Homeport Insurance v. McRae

Background

Homeport Insurance sued Veronica McRae, Daniel Weltin, Philip Weltin, and Weltin, Streb & Weltin in Alameda County Superior Court. Homeport alleged that a settlement reached in October 2022 was invalid because it was obtained by fraud. Under that settlement, Homeport agreed to pay $425,000 to McRae and $30,000 to her attorneys. The settlement resolved McRae’s claim for death benefits under the Longshore and Harbor Workers’ Compensation Act, based on her representation that she was the decedent’s spouse.

Homeport alleged that, after the settlement was approved and McRae received the death benefits, the decedent’s daughter told Homeport that McRae was not married to the decedent when he died. Homeport further alleged that court records showed a 2010 default judgment dissolving McRae’s marriage and that McRae unsuccessfully tried to set aside that judgment in September 2022. Homeport asserted state-law claims for fraud and deceit against McRae, and conversion and unjust enrichment against all defendants. Homeport was also pursuing an administrative challenge to the settlement before the United States Department of Labor’s Office of Administrative Law Judges.

Removal and remand arguments

Daniel Weltin removed the case to federal court in November 2023 with the consent of the other defendants. He argued that the Longshore Act completely preempted Homeport’s state-law claims. Complete preemption is a jurisdictional doctrine that applies when a federal statute is so comprehensive that it replaces a state-law claim and supplies a federal substitute claim.

Homeport moved to remand, meaning it asked the federal court to return the case to state court. The court explained that a federal defense, including ordinary preemption, generally does not create federal-question jurisdiction. It also explained that complete preemption can create federal jurisdiction in limited circumstances.

Court’s ruling

The court held that Weltin had not shown that the Longshore Act had the unusually strong preemptive force required for complete preemption. Weltin cited no federal authority holding that the Longshore Act completely preempts state claims like Homeport’s, and the court was aware of no such authority. The court also noted a circuit decision concluding that the Longshore Act does not create federal jurisdiction over state-law claims under the complete-preemption doctrine.

The court concluded that, in this case, the Longshore Act was only a statutory defense to claims brought in state court and therefore did not make the case removable. Because no other basis for removal was alleged, the court did not address Homeport’s additional arguments for remand or the merits of Weltin’s motion to dismiss.

The court granted Homeport’s motion to remand, directed the Clerk to remand the case to Alameda County Superior Court, and directed the Clerk to close the federal file.