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Sawyer v. USAA Insurance
Citations: 839 F. Supp. 2d 1189; 2012 WL 843639; 2012 U.S. Dist. LEXIS 34139Docket: No. CIV 11-0523 JB/CG
Court: District Court, D. New Mexico; March 7, 2012; Federal District Court
The Court evaluated multiple motions concerning default judgments against defendants United Services Automobile Association (USAA), Blue Cross Blue Shield Association (BCBSA), and Blue Cross Blue Shield of Kansas City (BCBSKC). The primary considerations included whether the default judgments should be set aside due to lack of service of process, the existence of meritorious defenses, and the state court's personal jurisdiction over USAA. The Court concluded that the default judgment was void because none of the defendants were properly served. Additionally, the Court determined that the motions to set aside were timely, resulting in the granting of the motions from USAA, BCBSKC, and BCBSA, while denying the plaintiff Constance A. Sawyer's motion to remand. The case involved Sawyer's claims stemming from a motor vehicle accident on June 7, 2007, where she sustained significant injuries and incurred substantial medical expenses, alleging breach of contract, insurance bad faith, violations of the Unfair Insurance Practices Act, and seeking punitive damages. On February 24, 2011, the Clerk of the District Court of the Ninth Judicial District in New Mexico certified that the Complaint was served on USAA Insurance Company through mail to the Superintendent of Insurance. The Clerk also certified service on BCBS Association and BCBS Kansas City. On the same day, Sawyer filed an Application for Entry of Default Judgment, asserting that no Defendant had filed an Answer and that the time for doing so had expired, requesting default against all Defendants based on the Return of Service. A hearing on the Default Judgment Application took place on May 5, 2011, before Judge Drew Douglas Tatum. Sawyer reported that no Defendant had appeared and confirmed that notice of the hearing was sent to the Superintendent of Insurance. Judge Tatum expressed surprise at the absence of appearances from the national companies and indicated he would grant default judgment against all Defendants except Nueterra Healthcare due to uncertainties about service. On May 11, 2011, Judge Tatum issued a default judgment, concluding that service of process was properly executed. The judgment awarded: i) $100,000 against USAA Insurance for breach of contract; ii) $300,000 against USAA Insurance for violations of the Unfair Practices Act; iii) $500,000 against USAA Insurance as punitive damages; iv) $85,625.01 against BCBS Association, BCBS Kansas City, and BCBS New Mexico jointly for breach of contract; v) $256,875.63 against the same entities for violations of the Unfair Practices Act; and vi) $428,126.05 against them as punitive damages. On June 6, 2011, Sawyer filed a motion to vacate and set aside a default judgment against Blue Cross Blue Shield of New Mexico (BCBS New Mexico) and to dismiss her claims without prejudice. She indicated that subsequent to the judgment, she received information showing that BCBS New Mexico is a division of Health Care Service Corporation and confirmed that she was never a member. Health Care Service Corporation claimed it did not receive proper service, asserting "good cause" for vacating the judgment. Judge Tatum granted the motion the same day. On June 14, 2011, the Defendants filed a Notice of Removal, arguing that BCBS Kansas City is an independent licensee of the BCBS Association and that their removal was timely, occurring within thirty days of becoming aware of the litigation, in accordance with 28 U.S.C. § 1446(b). They contended that the one-year removal limitation applies only to diversity cases, and that the default judgment was not final as the Complaint sought costs. BCBS Kansas City claimed it is authorized to transact insurance only in Missouri and Kansas, thus classifying it as an "unauthorized" insurer in New Mexico, necessitating specific service requirements that had not been met. BCBS Association stated that it is incorporated and does not engage in insurance contracts or solicitations. Both BCBS Kansas City and BCBS Association argued that the general rule of unanimity for removal does not apply to defendants that were not served or were dismissed prior to removal. They maintained that BCBS New Mexico did not need to consent to the removal due to its denial of service and Sawyer's voluntary dismissal of claims against it. Additionally, United Services and Nueterra Healthcare, while denying service, stated they consented to removal. Defendants claim federal jurisdiction under the Employee Retirement Income Security Act of 1974 (ERISA), asserting that the Supreme Court has determined ERISA preempts state claims, converting them to federal claims for removal purposes. They argue that the group health plan issued by BCBS Kansas City to Sawyer’s former employer qualifies as an ERISA employee benefit plan. Defendants assert that all of Sawyer’s state law claims against BCBSKC, BCBSA, and Nueterra Healthcare relate to this plan and are thus completely preempted by ERISA’s enforcement scheme. United Services filed a motion to set aside a default judgment, claiming it was never properly served with the lawsuit and therefore did not have a chance to respond before the judgment was entered. United Services clarifies that it is a reciprocal interinsurance exchange and not a legal entity known as "USAA Insurance Company." It contends that the service returns show only that the Complaint was sent to the Superintendent of Insurance and that the Superintendent has acknowledged improper service on both United Services and BCBS of NM. Furthermore, they state that other named defendants are not doing business in New Mexico and could not be served, and that Sawyer failed to produce a Certificate of Acceptance of Service. United Services challenges the Default Judgment, arguing it improperly includes treble damages under New Mexico's Unfair Practices Act, even though such a claim is not present in the complaint, and that awarding both treble and punitive damages violates New Mexico law. They assert that upon removal to federal court, the federal court adopts the state court's previous orders and that the Default Judgment is void due to lack of proper service and personal jurisdiction. United Services cites due process violations, noting that neither USAA Insurance nor United Services received service of process, referencing relevant case law. They seek to set aside the Default Judgment under Federal Rule of Civil Procedure 60(b), claiming mistake and asserting they were not responsible for the Default Judgment's entry, have a valid defense since they allegedly do not insure the plaintiff, and that setting it aside would not prejudice the plaintiff, Sawyer. In opposition, Sawyer contends that United Services is bound by the Default Judgment and argues that their motion is untimely, citing that under New Mexico law, a court maintains jurisdiction for thirty days post-judgment, within which United Services failed to act. She asserts proper service was achieved through the Superintendent of Insurance, which she claims suffices for due process under New Mexico law. Sawyer argues that the defendants had timely notice of the state court action, rendering any defenses they may have stale. She characterizes the removal to federal court as forum shopping. On August 1, 2011, United Services filed a reply supporting its motion to set aside a default judgment, claiming that the Default Judgment against Sawyer is illusory since "USAA Insurance Company" does not exist. United Services argues that even if the entity existed, Sawyer failed to serve it according to New Mexico law, which requires that service is completed only upon actual receipt or refusal, along with proof of compliance with statutory requirements, which Sawyer did not provide. Regarding timeliness, United Services contends that the thirty-day removal period did not commence because the Defendants were never formally served, allowing for a timely removal motion. It cites the Nieto case to support its position that a federal court retains jurisdiction for post-judgment motions despite a state court's final judgment. Additionally, on July 13, 2011, BCBS Kansas City filed a motion stating that Sawyer's policy had expired in 2007 and that they had no record of a COBRA policy. BCBSKC claims it was never served properly as required by New Mexico law, asserting that it has valid defenses to the complaint. In its memorandum, BCBS Kansas City emphasizes that the federal court has the authority to set aside the default judgment due to lack of proper service, which voids the judgment because the service protocol was not followed. They argue that the service requirements are in place to protect against issues with contact information for unauthorized insurers. Furthermore, BCBSKC claims that the Default Judgment should be annulled due to misrepresentations that led to the inclusion of unpleaded and duplicative damages. BCBS Kansas City asserts it has valid defenses against Sawyer's claims, arguing her allegations rely on an unproven right to health care benefits under COBRA, which they claim is absent. They maintain that without evidence of a valid COBRA election, they are not obligated to provide benefits post-termination. Additionally, BCBS Kansas City argues that ERISA preempts Sawyer's claims. In her response to BCBS Kansas City’s motion to set aside a default judgment, Sawyer reiterates arguments related to timeliness, service of process, and meritorious defense, asserting that no misrepresentation occurred and that any potential misrepresentation would not warrant overturning the default judgment. BCBS Kansas City counters that Sawyer did not refute their evidence regarding improper service, which they claim invalidates the default judgment. They also reference the Insurance Code concerning service on unauthorized insurers and assert that the court has subject matter jurisdiction. The BCBS Association, not a party to the agreement with Nueterra, claims it is not subject to service under New Mexico's Insurance Code because it does not conduct insurance transactions in New Mexico. It argues that personal jurisdiction was never established due to a lack of service and operations in the state. Sawyer did not respond to the BCBS Association's motion. In contrast, Sawyer filed a motion to remand the case to the Ninth Judicial District Court, arguing that the court lacks subject-matter jurisdiction as the default judgment is final. Sawyer contends that the Defendants' removal of the case to federal court constitutes an attempt to challenge the state court's ruling on constitutional grounds. She filed a Motion to Remand along with a Memorandum outlining twelve undisputed facts regarding the case's timeline, including her initial Complaint filing, service of process, the Default Judgment entered by Judge Tatum, and the subsequent removal by the Defendants. Sawyer argues that federal courts lack authority to review final state court judgments, asserting that the Default Judgment was final and no jurisdiction exists for the federal court. She cites a precedent indicating that removal is appropriate only if there is an ongoing case or controversy and claims the Defendants acted with undue delay, forfeiting their chance for post-judgment motions in state court. Additionally, Sawyer seeks attorney’s fees under 28 U.S.C. § 1447(c). In response, United Services argues that the court retains subject-matter jurisdiction and challenges Sawyer's factual assertions, labeling them as unsupported and erroneous. They specifically dispute the validity of service of process through the Superintendent of Insurance, claiming it was not properly executed, and contest the assertion that the time limit for filing post-judgment actions or appeals had expired. United Services argues that N.M.S.A.1978, 39-1-1 does not influence the deadlines established in N.M.R.A. 1-060(B), which allows for post-judgment relief. They contend that Sawyer misinterprets the Rooker-Feldman doctrine, which applies to cases where state-court losers seek to challenge state judgments prior to district court proceedings, asserting that appropriate removal does not equate to an appeal. United Services further claims Sawyer has waived arguments related to removal, as her motion to remand was filed over thirty days post-notice of removal. They state that the Court has the authority to consider setting aside the Default Judgment and reference the Nieto v. University of New Mexico case in support. Additionally, United Services maintains that Sawyer is not entitled to attorney's fees. In a response filed by BCBS Kansas City and BCBS Association, BCBS Association clarifies it is not an insurance company, and that the Superintendent of Insurance cannot serve as its agent. BCBS Kansas City argues that proper service was contingent upon Sawyer sending notice and filing an affidavit, which she failed to do. Both BCBS entities assert that Sawyer waived non-jurisdictional arguments due to the timing of her motion and emphasize that New Mexico courts uphold longer time limits in N.M.R.A. 1-060. They also reject the applicability of the Rooker-Feldman doctrine due to the original nature of removal jurisdiction. Sawyer's reply counters that she properly served the Defendants' agent, asserting that this establishes the Court's jurisdiction and necessitates remand. During a February 9, 2012 hearing, the Court inquired how United Services became aware of the Default Judgment, to which United Services responded that it was notified by a Blue Cross Blue Shield entity. They argued the Default Judgment was erroneous due to Sawyer's failure to name the correct corporate entity and improper service. United Services expressed comfort in removing the case and voiding the Default Judgment, even in more egregious scenarios where they only learned of the case years later. They cited 28 U.S.C. § 1446, indicating that the removal period begins with proper service, supported by Jenkins v. MTGLQ Investors from the Tenth Circuit. United Services argued for the application of Rule 60(b)(4) to set aside the judgment as void, given that USAA Insurance does not exist, asserting that a void judgment must be annulled. They indicated that they would similarly contest a summons issued under an incorrect name, though they acknowledged it would be a closer issue. When questioned by the Court about their concern over the Default Judgment against a non-entity, United Services stated their desire for a definitive ruling declaring the judgment void, preventing any enforcement against them. They referenced the Franchini Letter to claim that it confirmed inadequate service, noting that the Superintendent of Insurance received process documents but did not serve either USAA Insurance or United Services. United Services further argued for setting aside the Default Judgment due to mistake, inadvertence, surprise, or excusable neglect, asserting they did not cause the default, had valid defenses since the judgment was against a different entity, and that setting it aside would not prejudice Sawyer, who was not entitled to the judgment. BCBS Kansas City and BCBS Association provided affidavits asserting they were not served and referenced the Franchini Letter to support their claim that the Superintendent of Insurance did not forward the Complaint. They contended that Sawyer's evidence, a certified mail receipt, only proved service to the Superintendent, not to them. BCBS Association emphasized its non-insurance status, arguing that the Superintendent was not its agent and that no statute allowed for substituted service in their case, clarifying their lack of corporate ties to other Blue Cross Blue Shield entities. BCBS Kansas City acknowledged past insurance involvement with Sawyer’s employer but stated its unauthorized insurer status under New Mexico law. Section 59A-15-7 outlines the procedure for serving unauthorized insurers, which requires service on both the Superintendent of Insurance and direct service to the unauthorized insurer. The defendants, BCBS Association and BCBS Kansas City, argued that the Default Judgment is void due to improper service, asserting that the state court lacked personal jurisdiction over them without proper service. They claimed that if the motions were in state court, the court could set aside the default judgment upon finding that service was never properly executed and maintained that a live controversy exists to support the Court's subject-matter jurisdiction. Sawyer contended that the court would not be acting in an appellate capacity if the case had been removed within thirty days of service, citing New Mexico statutes regarding post-judgment motions. Sawyer acknowledged that the thirty-day rule would not affect motions under rule 60(b)(4) but would apply to those under rule 60(b)(6), specifically regarding the misnaming of USAA Insurance instead of United Services. She argued that United Services should be treated differently from other defendants, asserting it had sufficient notice of being the real party in interest. The Court inquired about the implications of a judgment against a non-existent entity, to which Sawyer responded that without an existing entity, enforcement of the Default Judgment would be impossible. She maintained that United Services, known as USAA, would have been notified had the Superintendent of Insurance properly forwarded the summons and complaint. The Court questioned the appropriate ruling on the motions if Sawyer complied with the service statutes but the Superintendent failed to forward the service, to which Sawyer attributed the blame to the Superintendent but insisted that the Court must decide whether the Superintendent acted as the defendants' agent for service purposes. She noted that New Mexico's Supreme Court has not specifically addressed service of process on authorized versus unauthorized insurers, but has ruled on agent service in corporate contexts. In 1935, the Supreme Court of New Mexico ruled in Silva v. Crombie Co. that serving the Secretary of State was adequate for process when a corporation's agent left the state, and the Secretary's failure to forward the process does not implicate the plaintiff. Collins indicated that the court established that actual notice is not a due process requirement, as long as service is reasonably calculated to notify the defendants. Collins argued that service on the Superintendent of Insurance provided adequate notice to United Services, BCBS Association, and BCBS Kansas City, and requested remand to state court while denying the defendants' motions. In reference to Nieto v. University of New Mexico, she noted that without an appealable issue, there is no case for the court. However, she conceded that if BCBS Association and BCBS Kansas City had not removed the case, the defendants could have pursued motions under rule 60(b) or 55(c) in state court. The court questioned United Services' standing to contest the Default Judgment, to which United Services responded that Sawyer's intention to enforce the judgment against it established standing. United Services argued that New Mexico statutes do not repeal earlier provisions regarding service and that rule 1-060 supersedes those provisions, referencing AC. v. C.B. and Classen v. Classen to support its position. They acknowledged that while New Mexico could allow service on the Superintendent to satisfy due process, it has not done so in this case, asserting that service is only complete when the insurer receives or declines service. United Services also maintained that the court lacked appellate jurisdiction under the Rooker-Feldman doctrine but claimed original jurisdiction due to the case's removal. United Services argued that the failure to meet statutory service requirements invalidated the Default Judgment, even if due process standards were allegedly met. BCBS Kansas City maintained that serving only the Superintendent of Insurance did not fulfill due process, as it was not adequately calculated to inform the defendant of the service. BCBS Kansas City and BCBS Association claimed that Sawyer did not counter their assertions of being unauthorized insurers, with BCBS Association specifically stating it is not an insurer. They noted that the issue lay with Sawyer for not complying with the unauthorized insurer statute by failing to send service of process directly to them. Regarding removal procedures, a defendant may remove civil actions from state courts to federal courts if the latter have original jurisdiction, following the requirements outlined in 28 U.S.C. 1441(a). The right to remove is statutory, and defendants must adhere strictly to these requirements, as established in case law. Removal statutes are interpreted narrowly, with ambiguities favoring remand. The notice of removal must be filed within thirty days of receiving the initial pleading or service of summons, whichever is shorter, as stated in 28 U.S.C. 1446(b). This filing requirement is mandatory but not jurisdictional. There is a legal split on whether the thirty-day period begins with the first or last served defendant, with many in the District of New Mexico supporting the “first-served rule.” However, the Court has concluded that a more modern interpretation may apply. The "last-served" rule aligns with the language of the removal statute, allowing each defendant to initiate removal or join a petition upon receiving formal service of process. The Court adheres to this rule. If a defendant removes a case to federal court, the plaintiff can contest this by filing a motion to remand, as governed by 28 U.S.C. § 1447. Grounds for remand include lack of subject-matter jurisdiction or defects in the removal procedure; such defects may include improper notice or failure to comply with procedural requirements outlined in 28 U.S.C. § 1446(b). Motions based on procedural defects must be filed within 30 days of the notice of removal. There is debate regarding a defendant's ability to remove a case to federal court after a state court has issued a judgment but before the removal period has expired. This scenario is rare; however, it is concluded that removal is permissible after a state-court judgment under certain conditions, and a federal court may annul the state judgment under Rule 60(b) of the Federal Rules of Civil Procedure. The removal statutes necessitate an existing civil action, original jurisdiction in federal court, and timely notice of removal, without specifying a required stage for removal. Article III of the Constitution restricts federal judicial power to specific cases and controversies, requiring plaintiffs to demonstrate standing (evidence of a concrete injury), that their claims are not moot, and that they are ripe for adjudication. An invasion of a legally protected interest must be concrete, particularized, and either actual or imminent, rather than hypothetical. There must be a traceable causal connection between the injury and the defendant's conduct, and it should be likely that a favorable decision will remedy the injury, as established in D.L.S. v. Utah and Morgan v. McCotter. Claims can become moot if the issues presented are no longer "live" or if the parties lack a legally cognizable interest in the outcome. A claim may also be deemed moot if there is no reasonable expectation of recurrence of the alleged violation, or if interim relief has completely eradicated its effects, as illustrated in County of L.A. v. Davis. The burden of proving mootness is substantial. The ripeness doctrine assesses whether the asserted harm is sufficient to warrant judicial intervention, requiring evaluation of the fitness of the issues for review and potential hardship from withholding consideration. The fitness inquiry examines the likelihood of uncertain future events, while the hardship inquiry considers whether the action creates immediate dilemmas for the parties. In cases removed post-state court judgment, some federal courts have ruled that jurisdiction is lost and the case must be remanded. However, Nieto v. University of New Mexico challenged this view, asserting that both parties maintain a cognizable interest in the outcome even after dismissal at the trial level, especially concerning potential post-trial motions or appeals. The court emphasized that a federal district court retains jurisdiction for ruling on post-judgment motions, and a state-court judgment does not extinguish the case-or-controversy as long as non-extraordinary appellate remedies remain available. The case-or-controversy requirement applies across all courts, including the Supreme Court, which retains the authority to review cases even after state appellate remedies have been exhausted. Federal jurisdiction persists as long as there are unresolved issues eligible for judicial review, establishing a case or controversy. The court can review and potentially overturn state-court judgments if treated as its own. This principle is supported by various federal court cases, including the Tenth Circuit's decision in Jenkins v. MTGLQ Investors, where it upheld that a case or controversy exists even after a state-court default judgment, allowing for timely removal and subsequent district court review of the default judgment. In In re Savers Federal Savings and Loan Association, the Eleventh Circuit addressed whether a case can be removed to federal court after a final state-court judgment but before the appeal period expires. The court found that such removals are permissible and the interpretation of “action” should not be limited to pre-judgment scenarios, as supported by precedents from other circuits regarding default judgments. The Eleventh Circuit ultimately concluded that a federal action exists for appeal even post-judgment, reinforcing the case-or-controversy requirement. The Ninth Circuit considered the existence of a case or controversy under Article III in a pending appeal from state court after the Resolution Trust Corporation removed the case to federal court. The federal district court denied motions to remand and adopted the state court's final judgment. GT Water Products, Inc. contended that federal jurisdiction is limited to actual cases or controversies, arguing that entering a state judgment as its own violated this principle. The Ninth Circuit rejected this argument, clarifying that Article III pertains to the overall scope of federal jurisdiction and does not impose specific procedural requirements on how federal courts must handle removed cases. The court emphasized that as long as a legal dispute exists between the parties, a case or controversy is present, regardless of the procedural novelty of the district court's actions. In a related case, the Fifth Circuit addressed a similar issue where the FDIC removed a case to federal court while an appeal was pending in state court. Despite Kahlil's appeal, the Fifth Circuit determined that the district court retained jurisdiction until it issued a final judgment, and thus the appellate court lacked jurisdiction in the absence of such a judgment. This case underscores the principle that federal courts can assert jurisdiction over removed cases even when state court proceedings are ongoing, as long as there is an existing legal dispute. The Fifth Circuit clarified the procedure a district court must follow when a case dismissed in state court is removed. The court should adopt the state court's judgment as its own, adhering to the standards set in Granny Goose Foods. Jurisdiction was affirmed despite not addressing the case-or-controversy issue. In precedents such as FDIC v. Yancey Camp Development and Murray v. Ford Motor Co., the Fifth Circuit upheld jurisdiction even after state court judgments were entered, allowing for potential vacating under Federal Rule of Civil Procedure 60(b). Similarly, the Sixth Circuit in Munsey v. Testworth Laboratories acknowledged the ability to remove cases post-default judgment, confirming the federal court's jurisdiction as it treated the state court's actions as its own. Importantly, while the federal court must take the case as if all prior state court actions had occurred in federal court, it is not bound by the same time limitations for setting aside judgments that apply in state courts. The Sixth Circuit upheld the district court's decision to vacate the default judgment against Testworth issued by a Tennessee trial court. Various U.S. District Courts have acknowledged the appropriateness of removing cases to federal court after a state court's dismissal, citing examples such as Yash Technologies and Virginia Stockton cases. Although the state court's default judgment was valid initially, the federal court will treat it as if it issued the judgment and will apply Federal Rules of Civil Procedure 55(c) and 60(b) to evaluate the motion to vacate. The reasoning from multiple circuits supports this approach, despite the Northern District of Illinois's previous stance that a closed case could not be removed due to lack of jurisdiction. However, it recognized that many cases permit removal after a default judgment, indicating a case or controversy exists. The Northern District addressed the issue of post-default removals without adequately engaging with the Eleventh Circuit’s rationale allowing such actions. When a case is removed, the federal court assumes the case in its existing state and recognizes previously entered state court orders, as confirmed by the Supreme Court in Granny Goose Foods, which emphasized the preservation of state court orders post-removal. State court orders retain their "full force and effect" after a case is removed to federal court, but their applicability is governed by federal law thereafter. Federal law dictates that proceedings will follow the Federal Rules of Civil Procedure, as established in various cases, including Wallace v. Microsoft Corp., where the Tenth Circuit confirmed that a removed case proceeds as if originally filed in federal court. The federal court has the authority to set aside state court judgments using rules like Fed. R. Civ. P. 55(c) and 60(b), which provide for relief from judgments due to mistakes or excusable neglect. The Fifth Circuit in Azzopardi v. Ocean Drilling echoed this principle, asserting that state actions become subject to federal procedures upon removal. If a final judgment was issued in state court, federal courts typically adopt that judgment as their own. This approach is supported by cases such as Resolution Trust Corp. v. BVS Dev. Inc. and FDIC v. Kahlil Zoom-In Markets, which affirm that federal courts treat state judgments as valid post-removal. Additionally, the federal court must regard any judgments entered before the state court was notified of removal as if issued by the federal court itself. The Rooker-Feldman doctrine establishes that federal district courts lack jurisdiction to act as appellate courts for state courts. Specifically, it bars federal jurisdiction in cases where a "state-court loser" seeks to contest a state-court judgment that was made prior to the federal proceedings. The key elements of this doctrine include: 1) the party must be a state-court loser; 2) they must seek review from a federal district court; 3) the federal court review must concern a state court judgment; and 4) that judgment must predate the federal court proceedings. The doctrine is applicable only after state court appeals are fully resolved. The Tenth Circuit has reiterated that the Rooker-Feldman doctrine does not apply to cases where the state court process is ongoing. In Jenkins v. MTGLQ Investors, the Tenth Circuit clarified that proper removal of a case from state to federal court does not equate to an appeal of state court decisions. Furthermore, in Sheriff v. Accelerated Receivables Solutions, the Tenth Circuit ruled that a default judgment was not "final" due to the absence of a Rule 60(b) motion, which meant the appeal period had not commenced before the federal suit was filed. Thus, the Rooker-Feldman doctrine does not apply to scenarios where there is no direct challenge to a final state-court judgment. In **Edwards v. Bank of New York**, the Tenth Circuit ruled that the Rooker-Feldman doctrine applied when a plaintiff sought federal court relief after appealing a state court's default judgment to the New Mexico Supreme Court. The court affirmed that it lacked subject-matter jurisdiction because the plaintiff was effectively seeking review of a final state court decision. Regarding **Rule 60(b)** of the Federal Rules of Civil Procedure, a court can set aside a default judgment for specific reasons, including mistake, newly discovered evidence, fraud, or if the judgment is void. The analogous New Mexico state rule, **N.M.R.A. 1-060(B)**, mirrors this framework and allows for relief from a final judgment under similar circumstances. Motions under this rule must be filed within a reasonable time, and certain reasons must be asserted within one year of the judgment. **Mora v. Hunick** illustrates that a court has discretion to reopen matters and provide relief from a judgment for good cause. The case involved a complaint dismissed twice for lack of prosecution but was ultimately reinstated, affirming the court's jurisdiction to hear it. New Mexico law mandates that district courts retain control over final judgments for 30 days post-entry, allowing time to address any motions filed within that period. This retention does not alter previous statutory provisions. The Court of Appeals of New Mexico has established that a Rule 1-060(B) motion can be filed without the district court's jurisdiction granted under Section 39-1-1 and can be submitted after the time limits under Section 39-1-1 have expired; hence, these time limits do not apply to Rule 1-060(B) motions. In Archuleta v. N.M. State Police, it was noted that Section 39-1-1 does not prevent the district court from addressing timely motions under Rule 60(B). Additionally, in Gordon v. Gordon, it was ruled that once the time limits of Section 39-1-1 have lapsed, Rule 1-060(B) is the only means for the district court to modify a decree. Regarding federal law, Rule 60(b) allows courts to relieve parties from final judgments due to mistakes, void judgments, or other justifiable reasons, but it is not a substitute for an appeal and must be balanced with the finality of judgments. Requests based on mistake or excusable neglect must be made within a year of the judgment, and the pendency of an appeal does not delay this requirement. The Tenth Circuit employs three factors in assessing whether to set aside a judgment under Rule 60(b)(1): the culpability of the moving party, the presence of a meritorious defense, and potential prejudice to the nonmoving party. Relief for judgments deemed void must also be sought within a reasonable timeframe, and such relief is mandatory if the court lacks personal jurisdiction due to improper service. The district court lacked personal jurisdiction due to insufficient compliance with Oklahoma service laws, leading to an error in denying the defendants' motion to set aside the default judgment under Fed. R. Civ. P. 60(b)(4). New Mexico law emphasizes that a court cannot issue a judgment without proper service. Rule 60(b)(6) allows for relief from a final judgment for any justifiable reason without a strict time limit, provided the motion is made within a reasonable timeframe. However, relief under this rule requires demonstrating "extraordinary circumstances." The Supreme Court has clarified that if a party is partly responsible for the delay, they must seek relief within one year under sections (1) to (3) of Rule 60(b). The analysis states that since the defendants removed the case while post-judgment motions were still viable, the court retains subject-matter jurisdiction. Consequently, the default judgment against United Services, BCBS Kansas City, and BCBS Association is void due to improper service, and the motion to remand is denied. Sawyer argued against the motions to set aside the Default Judgment, claiming that no case or controversy existed due to the elapsed time in which the defendant could have filed a post-judgment motion or appeal. She contended that the Default Judgment was final and that the court lacked jurisdiction because no appeal was possible. Referencing Nieto v. University of New Mexico, Sawyer noted that jurisdiction was maintained as long as there was time for reconsideration or appellate review. She further asserted that federal district courts do not have the authority to review final judgments from state courts, with such review only permissible by the U.S. Supreme Court, citing relevant case law. Sawyer emphasized that the court in Nieto held that a state-court dismissal does not extinguish a case or controversy if ordinary appellate remedies are available. New Mexico law allows thirty days to appeal, and since the Default Judgment was entered on May 11, 2011, the appeal period ended on June 10, 2011. The defendants filed a Notice of Appeal on June 14, 2011, after their appellate rights had lapsed. However, the state district court retained jurisdiction to consider a motion for reconsideration under Rule 1-060, which was still timely. Therefore, since the state court could potentially reconsider its judgment, the Default Judgment did not terminate the case or controversy, justifying the defendants' removal of the case. In Nieto v. University of New Mexico, the court established that a case remains active if parties are considering post-trial motions, fee requests, or appeals. This principle applies to the current matter, which aligns with both legal standards and common sense regarding case and controversy. Federal courts, including the Tenth Circuit, have affirmed that a district court can reconsider or set aside a state default judgment upon removal to federal court. In Jenkins v. MTGLQ Investors, the Tenth Circuit upheld a district court's decision to vacate a default judgment months after it was issued in state court, emphasizing the appropriateness of removal based on diversity of citizenship. The court noted that other jurisdictions have implicitly supported removal even after a default judgment. Similarly, in Price v. Wyeth Holdings Corp., the Seventh Circuit affirmed a decision to set aside a default judgment four years post-judgment, despite the appeal period having expired, under Rule 60(b). The District Court for South Carolina in Aiken v. Waffle House, Inc. also found that removal was proper, as the state court retained authority to modify or vacate the judgment at the time of removal. The court rejected the argument that no case or controversy existed simply because the appeal period had lapsed, asserting that post-judgment motions could still be filed. The court reiterated that as long as parties are contemplating such motions, the case remains active. Furthermore, the Rooker-Feldman doctrine, which restricts federal jurisdiction over cases challenging state court judgments, does not apply here. A state court judgment is considered final when certain conditions are met. An effective determination of litigation must be a final judgment, not an interlocutory one, and is not subject to further review in state courts. Proper removal of a case does not equate to an appeal but rather continues the original proceedings. The Eleventh Circuit has ruled that the Rooker-Feldman doctrine is inapplicable when a defendant invokes original jurisdiction in federal court, allowing federal courts to modify prior state court proceedings. In this case, Defendants removed a case after a default judgment in state court. Sawyer argues for remand, claiming federal courts cannot review final state judgments. However, the Defendants cite original jurisdiction under 28 U.S.C. § 1331 and assert they are not appealing a final judgment but seeking to set aside the default judgment. As post-judgment motions can still be filed, the Rooker-Feldman doctrine does not apply, and the state court judgment remains subject to reconsideration. Sawyer has waived challenges to removal except for those regarding subject-matter jurisdiction, which he does not successfully assert. Consequently, the court denies Sawyer's motion to remand, finding a valid case or controversy and that Rooker-Feldman does not bar federal consideration. Additionally, the court grants the motions to set aside the default judgment on the grounds that United Services, BCBS Kansas City, and BCBS Association were not properly served, lacking notice or receipt of the summons and complaint. Sawyer claims that she properly served the Defendants by serving the Superintendent of Insurance, referencing several legal documents and responses. United Services contends that service was inadequate, as it is an authorized insurer under New Mexico law, specifically N.M.S.A. 1978. 59A-5-32, which requires service to be made by delivering two copies of the process to the Superintendent. The statute mandates that service is deemed complete upon the insurer's receipt of the process. The Superintendent acknowledged that he did not forward the service to United Services and lacked a record of receiving the summons and complaint. United Services also confirmed it had not received the documents, relying on a certified mail receipt showing that a Paul Lucero signed for the service at the Superintendent’s office. United Services argues that under the statute’s wording, it cannot be considered served without actual receipt of the summons and complaint. Sawyer, however, cites a precedent from the Supreme Court of New Mexico, asserting that service on a corporate agent suffices even if the agent fails to forward it and the corporation receives no notice. She argues that the negligence of the Superintendent should not be attributed to her. The court has yet to analyze the specific statute governing service of process against authorized insurers. If no corporate agent is available, a plaintiff in New Mexico may serve the Secretary of State, which is equivalent to serving an officer, director, or registered agent of the corporation. The statute N.M.S.A. 1978, § 38-1-5(A) reflects this, while contrasting with N.M.S.A. 1978, § 59A-5-32(B), which states that service is complete upon receipt. This difference indicates legislative intent for distinct standards of service between corporate and insurance contexts. In *Silva v. Crombie Co.*, the New Mexico Supreme Court affirmed that service on the Secretary of State is effective as if made on the corporate agent, even if the service is not forwarded. However, the court noted that if the legislature intended service to be effective only upon notification to the corporation, it would have specified that. The court emphasized that the legislature's language was deliberate and meaningful. Consequently, according to § 59A-5-32, service is complete upon receipt. There is no evidence that United Services received service of process, as confirmed by the Superintendent of Insurance. Since United Services did not receive service, process was never completed, leading to a question about the validity of the Default Judgment. A default judgment is void if there is no personal jurisdiction over the defendant. Service of process is necessary for a court to assert jurisdiction over a party, and New Mexico courts uphold that jurisdiction cannot be established without proper service. Therefore, a New Mexico court cannot enforce a judgment against a party that has not been properly served. United Services was not properly served prior to the entry of the Default Judgment, rendering the judgment void. The United Services Motion to set aside the judgment was timely, filed approximately 60 days after the Default Judgment and 29 days following the Notice of Removal, demonstrating prompt action upon learning of both events. Consequently, the Court will grant the United Services Motion and vacate the Default Judgment as it relates to them. Additionally, BCBS Kansas City was improperly served, as it is classified as an unauthorized insurer under N.M.S.A. 1978. § 59A-15-7, which outlines specific service requirements. Proper service involves delivering two copies of the process to the superintendent and paying the prescribed fee. The superintendent must then forward one copy to the insurer's principal address via certified mail. Compliance also requires the plaintiff to send a notice and copy of the court process within ten days of service, along with proof of receipt and an affidavit filed with the court. Moreover, no default judgment can be entered until 45 days after filing the affidavit of compliance. The New Mexico courts have yet to interpret this statute. The superintendent has acknowledged that other companies are not doing business in New Mexico, complicating service. BCBS Kansas City also claims no evidence exists that it received the summons and complaint. On February 24, 2011, the clerk of the Ninth Judicial District Court certified that process was served on Defendant Blue Cross Blue Shield of Kansas City through mailing to the Superintendent of Insurance for the State of New Mexico. However, neither Sawyer nor her attorney filed an affidavit demonstrating compliance with the relevant New Mexico statutes (N.M.S.A. 1978 §§ 59A-15-6 and 59A-15-7). These statutes state that an unauthorized insurer's transaction of business in the state constitutes an irrevocable appointment of the superintendent as the insurer's lawful attorney for process service. Section 59A-15-7 outlines that service on the superintendent is valid only if the plaintiff also sends notice to the defendant, receives a certified mail receipt, and files an affidavit confirming compliance. Sawyer provided only certified mail return receipts as evidence of service, but there is no proof she sent a copy of the summons and complaint to BCBS Kansas City. In her response, she failed to assert that a second copy was sent or discuss compliance with § 59A-15-7. At a hearing on February 9, 2012, Sawyer did not argue her compliance with the statute. The court noted that without meeting the requirements for adequate service, BCBS Kansas City was not properly served. Sawyer attempted to compare her service method to prior case law, specifically Silva v. Crombie Co. and Abarca v. Henry L. Hanson, Inc., but the court distinguished these cases based on their facts regarding agent designation and service failure, concluding that mere gestures of service do not satisfy due process. BCBS Kansas City is analogous to the entity in Abarca v. Henry L. Hanson, as it has not appointed an agent, is unauthorized to conduct business in New Mexico, and has not provided information to the Superintendent of Insurance, nor appointed the Superintendent as its agent as required by statute. Consequently, the Court concludes that the New Mexico Supreme Court would determine that BCBS Kansas City was not properly served. Improper service renders a default judgment void due to lack of personal jurisdiction over the defendant, as established in United States v. Bigford and affirmed by New Mexico case law. Since BCBS Kansas City was not properly served when the Default Judgment was issued, that judgment is deemed void. The motion to set aside the Default Judgment was filed within approximately 60 days, meeting the reasonable time requirement under rule 60(b)(4), warranting the Court's approval to set aside the judgment against BCBS Kansas City. Regarding BCBS Association, it is not an insurer and does not engage in insurance activities, nor is it part of the agreement between BCBS Kansas City and Nueterra. The Superintendent of Insurance acknowledged that BCBS Association was not served. Sawyer failed to provide evidence to dispute the affidavit from BCBS Association’s counsel, which confirmed the lack of service. Additionally, Sawyer did not respond to the BCBSA Motion nor contest its claims at the hearing, which under D.N.M.LR-Civ. 7.1 constitutes consent to the motion. Therefore, service on the Superintendent of Insurance was improper, as BCBS Association is not classified as an insurer. The Court reiterated that service under both the authorized and unauthorized insurer statutes was not properly executed. A default judgment against defendants United Services Automobile Association (United Services), Blue Cross Blue Shield of Kansas City, and Blue Cross Blue Shield Association is deemed void due to improper service, as established in previous court rulings (Hukill v. Oklahoma Native American Domestic Violence Coalition and Edmonds v. Martinez). The Court grants motions to set aside the default judgments against these defendants and denies a motion to remand the case. The Court confirms its subject-matter jurisdiction based on the proper removal before a final state court judgment. United Services argues that "USAA Insurance Company" is not a legal entity and contends it was not named correctly in the complaint, asserting that Sawyer’s attempt to enforce the judgment against it is unwarranted. The complaint lacks specificity regarding the Blue Cross Blue Shield entity to which payments were made. Additionally, the Superintendent of Insurance serves as the designated agent for legal process against insurers in New Mexico. The document mentions that terminated employees may qualify for continuation coverage under COBRA. The Sawyer Motion contends that the Court lacks subject-matter jurisdiction due to the absence of a case or controversy and the Rooker-Feldman doctrine, which bars federal courts from reviewing state court final judgments. However, the motion does not dispute the basis for removal under federal question jurisdiction via ERISA's complete preemption. The Rooker-Feldman doctrine is rooted in Supreme Court cases Rooker v. Fidelity Trust Co. and District of Columbia Court of Appeals v. Feldman, which establish that federal suits cannot serve as appeals of state court decisions, as affirmed by the Tenth Circuit in Bolden v. City of Topeka. The document notes that citations to hearing transcripts refer to the original unedited versions, with final transcripts possibly differing in page and line numbers. The Federal Courts Jurisdiction and Venue Clarification Act of 2011 introduced the last-served rule, allowing defendants 30 days to file a notice of removal after being served with the initial pleading, applicable to cases commenced on or after January 6, 2012. The Court assumes that a case or controversy exists in a pending appeal and similarly in cases with final judgments if procedural options for relief remain. The Ninth Circuit's application of removal procedures under 28 U.S.C. 1447 illustrates this point. Additionally, relevant statutory provisions allow the Resolution Trust Corporation to remove actions from state to federal court within specified timeframes based on its involvement in the case, emphasizing a similarity in removal statutes under 12 U.S.C. 1441a(Z) and 28 U.S.C. 1441. The court interprets 12 U.S.C. 1441a(Z) to align with 28 U.S.C. 1441 regarding case or controversy existence and district court jurisdiction over removed cases post-final judgment. Sawyer's remand motion, filed 51 days after removal, can only contest subject-matter jurisdiction per 28 U.S.C. 1447(c). Any other remand basis must be asserted within 30 days of the removal notice under section 1446(a). Indiana's civil procedure aligns with this, allowing a 30-day appeal window. Jurisdiction has been exercised in cases involving default judgments where defendants, inadequately served or lacking state contacts, later remove cases and challenge state-court judgments. Finality in these matters permits federal jurisdiction, as non-final cases can still be modified or appealed within the state system. The Jenkins-Dyer case illustrates that an expired appeal timeframe does not render a removed action final, and a lack of identified final state court judgments weakens a motion to remand. United Services claims it learned of a Default Judgment from a Blue Cross Blue Shield Defendant, asserting a 57-day response period post-notification, and contends that the Default Judgment does not apply to it since it is not USAA Insurance. The court concludes that United Services was never served, making the misnaming irrelevant. United Services would likely have been adequately notified had it received the summons and Complaint, as the name USAA Insurance could sufficiently indicate the intended party. In similar cases, where the correct defendant was served but named incorrectly, courts do not dismiss claims based on misnomer if the intended party has notice of the action. The initials "USAA" correspond to United Services Automobile Association, and the organization’s identification as “USAA Auto Insurance” on its website further corroborates this connection. The Court found that despite USAA Insurance not being a recognized entity, proper service of process might allow enforcement of the Default Judgment against United Services. No affidavit was submitted in the state court concerning this matter. Additionally, the Default Judgment against BCBS Kansas City was deemed improper under New Mexico statute N.M.S.A.1978, § 59A-15-7(C), due to Sawyer's failure to file the required affidavit of compliance within the stipulated time frame. Although a State Certificate was filed showing that the Superintendent had been served, it did not fulfill the affidavit requirement, leading to the conclusion that the Default Judgment was improperly entered. If the Court has jurisdiction over this judgment, it retains the authority to set it aside based on these findings.