Hamilton v. Gibson County Utility Dist.

• Decision Date: 26 August 1992
• Citation: 845 S.W.2d 218
• Parties: James A. HAMILTON, Jr. and wife, Mary Nelle Hamilton, Plaintiffs/Appellees, v. GIBSON COUNTY UTILITY DISTRICT, Defendant/Appellant.
• Court: Tennessee Court of Appeals

Page 218

845 S.W.2d 218

James A. HAMILTON, Jr. and wife, Mary Nelle Hamilton, Plaintiffs/Appellees, v. GIBSON COUNTY UTILITY DISTRICT, Defendant/Appellant.

Court of Appeals of Tennessee,

Western Section,

at Jackson.

Aug. 26, 1992.

Application for Permission to

Appeal Denied by

Supreme

Court Nov. 30, 1992.

Richard Gossum, Trenton, for defendant/appellant.

James A. Hamilton III, Farmer, Moore & Jones, Dversburg, for plaintiffs/appellees.

TOMLIN, Presiding Judge (Western Section).

James A. Hamilton, Jr. and wife, Mary Nelle Hamilton (hereafter "Hamilton" or "plaintiff") ¹ brought an action for breach of contract against Gibson County Utility District ("defendant") claiming defendant unilaterally terminated health insurance coverage for Hamilton and his wife subsequent to Hamilton's retirement from defendant. The trial court granted plaintiff's motion for summary judgment and denied defendant's motion for summary judgment. The singular issue presented on appeal by defendant is whether the trial court erred in granting plaintiff's motion for summary judgment and denying defendant's motion for summary judgment. Plaintiff presents two issues on appeal: Whether the trial court erred (1) in denying plaintiff's motion to amend the complaint so as to certify this suit as a class action; and (2) in refusing to award attorney fees to plaintiff. As to plaintiff's issues, we find no error. However, we are of the opinion that the trial court erred in granting plaintiff's summary judgment motion.

In his complaint plaintiff alleges he was employed by defendant in the position of office manager from March, 1962, until August 23, 1990. In 1972, defendant and Blue Cross/Blue Shield (BCBS) entered into a contract whereby BCBS provided a major medical/group health insurance plan for defendant's employees. Under the plan, employees paid a monthly premium for individual or family coverage, with defendant paying a portion of the premium. Plaintiff alleges in part that:

The resolution further states that upon twenty-five (25) years of service or more or upon reaching the age of sixty (60) then the GIBSON COUNTY UTILITY DISTRICT will pay 100% of the employee's health insurance premium. The resolution continues by saying the employee shall remain under the health insurance plan of defendant until said employee reaches the age of sixty-five (65) at which time the employee will be provided supplemental health insurance coverage.

Plaintiff contends his service to defendant was continuous and uninterrupted from March, 1962, until August 23, 1990, when he terminated his employment by resignation. At that time plaintiff was sixty-three years of age and had been an employee of defendant for more than twenty-eight years.

In addition, plaintiff's complaint alleges as follows:

8. Plaintiffs allege that the resolution referred to hereinabove and marked as Exhibit "A" hereto is a valid and binding contract and was part of the employment benefits which vested during the course of plaintiff, JAMES A. HAMILTON, JR.'s employment with defendant. That due to the fact plaintiff, JAMES A. HAMILTON, JR., was employed by defendant for more than twenty-five (25) years and also due to the fact that he was more than sixty (60) years of age at the time of his resignation, plaintiffs were fully and completely vested in the health insurance plan which was previously offered to the defendant's employees and under which plan plaintiff, JAMES A. HAMILTON, JR., elected to participate.

9. Plaintiffs stay [sic] that the only condition precedent to an employee becoming 100% vested was attaining twenty-five (25) years of service to the defendant or attainment of the age of sixty (60). That plaintiff, JAMES A. HAMILTON, JR., at the time of his resignation, had provided more than twenty-five (25) years of service to defendant and was also more than sixty (60) years of age. That plaintiff, JAMES A. HAMILTON, JR., was influenced and induced to remain in the employment of the defendant, GIBSON COUNTY UTILITY DISTRICT, because of the retirement benefits, including the health insurance coverage, which defendant provided to its employees. That plaintiffs relied upon the representations made to them by the Commissioners of the GIBSON COUNTY UTILITY DISTRICT during the course of plaintiff, JAMES A. HAMILTON, JR.'s, employment and also relied upon the various resolutions which were passed by the Commissioners of the GIBSON COUNTY UTILITY DISTRICT prior to August 23, 1990, specifically regarding retirement benefits and health insurance coverage.

10. Plaintiffs say that the recent action by the Commissioners of the GIBSON COUNTY UTILITY DISTRICT in refusing to pay plaintiffs' health insurance premiums is illegal improper, arbitrary and capricious and totally contrary to and in contravention of the specific resolutions adopted by the Commissioners of the GIBSON COUNTY UTILITY DISTRICT during the course of plaintiff, JAMES A. HAMILTON, JR.'s, employment with defendant. Plaintiffs say that plaintiff, JAMES A. HAMILTON, JR., was fully and completely vested in the retirement plan and health insurance plan provided defendant's employees prior to the resignation of plaintiff, JAMES A. HAMILTON, JR., on August 23, 1990.

11. Plaintiffs say the resolutions adopted by the Commissioners of the GIBSON COUNTY UTILITY DISTRICT prior to August 23, 1990, and specifically, the 1985 Resolution attached hereto, provide health insurance coverage for employees and their dependents subsequent to retirement provided such benefits have become vested prior to an Employee's retirement. Plaintiffs in the instant action say that since plaintiff, JAMES A. HAMILTON, JR., had served as an employee of the GIBSON COUNTY UTILITY DISTRICT for more than twenty-five (25) years and that he was more than sixty (60) years of age at the time of his retirement on August 23, 1990, that defendant pursuant to the Resolutions referred to herein should be absolutely responsible for the payment of the plaintiffs entire health insurance premiums.

In response to plaintiff's complaint, defendant filed an answer, which we quote in material part as follows:

3. Defendant admits that it instituted a group health insurance plan for its employees and their dependents many years ago.

Defendant admits that a resolution was adopted in May, 1985, regarding its group health insurance plan. Defendant avers that the minutes, which are partially attached to the complaint as Exhibit A, show that the Board of Commissioners took such action in light of a then recent amendment to Section 7-82-308(a) of Tennessee Code Annotated; that Section 7-82-308 deals with compensation of commissioners of utility districts; and that the 1985 amendment to that section allowed commissioners, in addition to their monthly monetary compensation, to receive group medical insurance coverage as provided employees....

4. The resolution purports to show the coverage of the group health plan as to commissioners, employees, and dependents. That group plan coverage was then and is now provided by Blue Cross-Blue Shield of Tennessee.

Defendant avers that the group health plan coverage as provided by Blue Cross-Blue Shield did not and does not include provision for continued membership in the group after an employee or commissioner has retired.

Further, Defendant avers that the statute, with which the resolution purportedly was seeking to comply, makes no provision for inclusion of retired commissioners.

Further, the group health plan provides for coverage supplemental to Medicare at age 65, not 60 as the resolution states.

Further, the resolution sets out guidelines for employee participation in payment of premiums, but those guidelines have never been applied. Instead, all employees' insurance premiums have been paid in full since 1982....

6. Defendant admits that upon discovery of the fact that retired employees could not be members of the group under its health plan, it notified plaintiffs of that fact.

7. Defendant admits that it notified plaintiffs that federal law (COBRA) provided that they may maintain their insurance by reimbursing defendant for the premiums for a period of 18 months. However, defendant is advised by its group health plan carrier that after the expiration of that time, a retired employee may no longer be a member of the group.

8. Defendant denies that the resolution is a valid and binding contract. The minutes show that after "a discussion of the Utility's group health plan," the Board purported to establish certain guidelines for coverage of "the group plan." Defendant avers that the parties were under the mistaken belief that adoption of such a resolution would change the defendant's group plan. However, defendant is advised that, contrary to the resolution, its group plan does not allow retired commissioners or employees to be members of the group.

9. Defendant admits plaintiff James A. Hamilton, Jr.'s age and years of service. Defendant is unable to admit or deny the remainder of the allegations contained in paragraph 9 of the complaint but demands strict proof thereof.

10. Defendant avers that it stopped paying plaintiff's insurance premiums upon its discovery that plaintiff, no longer being an employee, could not be a member of the group for coverage under defendant's group insurance plan. Further, it is not possible for defendant to make plaintiff a member of the group by paying his premium.

11. In response to paragraph 11 of the complaint, defendant avers that the minutes of the May, 1985, meeting show on their face an intent to effect guidelines with respect to its "group health plan" and not an intent to enter into any contract separate and apart from said "group health plan." ...

13. Defendant's response to paragraph 13 of the complaint is that, even if it paid plaintiffs' premiums, it could not make the group insurance plan carrier deem plaintiffs to be members of the group for medical coverage.

14. Defendant...