Dupre v. State Farm Mutual Automobile Insurance Company

Filing 43

ORDER AND REASONS granting in part and denying in part 32 Motion for Summary Judgment. Plaintiff's claim for attorney fees, interests, costs and penalties for breach of fiduciary duty under ERISA is DISMISSED WITH PREJUDICE. IT IS FURTHER ORDERED that defendant shall submit competent evidence showing that the PSL plan qualifies for exclusion from ERISA within fourteen (14) days of this order. Signed by Judge Helen G. Berrigan on 2/24/2015. (kac)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

AMY P. DUPRE

CIVIL ACTION NO. 14-715

VERSUS

SECTION “C”

STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY

HON. HELEN BERRIGAN

Order and Reasons
Before the Court is defendant’s Motion for Summary Judgment. Rec. Doc. 32. Having
considered the record, the law, and the memoranda of counsel, the Court GRANTS IN PART
and DENIES IN PART defendant’s motion.

I.

Factual background
This action involves a dispute over the denial of paid sick leave (“PSL”) and long term

disability (“LTD”) benefits. Plaintiff, Amy Dupre, was employed by defendant, State Farm
Mutual Automobile Insurance Company for twenty years. Rec. Doc. 1-1 at 3. On August 19,
2013, plaintiff was diagnosed with Major Depressive Disorder, Severe, and advised by a Clinical
Social Worker and Clinical Psychologist that she could not perform her job duties for defendant.
Id. Based on the length of her employment with defendant, plaintiff was eligible for 215 days of
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paid sick leave (PSL). Plaintiff applied for PSL to Cigna, a third-party administrator tasked with
determining PSL eligibility. Cigna denied her PSL claim, and upheld its denial on appeal. Rec.
Doc. 32-2 at 2. Plaintiff subsequently filed suit against defendant for payment of her PSL
benefits, as well as LTD benefits. Rec. Doc. 1-1. In addition, the petition alleged that defendant’s
refusal to pay these benefits should result in a penalty of double the amount of benefits owed,
together with reasonable attorney’s fees, interest and costs. Id. at 4.
On April 25, 2014 defendant brought a motion to partially dismiss plaintiff’s LTD claim
and claim for penalty of double the amount of benefits owed as well as other remedies under the
Employment Retirement Income Security Act (“ERISA”). Rec. Doc. 7. On May 30, 2014, the
Court granted in part and denied in part defendant’s motion. The Court dismissed with prejudice
plaintiff’s demand for a penalty of double the amount of benefits owed, finding that such a
penalty was forbidden by ERISA. The Court dismissed without prejudice plaintiff’s long term
disability benefits claim, finding that she had not adequately pleaded exhaustion of the claim as
required by ERISA. Id.
On July 7, 2014, defendant sent plaintiff a letter informing her that a decision had been
made to provide her with her remaining allotment of PSL benefits retroactive to the date that her
PSL benefits had been denied—an amount totaling $52,175.71. Rec. Doc. 32-2 at 31. On
September 5, 2014, defendant sent plaintiff’s counsel a check for $26,607.83, which it calculated
to be the amount owed less applicable tax, FICA, and Medicare withholdings. Id. at 34. On
January 9, 2015, defendant sent a second check for $709.59 pursuant to the “Pay and FICA
Taxes” section of the PSL policy. Id. at 36 Defendant now moves to dismiss the remaining
claims in this action.

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II.

Law and Analysis
Defendant argues that plaintiff’s remaining claim for paid sick leave (PSL) should be

dismissed because defendant has paid all funds to which plaintiff is entitled. Specifically,
defendant argues that under Louisiana’s state law on obligations, “[p]erformance by the obligor
extinguishes the obligation.” La. Civ. Code. Art. 1854. Defendant claims that the PSL claim does
not fall under ERISA, as it the PSL is a “payroll practice” plan that is excluded from ERISA’s
coverage. 29 C.F.R. §2510.3-1(b)(2). 1 Plaintiff admits that her PSL benefits and FICA taxes
have been paid. However, she contends that dismissal is inappropriate because the issues of
determining attorney fees, interest, costs and penalties for breach of fiduciary duty under ERISA
are still pending. Rec. Doc. 35 at 1.
The Court notes that although defendant’s PSL policy appears to be “payment of an
employee’s normal compensation” for time missed due to the employee being physically or
mentally unable to perform his or her duties, the PSL policy that defendant has attached as an
exhibit to the motion does not specify that payments are made “out of the employer’s general
assets” as required for exclusion from ERISA. Thus, the Court is unable to make its own
determination of whether the PSL policy falls outside the purview of ERISA. Nevertheless,
because the plan does appear to satisfy the other criteria for exclusion from ERISA, the Court
will proceed with its analysis under the assumption that the PSL policy is not covered by ERISA.
However, defendant is ordered to file within fourteen (14) days an affidavit or other competent
evidence showing that payments pursuant to the PSL policy are made out of its general assets.

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ERISA excludes “[p]ayment of an employee’s normal compensation, out of the employer’s general assets, on
account of periods of time during which the employee is physically or mentally unable to perform his or her duties,
or is otherwise absent for medical reasons. . .” 29 C.F.R. §2510.3-1(b)(2).

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Under Louisiana law, performance of an obligation extinguishes the obligation. La. Civ.
Code. Art. 1854. Defendant argues that since it has paid the full amount owed under plaintiff’s
PSL policy, the instant action must be dismissed. However, under Louisiana law, a delay in
performance is considered a failure to perform. LSA-C.C. art. 1994 (“An obligor is liable for the
damages caused by his failure to perform a conventional obligation. A failure to perform results
from. . . delay in performance.”). See also, Riverside Recycling, LLC v. BWI Companies Inc. of
Texas, 112 So.3d 869 (La.App. 1 Cir. 12/28/12); Odyssea Vessels, Inc. v. A & B Industries of
Morgan City, Inc., 94 So.3d 182 (La.App. 1 Cir. 6/13/12). Here, defendant did not come to a
decision to pay plaintiff until nearly five months after plaintiff had filed suit. Thus, the Court
finds that though defendant has paid the PSL compensation to which plaintiff was entitled,
dismissal of the action is not appropriate because plaintiff may yet prevail on a breach of contract
claim, provided she can show that performance was delayed and that she suffered damages as a
result of the delay.
Plaintiff contends that she is entitled to attorney fees, interest, costs and penalties for
breach of fiduciary duty under ERISA. However, the Court has already found that ERISA does
not apply to plaintiff’s PSL claim. Thus, ERISA cannot serve as grounds for recovery of attorney
fees, interest, costs, or penalties. Furthermore, under Louisiana state law, attorney fees are not
recoverable “unless specifically provided for by contract or by statute. Frank L. Beier Radio, Inc.
v. Black Gold Marine, Inc., 449 So.2d 1014, 1015 (La. 1984). Plaintiff has not cited to any
contractual provision or statute that would enable her to recover attorney fees in this case. Thus,
the Court finds no grounds for awarding attorney fees, interest, costs or penalties beyond what
plaintiff may be entitled to if she can prevail on a breach of contract claim under Louisiana state
law.

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Accordingly,
IT IS ORDERED that defendant’s Motion for Summary Judgment (Rec. Doc. 32) is
GRANTED IN PART and DENIED IN PART. Plaintiff’s claim for attorney fees, interests, costs
and penalties for breach of fiduciary duty under ERISA is DISMISSED WITH PREJUDICE. IT
IS FURTHER ORDERED that defendant shall submit competent evidence showing that the PSL
plan qualifies for exclusion from ERISA within fourteen (14) days of this order.
New Orleans, Louisiana, this 24th day of February 2015.

________________________________
HELEN G. BERRIGAN
UNITED STATES DISTRICT JUDGE

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