Zimmerman v. Sloss Equipment, Inc.

• Decision Date: 28 October 1993
• Docket Number: Civ. A. No. 92-2383-GTV.
• Citation: 835 F. Supp. 1283
• Parties: Cheryl B. ZIMMERMAN, Plaintiff, v. SLOSS EQUIPMENT, INC., et al., Defendants.
• Court: U.S. District Court — District of Kansas

835 F. Supp. 1283

Cheryl B. ZIMMERMAN, Plaintiff, v. SLOSS EQUIPMENT, INC., et al., Defendants.

Civ. A. No. 92-2383-GTV.

United States District Court, D. Kansas.

September 28, 1993.

Memorandum Denying Reconsideration October 28, 1993.

COPYRIGHT MATERIAL OMITTED

Mark A. Buchanan, the Popham Law Firm, Kansas City, MO, for plaintiff.

William M. Modrcin, Hillix, Brewer, Hoffhaus, Whittaker & Wright, Kansas City, MO, for defendants.

MEMORANDUM AND ORDER

VAN BEBBER, District Judge.

This case is before the court on the following motions:

1. Defendants' Motion for Summary Judgment (Doc. 42);

2. Defendants' Motion to Strike Plaintiff's Request for Punitive Damages and Damages for Intentional Infliction of Emotional Distress (Doc. 58); and

3. Defendants' Motion to Strike Plaintiff's Jury Demand (Doc. 56).

Plaintiff has responded to the motion for summary judgment (Doc. 47) and opposes the motion. The other motions have not been responded to. For the reasons stated in this memorandum and order, the motion for summary judgment is denied and the motions to strike are granted.

I. MOTION FOR SUMMARY JUDGMENT

This case concerns claims brought by plaintiff Cheryl Zimmerman alleging that her employment was terminated by defendants Sloss Equipment and S & N Enterprises, Inc., in order to avoid paying her medical expenses as required under the terms of defendants' health insurance plan, and that the termination was thus in violation of section 510 of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1140. Plaintiff has also alleged a state law claim for breach of an employment contract. Defendants have now moved for summary judgment on all claims.

A. Summary Judgment Standards

In deciding a motion for summary judgment, the court must examine any evidence tending to show triable issues in the light most favorable to the nonmoving party. Bee v. Greaves, 744 F.2d 1387, 1396 (10th Cir. 1984), cert. denied, 469 U.S. 1214, 105 S.Ct. 1187, 84 L.Ed.2d 334 (1985). A moving party is entitled to summary judgment only if the evidence indicates "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A genuine factual issue is one that "can reasonably be resolved only be a finder of fact because it may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986).

The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. This burden may be discharged by "showing" that there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). Once the moving party has properly supported its motion for summary judgment, the burden shifts to the nonmoving party, who "may not rest on mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256, 106 S.Ct. at 2514. Thus, the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Id.

B. Factual Background

The pertinent uncontroverted facts established by the parties in accordance with D.Kan. Rule 206(c) are as follows:

Plaintiff Cheryl Zimmerman was hired by defendants Sloss Equipment, Inc., and S & N Enterprises, Inc., on August 24, 1990, as a full-time secretary/receptionist. She was an employee of both corporations and each corporation paid one-half of her salary.

Defendant Sloss Equipment is a corporation engaged in the leasing and sale of trash compaction equipment. S & N Enterprises is a corporation which owns the trash compacting equipment leased by Sloss Equipment. Richard Sloss is President, Chief Executive Officer, and sole stockholder of Sloss Equipment. S & N Enterprises is owned jointly by Richard Sloss and Chase Nixon. Nixon is President of S & N Enterprises.

S & N Enterprises purchased a group health insurance plan with Employers Health Insurance Company (Employers) through the Lockton Agency effective June 1, 1990. Donna Sherrow, Manager of Client Services for Lockton, handled the transaction. Plaintiff has testified that during her initial employment interview with defendants she was told by Chase Nixon that she would have health insurance within sixty days after employment if she worked out.¹

On September 27, 1990, plaintiff contacted Donna Sherrow and requested that Sherrow send her an application for health coverage pursuant to the group plan. Sherrow sent plaintiff an application to fill out. Because of the size of the group plan, each applicant was required to be medically underwritten. The applicant would furnish information concerning his or her prior medical history, and based upon the information, the insurance company would determine if coverage would be available to the applicant. Coverage was not automatically given to each employee.

On October 4, 1990, Sherrow received from plaintiff an incomplete insurance application. That same day, plaintiff called Sherrow. Sherrow told plaintiff that she had failed to answer the health questions on the application and Sherrow was mailing the application back to her.

On December 12, 1990, plaintiff called Sherrow to see if her health insurance was effective. Sherrow had never received a completed enrollment form from plaintiff. Sherrow checked with Employers to see if they had received one directly and was advised they had not. Sherrow then sent plaintiff another application to complete.

Chase Nixon was advised by plaintiff in September or October, 1990, that she was applying for health insurance. Nixon testified during a deposition that he thought plaintiff would become insured if her application was approved by Employers.

On January 10, 1991, plaintiff was admitted to Humana Hospital in Overland Park, Kansas. In middle or late January, after plaintiff was released from the hospital, she called Wallace McIntire, another employee of S & N Enterprises and Sloss Equipment, to inquire about her health insurance. McIntire contacted the Lockton Agency and learned that they had never received a completed application from plaintiff and that she had not been added to the company's insurance.

On January 28, 1991, plaintiff spoke with Chase Nixon by telephone. The parties dispute what occurred during the phone conversation, but plaintiff claims that Nixon told her that she was fired.² Plaintiff also asserts that in October, 1990, after plaintiff was hired by the defendants, Chase Nixon contacted Sherrow to inquire about the estimated costs of adding plaintiff to the company insurance plan. He testified that he was shocked by the $190.70 per month amount. He also testified that he wanted plaintiff to know how much her insurance cost and that it was a big bonus to receive insurance coverage.

According to underwriter Bruce Lund, Employers' underwriting policies in effect in September, 1990, required them to decline health insurance coverage to any applicant who had been hospitalized for alcohol abuse treatment within three years prior to submitting an application.³ Plaintiff was treated for depression related to alcohol abuse during July, 1990, prior to her employment with defendants.

C. Discussion

As an initial matter, the court notes that the parties have agreed that plaintiff's state law claims for breach of implied contract of employment and wrongful discharge are preempted by ERISA. Therefore, Count II of plaintiff's complaint is dismissed. Additionally, the court notes that in the Pretrial Order entered in this case the parties have agreed that individual defendant Richard Sloss may be dismissed from this action.

As to Count I of her Complaint, plaintiff alleges that she was terminated in violation of ERISA § 510, 29 U.S.C. § 1140, which provides in relevant part, that it is unlawful "for any person to discharge, fire, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of the employee benefit plan ... or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan...." In the present case, plaintiff claims that defendants terminated her employment while she was on medical leave to avoid paying her health insurance benefits.

In their motion for summary judgment, defendants contend that plaintiff cannot demonstrate any evidence of specific intent on the part of defendants to violate ERISA and that therefore plaintiff cannot establish a prima facie case under ERISA § 510. Plaintiff contends, on the other hand, that firing plaintiff while she was on medical leave is direct evidence of specific discriminatory intent.

She also argues that comments by Chase Nixon concerning the high cost of providing plaintiff with medical insurance, as well as defendants' failure to help plaintiff obtain her medical insurance also constitute evidence from which a specific intent to violate ERISA may be inferred. The court agrees with plaintiff.

To recover under ERISA § 510, a plaintiff need not prove that "the sole reason for his termination was to interfere with pension rights." Morgan v. ANR Freight Systems, Inc., No. 87-2239, 1989 WL 7890 (D.Kan. Jan. 10, 1989) (quoting, Titsch v. Reliance Group, Inc., 548 F.Supp. 983, 985 (S.D.N.Y.1982), aff'd, 742 F.2d 1441 (2d Cir. 1983)). A plaintiff, must, however, demonstrate that the defendant had the "`specific intent' to violate ERISA." Morgan, 1989 WL 7890 at 4 (quoting Watkinson v. Great Atlantic & Pacific Tea Co., Inc., 585 F.Supp. 879, 883 (E.D.Pa.1984)); see also, Nixon v. Celotex Corp., 693 F.Supp. 547 (W.D.Mich. 1988). Under section 510, no cause of action lies where the loss of pension benefits is a mere consequence of,...