Wallace v. Cooper
1:18-cv-00768
D.N.M.Mar 14, 2019Background
- Decedent William Wallace retired from Sandia and had named his then-wife Carolyn Cooper as beneficiary of his Sandia retirement plan (SIP); they divorced in 1999 and a QDRO/MSA split the fund, but William did not change the SIP beneficiary form.
- William died in 2016; his sister Tatiana Wallace is personal representative of his estate and named sole beneficiary in his will.
- Tatiana demanded the SIP funds from Sandia; Sandia refused because Carolyn is the named beneficiary; Tatiana then sued Carolyn in New Mexico state court asserting unjust enrichment, constructive trust, conversion, and punitive damages.
- Carolyn removed to federal court, asserting ERISA preemption/complete preemption (29 U.S.C. § 1132) and arguing federal jurisdiction is required to interpret the ERISA plan documents and QDRO.
- Tatiana moved to remand, arguing she is not an ERISA participant or beneficiary and seeks relief under state law to compel payment by Carolyn, not to alter plan administration.
- The district court granted remand for lack of subject-matter jurisdiction but denied Tatiana’s request for attorneys’ fees because removal was not objectively unreasonable given the complaint’s ERISA references.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ERISA §502(a) completely preempts state-law claims so removal is proper | Tatiana is not an ERISA participant or beneficiary; she sues in her individual capacity under state law to recover estate funds | Removal proper because ERISA preempts and §502(a) supplies exclusive federal cause for plan-related claims | Not preempted: Tatiana lacks §502(a) standing (not participant, beneficiary, or alternate payee); complete preemption fails |
| Whether the substantial-federal-issue (embedded federal question) doctrine permits federal jurisdiction | Tatiana concedes Carolyn is the SIP beneficiary; dispute is about Carolyn’s obligation to transfer funds to the estate under state-law instruments | Carolyn says resolution requires interpreting ERISA plan/QDRO and thus raises a disputed, substantial federal issue | Fails: no actually disputed federal issue because both parties agree Carolyn is the named beneficiary; doctrine does not apply |
| Whether conflict (§514) preemption supports removal | Tatiana says she asserts state-law contract/tort remedies; any ERISA conflict is defense, not basis for removal | Carolyn contends plan terms may trump state instruments, implicating ERISA | Conflict preemption insufficient for removal; court lacks subject-matter jurisdiction |
| Whether plaintiff is entitled to attorneys’ fees under 28 U.S.C. §1447(c) | Tatiana requests fees because removal was improper | Carolyn argues removal was reasonable given complaint’s ERISA references | Fees denied: removal was objectively reasonable because complaint invoked ERISA and was ambiguous |
Key Cases Cited
- Metro. Life Ins. Co. v. Taylor, 481 U.S. 58 (Sup. Ct. 1987) (ERISA §502(a) can completely preempt state-law claims)
- Caterpillar, Inc. v. Williams, 482 U.S. 386 (Sup. Ct. 1987) (plaintiff is master of complaint; well-pleaded complaint rule)
- Felix v. Lucent Techs., Inc., 387 F.3d 1146 (10th Cir. 2004) (distinguishes ERISA §514 conflict preemption from §502(a) complete preemption)
- Devon Energy Prod. Co. v. Mosaic Potash Carlsbad, Inc., 693 F.3d 1195 (10th Cir. 2012) (test for substantial federal issue embedded in state claim)
- Hansen v. Harper Excavating, Inc., 641 F.3d 1216 (10th Cir. 2011) (standing requirement defeats complete-preemption removal)
- Martin v. Franklin Capital Corp., 546 U.S. 132 (Sup. Ct. 2005) (attorney-fee standard for remand: objectively reasonable basis for removal)
- Qwest Corp. v. City of Santa Fe, 380 F.3d 1258 (10th Cir. 2004) (plaintiff may avoid federal jurisdiction by relying exclusively on state law)