Adobbati v. Guardian Life

• Court: Court of Appeals for the Fifth Circuit
• Decided: April 17, 2000
• Docket: 99-40346
• Status: Unpublished

Opinion

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT ____________________

No. 99-40346 ____________________

RICARDO N. ADOBBATI,

Plaintiff-Appellant, versus

GUARDIAN LIFE INSURANCE COMPANY OF AMERICA; MORELAND, BLACK & MANNING, INC.; DONALD BLACK,

Defendants-Appellees.

_________________________________________________________________

Appeal from the United States District Court for the Southern District of Texas (B-97-CV-178) _________________________________________________________________ April 14, 2000

Before POLITZ, JOLLY, and BARKSDALE, Circuit Judges.

PER CURIAM:*

Primarily at issue is whether the district court, having

dismissed with prejudice Ricardo N. Adobbati’s state law claims as

preempted under the Employee Retirement Income Security Act

(ERISA), 29 U.S.C. §§ 1132(a), 1144(a), should have granted him

leave to amend his complaint to assert an ERISA claim. We AFFIRM

in PART; REVERSE in PART; and REMAND.

I.

In January 1997, Adobbati filed suit in Texas state court

against Guardian Life Insurance, Moreland, Black & Manning, Inc.,

and Donald R. Black (Appellees), claiming breach of contract,

* 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 R. 47.5, the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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. fraud, and other state law violations in connection with a

“vanishing premiums” life insurance policy. Adobbati had purchased

the policy, on Black’s recommendation, in 1988, on behalf of an

ERISA plan in which he and his medical office employees were

participants (ownership of the policy was converted to him when the

plan was terminated). But, the complaint made no reference to the

plan.

In interrogatory responses, served on Appellees on 7 August

1997, Adobbati stated for the first time that the policy was

obtained through the plan. On 18 August, Appellees filed notice of

removal, asserting a federal question under ERISA. Adobbati moved

to remand, claiming removal was untimely and ERISA inapplicable.

In his April 1998 report and recommendation, the magistrate

judge concluded: the removal was timely, because Adobbati’s

discovery responses were the first “other paper” he submitted

indicating his claims were removable; and ERISA preempted his state

law claims. That July, the district court adopted the

recommendation and denied remand.

Pursuant to FED. R. CIV. P. 12(b)(6), Appellees moved, based on

ERISA preemption, to dismiss Adobbati’s claims. In opposition, he

continued to assert ERISA was inapplicable, but, alternatively,

requested leave to replead under ERISA if the court found

preemption:

... [Adobbati] should be given the opportunity to replead pursuant to the federal rules within the doctrine of ERISA as it is clear a claim exists against [Appellees] under same. The dispute to date has not been whether the suit filed presents the

- 2 - availability of a claim but rather what is the applicable law. Although [Adobbati] believes a state cause of action would be proper for his claims, clearly another avenue available to him would be to pursue this claim under ERISA and the applicable statutes.

In December 1998, the magistrate judge recommended dismissal,

but did so without addressing the request to replead under ERISA.

Adobbati’s objections to this recommendation included the

following:

AMENDMENT OF COMPLAINT

16. As previously indicated in [Adobbati’s] Response to [Appellees’] Motion to Dismiss, by admission of [Appellees], there exist ERISA claims in this matter and as such it would be incorrect to dismiss the claims brought by [Adobbati], but rather [Adobbati] should be allowed the opportunity to replead and amend the Complaint to state a cause of action under ERISA.

....

... [Adobbati] hereby requests that this court make a final determination ERISA is not applicable to the case at bar, and that this case be remanded to State Court .... In the alternative, and without waiving the above, that [Adobbati] be provided with the opportunity to amend the complaint pursuant to the case law stated in order to assert those causes of action available to [Adobbati] under ERISA.

In January 1999, the district court granted the motion to

dismiss, summarily adopting the magistrate judge’s recommendation.

It did not address Adobbati’s request/objection concerning

amendment. The action was dismissed with prejudice.

II.

- 3 - Adobbati contends: removal was not timely; ERISA does not

preempt his claims; and he should have been allowed to amend.

A.

The removal issue is based on the contention Appellees had

knowledge of the policy’s relationship to the ERISA plan prior to

the complaint being filed. Having reviewed the remand-denial de

novo, Leffall v. Dallas Ind. Sch. Dist., 28 F.3d 521, 524 (5th Cir.

1994), removal was timely under the “other paper” rule. E.g.,

Chapman v. Powermatic, Inc., 969 F.2d 160, 163-64 (5th Cir. 1992),

cert. denied, 507 U.S. 967 (1993).

B.

The ERISA issue is based on Adobbati’s not seeking to recover

ERISA benefits or enforce ERISA rights. He acknowledges, however,

that the ERISA plan was the original purchaser and beneficiary of

the policy at issue. Based upon our de novo review of the ERISA-

preemption determination, McClelland v. Gronwaldt, 155 F.3d 507,

511 (5th Cir. 1998), and Rule 12(b)(6) dismissal, Beanal v.

Freeport-McMoran, Inc., 197 F.3d 161, 164 (5th Cir. 1999), ERISA

completely preempted Adobbati’s state law claims. See McClelland,

155 F.3d at 512-13.

C.

As noted, in summarily adopting the report and recommendation,

the district court did not address allowing Adobbati to replead

under ERISA, rather than dismissing with prejudice. Denial of a

motion to amend the complaint is reviewed for abuse of discretion.

E.g., Jacobsen v. Osborne, 133 F.3d 315, 318 (5th Cir. 1998).

- 4 - Leave to amend should be freely granted “when justice so requires”.

FED. R. CIV. P. 15(a); Jacobsen, 133 F.3d at 318.

Appellees respond that such dismissal was proper, because

Adobbati failed to move to amend or submit a proposed amended

complaint. They assert also that amendment would be futile,

claiming the ERISA limitations period has run.

Despite the lack of a formal motion, the court should have

allowed Adobbati to amend, in the light of his making that request

in his response to Appellees’ motion to dismiss, and repeating it

in his objections to the report and recommendation regarding that

motion. In short, “justice so requires”.

Because Appellees raised the limitations issue for the first

time in response to Adobbati’s objections to the report, and it was

not considered by the district court, the issue is not before us.

Cf. United States v. Armstrong, 951 F.2d 626, 630 (5th Cir. 1992).

On remand, Adobbati’s amendments will “relate back” to the date of

his original complaint, pursuant to Rule 15(c)(2). See Peña v.

United States, 157 F.3d 984, 987 (5th Cir. 1998). Nevertheless,

Appellees are not precluded from thereafter raising their

limitations defense. Of course, we express no opinion concerning

its merits.

III.

For the foregoing reasons, we AFFIRM in PART; REVERSE in PART;

and REMAND for further proceedings consistent with this opinion.

AFFIRMED IN PART; REVERSED IN PART; AND REMANDED

- 5 -