James v. Life Insurance Company Of North America et al
Filing
150
MEMORANDUM OPINION AND ORDER ADOPTING 145 Memorandum and Opinion DENYING 126 Second MOTION for Summary Judgment , GRANTING 128 Corrected AMENDED 127 Motion for Summary Judgment, GRANTING IN PART, DENYING IN PART 135 MOTION to Strike.(Signed by Judge Gray H. Miller) Parties notified.(rkonieczny, 4)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
SANDRA W. JAMES,
Plaintiff,
v.
LIFE INSURANCE COMPANY OF NORTH
AMERICA AND GEICO CORPORATION
VOLUNTARY GROUP ACCIDENT INSURANCE
PLAN ,
Defendants.
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CIVIL ACTION H-12-2095
ORDER AFFIRMING & ADOPTING MAGISTRATE JUDGE’S
MEMORANDUM , RECOMMENDATION & ORDER
Pending before the court is the Magistrate Judge’s Memorandum, Recommendation, and
Order (the “MRO”) (Dkt. 145) recommending that defendants’ motion for summary judgment (Dkt.
126) be denied; plaintiff’s motion for summary judgment (Dkt. 128, amending Dkt. 127) be granted;
and defendants’ motion to strike (Dkt. 135) be granted in part and denied in part. The defendants
filed objections to the MRO (Dkt. 146), as did the plaintiff (Dkt. 148). Having reviewed the MRO,
the objections to the MRO and responses, and the applicable law, the court OVERRULES the
parties’ objections, AFFIRMS the Magistrate Judge’s orders, and ADOPTS the Magistrate Judge’s
recommendations in all respects.
I. BACKGROUND
This case arises out of the tragic death of plaintiff Sandra James’s (“plaintiff”) husband,
Robert L. James (“Robert”). Dkt. 1 (complaint) at 2 ¶ 7. On May 21, 2010, Robert died in a single
vehicle accident in Caroline County, Virginia, after his car collided with a tree and caught fire. Id.
The medical examiner stated that Robert’s cause of death was “inhalation of combustion products
and thermal injury.” Id. at 2 ¶ 8. The medical examiner listed the manner of death as an “accident.”
Id. A toxicology report revealed that Robert had a blood alcohol level of 0.19%. Id. at 3 ¶ 8.
At the time of Robert’s death, plaintiff was a GEICO Corporation (“GEICO”) employee and
a member of its Accidental Death & Dismemberment (“AD&D”) insurance program within the
GEICO Consolidated Welfare Benefit Plan (the “plan”). Id. at 3 ¶ 9. Plaintiff’s insurance covered
accidental deaths of herself and/or members of her family, including her spouse. Id. The coverage
amount at the time of Robert’s death was $300,000. Id. The insurance was provided by defendant
Life Insurance Company of North America (“LINA”) under Group Accident Policy OK 826414 (the
“policy”). Id. at 3 ¶ 10. LINA was designated as the claims administrator for the plan. Id.
The policy’s AD&D benefits were triggered when “the Covered Person suffer[ed] a Covered
Loss resulting directly and independently of all other causes from a Covered Accident . . . .” Dkt.
72, Ex. A at 97. A “Covered Accident” was defined as a “sudden, unforeseeable, external event that
results, directly and independently of all other causes, in a Covered Injury or a Covered Loss” that
is “not contributed to by disease, Sickness [sic], or mental illness,” and “is not otherwise excluded”
by the policy. Id. at 85.
About a month after Robert’s death, on June 16, 2010, plaintiff filed a benefits claim with
LINA, seeking the policy’s accidental death benefit. Id. at 55–56. LINA denied plaintiff’s claim on
August 4, 2010. Id. at 25–28. LINA found that the crash was not “unforeseen” as required by the
policy, because it was caused by Robert’s driving under the influence with a blood alcohol
concentration (“BAC”) of 0.19%, a level more than two times above the legal limit (0.08%) in the
Commonwealth of Virginia. Id. at 26. LINA reasoned that because studies have shown that
individuals with BACs between 0.11 and 0.20 percent suffer serious physical impairments including
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slowed reaction time and gross motor control, Robert’s death was not an unforeseen event while he
operated a motor vehicle with a BAC at the high end of that range. Id.
On August 27, 2010, plaintiff appealed LINA’s decision. Id. at 21. LINA denied plaintiff’s
appeal on September 22, 2010. Id. at 16–18. LINA reiterated that “we have determined that Mr.
James’ death was the foreseeable outcome of his intentional conduct and thus not accidental in
nature.” Id. at 18. Plaintiff then filed suit under the Employee Retirement Income Security Act of
1974 (“ERISA”), 29 U.S.C. § 1001 et seq., to recover the GEICO AD&D benefits to which she
claims to be entitled. Dkt. 1. She contended that LINA’s denial of her claim was based on an
incorrect factual determination and an erroneous interpretation of the policy. Id. at 7. She further
alleged that she was owed statutory penalties of up to 100 dollars per day for LINA’s alleged failure
to supply a complete copy of her claim file, and that she was entitled to surcharge damages for
LINA’s alleged breach of fiduciary duty by denying plan benefits to derive unjust profits. Id. at
12–13.
On November 1, 2013, this court adopted the MRO before it recommending dismissal of
plaintiff’s claims for breach of fiduciary duty. Dkt. 77. On August 14, 2014, in an order adopting
a second MRO pending before it the court: 1) decided the court would review LINA’s factual
determinations for an abuse of discretion and its legal determinations de novo; and 2) dismissed
plaintiff’s claim regarding LINA’s purported failure to provide documents; 3) made the factual
determination that Robert died as a result of driving while intoxicated; and 4) declined to decide the
issue of LINA’s coverage determination. Dkt. 116. On November 12, 2014, the court denied a
motion for reconsideration of its order adopting the MRO from August 14, 2014. Dkt. 142. On May
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11, 2015, the Magistrate Judge issued the MRO that is now before the court. Dkt. 142. Both parties
filed objections to the Magistrate Judge’s MRO. Dkts. 145, 146, 148.
II. LEGAL STANDARD
After referring a case for full pretrial management to a magistrate judge, the court must
review de novo any of the magistrate’s recommendations on dispositive matters to which the parties
have properly objected. See FED . R. CIV . P. 72(b)(3). The court may then “accept, reject, or modify
the recommended disposition; receive further evidence; or return the matter to the magistrate judge
with instructions.” Id. Moreover, when the magistrate issues an order deciding a nondispositive
matter, the district court may overrule or modify the magistrate’s orders only to the extent they are
“clearly erroneous or contrary to law.” FED . R. CIV . P. 72(a).
The MRO addressed the parties’ cross motions for summary judgment on the interpretation
of the policy, as well as each party’s objections to the evidence submitted by the opposing party.
Both parties object to some of the MRO’s recommendations on evidentiary issues, and defendants
object to the recommendation that plaintiff’s motion for summary judgment be granted, and
defendants’ motion be denied. The court will first consider the objections to the evidentiary
recommendations, and will follow with the summary judgment recommendation.
III. EVIDENTIARY OBJECTIONS
In an ERISA benefits claim under § 1132(a)(1)(B), a plaintiff is generally limited to
presenting evidence from the administrative record on the issue of coverage, unless the evidence
relates to how the administrator interpreted the plan in the past or would assist the court in
understanding medical terms and procedures. Crosby v. La. Health Serv. & Indem. Co., 647 F.3d
258, 263 (5th Cir. 2011). Moreover, evidence outside the administrative record may be offered for
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certain discrete purposes beyond coverage, namely to determine “[1] the completeness of the
administrative record; [2] whether the plan administrator complied with ERISA’s procedural
regulations; and [3] the existence and extent of a conflict of interest created by an administrator’s
dual role in making benefits determinations and funding the plan.” Id. at 5.
A. Defendants’ evidentiary objections
In response to the Magistrate Judge’s recommendations regarding evidence she would
consider in the motion for summary judgment, defendants raised three objections. First, defendants
object to the recommendation to not strike three internal LINA documents. Dkts. 128-8, 128-9, 12810. Defendants object that 1) the documents were not in effect when plaintiff’s claim was decided
and were not considered by LINA in connection with plaintiff’s claim for benefits; 2) the documents
do not reflect LINA’s conduct with respect to GEICO; or its conduct with respect to Robert and Mrs.
James; or GEICO’s understanding of the contract; and 3) the documents do not reflect how LINA
previously interpreted the law applicable to plaintiff’s claim. Dkt. 146 at 2.
The Magistrate Judge previously found that two of the three internal documents were relevant
to LINA’s prior interpretation of plan terms, and this court adopted that recommendation Dkt. 116
at 6. The Magistrate Judge determined that the third exhibit that she had not previously ruled upon
also indicated LINA’s previous interpretation and application of the foreseeability concept in similar
situations. This court’s prior reasoning holds true to admit all three exhibits: “the conduct of the
parties before the advent of a controversy may be relied upon to discover the parties’ understanding
of the contract.” Schultz v. Metro Life Ins. Co., 872 F.2d 676, 679 (5th Cir. 1989). And, as the
Magistrate Judge pointed out, LINA does not deny that the exhibits are LINA documents, nor does
LINA deny that they are indications of how LINA has interpreted similar policy provisions in the
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past. Dkt. 145. Though defendants argue that these documents are based on different law than that
applicable in this case, it provides no further explanation, making it a conclusory argument. The
Magistrate Judge’s order is not clearly erroneous. Defendants’ objections regarding the three internal
LINA documents (Dkts. 128-8; 128-9; 128-30) are OVERRULED.
Defendants also object to the Magistrate Judge striking a Blood Alcohol Content chart that
Ms. Sciulli, the accident specialist who initially reviewed the claim, used as a resource. Dkts. 145
at 15; 138-1. Defendants claim that because there is no dispute that Ms. Sciulli actually used the
BAC chart to determine plaintiff’s claim, it does not matter where she obtained the document.
Dkt. 146 at 3. Defendants further contend that Ms. Sciulli is well-qualified to offer opinions based
on the BAC chart and objects to the section of the MRO that suggests Ms. Sciulli is not qualified as
an expert in the area.
Ms. Sciulli’s qualifications to offer expert opinions in any capacity is not at issue here. The
Magistrate Judge simply sustained plaintiff’s objection to the chart and did not rely on the chart in
her review of the parties’ motions for summary judgment. Dkt. 145 at 15. The Magistrate Judge
sustained the objection to the chart on the basis that the chart was not in the administrative record
and did not fit within one of the categories of admissible evidence. Id. at 14. Further, Ms. Sciulli
could not authenticate the chart or explain who created the chart. Id. at 15. “A plan participant is
not entitled to a second chance to produce evidence demonstrating that coverage should be afforded.”
Crosby v. Louisiana Health Serv. & Indem. Co., 647 F.3d 258, 263 (5th Cir. 2011). LINA had the
opportunity to provide evidence that it used to determine coverage, and defendants do not dispute
that this chart was not included in the administrative record. The Magistrate Judge’s order is not
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clearly erroneous as to the BAC chart. Defendants’ objections regarding the BAC Chart are
OVERRULED.
B. Plaintiff’s evidentiary objections
The Magistrate Judge excluded five of plaintiff’s exhibits, the same exhibits she had
excluded in a prior MRO, which this court adopted. Dkt. 145 at 12 (pending MRO); Dkt. 110 at
20–21 (prior MRO); Dkt. 116 at 5–6 (adoption of prior MRO’s ruling on the same evidence).
Plaintiff objects to the current exclusion of Exhibits D through H (Dkts. 128-3–128-7), arguing that
these show, in part, how LINA interprets the terms of its AD&D policy and LINA’s interpretation
of foreseeability in other instances. The Magistrate Judge declined to reconsider her prior decision
to strike the exhibits because plaintiff did not provide the court with any reason to do so. Dkt. 145
at 12. This court agrees that the exhibits should be excluded. Dkt. 116 at 6. As this court concluded
before: the fact that LINA has included express intoxication exclusions in other policies is irrelevant
to how it construed the foreseeability test itself in other benefits determinations. The documents
merely show that LINA could draft additional contract terms for different policies. The Magistrate
Judge’s order is not clearly erroneous. Plaintiff’s objections to the court striking Exhibits D through
H (Dkts. 128-3–128-7) are OVERRULED.
IV. MSJ OBJECTIONS
Summary judgment is proper 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 a judgment as a matter of law.” Fed. R. Civ.
P. 56(c); see also Carrizales v. State Farm Lloyds, 518 F.3d 343, 345 (5th Cir. 2008). The issue
before the Magistrate Judge, and now under review with this court, is the interpretation and
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application of the policy, particularly how it relates to the meaning of “unforeseeable” as used in the
policy’s definition of “accident.” Dkt. 145 at 18.
In construing ERISA policy terms, the court looks at the “plain meaning of the plan
language.” Tucker v. Shreveport Transit Mgmt. Inc., 226 F.3d 394, 398 (5th Cir.2000). The court
interprets “plan terms in accordance with their ordinary and popular sense as would a person of
average intelligence and experience.” Id. (internal quotations omitted). In other words, the terms
are construed as they would be by “the average plan participant, consistent with the statutory
language.” Id. at 398.
A. Magistrate Judge’s Analysis
The Magistrate Judge concluded that LINA’s interpretation of the policy was not reasonable.
Dkt. 145 at 39. In coming to that conclusion, she reviewed four Fifth Circuit decisions that
interpreted AD&D policies, many of which had similar elements to the case at issue, and many of
which also analyzed other prior and relevant Fifth Circuit cases. Id. at 19–33. As no cases were
directly on point, the Magistrate Judge utilized the rules and reasoning of each case to create a set
of applicable rules for the case at hand. Id. at 33. Then, she isolated the relevant question: whether
Robert could have reasonably anticipated that he would be seriously injured or die as a result of
driving while intoxicated. Id. at 35. The Magistrate Judge concluded that, contrary to the conclusion
of the LINA policy specialist, a reasonable person would not necessarily anticipate, must less find
highly likely, serious injury or death from driving with a BAC percentage higher than the state’s
legal limit. Id. at 36. The Magistrate Judge reasoned that the conclusion was consistent with Fifth
Circuit case law. For example, the Magistrate Judge explained, a denial must be based on more than
a BAC percentage, even if the definition of “accident” included a foreseeability component, and the
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interpretation of the policy improperly used a per se rule: if Robert was legally intoxicated, this
created “foreseeable” serious injury or death and was not an accident. Id. at 37–38.
B. Defendants’ objections
Defendants object that the MRO 1) makes an improper extrapolation from the Firman case;
2) improperly concludes that LINA applied a per se rule; and 3) improperly concludes that LINA’s
interpretation of the policy was not reasonable.
1. Objection to use of Firman case
As to the Firman case, defendants argue that the court should not use the Firman case’s
review of the policy’s seatbelt benefit as it relates to a loss being found to be unforeseeable, and the
court also should not construe Firman to conclude that the administrator must rely on more facts
than the decedent’s BAC percentage to incorporate a foreseeability component. Dkt. 146 at 4.
Defendants assert that extrapolation is improper because the policy at issue in Firman is worded
significantly differently from the policy in this case, including that it did not include a definition for
the term accident, much less a definition that included the element of unforeseeability. In contrast,
defendants explain, the policy in this case defines “covered accident,” in part, as an unforeseeable
external event.
LINA’s denial letter focuses almost exclusively on the fact that Robert was driving with a
BAC over the legal limit, which meant he would suffer various physical impairments; that this
behavior was criminal; and therefore, that it was reasonably foreseeable that Robert’s death could
result from this activity. Dkt. 126-1 at 20. The only evidence it points to in this regard is Robert’s
BAC after the accident. Id. Relying on the BAC alone, is not enough to show that an accident was
foreseeable. Firman, 684 F.3d at 544. This is not an improper extrapolation from Firman, as
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defendants assert. Even though Firman can be distinguished in various respects from the case at
hand, and even if not binding, it is very persuasive in light of the facts of this case and other Fifth
Circuit cases. See, e.g., Davis v. Life Ins. Co. of N.A., 379 F. App’x 393, 396 (5th Cir. 2012)
(unpublished); Sanchez v. Life Ins. Co. of N.A., 393 F. App’x 229, 233 (5th Cir. 2010) (unpublished).
Accordingly, defendants’ objection to the MRO’s extrapolation of the Firman case is
OVERRULED.
Buried within defendants’ objection that the Magistrate Judge improperly extrapolated the
Firman case is an argument that the insured did not show that her loss was covered, and therefore
is not entitled to coverage. Dkt. 146 at 5. However, defendants do not submit a controlling case on
this issue; the Fifth Circuit very recently declined to decide this issue on the burden of proof; and it
is not the relevant question before this court. George v. Reliance Standard Life Ins. Co., 776 F.3d
349, 353 (5th Cir. 2015). The proper question is whether the record supports the administrator’s
decision, and whether the administrator’s justifications for denying the claim at the time it was
denied were adequate. Id. Defendants do not point to where in the record they raised this argument,
and therefore the court will not consider it.1 To the extent this was meant as an independent
objection, it is OVERRULED.
2. Objection to conclusion that a per se rule was used
As to the Magistrate Judge’s finding that a per se rule was used in LINA’s determination,
defendants object that because it considered not just that Robert’s BAC level was over the legal
1
Pointing to a letter from plaintiff’s attorney asserting that plaintiff has no burden to submit proof that Robert was not
operating a vehicle under the influence of alcohol at the time of the crash does not show that LINA denied coverage
because plaintiff did not submit this information. Dkt. 126-1 at 23. Even if it was plaintiff’s burden to prove that
Robert was covered, which the court need not consider, plaintiff’s letter does not show that a lack of proof was the
reason for the denial or that the argument was raised before in this case.
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limit, but that it was in one of several different ranges above the legal limit, that shows LINA did not
use a per se rule. Dkt. 146 at 7. Defendants also claim that Ms. Sciulli considered other factors such
as roadway conditions and the weather. Id. Further, defendants explain, it is clear there was no per
se rule in place because Ms. Sciulli testified that she had personally found benefits to be payable on
occasions where the deceased driver’s BAC was above the legal limit. Id.
The conclusion that a per se rule was used is supported by record’s focus on Robert’s BAC.
Though LINA claims that Ms. Sciulli considered factors such as roadway conditions and the weather
in addition to Robert’s BAC level, and the denial letter did state that the police report said the
roadway was dry and the weather was clear, nowhere can the court find where these factors actually
factored into LINA’s decision. Dkt. 126-1 at 20 (denial letter focusing nearly exclusively on the
BAC level over the legal limit, and not how clear weather or road conditions played into the
determination); Dkt. 126-1 at 25 (explaining that “proof that [Robert] was not under the influence
at the time of the crash” was required to succeed on appeal, not anything related to roadway or
weather conditions). Simply stating information from the various reports does not show that the
information was used by LINA to make its determination. In further support, LINA’s message to
Ms. James explained that on appeal she would need proof that her husband was not intoxicated at
the time of the accident. If the decision had been made on multiple bases, proof that those other
bases were untrue also logically should have been required or at least helped.
LINA’s use of various “ranges” of intoxication in its denial letter also is not persuasive.
Stating various physical impairments that are commonly associated with Robert’s BAC level, does
not show that LINA relied on more than the BAC level to support its finding. In its denial letter,
LINA representatives are very clear about how they used the BAC measure to deny coverage. It
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appears to be the sole basis of the conclusion that the accident was foreseeable, which is improper.
See Firman, 684 F.3d at 543 (comparing a case where only BAC was improperly used to a case
where the BAC and a toxicologists’ findings were properly used, and another case where BAC and
eyewitness accounts and a forensic consultant’s opinion and research were properly used) (citing
Davis, 379 F. App’x at 396; Sanchez, 393 F. App’x at 233).
Finally, the fact that Ms. Sciulli can point to different cases where she granted coverage even
though the person had a BAC over the legal limit does not say anything about whether she applied
a per se rule in this case. The court agrees that it appears that LINA applied a per se rule to deny
Robert’s coverage simply because his BAC was over the legal limit, which is improper. See Firman,
684 F.3d at 544. Accordingly, defendants’ objection to the conclusion that a per se rule was used
is OVERRULED.
3. Objection to MSJ recommendation
Finally, defendants object to the ultimate decision in the case and urge that if the evidence
is properly considered and the correct burden of proof is applied, LINA’s interpretation is reasonably
supported and consistent with the plain meaning of the terms used in the policy. Id. at 9.
Though the court conducted a de novo review, it reaches the same conclusion as the
Magistrate Judge and agrees with much, if not all, of her reasoning. The policy applies to “covered
accidents,” which are: “A sudden, unforeseeable, external event that results, directly and
independently of all other causes, in a Covered Injury or Covered Loss . . . .” Dkt. 126-1 at 18. It
is undisputed that none of the exclusions included in the rest of the definition applies. And,
“unforeseeable” is not further defined. See Dkt. 126-1 at 87–89 (definitions that apply to policy).
However, the court agrees with the Magistrate Judge that the term must incorporate reasonableness,
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such that it must determine if Robert could reasonably foresee that driving with a BAC over the legal
limit would lead to serious injury or death. If he could not reasonably forsee such injury or death
from driving with a BAC level over the legal limit, then the accident was unforeseeable, and
therefore should be covered. This conclusion is supported by the standard policy interpretation
guidelines that require interpretation that a person of average intelligence and experience would
understand . See Tucker, 226 F.3d at 394, 398 (5th Cir.2000). In that light, “unforeseeable” cannot
mean that anything one could possibly foresee, however remote, would not be covered. And, the
online Merriam-Webster definition of the word foreseeable is consistent with this conclusion: “being
such
as
may
be
reasonably
anticipated.”
Merriam-Webster
Dictionary,
http://www.merriam-webster.com/dictionary/foreseeable (last visited June 30, 2015) (emphasis
added).
Though LINA concluded that “serious injury or death would be highly likely to occur while
operating a vehicle with a BAC of .19% and would not be an unforeseen event,” the reasoning of the
denial simply listed common side effects of having a BAC of .19 and, based on these side effects,
concluded that Robert’s death was highly likely. Dkt. 128-1 at 11. Based on the conclusion that the
injury was highly likely, LINA concluded that the accident was foreseeable. The court, like the
Magistrate Judge, is not persuaded by this reasoning, particularly when considering whether it is
reasonably foreseeable that such injury or death would be highly likely. More persuasive is a Sixth
Circuit opinion that the Magistrate Judge also relied upon, which reviews 2003 National Highway
Traffic Administration statistics that compared the amount of alcohol impaired trips that were taken
to the amount of people who died (0.17 percent). Kovach v. Zurich Am. Ins. Co, 587 F.3d 323, 334
(6th Cir. 2009) (quoting Lennon v. Metro. Life Ins. Co., 504 F.3d 617, 629 (6th Cir. 2007)). It
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cannot be reasonably said that a less than one percent chance of death makes death reasonably
foreseeable, much less highly likely. Certainly, there are points under which this analysis might
differ from the case at hand but it supports the conclusion. This reasoning is not meant to dismiss
the tragic consequences that drunk driving can create or the diminish the responsibility drivers must
take for their actions, it simply points out that Ms. Sciulli’s conclusion does not comport with how
an average person would interpret the policy. Id.
For all these reasons, the court OVERRULES defendants’ objections to the MRO’s
conclusions on the cross motions for summary judgment. Therefore, defendants’ summary judgment
motion is DENIED and plaintiff’s motion for summary judgment is GRANTED.
IV. CONCLUSION
The Magistrate Judge’s MRO is AFFIRMED & ADOPTED in all respects. Defendants’
motion for summary judgment (Dkt. 126) is DENIED; plaintiff’s motion for summary judgment
(Dkt. 128, amending Dkt. 127) is GRANTED; and defendants’ motion to strike (Dkt. 135) is
GRANTED IN PART & DENIED IN PART.
It is so ORDERED.
Signed at Houston, Texas on July 8, 2015.
Gray H. Miller
United States District Judge
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