Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-05-01885/USCOURTS-ca8-05-01885-0/pdf.json

Parties Involved:
Metropolitan Life Insurance Company
Appellee
Harry Stone
Appellant

Document Text:

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 05-1885

___________

Harry Stone, *

*

Appellant, *

* Appeal from the United States

v. * District Court for the Eastern

* District of Arkansas.

Metropolitan Life Insurance *

Company, * [UNPUBLISHED]

*

Appellee. *

___________

Submitted: November 17, 2005

Filed: April 10, 2006

___________

Before SMITH, HEANEY, and BENTON, Circuit Judges.

___________

PER CURIAM.

Harry N. Stone appeals the grant of summary judgment to Metropolitan Life

Insurance Company in this Employee Retirement Income Security Act case. The

parties dispute whether their settlement agreement permits MetLife to deduct his (presettlement) disability retirement benefits from his (pre-settlement) long-term group

disability benefits. Jurisdiction being proper under 28 U.S.C. § 1291, this court

reverses and remands.

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In 2002, Stone and MetLife were in litigation over long-term group disability

benefits. A settlement agreement was reached. In paragraphs 3(a), 3(c), and 3(d) of

the agreement, MetLife agreed to reinstate his group disability benefits and to pay his

legal fees and costs. Paragraph 3(b) of the agreement provides:

MetLife will pay Releasor [Stone] all back benefits due under Policy No.

90701-G from the date such benefits were terminated less all disability

payments received by Releasor from the Social Security Administration;

After the settlement agreement was signed and the case dismissed, MetLife

learned that Stone was receiving disability retirement benefits from the employer.

MetLife then recalculated his benefits determining that Stone was overpaid by

$22,322.20. After a demand for the overpayment, MetLife began withholding benefits

to satisfy the overpayment. In response, Stone initiated this case. The district court

found that by its plain, ordinary language, the settlement agreement authorized the

offset. Stone appeals. 

This Court reviews a grant of summary judgment de novo. Gilooly v. Mo. Dept.

of Heath & Senior Servs., 421 F.3d 734, 738 (8th Cir. 2005). To reverse a grant of

summary judgment, the non-movant must present sufficient evidence to create a

genuine issue of material fact, or demonstrate that the movant is not entitled to

judgment as a matter of law. See Smith v. Basin Park Hotel, Inc., 350 F.3d 810, 813

(8th Cir. 2003); Shelter Ins. Cos. v. Hildreth, 255 F.3d 921, 924-25 (8th Cir. 2001).

The parties agreed that the laws of Arkansas shall govern the settlement

agreement. In Arkansas, when contracting parties express their intention in a written

instrument in clear and unambiguous language, the written agreement is enforced

according to the plain meaning of the language employed. See C. & A. Constr. Co.

 v. Benning Constr. Co., 509 S.W.2d 302, 303 (Ark. 1974). Determining whether an

agreement is clear or ambiguous is an issue of law. Id. 

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The threshold issue is whether the agreement is clear or ambiguous. An

ambiguity exists if "a provision is susceptible to more than one reasonable

interpretation." State Farm Fire & Cas. Co. v. Midgett, 892 S.W.2d 469, 471 (Ark.

1995); see also Unigard Sec. Ins. Co. v. Murphy Oil USA, Inc., 962 S.W.2d 735, 740

(Ark. 1998). Stone stresses the ending phrase of paragraph 3(b), which explicitly

requires a deduction only of social security benefits, and omits any mention of a

deduction of disability retirement benefits. 

MetLife emphasizes the first phrase in paragraph 3(b), that it will pay benefits

due under Policy No. 90701-G. The policy, the group disability plan itself, allows

MetLife to reduce his benefits by "other income" Stone receives. The plan defines

"other income" to include disability retirement benefits from the employer. 

MetLife also points to paragraph 3(a), which refers to the benefits to be

reinstated after the agreement, as those "under Alltel Corporation Group Policy No.

90701-G." See Cont'l Cas. Co. v. Davidson, 463 S.W.2d 652, 655 (Ark. 1971) ("the

interpretation must be upon the entire instrument and not merely on disjointed or

particular parts of it"). The reinstated benefits include a deduction for the disability

retirement benefits, and for social security benefits. Unfortunately for MetLife,

paragraph 3(a) defines benefits under the policy differently than paragraph 3(b), which

references one specific deduction. While MetLife's interpretation is reasonable,

Stone's is also reasonable. 

The settlement agreement thus is ambiguous. In Arkansas, if an ambiguity

exists, then the true intention of the parties must be determined, which is the primary

rule for construction of agreements. See Harris v. Stephens Prod. Co., 832 S.W.2d

837, 839 (Ark. 1992). MetLife asserts that this court should determine the intention

of the parties by considering the situation of the parties when they agreed to it. See

Asimos v. T.L. Reynolds & Sons, Inc., 429 S.W.2d 103, 107 (Ark. 1968). Specifically,

MetLife points to another document (which is undisputed). Before any of the

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litigation, Stone signed a MetLife form, "Agreement to Reimburse Overpayment of

Long Term Disability Benefits." It authorizes MetLife to offset his group benefits by

payments "under disability or retirement provisions of the Social Security Act

(including any payments for my eligible dependents), under a Workers' Compensation

or any Occupational Disease Act or Law, and under any State Compulsory Disability

Benefit Law, or any other act or law of like intent." Stone's private disability

retirement benefits are not included in any of these categories. The reimbursement

form also requires Stone to report any "disability or retirement payments under the

laws described above." Other than social security, Stone has not received any

payments under the "laws described above," which include disability or retirement

provisions of the Social Security Act, Workers' Compensation, Occupational Disease

Act or Law, State Compulsory Disability Benefit Law, or any similar act or law. The

MetLife form does not grant MetLife the right of offset it claims.

The parties point to no other relevant extrinsic evidence, and in the crossmotions for summary judgment, they agree on the facts of this case. In this posture,

Arkansas courts resolve the ambiguity as a question of law. See Jackson v. City of

Blytheville Civil Serv. Comm'n., 43 S.W.3d 748, 751 (Ark. 2001); Smith v. Prudential

Prop. & Cas. Ins. Co., 10 S.W.3d 846, 850 (Ark. 2000). It is undisputed that MetLife

drafted the settlement agreement (and the reimbursement form). In Arkansas, the law

is clear:

When there is uncertainty or ambiguity in a contract or contracts and

they are susceptible to more than one reasonable construction, then we

must construe them most strongly against the party who drafted them.

Further the drafter of a document is in a better position to convey a

clarity in meaning by its choice of phraseology and words, and if there

are any uncertainties, they will be construed against the drafter of the

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form if the language bears more than one reasonable meaning in its

interpretation.

Elcare, Inc. v. Gocio, 593 S.W.2d 159, 161 (Ark. 1980) (citations omitted).

Because MetLife drafted the settlement agreement, Stone's interpretation

prevails. MetLife cannot offset for pre-settlement benefits not addressed in the

agreement (or the reimbursement form). Therefore, this court reverses the grant of

summary judgment, and remands for entry of judgment consistent with this opinion.

______________________________

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