ACORD et al v. MONTELONE et al

Filing 24

MEMORANDUM OPINION AND ORDER GRANTING 11 Plaintiff's Motion to Remand and DENYING AS MOOT 12 Defendant Greater Pennsylvania Carpenters' Medical Plan's Motion to Dismiss. This action is REMANDED to the Circuit Court of Brooke County. Clerk directed to enter Judgment. Signed by Senior Judge Frederick P. Stamp, Jr on 1/28/13. (cc)(c to Clerk, Brooke County Circuit Court)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
NANCY ACORD and JAMES ACORD,
Plaintiffs,
v.

Civil Action No. 5:12CV88
(STAMP)

FLORENCE MONTELONE and
GREATER PENNSYLVANIA
CARPENTERS’ MEDICAL PLAN,
Defendants.
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND AND
DENYING DEFENDANT GREATER PENNSYLVANIA CARPENTERS’
MEDICAL PLAN’S MOTION TO DISMISS AS MOOT
I.

Background

On May 17, 2012, the plaintiffs, Nancy and James Acord (“the
Acords”), commenced this civil action by filing a complaint in the
Circuit Court of Brooke County, West Virginia.

Through this

complaint, the plaintiffs allege that defendant, Florence Montelone
(“Montelone”), was negligent regarding a motor vehicle accident
that occurred on June 16, 2010.

The accident complained of

occurred in Brooke County, West Virginia.

The plaintiffs allege

that defendant Montelone negligently ran a red light and collided
with plaintiff Nancy Acord’s vehicle resulting in severe and
disabling injures, which have caused medical expenses and other
damages, including

pain and suffering.

Further, plaintiff James

Acord alleges that he has suffered a loss of the duties and
obligations of the marital relationship, including the right to

consortium, society, companionship, and services as a result of
defendant Montelone’s negligence.

Both the Acords and defendant

Montelone are residents of West Virginia.
The plaintiffs also assert a claim against defendant, Greater
Pennsylvania Carpenters’ Medical Plan (“Medical Plan”).

At the

time of the car accident, plaintiff Nancy Acord had medical
coverage through the defendant Medical Plan. The defendant Medical
Plan is a fully self-funded Employee Retirement Income Security Act
(“ERISA”) plan and maintained its right to subrogation against its
members for any benefits provided due to accidental injuries caused
by third parties.

The plaintiffs are seeking a declaratory

judgment from this Court as to the amount of subrogation owed to
the defendant Medical Plan. Specifically, the plaintiffs first ask
that this Court find that the defendant Medical Plan’s claim to any
recovery from defendant Montelone is discharged under state law
pursuant to the made-whole doctrine.

In the alternative, the

plaintiffs seek a declaration as to the equitable distribution of
the proceeds available in this case.
On June 14, 2012, defendant Medical Plan removed this case to
the Western District of Pennsylvania. Thereafter on June 15, 2012,
the case was transferred to this Court.
plaintiffs

filed

a

motion

for

remand.

On June 20, 2012, the
In

this

motion,

the

plaintiffs allege that this action was improperly removed because:
(1) this Court lacks subject matter jurisdiction as there is no

2

federally preempted claim in this case, and therefore, no federal
question; (2) if this Court is not inclined to remand, then Count
III should be severed and stayed; (3) no diversity jurisdiction
exists; (4) the removal is procedurally defective for violation of
the unanimity rule; and (5) plaintiffs should be awarded attorneys’
fees in remanding this case.
The defendant Medical Plan responded by arguing: (1) the
plaintiffs’ claims are completely preempted by federal statute, and
therefore,
plaintiffs’

there
claims

is

federal
establish

question
a

federal

jurisdiction;
question,

(2)

as

diversity

jurisdiction need not be met prior to removal, but nonetheless
diversity exists; (3) removal of this action was based upon the
existence of a federal question and removal was therefore not
procedurally defective; and (4) as removal of this matter was
proper, the plaintiffs’ request for attorneys’ fees should be
denied.

The plaintiffs thereafter replied and continued to assert

that this Court lacked subject matter jurisdiction to hear this
case.
On the same day that the plaintiffs filed their motion to
remand, the defendant Medical Plan filed a motion to dismiss or, in
the alternative, a motion for summary judgment.

In this motion,

defendant Medical Plan argued that the plaintiffs’ claim against it
should be dismissed in its entirety because the state law claims
against the Medical Plan, which is an ERISA-qualified plan, are

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preempted by federal law.

The plaintiffs then responded arguing

the motion to remand should be decided before this Court rules upon
the merits of the plaintiffs’ claims.

However, they argue that

nonetheless, ERISA does not strip a court of its equity powers and
their claim should be adjudicated because the plaintiffs have
invoked equitable doctrines in their claim.

The defendant Medical

Plan replied and argued that the plaintiffs’ motion to remand is
improper and ERISA preemption is not eliminated by a state court
action in equity.
For the reasons stated below, this Court grants plaintiffs’
motion to remand and, accordingly, denies the defendant Medical
Plan’s motion to dismiss or, in the alternative, the motion for
summary judgment as moot.
II.

Applicable Law

This opinion deals with two separate motions, a motion to
remand and a motion to dismiss or, in the alternative, a motion for
summary judgment.
A.

Motion to Remand
A defendant may remove a case from state court to federal

court in instances where the federal court is able to exercise
original jurisdiction over the matter.

28 U.S.C. § 1441.

Federal

courts have original jurisdiction over primarily two types of
cases: (1) those involving federal questions under 28 U.S.C.
§ 1331, and (2) those involving citizens of different states where

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the

amount

in

controversy

exceeds

$75,000.00,

exclusive

interests and costs pursuant to 28 U.S.C. § 1332(a).
seeking

removal

jurisdiction.

bears

the

burden

of

of

The party

establishing

federal

See Mulcahey v. Columbia Organic Chems. Co., Inc.,

29 F.3d 148, 151 (4th Cir. 1994). Removal jurisdiction is strictly
construed, and if federal jurisdiction is doubtful, the federal
court must remand.
B.

Id.

Motion to Dismiss
Rule 12(b)(6) of the Federal Rules of Civil Procedure allows

a defendant to raise the defense of “failure to state a claim upon
which

relief

can

be

granted”

as

a

motion

in

response

to

a

plaintiff’s complaint before filing a responsive pleading.
In assessing a motion to dismiss for failure to state a claim
under Rule 12(b)(6), a court must accept the factual allegations
contained in the complaint as true.

Advanced Health-Care Servs.,

Inc. v. Radford Cmty. Hosp., 910 F.2d 139, 143 (4th Cir. 1990).
Dismissal is appropriate only if “‘it appears to be a certainty
that the plaintiff would be entitled to no relief under any state
of facts which could be proven in support of its claim.’”

Id. at

143-44 (quoting Johnson v. Mueller, 415 F.2d 354, 355 (4th Cir.
1969)); see also Rogers v. Jefferson-Pilot Life Ins. Co., 883 F.2d
324, 325 (4th Cir. 1989).
A motion to dismiss for failure to state a claim under Rule
12(b)(6) should be granted only in very limited circumstances, as

5

the pleading requirements of Federal Rule of Civil Procedure
8(a)(2) only mandate “a short and plain statement of a claim
showing that the pleader is entitled to relief.” Conley v. Gibson,
355 U.S. 41, 47 (1957).

Still, to survive a motion to dismiss, the

complaint must demonstrate the grounds to entitlement to relief
with “more than labels and conclusions . . . factual allegations
must be enough to raise a right to relief above the speculative
level.”

Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007).
III.

A.

Discussion

Motion to Remand
1.

Federally

preempted

claim

and

federal

question

jurisdiction
The defendant removed this action to federal court based on 28
U.S.C. § 1331 federal question jurisdiction.

Federal jurisdiction

based upon 28 U.S.C. § 1331 requires that a question “arising under
the Constitutions, laws, or treaties of the United States” be
present on the face of the plaintiff’s well pleaded complaint.
There is, however, an exception to the well pleaded complaint rule
in cases where a plaintiff’s complaint contains state law causes of
action which are subject to complete preemption by federal law. In
these situations, the state law cause of action actually pled
“transform[s]” into a federal claim by operation of law, and
removal is proper.

See Lontz v. Tharp, 413 F.3d 435, 441 (4th Cir.

6

2005) (citing Rivets v. Regions Bank of Louisiana, 522 U.S. 470,
476 (1998)).
ERISA, specifically §§ 502 and 514 of ERISA, is one of those
federal statutes that have been found to completely preempt state
law.

Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 64-66

(1987); Lontz, 413 F.3d at 441 (remarking that the United States
Supreme Court has found that only three federal statutes that
create complete preemption, National Bank Act, ERISA § 502, and
Labor Management Relations Act).

When Congress drafted ERISA, it

clearly expressed an intent that the civil enforcement
provisions of ERISA § 502(a) be the exclusive vehicle for
actions by ERISA-plan participants and beneficiaries
asserting improper processing of a claim for benefits,
and that varying State causes of action for claims within
the scope of § 502(a) would pose an obstacle to the
purposes and objective of Congress.
Pilot Life Ins. Co. v. Dedeaux, 781 U.S. 41, 52 (1987).

These

civil enforcement provisions of § 502 “authorize plan participants
or beneficiaries ‘to file civil actions, to among other things,
recover benefits, enforce rights conferred by an ERISA plan, remedy
breaches of fiduciary duty, clarify rights to benefits and enjoin
violations of ERISA.’” Singh v. Prudential Health Care Plan, Inc.,
335 F.3d 278, 290 (4th Cir. 2003) (quoting Marks v. Watters, 322
F.3d 316, 323 (4th Cir. 2003).

The United States Court of Appeals

for the Fourth Circuit has specifically held that “when the
validity, interpretation or applicability of a plan term governs
the participant’s entitlement to a benefit or its amount, the claim

7

for such a benefit falls within the scope of § 502(a).”

Id.

(citations omitted).
The plaintiffs argue that their claim against the defendant
Medical Plan is not preempted as there is no need to interpret an
ERISA-governed plan in order to adjudicate the plaintiffs’ claim.
The plaintiffs argue that this Court must only determine the value
of the lien that the defendant Medical Plan is entitled to, which
does not require the interpretation of the ERISA-governed plan.
The defendant Medical Plan, however, argues that the plaintiffs’
claim is completely preempted by ERISA.

It argues that the claim

does require the interpretation of a plan term, specifically the
subrogation term.
The provision of the plan that is at issue is the subrogation
provision.

The plaintiffs seek to have this Court discharge the

claims of the defendant Medical Plan pursuant to the made-whole
doctrine1 or they seek a declaration from this Court as to the
equitable distribution of the proceeds available in this case.
Both

of

these

requests

require

this

Court

to

determine

the

“validity, interpretation or applicability” of the subrogation term

1

The made-whole doctrine has been described by the West
Virginia courts to mean that “‘[u]nder general principles of
equity, in the absence of statutory law or valid contractual
obligations to the contrary, an insured must be fully compensated
for injuries or losses sustained (made whole) before the
subrogation rights of an insurance carrier arise.’”
Bush v.
Richardson, 484 S.E.2d 490, 494 (1997) (citing Porter v. McPherson,
479 S.E.2d 668, 672 (1996)).
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in light of the equitable doctrines that the plaintiffs wish this
Court to apply.
Further, the plaintiffs seek to have these state common law
doctrines applied to determine the subrogation rights of the
defendant Medical Plan.

The Fourth Circuit has specifically found

that “ERISA preempts state law regarding subrogation rights.”

In

re Paris, No. 99-1558, 2000 WL 384036, at *2 (4th Cir. Apr. 17,
2000); Hampton Indus., Inc. v. Sparrow, 981 F.2d 726, 728-730 (4th
Cir. 1992) (finding that ERISA preempts a state apportionment
statute that limited a medical service provider’s recovery in a
suit involving the subrogation rights under an ERISA plan).

The

plaintiffs in In re Paris, filed a petition in Maryland state court
seeking an apportionment of settlement proceeds by asserting that
the made-whole doctrine prevented subrogation by the defendant
fund, which had an ERISA-qualified plan of benefits that included
a subrogation clause.

The defendants removed the case to federal

court and the district court found that Maryland law concerning the
make-whole doctrine was inapplicable.

The Fourth Circuit upheld

the district court’s finding of inapplicability, as it indicated
that ERISA preempts state law regarding subrogation rights, which
were the rights at issue in that petition.

Although In Re Paris is

not a published opinion of the Fourth Circuit, this Court finds its
reasoning persuasive. Therefore, although the plaintiffs bring the
claim against defendant Medical Plan based on West Virginia law

9

concerning apportionment and the made-whole doctrine, this Court
finds that for purposes of this motion dealing with removal, such
law is preempted by ERISA.

As such, the plaintiffs’ claim is

converted into a federal claim that must be decided under § 502(a)
of ERISA.

Singh, 335 F.3d at 292 (finding that although certain

state law claims were preempted by ERISA, the claims should not be
dismissed but instead converted into federal law claims under
§ 502(a)).

Due to the state law claim being converted into a

federal law claim, removal is therefore substantively proper.

See

Lontz, 413 F.3d at 441 (finding that after a plaintiff’s state-law
claims were transformed into federal claims, the complaint is then
understood to state a federal question, which justifies removal
under 28 U.S.C. § 1441).
2.

Diversity jurisdiction

This Court next finds that based on the pleadings, diversity
jurisdiction does not exist as complete diversity jurisdiction is
lacking.

The diversity statute, 28 U.S.C. 1332(a) that permits

suits for more than $75,000.00 between citizens of different
states, “applies only to cases in which the citizenship of each
plaintiff is diverse from the citizenship of each defendant.”
Caterpillar Inc. v. Lewis, 519 U.S. 61 (1996).

The plaintiffs are

citizens of West Virginia and defendant Montelone is also a citizen
of West Virginia.

The defendant Medical Plan alleges that it has

its offices in Pittsburgh, Pennsylvania and therefore it is diverse

10

from

the

plaintiffs

and

the

diversity

requirement

is

met.

Regardless of where the defendant Medical Plan is a citizen of,
however, both plaintiffs and defendant Montelone are citizens of
West Virginia.

Thus, the citizenship of each plaintiff is not

diverse from the citizenship of each defendant and the diversity
jurisdiction statute therefore does not apply.
3.

Procedurally defective claim

Although this Court believes that removal was substantively
proper, it finds that a procedural defect exists in the manner of
the defendant Medical Plan’s removal and causes removal to be
improper.

The plaintiffs claim that the removal by the defendant

Medical Plan was defective because the defendants did not comply
with the unanimity rule.

The plaintiffs claim that because

defendant Montelone did not join in the removal nor file a written
consent to the removal, the removal was procedurally defective and
the case should therefore be remanded.

The defendants argue that

the unanimity rules applies when a matter is removed solely under
18 U.S.C. § 1441 and there is no indication in the rule that it
applies to removal based on federal question.

The plaintiffs do

not respond to this contention in their reply.
This Court finds that the defendant Medical Plan’s argument
that § 1446(b)(2)(A) does not apply to federal question cases lacks
merit.

According to 28 U.S.C. § 1446(b)(2)(A), “[w]hen a civil

action is removed solely under section 1441(a), all defendants who

11

have been properly joined and served must join in or consent to the
removal of the action.”2

The statute specifically says that it

applies “solely” to those actions removed under § 1441(a). Section
1441(a) encompasses the removal of both federal question cases and
diversity

actions.

See

28

U.S.C.

§1441(a).

The

statute

specifically states,
Except as otherwise expressly provided by Act of
Congress, any civil action brought in a State court of
which the district courts of the United States have
original jurisdiction, may be removed by the defendant or
the defendants, to the district court of the United
States for the district and division embracing the place
where such action is pending.
28 U.S.C. § 1441(a) (emphasis added).
Further, as the Southern District of West Virginia indicated,
“ERISA claims are not exempt from the requirement of defendant
unanimity in removal.”

Forth’s Foods, Inc. v. Allied Ben Adm’r,

Inc., No. 3:07-0670, 2008 WL 88610 at *3 (S.D. W. Va. Jan. 7, 2008)
(citing Stonewall Jackson Memorial Hosp. v. American United Life
Ins. Co., 963 F. Supp. 55, 557-565 (N.D. W. Va. 1997) (applying the
defendant unanimity rule in a case removed on the basis of ERISA
preemption).

Although the “failure of all defendants to join the

removal petition does not implicate the court’s subject matter

2

According to a notice of appearance filed on behalf of
defendant Montelone (ECF No. 21), defendant Montelone’s counsel
represented that she was served May 19, 2012.
The defendants
Thus, it
removed this case on June 14, 2012.
See ECF No. 1.
appears that defendant Montelone was served at the time of removal
and no party has contested this assertion.
12

jurisdiction, the requirement that all defendants . . . consent
thereto within thirty days, is nevertheless mandatory.”

Wolfe v.

Green, 660 F. Supp. 2d 738, 744 (S.D. W. Va. 2009) (internal
quotations omitted).

Such a lack of consent “is sufficient to

render removal improper and to require remand.” Id. (citing Unicom
Systems, Inc. v. National Louis University, 262 F. Supp. 2d 638,
641 (E.D. Va. 2003)).
The defendant Medical Plan in this case removed based on
federal question jurisdiction. The defendant Medical Plan provided
no indication that defendant Montelone consented in the notice of
removal, nor did the defendant Medical Plan provide an explanation
as to why defendant Montelone’s consent was not required.

Some

narrow exceptions exist to the unanimity rule, however, none of
these exceptions are addressed by the defendants, whose burden it
is of establishing removal is proper.

In re Blackwater Sec.

Consulting, LLC, 460 F.3d 576, 583 (4th Cir. 2006) (“The party
seeking removal bears the burden of demonstrating that removal
jurisdiction is proper.”); see 14 Charles Alan Wright & Arthur R.
Miller, Federal Practice and Procedure § 3730 (4th ed. 2012)
(explaining the exceptions to the unanimity requirement). Based on
the case law and statutes cited to above, it appears to this Court
that the consent of defendant Montelone was required.

Therefore,

this Court finds that the defendant Medical Plan’s removal of the
state action to federal court was procedurally improper, as such

13

consent was not obtained and as a result this Court must remand the
case to the state court.

It is thus, unnecessary to address the

plaintiffs’ argument concerning severing the state law claims from
those preempted by ERISA.

Further, as a result of the improper

removal and the subsequent remand of this case, the Court cannot
decide the defendant Medical Plan’s motion to dismiss, and must
accordingly deny the motion as moot, but without prejudice subject
to refiling in state court, if appropriate to do so.
E.

Award of attorneys’ fees incurred in remanding this case
In addition to a remand, the plaintiffs ask that this Court

award them the attorneys’ fees and costs associated with pursuing
this motion.

With respect to the award of attorneys’ fees and

costs, the Fourth Circuit has found that 28 U.S.C. § 1447(c)
“provides the district court with discretion to award fees when
remanding a case” where it finds such awards appropriate.
Lowe, 102 F.3d 731, 733 n.2 (4th Cir. 1996).

In re

This Court finds that

such fees and costs are inappropriate in this matter because the
defendant Medical Plan asserted at least a colorable claim to
removal jurisdiction in this Court.
found that removal was proper.

Substantively, this Court

This Court would not have remanded

this case but for the fact that it found the defendant Medical
Plan’s removal was procedurally defective. Accordingly, this Court
finds that the plaintiffs’ request for an award of attorneys’ fees
and costs should be denied.

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IV.

Conclusion

For the reasons stated above, the plaintiffs’ motion to remand
(ECF No. 11) is GRANTED.

Accordingly, the defendant Greater

Pennsylvania Carpenters’ Medical Plan’s motion to dismiss (ECF No.
12) is DENIED AS MOOT.

This matter is hereby REMANDED to the

Circuit Court of Brooke County, West Virginia.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein and to the Clerk of
the Circuit Court of Brooke County, West Virginia.

Pursuant to

Federal Rule of Civil Procedure 58, the Clerk is DIRECTED to enter
judgment on this matter.
DATED:

January 28, 2013

/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE

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