Court Opinion

ID: 180810
Source: CourtListenerOpinion
Date Created: 2010-12-10 00:28:48+00
Date Added: 2024-06-11T17:25:53.015517
License: Public Domain

Case: 10-60294 Document: 00511317712 Page: 1 Date Filed: 12/09/2010

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                 FILED
                                                                          December 9, 2010

                                       No. 10-60294                         Lyle W. Cayce
                                                                                 Clerk

JIMMY BULLOCK,

                                                   Plaintiff-Appellant
v.

GOTTFRIED CORPORATION,

                                                   Defendant-Appellee

                   Appeal from the United States District Court
                     for the Southern District of Mississippi
                             USDC No. 1:04-CV-835

Before WIENER, GARZA, and PRADO, Circuit Judges.
PER CURIAM:*
       Plaintiff-Appellant Jimmy Bullock brought this tort action against his
employer, Defendant-Appellee Gottfried Corporation (“Gottfried”), alleging that
Gottfried acted in bad faith by refusing to pay him workers compensation
benefits for almost three years.1 Gottfried moved for summary judgment, which

       *
         Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
       1
          Originally, Bullock also sued AIU Insurance Company, Gottfried’s workers
compensation carrier, and AIG Claim Services, Inc., Gottfried’s claims servicing company. But
while summary judgment motions were pending, Bullock reached amicable settlement terms
with these companies, and they were dismissed as parties by agreement. As such, the breach
     Case: 10-60294 Document: 00511317712 Page: 2 Date Filed: 12/09/2010

                                       No. 10-60294

the district court granted. The district court held that Gottfried was entitled to
a judgment as a matter of law because Gottfried showed an arguable basis for
challenging Bullock’s eligibility for workers compensation. We agree and affirm
the district court’s grant of Gottfried’s motion for summary judgment.
                            I. FACTS & PROCEEDINGS
A. Facts
       Bullock is a sheet metal subcontractor who had worked for Gottfried since
1994 on approximately six jobs. In November 1996, Bullock was injured while
working for Gottfried. Bullock did not have his own workers compensation
insurance policy, so he filed his claim under Gottfried’s policy. Gottfried disputed
Bullock’s coverage under its policy.
       Gottfried relied on the fact that Bullock was a subcontractor, and not an
employee, under a contract that required Bullock to maintain his own workers
compensation coverage. Gottfried also produced a copy of a certificate of
insurance indicating that Bullock maintained his own workers compensation
policy effective from January 1996 until January 1997, covering the time of his
injury. Gottfried contended that it was never notified by Bullock that he
cancelled his insurance policy or was provided with a cancellation notice.
       Bullock asserted that he had made an oral agreement with Gottfried
before signing the subcontract that he would not provide his own insurance and
instead would be covered on Gottfried’s policy. Bullock alleges that Gottfried
agreed to allow Bullock to deduct the insurance premiums from his invoices to
Gottfried, known as “backcharging.” The first time this backcharge ever
occurred, however, was after Bullock’s injury. Bullock had submitted two
previous invoices, one on November 4 and the other on November 22—the later
one after the injury took place on November 8—neither of which included a

of fiduciary duty claim is not at issue on appeal. See Bullock v. AIU Ins. Co., No. 1:04-CV-835,
2010 WL 1141122, at *1 n.1 (S.D. Miss. Mar. 22, 2010).

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                                       No. 10-60294

backcharge deduction. Gottfried testified that this sequence of invoices, along
with the contract and certificate of insurance, led it to believe that Bullock’s
insurance was effective at the time of his injury but had been allowed to lapse
subsequently.
      Gottfried’s insurance company denied Bullock’s workers compensation
claim. Bullock then filed a petition with the Mississippi Workers’ Compensation
Commission to contest the denial of coverage. An administrative law judge held
a hearing in October 1999 and determined that Bullock was indeed entitled to
workers compensation benefits under Gottfried’s policy, and Gottfried’s
insurance company accordingly paid him the requested benefits. In October
2003, another administrative hearing was held on the issue of temporary and
permanent disability, which the parties had agreed to reserve pending the ruling
on the issue of coverage. The administrative law judge concluded that Bullock’s
disability claim was compensable and awarded Bullock additional workers
compensation benefits, which Gottfried’s insurance company paid.
B. Proceedings
      In August 2004, Bullock filed a tort action in Mississippi state court,
claiming that Gottfried had acted in bad faith by refusing to provide him
workers compensation benefits. Gottfried removed the case based on diversity
of citizenship.2
      Gottfried first sought to dismiss Bullock’s case on the basis that the
statute of limitations had expired. The district court denied the motion but then
granted it on rehearing, dismissing all of Bullock’s claims as time-barred.3 On
appeal, we certified a question to the Mississippi Supreme Court asking on
which date—that of the first administrative hearing or that of the second—this

      2
          Bullock is a Mississippi resident and Gottfried is a Louisiana corporation.
      3
         Bullock v. AIU Ins. Co., No. 1:04-CV-835, 2006 WL 1195465, at *2 (S.D. Miss. Apr.
28, 2006).

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                                         No. 10-60294

action accrued for purposes of the statute of limitations.4 The Mississippi
Supreme Court held that the statute of limitations only began to run after the
second administrative hearing so that Bullock’s claims were timely.5 We then
reversed the dismissal and remanded to the district court for consideration of the
merits of Bullock’s claims.6
      After completing discovery, Gottfried again moved for summary judgment.
The district court granted Gottfried’s motion, ruling that there was no genuine
issue of material fact and that Gottfried was entitled to judgment as a matter of
law.7 The district court also granted Gottfried’s motion to strike portions of
Bullock’s affidavit. Bullock timely filed his notice of appeal.
                                        II. ANALYSIS
A. Bad Faith Refusal of Workers Compensation
      Summary judgment is appropriate when there is no question of material
fact and the moving party is entitled to a judgment as a matter of law. We
review a district court’s grant of summary judgment de novo, applying the same
legal standards as the district court.8
      Under Mississippi law, the liability of an employer to pay workers
compensation is the employee’s exclusive remedy against his employer.9 But “the
independent tort of bad faith refusal to pay compensation is an exception to this
provision.”10 The Mississippi Supreme Court has summarized the tort as follows:

      4
           Bullock v. AIU Ins. Co., 503 F.3d 384, 388 (5th Cir. 2007).
      5
           Bullock v. AIU Ins. Co., 995 So. 2d 717, 723 (Miss. 2008).
      6
           Bullock v. AIU Ins. Co., 554 F.3d 524, 525 (5th Cir. 2008).
      7
           Bullock, 2010 WL 1141122, at *6.
      8
           See FED . R. CIV . P. 56(a) (as amended effective Dec. 1, 2010).
      9
           See MISS . CODE ANN . § 71-3-9.
      10
           Miss. Power & Light Co. v. Cook, 832 So. 2d 474, 479 (Miss. 2002) (en banc).

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       In order to prevail in a claim for damages for bad faith there must
       be a determination as to whether there was a legitimate or arguable
       reason to deny the benefits, and/or that the denial constituted a
       willful or malicious wrong in disregard for [the employee’s] rights.
       Really the only test . . . is whether the injury is compensable under
       the act. The two prongs of the test are not separate requirements,
       but rather part of the inquiry into whether the injury is
       compensable. Furthermore, where there is a legitimate or arguable
       basis in the delay or denial of payments, there is no valid claim for
       punitive damages.11
In addition, “[t]he fact that an [employer’s] decision to deny benefits may
ultimately turn out to be incorrect does not in and of itself warrant an award of
punitive damages if the decision was reached in good faith.”12 Ultimately, then,
we must determine whether there was an arguable basis for Gottfried’s initial
refusal of workers compensation to Bullock—in other words, whether there was
“a reason ‘sufficiently supported by credible evidence as to lead a reasonable
[employer] to deny the claim.’” 13
       Here, credible evidence supports the conclusion that Gottfried had an
arguable basis for disputing Bullock’s workers compensation claim. Bullock’s
written contract with Gottfried stated that Bullock had to maintain his own
workers compensation insurance coverage. Bullock had also provided Gottfried
with a certificate of insurance that was effective at the time of the subject injury,
and he never provided Gottfried with a written cancellation notice. Lastly,
Bullock had received payments without the deducted backcharge both before and
after his injury before submitting the final invoice months later with the

       11
            Id. (citations omitted).
       12
            Liberty Mut. Ins. Co. v. McKneely, 862 So. 2d 530, 533 (Miss. 2003).
       13
          Sobley v. S. Natural Gas Co., 302 F.3d 325 (5th Cir. 2002) (quoting State Farm Mut.
Auto. Ins. Co. v. Grimes, 722 So. 2d 637, 642 (Miss. 1998)). See also Luckett v. Miss. Wood Inc.,
481 So. 2d 288, 290 (Miss. 1985) (extending the tort of bad faith refusal of workers
compensation to employers as well as insurance carriers).

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                                        No. 10-60294

backcharge included. In sum, despite the fact that Gottfried eventually was
required to cover Bullock’s injury, Gottfried had an arguable basis to deny
coverage initially.
B. Motion to Strike
      We review the district court’s grant of Gottfried’s motion to strike for
abuse of discretion.14 The district court concluded that one statement in Bullock’s
affidavit was improper hearsay, one statement was irrelevant, and two other
statements were improper conclusions or accusations of lying, or both. We agree
and therefore affirm the district court’s grant of Gottfried’s motion to strike.
                                   III. CONCLUSION
      We conclude that Bullock’s bad faith tort action was properly dismissed
and that the district court did not abuse its discretion in striking several
statements from Bullock’s affidavit. All rulings of the district court and its
judgment are AFFIRMED.

      14
           See Hollis v. Am. Airlines, Inc., 138 F.3d 1028, 1030 (5th Cir. 1998).

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