Byrd v. Canadian Imperial Bank of Commerce

• Decision Date: 20 January 2005
• Docket Number: C.A. No. 2:04-0783-23.
• Citation: 354 F.Supp.2d 597
• Court: U.S. District Court — District of South Carolina
• Parties: E. Thomas BYRD, Jr., Plaintiff, v. CANADIAN IMPERIAL BANK OF COMMERCE and CIBC World Markets Corp., Defendants.

354 F.Supp.2d 597

E. Thomas BYRD, Jr., Plaintiff, v. CANADIAN IMPERIAL BANK OF COMMERCE and CIBC World Markets Corp., Defendants.

C.A. No. 2:04-0783-23.

United States District Court, D. South Carolina, Charleston Division.

January 20, 2005.

COPYRIGHT MATERIAL OMITTED

Walter Henry Bundy, Jr., Stanley Eugene Barnett, Smith Bundy Bybee and Barnett, MT Pleasant, SC, for Plaintiff.

Amy Yager Jenkins, Ellis Reed-Hill Lesemann, Nelson Mullins Riley and Scarborough, Charleston, SC, for Defendants.

ORDER

DUFFY, District Judge.

This matter is before the court upon the parties' cross motions for summary judgment. For the reasons set forth herein Defendants' Motion for Summary Judgment is granted, and Plaintiff's Motion for Summary Judgment is denied.

BACKGROUND

In March of 1999, Plaintiff left his position as a securities broker with Prudential Securities in Charleston, South Carolina to begin employment as a broker with CIBC Oppenheimer¹ and to open CIBC's Mount Pleasant, South Carolina office. (Am.Comp.¶, ¶ 4,5). Plaintiff contends that in an attempt to induce him to leave Prudential and join CIBC, Defendants offered him (1) long term disability ("LTD") benefits equaling the amount he carried with Prudential, or $25,000 per month, and (2) participation in CIBC's Wealth Plus Plan ("WPP"). (Am.Comp.¶ 6). Plaintiff signed an Employment Agreement and an Account Executive Compensation Schedule on March 25, 1999. Defendants contend that neither of these agreements contained promises regarding disability or WPP benefits. Specifically, Defendants cite a provision of the Employment Agreement which provides

Aside from the terms set forth herein, you have no other agreements or understandings, written or oral, with CIBC Oppenheimer regarding compensation with the exception of your Salesman's Compensation Schedule ... this Agreement embodies the entire understanding of the parties and supersedes all prior understandings of the parties, whether oral or written, in connection with the subject matter hereof.

(Def. Ex. 5; CIBC 0125-0130). Additionally, at the time Plaintiff was hired, he received a lump sum loan of $664,000. The Employment Agreement provided that this loan would be forgiven in yearly increments of $132,800 over a five-year period, and that if Plaintiff left CIBC before the loan's forgiveness in full, he would immediately owe the balance of the loan to CIBC. Id.

A. LTD Benefits

In early 2002, Plaintiff was diagnosed with an incurable, progressive vision disorder. Around this time, Plaintiff inquired about his disability benefits coverage to the CIBC benefits department. Plaintiff contends that he was told that he had $25,000 in coverage (Pl. Dep. at 54). In response to his inquiry, CIBC's benefits department faxed Plaintiff a one page "Confirmation of Benefits Elections" form dated January 1, 2002, which set forth Plaintiff's benefits elections. The elections form confirmed Plaintiff's enrollment in the long-term disability plan, and stated that his "Coverage Category/Amount" was $25,000. Of particular importance to the present dispute, this $25,000 figure had an asterisk beside it with a notation which explained that "Monthly Benefit is 60% of Pay." (Def. Ex. 8, UNUM 009).² While Plaintiff believed he qualified for disability payments of $25,000 per month, Defendants contend that what this notation on the benefits form meant was that $25,000 was the maximum monthly earnings that would be used to calculate monthly disability benefits. (Asman Aff. ¶ 5).³

The LTD plan (hereinafter "the UNUM LTD plan") explained this calculation in a section entitled "Schedule of Insurance, Disability Benefits and Requirements." (Def. Ex. 9 at 4). That section read as follows:

                DISABILITY BENEFITS AND REQUIREMENTS
                LTD BENEFITS AMOUNT                      Earnings multiplied by the LTD Benefit
                                                         Percentage, not to exceed the
                                                         Maximum LTD Monthly Benefit
                                                         Amount, minus Benefit Offsets
                LTD BENEFITS PERCENTAGE                  60%
                MAXIMUM MONTHLY LTD BENEFITS AMOUNT      $15,000 before reduction by Benefit
                                                         Offsets
                

Id.

On May 3, 2002, Plaintiff notified his managers that he intended to elect disability benefits due to his eye problems. On May 10, 2002, CIBC's payroll administrator, EDS/CIBC People Matrix (hereinafter "EDS"), confirmed Plaintiff's application for disability leave and reiterated that "[s]hould you qualify for long-term disability. your pre-disability salary would be 60% to a [m]aximum of $15,000 a month." (Def.Ex.11). On May 24, 2002, Plaintiff wrote to his managers stating that he wished to cancel his Employment Agreement because he could not receive his WPP funds while remaining an active employee. (Def.Ex.12). However, Asman warned Plaintiff that if he took this step, he would be responsible for the balance of the loan he had obtained when hired. (Asman Aff. ¶ 6). Thus, Plaintiff decided to remain employed and apply for disability leave. (Def.Ex.9).

Defendant CIBC provided Plaintiff with various forms to fill out related to his disability.⁴ CIBC forwarded all of Plaintiff's documentation to its long-term disability insurance carrier, Provident Life & Accident Casualty Company, later known as Unum/Provident ("UNUM"). (Asman Aff. ¶ 9). By letter dated December 5, 2002, UNUM informed Plaintiff that he had been approved for long-term disability benefits. (Def.Ex.20). UNUM notified Plaintiff that his elimination period of ninety days was satisfied on November 16, 2002, and that his first check covered the period from November 17, 2002 through November 20, 2002. Id. As Defendants concede, UNUM erroneously based his monthly benefit amount on "60% of [Plaintiff's] pre-disability income averaged over the past 12 months." Id. CIBC notified UNUM that the Plan had been amended to base benefits on 60% of average earnings over the past three years. (Def.Ex.21). UNUM wrote Plaintiff to notify him of the mistaken calculation and confirmed that he would be receiving compensation for the underpayment. Id. UNUM also confirmed that all future checks would be in the amount of $15,000, "the maximum monthly benefit." Id. Since December of 2002, Plaintiff has consistently received this maximum monthly benefit from UNUM. (Byrd Dep. at 158).

Relatedly, and at the very heart of the dispute surrounding Plaintiff's entitlement to LTD benefits, for a very short period of time, CIBC apparently allowed its highly compensated employees, including Plaintiff, the opportunity to purchase supplemental long term disability insurance from a Paul Revere, a third party insurance company. CIBC did not pay for any of the premiums, but supposedly made payroll deductions from the wages of individuals who purchased this supplemental insurance. CIBC would then forward this amount to the insurer. According to Asman, all employees who purchased supplemental insurance were required to fill out and submit an application for supplemental coverage, and to make regular premium payments via wage deductions. (Asman Aff. ¶ 12). Plaintiff contends that in his second year with CIBC, his salary (over $300,000) met the threshold for supplemental long term disability coverage, and he elected coverage in the amount of $10,000 per month. Defendants argue that Mr. Byrd never applied and paid for a supplemental policy.

B. The WPP

Plaintiff also claims that he has been wrongfully denied benefits under the WPP. The WPP was a plan designed to provide CIBC executives like Plaintiff with "the opportunity to build long-term wealth via financial awards and permitting the voluntary deferral of compensation under the provisions of the Plan." (Def. Ex. 38, Article 1.2). Plaintiff began participating in the WPP on November 1, 2000, and elected to have three percent of his income deferred into the WPP during his employment. (Def. Ex. 42, 43; Richards Aff. ¶ 8).

Each month, CIBC contributed a "firm matching credit" equal to fifty percent of what the employee contributed. Aside from this firm matching credit, there were several other credits available to eligible employees. First, a "Firm Annual Credit" was given under certain circumstances, including meeting certain production requirements over the prior twelve month period. Plaintiff received the Firm Annual Credit in November of 2001 because he met the production requirements over the prior twelve months. (Def.Ex.45). In 2002, Plaintiff did not qualify for this credit because his production was not high enough that year. (Richards Aff. ¶ 12). Other types of credits under the WPP included the "Firm Initial Credit" and the "Firm Second Credit." According to Defendants, Plaintiff was not entitled to either of credits by virtue of the loan he had taken out and the length of time employed by CIBC, respectively.

Plaintiff stopped making payments into the WPP when he ceased earning income during 2002. (Richards Aff. ¶ 9). At this point, Plaintiff applied for and received accelerated vesting status from the WPP administration committee. As of January 2003, Plaintiff's entire WPP account balance was $11,530.44, and it was entirely vested due to his disability. (Richards Aff. ¶ 17). On January 6, 2003, the WPP was terminated in conjunction with a divestiture of CIBC Oppenheimer to Fahnestock Viner Holdings. CIBC notified Plaintiff of this termination by letter dated January 17, 2003, and informed him that he would receive his "vested balance plus a pro-rata portion of the unvested principal amount of the Firm Initial Credit and the Firm Second Credit, if any, allocated to your account." (Def.Ex.40).

Plaintiff did not receive a distribution during 2003 because, according to Defendants, he owed substantial amounts of money to CIBC pursuant to his initial loan. Under a provision of the WPP entitled "Right of Offset," "[v]ested amounts in a Participant's Account will be...