Appeal in injury-related wrongful termination case and related sanction motions dismissed

By Nicholas Malfitano | Dec 19, 2016

PHILADELPHIA – A panel of appellate judges has ruled to dismiss an injury-related wrongful termination case and connected motions for sanctions, in keeping with the decision of the original trial court.

On Dec. 12, judges Patty Shwartz, Robert E. Cowen and Julio M. Fuentes ruled to affirm the decision of the U.S. District Court for the Eastern District of Pennsylvania with respect to the aforementioned motions in favor of defendant Zurich American Insurance Company and against plaintiff Steven LeBoon.

LeBoon was hired as a Human Resources Manager by the Alan McIlvain Company (AMC) in September 2008, and terminated from his position on May 8, 2009. On May 9, 2012, he filed a complaint in the U.S. District Court for the Eastern District of Pennsylvania against AMC, alleging violations of the Americans with Disabilities Act (ADA), 42 U.S.C. Section 12101, et seq. and the Pennsylvania Human Relations Act (PHRA), in that he was terminated just after he had suffered a workplace injury.

Due to transportation issues that caused LeBoon to miss court time, the case was declared a mistrial and ultimately dismissed for failure to prosecute, a decision affirmed on appeal.

Then, on Oct. 29, 2015, LeBoon filed a complaint in the same court against Zurich American Insurance Company, AMC’s liability insurer, alleging bad faith in connection with his employment discrimination action, Section 8371, common law bad faith, and breach of an implied covenant of good faith and fair dealing. LeBoon’s allegations were based on Zurich’s conduct while defending AMC.

LeBoon claimed Zurich, as AMC’s counsel and insurer, failed to make any good faith offers to settle the employment litigation and thus breached a duty owed to him. LeBoon asserted that, “Zurich was careless in unnecessary litigation using over $1 million [and] leaving ZERO pennies for me.”

Zurich responded with a motion to dismiss for failure to state a claim and argued LeBoon’s common law claims failed for the same reason, Zurich alleged, and ERISA had no application whatever to the case because the liability policy at issue clearly was not an “employee welfare benefits plan” subject to the Employment Retirement Income Security Act (ERISA).

Eight days later, LeBoon filed a motion for sanctions (and later another identical one) against Zurich alleging that its counsel failed to properly serve him with the motion to dismiss, and sought a default judgment in the amount of $1,000,000.00.

In April, the trial court dismissed that complaint from LeBoon and denied both of his motions for sanctions – due to LeBoon’s complaint failing to state a plausible claim for relief, and finding LeBoon was not an insured within the meaning of the policy. This decision led LeBoon to appeal the ruling to the Third Circuit.

“We will affirm. We hold first that the District Court properly determined that LeBoon failed to overcome the presumption of service of Zurich’s motion to dismiss the complaint, and thus properly denied LeBoon’s motions for sanctions,” the Third Circuit said. “Beyond his denial of receipt of Zurich’s motion to dismiss, LeBoon offered no explanation or evidence, such as a recent change of address or problems with receipt of mail, to rebut the presumption of receipt of the motion to dismiss.”

The appellate court further held the trial court properly granted Zurich’s motion to dismiss LeBoon’s complaint.

“When ruling on a defendant’s motion to dismiss, the Court may consider a document explicitly relied upon in the complaint without converting the motion to dismiss to a summary judgment motion. Here, the District Court properly relied upon the terms of Zurich’s liability insurance policy in ruling on the motion to dismiss,” the Third Circuit said.

“In that LeBoon plainly is not an insured under the liability policy, he failed to state a plausible claim for relief on his allegations of bad faith. Under the unambiguous terms of the liability policy, Zurich’s only obligation was to provide for the defense and indemnity of covered claims against AMC. In addition, the liability policy clearly is not an ‘employee welfare benefits plan’ subject to ERISA,” the Third Circuit added.

The Court then affirmed the order of the District Court dismissing LeBoon’s complaint and denying his motions for sanctions, and further denied LeBoon’s motion and supplemental motion to stay this appeal, “because additional discovery will not establish that Zurich owed him a duty to settle the employment litigation.”

The defendant is represented by Louis A. Bove of Bodell & Bove in Philadelphia.

U.S. Court of Appeals for the Third Circuit case 16-2088

U.S. District Court for the Middle District of Pennsylvania case 2:15-cv-05904

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at

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