Qualchoice, Inc. v. Rowland

• Decision Date: 11 May 2004
• Docket Number: No. 02-3614.,02-3614.
• Parties: QUALCHOICE, INC., Plaintiff-Appellant, v. Robin ROWLAND, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

367 F.3d 638

QUALCHOICE, INC., Plaintiff-Appellant, v. Robin ROWLAND, Defendant-Appellee.

No. 02-3614.

United States Court of Appeals, Sixth Circuit.

Argued December 3, 2003.

Decided and Filed May 11, 2004.

Daran P. Kiefer (argued and briefed), Ted M. Traut (briefed), Kreiner & Peters Co, Cleveland, OH, for Plaintiff-Appellant.

Donald Cybulski (argued and briefed), Claudia R. Eklund, Lowe, Eklund, Wakefield & Mulvihill, Cleveland, OH, for Defendant-Appellee.

Before: MARTIN and MOORE, Circuit Judges; McKEAGUE, District Judge.^*

OPINION

MOORE, Circuit Judge.

Plaintiff-Appellant QualChoice, Inc. ("QualChoice"), a fiduciary and administrator of an employee benefits plan governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), appeals from the district court's dismissal, for lack of subject matter jurisdiction, of its action to obtain reimbursement under the terms of that plan from Defendant-Appellee Robin Rowland ("Rowland"), a plan participant. QualChoice raises three claims of error on appeal. First, QualChoice argues that the district court had jurisdiction pursuant to 28 U.S.C. § 1331, as federal common law provides federal question jurisdiction for ERISA reimbursement actions. Second, QualChoice argues that the district court had jurisdiction pursuant to 29 U.S.C. § 1132(e)(1), as QualChoice prayed for equitable relief within the meaning of 29 U.S.C. § 1132(a)(3). Third, QualChoice argues that the district court erred in granting Rowland's motion to dismiss for lack of subject matter jurisdiction before allowing QualChoice sufficient time to gather evidence.

For the following reasons, we AFFIRM the district court's dismissal for lack of subject matter jurisdiction.

I. BACKGROUND

On November 16, 2001, QualChoice filed a complaint against Rowland alleging that QualChoice was a plan administrator and fiduciary for an employee benefit plan governed by ERISA, and that Rowland was a participant in that plan. QualChoice further alleged that it had advanced $80,763.58 to Rowland under the plan to cover medical expenses arising from an accident, that Rowland had settled a claim with the third-party tortfeasor, and that under the terms of the plan Rowland was obligated to reimburse QualChoice from the money she received in that settlement. QualChoice prayed for specific performance of the reimbursement provision of the plan and restitution of the money it had advanced under the plan. On January 11, 2002, Rowland filed a Rule 12(b)(1) motion to dismiss QualChoice's complaint for lack of subject matter jurisdiction because QualChoice sought only legal remedies for which ERISA does not provide federal question subject matter jurisdiction. On January 21, 2001, QualChoice filed a motion for leave to file an amended complaint that requested equitable relief in order to avoid dismissal for lack of federal question subject matter jurisdiction.

On February 27, 2002, the district court held a case management conference during which it granted QualChoice's motion for leave to file an amended complaint, but specified that Rowland's motion to dismiss for lack of subject matter jurisdiction would apply to the amended complaint. On February 28, 2002, QualChoice filed an amended complaint that made many of the same factual allegations as its original complaint but newly alleged that it had advanced $101,440.54 to Rowland and prayed for equitable restitution, imposition of a constructive trust or equitable lien, an order declaring that QualChoice "has a right to the equitable remedy of subrogation to obtain reimbursement... [and] any other equitable relief." Joint Appendix ("J.A.") at 11-12 (First Am. Compl. ¶¶ 10, 13, 14). The amended complaint claimed that federal jurisdiction was proper under 29 U.S.C. § 1132(e) and 28 U.S.C. § 1331. On April 29, 2002, the district court entered an order explaining its obligation to ascertain whether federal question subject matter jurisdiction existed and its power to conduct an evidentiary investigation in furtherance of that goal, and requesting that the parties supply the following "information to the Court as soon as possible." J.A. at 65-67 (District Ct. Order, 4/29/02) (emphasis added).

.The time and nature of defendant Rowland's accident, as referred to in ¶ 8 of the amended complaint.

.The details of how Rowland received a "fund in settlement of her claims from the above accident," id. at ¶ 11 (e.g., whom she sued, what the settlement amount was, and when and to whom settlement amounts were or will be paid).

.Where the monies making up the "fund in settlement" are now.

J.A. at 66-67. (District Ct. Order). One day later, on April 30, 2002, Rowland filed an affidavit sworn by Attorney Claudia R. Eklund ("Attorney Eklund") in response to the district court's order.

Attorney Eklund's affidavit provided the following information. On the evening of November 23, 1994, when a Wheeling & Lake Erie Railroad ("W & LE") "train was crossing an unguarded, unlit track," Rowland drove her car into one of the railcars. J.A. at 68 (Eklund Aff. ¶¶ 2, 3). Rowland was severely injured in the accident and required several hospitalizations, surgical procedures, and eventually a below-the-knee amputation. Rowland incurred medical bills totaling $203,000 as a result of the accident. Attorney Eklund represented Robin and Robert Rowland in their lawsuit against W & LE for personal injuries and damages arising out of the collision. W & LE "was an uninsured entity and verified by counsel to be an entity functioning on the verge of bankruptcy." J.A. at 69 (Aff.¶ 5). "[A] settlement was proposed under which [W & LE] agreed to pay a total of $147,668.00 over the course of forty-four (44) months." J.A. at 69 (Aff.¶ 6). W & LE agreed to pay an additional $37,500 over the same forty-four months, contingent upon W & LE "obtaining certain concessions from the Surface Transportation Board at a hearing to be held in June, 1998." J.A. at 69 (Aff.¶ 7). According to Attorney Eklund, QualChoice agreed to waive any subrogated interest it may have had in the proposed settlement agreement. On December 3, 1997, W & LE and Rowland consummated the settlement agreement. The Surface Transportation Board, however, did not grant the concessions upon which the contingent payment of $37,500 was based; therefore, that amount did not become payable.

On December 3, 1997, upon signing the agreement, W & LE paid a lump sum of $25,000 to Rowland. On May 1, 1998, W & LE paid an additional lump sum of $8,000 to Rowland. "[C]ommencing with June 1, 1998, monthly payments of $2,322.00 for the next 44 months were paid by [W & LE], the last of which was received on January 1, 2002." J.A. at 69-70 (Aff.¶ 12). "From the initial payments, the sum of $13,168 was" used to pay litigation expenses. J.A. at 69 (Aff.¶ 11). From each monthly check, an amount was deducted to pay the $27,308 attorney fee balance. "Robin and Robert Rowland received a net recovery of $107,192." J.A. at 69 (Aff.¶ 11).

According to Attorney Eklund, "at this time [April 30, 2002], no `settlement fund' exists, as the money has been disbursed over the last 44 months on a monthly basis." J.A. at 70 (Aff.¶ 13).

On April 30, 2002, which was the day after the district court requested that the parties supply additional information and the same day that Rowland filed Attorney Eklund's affidavit, the district court entered an order granting Rowland's motion to dismiss for lack of subject matter jurisdiction. QualChoice timely appealed the district court's order dismissing this action for lack of subject matter jurisdiction.

II. ANALYSIS

A. Standard of Review

We review de novo "a district court's decision to grant a motion to dismiss for lack of subject matter jurisdiction." Nichols v. Muskingum College, 318 F.3d 674, 677 (6th Cir.2003). Although Rowland makes both facial and factual challenges to QualChoice's assertion of federal question subject matter jurisdiction, we only reach the facial challenge, and thus we must view the facts in the light most favorable to QualChoice, the non-moving party. See Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325-26 (6th Cir.1990).

B. 28 U.S.C. § 1331

QualChoice argues that the district court had federal question subject matter jurisdiction pursuant to 28 U.S.C. § 1331 because QualChoice sought reimbursement under the terms of an ERISA plan, which we have held may be obtained under federal common law. To support this argument, QualChoice relies upon Walbro Corp. v. Amerisure Cos., 133 F.3d 961, 965-66 (6th Cir.1998), in which we held that a plan fiduciary's action for reimbursement is cognizable under federal common law doctrines building on the enforcement provisions of ERISA, and thus falls within the district court's federal question jurisdiction.

Subsequent to our decision in Walbro, however, the Supreme Court decided Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204, 209, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002), in which the Court reemphasized its view "that ERISA is a `comprehensive and reticulated statute,' the product of a decade of congressional study of the Nation's private employee benefit system." (citations omitted). The Court further stated that, because of the comprehensive nature of the statute, it has "been especially `reluctant to tamper with [the] enforcement scheme' embodied in the statute by extending remedies not specifically authorized by its text." Id. (quoting Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 147, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985)). Obeying the Court's direction in Knudson, we explicitly held in Community Health Plan of Ohio v. Mosser, 347 F.3d 619, 624 (6th Cir.2003), that federal question jurisdiction does not exist under 28 U.S.C. § 1331 in an action by a plan fiduciary seeking civil enforcement of the terms of an ERISA plan that does not implicate any ERISA provision. In Mosser, we held that 29 U.S.C. § 1132(e)(1) did not provide...