Vultaggio v. Liberty Mutual Fire Insurance Company
Filing
26
OPINION AND ORDER DENYING DEFENDANTS MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION [#18], DENYING PLAINTIFFS MOTION FOR SUMMARY JUDGMENT [#19] AND CANCELLING APRIL 28, 2015 HEARING. Signed by District Judge Gershwin A. Drain. (Bankston, T)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
GIUSEPPE VULTAGGIO,
Plaintiff,
Case No. 14-cv-12299
HON. GERSHWIN A. DRAIN
v.
LIBERTY MUTUAL FIRE INSURANCE
COMPANY,
Defendant.
__________________________________/
OPINION AND ORDER DENYING DEFENDANT’S MOTION TO
DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION [#18],
DENYING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [#19]
AND CANCELLING APRIL 28, 2015 HEARING
I.
INTRODUCTION
Presently before the Court are the following motions: (1) Defendant’s Motion
to Dismiss for Lack of Subject Matter Jurisdiction, filed on October 30, 2014, and (2)
Plaintiff’s Motion for Summary Judgment, also filed on October 30, 2014. Responses
were filed to each pending motion [Dkt. Nos. 22 and 24] and Defendant filed a Reply
in Support of its Motion to Dismiss. Upon review of the parties’ submissions, the
Court concludes that oral argument will not aid in the resolution of these matters.
Accordingly, both motions will be decided on the briefs. See E.D. Mich. L.R.
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7.1(f)(2). For the reasons that follow, the Court will deny Defendant’s Motion to
Dismiss for Lack of Subject Matter Jurisdiction and will deny Plaintiff’s Motion for
Summary Judgment.
II.
FACTUAL BACKGROUND
Plaintiff Giuseppe Vultaggio filed the instant action in the Macomb County
Circuit Court on May 13, 2014, alleging claims of breach of contract, unjust
enrichment, fraud and fraudulent misrepresentation, innocent misrepresentation and
conversion stemming from a purported settlement agreement between Plaintiff and
Defendant, Liberty Mutual Fire Insurance Company. Defendant removed the action
to this Court on June 11, 2014.
In the Complaint, Plaintiff alleges he sustained a serious back and hip injury
while working for Prince Macaroni of Michigan on February 20, 1988. At the time of
Plaintiff’s injury, Defendant provided workers’ compensation insurance coverage to
Plaintiff’s employer. In 1988, Plaintiff began receiving workers’ compensation
benefits in the amount of $266.38 per week.
On February 7, 2008, Claims Specialist Christopher Kijovsky sent
correspondence to Plaintiff stating in relevant part:
This is a settlement offer I have prepared for you. Please note that this
offer provides a benefit to you greater than what you are currently
receiving from Liberty Mutual and the monthly payments would be
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directly deposited into an account of your choice.
Also, please note that the monthly payment will be paid for the rest of
your life with a minimum guarantee of 5 years. What this means is that
if [you] were to pass away before 5 years of this benefit is paid the
payments will continue to your noted beneficiary.
See Compl., Ex. A. According to Plaintiff, the settlement offer provided for a
$10,000.00 lump sum payment, plus an annuity which paid $1,565.00 per month
beginning in January of 2009, and, in return, Plaintiff would no longer receive the
$266.38 in weekly payments. Compl., ¶ 11. Plaintiff further claims that the $1,565.00
monthly payments were guaranteed for a minimum of five years and if he expired prior
to the five-year term, the benefits would be paid to his beneficiary. He also contends
that if he were alive past the five-year term, the $1,565.00 monthly payments would
continue for the remainder of his life.
Contrarily, Defendant claims that several offers were made during the parties’
negotiation of the settlement agreement. See Def.’s Resp., Ex. D. Defendant claims
that while it is true Plaintiff was offered a lifetime monthly benefit award, the payment
amount was lower than the amount the parties ultimately agreed upon. Id. Specifically,
Defendant argues that the first option extended by Mr. Kijovsky included a lump sum
payment of $10,000.00, and monthly payments of $1,565.00, which were guaranteed
only for five years. Id. The second option provided for a lump sum payment of
$5,000.00 and monthly payments of $725.00, guaranteed for ten years. Id. With the
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second option, the payments were to continue for life if Plaintiff was still alive past the
ten-year guarantee. Id.
A hearing was held before Magistrate Rosemary Wolock on Defendant’s
redemption offer. During the hearing, the terms of the parties’ agreement were placed
on the record. Specifically, Defendant’s attorney explained the parties agreed to a
$10,000.00 lump sum payment plus an annuity that would pay monthly benefits in the
amount of $1,565.00. See Plf.’s Mot. for Summ. J., Ex. B at 10. In exchange, the
weekly payments of $266.38 would cease. Id. As to Plaintiff’s claim that the monthly
benefits were to continue if he was still living beyond the five-year term, the following
exchange occurred between Plaintiff’s interpreter1 and Defendant’s attorney:
THE INTERPRETER:
Okay, I explained to him that it continues for
his lifetime but if he expires that you only
cover the first five years.
MR. SCHOENER:
Right, right, and then after the five years the
benefits stop upon his expiration.
Id. at 25.
After the hearing, the parties executed an “Agreement to Redeem Liability,”
authorized by the Workers’ Compensation Act. Specifically, the Agreement to
Redeem Liability states in relevant part:
1
Plaintiff does not speak English.
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WHEREFORE, it is agreed to by and between the parties that the Agency
may enter an order in this cause providing that the sum of NINETYEIGHT THOUSAND FORTY-ONE DOLLARS ($98,041.00) BROKEN
DOWN AS FOLLOWS: $10,000 CASH AND $88,041.00 FOR THE
COST OF TH[sic] ANNUITY be forthwith paid by the employer/carrier
to: Giuseppe Vultaggio
and that upon such payment the liability of the employer/carrier for the
payment of compensation for said injury shall be redeemed in accordance
with Sections 418.835, 418.836 and R408.39 of the Workers’ Disability
Compensation Act except for medical potentiality covered by Medicare.
See Def.’s Mot. to Dismiss, Ex. B.
Additionally, Magistrate Wolock signed a Redemption Order, which stated in
pertinent part:
IT IS FURTHER ORDERED that the above sum be paid as follows:
cost of annuity, if applicable. TO BE PAID $1,565.00
$ 88,041.00
MONTHLY, GUARANTEED FOR 5 YEARS, BEGINNING 1-1-09
See Def.’s Resp. to Plf.’s Mot. for Summ. J., Ex. B. The parties also executed a NonQualified Assignment and Release of Periodic Payment Obligation, which states in
relevant part:
Claimant has executed a settlement agreement or release dated 11-3-08
(the “Settlement Agreement”) that provides for the Assignor [Liberty
Mutual Insurance Company] to make certain periodic payments to or for
the benefit of the Claimant as stated in Addendum No. 1[.]
*
*
*
Addendum No. 1
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Description of Periodic Payments
Payee:
Benefits:
Giuseppe Vultaggio
$1,565.00 payable monthly, guaranteed 5 years, beginning
on 1/1/2009, with the last guaranteed payment on 12/1/2013
Id., Ex. C.
Plaintiff claims that Defendant made all the $1,565.00 monthly payments until
February of 2014 and then ceased making the payments for no valid reason.
III.
LAW & ANALYSIS
A.
Defendant’s Motion to Dismiss for Lack of Subject Matter
Jurisdiction
Federal Rule of Civil Procedure 12(b)(1) authorizes a party to challenge the
court's subject matter jurisdiction. In analyzing a Rule 12(b)(1) motion,
[t]here is no presumption that the factual allegations set forth in the
complaint are true and the court is “free to weigh the evidence and satisfy
itself as to the existence of its power to hear the case.” [United States v.
Ritchie, 15 F.3d 592, 598 (6th Cir.), cert. denied, 513 U.S. 868 (1994)].
The court has wide discretion to consider materials outside the pleadings
in assessing the validity of its jurisdiction. Ohio Nat'l Life Ins. Co. v.
United States, 922 F.2d 320, 325 (6th Cir. 1990). The plaintiff bears the
burden of demonstrating subject matter jurisdiction. RMI Titanium Co.
v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir. 1996).
Ashley v. United States, 37 F. Supp.2d 1027, 1029 (W.D. Mich. 1997). "A court
lacking jurisdiction cannot render judgment but must dismiss the cause at any stage
of the proceedings in which it becomes apparent that jurisdiction is lacking." Sweeton
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v. Brown, 27 F.3d 1162, 1169 (6th Cir. 1994) (quoting United States v. Siviglia, 686
F.2d 832, 835 (10th Cir. 1981), cert. denied, 461 U.S. 918 (1983)(emphasis in
original)).
Defendant argues that the predicate issue herein is whether it fulfilled its
obligations under the Agreement to Redeem Liability and Redemption Order, which
can only be determined by the Workers’ Compensation Bureau. Thus, this matter must
be dismissed for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the
Federal Rules of Civil Procedure.
Contrary to Defendant’s argument, the Workers’ Compensation Bureau does not
have exclusive subject matter jurisdiction over the instant action. Defendant relies on
Michigan Compiled Laws § 418.841(1), which states “[a]ny dispute or controversy
concerning compensation or other benefits shall be submitted to the bureau and all
questions arising under this act shall be determined by the bureau or a worker’s
compensation magistrate, as applicable.” MICH. COMP. LAWS § 418.841(1). However,
this exclusive remedy provision is directed to claimants bringing an initial claim for
workers’ compensation benefits following an injury in the workplace and does not bar
court review of a final redemption agreement.
This case involves a redemption agreement, which occurs only after a hearing
and approval by a workers’ compensation Magistrate. It is the sole means by which
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an employer can terminate its liability. Once a redemption agreement is approved, the
workers’ compensation bureau’s authority to review the agreement is limited to an
appeal that must be taken within fifteen days of the initial approval by the Magistrate.
Once the appeal period has expired, the redemption agreement becomes final and any
disputes concerning the agreement are to be resolved by resort to the principles
“applicable to the interpretation and construction of contracts.” Dubois v. Betz
Industries, No. 228391, 2002 Mich. App. LEXIS 796, *4 (Mich. Ct. App. Jun. 4,
2002) (concluding that the plaintiff had stated a viable claim requesting that the court
void a redemption agreement based on lack of capacity).
Defendant offers no authority for its position that the workers’ compensation
bureau is the exclusive remedy for interpretation and construction of the parties’
redemption agreement, which is the issue before this Court. The issue is not a dispute
about “compensation or benefits,” rather it concerns the intent of the parties in entering
into the redemption agreement in 2008.
Defendant fails to offer any authority in support of its argument that this Court
lacks subject matter jurisdiction over the instant action.
Defendant cites to
Maglaughlin v. Liberty Mutual Ins. Co., 82 Mich. App. 708; 267 N.W.2d 160 (Mich.
Ct. App. 1978), however this case is distinguishable from the present matter. In
Maglaughlin, the plaintiff petitioned for, and received a favorable award of workers’
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compensation benefits and the defendant appealed the decision. Id. at 709. While the
decision was still on appeal, the plaintiff brought an action in state court for damages
attributable to the defendant’s failure to pay any benefits during the pendency of the
appeal. Id. at 710. The Maglaughlin court concluded that whether the defendant was
required to pay benefits during the pendency of the appeal was a “controversy
concerning compensation” within the exclusive jurisdiction of the workers’
compensation bureau. Id. at 710-11. This case involves a final redemption agreement
and not a dispute concerning compensation during the pendency of an appeal.
Another case relied on by Defendant, Holcomb v. Ford Motor Co., 108 Mich.
App. 61; 310 N.W.2d 275 (Mich. Ct. App. 1981), also does not support its position.
In Holcomb, the Michigan Court of Appeals concluded the trial court erred in granting
the plaintiff’s petition for final judgment on his award of workers’ compensation
benefits under MICH. COMP. LAWS § 418.863. Id. at 68. The Holcomb court reached
this conclusion because the defendant’s delayed application for leave to appeal with
the Michigan Supreme Court had not been decided. Id. at 62, 67.
Lastly, Defendant’s reliance on Hartline v. Dana Corporation, No. 233601,
2003 WL 1861480 (Mich. Ct. App. Apr. 8, 2003) is likewise misplaced. In Hartline,
the Michigan Court of Appeals concluded that the “circuit court erred in entering
judgment on an issue that was contemporaneously on appeal before the Workers’
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Compensation Appellate Commission[.]” Id. at *1. The Hartline court explained that
a decision by the commission must be final before a circuit court may enter judgment
on an award. Id. at *2. As such, because the decision concerning benefits had been
challenged and was still under review, the bureau had exclusive jurisdiction over the
matter. Id.
While the Court cannot find a case directly on point with the instant matter,
there is nonetheless ample authority supporting Plaintiff’s position that courts have
authority to enforce redemption agreements once they are final. See Solo v. Chrysler
Corp., 408 Mich. 345, 354-55; 292 N.W.2d 438 (Mich. 1980)(concluding that the
court may exercise equity power to set aside a workers’ compensation redemption
agreement on the basis of mutual mistake of fact); see also Badon v. General Motors
Corp., 188 Mich. App. 430; 470 N.W.2d 436 (Mich. Ct. App. 1991) (concluding that
the circuit court erred in setting aside a redemption agreement based on public policy
grounds).
In Allen v. Allen, 141 Mich. App. 105; 366 N.W.2d 88 (Mich. Ct. App. 1985),
the plaintiff had a divorce decree entered that included an order to pay child support.
Id. at 106. Thereafter, a final order of redemption in favor of the plaintiff was entered
against the plaintiff’s employer, the city of Detroit. Id. Because the plaintiff was in
arrears on his obligation to pay child support, the circuit court entered an order
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appointing the Friend of the Court as receiver for the plaintiff’s workers’ compensation
benefits. Id. Despite receiving notice of the circuit court’s order, the city forwarded
the compensation award to the plaintiff. Id. The circuit court entered judgment
against the city for the amount of the redemption order. Id.
On appeal, the city challenged the subject matter jurisdiction of the circuit court
over the final order of redemption. Id. at 106-07. In rejecting this argument, the
Michigan Court of Appeals concluded that “[t]here is no controversy between the
husband and his employer . . . .” Id. at 107. Here, similar to the situation in Allen, the
dispute is not between Plaintiff and his employer. Rather, this action is between
Plaintiff and his employer’s insurance carrier and raises a breach of contract claim in
addition to other claims.
Lastly, in General Motors Corp. v. Weberman, No. 210441, 2000 Mich. App.
LEXIS 1502 (Mich. Ct. App. Oct. 3, 2000), the court held that “jurisdiction of the
bureau is exclusive in matters where the employer-employee relationship is
substantially involved.” Id. at *3. In order to fall within the exclusive jurisdiction of
the bureau, the employer-employee relationship must be “at the heart” of the plaintiff’s
claim. Id. at *4. Here, Plaintiff’s relationship with his employer is “only incidentally
involved” and therefore the bureau does not have exclusive jurisdiction over Plaintiff’s
claim. Id. at *4-6.
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Accordingly, based on the foregoing considerations, Defendant’s Motion to
Dismiss for Lack of Subject Matter Jurisdiction is denied.
B.
Plaintiff’s Motion for Summary Judgment
Federal Rule of Civil Procedure 56(a) empowers the court to render summary
judgment forthwith “if 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 judgment as a
matter of law." See Redding v. St. Eward, 241 F.3d 530, 532 (6th Cir. 2001). The
Supreme Court has affirmed the court's use of summary judgment as an integral part
of the fair and efficient administration of justice. The procedure is not a disfavored
procedural shortcut. Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986); see also Cox
v. Kentucky Dept. of Transp., 53 F.3d 146, 149 (6th Cir. 1995).
The standard for determining whether summary judgment is appropriate is
"'whether the evidence presents a sufficient disagreement to require submission to a
jury or whether it is so one-sided that one party must prevail as a matter of law.'"
Amway Distributors Benefits Ass’n v. Northfield Ins. Co., 323 F.3d 386, 390 (6th Cir.
2003) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986)). The
evidence and all reasonable inferences must be construed in the light most favorable
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to the non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475
U.S. 574, 587 (1986); Redding, 241 F.3d at 532 (6th Cir. 2001). "[T]he mere existence
of some alleged factual dispute between the parties will not defeat an otherwise
properly supported motion for summary judgment; the requirement is that there be no
genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48
(1986) (emphasis in original); see also National Satellite Sports, Inc. v. Eliadis, Inc.,
253 F.3d 900, 907 (6th Cir. 2001).
If the movant establishes by use of the material specified in Rule 56(c) that there
is no genuine issue of material fact and that it is entitled to judgment as a matter of
law, the opposing party must come forward with "specific facts showing that there is
a genuine issue for trial." First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 270
(1968); see also McLean v. 988011 Ontario, Ltd., 224 F.3d 797, 800 (6th Cir. 2000).
Mere allegations or denials in the non-movant's pleadings will not meet this burden,
nor will a mere scintilla of evidence supporting the non-moving party. Anderson, 477
U.S. at 248, 252. Rather, there must be evidence on which a jury could reasonably
find for the non-movant. McLean, 224 F.3d at 800 (citing Anderson, 477 U.S. at 252).
“A worker’s compensation redemption is an agreement to settle the dispute
between the parties.” Dubois, 2002 Mich. App. LEXIS 796, at *3. “An agreement to
settle a pending action is a contract that is to be governed by the legal principles that
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are generally applicable to the interpretation and construction of contracts.” Id. at *34. “The cardinal rule in the interpretation of contracts is to ascertain the intention of
the parties.” Shay v. Aldrich, 487 Mich. 648, 660; 790 N.W.2d 629 (Mich. 2010).
“[I]f the language of a contract is unambiguous, it is to be construed according to its
plain meaning.” Id. However, “if the language of a contract is ambiguous, courts may
consider extrinsic evidence to determine the intent of the parties.” Id.
As an initial matter, it appears that Plaintiff is moving solely for summary
judgment on his claim for breach of contract. His present motion does not address his
claims for unjust enrichment, fraud/fraudulent misrepresentation, innocent
misrepresentation, or conversion.
As to Plaintiff’s argument that Defendant breached the terms of the parties’
redemption agreement, the Court cannot conclude as a matter of law that Plaintiff is
entitled to summary judgment in his favor. Here, there is no ambiguity that the
language of the various documents memorializing the parties’ agreement do not reflect
a lifetime benefits award. The parties’ Redemption Agreement states in relevant part
that:
WHEREFORE, it is agreed to by and between the parties that the Agency
may enter an order in this cause providing that the sum of NINETYEIGHT THOUSAND FORTY-ONE DOLLARS ($98,041.00) BROKEN
DOWN AS FOLLOWS: $10,000 CASH AND $88,041.00 FOR THE
COST OF TH[sic] ANNUITY be forthwith paid by the employer/carrier
to: Giuseppe Vultaggio
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See Def.’s Mot. to Dismiss, Ex. B. Moreover, the parties also executed a NonQualified Assignment and Release of Periodic Payment Obligation which states that
Plaintiff was to be paid benefits described as: “$1,565.00 payable monthly, guaranteed
5 years, beginning on 1/1/2009, with the last guaranteed payment on 12/1/2013.” See
Def.’s Resp. to Plf.’s Mot. for Summ. J., Ex. C.
Plaintiff mostly relies on the transcript from the hearing before Magistrate
Wolock to argue that the parties agreed to a lifetime benefit award. However, the
hearing transcript is parol evidence and therefore the Court may not rely on this
evidence to determine the intent of the parties. Shay, 487 Mich. at 667 (stating that
contracts are “subject to the parol evidence rule, which prohibits the use of extrinsic
evidence to interpret unambiguous language within a document.”) Similarly, Plaintiff’s
reliance on the February 2008 offer letter is parol evidence that is inadmissible to
establish intent.
Plaintiff ignores the parties’ written agreements in both his Complaint and in the
present motion. However, the language of these documents unambiguously evidences
the intent of the parties for a lump sum payment of $10,000 and an annuity of
$88,041.00, which was to be paid by monthly installments of $1,565.00 for five years.
The plain terms of the parties’ agreements preclude this Court from concluding that
Plaintiff is entitled to summary judgment in his favor on his breach of contract claim.
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IV.
CONCLUSION
For the foregoing reasons, Defendant’s Motion to Dismiss for Lack of Subject
Matter Jurisdiction [#18] is DENIED.
Plaintiff’s Motion for Summary Judgment [#19] is also DENIED.
SO ORDERED.
Dated: March 31, 2015
/s/Gershwin A Drain
GERSHWIN A. DRAIN
UNITED STATES DISTRICT JUDGE
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