Brosted v. Unum Life Ins. Co. of America

• Decision Date: 26 August 2005
• Docket Number: No. 04-4317.,04-4317.
• Citation: 421 F.3d 459
• Parties: Daniel BROSTED, Plaintiff-Appellant, v. UNUM LIFE INSURANCE COMPANY OF AMERICA and Dreisilker Electric Motors, Inc. Group Long Term Disability Income Plan, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

421 F.3d 459

Daniel BROSTED, Plaintiff-Appellant, v. UNUM LIFE INSURANCE COMPANY OF AMERICA and Dreisilker Electric Motors, Inc. Group Long Term Disability Income Plan, Defendants-Appellees.

No. 04-4317.

United States Court of Appeals, Seventh Circuit.

Argued June 9, 2005.

Decided August 26, 2005.

COPYRIGHT MATERIAL OMITTED

Douglas M. Brown (argued), Brown Law Offices, Chicago, IL, for Plaintiff-Appellant.

Michael J. Smith, W. Sebastian von Schleicher (argued), Smith & Associates, Chicago, IL, for Defendants-Appellees.

Before BAUER, RIPPLE, and MANION, Circuit Judges.

MANION, Circuit Judge.

Daniel Brosted sued Unum Life Insurance Company and the Dreisilker Electric Motors, Inc. Long Term Disability Income Plan under the Employment Retirement Income Security Act, 29 U.S.C. §§ 1001 et seq. (ERISA), alleging the defendants violated their fiduciary duties by misstating the amount of benefits to which he was entitled under the Plan. Brosted also alleged an equitable estoppel claim premised on the misstatement of benefits. The district court granted the defendants summary judgment. Brosted appeals. We affirm.

I.

Daniel Brosted began working for Dreisilker Electric Motors, Inc. ("Dreisilker") in 1974. In the early 1980s, Brosted was diagnosed with multiple sclerosis. He nonetheless was able to continue working at Dreisilker as a purchasing manager until late 1999, when he was hospitalized for complications related to multiple sclerosis. In February 2000, after leaving the hospital, Brosted received a written return-to-work release from his physician. When, in the spring of 2000, Brosted attempted to return to his job, Dreisilker refused to allow him back. After considering filing a disability discrimination suit against Dreisilker, Brosted instead decided to negotiate with Dreisilker to work out a solution.

While negotiating with Dreisilker, Brosted also applied for disability benefits from the Long Term Disability Plan ("Plan") which Dreisilker sponsored, listing his first day of hospitalization, December 29, 1999, as the last day he worked before his disability. The Plan provided coverage for long-term disability income to its participants funded through the purchase of insurance from Unum Life Insurance Company of America, Inc. ("Unum").

The Unum policy¹ provided that a person is disabled when Unum determines that the employee is "limited from performing the material and substantial duties of [his] regular occupation due to sickness or injury" and has "a 20% or more loss in [his] indexed monthly earnings due to the same sickness or injury." The policy further provided that if a person is disabled, as defined by the policy, Unum will calculate the monthly disability benefits by: multiplying the claimant's monthly earnings by 60% (capped at $6,000) and subtracting any deductible sources of income, such as social security benefits. The Policy further defined "monthly earnings" to mean the claimants'

gross monthly income from your Employer in effect just prior to your date of disability. It includes your total income before taxes, but does not include deductions made for pre-tax contributions to a qualified deferred compensation plan, Section 125 plan, or flexible spending account.

After applying for benefits from Unum, Brosted spoke with a Unum representative, Molly Neylan, regarding the amount of benefits for which he qualified. Neylan informed Brosted that he would receive 60% of his monthly earnings as benefits, provided he met the policy definition of disability. Neylan further informed Brosted that he would shortly receive a confirmation of the exact dollar amount of his monthly benefits. On July 27, 2000, Brosted received the promised letter, in which Neylan wrote: "This plan provides you with 60% of your basic monthly earnings reduced by certain other income benefits such as Social Security, Workers' Compensation and Pension. Please refer to the monthly benefit reductions in your certificate of insurance for full details." Brosted also received from Unum a check for $2,596 with an "Explanation of Long Term Disability Benefits" that listed the amount of net benefits as "$3,016.00." (Brosted opted to have the Plan withhold taxes from the disability check, and $2,596 was the after-tax benefits total.)

After receiving this letter, on August 1, 2000, Brosted entered into a release and severance agreement with Dreisilker. This agreement expressly provided as a condition precedent that Unum must deem Brosted disabled and he must secure long-term disability benefits under the Plan. Unfortunately for Brosted, while he was executing the release and severance agreement, a Certified Public Accountant working for Unum reviewed the disability benefits calculations for Brosted, and discovered that the previous benefits calculation was incorrect. After properly calculating Brosted's benefits, the CPA determined that he would receive only $2,082.37 per month, $513.63 less than originally stated. Apparently, the mistake occurred because Unum's original calculation was based on Brosted's basic monthly wages of $5,026.66, whereas under the policy terms, that amount should have been reduced by the amounts Brosted contributed to his 401(k) plan and section 125 flexible spending account, $790.20 and $102.05 respectively.

On August 16, 2000, Unum informed Brosted of its error in calculating his monthly disability benefits, notifying him that the $513.63 overpayment would be deducted from his second disability check, and that thereafter he would receive the correct after-tax amount of $2,082.37. Brosted appealed Unum's determination of his monthly disability benefits through the Plan appeal process. On January 16, 2002, Unum notified Brosted of its decision to uphold its benefits determination.

After losing his appeal, Brosted filed suit against Unum Life Insurance and the Plan, under ERISA, alleging, in count one, a claim of equitable estoppel and, in count two, breach of fiduciary duty. Following discovery, the district court granted the defendants summary judgment. Brosted appeals.

II.

On appeal, Brosted argues that the district court erred in granting the defendants summary judgment on his equitable estoppel and breach of fiduciary duty claims. Brosted also argues that the district court abused its discretion in denying his motion for an extension of time for discovery.

A. Motion for an Extension of Time

We consider first Brosted's claim that the district court abused its discretion in denying his motion for an extension of time for discovery. The district court originally set a discovery deadline of March 31, 2004. Brosted requested an eight-week extension, which the district court granted, establishing a new deadline of May 31, 2004. During late February and early March, Brosted initiated discovery requests, seeking the production of documents and noticing depositions for three individuals — two representatives of Unum and a Vice President of Dreisilker. On April 7, 2004, the defendants filed a motion for a protective order, seeking to limit discovery to the administrative record developed during Brosted's appeal of the benefits determination through the Plan appeal process. This effectively put the discovery on hold because the district court did not rule on the defendants' motion until July 1, 2005, at which time the district court denied the defendants' motion for a protective order. That same day, and apparently before the district court entered its order on the protective order motion, Brosted filed a motion to enlarge the discovery deadline.² On July 12, 2004, the district court denied as moot Brosted's motion to enlarge time and reset discovery.

On appeal, Brosted claims that the district court erred in denying his motion for an extension of time as moot because he still needed to depose three witnesses. Brosted further asserts that he needed to wait until the district court ruled on the protective order before proceeding with these depositions, and that the district court should have, therefore, granted him an extension of time to complete discovery.

This court reviews the district court's decision to deny an extension of time to conduct discovery for an abuse of discretion. See, e.g., Campania Management Co., Inc. v. Rooks, Pitts & Poust, 290 F.3d 843, 850-51 (7th Cir.2002) (holding that the district court did not abuse its discretion in denying a motion to extend discovery filed nine days after the close of discovery). In this case, in his motion Brosted sought an extension of time in order to obtain responses from the defendants to "discovery previously requested." Prior to ruling on that motion, the district court denied the defendants' request for a protective order. Without a protective order prohibiting discovery, the defendants were forced to respond to the discovery requests that Brosted had filed before the discovery deadline. This, as the district court recognized, made the request for an extension of time to obtain responses for discovery previously requested moot.

However, Brosted's attorney failed to take the depositions of the three witnesses before the discovery deadline, instead writing to the defendants' attorney, stating that those depositions were continued. On appeal, Brosted justifies this failure by arguing that he needed access to the documents being withheld before he could depose the three witnesses. That may well be true. Perhaps when Brosted belatedly requested an extension of time for discovery, had he argued that he needed additional time to depose the witnesses because he had yet to receive the documents, the court might have granted his request. But the primary problem with his motion is that he did not seek an extension until a month after the discovery deadline had passed. Thus, pursuant to Fed.R.Civ.P. 6(b)(2), Brosted was required to show excusable neglect for failing to comply with the discovery deadline.³ But in seeking an extension of time, Brosted did...