839 F. Supp. 2d 1189
D.N.M.2012Background
- Sawyer filed a state court complaint on May 24, 2010 seeking four counts including breach of contract and insurance bad faith.
- A state court default judgment was entered on May 11, 2011 against USAA Insurance, BCBS Association, and BCBS Kansas City, with damages and treble punitive aspects.
- BCBS New Mexico’s default was vacated in a separate order earlier, leaving other defendants subject to the default judgment.
- The defendants removed the case to federal court in June 2011, arguing proper removal and ERISA preemption as to certain entities.
- Sawyer moved to remand in August 2011, and a federal hearing occurred in February 2012; the court concluded removal was proper and that the default judgments against the non-served defendants were void.
- The court granted United Services’, BCBS Kansas City’s, and BCBS Association’s motions to set aside the default judgments and denied Sawyer’s remand motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was removal proper and is there subject-matter jurisdiction? | Sawyer argues no case or controversy post-judgment; removal is improper. | Defendants removed timely and invoked original jurisdiction; case-or-controversy exists. | Yes; removal proper and subject-matter jurisdiction exists. |
| Are the default judgments void for lack of service? | Sawyer asserts proper service via Superintendent of Insurance. | No proper service under NM service statutes. | Yes; judgments void for lack of service. |
| Was service valid under NM insurer service statutes for United Services, BCBS Kansas City, and BCBS Association? | Superintendent service suffices to notify defendants. | No effective service under NM statutes; improper or incomplete. | Service inadequate; judgments void for each entity. |
| Does the Rooker-Feldman doctrine bar review after removal? | Rooker-Feldman bars federal review of state judgments. | Removal is not an appeal; doctrine inapplicable after proper removal. | Rooker-Feldman does not apply. |
| Should Sawyer’s remand motion be granted or denied? | Lack of case-or-controversy requires remand. | There is a live case-or-controversy and jurisdiction despite post-judgment posture. | Remand denied; court retains jurisdiction. |
Key Cases Cited
- Jenkins v. MTGLQ Investors, 218 F. App'x 719 (10th Cir. 2007) (post-removal setting of default judgement reviewed under Rule 60(b))
- Granny Goose Foods v. Brotherhood of Teamsters, 415 U.S. 436 (1974) (federal courts take state judgments as their own after removal)
- Nieto v. University of New Mexico, 727 F. Supp. 2d 1176 (D.N.M. 2010) (case-or-controversy exists post-removal despite state dismissal)
- In re Savers Federal Savings & Loan Ass’n, 872 F.2d 963 (11th Cir. 1989) (removal after final state judgment allowed; continue case for relief under Rule 60(b))
- Resolution Trust Corp. v. BVS Development, Inc., 42 F.3d 1206 (9th Cir. 1994) (federal court may review/modify state-court orders after removal)
- Philpott v. Resolution Trust Corp., 739 F. Supp. 380 (N.D. Ill. 1990) (recognizes removal after judgment may be proper under certain rules)