United States District Court, E.D. Virginia, Norfolk Division
PAMELA J. ABADIE FORMERLY PAMELA J. NELSON, Plaintiff,
CCG SYSTEMS, INC. EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST, Defendant
Pamela J. Abadie, formerly known as Pamela J. Nelson,
Plaintiff, Counter Defendant: John Frederick Sawyer, Samuel
Warrenton Meekins, Jr., LEAD ATTORNEYS, Wolcott Rivers Gates
P. C., Virginia Beach, VA USA.
Systems, Inc. Employee Stock Ownership Plan And Trust,
Defendant, Counter Claimant: James Richard Theuer, LEAD
ATTORNEY, James R. Theuer, PLLC, Norfolk, VA USA; Lars Calvin
Golumbic, Natasha Sophia Fedder, PRO HAC VICE, Groom Law
Group, Chartered, Washington, DC USA.
SHOW CAUSE ORDER
BEACH SMITH, Chief United States District Judge.
matter comes before the court on the Notice of Removal filed
by CCG Systems, Inc. Employee Stock Ownership Plan and Trust
(the " Plan" ) on April 17, 2015. ECF No. 1
FACTS AND PROCEDURAL HISTORY
Jo Abadie, formerly Pamela J. Nelson (" Abadie" ),
is the former president and former majority stockholder of
CCG Systems, Inc. (" CCG" ). Exh. A, Notice of
Removal [hereinafter Compl. ] ¶ 1, ECF No.
1-1. CCG was a closely held corporation,
and Abadie rewarded her employees with shares of stock.
Id. ¶ ¶ 4-5. In 2003, the decision was
made to create an employee stock ownership plan ("
ESOP" ), which eventually became the Plan. The Complaint
alleges that Abadie and the other shareholders, who were all
employees of CCG, sold their shares of CCG stock to the Plan
in exchange for promissory notes and cash. Id.
¶ ¶ 8-9. The promissory note (the " Note"
) executed between Abadie and the Plan -- of which Abadie was
the trustee at the time -- was for a total of $2,399,358.00
at a per annum interest rate of 5.0%. Promissory Note, Ex. A.
to Compl. The Note was issued without recourse against the
Plan or its assets, meaning that the lender's only remedy
for a breach of contract is against any collateral pledged.
Id. Abadie has not worked for CCG or held a
fiduciary position with the Plan since February of 2009.
Compl. ¶ 11-
Plan regularly made payments to Abadie on the Note from 2005
through 2012. See Loan Amortization Schedule, Exh. B. to
Compl. However, Abadie claims that in July 2013, the Plan,
through counsel, demanded that she enter into a new
promissory note that would reduce the remaining balance owed
from $1,897,168 to $738,751. Compl. ¶ 13. Abadie alleges
that, in order to compel her to enter into this revised
agreement, the Plan refused to continue to make payments to
her and advised her that her payments were being "
escrowed," although it never identified an escrow agent.
Compl. ¶ ¶ 14-15. The Plan, in the Notice of
Removal, contends that a Department of Labor investigation
revealed " evidence of various violations of the
Employee Retirement Income Security Act (" ERISA" )
by Abadie in the formation of the Plan, which occurred while
Abadie was in the conflicted roles of the Company's CEO,
trustee, and majority shareholder." Notice of Removal
¶ 14. The Plan contends that it contacted Abadie in an
attempt to amend the Note in order to bring it into
compliance with ERISA, an offer which Abadie declined.
Id. ¶ ¶ 16, 18. As a consequence, the Plan
began to place the payments to her in an escrow account.
Id. ¶ 18.
March 13, 2015, Abadie filed a Complaint against the
Defendant in the Circuit Court of the City of Virginia Beach,
seeking a judgment " for the amounts due her pursuant to
the Promissory Note for 2013 and 2014, and any others that
may accrue in the course of this litigation, for the costs
incurred as a result of this action, and for such other and
further relief the Court deems appropriate in this
matter." Compl. at 4.
April 17, 2015, the Plan removed the action to this court
pursuant to 28 U.S.C. § § 1441 and 1446. Although
the Plan acknowledges that " federal jurisdiction is not
expressly presented on the face of the plaintiff's
complaint," it claims that the action may nevertheless
be removed because " it falls within the class of claims
to which the doctrine of 'complete preemption'
applies." Notice of Removal ¶ 25. Specifically, the
Plan argues that " ERISA is one of the particular
subject matter areas in which Congress has completely
preempted groups of ERISA qualified plan-related
claims." Id. ¶ 26. Because the Plan's
claim involves a loan made to an ESOP, which is covered by
ERISA, it maintains that ERISA's comprehensive statutory
scheme " completely preempt[s] and federalize[s]
Abadie's claim that she is entitled to relief based on
[its] alleged breach of the [promissory note]."
Id. ¶ 32.
Abadie has not yet contested this court's jurisdiction
over this matter, " questions concerning subject-matter
jurisdiction may be raised at any time by either party or sua
sponte by this court." Plyler v. Moore, 129
F.3d 728, 731 n.6 (4th Cir. 1997); 28 U.S.C. § 1447
(" If at any time before final judgment it appears that
the district court lacks subject matter jurisdiction, the
case shall be remanded." ). While the Plan asserts that
federal question jurisdiction is satisfied in this case
because Abadie's state law claim is completely preempted
by ERISA, questions remain that need to be addressed before
this court assumes jurisdiction of this case.
a case that is filed in state court may only be removed to
federal court by a defendant, if such a case could have been
filed in federal court originally. 28 U.S.C. § 1441(a)
(" [A]ny civil action brought in a State court of which
the district courts of the United States have original
jurisdiction, may be removed by the defendant." );
Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107
S.Ct. 1542, 95 L.Ed.2d 55 (1987). The burden of demonstrating
such subject matter jurisdiction " resides with the
party seeking removal." Sonoco Prods. Co. v.
Physicians Health Plan, Inc., 338 F.3d 366, 370 (4th
Cir. 2003) (internal citation omitted). Moreover, federal
courts " are obliged to narrowly interpret removal
jurisdiction because the removal of proceedings from state
courts raises significant federalism concerns."
Id. (internal citation omitted). If removal is based
on federal question jurisdiction, the federal question must
ordinarily appear on the face of the state complaint.
Metro. Life Ins. Co., 481 U.S. at 63. Pursuant to
this " well-pleaded complaint rule," a federal
issue that may be raised as a defense, such as federal
preemption, does not suffice to confer subject-matter
jurisdiction on the case. Id. However, when a
federal statutory scheme is so comprehensive that it
encapsulates any related state claims, courts have deemed
such claims to be completely preempted by the federal
statutory scheme. Id. at 63-64 (" Congress may
so completely pre-empt a particular area that any civil
complaint raising this select group of claims is necessarily
federal in character." ). In other words, the state law
claim is recharacterized as an action arising under federal
law. Id. at 64. This " complete
preemption" doctrine has only been extended to certain
comprehensive statutes, one of which is ERISA. Aetna
Health Inc. v. Davila, 542 U.S. 200, 209, 124 S.Ct.
2488, 159 L.Ed.2d 312 (2004) (" Therefore, any state-law
cause of action that duplicates, supplements, or supplants
the ERISA civil enforcement remedy conflicts with the clear
congressional intent to make the ERISA remedy exclusive and
is therefore pre-empted." ).
a state claim may be preempted by ERISA without being
completely preempted, and, therefore, it is not removable to
federal court. Sonoco, 338 F.3d at 371 (" The fact that
a state law claim is 'preempted' by ERISA - i.e.,
that it conflicts with ERISA's exclusive regulation of
employee welfare benefit plans -- does not, however, provide
a basis for removing the claim to federal court." ). In
order for a claim to be completely preempted by ERISA's
comprehensive scheme, and therefore removable, the Court of
Appeals for the Fourth Circuit has recognized three "
essential requirements" :
(1) the plaintiff must have standing under § 502(a) to
pursue its claim; (2) its claim must fall within the scope of
an ERISA provision that it can enforce via § 502(a); and
(3) the claim must not be capable of resolution without an
interpretation of the contract ...