action preempted by ERISA removable to federal court even though defense of ERISA preemption does not appear on face of complaint, as normally required for removal by "well-pleaded complaint" rule). In the district court, LINA moved for summary judgment on the breach of contract claim in Count I as preempted by ERISA and on the Count III tortious interference claim as preempted by both ERISA and LMRA. Milgram moved for summary judgment on the Count III tortious interference claim as preempted by ERISA.

On March 8, 1988, the district court concluded that the breach of contract portion of Count I as well as the Count II claim of tortious interference with an insurance claim were preempted by ERISA. Lewis v. Life Insurance Co., No. 86-0763-CV-W-6, slip op. at 5-6 (W.D.Mo. Mar. 8, 1988) (memorandum and order). The district court further concluded that the Count III claim of tortious interference with an employment contract was preempted by LMRA. Id. at 8. The district court did not believe, however, that either LMRA or ERISA preempted the Count I claim of vexatious refusal to pay insurance benefits under Missouri law. Id. The court dismissed this claim as pendent under United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966), and granted summary judgment on the other claims due to preemption.

Lewis then moved for leave to amend his complaint so as to cast his allegations as federal claims arising under ERISA and LMRA. Alternatively, Lewis requested the district court to remand his remaining vexatious refusal to pay claim to state court rather than dismissing it. LINA simultaneously requested the district court to reconsider its ruling that the vexatious refusal to pay claim was not preempted by ERISA in light of Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987) (Pilot Life ).

On June 17, 1988, the district court denied Lewis's request for leave to amend his complaint. Lewis v. Life Insurance Co., No. 86-0763-CV-W-6, slip op. at 3-4 (W.D.Mo. June 17, 1988) (memorandum and order). The district court then reconsidered its ruling that ERISA did not preempt Lewis's vexatious refusal to pay claim. The district court noted five other cases holding that, after Pilot Life, ERISA preempts such state law vexatious refusal to pay actions. Nevertheless, the district court chose to follow Hoeflicker v. Central States, Southeast & Southwest Areas Health & Welfare Fund, 644 F.Supp. 195, 198-200 (W.D.Mo.1986) (Hoeflicker ), a case decided before Pilot Life, holding that ERISA does not preempt such claims. Accordingly, the district court reaffirmed its holding that ERISA did not preempt the Missouri vexatious refusal to pay claim. The district court did, however, modify its previous dismissal of Lewis's vexatious refusal to pay claim and instead remanded the claim to state court.

In its petition for a writ of mandamus, LINA requests this court to reverse the district court's holding that ERISA does not preempt the vexatious refusal to pay claim. Lewis has separately appealed from the district court's grant of summary judgment on his other claims (No. 88-2149) and LINA has cross-appealed (No. 88-2216), but these appeals are not now before this court.

II

We begin by considering our authority to issue a writ of mandamus. It is well established that "the remedy of mandamus is a drastic one, to be invoked only in extraordinary situations." Allied Chemical Corp. v. Daiflon, Inc., 449 U.S. 33, 34, 101 S.Ct. 188, 190, 66 L.Ed.2d 193 (1980) (per curiam) (Allied Chemical ); see, e.g., Kerr v. United States District Court, 426 U.S. 394, 402, 96 S.Ct. 2119, 2123, 48 L.Ed.2d 725 (1976); Will v. United States, 389 U.S. 90, 95, 88 S.Ct. 269, 273, 19 L.Ed.2d 305 (1967). In Allied Chemical, the Court explained that mandamus should issue only in extraordinary circumstances because

"[i]ts use has the unfortunate consequence of making a district court judge a litigant, and it indisputably contributes to piecemeal appellate litigation. It has been Congress' determination since the Judiciary Act of 1789 that as a general rule appellate review should be postponed until after final judgment has been rendered by the trial court. A judicial readiness to issue the writ of mandamus in anything less than an extraordinary situation would "run the real risk of defeating the very policies sought to be furthered by that judgment of Congress."

449 U.S. at 35, 101 S.Ct. at 190 (quoting Kerr v. United States District Court, 426 U.S. at 403, 96 S.Ct. at 2124). To avoid any erosion of the final judgment rule, the Court has required a party seeking mandamus to make two showings: (1) there are "no other adequate means to attain the relief ... desire[d]," and (2) that the "right to issuance of the writ is 'clear and indisputable.' " Allied Chemical, 449 U.S. at 35, 101 S.Ct. at 190 (quoting Bankers Life & Casualty Co. v. Holland, 346 U.S. 379, 384, 74 S.Ct. 145, 148, 98 L.Ed. 106 (1953)); see also In re Ford Motor Co., 751 F.2d 274, 276 (8th Cir.1984) (mandamus denied because moving party "failed to show that it will be irreparably harmed or that its opportunity for meaningful appellate review will be lost unless immediate review is permitted"); In re Exterior Siding & Aluminum Coil Antitrust Litigation, 696 F.2d 613, 619 (8th Cir.1982) (Arnold, J., dissenting) ("The petitioner must show that he has no other adequate means to attain the relief he desires, and that his right to issuance of the writ is clear and indisputable.").

Although we are always reluctant to invoke such a drastic remedy as mandamus, we conclude that it is necessary here. LINA has demonstrated that it (1) has no other means to obtain appellate review of the district court's preemption ruling and (2) its right to relief is clear and indisputable.

The district court ruled that as a matter of federal law ERISA does not preempt a claim under Missouri's vexatious refusal to pay statute and then remanded the claim to state court. Had the district court instead dismissed the complaint, this ruling would be directly appealable as a final order. The remand, however, is not directly appealable as a final order to this court. As a result of the remand, then, this court will never have appellate jurisdiction over this order in the absence of review by mandamus.

Moreover, LINA will not be able to challenge the district court's preemption ruling on remand in the Missouri courts either. The district court's ruling on a question of federal law will be binding on the Missouri courts as res judicata and the law of the case. Jackson v. Hartford Accident & Indemnity Co., 484 S.W.2d 315 (Mo.1972); McPheeters v. Community Federal Savings & Loan Ass'n, 736 S.W.2d 62 (Mo.Ct.App.1987); see also United States ex rel. Lawrence v. Woods, 432 F.2d 1072, 1076 (7th Cir.1970) ("[W]hen a lower federal court has jurisdiction over the subject matter and the parties, its adjudication is the law of the case and its judgment is binding on all other courts, subject only to the appellate process."). Accordingly, LINA has demonstrated...

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