458 F.3d 416 (6th Cir. 2006), 04-1146, Moore v. LaFayette Life Ins. Co.

Docket Nº:04-1146, 04-1942, 04-1945, 05-1109.
Citation:458 F.3d 416
Party Name:Richard L. MOORE, Plaintiff-Appellant, v. LAFAYETTE LIFE INSURANCE CO., an Indiana Corporation; Michigan Tooling Association, a Michigan Corporation; Michigan Tooling Association Long Term Disability Plan; Michigan Tooling Association Short Term Disability Plan, Jointly and Severally, Defendants-Appellees. Richard L. Moore, Plaintiff-Appellant/Cros
Case Date:August 07, 2006
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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458 F.3d 416 (6th Cir. 2006)

Richard L. MOORE, Plaintiff-Appellant,

v.

LAFAYETTE LIFE INSURANCE CO., an Indiana Corporation; Michigan Tooling Association, a Michigan Corporation; Michigan Tooling Association Long Term Disability Plan; Michigan Tooling Association Short Term Disability Plan, Jointly and Severally, Defendants-Appellees.

Richard L. Moore, Plaintiff-Appellant/Cross-Appellee,

v.

Lafayette Life Insurance Co., an Indiana Corporation, Defendant-Appellee/Cross-Appellant,

Michigan Tooling Association, a Michigan Corporation; Michigan Tooling Association Long Term Disability Plan; Michigan Tooling Association Short Term Disability Plan, Jointly and Severally, Defendants.

Nos. 04-1146, 04-1942, 04-1945, 05-1109.

United States Court of Appeals, Sixth Circuit.

August 7, 2006

Argued: Dec. 2, 2005.

Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 01-73944—Robert H. Cleland, District Judge.

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ARGUED:

Mary C. O'Donnell, Durkin, McDonnell, Clifton & O'Donnell, Detroit, Michigan, for Appellant.

D. Andrew Portinga, Miller, Johnson, Snell & Cummiskey, Grand Rapids, Michigan, Elaine A. Parson, Raymond & Prokop, Southfield, Michigan, for Appellees.

ON BRIEF:

Mary C. O'Donnell, Gregory A. Clifton, Durkin, McDonnell, Clifton & O'Donnell,

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Detroit, Michigan, for Appellant. D. Andrew Portinga, Miller, Johnson, Snell & Cummiskey, Grand Rapids, Michigan, Elaine A. Parson, Jeffrey D. Wilson, Raymond & Prokop, Southfield, Michigan, for Appellees.

Before: CLAY and COOK, Circuit Judges; OLIVER, District Judge. [*]

OPINION

CLAY, Circuit Judge.

Plaintiff, Richard L. Moore, appeals the district court's judgments in favor of Defendants Lafayette Life Insurance Co. ("Lafayette") and the Michigan Tooling Association ("MTA"). The district court granted judgment to Defendants on Plaintiff s claims under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. plaintiff also appeals the district court's award of partial attorneys' fees and costs to Defendants, along with sanctions against Plaintiffs attorney. Defendant Lafayette cross-appeals the award of attorneys' fees in its favor as too low. For the reasons which follow, we AFFIRM the decision of the district court in all respects.

I.

BACKGROUND

A. Substantive Facts

Defendant MTA is an association of approximately 700 member companies in the metal-working industry in Michigan. Plaintiff is a licensed insurance agent in the state of Michigan. MTA hired Plaintiff in 1971 to handle all group life, disability, and workers' compensation insurance for MTA and its member companies. While Plaintiff was initially hired as a salaried employee, in 1972 MTA and Plaintiff agreed that Plaintiffs compensation would come only from commissions for premiums paid and signed a "Memorandum of Understanding" ("MOU") to that effect. Plaintiffs responsibilities included taking "complete responsibility for all Group Life and Disability insurance for the Detroit Tooling Association .... handling] all questions, claim problems and generally servicing] all participants in the plan ...." (J. A. at 1722.) The MOU also provided that Plaintiff would pay all his own expenses. MTA filed 1099s on Plaintiff for income tax purposes.

MTA and Plaintiff operated under the MOU until December 1998, when Plaintiff and MTA signed a "Consulting Service Agreement" ("CS A"), whereby MTA would pay Plaintiff a fixed sum of $75,000, in monthly installments, and Plaintiff was deemed an "independent contractor." (J. A. at 273.) Plaintiff was responsible for all federal and state payroll taxes, all expenses incurred in the state of Michigan, and was free to accept outside consulting agreements. MTA continued to file 1099s on Plaintiff for income tax purposes.

Prior to 1996, Royal Maccabees Insurance provided MTA life and disability insurance policies. In 1996, Plaintiff recommended to MTA that MTA switch its insurance provider to Lafayette. Lafayette became MTA's provider of group life and disability insurance in March 1996; Plaintiff signed the Application for Group Insurance as a licensed agent. As the signing agent, Plaintiff attested:

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I have fully explained to the Policyholder that any Employee not in Active Employment or in a class otherwise eligible to apply for insurance coverage on the Contract Effective Date of any Contract to be issued by the Company will not be eligible to apply for any such insurance issued by the Company unless and until such time such Employee becomes a member of a class eligible to apply for insurance coverage.

(J.A. at 236.)

In March 1996, at the time Lafayette began writing insurance polices to MTA, its employees, and MTA member companies, Plaintiff was listed as an "employee" on premium statements submitted by MTA. From 1996 through December 1998, Plaintiff paid the premiums on his own coverage for disability insurance directly to Lafayette.

Plaintiff and MTA operated under the CSA throughout 1999 and into 2000. During this period, MTA deducted the costs of short-term disability ("STD") and long-term disability ("LTD") premiums from Plaintiffs monthly remunerations and remitted the premiums to the insurer, Lafayette. MTA asserts that MTA was reliant on Plaintiff s representations to MTA of who would be a covered "employee" under the terms of the plan. Neither Plaintiff nor MTA informed Lafayette of the terms of the CSA.

In September 2000, Plaintiff filed for STD benefits, and then one month later requested LTD benefits. MTA filed the benefit request forms on behalf of Plaintiff with Lafayette in those same months. Lafayette proceeded to adjudicate the claims for benefits; although there are indications in the record that Lafayette initially indicated that MTA should adjudicate the STD claim, MTA and Lafayette ultimately agreed that Lafayette would adjudicate both claims.

Lafayette ultimately determined that Plaintiff was not a covered "employee" under the ERISA plan. Lafayette does not dispute that "prior to January 1, 1999 [the CSA effective date] [Plaintiff] was eligible for certain group insurance coverages issued by Lafayette .... However, facts show that effective January 1, 1999, [Plaintiffs] status with MTA changed. We were not aware of this change in status until [Plaintiffs] claims for benefits were submitted to us." (J.A. at 1923.)

The STD policy states that "[a]ny employee whose employment commenced on or before the effective date of this policy and is actively at work on full time [sic]" was eligible for coverage upon the plan's effective date. (J.A. at 1434.) The STD policy further provides for coverage for employees starting after the effective date of the policy. The STD policy defines "employee" as "an employee in the service of the employer whose terms of employment require him to work at least 20 hours per week." (J.A. at 1435.) The policy further defines "actively at work on full time" to mean "actually working at least six hours per working day at the employer's place of business or other location where his business requires the employee to be." (J.A. at 1435.)

The LTD policy defines "employee" to mean:

A regular, full-time employee duly recorded as such on the payroll records of the Policyholder, who is regularly working through the entire duration of the Policyholder's work week, and in any event not less than 30 hours per week, and is insured under the terms of this Policy.

(J.A. at 1893.) The clause "on the payroll records" is not further defined.

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B. Procedural History

Plaintiff filed the instant action in district court on October 17, 2001. Plaintiff alleged that Defendants violated numerous responsibilities under the STD and LTD policies of MTA's ERISA benefit plan and prayed for relief in the form of benefits due, attorneys' fees and costs, and statutory penalties. Specifically, Plaintiff alleged:

Count I: that he was wrongfully denied STD and LTD benefits as an MTA-covered "employee" under 29 U.S.C. § 1132(a)(1)(B);

Count II: that Defendants breached fiduciary duties to Plaintiff with respect to the ERISA plan;

Count III: that if Plaintiff is not covered "employee," Plaintiff qualifies for benefits as a "participating employer" under the plan;

Count IV: that Defendants should pay Plaintiff s attorneys' fees and costs with respect to the ERISA action;

Count V: that Defendants refused to furnish requested information as required by 29 U.S.C. 1132(c); and

Count VI: that Defendants are estopped from asserting that Plaintiff was not covered under the STD and LTD policies.

(J.A. at 17-28 (list formatting not in original).)

At an initial Rule 16 conference, Plaintiff objected to the application of the rules set forth in Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609 (6th Cir. 1998), as controlling the form and extent of discovery in the case. Accordingly, the magistrate judge ordered the parties to brief the applicability of Wilkins. in conjunction with its brief and motion on Wilkins, defendant Lafayette filed a motion to dismiss with respect to Counts II, V, and VI. Likewise, Defendant MTA moved to dismiss with respect to Counts I, II, III, and VI. The district court judge consolidated the Wilkins motions and the motions to dismiss and issued an opinion and judgment on the motions on August 19, 2002.

The district court denied MTA's motions on Count I, dismissed the first three (of five) subclaims under Count II as against both Defendants, denied the motion to dismiss on Count III, dismissed Count V as against Lafayette, and dismissed Count VI as against both defendants....

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