Opinion
CIVIL ACTION NO. 3:00-CV-2683-G.
August 29, 2001.
MEMORANDUM ORDER
The defendant Jim Collins ("Collins") brings motions to dismiss the plaintiffs' claims against him for lack of personal jurisdiction and for failure to state a claim on which relief can be granted. For the following reasons, both motions are denied.
I. BACKGROUND
The defendant Benny Tafoya, a participant in the plaintiff IBEW-NECA Southwestern Health and Benefit Fund ("the Plan"), and Glenda Tafoya, his now deceased wife, received benefits provided by the Plan. Plaintiffs' Original Complaint ("Complaint") at 3. It is undisputed that the Plan is a self-funded welfare benefit plan and employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1002(1) and (3) and 1132(d)(1). Id. On July 29, 1996, Glenda Tafoya was injured in an automobile accident ("the Accident"). Id. at 5; see also Memorandum of Points and Authorities in Support of Motion by Jim Collins to Dismiss for Failure to State a Claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure ("Motion to Dismiss for Failure to State a Claim") at 2. The Plan and American Benefit Plan Administrators ("American Benefit"), the plaintiffs, seek an accounting and reimbursement of any funds paid to the employee-participant, Benny Tafoya, or his late wife, Glenda, to the extent that either one of them received any recovery from a third party such as an award, settlement, judgment or other payment regarding the Accident. Complaint at 2, 12-13.
Pursuant to the terms of the Plan, the Tafoyas signed a written Reimbursement Agreement and a written Deferred Reimbursement Agreement on or about March 21, 1997. Id. at 5; see also Complaint, Exhibits A and B. Under the Reimbursement Agreement and Deferred Reimbursement Agreement, the Plan advanced full and immediate payment for all of Mrs. Tafoya's medical bills in exchange for the Tafoyas' agreement to repay to the Plan all sums advanced to cover medical expenses from any judgment and/or settlement received, other than a $30,000 recovery from Farmers Insurance Company, according to the priority of payment contained in the Deferred Reimbursement Agreement. Complaint at 3; see also Complaint, Exhibits A and B. The Plan paid $234,000 to or on behalf of Mrs. Tafoya for covered medical expenses. Id. at 5.
The Reimbursement Agreement assigned to the plaintiffs the right to recover against a third party or insurance company and also provided that the Plan could file the Reimbursement Agreement as a lien with the third person, his agent, the court, or the Plan's attorney. Complaint at 6; see also Complaint, Exhibits A and B. The Deferred Reimbursement Agreement allowed the Tafoyas to defer payment to the Plan until they were able to recover such funds from third parties through settlement, litigation, or other means. Complaint at 6.
The Morris Law Firm ("Morris") and William Frazier ("Frazier") represented the Tafoyas in asserting claims against various parties regarding the Accident. Motion to Dismiss for Failure to State a Claim at 2. Morris retained the law offices of O'Reilly, Collins and Danko to prosecute a different aspect of the case against General Motors and Sears. Id. Benny Tafoya recovered $200,000 from General Motors Corporation in settlement of claims arising out of the Accident that the Tafoyas had against General Motors. The defendant Collins represented the Tafoyas in the lawsuit that asserted those claims. Id; see also Complaint at 7. Collins, Frazier, and/or Morris at one time held funds in trust in the amount of $200,000 as a result of the settlement with General Motors. Complaint at 7; see also Defendant's Motion to Dismiss for Failure to State a Claim at 2.
The Deferred Reimbursement Agreement provides that after Morris's actual out-of-pocket expenses have been paid from the fund, the Plan has priority over any settlement agreement, other than the $30,000 recovery from Farmers Insurance Company, on a dollar for dollar basis proportionately between Morris's legal fees, including gross receipts tax, and the full amount the Plan paid to or on behalf or for the benefit of Mrs. Tafoya. Complaint at 8.
On or before April 6, 2000, the Plan and American Benefit allege, they notified Morris, Frazier, and Collins of their lien on any settlement funds involving the Accident. Complaint at 6. Later, on October 11, 2000, the Plan and American Benefit claim they sent Collins a letter detailing their position and requesting that Collins, in his capacity as constructive trustee of the $200,000 in settlement funds received from General Motors, provide them with a full and detailed accounting of the funds. Id. at 7. Collins has not complied with this request. Id. Collins contends that the settlement funds were dedicated to the success of a trial against the two non-settling co-defendants, Sears and the New Mexico State Highway and Transportation Department, but that there was a defense verdict in that case and the Tafoyas did not recover any damages. Motion to Dismiss for Failure to State a Claim at 2. Collins asserts that the money held in trust from the settlement with General Motors was spent on the trial. He maintains that the Tafoyas never received any of the money and the law firms involved never received any of the money in legal fees. Id.
II. ANALYSIS A. Motion to Dismiss for Lack of Personal Jurisdiction 1. Factual Standard: Prima Facie Case
Collins contends the court lacks personal jurisdiction over him because he does not have the requisite contacts with the forum to substantiate the assertion of personal jurisdiction over him. Memorandum of Points and Authorities in Support of Motion by Defendant Jim Collins to Dismiss Plaintiffs' Original Complaint for Lack of Personal Jurisdiction at 1.When a nonresident defendant moves to dismiss for lack of personal jurisdiction, the plaintiffs bear the burden of establishing the trial court's jurisdiction over the nonresident. Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985); see also Ham v. La Cienega Music Company, 4 F.3d 413, 415 (5th Cir. 1993); D.J. Investments, Inc. v. Metzeler Motorcycle Tire Agent Gregg, Inc., 754 F.2d 542, 545 (5th Cir. 1985) (citations omitted); DeMelo v. Toche Marine, Inc., 711 F.2d 1260, 1270 (5th Cir. 1983) (citation omitted). If the district court chooses to decide the matter without an evidentiary hearing, the plaintiffs may meet their burden by presenting a prima facie case for personal jurisdiction. See Wilson v. Belin, 20 F.3d 644, 648 (5th Cir.) (citing Thompson v. Chrysler Motors Corporation, 755 F.2d 1162, 1165 (5th Cir. 1985)), cert. denied, 513 U.S. 930 (1994).
The court will take the allegations of the complaint as true, except where they are "controverted by opposing affidavits," and the court will resolve all conflicts in the facts in favor of the plaintiffs. Thompson, 755 F.2d at 1165 (citing DeMelo, 711 F.2d at 1270-71). In making its determination, the court may consider "affidavits, interrogatories, depositions, oral testimony, or any combination of . . . recognized [discovery] methods." Id. (citing Washington v. Norton Manufacturing, Inc., 588 F.2d 441, 443 (5th Cir.)[, cert. denied, 442 U.S. 942 (1979)]); Stuart, 772 F.2d at 1192.
2. Legal Standard
The plaintiffs' claims arise under ERISA, 29 U.S.C. § 1002(1) and (3) and 1132(d)(1). ERISA provides for nationwide service of process, stating that "[w]here an action under this subchapter is brought in a district court of the United States, it may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found, and process may be served in any other district where a defendant resides or may be found." 29 U.S.C. § 1132(e)(2).
When a federal court attempts to exercise personal jurisdiction over a defendant in a suit based upon a federal statute providing for nationwide service of process, the relevant inquiry is whether the defendant has minimum contacts with the United States. See Busch v. Buchman, 11 F.3d 1255, 1258 (5th Cir. 1994). This test is satisfied if the defendant is a resident of the United States. See id. Although Busch involved the nationwide service of process provision in § 78aa of the Securities Exchange Act of 1934, the Fifth Circuit held in Bellaire General Hospital v. Blue Cross Blue Shield of Michigan, 97 F.3d 822, 826 (5th Cir. 1996), that 29 U.S.C. § 1132(e)(2), which authorizes nationwide service of process under ERISA, "falls squarely within" the Busch holding. Although the court in Bellaire questioned the rationale behind Busch, Busch remains the law of the circuit, and the Busch standard applies to nationwide service of process under ERISA. See Bellaire, 97 F.3d at 826.
Collins, a resident of the United States, was served pursuant to 29 U.S.C. § 1132(e)(2), which authorizes nationwide service of process. Under the Busch standard, Collins' United States residency eliminates any due process concerns. Further, applying the Busch standard to Collins does not offend traditional notions of fair play and substantial justice. See Busch, 11 F.3d at 1257-58. Thus, this court may exercise personal jurisdiction over Collins. His motion to dismiss for lack of personal jurisdiction is denied.
B. Motion to Dismiss For Failure to State a Claim Upon Which Relief Can be Granted
Federal Rule of Civil Procedure 12(b)(6) authorizes dismissal of a complaint for "failure to state a claim upon which relief can be granted." However, a motion under Rule 12(b)(6) should be granted only if it appears beyond doubt that the plaintiffs could prove no set of facts in support of their claims that would entitle them to relief. See Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Leffall v. Dallas Independent School District, 28 F.3d 521, 524 (5th Cir. 1994); see also Kaiser Aluminum Chemical Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982) (citing WRIGHT MILLER, Federal Practice and Procedure: Civil § 1357 at 598 (1969), for the proposition that "the motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted"), cert. denied, 459 U.S. 1105 (1983). In determining whether dismissal should be granted, the court must accept all well-pleaded facts as true and view them in the light most favorable to the plaintiffs. See Capital Parks, Inc. v. Southeastern Advertising and Sales System, Inc., 30 F.3d 627, 629 (5th Cir. 1994); Norman v. Apache Corporation, 19 F.3d 1017, 1021 (5th Cir. 1994); Chrissy F. by Medley v. Mississippi Department of Public Welfare, 925 F.2d 844, 846 (5th Cir. 1991).
Collins contends that his motion to dismiss for failure to state a cognizable claim should be granted because the Plan and American Benefit base their claim on false assumptions of fact. Motion to Dismiss for Failure to State a Claim at 1. This argument misconstrues the standard of Federal Rule of Civil Procedure 12(b)(6), which requires the court to accept as true all material factual allegations in the complaint. See Kaiser Aluminum Chemical Sales, Inc., 677 F.2d at 1047.
It is undisputed that the Plan is entitled to reimbursement of any sums received by the Tafoyas from third parties after Morris's actual out-of-pocket expenses have been paid on a dollar for dollar basis proportionately between Morris's legal fees and the full amount paid by the Plan to, on behalf of, or for the benefit of Mrs. Tafoya, until all such fees and amounts have been paid in full. Plaintiffs' Response to Defendant's Motion to Dismiss Under FRCP 12(b)(6) ("Response to 12(b)(6) Motion") at 3. Further, Collins admits that the $200,000 in settlement funds from the settlement between the Tafoyas and General Motors were held in trust at one time. Motion to Dismiss for Failure to State a Claim at 2. The Plan and American Benefit have further pleaded that Collins has, or has had, control over these funds and that he received notice of the plaintiffs' lien on the funds. Response to 12(b)(6) Motion at 4. As relief, the Plan and American Benefit seek an accounting and possible reimbursement of those funds. Complaint at 2. Under the standard set by Rule 12(b)(6), the court must accept these allegations as true. Thus, Collins as the movant has not met his burden of showing that there is no set of facts which would entitle the plaintiffs to relief, and his motion to dismiss for failure to state a claim must be denied.
III. CONCLUSION
For the reasons discussed above, Collins' motion to dismiss for lack of personal jurisdiction is DENIED. Collins' motion to dismiss for failure to state a cognizable claim under Federal Rule of Civil Procedure 12(b)(6) is also DENIED.