Everett v. National Union Fire Insurance Company of Pittsburgh, PA et al
Filing
61
Memorandum Opinion and Order granting 41 MOTION for Summary Judgment, 46 Amended MOTION for Summary Judgment, 49 Amended MOTION for Summary Judgment, 27 MOTION for Summary Judgment. A separate judgment will be entered. Signed by District Judge Tom S. Lee on 3/9/12 (LWE)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF MISSISSIPPI
JACKSON DIVISION
SINCLAIR EVERETT
PLAINTIFF
VS.
CIVIL ACTION NO. 3:11CV299TSL-MTP
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURG, P.A.; CHARTIS
CLAIMS, INC., formerly known as AIG
DOMESTIC CLAIMS, INC.; GALLAGHER
BASSETT SERVICE, INC.; J.B. HUNT
TRANSPORT, INC. and JOHN AND JANE
DOES 1-10
DEFENDANTS
MEMORANDUM OPINION AND ORDER
This cause is before the court on the motion of defendants
National Union Fire Insurance Company of Pittsburg, P.A., Chartis
Claims, Inc. and Gallagher Bassett Service, Inc. (Gallagher
Bassett), and the separate motion of J.B. Hunt Transport, Inc.
(J.B. Hunt) for summary judgment pursuant to Rule 56 of the
Federal Rules of Civil Procedure.
Plaintiff Sinclair Everett has
responded to both motions and the court, having considered the
memoranda of authorities, together with attachments, submitted by
the parties, concludes that defendants’ motions should be granted.
This case presents a dispute over coverage under a Truckers
Occupational Accident Insurance policy issued by defendant
National Union Fire Insurance Company of Pittsburg (NUFIC).
On
January 25, 2006, plaintiff entered an Independent Contractor
Operating Agreement with J.B. Hunt which, as the name implies,
provided that plaintiff would be an independent contractor with
J.B. Hunt.
Under the contract, plaintiff had sole financial
responsibility for providing workers' compensation insurance or
occupational accident insurance.
To fulfill this obligation,
plaintiff had the option of either maintaining insurance himself
or allowing J.B. Hunt to acquire it on his behalf and deduct the
premiums from his compensation.
Everett chose to purchase
coverage through J.B. Hunt, and he thus became insured under a
Truckers Occupational Accident policy procured by J.B. Hunt from
NUFIC.
On November 26, 2008, while working for J.B. Hunt, Everett
allegedly sustained injuries when he fell from a trailer as he was
preparing to unload pallets.
He initially made a claim for
disability benefits under the Occupational Accident policy.
Based
on his claim, which was adjusted by defendant Gallagher Bassett,
NUFIC made payments for plaintiff’s medical treatment for injuries
to his left knee and paid temporary total disability benefits on
account of these injuries through April 1, 2009.
However, NUFIC
denied that additional injuries asserted by plaintiff (including
to his right knee, shoulder and neck) were related to the November
26, 2008 accident and it thus declined payment of benefits related
to those alleged injuries.
On March 17, 2009, while Everett’s occupational accident
claim was pending and benefits under that policy were being paid,
2
plaintiff filed a Petition to Controvert before the Mississippi
Workers’ Compensation Commission, asserting that he was an
employee of J.B. Hunt at the time of the November 26, 2008
accident and was entitled to recover workers’ compensation
benefits for his injuries.
On August 20, 2009, Everett
voluntarily dismissed his workers’ compensation claim without
prejudice.
A year later, on September 13, 2010, after obtaining
new counsel, he moved to reinstate his workers’ compensation
claim, and a few months later he reached a settlement of his
workers’ compensation claim, and on December 22, 2010, Everett,
joined by J.B. Hunt and its workers’ compensation carrier New
Hampshire Insurance Company, sought and received approval from the
Commission of the settlement of his workers’ compensation claim.
Under the terms of the settlement approved by the Commission in an
order dated December 22, 2010, plaintiff received a lump-sum
payment of $17,500, which according to the Commission-approved
order, represented “the entire liability of the employer and
carrier to [plaintiff] under [the] workers’ compensation case” for
“the accidental injuries sustained by claimant [to his body] while
in the employ of the employer....”
Plaintiff filed the present action on April 15, 2011 against
NUFIC, Gallagher Bassett and J.B. Hunt asserting claims for breach
of contract in bad faith, fraud/misrepresentation and negligent
infliction of emotional distress based on allegations that
3
defendants failed to pay him the benefits to which he is due under
the terms of the NUFIC Occupational Accident policy, and as
required by law.1
NUFIC and Gallagher Bassett have moved for summary judgment,
contending that since plaintiff asserted before the Workers’
Compensation Commission (MWCC or Commission) that he was an
employee of J.B. Hunt at the time of his accident and thus
entitled to benefits under the workers’ compensation laws, and
since he actually received workers’ compensation benefits, then he
is judicially estopped from recovering under the Occupational
Accident policy, as that policy states:
This policy does not cover any losses caused in whole or
in part by, or resulting in whole or in part from, the
following:
...
11. any Injury for which the Insured Person is entitled
to benefits pursuant to any workers’ compensation law or
other similar legislation.
1
In addition to these claims, which are based in part on
plaintiff’s allegation that defendants wrongfully denied benefits
for his shoulder, back and neck, and right knee injuries and
wrongfully terminated payment of disability benefits at a time
when he remained totally disabled, plaintiff has asserted a claim
for injunctive relief, seeking to invalidate a provision in the
policy establishing a 104-week maximum benefit period for medical
benefits and temporary disability coverage. Plaintiff alleges
this provision is inconsistent with Mississippi law governing
these types of policies, and specifically Miss. Code Ann.
§ 71-3-5, and that defendants are thus also liable for bad faith
breach of contract for failing to provide coverage under the
policy that confirmed to the requirements of Mississippi law, and
are liable for fraud/misrepresentation, for promising to provide
appropriate coverage while knowing that the policy in question was
not adequate under Mississippi law.
4
Judicial estoppel is a common law doctrine that “prevents a
party from asserting a position in a legal proceeding that is
contrary to a position previously taken in the same or some
earlier proceeding.”
Hall v. GE Plastic Pacific PTE Ltd., 327
F.3d 391, 396 (5th Cir. 2003) (quoting Ergo Science, Inc. v.
Martin, 73 F.3d 595, 598 (5th Cir. 1996)).
“The purpose of
judicial estoppel is ‘to protect the integrity of the judicial
process’ by preventing parties from ‘playing fast and loose’ with
the courts.”
In re Texas Wyoming Drilling, Inc., 647 F.3d 547,
552 (5th Cir. 2011) (quoting Brandon v. Interfirst Corp., 858 F.2d
266, 268 (5th Cir. 1988)).
“It is generally invoked where
‘intentional self-contradiction is being used as a means of
obtaining unfair advantage in a forum provided for suitors seeking
justice.’” Id. (quoting Superior Crewboats, Inc. v. Primary P & I
Underwriters, 374 F.3d 330, 334-35 (5th Cir. 2004)).
In this
circuit, “two bases for judicial estoppel” must be satisfied
before a party can be estopped.
“First, it must be shown that
“the position of the party to be estopped is clearly inconsistent
with its previous one; and [second,] that party must have
convinced the court to accept that previous position.”
Hall, 327
F.3d at 396 (citing Ahrens v. Perot Systems Corp., 205 F.3d 831,
833 (5th Cir. 2000)).
The record in this case establishes beyond dispute that
Everett took the position before the Workers’ Compensation
5
Commission that he was an employee of J.B. Hunt and as such
entitled to receive workers’ compensation benefits for his on-thejob injuries.
Yet in this action, Everett maintains that he was
not an employee of J.B. Hunt and thus was not entitled to workers’
compensation benefits, and that he was instead an independent
contractor.
As these positions are manifestly inconsistent, see
Miss. Code Ann. § 71-3-3(d) (defining “[e]mployee” for purposes of
workers’ compensation law to mean “any person ... in the service
of an employer under any contract of hire or apprenticeship, ...
provided that there shall be excluded therefrom all independent
contractors....”), the first requirement for application of
judicial estoppel is satisfied.2
Plaintiff argues, though, that judicial estoppel does not
apply because his asserted position that he was an employee of
J.B. Hunt was never “accepted” by the Workers’ Compensation
Commission.
In this vein, plaintiff admits he filed a claim for
workers’ compensation benefits for the injuries he received that
2
Plaintiff argues that his position in this case is not
inconsistent with his position in the workers’ compensation
proceeding because the MWCC never actually found that he was an
employee or found that he was entitled to workers’ compensation
benefits, and because in settling his claim for workers’
compensation benefits, he expressly reserved his rights under the
Occupational Accident policy. However, the essential premise of
his claim for workers’ compensation benefits, and the settlement
of that claim, was that he was an employee of J.B. Hunt. The
issue of whether the MWCC found plaintiff was an employee goes to
the second requirement for judicial estoppel, not the first.
6
are the subject of this action, which claim was necessarily
premised on his assertion that he was an employee of J.B. Hunt.
However, he points out that his petition was dismissed without
prejudice and was never reinstated.
He notes, in fact, that while
he moved for reinstatement of his workers’ compensation petition
in September 2010, his motion was denied by Administrative Law
Judge Robert Arnold by order entered December 21, 2010.
Thus, he
states, on December 22, 2010, the date on which he settled his
claim with J.B. Hunt and its workers’ compensation carrier (New
Hampshire Insurance Company), he had no pending workers’
compensation claim.
Rather, as he puts it, his claim for workers’
compensation benefits “remained ... a baseless and dismissed
claim” which the MWCC “did not adjudicate by compensability
hearing or final hearing [on] any aspect of the claim.”
Plaintiff further observes that not only did the order of the
MWCC approving the settlement recite that J.B. Hunt and New
Hampshire Insurance Company denied compensability of the claim,
but also, “not once in the order ... is it found that Plaintiff
was an employee of J.B. Hunt, and not an independent contractor.”
Everett concludes, “In reality, the order from the [MWCC] found
that Plaintiff was not entitled to benefits under the laws and
rules of the Commission.”
Plaintiff’s position cannot be squared
with the terms of the order, or with applicable law.
7
First, plaintiff’s suggestion that the Commission cannot be
found to have accepted his position because he had no pending
workers’ compensation claim before the Commission at the time of
the settlement is belied by the facts, and by express provisions
of the Commission’s order.
Although plaintiff had previously
voluntarily dismissed his petition to controvert without prejudice
and his motion to reinstate had been denied by the ALJ, the ALJ’s
order did not become final, as the parties requested approval of
their compromise settlement by the full Commission just one day
after that order was entered.
See Miss. Code Ann. § 71-3-47
(ALJ’s decision “shall be final unless within twenty (20) days a
request or petition for review by the full commission is filed”).
Further, in its order approving the settlement, the MWCC–-which
has “full power and authority to determine all questions relating
to the payment of claims for compensation,” Miss. Code Ann.
§ 71-3-47--explicitly found that it had “jurisdiction in this
matter,” that the case was “a proper one for disposition under the
provisions of the Mississippi Workers’ Compensation Act including
the provisions of Miss. Code Ann. § 71-3-29 (1972),” and that the
settlement was in the “best interest of the claimant.”3
added).
(Emphasis
The order recited that it was an “all-inclusive
3
Mississippi Code Annotated § 71-3-29 states that “lump
sum settlement payments shall be governed by rules of the
commission, and shall not be made except when determined to be in
the best interest of the injured worker or his dependents, the
commission having final authority in such questions.”
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settlement,” providing for a lump-sum payment of $17,500, which
represented “the entire liability of the employer and carrier to
[plaintiff] under this workers’ compensation case for
[plaintiff’s] alleged injuries, whether for compensation benefits,
medical benefits, or any other benefits under the terms of the
Mississippi Workers’ Compensation Act.”
(Emphasis added).
Finally, the order provided that upon payment of the $17,500, the
employer and workers’ compensation carrier would be forever
discharged from further liability to plaintiff “insofar as this
workers’ compensation case, MWCC No. 0902288-K-2413-E for the
accidental injuries sustained by claimant ... while in the employ
of the employer ....”
It is clear from the foregoing that notwithstanding the ALJ’s
order denying reinstatement, the Commission, at the request of the
parties to Everett’s worker’s compensation case, assumed
jurisdiction over the workers’ compensation case.
Moreover, the
Commission approved the payment of workers’ compensation benefits
to Everett for the injuries he sustained “while in the employ” of
J.B. Hunt.
By the Commission’s approval of the order, plaintiff
was by law adjudged a person “entitled to [workers’]
compensation.”
See Mississippi Power & Light Co. v. Cook, 832 So.
2d 474, 480 (Miss. 2002) (“Under Miss. Code Ann. § 71-3-37(10) the
Commission is entitled to approve settlements only when it is in
the best interest of a ‘person entitled to compensation.’
9
Thus,
clearly Cook was entitled to compensation based on the settlement
agreement approved by the Commission.”).
In short, Everett,
claiming to be an employee of J.B. Hunt, sought, and received,
approval of a workers’ compensation settlement by the Mississippi
Workers’ Compensation Commission.
Similar to this case, the plaintiff in C.W. Jones v. Quick &
Wiser Auto Sales, LLC, Civil Action No. 1:08CV-164-M, 2009 WL
4758750 (W.D. Ky. Dec. 8, 2009), filed a claim for workers’
compensation in Tennessee as a result of injuries he claimed to
have sustained while employed by the defendant, Quick & Wiser Auto
Sales, LLC (Q&W).
As here, the defendant argued in the workers’
compensation proceeding that it was not obligated to provide
workers' compensation benefits because Jones was not its statutory
“employee.”
The parties ultimately resolved their dispute through
a settlement agreement, which was approved by a Tennessee workers'
compensation specialist.
The plaintiff Jones thereafter filed
suit against Q&W in Kentucky, arguing that he was an independent
contractor rather than an employee and therefore not subject to
the exclusivity provision of the Tennessee Workers’ Compensation
Law.
Q&W argued in the later action that Jones was its employee,
a position inconsistent with its position in the workers'
compensation proceeding.
Q&W argued that Jones, by filing a
successful workers' compensation claim in Tennessee, was
judicially estopped from arguing that he was anything other than
10
Q&W's employee.
The court agreed that Jones was judicially
estopped from arguing that he was an independent contractor,
reasoning as follows:
To satisfy the prior success requirement, there must be
“judicial acceptance” of the prior inconsistent
position. This would generally mean that a party is not
judicially estopped from taking a position that is
inconsistent with a prior proceeding where that prior
proceeding is ultimately settled. However, success on
the merits is not a necessary prerequisite for
application of the doctrine; all that is required is
“that the first court has adopted the position urged by
the party, either as a preliminary matter or as part of
a final disposition.” [Reynolds v. Comm'r, 861 F.2d 469,
473 (6th Cir. 1988) (citing Edwards v. Aetna Life Ins.
Co., 690 F.2d 595, 599 n.5 (6th Cir. 1982)]. Therefore,
where the first court is required to approve of
settlements reached by the parties and does not “act as
a mere rubber stamp” of those agreements, there has been
sufficient “judicial acceptance” of the settlement
agreement so as to invoke the doctrine of judicial
estoppel. Id.; ...
Jones, 2009 WL 4758750, at 2 (additional citations omitted).
court concluded:
... Jones, by applying for workers' compensation
benefits, necessarily asserted that he was Q&W's
employee. ... Although Q&W contested whether Jones was
an employee, it was Jones's position that was ultimately
accepted by the Tennessee Workers' Compensation
Specialist when she approved the settlement agreement
providing Jones with benefits under the TWCL. Now Jones
is arguing that he is not subject to the exclusivity
provision of Tennessee or Kentucky's workers'
compensation laws. But having successfully argued
otherwise in a prior proceeding, Jones is estopped from
claiming that he was not Q&W's employee.
Id. at 3.
11
The
In the court’s opinion, the MWCC’s approval of Everett’s
workers’ compensation settlement with J.B. Hunt and its workers’
compensation carrier satisfies the judicial acceptance
requirement.4
In this case, as in Jones, in applying for workers’
4
Although the Fifth Circuit has recognized that
“settlements in ordinary civil cases do not require the judicial
acceptance of either party's position, and judicial estoppel is
therefore not warranted in a later proceeding,” Prideaux v. Tyson
Foods, Inc., 387 Fed. Appx. 474, 478, 2010 WL 2813813, 2 (5th Cir.
2010) (emphasis added), it has also held that the judicial
estoppel doctrine may be applied whenever a party makes an
argument ‘with the explicit intent to induce the district court's
reliance,’” Hall, 327 F.3d at 399 (quoting Hidden Oaks Ltd. v.
City of Austin, 138 F.3d 1036, 1047 (5th Cir. 1998)). Along these
lines, numerous courts have recognized that a court-approved
settlement is sufficient to establish judicial acceptance of a
prior inconsistent position. See, e.g., Reynolds v. Comm’r of
Internal Revenue, 861 F.2d 469, 473 (6th Cir. 1988) (fact of
bankruptcy court approval satisfied “judicial acceptance”
requirement since “[i]n bankruptcy proceedings, as distinguished
from ordinary civil cases, any compromise between the debtor and
his creditors must be approved by the court as fair and
equitable”); see also Rissetto v. Plumbers & Steamfitters Local
343, 94 F.3d 597, 604 (9th Cir. 1996)(although prior claim for
workers' compensation disability benefits did not result in an
award by the workers’ compensation board but rather a settlement
agreement with the employer's insurer, court held that board’s
approval of the settlement agreement was sufficient to constitute
“prior success” on plaintiff’s claim that she was totally
disabled, which was inconsistent with her position in later ADA
lawsuit that she was capable of performing work).
Under the law, the MWCC approval of the settlement was
required, and the Commission was authorized to approve the lump
sum settlement only if it determined that the settlement was in
the best interest of the injured worker or his dependents. See
Miss. Code Ann. § 71-3-29, supra note 8; § 71-3-37(10) (“The
commission shall be the sole judge as to whether or not a lump-sum
payment shall be to the best interest of the injured worker or his
dependents.”); see also 82 Am. Jur. 2d Workers’ Compensation § 511
(2012)(stating that “[a] settlement of a compensation claim which
has been approved as required by the workers' compensation statute
operates as an adjudication of the facts agreed upon in the
settlement, including the employer's obligation to pay
12
compensation benefits and in thereafter seeking and securing MWCC
approval of the settlement providing for J.B. Hunt’s payment of
workers’ compensation benefits, plaintiff necessarily asserted he
was J.B. Hunt’s employee and entitled to workers’ compensation
benefits.
Having successfully asserted this position in the prior
proceeding, he is judicially estopped from taking a contrary
position in this cause.
It follows that NUFIC, Chartis Claims and
Gallagher Bassett are entitled to summary judgment since each of
plaintiff’s claims against them is grounded on the factual premise
that plaintiff is entitled to recover benefits under the
Occupational Accident policy, and yet that policy excludes
coverage for “any Injury for which the Insured Person is entitled
to benefits pursuant to any workers’ compensation law.”5
compensation, [and] has the same force and effect as an award made
after a full hearing....”).
5
In the court’s opinion, the fact that the order
approving the settlement recited that Everett specifically
“reserved all causes of action, if any, against the employer and
their Occupational Accident Carriers concerning the November 26,
2008 incident other than the workers’ compensation claim” does not
preclude application of judicial estoppel. The MWCC did not find
that Everett had a right of recovery under the Occupational
Accident policy but merely allowed him to reserve “all rights of
action, if any,” he might have against these defendants. Given
that he recovered a MWCC-approved workers’ compensation settlement
based on his assertion that he was entitled to such benefits as an
employee of J.B. Hunt, he is estopped from claiming herein that he
was not entitled to recover workers’ compensation benefits as an
employee of J.B. Hunt and he thus has no viable claim under or
based on the Occupational Accident policy.
13
In the court’s opinion, it also follows that J.B. Hunt is
entitled to summary judgment.
Plaintiff has received workers’
compensation benefits for his alleged work-related injuries based
on his alleged status as an employee and is barred from further
recovery against J.B. Hunt.
See Miss. Code Ann. § 71-3-9 (“The
liability of an employer to pay compensation shall be exclusive
and in place of all other liability of such employer to the
employee ... from such employer on account of such injury.”); see
also Wingerter v. Brotherhood Prods., Inc. ,822 So. 2d 300, 303
(Miss. Ct. App. 2002) (claimant entitled to workers’ compensation
may not collect on tort claim against employer).6
Based on the foregoing, it is ordered that defendants’
motions for summary judgment are granted.
A separate judgment will be entered in accordance with Rule
58 of the Federal Rules of Civil Procedure.
SO ORDERED this 9th day of March, 2012.
/s/ Tom S. Lee
UNITED STATES DISTRICT JUDGE
6
estopped
workers’
entitled
asserted
In the court’s opinion, even if plaintiff were not
from proceeding against J.B. Hunt by virtue of his
compensation settlement, this defendant would still be
to summary judgment for each of the various reasons
in J.B. Hunt’s motion.
14
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