Court Opinion

ID: 180062
Source: CourtListenerOpinion
Date Created: 2010-11-30 17:46:22+00
Date Added: 2024-06-11T17:25:50.620167
License: Public Domain

NOT PRECEDENTIAL

                        UNITED STATES COURT OF APPEALS
                             FOR THE THIRD CIRCUIT
                                  ___________

                                       No. 10-3037
                                       ___________

                               EDWARD W. DONNELLY,
                                           Appellant

                                             v.

                 TRL, INC.; COMPSERVICES, Administrator;
            COMMONWEALTH OF PENNSYLVANIA, Third Party Insurer
                  ____________________________________

                     On Appeal from the United States District Court
                         for the Middle District of Pennsylvania
                          (D.C. Civil Action No. 10-cv-00665)
                      District Judge: Honorable John E. Jones, III
                      ____________________________________

                     Submitted Pursuant to Third Circuit LAR 34.1(a)
                                  November 22, 2010

                Before: BARRY, JORDAN and GARTH, Circuit Judges

                           (Opinion filed November 30, 2010)
                                       ___________

                                        OPINION
                                       ___________

PER CURIAM.

       Edward W. Donnelly appeals from the District Court’s final order dismissing this

civil rights action for failure to state a claim upon which relief can be granted. For the

reasons that follow, we will affirm.

                                              1
       In March 2010, Donnelly commenced this suit by filing a pro se “Brief in Support

of Complaint” with attached exhibits. As reflected in these submissions,1 Donnelly filed

a workers’ compensation claim against his employer, TRL, Inc., based on an alleged

work-related injury. A Workers’ Compensation Judge (“WCJ”) held a hearing on July

12, 2007, to consider whether to approve the parties’ proposed “Compromise and Release

Agreement” settling Donnelly’s claim. Under the agreement, Donnelly was to receive a

lump sum of $12,500 (less payment of his attorney fees), plus payment of reasonable and

necessary medical expenses up to July 12, 2007. Donnelly tendered a resignation letter to

TRL as part of the settlement. The WCJ rendered findings of fact and conclusions of

law, and approved the settlement agreement, in a written decision dated July 20, 2007.2

       On August 20, 2007, the administrator of TRL’s workers’ compensation benefits,

Compservices, Inc., issued two checks (one made out to Donnelly, one to his counsel) in

full payment of Donnelly’s claim. According to Donnelly, Compservices issued the

checks one day too late, failing to make payment, as required under Pennsylvania law,

within thirty days of the WCJ’s July 20 decision. Donnelly thus filed a petition seeking

penalties based on a claim that TRL and Compservices had breached the settlement by

   1
     “[I]n ruling on a motion to dismiss, a district court relies on the complaint,
   attached exhibits, and matters of public record.” Sands v. McCormick, 502 F.3d
   263, 268 (3d Cir. 2007).
   2
      Among other things, the WCJ found that Donnelly “fully understands the legal
   significance and ramifications of the Compromise and Release Agreement.”
   Donnelly contends that his counsel “fraudulently induced” his acceptance of the
   settlement because counsel had a conflict of interest due to a “relationship” with
   TRL. We note that Donnelly filed a separate suit asserting numerous claims
   against the lawyers who represented him in the worker’s compensation case. This
   Court affirmed the dismissal of that suit for failure to state a claim. See Donnelly
   v. O’Malley & Langan, P.C., 370 Fed. Appx. 347 (3d Cir. 2010).
                                            2
not issuing the checks on time. Donnelly contends that the thirtieth day for payment was

August 19, 2007, which was a Sunday.

       A WCJ conducted proceedings on the penalty petition and held a hearing on May

27, 2008. Donnelly claims that his due process rights were violated during the

proceedings because the WCJ accepted an “ex parte communication” from TRL in the

form of a letter outlining its response to the penalty petition. Donnelly concedes that he

was served with this letter, but he claims that he did not receive a copy of the July 12

hearing transcript that was submitted to the WCJ as an attachment to the letter. Donnelly

also contends that TRL “illegally” reproduced the hearing transcript. In addition, he

complains, as he did in the lawsuit against his former counsel, that counsel improperly

disclosed his letter of resignation to TRL prior to the July 12 settlement hearing.

       On February 29, 2008, an involuntary Chapter 7 bankruptcy petition was filed

against TRL. On March 31, 2008, a bankruptcy court judge entered an order converting

the case to a proceeding under Chapter 11. On November 16, 2009, the bankruptcy court

confirmed a reorganization plan. Thereafter, on January 29, 2010, the WCJ issued a

written decision denying Donnelly’s petition for penalties. The WCJ concluded that

TRL’s payment was not untimely because it was issued within thirty days of the WCJ’s

July 20 decision, and that there was no violation of the Workers’ Compensation Act.

       Donnelly commenced the present proceeding shortly thereafter, purporting, in

part, to seek a “change in venue” on his petition for penalties. He also sought relief,

presumably under 42 U.S.C. § 1983, for a violation of his right to a fair and impartial

                                             3
hearing before the WCJ on the penalty petition.3 In addition to naming TRL and

Compservices, Donnelly named the Commonwealth of Pennsylvania as a defendant,

asserting that the Commonwealth became “third party insurer” of his workers’

compensation claim when TRL entered into bankruptcy proceedings.

         The three defendants separately moved to dismiss the Complaint for failure to

state a claim upon which relief can be granted. The District Court granted the motions.

First, it held that the claims against TRL must be dismissed in light of the bankruptcy

proceeding. The District Court noted that all of the actions challenged by Donnelly

occurred prior to commencement of TRL’s bankruptcy case, and Donnelly did not move

to lift the automatic stay so as to proceed with litigation against TRL. Consequently, his

claims against TRL were void ab initio in light of the automatic stay. Second, the

District Court dismissed the claims against the Commonwealth on the basis of Eleventh

Amendment immunity. Third, the District Court concluded that the claims against

Compservices fail because that defendant is not a state actor for purposes of § 1983. The

District Court also rejected any attempt to void the WCJ’s rulings as barred under the

Rooker-Feldman doctrine. Donnelly timely filed this appeal.

   3
       Donnelly explained the relief sought as follows:

               I am seeking to have the letter of resignation rescinded,
               liquidated damages from the settlement agreement, back
               wages I lost, damages for violating my Civil Rights (ex
               parte communications), damages from the illegal
               reproduction of the Transcript from my Worker’s
               Compensation Hearing on July 12, 2007, liquidated
               damages, punitive damages, and the travel expenses to the
               three hearings I attended. I request mediation to put an
               end to this matter.
                                              4
       We have appellate jurisdiction under 28 U.S.C. § 1291. We exercise plenary

review over a decision to grant a motion to dismiss under Federal Rule of Civil Procedure

12(b)(6). Gelman v. State Farm Mut. Auto. Ins. Co., 583 F.3d 187, 190 (3d Cir. 2009).

To survive a motion to dismiss, a complaint must contain sufficient factual matter to

“state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550

U.S. 544, 570 (2007). Like the District Court, we accept well-pleaded factual allegations

as true and inquire as to whether “the plaintiff pleads factual content that allows the court

to draw the reasonable inference that the defendant is liable for the misconduct alleged.”

Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009).

       Our review of the record reveals no error in the District Court’s analysis. The

Commonwealth plainly is entitled to sovereign immunity in federal court under the

Eleventh Amendment. See, e.g., Betts v. New Castle Youth Dev. Ctr., --- F.3d ---, 2010

U.S. App. LEXIS 19052, at *6-8 & *8 n.5 (3d Cir. Sept. 13, 2010). The claims against

Compservice were properly dismissed because, “[t]o prevail on a § 1983 claim, a plaintiff

must allege that the defendant acted under color of state law, in other words, that there

was state action.” Great Western Mining & Mineral Co. v. Fox Rothschild LLP, 615

F.3d 159, 175-76 (3d Cir. 2010). Compservice, a private entity, acted as TRL’s benefits

administrator and issued the settlement checks to Donnelly. A review of Donnelly’s

Complaint reveals no allegation giving rise to a plausible inference that Compservice

acted under color of state law or conspired with state actors to deny Donnelly his

constitutional rights. See id.; see also Reichley v. Pa. Dep’t of Agric., 427 F.3d 236, 245

(3d Cir. 2005).

                                              5
       The claims against TRL were properly dismissed because, as the District Court

explained, actions taken in violation of an automatic bankruptcy stay, such as the filing of

this suit, are void ab initio. See Constitution Bank v. Tubbs, 68 F.3d 685, 692 n.6 (3d

Cir. 1995) (“Generally, judicial actions and proceedings against the debtor are void ab

initio absent relief from the stay.”). Donnelly’s Complaint turns on allegations of pre-

bankruptcy harm, and he did not move the bankruptcy court to lift the stay so that he

could proceed against TRL. Consequently, his suit as to TRL was properly dismissed.

       Donnelly contends on appeal that he commenced this action to “change venue” on

his penalty petition because he believed that his due process rights were being violated in

state court. The District Court properly rejected this attempt at venue shopping, which

appears to have been an effort to seek review of the WCJ’s judgment in federal court,

rather than through the state appellate process. Under the Rooker-Feldman doctrine, a

district court lacks jurisdiction over “cases brought by state-court losers complaining of

injuries caused by state-court judgments rendered before the district court proceedings

commenced and inviting district court review and rejection of those judgments.” Exxon

Mobil Corp. v. Saudi Basic Indus., 544 U.S. 280, 284 (2005); see Great Western Mining,

615 F.3d at 166. As mentioned, the WCJ held a hearing on Donnelly’s petition for

penalties and denied relief. Pennsylvania law affords a right to appeal that decision first

to the Workers’ Compensation Appeal Board, 77 P.S. § 853, then to the Commonwealth

Court, 42 Pa. Cons. Stat. § 763(a), and ultimately to seek allowance of appeal in the

Pennsylvania Supreme Court, 42 Pa. Cons. Stat. § 724(a). See Phila. Fed’n of Teachers,

                                             6
Am. Fed’n of Teachers, Local 3 v. Ridge, 150 F.3d 319, 324 n.5 (3d Cir. 1998).4 A

federal district court is not an alternative forum for adjudication of Donnelly’s penalty

petition, nor can it act in an appellate capacity to review the WCJ’s decision. The District

Court, therefore, properly rejected Donnelly’s effort to obtain federal court review.

       We are satisfied that any amendment to Donnelly’s Complaint would have been

futile, and thus the District Court properly dismissed without leave to amend. See

Grayson v. Mayview State Hosp., 293 F.3d 103, 114 (3d Cir. 2002). Further, we have

considered Donnelly’s numerous remaining arguments on appeal, many of which do not

pertain to the claims that he raised before the District Court. We find those arguments

either waived or without merit, and in need of no separate discussion.

       Based on the foregoing, we will affirm the District Court’s judgment.5

   4
     Donnelly appealed to the Workers’ Compensation Appeal Board, but he turned
   to the federal district court for a “change of venue” shortly after his hearing before
   the Appeal Board, apparently because he was dissatisfied with the hearing.
   5
     TRL’s motion to file its brief out of time is granted. Donnelly’s motion to file
   supplemental reply briefs is denied.
                                             7