Garcia v. Lumacorp, Inc.

Decision Date31 October 2005
Docket NumberNo. 04-11032.,04-11032.
Citation429 F.3d 549
PartiesJaime GARCIA; Maria Luisa Garcia, Plaintiffs-Appellants, v. LUMACORP, INC.; LumaCorp, Inc., as agent for MDWR Ltd., Defendants-Appellees.
CourtU.S. Court of Appeals — Fifth Circuit

Nadine R. King-Mays (argued), The King-Mays Firm, Dallas, TX, for Plaintiffs-Appellants.

John E. Richards (argued), Seth Allen Horwitz, Glast, Phillips & Murray, Dallas, TX, for Defendants-Appellees.

Appeal from the United States District Court for the Northern District of Texas.

Before HIGGINBOTHAM, WIENER, and DENNIS, Circuit Judges.

WIENER, Circuit Judge:

Plaintiff-Appellants Jaime and Maria Luisa Garcia appeal the district court's grant of summary judgment in favor of Defendant-Appellee LumaCorp on all claims asserted in this action which arose out of Mr. Garcia's work-related injury. As we perceive no error in the district court's determination of Mr. Garcia's coverage under LumaCorp's Employee Injury Benefit Plan or in its giving effect to the parties' settlement agreement, we affirm.

I. FACTS AND PROCEEDINGS

In October 2000, Jaime Garcia, then an assistant maintenance worker at the Villages of Meadow West Apartments in Dallas, was injured on the job when a solution of pool chemicals he was mixing exploded in his face. He sustained serious chemical burns to his face, head and body, as well as a cerebral injury resulting from his exposure to the solution. Garcia required extensive medical treatment for his injuries and was never able to return to work.

Garcia's employer at the time of his injury, Defendant-Appellee LumaCorp, Inc., manages multifamily residential apartment complexes in the Dallas area, including the Villages of Meadow West. At all times relevant to this litigation, LumaCorp was a nonsubscriber under the Texas Workers' Compensation Act.1 As an alternative to participating in the statutory workers' compensation scheme, LumaCorp adopted an Employee Injury Benefit Plan ("the 1993 Plan") to provide eligible employees with medical disability and wage replacement benefits in the event of a work-related injury.

The 1993 Plan required new LumaCorp employees who began working at LumaCorp on or after January 1, 1994, to execute a voluntary election form as a condition of participation in the Plan. The election form contained a waiver and release of all causes of action against LumaCorp arising from injuries sustained in the course and scope of employment, as well as a waiver of the right to sue LumaCorp in connection with such injuries, the employee's sole remedy being benefits under the Plan.2

Garcia became an employee of LumaCorp in August 1998. On his employment application he indicated proficiency in both Spanish and English. Several days later, Garcia signed the election form required for his participation in the 1993 Plan. Specifically, the election form he signed specified that

THE UNDERSIGNED HEREBY IRREVOCABLY AND UNCONDITIONALLY

RELEASES AND WAIVES ANY AND ALL CLAIMS OF ACTION, WHETHER NOW EXISTING OR ARISING IN THE FUTURE, THAT THE UNDERSIGNED MAY HAVE AGAINST ... LUMACORP, INC. ... THAT ARISE OUT OF OR ARE RELATED TO INJURIES ... SUSTAINED BY THE UNDERSIGNED IN THE COURSE AND SCOPE OF THE EMPLOYMENT OF THE UNDERSIGNED BY ... LUMACORP, INC.

I UNDERSTAND THAT BY EXECUTION OF THIS DOCUMENT, I WILL LOSE THE RIGHT TO SUE ... LUMACORP, INC. ... IN CONNECTION WITH INJURIES ... SUSTAINED DURING THE COURSE AND SCOPE OF MY EMPLOYMENT WITH ... LUMACORP, INC.; AND, FURTHER, THAT MY ONLY REMEDY WILL BE TO RECEIVE BENEFITS UNDER THE PLAN.

EXECUTION OF THIS DOCUMENT INVOLVES THE WAIVER AND RELEASE OF VALUABLE RIGHTS.

The 1993 Plan was in effect on the date of Garcia's injury, and shortly thereafter he began receiving wage replacement and medical benefits as provided under the Plan.

On February 16, 2001, LumaCorp instituted a new benefit plan, the Occupational Injury Benefit Plan ("the New Plan"), which expressly revoked and terminated the 1993 Plan, retroactively effective December 1, 2000. Among other things, the New Plan increased the aggregate amount of benefits available to an eligible employee for a work-related injury from $100,000 to $1,000,000. Then-current employees were not required to sign any additional documents to become covered under the New Plan in place of the terminated 1993 Plan. Garcia continued to receive medical and wage replacement benefits under the 1993 Plan, however, because his injury had occurred prior to the effective date of the New Plan. As interpreted by LumaCorp, the 1993 Plan — and not the New Plan — still covered Garcia's injury.

By April 2001, Garcia's medical bills surpassed the $100,000 maximum benefit allowed under the 1993 Plan. Shortly thereafter, LumaCorp received a letter from its third-party administrator stating that the policy limit had been exceeded as to Garcia and that no further reimbursements would be made without preapproval of the insurer.3 By this time, LumaCorp had already paid additional medical bills for which it had not been reimbursed, and Garcia had outstanding medical bills in the amount of $14,441.96.

On October 23, 2001, LumaCorp President and Plan Administrator James R. Mattingly, together with two other LumaCorp employees, went to the Garcias' home and tendered an instrument titled "Settlement Agreement and Release and Compromise of Claims" (the "Settlement Agreement"). It was written entirely in English. Mattingly explained the terms of the Settlement Agreement, including the release language, and informed Garcia that he had exhausted his benefits under the 1993 Plan. Mattingly further communicated LumaCorp's offer to pay Garcia's then-outstanding $14,441.96 in medical bills (which were in excess of the maximum benefit and for which LumaCorp would not receive reimbursement) plus an additional $10,000, if he would sign the Settlement Agreement. Rick Moncibais, LumaCorp's Director of Service, was also present and translated this information to the Garcias in Spanish. Garcia signed the Settlement Agreement, releasing LumaCorp from all claims arising out of his injury, in exchange for which LumaCorp paid all his outstanding medical bills as well as the additional $10,000.

On November 6, 2002, the Garcias filed suit in the district court, alleging claims of gross negligence, loss of consortium, fraud and fraud in the inducement, intentional infliction of emotional distress, race discrimination under 42 U.S.C. § 1981, public policy violations, wrongful termination, breach of fiduciary duty under ERISA and common law, breach of contract, and failure of consideration. They also sought a declaratory judgment to compel arbitration.

In a final order dated July 24, 2004, the district court (1) denied the Garcias' motion for partial summary judgment, (2) granted summary judgment in favor of LumaCorp on all claims, and (3) dismissed the action with prejudice. The Garcias appeal all rulings of the district court, asserting eleven points of error in their brief.

II. STANDARD OF REVIEW

We review a district court's findings of fact for clear error and its conclusions of law, including contractual interpretations, de novo.4 We also review de novo a district court's grant of summary judgment.5

III. ANALYSIS

Having carefully reviewed the evidence in the record and considered the arguments presented in the briefs and at oral argument, we conclude that Garcia waived all causes of action as well as his right to sue LumaCorp for work related injuries when he signed the voluntary election form to participate in the 1993 Plan. We further conclude that Garcia's coverage under the 1993 Plan was unaffected by LumaCorp's adoption of the New Plan and termination of the 1993 Plan, and that the original waiver still stands. Moreover, the parties' valid settlement agreement independently released LumaCorp from all claims. We therefore affirm all rulings of the district court.

A. Coverage under the 1993 Plan; waiver of right to sue.

In their appellate brief the Garcias assert that because LumaCorp revoked and terminated the 1993 Plan when it instituted the New Plan, "Mr. Garcia was therefore (1) either covered by the new Plan or (2) not covered by any Plan at all." They argue further that "[b]ecause LumaCorp failed and refused to provide Mr. Garcia with the information notifying him of the right to elect under the second plan ... Mr. Garcia was in all probability, not covered by any plan and therefore is not barred from his common law right to sue."

The district court did not err in determining that Garcia was covered by the 1993 Plan at the time of his injury. The summary judgment evidence shows that (1) Garcia signed an election form on August 17, 1998, to participate in the 1993 Plan, which was still in effect on the date of his injury; and (2) despite revocation and termination of the 1993 Plan, benefits would continue to be paid for work-related employee injuries that had occurred prior to termination of the 1993 Plan.

The New Plan did not cover Garcia's injury because it occurred prior to the New Plan's effective date. Specifically, subsection 2.15(ii) of the New Plan excluded from the definition of covered injuries any pre-existing conditions, defined in subsection 2.25 as "any illness, injury, disease, or other physical or mental condition, whether or not work-related, which originated or existed prior to the date of Accident or Occurrence [covered under the New Plan]." Mattingly, as Plan Administrator vested with "the sole and absolute discretionary power and authority to construe and interpret the Plan" under subsection 6.3, interpreted these provisions as limiting coverage under the New Plan to injuries occurring on or after December 1, 2000. "[W]hen an employee benefit plan vests discretion in the administrator, principles of trust law require that we leave the plan administrator's interpretation undisturbed if reasonable."6 Considering the plain language of subsections 2.15(ii) and 2.25, quoted above,...

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