Opinion
CASE NO. 1:06CV961.
January 9, 2007
OPINION AND ORDER
This matter comes before the Court upon the Motion (ECF DKT #4) of Defendants to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6) for Failure to State Claims Upon Which Relief Can Be Granted. For the following reasons, the Motion is granted and Plaintiff's Complaint is dismissed with prejudice.
I. BACKGROUND
In Plaintiff's first lawsuit (Case No. 4:04CV1269), General Electric Company and MetLife removed the case on July 6, 2004 from Cuyahoga County Common Pleas Court to this Court on the grounds that her claim was governed by the Employee Retirement Income Security Act of 1974 ("ERISA"). After removal, Defendants moved for summary judgment, relying upon the express terms of the GE Long Term Disability Income Plan ("Plan") and Plaintiff's signed acknowledgment that the Plan could offset benefits payments by amounts Plaintiff received from other sources.
By Memorandum of Opinion and Order dated January 5, 2005, Judge Patricia A. Gaughan entered summary judgment for Defendants. Judge Gaughan specifically found that the Plan was an ERISA-covered welfare benefit plan and, under ERISA, offsets against long-term disability benefits are valid and enforceable.
Plaintiff, proceeding pro se, appealed to the Sixth Circuit Court of Appeals, which affirmed on October 26, 2005, stating:
Here, summary judgment for the Defendants was proper. The plan's provisions must be given plain meaning as they would be understood by a person of average intelligence and experience. Perez v. Aetna Life Ins. Co., 150 F. 3d 550, 556 (6th Cir. 1998). As pointed out by the district court in this case, under the express term of the plan in GE's benefits handbook, disability benefits are offset from long-term disability insurance benefits. Moreover, when she became eligible for LTDI benefits under the plan, Plaintiff signed a document agreeing to the offset. This Court has held that such offsets are valid and enforceable in an ERISA plan. See Lake v. Metro Life Ins. Co., 73 F. 3d 1372 (6th Circuit 1996); Garst v. Wal-Mart Stores, Inc., 30 Fed. Append. 585 (6th Circuit 2002).
Thereafter, Plaintiff's counsel, Howard V. Mishler, entered his appearance and filed a petition for rehearing. The petition was denied on December 14, 2005.
On March 17, 2006, Plaintiff filed a Complaint for Declaratory Judgment in Cuyahoga County Common Pleas Court, with Attorney Mishler as counsel of record. In her prayer for relief, Plaintiff asks the Court to "declare and determine that the state of Ohio governs the interpretation of Long-Term Disability plans funded by insurance pursuant to Ohio Revised Code 3905.42 and that Plaintiff is entitled to be reimburse [sic] for all monies paid to Defendant(s) in excess of twenty percent (20%) of her disability retirement pension and for such other and further relief as may be just and equitable in the premises." This action was removed to Federal Court on April 19, 2006, on the basis of a federal question, i.e., ERISA preempts Plaintiff's attempt to recover benefits (by undoing the offsets) via state law. Defendants have now moved to dismiss on the grounds of ERISA preemption and res judicata.
II. LAW AND ANALYSIS
Standard of Review Motion to DismissA motion to dismiss for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the sufficiency of the complaint, and is designed to determine "whether a cognizable claim has been pleaded in the complaint." Scheid v. Fanny Farmer Candy Shops, Inc., 859 F. 2d 434, 436 (6th Cir. 1988). For purposes of the motion, the court must presume that all factual allegations of the complaint are true and make all reasonable inferences in favor of the nonmoving party. Roth Steel Products v. Sharon Steel Co., 705 F. 2d 134, 155 (6th Cir. 1983). In order for a court to dismiss a complaint for failure to state a claim upon which relief can be granted, it must appear beyond doubt from the complaint that the plaintiff can prove no set of facts entitling him to recovery. Hartford Fire Ins. Co. v. California, 509 U.S. 764 (1993); Conley v. Gibson, 357 U.S. 41, 45-46 (1957); Kottmyer v. Maas, 436 f. 3d 684, 688 (6th Cir. 2006). A court should dismiss, pursuant to Fed.R.Civ.P. 12(b)(6), state law claims that are preempted by ERISA and/or barred by the doctrine of res judicata. See Smith v. Provident Bank, 170 F. 3d 609 (6th Cir. 1999). ERISA Preemption
The United States Supreme Court has described the ERISA preemption provision as "deliberately expansive", Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45-46 (1997), and "intended to displace all state laws that fall within its sphere." Metro. Life Ins. v. Mass., 471 U.S. 724, 739 (1985). In keeping with that determination, the Sixth Circuit has "repeatedly recognized that virtually all state law claims relating to an employee welfare benefit plan are preempted by ERISA." Cromwell v. Equicor-Equitable HCA Corp., 944 F. 2d 1272, 1276 (6th Cir. 1991), cert. dismissed, 505 U.S. 1233 (1992). In analyzing preemption, the court must decide if there is an employee welfare benefit plan and if the state law "relates to" the employee benefit plan in question. See Pilot Life, 481 U.S. at 47. The term, "relates to", should be given a "broad common-sense meaning." Metro. Life, 471 U.S. at 739.
Res Judicata
"The general rule of claim preclusion, or true res judicata, is that a valid and final judgment on a claim precludes a second action on that claim or any part of it. Claim preclusion applies not only to bar the parties from relitigating issues that were actually litigated but also to bar them from relitigating issues that could have been raised in an earlier action." J.Z.G. Resources, Inc. v. Shelby Ins. Co., 84 F. 3d 211, 214 (6th Cir. 1996), citing Comm'r v. Sunnen, 333 U.S. 591, 597 (1948); see also, Godley v. Ameritech Corp. 173 F. 3d 855 (6th Cir. 1999) (applying res judicata in ERISA benefits dispute).
Declaratory Judgment
The Declaratory Judgment Act states that "[i]n a case of actual controversy within its jurisdiction . . . any court of the United States . . . may declare the rights and other legal relations of any interested party seeking such declaration." 28 U.S.C. § 2201. Nevertheless, the Supreme Court has reiterated the discretionary nature of the Act. In Public Affairs Press v. Rickover, 369 U.S. 111, 82 S. Ct. 580, 7 L. Ed. 2d 604 (1962), the highest court opined: "`The Declaratory Judgment Act was an authorization, not a command. It gave the federal courts competence to make a declaration of rights; it did not impose a duty to do so.' Brillhart v. Excess Ins. Co., 316 U.S. 491, 494, 499 [ 62 S.Ct. 1173, 1177-78, 86 L.Ed. 1620 (1942)]." Put another way, the declaratory judgment statute "is an enabling Act, which confers a discretion on the courts rather than an absolute right upon the litigant." Green v. Mansour, 474 U.S. 64 at 72 (1985).
In this Circuit, declaratory judgments are favored when (1) the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and when (2) it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding. Grand Trunk W.R.R. Co. v. Consolidated Rail Corp., 746 F. 2d 323 at 325-326 (6th Cir. 1984). Consequently, if neither of these factors is satisfied, then the court should decline to grant the declaratory relief.
Based upon the settled law outlined above, this Court agrees with Defendants that Plaintiff's Complaint must be dismissed.
Plaintiff's state law claims for declaratory judgment relief, relying upon Ohio insurance statutes are preempted by ERISA. It is undisputed that the GE Plan is an ERISA-covered welfare benefit plan, since Judge Gaughan made that determination in her summary judgment opinion in Plaintiff's first lawsuit. The Sixth Circuit reviewed the summary judgment de novo, and affirmed, stating that the GE Long Term Disability Income Plan was an ERISA-covered welfare benefit plan. Furthermore, the nearly all-encompassing scope of ERISA preemption applies to "virtually all state law claims relating to an employee welfare benefit." Cromwell, 944 F. 2d at 1276. State statutes that affect plan administration and the benefits available under the plan are "connected with" ERISA plans and preempted by ERISA. Kentucky Ass'n of Health Plans, Inc. v. Nichols, 227 F. 3d 352, 363 (6th Cir. 2000).
In addition, if preemption were not an absolute bar, Plaintiff's current claims are foreclosed by the doctrine of res judicata. Her prayer for reimbursement of offset benefits amounts was previously fully adjudicated by Judge Gaughan, whose decision was reviewed de novo, and affirmed by the Sixth Circuit. To the extent that Plaintiff's declaratory judgment Complaint for the application of Ohio insurance regulation to benefit offsets in the Plan has merit, Plaintiff was required to assert it in her first lawsuit. As set forth in Restatement (Second) Judgments § 24 (1982), res judicata extinguishes "all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose."
Finally, entertaining a declaratory judgment action is wholly inappropriate in this instance. Plaintiff is attempting to avail herself of one more avenue to challenge the offsets she was bound to honor by the terms of the ERISA plan, by her own agreement, and by order of the federal court. She is not entitled to a "second bite of the apple" through the declaratory judgment mechanism. Such a judgment would not be useful in clarifying nor settling the legal relations of the parties, which were conclusively settled in her initial lawsuit. Also, no "uncertainty, insecurity, and controversy" remain to be resolved. Although this Court is empowered under the Declaratory Judgment Act to declare the rights of parties properly before it, it is under no obligation to do so in the absence of a real case or controversy.
III. CONCLUSION
Plaintiff's Complaint, seeking a declaration that she is entitled, under state law, to be reimbursed for all monies paid to Defendants as offsets to her disability retirement pension, is totally preempted by ERISA. Such offsets have been held valid and enforceable in an ERISA plan; and Plaintiff agreed to the offsets in writing. Plaintiff's claim is also barred by the doctrine of res judicata, since any cause of action she had against these Defendants could have, and should have, been brought at the time of her first lawsuit. At that time, Plaintiff had the opportunity to fully litigate her claims at the District Court level and before the Sixth Circuit. Finally, Plaintiff's attempt to utilize the remedy of the declaratory judgment is to no avail. This Court declines to accept jurisdiction and declare the rights and obligations of parties where there is no actual controversy. Therefore, Defendants' Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) is granted; and Plaintiff's Complaint is dismissed with prejudice.