Reeds v. Walker

• Decision Date: 20 June 2006
• Docket Number: No. 101,994.,101,994.
• Citation: 2006 OK 43,157 P.3d 100
• Parties: William S. REEDS, Co-Guardian of the Estate of Phillip M. Reeds, and Ellen O. Reeds, Co-Guardian of the Estate of Phillip M. Reeds, and Phillip M. Reeds, Petitioners, v. The Honorable Thomas S. WALKER, Judge of the District Court, Carter County, Oklahoma, Respondent. National American Insurance Company, Plaintiff/Appellee, v. William S. Reeds, Co-Guardian of the Estate of Phillip M. Reeds, and Ellen O. Reeds, Co-Guardian of the Estate of Phillip M. Reeds, and Phillip M. Reeds, Defendants/Appellants.
• Court: Oklahoma Supreme Court

157 P.3d 100

2006 OK 43

William S. REEDS, Co-Guardian of the Estate of Phillip M. Reeds, and Ellen O. Reeds, Co-Guardian of the Estate of Phillip M. Reeds, and Phillip M. Reeds, Petitioners, v. The Honorable Thomas S. WALKER, Judge of the District Court, Carter County, Oklahoma, Respondent.

National American Insurance Company, Plaintiff/Appellee, v. William S. Reeds, Co-Guardian of the Estate of Phillip M. Reeds, and Ellen O. Reeds, Co-Guardian of the Estate of Phillip M. Reeds, and Phillip M. Reeds, Defendants/Appellants.

No. 101,994.

Supreme Court of Oklahoma.

June 20, 2006.

Rehearing Denied October 3, 2006.

Application to assume Original Jurisdiction for Issuance of a Writ of Mandamus together with Appeal from the District Court, Carter County, Honorable Thomas S. Walker, Trial Judge.

¶ 0 Plaintiff brought this action in the District Court, Carter County, Honorable Thomas S. Walker, trial judge, for reimbursement of medical benefits paid on behalf of defendant, Phillip M. Reeds. On counter motions for summary judgment, the trial judge gave judgment to plaintiff. Plaintiff moved for and was granted an award of prejudgment interest and costs. Defendants' motions for postjudgment relief were denied. Defendants filed an appeal, designated as Cause No. 101,678, in which they challenged the adverse judgment and ancillary award as well as the denial of their postjudgment motions. While the appeal was pending, defendants asked this court to assume original jurisdiction to issue a writ of mandamus to the trial judge to direct that he refrain from implementing or enforcing the judgment and dismiss the action for lack of subject matter jurisdiction. We assumed original jurisdiction in Cause No. 101,994 and after withdrawing Cause No. 101,678 from assignment to the Court of Civil Appeals, we consolidated the two proceedings under surviving Cause No. 101,994 for disposition by a single opinion.

ORIGINAL JURISDICTION IS ASSUMED; WRIT OF MANDAMUS IS DENIED; THE TRIAL COURT'S SUMMARY JUDGMENT IS REVERSED AND THE CAUSE IS REMANDED FOR FURTHER PROCEEDINGS TO BE CONSISTENT WITH THIS OPINION.

Dino E. Viera, Nicholas V. Merkley, and Kevin R. Donelson, Fellers, Snider, Blankenship, Bailey & Tippens, Oklahoma City, OK; Stephen J. Adams, Fellers, Snider, Blankenship, Bailey & Tippens; and Stephen Q. Peters, Harris, McMahan, Peters, Thompson & Stall, PC, Tulsa, OK, Attorneys for Petitioners/Appellants.

Michael G. McAtee, McAtee & Woods, P.C., Oklahoma City, OK, Attorney for Respondent and for Appellee.¹

OPALA, J.

¶ 1 The dispositive issues presented in these consolidated proceedings are: (1) Do Oklahoma courts have subject matter jurisdiction over an ERISA fiduciary's claim for damages for breach of the subrogation/reimbursement provision of an ERISA-regulated employee benefit plan? and if so, (2) Was plaintiff entitled to summary relief? We answer the first question in the affirmative and the second in the negative.

I ANATOMY OF LITIGATION

¶ 2 Phillip M. Reeds (Phillip) was injured in August 1999 in an automobile accident that was caused by a third party's negligence. At the time of the accident, Phillip was insured under a health insurance contract (the Plan) sold to his father's company by plaintiff, National American Insurance Company (NAICO). Phillip suffered extensive injuries in the accident and received medical benefits pursuant to the Plan in the amount of $454,407.94.

¶ 3 Phillip and his parents/guardians, William S. Reeds and Ellen O. Reeds (collectively "defendants" or "the Reeds"), sued the tortfeasor and their own automobile insurer. They settled with their own insurer for $2,250,000.00.² The court order approving the settlement identified the sole source of these funds as the proceeds of the Reeds' own uninsured motorist (UM) benefits. NAICO did not participate in, approve of, or consent to the settlement. Upon learning that the Reeds' claim had been settled, NAICO invoked the subrogation/reimbursement provision of the health insurance policy, demanding reimbursement from defendants of the medical expenses it had paid on Phillip's behalf. Defendants refused.

¶ 4 NAICO brought this action against defendants in the district court, Carter County, alleging breach of contract. Both sides moved for summary judgment. After consideration of the submitted materials, the trial court granted judgment to NAICO, ordering defendants to pay damages in the amount of $454,407.94. Plaintiff's motion for prejudgment interest and costs was granted and defendants were ordered to pay the additional sum of $146,607.81. Defendants' postjudgment motion for a new trial³ or for judgment notwithstanding the verdict and their postjudgment motion for dismissal⁴ on the grounds that the trial court lacked subject matter jurisdiction were all denied.

¶ 5 Defendants appealed. The appeal, designated as Cause No. 101,678, was assigned to the Court of Civil Appeals in Oklahoma City. While the appeal was pending, defendants filed an application in this court, designated as Cause No. 101,994, invoking the court's original cognizance to direct the trial court not to implement or enforce the judgment and to dismiss the action for lack of subject matter jurisdiction. We agreed to assume original cognizance, withdrew the appeal's earlier assignment to the Court of Civil Appeals, and consolidated the two proceedings for disposition by a single opinion under surviving Cause No. 101,994.

¶ 6 Defendants argue in this consolidated proceeding that Oklahoma courts do not have subject matter jurisdiction over this action because federal law requires us to treat plaintiff's lawsuit as a federal ERISA claim over which the federal courts assert exclusive subject matter jurisdiction. They argue in the alternative that should we determine that the Oklahoma courts have jurisdiction, we must reverse the judgment because (1) the trial court wrongly construed the words "third party" in the Plan's subrogation/reimbursement provision to include defendants' own "first party" UM carrier; and/or (2) the trial court erred in finding that the subrogation/reimbursement clause contains a "priority of payments" provision, thereby overriding the Oklahoma make-whole rule.

¶ 7 For the reasons to be explained below, we hold that Oklahoma courts have jurisdiction over this action, but that summary judgment was not plaintiff's due. We hence reverse the judgment and remand the cause with instructions to proceed in a manner consistent with this opinion.

II STANDARD OF REVIEW

¶ 8 Summary process — a special pretrial procedural track pursued with the aid of acceptable probative substitutes⁵ — is a search for undisputed material facts which, sans forensic combat, may be utilized in the judicial decision-making process.⁶ Summary relief is permissible where neither the material facts nor any inferences that may be drawn from uncontested facts are in dispute, and the law favors the movant's claim or liability-defeating defense.⁷ Only those evidentiary materials which eliminate from trial some or all fact issues on the merits of the claim or defense afford legitimate support for nisi prius resort to summary process for a claim's adjudication.⁸

¶ 9 Summary relief issues stand before us for de novo review.⁹ All facts and inferences must be viewed in the light most favorable to the non-movant.¹⁰ Appellate tribunals bear the same affirmative duty as is borne by nisi prius courts to test for legal sufficiency all evidentiary material received in summary process in support of the relief sought by the movant.¹¹ Only if the court should conclude there is no material fact (or inference) in dispute and the law favors the movant's claim or liability-defeating defense is the moving party entitled to summary relief in its favor.¹² A trial court's denial of a motion for new trial is reviewed for abuse of discretion.¹³ Where, as here, our assessment of the trial court's exercise of discretion in denying defendants a new trial rests on the propriety of the underlying grant of summary judgment, the abuse-of-discretion question is settled by our de novo review of the summary adjudication's correctness.¹⁴ Judicial discretion is abused when a trial court errs with respect to a pure, unmixed question of law.¹⁵

III OKLAHOMA COURTS HAVE JURISDICTION OVER AN ERISA FIDUCIARY'S CLAIM FOR DAMAGES FOR BREACH OF AN ERISA-REGULATED HEALTH INSURANCE CONTRACT

¶ 10 Our initial task today calls for an inquiry into whether Oklahoma courts stand ousted by federal law of jurisdiction over a state-law contract action brought by an ERISA fiduciary against an ERISA beneficiary over the interpretation and application of an ERISA plan provision. When there are no contested jurisdictional facts,¹⁶ the question of subject matter jurisdiction is purely one of law which we review de novo.¹⁷ Defendants argue that extant United States Supreme Court jurisprudence requires us to treat NAICO's state-law claim as a federal claim arising under ERISA over which the federal courts have federal question jurisdiction. Defendants further assert that the specific provision of ERISA under which NAICO's cause of action arises provides for exclusive federal jurisdiction, thereby ousting the state courts of jurisdiction. We disagree.

¶ 11 The state judiciary's subject matter jurisdiction is derived from the State Constitution which gives Oklahoma courts unlimited original jurisdiction over all justiciable matters unless otherwise provided by law.¹⁸ State courts also have inherent authority to adjudicate claims arising under the laws of the United States,¹⁹ unless Congress affirmatively assigns exclusive jurisdiction over a federal claim to the federal courts.²⁰ In contrast, the subject matter jurisdiction of the federal district courts is limited to that which is granted to them by Congress.²¹ In the provisions of 28 U.S.C. § 1331, Congress has given the federal district courts subject matter jurisdiction over "all civil actions arising...