774 F.3d 1117
7th Cir.2014Background
- VA determined Evans was incompetent to manage his benefits and appointed his daughter as federal fiduciary in July 2009.
- The VA terminated the daughter's fiduciary appointment in October 2010 and appointed Greenfield Banking Company as fiduciary.
- Stump, Evans's daughter, had a state-court guardianship and power of attorney; she incurred expenses for Evans in late 2010.
- Plaintiffs alleged the Bank complied with VA directives, breaching fiduciary duties to Evans, and sought a constructive trust.
- Plaintiffs filed suit in Indiana state court; VA sought removal to federal court and then moved to dismiss for lack of jurisdiction.
- District court dismissed with prejudice? actually without prejudice for lack of jurisdiction; Evans died in 2012; estate continued litigation briefly.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court lacked jurisdiction on removal | Evans's estate claims state-law breach and conversion against the Bank. | Claims attack VA fiduciary designation; exclusive review lies with Veterans Court under 38 U.S.C. § 511(a). | Yes; dismissal for lack of jurisdiction affirmed. |
| Whether the claims are barred by exclusive veterans benefits review | Claims do not challenge VA decision-making or benefits adjudication; pure state-law breach. | Claims impermissibly challenge Secretary’s fiduciary designation and supervision; review proper under Veterans’ scheme. | Held barred; exclusively reviewable in Veterans Court/Federal Circuit. |
| Whether exhaustion or status of VA remedies affects jurisdiction | Plaintiffs exhausted or were not challenging the VA’s process. | Remedy lies in VA review channels; state court proceedings are not appropriate. | Held: exhaustion further confirms lack of jurisdiction in district court. |
Key Cases Cited
- Edwards v. United States Dep’t of Justice, 43 F.3d 312 (7th Cir. 1994) (derivative jurisdiction rule for removal)
- Arizona v. Manypenny, 451 U.S. 232 (1981) (state court lacks subject-matter or party jurisdiction; federal removal dependent)
- Freeman v. Shinseki, 24 Vet. App. 404 (Vet. App. Ct. 2011) (review of § 5502 actions reserved for Veterans Court)
- Henderson ex rel. Henderson v. Shinseki, 131 S. Ct. 1197 (2011) (VA adjudicatory process with informality and duty to assist claimants)
- Sugrue v. Derwinski, 26 F.3d 8 (2d Cir. 1994) (courts do not review benefits determinations cloaked in constitutional terms)
- Czerkies v. U.S. Dep’t of Labor, 73 F.3d 1435 (7th Cir. 1996) (limits on jurisdiction over certain federal-claim challenges)
- Bhatt v. Bd. of Immigration Appeals, 328 F.3d 912 (7th Cir. 2003) (jurisdictional dismissal when attempting to evade exclusive review)
- Johnson v. Robison, 415 U.S. 361 (1974) (courts do not review benefits determinations by cloaking as constitutional actions)
- Paige v. Cisneros, 91 F.3d 40 (7th Cir. 1996) (lack of remedy does not create jurisdiction where exclusive review applies)