Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 99 C 1286--Matthew F. Kennelly, Judge.
Before Manion, Rovner, and Evans, Circuit Judges.
The opinion of the court was delivered by: Manion, Circuit Judge.
In 1993, Richard and Hazel Biondi decided to end their marriage of thirty years. In doing so, the Biondis entered into a divorce decree which required Richard to pay COBRA health insurance premiums on behalf of Hazel for two years. Instead, and without no-tifying his employer of the divorce, Richard allowed Hazel to remain listed under the existing medical plan as his spouse for a period of approximately five years. During that time, Hazel incurred substantial medical expenses. Upon learning of this ruse, the Trustees of the American Federation of Television and Radio Artists ("AFTRA") Health Fund filed suit against Richard Biondi, pursuant to Employee Retirement Income Security Act ("ERISA") and state common law fraud principles, seeking to recover monies paid to Hazel's medical providers after she became ineligible to receive dependent care health insurance benefits. Biondi, in turn, filed a third-party complaint against his former divorce attorneys and their law firms, alleging that their malpractice caused the damages sought in the Trustees' complaint, and contending that they were re-quired to indemnify him for any judgment obtained against him and for the cost of defending the suit. The district court dismissed the Trustees' ERISA claim but entered judgment in their favor on the common law fraud claim. The district court also granted the third-party defendants summary judgment on Biondi's malpractice claim. Biondi filed a timely Rule 59(e) motion to alter or amend the district court's judgment, which the court denied. Biondi appeals the district court's entry of judgment against him on the Trustees' common law fraud claim, the court's decision to grant the third-party defendants' motion for summary judgment on his malpractice claim, and the denial of his Rule 59(e) motion. The Trustees do not appeal the district court's dismissal of their ERISA claim. We affirm.
In 1992, Richard Biondi hired the law firm of O'Brien & Barbahen to represent him in divorce proceedings initiated by his wife, Hazel, in a New Mexico state court. On March 30, 1993, the state court rendered a judgment expressly incorporating a Marital Settlement Agreement ("Settlement Agreement") entered into by the parties. The Settlement Agreement provided that Hazel "would have continued medical insurance coverage through [Biondi's] medical insurance company pursuant to COBRA," and that "[Biondi] shall pay the medical insurance premiums for [Hazel] for a period of twenty-four (24) months after the filing of the Final Decree in this matter." At all times relevant to this lawsuit, Biondi was an AFTRA employee and thus a plan "participant," as defined by 29 U.S.C. § 1002(7), in the AFTRA Health Fund ("Fund"). The Fund is an "employee welfare benefit plan" ("Plan"), as defined in 29 U.S.C. § 1002(3), that provides medical, hospital, and other welfare benefits to employees covered by collective bargaining agreements between employers and AFTRA. The Plan is established and maintained according to the Agreement and Declaration of Trust of the AFTRA Health and Retirement Funds ("Trust Agreement"). Provisions of the Plan are published in the Fund's Summary Plan Description ("Summary Plan") in accordance with 29 U.S.C. § 1022. *fn1
Before their divorce, Hazel was a covered "beneficiary," as defined by 29 U.S.C. § 1002(8), under the Plan. The insurance premiums for that coverage were paid directly by Biondi's employer. After the divorce, Hazel was no longer eligible for dependent care coverage under the terms of the Plan. The Trust Agreement, Plan, and Summary Plan all emphasize that a "lawful" or "legal" spouse is covered by the Plan. The Summary Plan provides that "[i]f you gain or lose a dependent by reason of marriage, divorce, birth, death or otherwise, you must so advise the nearest Fund office promptly. It is particularly important that you contact the Fund office as soon as possible if you marry or divorce." (Emphasis added.) *fn2 Although no longer a dependent, Hazel was eligible for COBRA coverage, see 29 U.S.C. § 1161 et seq. Biondi did not, however, obtain this coverage for her as required by the divorce decree. Biondi also did not advise the Fund of his divorce, as required, until December 1997, when one of his former attorneys, Thomas C. O'Brien, sent a letter to the Fund advising it of the divorce and conveying an offer by Biondi to retroactively pay COBRA conversion premiums for the five-year period that Hazel received dependent care coverage under the Plan. In the letter, O'Brien noted that "[since] the requirement that Mrs. Biondi's coverage after the divorce judgment be pursuant to a COBRA or conversion plan was not brought to Mr. Biondi's attention, he simply left his union benefits in place and treated her as a spouse, believing that this was the proper way to discharge his liabilities under the divorce judgment." (Emphasis added.) Shortly after receiving this correspondence, the Fund terminated Hazel's dependent care coverage under the Plan, fifty-seven months after her divorce from Biondi. During this time period, the Fund made medical payments on Hazel's behalf to the tune of $122,792.86.
On July 17, 1998, the Trustees of the Fund filed a complaint against Biondi and Hazel in the United States District Court for the Southern District of New York, seeking a declaratory judgment for equitable relief under the Employee Retirement Income Security Act ("ERISA"), i.e., 29 U.S.C. § 1132(a)(3)(B)(i), and damages for common law fraud. Specifically, the Trustees sought to recover $122,792.86 paid by the Fund on Hazel's post-divorce medical claims, as well as applicable interest, attorneys' fees, costs of litigation, and $50,000 in punitive damages. The Trustees' complaint alleged that Biondi intentionally failed to notify the Fund of his divorce, and misrepresented to the Fund that he was still married to his ex-wife, in order to cause the Fund to continue to provide Hazel with dependent care coverage and benefits. The Trustees subsequently amended their complaint to dismiss Hazel from the suit.
On February, 2, 1999, the Trustees filed a motion requesting the district court to transfer the action to the United States District Court for the Northern District of Illinois, which the court granted on February 17, 1999. On March 10, 1999, Richard Biondi filed a third-party complaint against Thomas C. O'Brien, Selma D'Souza, O'Brien & Barbahen ("third-party defendants"), *fn3 alleging that they committed legal malpractice in their representation of him during his divorce proceedings. He also sought indemnification from them for any judgment the Trustees might obtain against him, as well as reimbursement of all expenses and attorneys' fees incurred in his defense of the Trustees' claim. Biondi's legal malpractice claim is premised on the attorneys' collective failure to advise him of the Plan's requirements to notify it of the change in his marital status and request COBRA coverage for his ex-wife.
On April 13, 2000, after conducting a bench trial, the district court, relying on Mertens v. Hewitt Assoc., 508 U.S. 248 (1993), dismissed the Trustees' declaratory action for restitution under ERISA, holding that: (1) 29 U.S.C. § 1132(a)(3)(B)(i) only provides plan administrators and fiduciaries with a remedy for equitable, not legal, relief against nonfiduciaries like Biondi; and (2) the Trustees could not obtain equitable relief against Biondi under § 1132(a)(3)(B)(i) because Biondi did not directly receive any of the payments that the Fund made on his exwife's behalf. The district court did, however, rule in the Trustees' favor on their common law fraud claim, rejecting Biondi's argument that ERISA expressly preempted the claim. The court found that on February 21, 1997, Biondi "knowingly made a false statement to the Fund [on a claims form] that Hazel was his wife . . . in order to claim medical benefits on her behalf with knowledge that the Fund would rely on that statement." At trial, Biondi denied that he had filled out the claims form, but the district court concluded that the handwriting on the form was his and that the Fund relied on this misrepresentation in paying the claim. The district court also found that Biondi fraudulently concealed his divorce from the Fund and that he failed to disclose this fact "knowingly and with the intent that the Fund would rely upon the omission, in other words, that it would continue to believe that she was his wife and provide her with medical coverage." The district court reached this conclusion in large part because of his former attorney's December 22, 1997, correspondence, wherein he indicated that Biondi made a conscious decision to "treat [Hazel] as his spouse" for purposes of insurance coverage. The court surmised that this admission demonstrated that "whether or not Mr. Biondi was aware of a specific obligation to tell the Fund of the divorce, he did have some level of knowledge and awareness that this status made some difference." The court also found Biondi's decision not to "put his new wife on the insurance policy" relevant. Finally, the court concluded that Biondi's fraudulent misrepresentation on the February 21, 1997 claims form "provides further confirmation that he acted knowingly in failing to advise the Fund of the divorce even if that statement by itself did not influence all of the claims in this case." The district court delayed entering judgment on the Trustees' fraud claim, however, to give the parties time to enter into a stipulation regarding the measure of the Trustees' damages for Biondi's fraud. *fn4
In light of this ruling, on May 25, 2000, the third-party defendants filed a motion for summary judgment of Biondi's malpractice claim, which the district court granted on August 4, 2000, holding that "[e]ven if Biondi's lawyers were negligent and committed malpractice as he contends, Biondi cannot seek to hold them responsible for the damages he has to pay as a result of his fraud." On August 9, 2000, the district court entered judgment against Biondi and in favor of the Trustees on their common law fraud claim, awarding them $118,006.70, and in favor of the third-party defendants on Biondi's third-party complaint. *fn5 Biondi filed a timely motion to alter or amend the judgment, pursuant to Fed. R. Civ. P. 59(e), which the district court denied. Biondi appeals the district court's judgment and its denial of his Rule 59(e) motion.
On appeal, Biondi argues that the district court's judgment against him on the Trustees' common law fraud claim must be reversed because the claim is expressly preempted by ERISA. A district court's preemption ruling is a question of law that we review de novo. See, e.g., Moran v. Rush Prudential HMO, Inc., 230 F.3d 959, 966 (7th Cir. 2000), aff'd by 122 S.Ct. 2151 (2002). Biondi also contends that the district court erred when it granted the third-party defendants' motion for summary judgment of his legal malpractice claim. We review a district court's decision to grant a motion for summary judgment de novo, construing all facts, and drawing all reasonable inferences from those facts, in favor of Biondi, the nonmoving party. See, e.g., Peele v. Country Mut. Ins. Co., 288 F.3d 319, 326 (7th Cir. 2002). Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a ...