Pan-American Life Insurance v. Bergeron ( 2003 )

United States Court of Appeals
Fifth Circuit
F I L E D
December 8, 2003
IN THE UNITED STATES COURT OF APPEALS
Charles R. Fulbruge III
Clerk
FOR THE FIFTH CIRCUIT
______________________
No. 03-30500
Summary Calendar
_______________________
PAN-AMERICAN LIFE INSURANCE COMPANY,
Plaintiff-Appellant,
versus
KAREN BERGERON,
Defendant-Appellee.
_________________________________________
Appeal from the United States District Court
for the Western District of Louisiana
(USDC No. CV02-1300-L-O)
________________________________________
Before SMITH, DeMOSS, and STEWART, Circuit Judges.
PER CURIAM:*
Plaintiff-Appellant, Pan-American Life Insurance Company (“PanAm”) appeals the district
court’s grant of Defendant-Appellee, Karen Bergeron’s (“Bergeron”) Federal Rule of Civil Procedure
12(b)(1) (“Rule 12(b)(1)”) motion to dismiss for lack of subject matter jurisdiction and alternative
motion for summary judgment dismissal of PanAm’s action against Bergeron seeking repayment of
$34,935.36 that was paid to Bergeron for medical expenses under an ERISA plan in which PanAm
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be published and is not
precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
alleges it is an assignee.1 PanAm also appeals the district court’s dismissal of its cross motion for
summary judgment in which it sought a court order granting it a constructive trust and restitution
requiring Bergeron to turn over to PanAm the amount of $34,935.36.
DISCUSSION
I. Statement of facts
Bergeron was involved in an automobile accident on or about May 8, 2000 in which she
incurred injuries requiring medical treatment. Her medical bills were paid in accordance with an
ERISA health and welfare plan (the “Plan”) for employees and dependants of Stric-Lan Companies
Corporation. The accident which caused the injuries was the fault of a third party tortfeasor who had
procured insurance through Farm Bureau Insurance Companies (“Farm Bureau”) with policy limits
in the amount of $100,000 per person and $300,000 per accident.
In the latter part of 2001 Farm Bureau forwarded to Bergeron a $100,000 draft, which
represented the policy limit; along with settlement documents, as an offer to settle. Begeron did not
agree upon a settlement and has subsequently rejected the offer and returned the $100,000 draft.
Under the Plan, $39,935.36 of Bergeron’s medical expenses have been paid to date. PanAm
requested that $39,935.36 be paid to it out of the $100,000 that Bergeron received from Farm
Bureau.
II. Jurisdiction
This Court has jurisdiction over this appeal pursuant to 28 U.S.C. § 158(d) and 28 U.S.C. §
1291. In re Topco, Inc., 894 F.2d 727, 734 (5th Cir. 1990).
1
PanAm asserts that it is an assignee of the Plan, and is thus a “fiduciary” with respect to subrogation and
reimbursement of the Plan and entitled to bring an action under 29 U.S.C. § 1132(a)(3). The parties entered a
stipulation as to this point, and the district court accepted the stipulation for purposes of this suit.
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III. Standard of Review
Rule 12(b)(1) - Lack of Subject Matter Jurisdiction
This Court reviews a district court’s dismissal for lack of subject matter jurisdiction pursuant
to Rule 12(b)(1) de novo. Zephyr Aviation, L.L.C. v. Dailey, 247 F.3d 565, 570 (5th Cir. 2001).
In considering a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1),
dismissal is proper when it appears certain that the plaintiffs cannot prove any set of facts in support
of their claim which would entitle them to relief. Saraw Partnership v. United States, 67 F.3d 567,
569 (5th Cir. 1995), quoting Hobbs v. Hawkins, 968 F.2d 471, 475 (5th Cir. 1992). A court may
base its disposition of a motion to dismiss for lack of subject matter jurisdiction on the complaint
alone, the complaint supplemented by undisputed facts evidenced in the record, or the complaint
supplemented by undisputed facts plus the court’s resolution of disputed facts. Ynclan v. Department
of the Air Force, 943 F.2d 1388, 1390 (5th Cir. 1991), citing Williamson v. Tucker, 645 F.2d 404,
413 (5th Cir.), cert. denied, 454 U.S. 897 (1981). The burden of proof on a Rule 12(b)(1) motion
to dismiss is on the party asserting jurisdiction. Ramming v. United States, 281 F.3d 657, 659 (5th
Cir. 1996).
IV. Law and Analysis
As the district court noted, ERISA grants federal courts exclusive jurisdiction of civil actions
under its title brought by a participant, beneficiary, or fiduciary and authorizes a civil action in federal
court by any of these types of parties to (A) enjoin any act or practice which violates...the terms of
the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to
enforce any provisions of the terms of the plan. 29 U.S.C. § 1132(a)(3), (e)(1).
The Supreme Court, in Great-West Life and Annuity Insurance Company v. Knudson, 534
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U.S. 204, 213 (2002), held that a plaintiff has a right to seek, under ERISA, “restitution in equity,
ordinarily in the form of a constructive trust or an equitable lien, where money or property identified
as belonging in good conscience to the plaintiff could be clearly traced to particular funds or property
in the defendant’s possession.” However, the Supreme Court in Knudson also recognized a
distinction between restitution in equity and restitution at law and held that for a restitution action
to lie in equity, the action must not seek to impose personal liability on the defendant, but to restore
to the plaintiff particular funds or property in the defendant’s possession. 534 U.S. at 214.
This Court has required, in suits by fiduciaries seeking reimbursement of amounts paid by an
ERISA plan for medical expenses resulting from third party fault where t he imposition of a
constructive trust over settlement proceeds received from the third party tortfeasor is requested, that
there be specifically identifiable funds in possession of the defendant over which such a trust may be
imposed. Bauhaus v. Copeland, 292 F.3d 439, 445 (5th Cir. 2002).
PanAm asserts that its action here satisfies the requirements of Knudson and Copeland
because Bergeron possesses a $100,000 “negotiable instrument,” the draft from Farm Bureau, and
thus there exist traceable funds sufficient to trigger subject matter jurisdiction and preclude a Rule
12(b)(1) dismissal, and support its cross motion for summary judgment seeking a restitution order.
The district court, in granting Bergeron’s Rule 12(b)(1) motion to dismiss and denying
PanAm’s cross motion, held that there existed no “money or property identified as belonging in good
conscience to [PanAm] which is clearly traceable to particular funds in [Bergeron’s] possession.”
(citing Knudson, 534 U.S. at 213.) The only thing that Bergeron possessed, the district court added,
was an offer to settle, which had not been accepted. The district court, citing this Court’s decision
in Copeland, 292 F.3d at 445, held that it was bound to grant dismissal because our decision in that
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case required actual possession of settlement funds by a defendant in order for a court to exercise
equitable jurisdiction under ERISA. Furthermore, Bergeron argues not only that the $100,000 draft
fails to qualify as a negotiable instrument, but also that because she has rejected Farm Bureau’s
settlement and returned the draft, there never existed traceable funds sufficient to trigger subject
matter jurisdiction.
A “negotiable instrument” is defined in Louisiana as “an unconditional promise or order to
pay a fixed amount of money.” La. R.S. 10:3-104. As both the district court and Begeron correctly
point out, the acceptance by Bergeron of the $100,000 draft was conditioned upon her accepting it
as full settlement of her claims. If she had cashed it or deposited it, she would have been held to have
accepted the settlement offer from Farm Bureau and thus be precluded from bringing any future
actions against the insured tortfeasor for any additional amount of damages she may have incurred
as a result of the accident. Furt hermore, even if the draft was a negotiable instrument and its
possession would have triggered jurisdiction, the undisputed fact that Bergeron has returned it in
rejection of the settlement offer clearly shows that she no longer possesses traceable funds sufficient
to maintain subject matter jurisdiction. Bauhaus, 292 F.3d at 445. This fact is significant because
the Supreme Court in Knudson, clearly restricted a federal court’s jurisdiction in ERISA
reimbursement actions to those in which a plaintiff seeks restitution in equity, and held that where
there existed no identifiable funds that in good conscience belong to the plaintiff and which are
traceable to being in possession of the defendant, a restitution action in such case would be “an action
at law” thus precluding jurisdiction. 534 U.S. at 213-14. Therefore, because Bergeron no longer
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possesses the draft, even if it were negotiable, jurisdiction here no longer exists.2
As the district court noted, PanAm is attempting to impose a trust on funds which had not
been accepted, and in fact have been returned. This would clearly violate the Supreme Court’s
holding in Knudson and our holding in Bauhaus. Furthermore, because Bergeron does not possess
identifiable and traceable funds, t he action here does not qualify as one seeking equitable relief
authorized under 29 U.S.C. § 1132(a)(3). Therefore, the district court was correct to grant
Bergeron’s Rule 12(b)(1) motion to dismiss, and deny PanAm’s cross motion for summary judgment.
Because we conclude that the district court properly granted Bergeron’s Rule 12(b)(1) motion
to dismiss, we need not address whether the district court’s alternative grant of Bergeron’s motion
for summary judgment dismissal was also correct.
CONCLUSION
Because the $100,000 draft sent to Bergeron from Farm Bureau was not a “negotiable
instrument,” but rather an offer to settle, in that its acceptance was conditioned upon releasing the
insured tortfeasor from future liability, and Bergerson rejected the offer and returned the draft, there
existed no traceable funds in Bergeron’s possession which would trigger jurisdiction for PanAm’s
restitution action under ERISA. Therefore, subject matter jurisdiction was lacking, and the decision
of the district court dismissing PanAm’s action pursuant to Rule 12(b)(1), as well as its denial of
2
This conclusion is consistent with the Supreme Court’s Knudson holding which stated in pertinent part:
[W]here the property sought to be recovered or its proceeds have been dissipated
so that no product remains, the plaintiff’s claim is only that of a general creditor,
and the plaintiff cannot enforce a constructive trust of or an equitable lien upon
other property of the defendant. . . . [F]or restitution to lie in equity, the action
generally must seek not to impose personal liability on the defendant, but to
restore to the plaintiff particular funds or property in the defendant’s possession.
(internal citations omitted).
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PanAm’s cross motion for summary judgment, is affirmed.
AFFIRMED.
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