United States District Court, N.D. Texas, Dallas Division
STEVE WESLEY CULVER, CASSIE CHARLENE CULVER, individually and on behalf of MADISON RENEE HILL, Plaintiffs,
UNITED COMMERCE CENTERS, INC., NEW WORLD INTERNATIONAL, INC., and NATIONAL AUTO PARTS, INC., Defendants.
MEMORANDUM OPINION AND ORDER
BARBARA M. G. LYNN O CHIEF JUDGE.
the Court is Plaintiffs' Motion for Partial Summary
Judgment (ECF No. 16) and Plaintiffs' Motion to
Supplement its Motion for Partial Summary Judgment (ECF No.
31). The Motion to Supplement is GRANTED, but for the reasons
stated below, the Motion for Partial Summary Judgment is
FACTUAL AND PROCEDURAL BACKGROUND
April 19, 2016, Plaintiffs Steve Wesley Culver and his wife,
Cassie Charlene Culver, filed suit against Mr. Culver's
former employer, United Commerce Centers, Inc.
(“UCC”), as well as the alleged sponsors of their
medical insurance plan, New World International, Inc., and
National Auto Parts, Inc. In May 2013, Steve Culver developed
Hepatitis C and cirrhosis of the liver. The parties agree
that more than $300, 000 was paid in medical expenses by the
plan for Mr. Culver over the course of two years. Plaintiffs
allege UCC then terminated Mr. Culver's employment, so it
could stop paying for his medical expenses under the medical
insurance plan. UCC contends it terminated him for theft. Mr.
Culver further alleges he was illegally denied COBRA
continuing medical coverage after his termination, and denies
UCC's allegation that he was terminated for theft.
Plaintiffs also assert that Mrs. Culver was not given timely
notice under COBRA of her right to elect continuing coverage
under the medical insurance plan, and that UCC forced Mr.
Culver into a separation agreement in which he released all
brought suit for slander, duress, and violations of the
Employee Retirement Income Security Act
(“ERISA”), the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”), and the Age
Discrimination in Employment Act (“ADEA”). On
November 4, 2016, Plaintiffs moved for partial summary
judgment on their COBRA claims, asserting that New World
International, Inc. and National Auto Parts, Inc. are plan
sponsors. On March 3, 2017, Plaintiffs sought leave to
supplement their motion to reference the deposition of Seth
Denson, the Defendants' former health insurance broker.
On May 2, 2017, the Culvers filed their Fourth Amended
Complaint adding their granddaughter, Madison Renee Hill,
allegedly a plan beneficiary, as a plaintiff.
support of their motion, Plaintiffs assert that, as a matter
of law, under COBRA Defendants were obligated to provide Mr.
Culver with continuing medical coverage, and to give Mrs.
Culver notice of her right to elect continuing coverage.
Fed.R.Civ.P. 56, summary judgment is proper “if the
movant shows that there is no genuine dispute as to any
material fact and that the movant is entitled to judgment as
a matter of law.” Fed.R.Civ.P. 56(a). A factual issue
is material “if its resolution could affect the outcome
of the action.” Weeks Marine, Inc. v. Fireman's
Fund Ins. Co., 340 F.3d 233, 235 (5th Cir. 2003). A
factual dispute is “‘genuine, ' if the
evidence is such that a reasonable [trier of fact] could
return a verdict for the non-moving party.” Crowe
v. Henry, 115 F.3d 294, 296 (5th Cir. 1997). The Court
is required to view all facts and draw all reasonable
inferences in the light most favorable to the non-moving
party and to resolve all disputed factual controversies in
favor of the non-moving party. See Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 255 (1986); Boudreaux v.
Swift Transp. Co., Inc., 402 F.3d 536, 540 (5th Cir.
requires that “the plan sponsor for each group health
plan shall provide…that each qualified beneficiary who
would lose coverage under the plan as a result of a
qualifying event is entitled, under the plan, to elect,
within the election period, continuation coverage under the
plan.” 29 U.S.C. § 1161(a). In the case of
termination, COBRA also requires the employer under a plan to
notify the administrator within 30 days of the date of the
qualifying event, and the administrator of the plan shall
notify any qualified beneficiaries of their rights under
COBRA “within 14 days…of the date on which the
administrator is notified.” Id. §
parties agree that Mrs. Culver is a qualified beneficiary who
was not provided with COBRA notice, and that Mr. Culver was
not provided with continuing coverage. However, Defendants
rely on 29 U.S.C. § 1163(2), which provides that
termination of employment is not a qualifying event if the
employee is fired for gross misconduct. Gross misconduct is
undefined in COBRA, but Defendants contend Mr. Culver was
fired for theft, which the Court concludes would constitute
gross misconduct, and that therefore, neither he nor Mrs.
Culver would be entitled to COBRA protections. Plaintiffs
assert the theft allegation is false, and that UCC terminated
Mr. Culver so it could stop paying for his medical expenses
under the medical insurance plan. Plaintiffs cite the
deposition testimony of Seth Denson, Defendants' former
health insurance broker. Denson testified that Grace Tsai, one
of the owners of UCC, who was also its controller and who is
married to Peter Tsai, UCC's President, expressed
frustration about the medical insurance plan and the costs
for care of Mr. Culver in particular. However, UCC filed an
affidavit from Grace's son, Joseph Tsai, UCC's Senior
Vice President, stating that Mr. Culver was fired for
theft-specifically, for selling UCC's scrap metal and
cardboard and for selling UCC's auto parts without giving
the proceeds to UCC. Joseph Tsai's affidavit states that
Mr. Culver admitted to the allegations regarding the scrap
cardboard. The thrust of the Tsai affidavit is also to deny
that New World International and National Auto Parts are plan
sponsors. The Culvers submit no affidavits or other evidence
disproving the theft allegation, but seemingly assert that
the Defendants are estopped to assert that claim as a matter
of law, because UCC gave Culver a COBRA notice and three
months of coverage after his termination. Defendants assert
that was pursuant to a separation agreement UCC and Mr.
are genuine issues of material fact as to whether Plaintiffs
were entitled to COBRA notice, whether the separation
agreement bars the claim, whether Defendants acted
inconsistently with their current position as to the reasons
for termination and are therefore estopped, and whether New
World International and National Auto Parts are plan
sponsors. Therefore, summary judgment is improper.