Marshall v. American General Life & Accident Ins.
Decision Date | 18 October 2001 |
Docket Number | No. 3:01-0551.,3:01-0551. |
Citation | 174 F.Supp.2d 709 |
Parties | John Earl MARSHALL, Kayochie Marshall, et al., v. AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE COMPANY, et al. |
Court | U.S. District Court — Middle District of Tennessee |
Thomas Anderton Wiseman, III, Edward A. Hadley, Gideon & Wiseman, Nashville, TN, K. Stephen Jackson, Gary B. Holder, Craig L. Lowell, Jackson & Shuttlesworth, P.C., Birmingham, AL, for plaintiffs.
Robert E. Cooper, Jr., Anna M. Grizzle, Bass, Berry & Sims, Nashville, TN, N. Lee Cooper, Lee E. Bains, T. Louis Coppedge, Stephen C. Jackson, Michael D. Mulvaney, Maynard, Cooper & Gale P.C. ,Birmingham, AL, for American General Life and Accident Insurance Company.
Christopher A. Holland, Robert S. W. Given, James E. Fleenor, Jr., Burr & Forman, Birmingham, AL, John M. Tipps, Joseph F. Welborn, III, Walker, Bryant & Tipps, Nashville, TN, for Laymon D. Phillips, Delbert E. Phillips.
Pending before the Court are Defendants' Notice of Removal (Doc. No. 1), and Plaintiffs' Motion to Remand and accompanying Memorandum in Law (Doc. Nos. 18 and 19). Defendants responded by filing a Brief in Opposition to the Motion to Remand (Doc. No. 41), and Plaintiffs filed a Reply Memorandum (Doc. No. 69). Defendants also filed a Motion to Amend Notice of Removal, and Plaintiffs filed an Amended Motion to Remand (Doc. Nos. 21 and 35), which are held in abeyance for the reasons explained below. A hearing on the issues involved in the Remand and Removal requests was held by this Court on August 20, 2001. For the reasons stated below, the case is removed to this Court, and Plaintiffs' Motion to Remand is hereby denied.
The motions in this case are merely the most recent chapter of the ongoing litigation involving American General Life and Accident Insurance Company ("AGLA"), which date back to 1998. See McNeil v. Am. Gen. Life & Accident Ins. Co., Case No. 3:99-1157 (M.D.Tenn.) ( ).
In 1999, McNeil was filed as a class action in the United States District Court for the Middle District of Tennessee. The plaintiffs in McNeil represented the class of persons who had purchased insurance policies issued or administered by AGLA. Their complaint asserted various causes of action, "including federal claims based upon 42 U.S.C. § 1981 and common law claims based on breach of fiduciary duty, breach of contract, fraudulent inducement, breach of statutory duty and negligent misrepresentation." (Id. at 7.) In June, 2000, the parties agreed to settle the suit and this Court preliminarily certified the class under FED.R.CIV.P. 23(b)(3), ordering notice to the potential class of members, and scheduling a Fairness Hearing. On September 8, 2000, the Court entered its Order Approving Class Settlement and Final Judgment. (McNeil 119 and 120.) The Order dismissed all Class Members' claims "on the merits and with prejudice." (McNeil 119 at ¶ 20.) Simultaneously, on May 11, 2000, another complaint was filed on behalf of the Marshall's, in the Circuit Court of Barbour County, Alabama. See Marshall v. Am. Gen. Life & Accident Ins. Co., CV: 2000-035. The Marshall Complaint contains allegations of unjust enrichment, fraud, deceit and fraudulent suppression, and continuing misrepresentations, which are centered around AGLA's practice of charging African-Americans a higher premium based on their race. See Second Amended Complaint ¶¶ 53-89 (Doc. No. 19, Ex. B.)
On June 22, 2001, Defendants filed the Notice of Removal of the Alabama civil action to this Court, asserting that it is proper: (1) under the All Writs Act (the "Act"), 28 U.S.C. § 1651(a) to prevent frustration of this Court's orders in the McNeil Settlement; (2) pursuant to 28 U.S.C. § 1331 and this Court's ancillary and retained jurisdiction because the state action conflicts with this Court's decisions in McNeil; and (3) pursuant to FED. R.CIV.P. 60(b)(3) because the state action is a disguised claim of fraud on this Court. (Doc. No. 1.) Defendants cite three events as the basis for this Court's jurisdiction.
First, they argue that John Eddie Marshall was not properly excluded from the McNeil Class, and thus, his participation in the Alabama suit violated this Court's permanent injunction, or at minimum created a dispute which this Court has retained jurisdiction to decide.1 (Id. at 2; Doc. No. 41 at 8, Brief in Opposition to Remand.) Second, AGLA argues that Plaintiffs' state claims directly implicate this Court's prior rulings because their claims allege Class Counsel's misrepresentations to Plaintiffs while in the Class, and misrepresentations in a Court-approved Letter sent as part of the Class Notice package denying discriminatory pricing which AGLA allegedly continued to apply. (Id. at 13-14;2 see also Doc. No. 1 at 10. ) They further cite to portions of Plaintiffs' Memoranda stating that AGLA suppressed information from this Court, which implicates its Findings of Facts and Conclusions of Law in McNeil. (Id. at 13.) Finally, AGLA asserts that Plaintiffs' discovery in the state action challenges the statistical method used by the experts testifying in McNeil, which this Court relied upon in drafting its findings and in issuing its fairness decision. (Id. at 18-26, see also Doc. No. 41 at 22-28.3)
Plaintiffs' Motion for Remand and Memorandum state that AGLA is merely trying to avoid the state suit. (Doc. Nos. 18 and 19.) Plaintiffs assert that any dispute as to whether Eddie Marshall properly opted-out of the McNeil Class is a claim preclusion defense raised by AGLA. (Doc. No. 19 at 2.) As it regards to discovery, Plaintiffs assert it was Defendants who submitted expert reports arguing that the Settlement was relevant to punitive damages, and Plaintiffs merely cross-examined these experts. (Id. at 3-5.) They assert that neither the state claims nor their discovery requests represent an attack on McNeil. In their Reply Brief, Plaintiffs acknowledge making misrepresentation claims in their brief opposing summary judgment and their Pre-Trial contentions, but assert that their Complaint contains no such claims. (Doc. No. 69 at 12.)
Plaintiffs correctly assert that the All Writs Act requires a finding of ancillary jurisdiction and exceptional circumstances in order to be used as a basis for removal, but argue that the Act is inapplicable because this Court has no ancillary jurisdiction over their claims. (Doc. No. 18.) They assert that claim preclusion by reason of a prior federal judgment is a defensive plea, which fails to support such jurisdiction,4 and their claims do not give rise to jurisdiction in the absence of an affirmative misrepresentation claim for damages; and even if such claim is asserted, it does not interfere with the McNeil Orders. (Id.; see also Doc. No. 69 at 12 ( ).) They also argue that there are no "exceptional circumstances" threatening the integrity of the Court's rulings, and removal based on claim preclusion is untimely under 28 U.S.C. § 1446. (Doc. No. 19 at 15-16 ( ).) Finally, Plaintiffs assert that the state action is not a disguised Rule 60(b)(3) claim, because they have neither asked the Court to invalidate the McNeil Settlement, nor are they seeking relief under the Settlement. (Id. at 18.)
The Order Approving the McNeil Settlement enjoined all Class Members not properly excluded from the Class from "filing, commencing ... any other lawsuit ... in any jurisdiction based on or relating to the claims and causes of action, or the facts or circumstances relating thereto...." (McNeil 119 at ¶ 12.) Furthermore, the Court stated that "the issuance of this permanent injunction is necessary and appropriate in aid of the Court's jurisdiction over the action and to protect and effectuate the Court's Final Judgment." (Id.) Finally, the Court explicitly retained jurisdiction over the McNeil action:
Retention of Jurisdiction. The Court has jurisdiction to enter this Order and the accompanying Final Judgment. Without in any way affecting the finality of this Order ..., this Court expressly retains jurisdiction as to all matters relating to the administration, consummation, enforcement and interpretation of the Settlement Agreement ... including, without limitation,
(a) ... resolving any disputes, claims or causes of action that, in whole or in part, are related to or arise out of the Settlement Agreement ...
(b) entering such additional orders as may be necessary or appropriate to protect and effectuate the Court's Order....
(Id. at ¶ 18, see also McNeil 120 at ¶ 5.)
An analysis of the Order Approving the Settlement, the Final Judgment, and the case law establishes that this Court has continuing jurisdiction over the Agreement and related orders. See Bylinski v. City of Allen Park, 169 F.3d 1001 (6th Cir.1999). In deciding whether Plaintiff Marshall was properly excluded from the McNeil Class, "[a ] district court `is in the best position to interpret its own orders.'"5 In Re VMS Securities Lit., 103 F.3d 1317, 1321 (7th Cir.1996) (citations omitted). Had Marshall not been properly excluded, his participation in the Alabama state action would violate this Court's permanent injunction in the McNeil Settlement. (McNeil 120 at ¶ 5.) Since this Court explicitly reserved its power to enforce the Settlement, "a breach of the agreement would be a violation of the order, and ancillary jurisdiction to enforce the agreement would therefore exist." Kokkonen v....
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