Culver et al v. United Commerce Centers Inc et al
MEMORANDUM OPINION AND ORDER: Before the Court is Plaintiffs' Motion for Partial Summary Judgment (ECF No. 16 ) and Plaintiffs' Motion to Supplement its Motion for Partial Summary Judgment (ECF No. 31 ). The Motion to Supplement is GRANTED, but for the reasons stated below, the Motion for Partial Summary Judgment is DENIED. (Ordered by Chief Judge Barbara M.G. Lynn on 5/16/2017) (sss)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
STEVE WESLEY CULVER, CASSIE
CHARLENE CULVER, individually
and on behalf of MADISON RENEE HILL,
UNITED COMMERCE CENTERS, INC.,
NEW WORLD INTERNATIONAL, INC.,
and NATIONAL AUTO PARTS, INC.,
MEMORANDUM OPINION AND ORDER
Before the Court is Plaintiffs’ Motion for Partial Summary Judgment (ECF No. 16) and
Plaintiffs’ Motion to Supplement its Motion for Partial Summary Judgment (ECF No. 31). The
Motion to Supplement is GRANTED, but for the reasons stated below, the Motion for Partial
Summary Judgment is DENIED.
FACTUAL AND PROCEDURAL BACKGROUND
On April 19, 2016, Plaintiffs Steve Wesley Culver and his wife, Cassie Charlene Culver,
filed suit against Mr. Culver’s former employer, United Commerce Centers, Inc. (“UCC”), as
well as the alleged sponsors of their medical insurance plan, New World International, Inc., and
National Auto Parts, Inc. In May 2013, Steve Culver developed Hepatitis C and cirrhosis of the
liver. The parties agree that more than $300,000 was paid in medical expenses by the plan for
Mr. Culver over the course of two years. Plaintiffs allege UCC then terminated Mr. Culver’s
employment, so it could stop paying for his medical expenses under the medical insurance plan.
UCC contends it terminated him for theft. Mr. Culver further alleges he was illegally denied
COBRA continuing medical coverage after his termination, and denies UCC’s allegation that he
was terminated for theft. Plaintiffs also assert that Mrs. Culver was not given timely notice under
COBRA of her right to elect continuing coverage under the medical insurance plan, and that
UCC forced Mr. Culver into a separation agreement in which he released all claims.
Plaintiffs brought suit for slander, duress, and violations of the Employee Retirement
Income Security Act (“ERISA”), the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”), and the Age Discrimination in Employment Act (“ADEA”). On November 4, 2016,
Plaintiffs moved for partial summary judgment on their COBRA claims, asserting that New
World International, Inc. and National Auto Parts, Inc. are plan sponsors. On March 3, 2017,
Plaintiffs sought leave to supplement their motion to reference the deposition of Seth Denson,
the Defendants’ former health insurance broker. On May 2, 2017, the Culvers filed their Fourth
Amended Complaint adding their granddaughter, Madison Renee Hill, allegedly a plan
beneficiary, as a plaintiff.
In support of their motion, Plaintiffs assert that, as a matter of law, under COBRA
Defendants were obligated to provide Mr. Culver with continuing medical coverage, and to give
Mrs. Culver notice of her right to elect continuing coverage.
Under Fed. R. Civ. P. 56, summary judgment is proper “if the movant shows that there is
no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(a). A factual issue is material “if its resolution could affect the
outcome of the action.” Weeks Marine, Inc. v. Fireman’s Fund Ins. Co., 340 F.3d 233, 235 (5th
Cir. 2003). A factual dispute is “‘genuine,’ if the evidence is such that a reasonable [trier of fact]
could return a verdict for the non-moving party.” Crowe v. Henry, 115 F.3d 294, 296 (5th Cir.
1997). The Court is required to view all facts and draw all reasonable inferences in the light most
favorable to the non-moving party and to resolve all disputed factual controversies in favor of the
non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Boudreaux v.
Swift Transp. Co., Inc., 402 F.3d 536, 540 (5th Cir. 2005).
COBRA requires that “the plan sponsor for each group health plan shall provide…that
each qualified beneficiary who would lose coverage under the plan as a result of a qualifying
event is entitled, under the plan, to elect, within the election period, continuation coverage under
the plan.” 29 U.S.C. § 1161(a). In the case of termination, COBRA also requires the employer
under a plan to notify the administrator within 30 days of the date of the qualifying event, and
the administrator of the plan shall notify any qualified beneficiaries of their rights under COBRA
“within 14 days…of the date on which the administrator is notified.” Id. § 1166(a)–(c).
The parties agree that Mrs. Culver is a qualified beneficiary who was not provided with
COBRA notice, and that Mr. Culver was not provided with continuing coverage. However,
Defendants rely on 29 U.S.C. § 1163(2), which provides that termination of employment is not a
qualifying event if the employee is fired for gross misconduct. Gross misconduct is undefined in
COBRA, but Defendants contend Mr. Culver was fired for theft, which the Court concludes
would constitute gross misconduct, and that therefore, neither he nor Mrs. Culver would be
entitled to COBRA protections. Plaintiffs assert the theft allegation is false, and that UCC
terminated Mr. Culver so it could stop paying for his medical expenses under the medical
insurance plan. Plaintiffs cite the deposition testimony of Seth Denson, Defendants’ former
health insurance broker.1 Denson testified that Grace Tsai, one of the owners of UCC, who was
also its controller and who is married to Peter Tsai, UCC’s President, expressed frustration about
(ECF No. 31 at 9).
the medical insurance plan and the costs for care of Mr. Culver in particular.2 However, UCC
filed an affidavit from Grace’s son, Joseph Tsai, UCC’s Senior Vice President, stating that Mr.
Culver was fired for theft—specifically, for selling UCC’s scrap metal and cardboard and for
selling UCC’s auto parts without giving the proceeds to UCC.3 Joseph Tsai’s affidavit states that
Mr. Culver admitted to the allegations regarding the scrap cardboard. The thrust of the Tsai
affidavit is also to deny that New World International and National Auto Parts are plan sponsors.
The Culvers submit no affidavits or other evidence disproving the theft allegation, but seemingly
assert that the Defendants are estopped to assert that claim as a matter of law, because UCC gave
Culver a COBRA notice and three months of coverage after his termination. Defendants assert
that was pursuant to a separation agreement UCC and Mr. Culver signed.
There are genuine issues of material fact as to whether Plaintiffs were entitled to COBRA
notice, whether the separation agreement bars the claim, whether Defendants acted inconsistently
with their current position as to the reasons for termination and are therefore estopped, and
whether New World International and National Auto Parts are plan sponsors. Therefore,
summary judgment is improper.
For the reasons stated above, Plaintiffs’ Motion for Partial Summary Judgment is
May 16, 2017.
BARBARA M. G. LYNN
(ECF No. 31 Exhibit A at pp. 17-21).
(ECF No. 25-1 at 2).
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