Keintz et al v. Belron US

Filing 64

MEMORANDUM (eo, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
KATHRYN AGNEW, Executrix of
the Estate of Robert W. Keintz
Plaintiffs,

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v.
BELRON US INC., et al.,
Defendants.

4:08-cv-2153
Hon. John E. Jones III
Hon. William T. Prince

MEMORANDUM
April 20, 2011
Before the Court is the Report and Recommendation (“R&R”) of Magistrate
Judge William T. Prince filed on March 18, 2011 (Doc. 58). The R&R
recommends that we grant the Defendant’s Motion for Summary Judgment (Doc.
43) and Motion to Strike (Doc. 55), and dismiss the complaint. Objections to the
R&R were filed by Plaintiff Kathryn Agnew (“Plaintiff”) on April 1, 2011. (Doc.
61). Accordingly this matter is ripe for our review.
For the reasons that follow, the parts I, II, and IV-B of the R&R shall be
adopted. The Defendants’ Motion for Summary Judgment and Motion to Strike
shall be granted, and the complaint shall be dismissed.

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I.

STANDARDS OF REVIEW
A.

Objection to Magistrate Judge’s R&R

When objections are filed to the report of a magistrate judge, the district
court makes a de novo determination of those portions of the report or specified
proposed findings or recommendations to which objections are made. 28 U.S.C. §
636(b)(1); United States v. Raddatz, 447 U.S. 667, 674-75 (1980). The court may
accept, reject, or modify, in whole or in part, the magistrate judge’s findings or
recommendations. Id. Although the standard of review is de novo, 28 U.S.C. §
636(b)(1) permits whatever reliance the district court, in the exercise of sound
discretion, chooses to place on a magistrate judge’s proposed findings and
recommendations. Raddatz, 447 U.S. at 674-75; see also Mathews v. Weber, 423
U.S. 261, 275 (1976); Goney v. Clark, 749 F.2d 5, 7 (3d Cir. 1984).
B.

Summary Judgment

Summary judgment is appropriate if the record establishes “that there is no
genuine issue as to any material fact and that the movant is entitled to judgment as
a matter of law.” Fed. R. Civ. P. 56(c). Initially, the moving party bears the
burden of demonstrating the absence of a genuine issue of material fact. Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). The movant meets this burden by
pointing to an absence of evidence supporting an essential element as to which the
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non-moving party will bear the burden of proof at trial. Id. at 325. Once the
moving party meets its burden, the burden then shifts to the non-moving party to
show that there is a genuine issue for trial. Fed. R. Civ. P. 56(e)(2). An issue is
“genuine” only if there is a sufficient evidentiary basis for a reasonable jury to find
for the non-moving party, and a factual dispute is “material” only if it might affect
the outcome of the action under the governing law. Anderson v. Liberty Lobby,
Inc, 477 U.S. 242, 248-49 (1986).
In opposing summary judgment, the non-moving party “may not rely merely
on allegations of denials in its own pleadings; rather, its response must ... set out
specific facts showing a genuine issue for trial.” Fed. R. Civ. P. 56(e)(2). The
non-moving party “cannot rely on unsupported allegations, but must go beyond
pleadings and provide some evidence that would show that there exists a genuine
issue for trial.” Jones v. United Parcel Serv., 214 F.3d 402, 407 (3d Cir. 2000).
Arguments made in briefs “are not evidence and cannot by themselves create a
factual dispute sufficient to defeat a summary judgment motion.” Jersey Cent.
Power & Light Co. v. Twp. of Lacey, 772 F.2d 1103, 1109-10 (3d Cir. 1985).
However, the facts and all reasonable inferences drawn therefrom must be viewed
in the light most favorable to the non-moving party. P.N. v. Clementon Bd. of
Educ., 442 F.3d 848, 852 (3d Cir. 2006).
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Summary judgment should not be granted when there is a disagreement
about the facts or the proper inferences that a factfinder could draw from them.
Peterson v. Lehigh Valley Dist. Council, 676 F.2d 81, 84 (3d Cir. 1982). Still, “the
mere existence of some alleged factual dispute between the parties will not defeat
an otherwise properly supported motion for summary judgment; there must be a
genuine issue of material fact to preclude summary judgment.” Anderson, 477
U.S. at 247-48.
II.

DISCUSSION
On November 28, 2008 Plaintiff and her now deceased husband Robert W.

Keintz filed this action against Defendant Belron US Inc. and its former entity
Safelite Glass Corp.1 Mr. Keintz was the beneficiary of an employee benefits plan
sponsored and administered by Defendant. The case arises out of certain alleged
misrepresentations Defendant made to Plaintiff and her husband regarding the
calculation of benefit payments. Plaintiff claims that she and her husband relied
upon these statements to their financial detriment. The complaint alleges two
violations of ERISA, 29 U.S.C. § 1132(a)(3)(B): (1) equitable estoppel and (2)
breach of fiduciary duties.

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For clarity, the discussion refers only to Defendant Belron US Inc., regardless of the
name of the company at the time of the particular event or communication.
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The facts that form the basis of this action are largely undisputed. Because
Magistrate Judge Prince undertook a painstaking recitation of the facts within his
R&R, we shall not endeavor to recite them herein but instead shall refer the reader
to section II of the R&R for that summary. In short, the Plaintiff alleges that she
and her husband relied on Defendant’s repeated statements that Mr. Keintz’s
benefits base would increase automatically on January 1, 2008 regardless of when
he began disability leave. Mr. Keintz began disability leave on November 8, 2007,
but his benefits base did not increase as he had expected. On January 28, 2008, a
Belron representative informed Plaintiff and her husband that the base did not
increase because Mr. Keintz was on leave on January 1, 2008, the date the plan
year changed. Plaintiff alleges that she and her husband relied on Defendant’s
interpretation of the plan, and, had they known that Mr. Keintz needed to work
through January 1 to receive the increased benefits, they would have postponed his
application for leave. Notably, however, Mr. Keintz’s oncologist reported in
November of 2007 that Mr. Keintz’s health had already deteriorated such that he
was unable to walk or preform the fine motor skills essential to his job.
Furthermore, the misrepresentations made by Belron representatives directly
contradict the language in the benefits plan that states, “[the] effective date of any
initial, increased, or additional insurance will be delayed” if a participant is not “in
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Active Employment because of Injury or Sickness.” “Active Employment” is
defined in the plan as working on a full-time basis for regular pay.
A.

Motion to Strike

As a threshold matter, we note that Defendant has filed a Motion to Strike
certain attachments to the summary judgment briefing regarding a uncompleted
settlement negotiations between the parties. Magistrate Judge Prince recommends
that Defendant’s Motion to Strike be granted based on Plaintiff’s failure to file a
brief in opposition. As noted by the Magistrate Judge, Local Rule 7.6 requires a
party opposing a motion to file a brief in opposition within 14 days after service of
the movant’s brief, or the motion will be deemed unopposed. Plaintiff has not filed
a brief in opposition to the motion to strike nor has she filed objections with
respect to this recommendation. We will therefore adopt this recommendation and
grant Defendant’s Motion to Strike.
B.

Motion for Summary Judgment2

As correctly noted by the Magistrate Judge, a claim for equitable estoppel
requires the Plaintiff to establish: (1) the existence of a material representation, (2)
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Magistrate Judge Prince first recommends that the Defendants’ Motion for Summary
Judgment be granted, concluding that Plaintiff has failed to exhaust her administrative remedies
and present facts that would entitle her to relief on either of her substantive claims. However,
because we agree that Plaintiff has failed to show that there is a genuine issue of material fact
that would establish either reasonable or detrimental reliance, we need not reach a determination
as to whether Plaintiff has exhausted her administrative remedies.
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reasonable and detrimental reliance upon that representation, and (3) extraordinary
circumstances. Curcio v. John Hancock Mut. Life Ins. Co., 33 F.3d 226, 235 (3d
Cir. 2004). Similarly, a claim for breach of fiduciary duties requires the Plaintiff to
establish: (1) the Defendant acted in a fiduciary capacity, (2) the Defendant made
affirmative misrepresentations or failed to adequately inform plan beneficiaries, (3)
the misrepresentation or inadequate disclosure was material, and (4) the Plaintiff
relied to her detriment on the misrepresentation or inadequate disclosure. In re
Unisys Corp. Retiree Medical Benefit ERISA Litigation (Unisys IV), 579 F.3d 220,
228 (3d Cir. 2009).
1.

Reasonable Reliance

In determining that Plaintiff has failed to show a genuine issue of material
fact establishing reasonable reliance on Defendant’s representations, the Magistrate
Judge correctly relied on In re Unisys Corp. Retiree Medical Benefit ERISA
Litigation (Unisys I), 58 F.3d 896, 907-08 (3d Cir. 1995). In that case, the Third
Circuit held that reliance upon an oral interpretation of plan benefits is never
reasonable when the interpretation cannot be reconciled with the unambiguous
written language of the plan. Id. Here, the Magistrate Judge found that the
language of the benefits plan unambiguously requires the beneficiary to maintain
active employment status on the date that the benefit is scheduled to increase in
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order for the increase to take effect.
In her objections, Plaintiff argues that her reliance was reasonable because
nothing in the plan language explicitly states that Defendant is not the proper party
to calculate the benefits base. Plaintiff further argues that the policy language cited
by the magistrate judge is ambiguous because the language “increased or
additional insurance” could refer to the benefit rate rather than the benefit base. We
disagree with both of Plaintiff’s arguments for the following reasons. First,
absence of plain language indicating the party responsible for determining the
benefits base does not render reliance upon Defendant’s misstatements reasonable
where the statements themselves contradict the written language in the plan stating
how the benefits base will be calculated. Second, the language of the plan is not
ambiguous because it requires active status for any insurance increase. Both an
increase in the benefits base or an increase in the benefits rate would generate
additional insurance payments, so the language requiring active status applies
equally to both situations.
2.

Detrimental Reliance

In determining that Plaintiff has failed to show a genuine issue of material
fact establishing detrimental reliance on Defendant’s representations, the
Magistrate Judge correctly relied on Unisys IV, 579 F.3d at 223. In that case, the
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Third Circuit agreed with the lower courts that two plaintiffs failed to show
detrimental reliance where the plaintiffs’ decisions regarding their benefits plans
were based on factors unrelated to the employer’s misrepresentations. Id. Here, the
Magistrate Judge found that Plaintiff and her husband similarly made their decision
to begin disability leave in November 2007 based on the severity of Mr. Keintz’s
illness rather than the Defendant’s misrepresentations.
In her objections, Plaintiff asserts that the Magistrate Judge failed to account
for the multiple means by which Mr. Keintz could have accommodated his work
schedule to preserve his employment until January 1, 2008. Plaintiff further
asserts that reliance on Unisys IV is inappropriate because Unisys IV is a fiduciary
duty case rather than an equitable estoppel case, and the Third Circuit in Unisys IV
was bound by a more deferential standard of review than applies to this Court.
Plaintiff relies instead on Curcio v. John Hancock Mutual Life Insurance Co. in
which the Third Circuit held that the plaintiff did establish detrimental reliance
where plaintiff attested that she and her husband decided to purchase accidental
death benefits after a conversation discussing the policy options available through
the employer. 33 F.3d at 237.
We disagree with each of Plaintiff’s arguments. First, the distinctions
Plaintiff attempts to draw between Unisys IV and the instant matter are without
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legal significance. Although we exercise de novo review of the R&R, 28 U.S.C. §
636(b)(1) permits whatever reliance the district court chooses to place on a
Magistrate Judge’s proposed findings. United States v. Raddatz, 447 U.S. 667,
674-75 (1980). Furthermore, because detrimental reliance is an element of both
equitable estoppel and breach of fiduciary duty, the reasoning in Unisys IV is
applicable to both claims.
Second, we find that the facts of Curcio are inapposite. In Curcio, the only
influence upon the plaintiff’s decision to purchase additional insurance was her
desire to obtain a larger recovery in the event that her husband prematurely passed
away. But for the employer’s representations that she and her husband qualified for
the insurance plan, the plaintiff would not have purchased the additional coverage.
Such is not the case in matter sub judice. Taking the facts in the light most
favorable to Plaintiff, it appears that she and her husband based their decision to
begin disability leave in November 2007 on Mr. Keintz’s physical condition, not
his available benefits. Although Plaintiff undoubtedly expected additional benefits
after her conversations with Defendant, her success in establishing Mr. Keintz’s
complete disability as of November 2007 conclusively establishes that Mr. Keintz
would have been unable to maintain active status until January 2008. Given the
severity of Mr. Keintz’s illness, Plaintiff and her husband could not have qualified
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for increased benefits and could not have relied on Defendant’s misrepresentations.
III.

CONCLUSION
Accordingly, based on the foregoing, the Plaintiff’s objections to the R&R

shall be overruled and the R&R shall be adopted in part. An appropriate Order
shall issue.

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