Selkridge v. United of Omaha Life Ins. Co., CIV. 2001-143.

• Citation: 237 F.Supp.2d 600
• Decision Date: 20 December 2002
• Docket Number: No. CIV. 2002-73.,No. CIV. 2001-143.,CIV. 2001-143.,CIV. 2002-73.
• Parties: Margarita SELKRIDGE, Plaintiff, v. UNITED OF OMAHA LIFE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Virgin Islands

Page 600

237 F.Supp.2d 600

Margarita SELKRIDGE, Plaintiff, v. UNITED OF OMAHA LIFE INSURANCE COMPANY, Defendant.

No. CIV. 2001-143.

No. CIV. 2002-73.

District Court, Virgin Islands, D. St. Thomas and St. John.

December 20, 2002.

Lee J. Rohn, St. Croix, VI, Terry Halpern, St. Thomas, VI, for the plaintiff.

Charles E. Engeman, St. Thomas, VI, for the defendant.

MEMORANDUM

MOORE, District Judge.

On February 21, 2002, I granted defendant United of Omaha Insurance's ["United of Omaha" or "defendant"] motion for summary judgment on the ground that plaintiff Magarita Selkridge's ["Selkridge" or "plaintiff"] common law claims were expressly preempted by section 514(a) of the Employee's Retirement Income Security Act of 1974 ["ERISA"]. Plaintiff now moves this Court to amend its February 21st order. Specifically, Selkridge seeks to have me declare that her claims were dismissed without prejudice because they were only "completely preempted" by ERISA, thereby converting her common law claims to federal claims and allowing her to refile these same claims in another action, already filed in this Court, namely Selkridge v. United of Omaha Life Insurance Company, Civ. No.2002-73 (D.V.I. Apr. 29, 2002). (See Plt.'s Rule 60(b) Mot. to Amend J.) I will deny plaintiff's request as she gravely misunderstands both preemption under ERISA and the essence of my February 21st order. I will, however, amend that order to confirm that it was with prejudice and a decision on the merits. I will also dismiss plaintiff's related complaint in Civil No.2002-73 as barred by res judicata and claim preclusion.

I. PROCEDURAL BACKGROUND

After United of Omaha had denied her claim for long-term disability benefits, Selkridge filed a six-count complaint in this Court on October 21, 1999, seeking compensatory and punitive damages.¹ Selkridge alleged claims under Virgin Islands law for breach of contract (Count I), bad faith (Count II), misrepresentation (Count III), intentional infliction of emotional distress (Count IV), negligent infliction of emotional distress (Count V), and punitive damages (Count VI). On December 10, 1999, United of Omaha filed an amended answer containing the affirmative defense that plaintiff's territorial common law claims were preempted by ERISA. (Am. Answer, Dec. 10, 1999, at ¶ 41.) On December 21, 1999, plaintiff was allowed to amend her complaint to change the name of the defendant.² On February 21, 2002, I granted United of Omaha's motion for summary judgment. See Selkridge v. United of Omaha Life Insurance Company, 221 F.Supp.2d 579 (D.Vi.2002). Selkridge did not appeal this decision, but instead chose some two months later to file another action in this Court against United of Omaha for alleged ERISA violations based on the same events recited in this original lawsuit (See Compl., Selkridge v. United of Omaha Life Ins. Co., Civ. No.2002-73, Apr. 29, 2002.) On October 31, 2002, more than eight months after my February 21st order in this case and more than six months after she filed her separate lawsuit against defendant, Selkridge moved to reconsider my grant of summary judgment in favor of defendant by "clarifying" that my decision to dismiss her claims as preempted was without prejudice and "implicitly" permitted her to file the second action. United of Omaha opposed plaintiff's Rule 60(b) motion to reconsider and also moved for summary judgment in the other lawsuit on the ground of res judicata.

II. DISCUSSION

A. Plaintiff's Claims Were Expressly Preempted

The crux of Selkridge's motion to reconsider my February 21st order is that I erred in failing to convert her common law claims to federal claims when I "held" that her complaint was completely preempted by ERISA. (Plt.'s Rule 60(b) Mot. to Amend J. at 1-2.) This contention, however, is tantamount to arguing that I committed a legal error. It is wellestablished that "a Rule 60(b) motion may not be used as a substitute for appeal, and that legal error, without more, cannot justify granting a Rule 60(b) motion." Smith v. Evans, 853 F.2d 155, 158 (3d Cir.1988). I could, therefore, simply deny plaintiff's motion summarily on that basis. As plaintiff has misapprehended the decision I rendered back in February, however, it seems advisable that I attempt to correct those misconceptions.

I did not, as plaintiff asserts in her Rule 60(b) motion, find that her common law claims were completely preempted by ERISA. (See id. at 2.) Instead, I found that her claims were expressly preempted by ERISA.³ I am well aware that common law claims can be converted to federal ERISA claims. Such conversion, however, only occurs for jurisdictional purposes. As clearly stated in my February 21st order, "[c]omplete preemption arises only in the context of removal of a case from state or territorial court to federal court." See Selkridge, 221 F.Supp.2d at 582 n. 3 (citing In re U.S. Healthcare, Inc., 193 F.3d 151, 160 (3d Cir.1999) ("Complete preemption operates to confer original federal subject matter jurisdiction notwithstanding the absence of a federal cause of action on the face of the complaint.")). Since Selkridge had filed her common law claims directly in this Court, complete preemption was completely irrelevant to the issues before me and had absolutely no bearing on my decision. See Selkridge, 221 F.Supp.2d at 582 n. 3 ("Only [express preemption] is considered here since the plaintiff brought her suit directly to federal court through its diversity jurisdiction."). Accordingly, all of the cases plaintiff relies on in her Rule 60(b) motion to argue that this Court must convert her common law claims to federal claims are totally inapposite because the plaintiffs in each of those cases had initially filed common law claims in state court.

Moreover, Selkridge apparently fails to grasp the essence of preemption in ERISA-related claims. Regardless of whether a court initially addresses the issue of complete preemption, it must also examine whether the plaintiff's claims are expressly preempted. See Pryzbowski v. U.S. Healthcare, Inc., 245 F.3d 266, 277 (3d Cir.2001) ("[U]nlike the scope of § 502(a)(1)(B) [complete preemption], which is jurisdictional and creates a basis for removal to federal court, § 514(a) [express preemption] ... governs the law that will apply to state law claims, regardless of whether the case is brought in state or federal court."); see also Stewart v. United States Bancorp, 297 F.3d 953, 958-59 (9th Cir.2002) ("The recharacterization of a state claim as federal is independent from the process of finding that claim [federally] preempted.") (citing Schroeder v. Trans World Airlines, Inc., 702 F.2d 189, 192 (9th Cir.1983)).

Since I do not think I can say it any clearer, I reiterate what I stated in my original memorandum opinion. I first found that plaintiff's United of Omaha group insurance plan was covered by ERISA. I next addressed whether this lawsuit was expressly preempted by ERISA, noting that

[e]xpress preemption provides "a federal defense to a state-law claim." Section 514(a) of ERISA provides that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan ...." 29 U.S.C. § 1144(a). Any statelaw claims that fall within the purview of express preemption are displaced and subject to dismissal. Section 514(a) also preempts any common-law claims brought by a plaintiff. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 48, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987) (preempting plaintiff's common-law claims of tortious breach of contract, breach of fiduciary duties and fraud in the inducement).

To determine whether plaintiff's state/territorial-law claims come within the scope of section 514(a), I must decide whether her claims relate to an employee benefit plan. Generally, claims concerning the "quantity" of care (i.e. the extent and type of benefits) relate to an employee benefit plan and thus are preempted, whereas claims regarding the "quality" of care (i.e. medical treatment decisions) do not relate to the plan and would not be preempted.

All of plaintiff's causes of action in her complaint clearly relate only to the extent and type of benefits provided by United of Omaha. Nowhere in her complaint or in her opposition to defendant's motion for summary judgment does Selkridge challenge the quality of the care or question the medical treatment decisions of defendant. Plaintiff only alleges that she was wrongfully denied benefits, which are exactly the types of claims Congress preempted through ERISA.

Selkridge, 221 F.Supp.2d at 581-82 (internal footnotes and most citations omitted). Since I clearly found that all of plaintiff's claims related only to the quantity of her care rather than the quality of such care, I ruled that her common law claims were expressly preempted and displaced by ERISA and granted defendant's motion for summary judgment. See id. at 582. Nothing in plaintiff's Rule 60(b) motion provides any basis for me to amend my prior ruling. Therefore, I will deny plaintiff's motion to reconsider my previous order and leave to refile her complaint.

This result may seem harsh, but it is what the law requires. Plaintiff was on notice that her common law claims might be expressly preempted by ERISA as early as December 10, 1999, when United of Omaha filed its answer to her complaint. Rather than seek leave to amend her pleadings, Selkridge instead sat on her rights until two months after my February 21st order when she filed a separate ERISA action. Plaintiff then waited another six months before asking that I clarify/modify my decision so she could file the new complaint she had already filed. Unfortunately for plaintiff, the law simply does not permit a court to remedy these failings. See Tolle v. Carroll Touch, Inc., 977 F.2d 1129, 1137 (7th Cir.1992) (denying plaintiff leave to amend her complaint after district court held her claims to be expressly preempted because she...