Opinion
No. C-99-03127 EDL
January 4, 2001
ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
I INTRODUCTION
On June 28, 1999, pursuant to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq., plaintiff April Bennett filed this suit against defendant Codding Enterprises Long Term Disability Plan and the insurer, defendant Continental Casualty Company, seeking unpaid disability benefits. On October 31, 2000, Defendants moved for summary judgment on the following two issues: (1) that a confidential Settlement Agreement and Mutual Release ("Settlement") executed by plaintiff in her employment discrimination action constituted a waiver by plaintiff of her rights to bring this action and (2) that plaintiffs December 6, 1996 resignation from Codding Enterprises, as required by the Settlement, rendered her ineligible for disability benefits as of that date under the policy issued by defendant Continental Casualty Company to plaintiffs employer, Codding Enterprises.
On November 21, 2000, plaintiff opposed the motion and purported to bring a cross-motion for summary judgment, seeking judgment as a matter of law that: (1) plaintiff did not waive her right to bring this action by entering into the Settlement because defendants were not parties to the Settlement; (2) even if defendants were parties to the Settlement, the waiver contained therein was ambiguous and plaintiff did not knowingly and voluntarily waive her rights to seek disability benefits; and (3) plaintiffs eligibility for coverage did not terminate as of December 6, 1996. Plaintiff did not comply with the procedures for bringing a cross-motion for summary judgment. See Civil L.R. 7-2, 7-3 (d). Since plaintiffs cross-motion is not properly before the Court, the Court declines to rule on that cross-motion. Defendants filed a timely reply.
On December 12, 2000, the Court held a hearing on defendants' motion for summary judgment. Both parties appeared through their counsel of record. Upon consideration of the parties' submissions, the arguments at the hearing, the relevant authorities and the record in this case and good cause appearing, the Court enters the following order.
II FACTS
Plaintiff worked for Codding Enterprises, and its affiliated companies, for approximately 20 years and participated in defendant Codding Enterprises Long Term Disability Plan ("the Plan") for approximately 19 years. See April Bennett Decl. at 2:7; Reginald Bayley Decl. at 2:9-10, 12-13. At the time of her disability, plaintiff was Vice President of leasing and property management for Codding Investments Inc. See Bayley Decl. at 2:20-21.
Defendant Continental Casualty Company ("Continental") issued a group disability insurance policy to Codding Enterprises, which paid premiums for disability coverage of eligible employees. See Bayley Decl. at 2:11-17, Defendants' Motion at Ex. 1. A copy of the policy was provided to all Plan participants. See Bayley Decl. at 2:18-19. Through the policy, Continental, on behalf of Codding Enterprises, offered long term disability benefits to eligible employees, like plaintiff, who participated in the Plan. See Bayley Decl. at 2:11-17. Codding Enterprises is the Plan Administrator of the Plan. See Bayley Decl. at 2:7-8. The Plan is an entity of Codding Enterprises. See Supplemental Bayley Decl., dated April 17, 2000 at 1:11-12.
On January 20, 1996, Plaintiff submitted a claim for disability benefits stating that she was first injured on September 19, 1991. See Defendants' Motion at Ex. 3. She described her injury as an "injured back, neck, numbness, and paralysis of right arm + leg." Id. She stated that her "last date worked prior to current disability" was December 8, 1995. Id.
After a routine claim investigation, Continental began making payments to Plaintiff on February 7, 1996 based on a salary figure of $3875.00 per month, which was plaintiffs salary as of July 1, 1995. See Joint Statement of Undisputed Facts dated March 28, 2000, at 1:23-25. Prior to July 1, 1995, plaintiffs salary was $7750.00 per month, but Codding Enterprises reduced her salary based on her inability to adequately perform her job. See Bennett Decl. at 2:7-12.
According to the policy, disability benefits are paid at a rate of 66 2/3% of the employee's salary, or $6000.00, whichever is less. See Defendants' Motion at Ex. 1, p. D9.
On March 29, 1996, Codding Enterprises sent a letter to Continental asking it to reconsider its calculation of plaintiffs benefit award. See Joint Statement of Undisputed Facts dated March 28, 2000 at Ex. 5. On June 6, 1996, plaintiff appealed Continental's calculation of her benefits based on her $3875.00 per month salary and requested that her benefits be recalculated based upon her "full salary of $7750.00 per month." Id. at Ex. 6. These appeals were unsuccessful and Continental paid benefits to plaintiff, based on the salary of $3875.00, from February 7, 1996 through October 7, 1996. See id. at 2:12. Subsequently, in August 2000, this Court granted partial summary judgment on this issue, finding no triable issue of material fact that plaintiff was partially disabled under the plan and that Continental used the correct salary amount, that is, the salary in effect at the onset of her total disability. See Defendants' Motion at Ex. 4.
Plaintiffs counsel's request, in a letter dated October 13, 2000, that he be able to re-examine the issue of plaintiffs partial disability through testimony of Dr. Gary McCarthy is not well-taken. Plaintiff appears to be seeking a motion for reconsideration, which is not properly brought in a letter to the court. See Civil L.R. 7-9. Plaintiff had ample opportunity to explore this issue and plaintiffs letter does not meet the standards for reconsideration under Civil Local Rule 7-9.
On September 30, 1996, plaintiff notified Continental that she had returned to work. See id. at 2:7. On December 5, 1996, plaintiff discontinued work due to her disability, but apparently did not notify Continental. See Bennett Decl. at 2:15-17. Plaintiff stated that she has been unable to work since December 5, 1996. See id. at 2:18-19.
Meanwhile, plaintiff filed a claim for sexual harassment/employment discrimination on May 29, 1996. See Bayley Decl. at 2:25-27. On December 6, 1996, the day after plaintiff states she stopped working again, the parties attended mediation for those claims. See id. at 3:1-3. The claims were resolved and plaintiff, who was represented by counsel, entered into a confidential Settlement Agreement and Mutual Release ("Settlement") with Codding Enterprises, Codding Investments, Hugh Codding and David Codding ("Codding Defendants") on December 27, 1996. See Defendants' Motion at Ex. S (under seal). In the Settlement, plaintiff granted a complete general release to the Codding Defendants and to
their agents, servants, employees, officers, directors and shareholders, or any other person or persons, firm, corporation, association, partnership or entity acting on their behalf, and all other related business entities of any type owned and operated at this time, or at any past time by the Codding Defendants, or any of them . . .
See id. at ¶ 2. The Settlement provided that the terms and conditions shall be confidential and "the parties agree not to disclose said matters . . . unless legally required to do so." Id. at ¶ 7. The Settlement provided a substantial payment to plaintiff and included a mutual release "expressly intended to cover and include all claims, several or otherwise, past, present or future, which can or may ever be asserted . . ." See Defendants' Motion at Ex. 5 at ¶ 5. The parties acknowledged that the release covered "all claims of every kind or nature, past present or future, known or unknown, suspected or unsuspected, and all claims under Section 1542, Civil Code of California [were . . .] expressly waived." See Defendants' Motion at Ex. 5 at ¶ 6.
California Civil Code § 1542 states, "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor."
The intent of the parties was to effect a "full, final and complete settlement of all differences, allegations and claims by each against the other . . ." See Defendants' Motion at Ex. 5 at ¶ 18. Further, the parties agreed that as of December 27, 1996, the only "obligation existing between the parties is the obligation to perform the provisions of the agreement." See id. Plaintiff also agreed that "she will not file suit in any court upon any claim which she now has or ever may have against the Codding Defendants, or any of them." See id. at ¶ 11. The agreement constituted the "entire agreement of the parties on these matters, superseding any previous agreement between them . . ." See id. at ¶ 16. Effective December 6, 1996, plaintiff resigned from Codding Enterprises as required by the Settlement. See id. at ¶ 9.
III DISCUSSION
A. Summary Judgment Standard
Rule 56(c) of the Federal Rule of Civil Procedure provides that summary judgment "shall be rendered 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." Fed.R.Civ.P. 56(c). Material facts are those that may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is "genuine" if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. See id. The court may not weigh the evidence. See id. at 255. Rather, the nonmoving party's evidence must be believed and "all justifiable inferences must be drawn in [the nonmovant's] favor." United Steelworkers of America v. Phelps Dodge Corp., 865 F.2d 1539, 1542 (9th Cir. 1989) (en banc) (citing Liberty Lobby, 477 U.S. at 255).
The moving party bears the initial responsibility of informing the district court of the basis for its motion and identifying those portions of the pleadings, depositions, interrogatory answers, admissions and affidavits, if any, that it believes demonstrate the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the nonmoving party will bear the burden of proof at trial, the moving party's burden is discharged when it shows the court that there is an absence of evidence to support the nonmoving party's case. See id. at 325.
A party opposing a properly supported motion for summary judgment "may not rest upon the mere allegations or denials of [that] party's pleading, but . . . must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); Liberty Lobby, 477 U.S. at 250. However, the opposing party need not produce evidence in a form that would be admissible at trial in order to avoid a summary judgment. See Celotex, 477 U.S. at 324. Nor must the opposing party show that the issue will be resolved conclusively in its favor. See Liberty Lobby, 477 U.S. at 248-49. All that is necessary is sufficient evidence supporting the asserted factual dispute and requiring a jury or judge to resolve the parties' differing versions of the truth at trial. See id.
B. The Settlement Constituted a Waiver by Plaintiff to Bring this Action.
The Settlement released the Codding Defendants and
their agents, servants, employees, officers, directors, and shareholders, or any other person or persons, firm, corporation, association, partnership or entity acting on their behalf and all other related business entities of any type owned and operated at this time, or at any past time by the Codding Defendants, or any of them
See Defendants' Motion at Ex. 5 at ¶ 2 (emphasis added). Neither the Plan nor Continental are specifically named as releases in the Settlement.
The Plan, however, is administered by Codding Enterprises, a party which was specifically released in the Settlement. See Bayley Decl. at 2:7-8, Defendants' Motion at Ex. 5 at p. 1. Moreover, the Plan is an entity of Codding Enterprises. See Supplemental Bayley Decl. dated April 17,2000 at 1:11-12. Codding Enterprises provided disability benefits to its employees through the Plan. See Bayley Decl. at 2:12-13. Further, at the hearing, defendants' counsel represented that the Plan is owned by Codding Enterprises. Since the Plan is an "agent" of and an "entity acting on behalf" of Codding Enterprises (as well as apparently "owned" by Codding Enterprises), the Plan is released under the plain language of the Settlement.
Similarly, Continental provided a group disability insurance policy to Codding Enterprises in exchange for premiums paid by Codding Enterprises. See Bayley Decl. at 2:11-17. Through this policy, Continental, on behalf of Codding Enterprises, provided long term disability benefits to eligible employees. See Bayley Decl. at 2:11-17. Under this arrangement, Continental is an "agent" of and an "entity acting on behalf" of Codding Enterprises. Therefore, Continental is released under the plain language of the Settlement.
The Settlement is integrated and unambiguous, so no extrinsic evidence is permitted. See Defendant's Motion at Ex. 5 at ¶ 16; Sunniland Fruit, Inc. v. Verni, 233 Cal.App.3d 892, 898 (1991); Cerritos Valley Bank v. Stirling, 81 Cal.App.4th 1108, 1115-16 (2000). There is no triable issue of material fact as to the applicability of the Settlement to the Plan and Continental. Plaintiff released the Plan and Continental by executing the Settlement and is therefore barred from bringing this action.
California law applies to interpretations of the Settlement. See Defendants' Motion at Ex. 5 at ¶ 19.
Moreover, plaintiff knowingly and voluntarily waived her disability benefits claims in the Settlement. To determine whether there has been a knowing and voluntary relinquishment of employee benefits claims, courts examine the totality of the circumstances, including (1) the plaintiffs education, business experience and sophistication, (2) the amount of time the plaintiff had to review the agreement, (3) whether the plaintiff was represented by counsel, (4) clarity of the agreement, (5) whether and what kind of consideration was given and (6) the plaintiffs role in negotiating the agreement. See Smart v. Gillette, 70 F.3d 173, 181, n. 3 (1st Cir. 1995); Leavitt v. Northwestern Bell Tel. Co., 921 F.2d 160, 162 (8th Cir. 1990).
Here, the undisputed evidence regarding the factors set forth in Leavitt and Smart show that plaintiff released her disability benefit claim when she signed the Settlement. First, plaintiff is college-educated and is sophisticated and experienced in business, as evidenced by her 20-year employment with Codding Enterprises including her last position as a vice-president. Second, although it is unclear exactly how much time plaintiff had to look at the agreement, the mediation took place on December 6, 1996 and she did not execute the agreement until December 27, 1996. Third, plaintiff was represented by counsel. Fourth, the Settlement expressly exempts vested pension benefits from the release, but does not exempt disability benefits. Fifth, plaintiff received substantial consideration for the release. Sixth, plaintiff attended the entire mediation on December 6, 1996, during which the Settlement was negotiated. See Bayley Decl. at 3:1. The Settlement was specifically tailored to her situation, in contrast, for example, to a standard severance package offered on a "take it or leave it" basis to multiple employees in a lay-off.
Examination of the totality of the circumstances demonstrates that plaintiff knowingly and voluntarily released her claims to employee disability benefits in the Settlement. This conclusion is reinforced by the fact that the Settlement specifically exempted vested pension benefits, which shows that the parties discussed at least one employee benefit plan and knew how to exclude it from the general release in crafting the Settlement. The exclusion of pension benefits demonstrates that the parties did not regard employee benefits as being outside the scope of the Settlement unless expressly excluded. Thus, the parties knew that other employee benefits would be released by the Settlement. See Smart, 70 F.3d at 179.
IV OBJECTIONS TO EVIDENCE
A. Objections By Defendants
Defendants object to Exhibits N through T submitted by plaintiff in opposition to the motion for summary judgment. The exhibits are irrelevant in light of the Court's ruling on the effect of the Settlement.
Defendants also object to several portions of April Bennett's declaration submitted in opposition to defendants' motion for summary judgment. With respect to paragraph 4, defendants' objection is overruled.
With respect to paragraph 6, defendants' objection is sustained in part to the extent that plaintiff cannot testify to the medical conclusion that her symptoms were "caused by Chronic Fatigue Syndrome and post-traumatic fibromyalgia." The remaining objection is overruled.
With respect to paragraphs 7 and 8, defendants' objections are overruled. With respect to paragraph 9, defendants' objections based on lack of foundation and on violation of the parole evidence rule are sustained. Defendants' objections to paragraph 11 are overruled.
With respect to paragraph 12, defendants' objection is sustained to the extent that plaintiff purports to testify about what Bayley knew. Defendants' objection to plaintiffs Exhibit U is overruled. Finally, with respect to paragraph 13, defendants' objection is overruled.
Defendants object to portions of John A. McGuinn's declaration. The objections based on violation of the parole evidence rule to the last sentence of paragraph 6 and to paragraphs 7 and 8 are sustained.
B. Objections By Plaintiff
Plaintiff objects to the Bayley declaration in general, stating that it contains inadmissible hearsay and violates a court order that the complaint filed with the California Department of Hair Employment and Housing is inadmissible. The general objection to Bayley's declaration is overruled. The declaration does not violate a court order because Bayley did not file a copy of the complaint with the Court but simply stated that plaintiff filed such a complaint.
Plaintiffs objections to paragraph 8 is overruled as to all but the last clause ("claiming that Codding was preventing her from working.").
Plaintiff objects to paragraph 14 on the ground that it lacks a proper foundation. Plaintiffs objection is overruled. Bayley declared that he was responsible for overseeing the Plan and that he had personal knowledge of the matters in the declaration. These facts provide an adequate foundation.
V CONCLUSION
Since the Plan and Continental were released under the broad and unambiguous language of the Settlement, plaintiffs action is barred. Further, plaintiff knowingly and voluntarily waived her right to bring her disability benefits claim when she executed the Settlement. Therefore, defendants' motion for summary judgment (docket no. 64) is GRANTED. Accordingly, the remaining issue of whether plaintiff is entitled to benefits after December 6, 1996 is moot. This order also disposes of defendants' objections to evidence (docket no. 75) and plaintiffs objections to evidence (docket no. 69). The clerk shall close the file.