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Wallace v. Cooper

United States District Court, D. New Mexico

March 14, 2019




         Plaintiff Tatiana Wallace seeks to recover funds held in the retirement account of her deceased brother. After her brother's death, Plaintiff discovered that her brother neglected to change the beneficiary listed on his account after his divorce. Consequently, all the funds are being held in the name of his ex-wife, instead of his sister, the personal representative of his estate and the sole beneficiary in his will.

         Plaintiff filed the present suit in state court to recover the funds. Defendant removed the case to federal court, alleging the existence of subject-matter jurisdiction because federal law preempts Plaintiff's state law claims. Plaintiff now moves to remand the case to state court, arguing that her claims have nothing to do with federal law. The Court agrees that it lacks subject-matter jurisdiction over Plaintiff's state-law claims, and therefore grants the motion to remand to state court. But because the removal was not objectively improper, the Court denies Plaintiff's request for attorney's fees.

         I. Factual Background[1]

         Plaintiff's brother, William O. Wallace, Jr., married Defendant Carolyn Cooper on May 25, 1973. First Amended Complaint (“FAC”), Doc. 1-1 at 11-17, ¶ 5. William was employed by Sandia National Laboratories (“Sandia”) until his retirement on July 9, 2011. Id. ¶ 9. While they were married, William named Carolyn as the beneficiary of his retirement fund, the Sandia Corporation Savings and Income Plan (“SIP” or “the fund”). Id.

         William and Carolyn divorced in 1999. Id. ¶ 6. The divorce was finalized upon the filing and court approval of a Marital Settlement Agreement (“MSA”), a Qualified Domestic Relations Order (“QDRO”)[2] and a Final Decree in the Second Judicial District Court on December 8, 1999. Id. ¶ 7. As part of the divorce, Carolyn agreed to take half of the fund's balance at the time, plus a lump sum. Id. ¶ 8. In exchange, the rest of the fund became William's sole property. Id. ¶¶ 8-9. Carolyn received her share of the fund “sometime after the divorce.” Id. ¶ 9. But, William never changed the beneficiary named in the SIP. Id. ¶ 13.

         William passed away on July 27, 2016. Id. ¶ 10. He appointed his sister, Tatiana Wallace, as his Personal Representative and named her as the sole beneficiary of his estate. Id. As part of her duties as the Personal Representative, Tatiana submitted a final accounting of the assets of the estate in probate court. Id. ¶ 11. In December 2017, she sent Sandia a demand for payment in full of the SIP balance. Id. ¶ 12. Sandia refused, because the named beneficiary is Carolyn. Id. ¶ 13. Tatiana accordingly turned to Carolyn with her demand for payment. Id. ¶ 16. Carolyn promised to “‘think about it.'” Id. ¶ 17. This lawsuit followed.

         II. Procedural History

         Plaintiff filed her complaint in state court on June 4, 2018. Doc. 1-1 at 1. Plaintiff filed a First Amended Complaint on July 29, 2018. Doc. 1-1 at 11. The FAC brings causes of action under state tort law: Unjust Enrichment; Constructive Trust; Conversion of Property; and Punitive Damages. FAC at 3-6. On August 9, 2018, Defendant removed the case to federal court. Doc. 1. In her Notice of Removal, Defendant argued that the administration of the retirement fund is governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. Doc. 1 ¶ 12. Defendant alleged that, because ERISA completely preempts any state-law claim within its scope, removal to federal court is proper. Id. ¶¶ 18-19.

         Plaintiff filed the instant motion to remand on September 21, 2018. Doc. 10. In the motion, she argues that she seeks an order to compel Defendant to pay her, not an order to compel the plan administrator to take any action. Doc. 11 at 2-3. ERISA does not apply, she reasons, because the distribution of funds from a plan administrator is not at stake. Id. at 3. Defendant filed a response in opposition to the motion to remand. Doc. 17. In her response, Defendant alleges that the plan administrator has not distributed the funds to Defendant. Id. at 6. Instead, according to Defendant, the plan administrator placed a hold on the distribution until either: “(1) the parties come to an agreement as to the ERISA beneficiary designations . . . or (2) this Court interprets the ERISA 401K Plan documents, including the QDRO, to determine the appropriate ERISA beneficiaries to the ERISA 401K Plan.” Id. Therefore, according to Defendant, to resolve this suit requires a court to interpret ERISA Plan documents, including the QDRO, pursuant to federal law. Id.

         In reply, Plaintiff reiterates her stipulation that “the administrator of a plan covered by ERISA must distribute the proceeds to the designated beneficiary.” Doc. 18 at 3. “Likewise, the Plaintiff acknowledges that the Defendant is the beneficiary designated in the beneficiary designation form.” Id.

         III. Legal Standard

         An action is removable from state court if the federal district court has original jurisdiction over the matter. 28 U.S.C. § 1441(a). “One category of cases over which the district courts have original jurisdiction are ‘federal question' cases; that is, those cases ‘arising under the Constitution, laws, or treaties of the United States.'” Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987) (quoting 28 U.S.C. § 1331). “It is long settled law that a cause of action arises under federal law only when the plaintiff's well-pleaded complaint raises issues of federal law.” Id. “The ‘well-pleaded complaint rule' is the basic principle marking the boundaries of the federal question jurisdiction of the federal district courts.” Id.

         The well-pleaded complaint rule “makes the plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law.” Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). “By omitting federal claims from a complaint, a plaintiff can guarantee an action will be heard in state court.” Qwest Corp. v. City of Santa Fe, 380 F.3d 1258, 1264 n.1 (10th Cir. 2004). “Under the ‘artful pleading' doctrine, however, a plaintiff may not defeat removal by failing to plead federal questions that are essential elements of the plaintiff's claim.” Turgeau v. Admin. Review Bd., 446 F.3d 1052, 1060 (10th Cir. 2006). “[T]o invoke federal-question jurisdiction, [Defendant] must meet its burden and show that at least one of two recognized exceptions to the well-pleaded complaint rule is applicable-either (1) that [Plaintiff]'s state-law claims are completely preempted, ...

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