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Wilson v. O'Brien & Wolf, LLP

United States District Court, D. Minnesota

January 4, 2018

Weston Wilson and David Manderson, as Trustees of the South Central Minnesota Electrical Workers' Family Health Plan, and each of their successors, Plaintiffs,
v.
O'Brien & Wolf, LLP, and Travis R. Schurhammer, Defendants.

          Amanda R. Cefalu and Bryan J. Morbeu, Kutak Rock, for Plaintiffs.

          Daniel J. Heuel, O'Brien & Wolf, LLP, for Defendants.

          MEMORANDUM OPINION AND ORDER

          SUSAN RICHARD NELSON, UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         This matter is before the Court on two motions: Plaintiffs' Motion for Preliminary Injunction and Expedited Discovery [Doc. No. 4] and Defendants' Joint Motion to Dismiss Pursuant to Rule 12(b)(6) (“Motion to Dismiss”) [Doc. No. 22]. For the reasons stated below, the Court grants Defendants' motion in part and denies it in part. The Court finds that the remaining claims are not ripe for judicial determination, and dismisses them without prejudice. The Court denies Plaintiffs' motion as moot.

         II. BACKGROUND

         Plaintiffs Weston Wilson and David Manderson (“Plaintiffs”) are trustees of the South Central Minnesota Electrical Workers' Family Health Plan (“the Plan”), an employee benefit plan administrated under the federal Employee Retirement Income Security Act (“ERISA”). On June 6, 2017, Plaintiffs filed suit against Defendants O'Brien & Wolf, LLP (“O'Brien & Wolf) and Travis R. Schurhammer (“Schurhammer”), seeking injunctive relief under ERISA, 29 U.S.C. § 1132(a)(3), and the Declaratory Judgment Act, 28 U.S.C. § 2201. (Compl. [Doc. No. 1].)

         When evaluating a motion to dismiss under Rule 12(b)(6), the Court assumes the facts in the complaint to be true and construes all reasonable inferences from those facts in the light most favorable to the plaintiff. Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). Thus, the Court recites the facts as alleged in Plaintiffs' Complaint.

         Until September 2015, Schurhammer was a participant in the Plan, and had agreed to the General Plan Provisions, including the Plan's provisions requiring subrogation and reimbursement from the proceeds of any recovery obtained by a participant against a third party. The General Plan Provisions include the following statements:

• In return for receipt of benefits from the Plan, the Eligible Individual agrees that the Plan has first priority subrogation and reimbursement rights . . . .
• The Plan's first priority subrogation and reimbursement rights grant the Plan an equitable lien on the proceeds of any recovery obtained by the Eligible Individual from a Third-Party, whether by settlement, judgment or otherwise. The Plan's recovery operates on every dollar received by the Employee or Beneficiary from a third party. . . . If the Eligible Individual fails to hold the recovery proceeds in trust or in any other way prejudices or adversely impacts the Plan's first priority subrogation and reimbursement rights, the Plan reserves the right to, among other things, pursue all available equitable action and offset future benefits . . . .
• The Plan will not be responsible for any attorney's fees or cost incurred by the Eligible Individual in any legal proceeding or claim for recovery . . . .

(Compl. ¶ 16.) After Schurhammer was injured in a snowmobile accident on February 15, 2014, the Plan paid for his medical and disability benefits, totaling $152, 738.95. (Id. ¶¶ 17, 19.) In order to receive these benefits, Schurhammer signed a “subrogation acknowledgement agreement, ” which restated the Plan provisions for subrogation and reimbursement after recovery from third parties. (See Id. ¶ 18; id, Ex. C [Doc. No. 1-3].)

         Schurhammer hired O'Brien & Wolf to represent him in relation to the snowmobile accident. (Compl. ¶¶ 8, 20.) Plaintiffs allege, upon information and belief, that Schurhammer agreed to pay O'Brien & Wolf one-third of any recovery plus costs. (Id. ¶ 37.) O'Brien & Wolf reached a settlement of Schurhammer's claims, for a total sum of $800, 000. (Id. ΒΆ 20.) Plaintiffs allege, upon information and belief, that Defendants then agreed that Schurhammer would pay O'Brien & Wolf one-third of his net recovery only, that is, one-third of the money that ...


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