Coburn v. International Paper Co.

165 So. 3d 1187, 2015 La. App. LEXIS 994, 2015 WL 2405969
CourtLouisiana Court of Appeal
DecidedMay 20, 2015
DocketNo. 49,802-CA
StatusPublished

This text of 165 So. 3d 1187 (Coburn v. International Paper Co.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Coburn v. International Paper Co., 165 So. 3d 1187, 2015 La. App. LEXIS 994, 2015 WL 2405969 (La. Ct. App. 2015).

Opinion

PITMAN, J.

|!Plaintiff William E. Coburn appeals the district court’s granting of summary judgment in favor of Defendants International Paper Company (“IP”), International Paper Company Salary Continuance Plan1 (“the Plan”) and Sedgwick Claims Management Services, Inc. (“Sedgwick”). For the following reasons, we affirm.

FACTS

On June 26, 2012, Mr. Coburn filed a petition for damages for breach of contract. He stated that he was an employee of IP and was eligible to participate in its Plan, which is managed by Sedgwick and provides for a continuation of an employee’s salary if the employee is disabled. He [1189]*1189stated that he became disabled on August 29, 2009, and applied for continuation of his salary. Sedgwick first denied his request, but, after an appeal, granted the request for the time period from August 31, 2009, through September 30, 2009, and denied his claim for the period from October 1, 2009, through January 31, 2010.2 Mr. Coburn argued that this denial was a “bad faith, intentional denial of a valid claim” and that his compensation agreement was breached in bad faith by the denial. He requested the payment' of wages from October 1, 2009, through January 31, 2010, plus 90 days’ wages as penalty pursuant to thp Louisiana Wage Payment Act (“LWPA”), i.e., La. R.S. 23:631, et seq., in addition to all damages, including mental anguish, pain and suffering.

[¡.On September 18, 2013, Defendants filed a motion for partial summary judgment, arguing that they are entitled to summary judgment on Mr. Coburn’s claim that he is entitled to wages from October 1, 2009, through January 31, 2010, plus 90 days’ wages as penalty, because the disability benefits to which he claimed he is entitled are not “wages” pursuant to La. R.S. 23:631.

On October 24, 2013, the district court filed a ruling granting Defendants’ motion for partial summary judgment. It noted that Mr. Coburn attempted to equate disability pay to earned wages in his argument that he is entitled to unpaid wages. It determined that the Plan’s “purpose is to provide a wage replacement while the employee cannot earn a wage. Plan benefits are neither earned nor accrued. As such, they are not analogous to accrued, unused vacation leave as contemplated” by the LWPA.

On March 17, 2014, Defendants filed a motion for summary judgment, contending that Mr. Coburn cannot establish that Sedgwick’s denial of short-term disability benefits was arbitrary or capricious because the information before the Plan’s administrator provided a rational basis for the administrator’s determination pursuant to the terms of the Plan. Defendants added that, if Mr. Coburn cannot show that the denial of benefits was arbitrary or capricious, the district court need not address the issue of bad faith. They further contended that, even if the district court determines that there is a genuine issue of material fact as to the propriety of the administrator’s determination, Mr. Coburn cannot establish that they exercised their discretion in bad faith.

|sOn May 9, 2014, Mr. Coburn filed an opposition to Defendants’ motion for summary judgment, in which he alleged that Sedgwick’s administrative processing of his application for salary continuance was “conducted in a manner designed to discourage [him] from continuing his quest to seek benefits.” He reasserted that Defendants breached the contract to continue his salary during his period of short-term disability and that he is entitled to damages for Defendants’ bad faith.

On May 19, 2014, a hearing was held on the motion for summary judgment. Attorneys for both parties reiterated the arguments set forth in their written motions and memoranda.

On June 4, 2014, the district court filed a ruling granting Defendants’ motion for summary judgment. It noted the unique procedural posture of the case, stating that it is a “motion for summary judgment where the issue is not necessarily whether [1190]*1190a genuine issue of material fact exists, but whether the Committee’s decision based on all the facts in the record was arbitrary and capricious.” It opined that, in this case, a trial on the merits would add no additional facts or evidence not already in the record. It further stated that judicial review of the administration of a benefits plan is limited; and the administrator’s determination is conclusive so long as the evidence before it was sufficient and the decision was not arbitrary, capricious or in bad faith. The district court also discussed the physicians’ findings that were considered by Sedgwick and determined that, while it “may not agree with the Committee’s determination to deny benefits, it cannot say that it was an abuse of discretion.” It further noted that an |4employer is not bound by the recommendations of an employee’s treating physician and that independent medical assessments are not given less weight. A written judgment granting the motion for summary judgment and dismissing Mr. Coburn’s claims with prejudice was filed on June 20, 2014.

On August 27, 2014, Mr. Coburn filed a motion appealing the June 20, 2014 judgment.

ARGUMENT

Breach of Contract

In his first assignment of error, Mr. Coburn argues that the district court erred in granting summary judgment, specifically by applying the Employee Retirement Income Security Act’s (“ERISA’s”) “arbitrary, capricious, and bad faith” standard to an ordinary, non-ERISA breach of contract claim. He states that, because the contract covers the extension of his salary, it is governed by the LWPA. He also contends that he can show that Defendants failed to perform an obligation, which is a prerequisite to his claim of bad faith breach of contract.

Defendants argue that the district court did not err in granting their motion for summary judgment, contending that the administrator’s discretionary decision regarding whether Mr. Coburn was disabled is subject to the arbitrary and capricious standard of the Louisiana Administrative Procedure Act (“LAPA”); and, therefore, it did not err in applying this standard of judicial review. Defendants further argue that the district court correctly found that the Plan administrator did not abuse its discretion because the findings of physicians regarding Mr. Coburn’s | .¡alleged disability should be deemed evidence sufficient to provide a rational basis for the administrator’s determination. They also argue that bad faith is not at issue because Mr. Coburn cannot show that the Defendants failed to perform an obligation.

An appellate court reviews a trial court’s granting of summary judgment de novo. Volentine v. Raeford Farms of La., L.L.C., 48,219 (La.App.2d Cir.7/24/13), 121 So.3d 742, unit denied, 13-2493 (La.1/17/14), 130 So.3d 948. A motion for summary judgment will be granted if the pleadings, depositions, answers to interrogatories and admissions, together with the affidavits, if any, show that there is no genuine issue as to material fact and that the mover is entitled to summary judgment as a matter of law. La. C.C.P. art. 966(B)(2).

Mr. Coburn’s contention that the LWPA applies to the facts of this case is misplaced. He seeks review of Sedgwick’s decision to limit his disability payments to one month instead of granting him the maximum of 22 weeks. The LWPA’s pur[1191]*1191pose is to provide a former employee with a vehicle for receiving unpaid wages from a former employer. La. R.S. 23:631; Boudreaux v. Hamilton Med.

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Related

Boudreaux v. Hamilton Medical Group
644 So. 2d 619 (Supreme Court of Louisiana, 1994)
Volentine v. Raeford Farms of Louisiana, L.L.C.
121 So. 3d 742 (Louisiana Court of Appeal, 2013)
Mire v. Ormet Corp.
371 So. 2d 1209 (Louisiana Court of Appeal, 1979)

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Bluebook (online)
165 So. 3d 1187, 2015 La. App. LEXIS 994, 2015 WL 2405969, Counsel Stack Legal Research, https://law.counselstack.com/opinion/coburn-v-international-paper-co-lactapp-2015.