Jimmy Bullock v. AIU Insurance Co., et al


UNPUBLISHED OPINION FILED. [10-60294 Affirmed ] Judge: JLW , Judge: EMG , Judge: ECP Mandate pull date is 12/30/2010 [10-60294]

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Jimmy Bullock v. AIU Insurance Co., et al Document: 00511317712 Case: 10-60294 Page: 1 Date Filed: 12/09/2010 Doc. 0 IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED December 9, 2010 N o . 10-60294 Lyle W. Cayce Clerk J I M M Y BULLOCK, P la in t if f -A p p e lla n t v. G O T T F R I E D CORPORATION, D e fe n d a n t -A p p e lle e A p p e a l from the United States District Court for the Southern District of Mississippi U S D C No. 1:04-CV-835 B e fo r e WIENER, GARZA, and PRADO, Circuit Judges. P E R CURIAM:* P la in t iff-A p p e lla n t Jimmy Bullock brought this tort action against his e m p lo y e r , Defendant-Appellee Gottfried Corporation ("Gottfried"), alleging that G o t t fr ie d acted in bad faith by refusing to pay him workers compensation b e n e fits for almost three years.1 Gottfried moved for summary judgment, which Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. Originally, Bullock also sued AIU Insurance Company, Gottfried's workers compensation carrier, and AIG Claim Services, Inc., Gottfried's claims servicing company. But while summary judgment motions were pending, Bullock reached amicable settlement terms with these companies, and they were dismissed as parties by agreement. As such, the breach 1 * Dockets.Justia.com Case: 10-60294 Document: 00511317712 Page: 2 Date Filed: 12/09/2010 No. 10-60294 t h e district court granted. The district court held that Gottfried was entitled to a judgment as a matter of law because Gottfried showed an arguable basis for c h a lle n g in g Bullock's eligibility for workers compensation. We agree and affirm t h e district court's grant of Gottfried's motion for summary judgment. I . FACTS & PROCEEDINGS A . Facts B u llo c k is a sheet metal subcontractor who had worked for Gottfried since 1 9 9 4 on approximately six jobs. In November 1996, Bullock was injured while w o r k in g for Gottfried. Bullock did not have his own workers compensation in s u r a n c e policy, so he filed his claim under Gottfried's policy. Gottfried disputed B u llo c k 's coverage under its policy. Gottfried relied on the fact that Bullock was a subcontractor, and not an e m p lo y e e , under a contract that required Bullock to maintain his own workers c o m p e n s a tio n coverage. Gottfried also produced a copy of a certificate of in s u r a n c e indicating that Bullock maintained his own workers compensation p o lic y effective from January 1996 until January 1997, covering the time of his in ju r y . Gottfried contended that it was never notified by Bullock that he c a n c e lle d his insurance policy or was provided with a cancellation notice. B u llo c k asserted that he had made an oral agreement with Gottfried b e fo r e signing the subcontract that he would not provide his own insurance and in s t e a d would be covered on Gottfried's policy. Bullock alleges that Gottfried a g r e e d to allow Bullock to deduct the insurance premiums from his invoices to G o t t fr ie d , known as "backcharging." The first time this backcharge ever o c c u r r e d , however, was after Bullock's injury. Bullock had submitted two p r e v io u s invoices, one on November 4 and the other on November 22--the later o n e after the injury took place on November 8--neither of which included a of fiduciary duty claim is not at issue on appeal. See Bullock v. AIU Ins. Co., No. 1:04-CV-835, 2010 WL 1141122, at *1 n.1 (S.D. Miss. Mar. 22, 2010). 2 Case: 10-60294 Document: 00511317712 Page: 3 Date Filed: 12/09/2010 No. 10-60294 b a c k c h a r g e deduction. Gottfried testified that this sequence of invoices, along w i t h the contract and certificate of insurance, led it to believe that Bullock's in s u r a n c e was effective at the time of his injury but had been allowed to lapse s u b se q u e n tly . G o t t fr ie d 's insurance company denied Bullock's workers compensation c la im . Bullock then filed a petition with the Mississippi Workers' Compensation C o m m is s io n to contest the denial of coverage. An administrative law judge held a hearing in October 1999 and determined that Bullock was indeed entitled to w o r k e r s compensation benefits under Gottfried's policy, and Gottfried's i n s u r a n c e company accordingly paid him the requested benefits. In October 2 0 0 3 , another administrative hearing was held on the issue of temporary and p e r m a n e n t disability, which the parties had agreed to reserve pending the ruling o n the issue of coverage. The administrative law judge concluded that Bullock's d is a b il i t y claim was compensable and awarded Bullock additional workers c o m p e n s a tio n benefits, which Gottfried's insurance company paid. B . Proceedings I n August 2004, Bullock filed a tort action in Mississippi state court, c la im in g that Gottfried had acted in bad faith by refusing to provide him w o r k e r s compensation benefits. Gottfried removed the case based on diversity o f citizenship.2 G o t t fr ie d first sought to dismiss Bullock's case on the basis that the s t a t u t e of limitations had expired. The district court denied the motion but then g r a n t e d it on rehearing, dismissing all of Bullock's claims as time-barred.3 On a p p e a l , we certified a question to the Mississippi Supreme Court asking on w h ic h date--that of the first administrative hearing or that of the second--this 2 Bullock is a Mississippi resident and Gottfried is a Louisiana corporation. Bullock v. AIU Ins. Co., No. 1:04-CV-835, 2006 WL 1195465, at *2 (S.D. Miss. Apr. 28, 2006). 3 3 Case: 10-60294 Document: 00511317712 Page: 4 Date Filed: 12/09/2010 No. 10-60294 a c t io n accrued for purposes of the statute of limitations.4 The Mississippi S u p r e m e Court held that the statute of limitations only began to run after the s e c o n d administrative hearing so that Bullock's claims were timely.5 We then r e v e r s e d the dismissal and remanded to the district court for consideration of the m e r it s of Bullock's claims.6 A fte r completing discovery, Gottfried again moved for summary judgment. T h e district court granted Gottfried's motion, ruling that there was no genuine is s u e of material fact and that Gottfried was entitled to judgment as a matter of la w .7 The district court also granted Gottfried's motion to strike portions of B u llo c k 's affidavit. Bullock timely filed his notice of appeal. I I . ANALYSIS A . Bad Faith Refusal of Workers Compensation S u m m a r y judgment is appropriate when there is no question of material f a c t and the moving party is entitled to a judgment as a matter of law. We r e v ie w a district court's grant of summary judgment de novo, applying the same le g a l standards as the district court.8 U n d e r Mississippi law, the liability of an employer to pay workers c o m p e n s a tio n is the employee's exclusive remedy against his employer.9 But "the in d e p e n d e n t tort of bad faith refusal to pay compensation is an exception to this p r o v is io n ."1 0 The Mississippi Supreme Court has summarized the tort as follows: 4 Bullock v. AIU Ins. Co., 503 F.3d 384, 388 (5th Cir. 2007). Bullock v. AIU Ins. Co., 995 So. 2d 717, 723 (Miss. 2008). Bullock v. AIU Ins. Co., 554 F.3d 524, 525 (5th Cir. 2008). Bullock, 2010 WL 1141122, at *6. See FED. R. CIV. P. 56(a) (as amended effective Dec. 1, 2010). See MISS. CODE ANN. 71-3-9. Miss. Power & Light Co. v. Cook, 832 So. 2d 474, 479 (Miss. 2002) (en banc). 5 6 7 8 9 10 4 Case: 10-60294 Document: 00511317712 Page: 5 Date Filed: 12/09/2010 No. 10-60294 I n order to prevail in a claim for damages for bad faith there must b e a determination as to whether there was a legitimate or arguable r e a s o n to deny the benefits, and/or that the denial constituted a w illfu l or malicious wrong in disregard for [the employee's] rights. R e a lly the only test . . . is whether the injury is compensable under t h e act. The two prongs of the test are not separate requirements, b u t rather part of the inquiry into whether the injury is c o m p e n s a b le . Furthermore, where there is a legitimate or arguable b a s is in the delay or denial of payments, there is no valid claim for p u n it iv e damages.1 1 I n addition, "[t]he fact that an [employer's] decision to deny benefits may u lt im a te ly turn out to be incorrect does not in and of itself warrant an award of p u n it iv e damages if the decision was reached in good faith."1 2 Ultimately, then, w e must determine whether there was an arguable basis for Gottfried's initial r e fu s a l of workers compensation to Bullock--in other words, whether there was " a reason `sufficiently supported by credible evidence as to lead a reasonable [e m p lo y e r ] to deny the claim.'" 13 H e r e , credible evidence supports the conclusion that Gottfried had an a r g u a b le basis for disputing Bullock's workers compensation claim. Bullock's w r i t t e n contract with Gottfried stated that Bullock had to maintain his own w o r k e r s compensation insurance coverage. Bullock had also provided Gottfried w it h a certificate of insurance that was effective at the time of the subject injury, a n d he never provided Gottfried with a written cancellation notice. Lastly, B u llo c k had received payments without the deducted backcharge both before and a ft e r his injury before submitting the final invoice months later with the 11 Id. (citations omitted). Liberty Mut. Ins. Co. v. McKneely, 862 So. 2d 530, 533 (Miss. 2003). 12 Sobley v. S. Natural Gas Co., 302 F.3d 325 (5th Cir. 2002) (quoting State Farm Mut. Auto. Ins. Co. v. Grimes, 722 So. 2d 637, 642 (Miss. 1998)). See also Luckett v. Miss. Wood Inc., 481 So. 2d 288, 290 (Miss. 1985) (extending the tort of bad faith refusal of workers compensation to employers as well as insurance carriers). 13 5 Case: 10-60294 Document: 00511317712 Page: 6 Date Filed: 12/09/2010 No. 10-60294 b a c k c h a r g e included. In sum, despite the fact that Gottfried eventually was r e q u ir e d to cover Bullock's injury, Gottfried had an arguable basis to deny c o v e r a g e initially. B . Motion to Strike W e review the district court's grant of Gottfried's motion to strike for a b u s e of discretion.1 4 The district court concluded that one statement in Bullock's a ffid a v it was improper hearsay, one statement was irrelevant, and two other s t a t e m e n t s were improper conclusions or accusations of lying, or both. We agree a n d therefore affirm the district court's grant of Gottfried's motion to strike. I I I . CONCLUSION W e conclude that Bullock's bad faith tort action was properly dismissed a n d that the district court did not abuse its discretion in striking several s t a t e m e n t s from Bullock's affidavit. All rulings of the district court and its ju d g m e n t are AFFIRMED. 14 See Hollis v. Am. Airlines, Inc., 138 F.3d 1028, 1030 (5th Cir. 1998). 6

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