author: hTERRI F. LOVE, Judge.

text:
    Donald J. NALTY and Frank E. Schmidt v. D.H. HOLMES COMPANY, LIMITED.
    No. 2002-CA-2247.
    Court of Appeal of Louisiana, Fourth Circuit.
    April 14, 2004.
    Rehearing Denied Oct. 6, 2004.

      Charles A. Snyder, Milling Benson Woodward L.L.P., and F. Evans Schmidt, Denechaud and Denechaud, New Orleans, LA, for Plaintiffs/Appellants, Donald Nalty and Frank Schmidt.
    Joseph B. Hurst, Jr., Friday, Eldredge & Clark, LLP, Little Rock, AR, and Robert A. Kutcher, Nicole S. Tygier, Patricia D. Tunmer, Chopin, Wagar, Cole, Richard, Reboul & Kutcher, L.L.P., Metairie, LA, for Defendant/Appellant, D.H. Holmes Company, Ltd.
    (Court composed of Judge CHARLES R. JONES, Judge TERRI F. LOVE, Judge Pro Tempore MOON LANDRIEU).
   hTERRI F. LOVE, Judge.

Plaintiffs in this case, Donald J. Nalty and Frank E. Schmidt, were former directors of D.H. Holmes Company, Ltd., who now claim benefits under the D.H. Holmes Company, Ltd., Executive Savings Retirement Plan. Defendants, D.H. Holmes Company, Ltd., claim that Plaintiffs are not eligible for benefits because the directors violated the Interested Directors Statute, and the Plaintiffs were voluntarily terminated. The trial court found that the Plaintiffs did not violate the Interested Directors Statute and are entitled to benefits. For the reasons outlined below, we affirm the judgment of the trial court.

FACTS AND PROCEDURAL HISTORY

Donald J. Nalty (“Nalty”) and Frank E. Schmidt (“Schmidt”) were members of the D.H. Holmes Company, Ltd. (“Holmes”) board of directors (“Board”) in 1985. On March 27, 1985, they participated in a Board meeting at which the D.H. Holmes Company, Ltd., Executive Savings Retirement Plan (“Plan”) was adopted. Participation in the Plan was offered to corporate officers, divisional vice presidents, and Board members under the age of seventy. The Plan was marketed Land sold to Holmes by Charles Marks (“Marks”) of Management Compensation Group (“MCG”), an Atlanta-based benefits company, which specializes in nonqualified deferred compensation and life insurance funding. The Plan’s purpose was to assist in the retention of middle and senior management. Mr. Gary Snyder, an Atlanta lawyer and counsel for MCG, drafted the Plan.

Of the twelve-member Board, eleven were present and the Plan was adopted by unanimous vote. Nalty and Schmidt were among those present and who voted for the Plan. Nalty and Schmidt joined the Plan in the spring of 1985; each elected to defer $7,200.00 per year, for eight years. Nalty was born September 28, 1933, making him 51 years old on May 1, 1985, the Plan’s effective date. Schmidt was born October 6, 1934, making him 50 years old. Both Nalty and Schmidt contributed $28,800.00 to the Plan before voting for the merger of Holmes and Dillards Department Stores, Inc. (“Dillards”), which resulted in their being replaced as directors.

Participants could elect to defer compensation in the amounts and for the number of years specified in Schedule A of the Plan. The initial deferral election could be up to 30% of the participant’s compensation, with a minimum deferral of $5,000.00 a year for eight years. All-compensation deferred was placed in a Deferred Benefit Account maintained separately for each participant.

Article V of the Plan dealt with retirement benefits. The Plan provided for a normal retirement when a participant retired from full-time employment after reaching normal retirement age, and an early retirement benefit no sooner than' the | plater of (a) the participant reaching age 60 or (b) the Participant completing eight years of Plan participation.'

Article VII of the Plan outlined the benefits payable in the event of voluntary or involuntary termination of participants. If a participant voluntarily left employment for any reason other than retirement, death or disability prior to the Early Retirement Date, he would be entitled to a lump sum Termination .Benefit equal to the total of his Deferred Benefit Account, plus interest. If Holmes terminated a partich pant before his Early Retirement Date for any reason other than for cause, and he had completed -all of his compensation deferrals, he would be entitled to a Termination Benefit equal to the Normal Retirement Benefit he would have received if he had remained in continuous employment until Normal Retirement Date and retired pursuant to paragraph 5.1 of the Plan. If a participant had not completed all of his compensation deferrals when he. was involuntarily terminated, he would only receive the amount in his Deferred Benefit Account, plus 10% annual interest, payable in a lump sum.

In 1989, Holmes was merged into a subsidiary-of'Dillards. Nalty and Schmidt attended a March 6, 1989, board meeting at which the terms and conditions of the proposed Agreement and Plan of Merger (“Merger Agreement”) -were discussed. Nalty and Schmidt were present at the April 12, 1989, board meeting when the merger was approved. In addition to voting for the merger as directors, Nalty and Schmidt voted in favor of the merger at the May 9, 1989, special shareholders’ meeting. At a directors’ meeting immediately following that | ¿meeting, letters of resignation were circulated. Nalty and Schmidt did not sign the resignation letters. The other directors signed the resignation letters.

Nalty and Schmidt claim benefits under the Plan “change in control” provision, arguing Dillards involuntarily terminated them after the merger. The Plan provides greater benefits to Participants involuntarily terminated pursuant to its “change of control” provision, than it gives to Participants who leave voluntarily.

Schmidt claims a retirement benefit of $988,500.00; a death benefit of up to $454,500.00; and a disability benefit of $7,200.00 for the first year, $21,600.00 for years two through eight and $28,800 for year nine to continue consecutively until he attains the age 71. Nalty claims a retirement benefit of $1,080,000.00; a death benefit of up to $439,500.00; and a disability benefit of $7,200.00 for the first year, $21,600.00 annually for years two through eight, and $28,00.00 for year nine to continue consecutively until he attains the age 71.

Nalty and Schmidt argue that their resignation were not voluntary because they refused to sign the resignation letters, and requested a review of the Plan Committee’s decision to that effect. Nalty and Schmidt argue they were involuntarily terminated in connection with a change in control and therefore entitled to benefits as if they had completed their compensation deferral elections. A hearing on the appeal of the Plan Committee’s decision was held February 8, 1995. On April 10, 1995, the Plan Committee reaffirmed the denial of benefits, determining that Article VII, the termination provision, applied only to employees, |finot directors. The termination of benefits provision in Paragraph 7.2(a) did not apply to Nalty and Schmidt.

Nalty and Schmidt filed a petition for declaratory judgment on June 26, 1993, seeking a judgment decreeing:

1) Plaintiffs’ positions as directors were involuntarily terminated pursuant to a “change in control,” when Holmes merged with Dillards Department Stores, Inc. in 1989;
2) Plaintiffs are entitled to change their designated retirement ages from 70 to not less than 60;
3) Plaintiffs are entitled to death benefits under the Plan;
4) Prior determinations of those issues by the D.H. Holmes Company, Ltd. Executive Savings & retirement Plan Administrative Committee (“Plan Committee”) were arbitrary and capricious, contrary to the terms of the Plan, and violated fiduciary duties owed to Plaintiffs; and,
5) The Plan Committee is barred by principle of detrimental reliance, promissory estoppel and unjust enrichment from asserting that Plaintiffs’ termination was voluntary or that Plaintiffs’ retirement age designations are irrevocable.

The petition also prayed for Plaintiffs’ costs and, should the trial court find the Employee Retirement Income Security Act of 1974 (“ERISA”) applicable, their reasonable attorneys’ fees and any appropriate ERISA penalties.

Holmes filed its answer to the Petition for Declaratory Judgment on September 1, 1993, denying Plaintiffs were entitled to any benefits under the Plan, other than the return of their contributions and accrued interest.

On March 27, 1995, Holmes filed a re-conventional demand alleging Nalty and Schmidt breached their fiduciary duty to Holmes by voting in favor of the Plan, because they were “interested directors.” The reconventional demand further alleged that the approval of the plan was improper, because the votes of interested | fidirectors were counted in its adoption and it was never presented to nor approved by Holmes shareholders. Holmes sought a declaration that the Plan was void as to the interested directors, no amounts were due to Plaintiffs, and sought damages equal to all amounts paid to directors under the Plan, costs and attorneys’ fees. Nalty and Schmidt did not file an answer to the reconventional demand.

On November 10, 1998, Nalty and Schmidt filed a motion for summary judgment, seeking a judgment declaring the Plan provisions did not distinguish between employees and directors; that Nalty and Schmidt did not voluntarily resign as directors; and that the Plan Committee abused its discretion in its interpretation of the Plan.

Holmes opposed the motion on the grounds that the supporting affidavits were not based on personal knowledge, contained hearsay statements, asserted conclusory facts and legal conclusions, and attached unidentified and unauthenticated documents. Holmes further opposed the motion on the grounds that there existed disputed issues of material fact, including whether Plaintiffs voluntarily resigned or, if they did not, whether their refusal to do' so constituted a breach of their fiduciary duties under the circumstances; whether the interpretation of the Plan by the Plan Committee comported with a fair reading of the Plan; whether, the “change in control” provision of the Plan applied to directors; and whether -the interpretation of the Plan would result in any unanticipated costs to Holmes.

|70n February 8, 1999, the trial court rendered judgment on Nalty and Schmidt’s motion for summary judgment, granting partial summary judgment in Plaintiffs’ favor, finding them eligible for benefits under the Plan, but finding it was unable to determine their precise benefits without a trial. On January 7, 1999, Holmes filed a motion for summary judgment, seeking dismissal of Plaintiffs’ claims for benefits, on the grounds that the Plan was void as to Plaintiffs because they voted for its adoption as Holmes directors, in violation of the Interested Directors Statute, La. R.S. 12:84.

In response to defendants motion for summary judgment, Plaintiffs filed a cross motion for partial summary judgment, seeking dismissal of Holmes’ reconventional demand, on the grounds that: 1) the material facts were disclosed to the Holmes board of directors; 2) the directors acted in good faith in adopting-the Plan; 3) the Plan was fair to the company at the time it was adopted; and 4) the doctrine of Bangor Punta Operations, Inc. v. Bangor & Aroostook R.R. Co., 417 U.S. 703, 94 S.Ct. 2578, 41 L.Ed.2d 418 (1974), barred the reconventional demand.

Holmes’ motion for summary judgment was heard on March 18, 1999. On April 13, 1999, the trial court denied Holmes’ motion. Holmes filed its opposition to Plaintiffs’ cross motion for partial summary judgment on April 20, 1999. After hearing, the trial court granted Plaintiffs’ motion for partial summary judgment and dismissed Holmes’ reconventional demand.

Holmes filed a motion in the district court to certify the February 8, 1999, April 13, 1999, and May 3, 1999, judgments as final, under La. C.C.P. art. 1 «1915(B)(1), and filed a motion and order for devolutive appeal from those judgments on June 2, 1999. This Court dismissed the appeal without prejudice in Donald J. Nalty and Frank E. Schmidt v. D.H. Holmes Co. Ltd., 99-CA-2826 (La.App. 4 Cir. 12/27/00), 775 So.2d 695. This Court held

[cjonsidering the fact that the judgments of February 8, 1999 and May 3, 1999 granted partial summary judgments and the April 13, 1999 judgment denied a motion for summary judgment, the dispositive issue in this appeal is whether these judgments are appealable under La. C.C.P. art.1915, as amended by Acts 1997, No. 483, § 2, effective July 1,1997.

The Court further provided that

We initially note that of the three judgments at issue, only the February 8, 1999 and the May 3, 1999 judgments are partial summary judgments, and thereby subject to the rules of La. C.C.P. art.1915. Although the trial court designated these judgments as final, that order did not contain an “express determination that there is no just, reason for delay.” ... Because of lack of compliance with the rules set forth in the' 1997 version of the La. C.C.P. art.1915 and this Court’s jurisprudence interpreting this article, the February 8, 1999 and May 3, 1999 partial summary judgments do not constitute final, appealable judgments .... The denial of a motion for summary judgment is an interlocutory decree that is not appealable absent a showing of irreparable injury. La. C.C.P. art.2083; Orleans Parish School Board v. Scheyd, Inc., 95-2653, p. 1 (La.App. 4 Cir. 4/24/96), 673 So.2d 274, 275. There has been no showing of how the denial of this motion will result in irreparable injury to D.H. Holmes.... This appeal is dismissed without prejudice. Although D.H. Holmes does not have the right to an immediate appeal due to non-compliance with La. C.C.P. art.1915, it has not lost its right to appeal after final judgment is rendered adjudicating all of the claims, demands, issues and theories as to all parties.

Nalty and Schmidt v. D.H. Holmes Co. Ltd., 99-CA-2826 (La.App. 4 Cir. 12/27/00), 775 So.2d 695

19Plaintiffs filed a motion for partial summary judgment on September 20, 2001, seeking a declaration that Nalty was entitled to retirement benefits totaling $1,080,000.00 and Schmidt was entitled to retirement benefits totaling $988,500.00 under the Plan, plus death benefits for both. Holmes filed an opposition on November 6, 2001, arguing the motion was supported by inadequate affidavits and inadmissible and unauthenticated documents,. and disputed issues of material fact prevented its grant. The trial court denied Plaintiffs’ motion.

Holmes filed a motion for partial summary judgment seeking to strike Plaintiffs’ claim for attorneys’ fees under ERISA. After hearing, the trial court granted the motion to strike.

The amount of benefits was set for trial and submitted on the pleadings, exhibits and trial memoranda. The parties stipulated that, only in the event Plaintiffs were entitled to benefits, Nalty would be entitled to retirement benefits of $72,000.00 per year for fifteen years, beginning the second month after he reached age seventy; Schmidt would be entitled to retirement benefits of $65,900.00 per year for fifteen years, beginning the second month after he reached the age seventy; and, should either plaintiff die after his retirement benefits commenced, his beneficiary would continue receiving his ■ retirement benefits for the remaining portion of the fifteen years. The parties disagreed as to the benefit payable if Plaintiffs died before the commencement of retirement benefits. The trial court found Plaintiffs were entitled to $57,600.00, in benefits, in the event they died before the commencement of retirement benefits.

J^DISCUSSION

In its first assignment of error, Holmes argues that the trial court committed reversible error in denying its motion for summary judgment, seeking dismissal of Nalty and Schmidt’s petition on the grounds that the Louisiana Interested Directors Statute bars Nalty and Schmidt from claiming benefits under the Holmes Retirement Plan.

Appellate courts review summary judgments de novo, using the same criteria applied by trial courts to determine whether summary judgment is appropriate. Reynolds v. Select Properties, Ltd., 93-1480 (La.4/11/94), 634 So.2d 1180, 1182. This Court in Davis v. Board of Supervisors of LSU and Agric. and Mech. Coll., 97-0382, p. 7 (La.App. 4 Cir. 3/18/98), 709 So.2d 1030, 1033, stated in part:

A summary judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that- there is no genuine issue as to material fact, and that the mover is entitled to judgment as-a matter of law. The burden of proof remains with the movant. However; if the mov-ant will not bear the burden- of proof at trial on the matter that is before the court on the motion for summary judgment, the movant’s burden on the motion requires him only to point out to the -court that there is an absence of factual support for one or more elements essential to the adverse party’s claim, action, or defense. Thereafter, if the adverse party fails to- produce factual support sufficient to establish that he will be able to satisfy his evidentiary burdén of proof at trial, there is no genuine issue of material fact.
An adverse party to a supported motion for summary judgment may not rest on the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided by law, must set forth specific facts showing that there is a genuine issue of material fact for trial.
(Internal citations' omitted).

Holmes' argues that given the Nalty and Schmidt’s financial interest in the Plan, the voting directors were considered ‘interested directors’ and the implementation of the Plan must have conformed to the requirements set forth in the Interested Directors Statute, La. R.S. 12:84.

Holmes cites several cases that discuss how transactions between directors and corporations should be scrutinized. See Noe v. Roussel, 310 So.2d 806, 819 (La.1975) (“any agent who acquires his principal’s property; or- one who otherwise acts an a fiduciary capacity, bears the burden of establishing that the transaction was an arms length affair”), and Olinde v. 400 Group, 95-1233 (La.App. 1 Cir. 12/6/96), 686 So.2d 883, 886 (the burden is on the fiduciary not only to prove the good faith of' the transactions involved, but also to show their inherent fairness from the viewpoint of the corporation and its shareholders). Holmes also relies heavily on Rivercity v. American Can Co., 600 F.Supp. 908 (E.D.La.1984), which holds that the disjunctive language in La. R.S. 12:84 and technical compliance with its subsections 1 and 2 did not satisfy a director’s burden of proof where the transaction is unfair to the company. Finally, Holmes cites Dunbar v. Williams, 554 So.2d 56 (La.App. 4th Cir.1989), where the president of the corporation engaged in transactions with his own company to the detriment of his. corporation. In Dunbar, this Court found that the Director’s failure to inquire about the transactions was a breach of fiduciary duty. On rehearing in Dunbar, the panel adopted the holding in Noe.

The cases cited by Holmes; Noe, Olinde, Dunbar, Rivercity, among others, are not persuasive in this instance. First, they are not factually on point, as each case deals with a particular director .or fiduciary engaging in transactions with the corporation. In the case at bar, there was no transaction between the directors and bathe corporation, instead a retirement plan was presented to Holmes by a third party, and adopted by Holmes. The directors were not privy to any benefit that was not also available to the employee/participants of Holmes.

Holmes cites Olinde as supporting authority, however this case contains the following language written by the court, which is contrary to their argument: .

The (Interested Directors) statute does not automatically void an interested director transaction if: 1) it is authorized by vote. only, of the disinterested directors, or ... 3) the transaction was fair to the corporation as of the time it was authorized, approved, or ratified by the board of directors or shareholders.

This undermines Holmes’ argument that the vote of only three disinterested directors is not enough to institute the Plan.

Holmes argues the trial'court incorrectly applied the 'law, and accordingly, improperly granted Plaintiffs’ motion for summary judgment. Holmes further avers that:

Louisiana requires “a majority of the directors present at a meeting at which a quorum is present” to constitute an act of the board. La. R.S. 12:81(c)(7). Eleven of the twelve Board members were present when the Plan was adopted. Two, or even three, uninterested directors do not constitute a majority at an eleven member meeting. Legally the Board could not have adopted the Plan without counting the votes of interested directors, because all but two directors were interested, and two directors did not constitute a majority.

Holmes’ argument about the number of directors voting on the Plan is not supported by the law. La. R.S. 12:81(7) provides in pertinent part

A majority of the board of directors shall be necessary to constitute a quorum for the transaction of business, and thé acts of a majority of the directors present át a méeting at which a quorum is present shall be the acts of the board of clirect'ors. (Emphasis added.)

The record evidences that there were twelve (12) directors on the Board. At the meeting, eleven of the directors were present and participated in the vote to 11,implement the Plan. Of the eleven directors that were present, the record indicates that three of the directors who voted where unable to participate in the Plan and therefore are not considered ‘interested directors’: Hugh Mc.C. Evans, George W. Dodge, and Albert Flettrich. Furthermore, two additional directors who voted for the Plan’s implementation were eligible to, participate in the Plan, but elected not to:' Robert Karem and Stewart Maunsell. Because the board consisted of twelve (12) directors, a quorum required that at least seven (7) directors had to he present to begin a meeting for the purpose of transacting business on behalf of the board. Eleven of the twelve directors were present, thus satisfying the,requisite number of directors to constitute that quorum. We therefore find that this argument has no merit.

However, in assessing whether the presence and participation of the ‘interested directors’ makes the implementation of the Plan voidable, such transactions and contracts are subject to the Interested Directors Statute, La. R.S. 12:84. La. R.S. 12:84 provides in pertinent part

A.' No contract or transaction' ... between a corporation and any other business, nonprofit or foreign corporation, partnership, or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, shall be void or voidable solely for this reason, or solely because the common or interested director or officer was present at or participated in the meeting of the board or committee thereof which authorized the contract or transaction, or solely because his or their votes were counted for such purpose, if:
1. The material facts as to his interest and as to the contract or transaction were disclosed or known to the board of directors or the committee, and the board or committee in 114good faith authorized the contract or transaction by a vote sufficient for such purpose without counting the vote of the interested director or ■ directors; OR
2. The material facts as to his interest and as to the contract or transaction were disclosed or known to the shareholders entitled to vote thereon, and the contract or transaction was approved in good faith by vote ■ of the shareholders; OR
3.The contract or transaction was fair as to the corporation as of the time . it was authorized, approved or ratified by the board of directors, committee, or shareholders.
B. Common or interested directors may be counted in determining the presence of a quorum at a meeting ■ of the board of directors or of a committee, which authorized ■ the contract or transaction.

(Emphasis added.)

Holmes completes its argument by asserting the Plan was unfair to the corporation because the Plan was originally intended only for employees, and that the directors claim nearly a million dollar return on a $28,800.00 investment.

Our duty is to determine whether Plaintiffs were entitled to judgment as a matter of law on this issue. In Rivercity, the court stated, “An interested director bears the burden of proving his good faith in entering into a contract on behalf of his corporation as well as the inherent fairness of such contract from the standpoint of the corporation.” Rivercity v. American Can Company, 600 F.Supp. 908 (E.D.La.1984), affirmed, 753 F.2d 1300 (5th Cir.1985). Nalty and Schmidt have demonstrated good faith in adopting the Plan. They brought in Marks to develop a retirement plan to retain high-level, executive employees. Directors were later added to the list of eligible participants. The Plaintiffs have demonstrated the Plan’s fairness to the corporation, in that employee/participants were eligible for |isthe same benefits as the Plaintiffs, and the Plan was constructed in a manner whereby Holmes would not incur any costs. Plan benefits were to be paid to participants from life insurance policies purchased with contributions to the Plan. Those benefits, once the participant reached the age seventy, were paid out over fifteen years.

Holmes, as the mover, has failed to show that they were entitled to judgment as a matter of law. Further, Nalty and Schmidt have provided ample evidence that the adoption of the Plan was not in violation of La. R.S. 12:84, specifically 12:84 A(3), in that the transaction was fair as to the corporation as of the time it was authorized, approved or ratified by the board of directors. Our review of the record reveals the trial court was correct in granting summary judgment for Nalty and Schmidt based on Holmes failure to demonstrate an error of law or the existence of an issue of material fact.

In its second assignment of error, Holmes argues the trial court committed reversible error in granting partial summary judgment in favor of Nalty and Schmidt dismissing- Holmes’ reconventional demand.

This reconventional demand was instituted by Holmes, urging the trial court to find Plaintiffs violated La. R.S. 12:84 and thus breached a fiduciary duty. Plaintiffs filed a motion for partial summary judgment in response to the reconventional demand.

Based on our findings above, we find that the trial court was correct in granting partial summary judgment for the Plaintiffs on this issue. We further find the trial court did not commit error in dismissing Holmes’ reconventional demand. In this assignment of error, Holmes merely rehashes its argument from the denial of its motion for summary judgment discussed above.

| Kiln its third assignment of error, Holmes argues that the trial court committed reversible error in granting partial summary judgment in favor of Nalty -and Schmidt declaring them eligible for benefits under the Holmes Retirement Plan.

Holmes’ first argument is that the trial court erroneously granted summary judgment in favor of the Plaintiffs because it incorrectly found that the Employee Retirement ' Income Security Act of 1974 (“ERISA”) applied to the Plan. There is no evidence in the record to support this argument. While the ERISA question was presented in relationship to this issue, there is no indication that the trial court made its decision based on a finding that ERISA applied. On the contrary, in a later judgment of the trial court, discussed below, it found that ERISA did not apply to the Plan.

Holmes’ second argument is that the trial court erroneously found for Nalty and Schmidt because the Plan Committee made a correct determination that Nalty and Schmidt were not entitled to benefits under the Plan.

Section 9.1 of the Plan confers authority on the Plan Committee to determine eligibility under the Plan. If the administrator has not given a plan the legally correct interpretation, the court must then determine whether the administrator’s interpretation constitutes an abuse of discretion. In assessing whether there is an abuse of discretion, the Court must first look to whether the Plan Committee’s interpretation was legally correct. Jones v. SONAT, Inc., Master Employee Benefits Plan Administrative Committee, 997 F.2d 113, 115 (5th Cir.1993). In assessing whether the interpretation is legally correct, the court must look to factors such as (1) whether the Administrative Committee has given a uniform construction of the Plan; (2) whether the interpretation is consistent with a fair reading of the Plan; and (3) whether the interpretation results in any unanticipated |17costs. Batchelor v. International Brotherhood of Elec. Workers Local 861 Pension & Retirement Fund, 877 F.2d 441, 444-45.

The Plan Committee concluded that section VII of the Plan, which concerned termination benefits, only applied to employees who terminated employment with the company. However, this interpretation is in contradiction to the language of the Plan. Section of 1.9 of the Plan,- defines a participant as; “An employee or director of Employer who is eligible to participate in this Plan, according to standards adopted by the Plan Committee and who elects to participate in this Plan.” Given that the Plan was conceived and adopted as including directors as participants, it is inconsistent for the Plan committee to now claim that Plaintiffs can be denied benefits because they are not employees. The Plan Committee’s assessment cannot be considered either a fair reading of the Plan, or a uniform construction of the Plan, under Batchelor.

After determining that the Plan Committee interpretation is legally incorrect, the trial court must determine whether the Plan Committee abused its discretion by considering the following factors; 1) whether the Committee’s interpretation is internally consistent with the remainder of the plan, 2) whether the Committee’s interpretation comports with any relevant regulations formulated by the appropriate administrative agencies, 3) whether the factual background supports the Committee’s determination, and 4) any inferences of lack of good faith on the Committee’s part. Jones, 997 F.2d at 115.

Directors were eligible to participate in the Plan as adopted, and Plaintiffs made significant, contributions in reliance on the Plan’s schedule of benefits. The Plan Committee’s interpretation is not internally consistent with the Plan, because they choose to draw a distinction between employees and director, which is not | 1scontained in the language of the Plan. The Plan Committee attempted to establish a distinction between employees and directors upon Nalty and Schmidt’s attempt to claim benefits under the Plan. It is from this action that this Court, .infers a lack of good faith on the part of the Plan Committee, since Nalty and Schmidt were participants according to the Plan, without objection by the Plan Committee, until Holmes merged into Dillards and they sought to collect significant benefits. Given these facts, we find that the Plan Committee abused its discretion in finding the Plaintiffs ineligible to receive Plan benefits.

The Plan Committee further found that Nalty and Schmidt, because they “voluntarily resigned” their directorships, are ineligible for benefits as designated in section 7.1 of the Plan. Plaintiffs assert that they never intended their vote in favor of the merger to be determinative of their benefits under the Plan. Their argument is supported by. the fact that they refused to sign the voluntary resignation form given to the directors. Nalty and Schmidt argue that they understood that as a part of the merger the identity of the shareholders electing the directors would change, but if these new shareholders did not elect the directors they could not be considered voluntarily terminated.

Holmes argues that section 5.3 of the merger agreement granted Dillards the right to require the resignations of one or more of the directors. Section 5.3 addresses pre-merger business and stated that, prior to the merger, if Dillards acquired one million shares, it could have forced the resignation of one or all of the directors. As Nalty and Schmidt note, there is no evidence in the record to suggest that this series of events occurred. Moreover, the fact that Dillards could have forced resignation of the directors in this instance, supports the view that they were not voluntarily terminated.

|U)The trial court found that the Plaintiffs were entitled to benefits under section 7.2 of the Plan, which deals with Participants who are involuntarily terminated due to a change in control. Section 7.2(a) states in pertinent part:

... Notwithstanding the foregoing, in the event such involuntary termination of a Participant occurs in connection with a change in control of Employer, as described in Paragraph 11.1(b), hereof, such Participant shall be entitled to a Termination Benefit determined pursuant to the provisions of paragraph 7.2(b), hereof, as if such Participant had completed all such Compensation Deferral Elections.

Section 7.2(b) states:

In the event that at the time of termination of employment, Participant has completed all Compensation deferrals, pursuant to Schedule A, with respect to any one or more Compensation Deferral Elections, for the full term of such Election, Employer shall pay to such Participant, with respect to such completed Compensation Deferral Elections, and in addition to any amounts payable under Paragraph 7.2(a), hereof, a Termination Benefit determined as follows:
(i) A benefit, equal to the Normal Retirement Benefit Participant would have received, pursuant to Article V, with respect to such Compensation Deferral Election, had Participant remained in continuous employment with Employer until Normal Retirement date and retired from employment with Employer pursuant to Paragraph 5.1, hereof, and be payable pursuant to the provisions of Paragraph 5.5, hereof; or
(ii) If the participant so elects, in writing, to Plan Committee within thirty (30) days of the date of termination, Employer shall pay to Participant, in lieu of the benefit described in Paragraph 7.2(b)®, hereof, a benefit equal to the total amount of such Participant’s Deferred Benefit Accounts, established pursuant to paragraph 4.1, hereof, with respect to such completed Deferred Compensation Elections, determined pursuant to paragraph 4.1, hereof, as of the last day of the month preceding the date of termination of employment, except that the Interest Earnings Adjustment, described in Paragraph 4.3, hereof, shall be determined using the Interest Earnings Rate described in Paragraph 7.1(b), hereof, payable in a lump sum on the first day of the second calendar month following the date of Participant’s termination.

1 ?.nGiven the evidence presented in the motion for summary judgment, we find that the trial court was correct in finding that Nalty and Schmidt were involuntarily terminated and therefore entitled to benefits under section 7.2 of the Plan as outlined above. Since no evidence was presented, which indicated that Nalty and Schmidt made the elections described in 7.2(b)(ii), benefits are due to the plaintiffs as delineated in 7.2(b)®.

Plaintiff’s First and Second Assignment of Errors

In their first assignment of error, Plaintiffs argue that the trial court committed reversible error in finding that the federal law of ERISA did not apply to the D.H. Holmes Executive Savings and Retirement Plan so as to entitle Plaintiffs to attorney fees. In their second assignment of error, Plaintiffs argue the trial court committed reversible error in striking Plaintiffs’ request to engage in appropriate discovery in furtherance of their claim for attorney fees. Given the interrelated nature of these assignments of error, they will be addressed jointly.

ERISA, 29 USCA § 1002(2)(A) states, in part:

Except as provided in subparagraph (B), the terms “employee pension benefit plan” and “pension plan” mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program ...

However, there are retirement plans not covered under ERISA. Section 1051 states in part:

This Part shall apply to any employee benefit plan described in section 1003(a) of this title (and not exempted under section 1003(b) of this title) other than-
(2) a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred |21 compensation for a select group of management or highly compensated employees;
(7) an excessive benefit plan (exempted from ERISA in 1003(b)(5))

These exceptions are reiterated in sections 1081(A)(3), 1081(A)(9), and 1101(a)(1) of ERISA. Section 1002(36) of ERISA describes the term “excessive benefit plan” as follows:

The term “excess benefit plan” means a plan maintained by an employer solely for the purpose of providing benefits for certain employers in excess of the limitations on contribution and benefits imposed by section 415 of Title 26 or plans to which that section applies without regard to whether the Plan is funded.

Given these restrictions, it is clear that the Plan in question is not covered under ERISA. Of the evidence submitted on the motion for' summary judgment, we found the actual language associated with the plan most persuasive. Section 11.5 of the Plan entitled “Governing Law” states:

This Plan is made pursuant to, and shall be governed by, the laws of the State of Louisiana, in all respects, including matters of construction, validity and performance.

Contained in the “Discussion Draft” of the Plan entitled, Wealth-Op™ are the following points regarding the benefits and administration of the Plan:

i. An'executive retirement income security and wealth'accumulation plan offering attractive alternatives to 401(k).
ii. Holmes purchases cost recovery insurance with executive pre-tax salary deferrals at no cost to company.
iii. Substantially increases retirement benefits to executives and offers superior solution to highly paid individuals who might be limited under 40100.
iv. Eliminated problem of government restrictions on qualified plans.
v. “Golden Handcuff’... Beneficial as . ■ an executive attraction, retention and reward device.
laavi. Separate Administration: handed, for the most part, by Management Compensation Group.

This Plan is excluded from ERISA under 1051(2) and (7). It is both an unfunded plan maintained by an employer to provide deferred compensation for a select group of employees and it is an excess benefit plan as defined by 1002(36). Nalty and Schmidt were unable to demonstrate that the trial court made an error of law or that there exists an issue of material fact with regard to whether ERISA applies to the Plan. However, there is ample evidence, from the language and application of the Plan that it is exempt under ERISA.

Third Assignment, of Error

In their third assignment of error, Plaintiffs argue the trial court committed reversible error in finding that Plaintiffs were only entitled to $57,600.00 in Termination Benefits if death occurred prior to their commencement of benefits at age seventy instead of the full benefits, provided under the plan in lump sum.

After determination by the- trial court that Nalty and Schmidt were entitled to benefits under the Plan, the question as to the amount of benefits due Nalty and Schmidt was submitted for trial on the merits. The parties stipulated that, only in the event Plaintiffs were entitled to benefits, Nalty would be entitled to retirement benefits of $72,000.00 per year for fifteen years, beginning the second month after he reached age seventy; Schmidt would be entitled to retirement benefits of $65,900.00 per year for fifteen years, beginning the second month after he reached the age seventy; and, should either plaintiff die after his retirement benefits commenced, his beneficiary would continue receiving his' retirement benefits for the remaining portion of the fifteen years. The trial court found that in the event I^Nalty and Schmidt died prior to the commencement of their retirement benefits, $57,600.00 would be paid to Nalty and Schmidt, plus all accrued interest determined pursuant to paragraph 4.1 of the Plan, payable over fifteen years.

In its reasons for -judgment the trial court stated that since it already found that Plaintiffs were entitled to benefits,1 an inquiry into the amount of benefits owed must begin with the Plan document and Article VII, which addresses benefits owed to the Participant following involuntary termination of a participant other than for cause.

The trial court stated in its reasons:

Paragraph 7.2(a) of the plan provides that when a participant is terminated as the result of a change in control, the participant is entitled to the termination benefit determined in accordance with 7.2(b). The paragraph further provides that such participants are treated as if they had completed all their compensation deferral elections. Therefore the Plaintiffs are viewed as if they had completed all eight years of required contribution totaling $57,600.00.
The termination benefits set forth in paragraph 7.2(b) provide the participant who has completed the compensation deferral elections with two options. 7.2(b)(ii) regards the participant as one who continued employment with the employer until retirement, thus providing “Normal Retirement Benefits”. 7.2(b)(ii) also allows an election for a lump sum payment of the balance of the participant’s deferred benefit account if made in writing within 30 days of the date of termination. As no evidence has been presented that such an election has been made, the Plaintiffs are entitled to “Normal Retirement Benefits”.
Paragraph 6.2 addresses the benefits owed following the death of the participant after retirement.
If a Participant dies following retirement from full-time employment with Employer, but prior to the payment of all amounts payable to Participant pursuant to Article V, hereof, Employer shall pay to the Beneficiary or Beneficiaries designated in writing by Participant in Schedule A ... The amounts payable to such Beneficiary or Beneficiaries as the result of Participant’s death shall be made payable as follows:
(a) Continuation of Participant’s Retirement Benefit, payable over its remaining term thereof, as if such Participant had not died (in the event participant had begun to receive Retirement | ¡^Benefits, pursuant to Article V hereof, prior to Participant’s death); or
(b) If Participant had not yet begun to receive his Retirement Benefit, pursuant to Article V hereof, prior to his death, the amount of such Participant’s Death Benefit, determined pursuant to Paragraph 6.3....
This paragraph specifically addresses the instance where the death of a retired participant occurs prior too the receipt of retirement benefits. Paragraph 6.2(b) indicates that the determination of death benefits under such circumstances are to be made in accordance with Paragraph 6.3. Of this paragraph Section (a) is controlling. The paragraph states that, “each separate Compensation Deferral Benefit Accounts, ... as of the last day of the calendar month immediately preceding the date of such Participant’s death.” Therefore that amount to be paid to each Plaintiff in the event of death prior to the commencement of retirement benefits is $57,600.00, plus all accrued interest determined pursuant to paragraph 4.1 of the retirement plan, payable over fifteen years.

It is well settled that a trial court’s finding of fact will not be disturbed unless the record establishes that a factual, reasonable basis does not exist and the finding is clearly wrong or manifestly erroneous. Syrie v. Schillab, 96-1027 (La.5/20/97), 693 So.2d 1173. After a thorough review of the record, we find that the trial court’s determination of benefits in the event that a Participant died prior to the commencement of retirement benefits was not erroneous. Therefore we will not reverse the trial court’s determination of this matter.

CONCLUSION

For the foregoing reasons, we affirm all the rulings of the trial court.

AFFIRMED.

      . The Legislature recently amended C.C.P. art. 1915 in La. Acts 1999, No. 1263. However, Section 3 of this Act provides that "[t]he provisions' of this Act shall become effective on January 1, 2000, and shall apply to all actions filed on or after January 1, 2000.” Because the instant action was filed before January 1, 2000, the 1997 version of La. C.C.P. 'art. 1915 is applicáble in this case.


source: Caselaw Access Project

author: JjMOON LANDRIEU, Judge Pro Tempore. | TOBIAS, J., hTOBIAS, J.,

license: Public Domain

text:
    Vana ANDREWS v. Margaret DUFOUR, The Government Employees Insurance Company and Ford Motor Company. Vana Andrews v. Margaret Dufour, The Government Employees Insurance Company and Ford Motor Company.
    Nos. 2003-CA-0736, 2003-CA-1848.
    Court of Appeal of Louisiana, Fourth Circuit.
    June 2, 2004.
    Order Granting Rehearing in Part and Denying Rehearing in Part July 15, 2004.

      Darleen M. Jacobs, A1 Ambrose Sarrat, Jacobs & Sarrat, New Orleans, LA, for PlaintiffiAppellant.
    Terrill W. Boykin, Kriste L. Taitón, Rodney, Bordenave, Boykin & Ehret, New Orleans, LA, for Defendant/Appellant, Ford Motor Company.
    Martin E. Golden, Kantrow, Spaht, Weaver & Blitzer, Baton Rouge, LA, for Intervenor/ Appellee, United Healthcare Corporation.
    (Court composed of Judge MAX N. TOBIAS JR., Judge LEON A. CANNIZZARO JR., and MOON LANDRIEU, Judge Pro Tempore).
   JjMOON LANDRIEU, Judge Pro Tempore.

In this action involving an automobile accident, the plaintiff, Vana Andrews, and one of the defendants, Ford Motor Company (“Ford”), appeal a judgment notwithstanding the verdict (“JNOV”). The inter-venor, United Healthcare Corporation (“United Healthcare”), answered the appeal. We reverse in part, affirm in part, and amend.

Facts

On the night of September 9, 1991 at approximately 8:15 p.m., Margaret Dufour was driving her 1985 Oldsmobile Cutlass in the far left lane of the three-lane Interstate 10 westbound in New Orleans. She testified that she was traveling at approximately 55 miles per hour when she suddenly observed a car stopped in the center of the lane in which she was traveling with no lights on. She immediately applied her brakes but hit the rear of the car, a 1976 two-door Ford Granada, occupied by plaintiff, Vana Andrews, and Haywood Acker.

Although their names were not mentioned in the police report, two witnesses, John Griffin and Emily Griffin, testified that they observed the accident. [«.Mr. Griffin was driving in the far right westbound lane about four or five car lengths behind Ms. Dufour. Mr. Griffin estimated that he was driving 72-75 miles per hour and that Ms. Dufour was moving at about the same speed. He suddenly noticed a vehicle stopped with no lights in the far left lane of the roadway about halfway up the slope of an overpass. He saw the brake lights of Ms. Dufour’s vehicle light immediately before Ms. Dufour’s car struck the rear of the stopped car. Mr. Griffin testified that he swerved into the emergency lane on the right-hand side of the interstate and barely missed hitting Ms. Andrews’ Granada as it moved across the highway. Mr. Griffin then stopped his car at the top of the overpass. He returned to the accident scene on foot, left his name and telephone number with a bystander, and departed.

Ms. Griffin testified that at the time of the accident, she was Mr. Griffin’s fiancée and was a passenger in Mr. Griffin’s vehicle. She testified that Ms. Dufour’s vehicle was traveling a short distance in front of them in the far left-hand lane at approximately 70 to 75 miles per hour, the same speed that Mr. Griffin’s vehicle was traveling. Ms. Griffin said that she was alarmed to see a car stopped in front of Ms. Duf-our’s vehicle with no lights on. She said that the driver of the moving car (Ms. Dufour’s car) did not see the stopped vehicle. Ms. Griffin saw the brake lights of Ms. Dufour’s vehicle come on just before it ran into the rear of the stopped car. The Griffins testified that the streetlight directly above the stopped car was not working. (The police report did not reflect that the streetlight was not lit.)

Ms. Andrews maintains that she was not stopped at the time of the accident. Ford argues that the record shows that she could not remember whether her car was stopped or was moving at the time of the accident, for Ms. Andrews could not | ^remember what happened after passing an earlier interstate exit at Bullard Road. Ms. Andrews was asked if she recalled feeling an impact, to which she replied, “No.” Ms. Andrews testified that her headlights were on when she got on the interstate, but she could not remember what happened at the time of the collision.

Mr. Acker (Ms. Andrews’ boyfriend at the time and now her ex-husband) testified that Ms. Andrews’ vehicle was not stopped. Mr. Acker testified that he was sitting in the passenger seat with his head back, facing the ceiling with his eyes closed. He testified that he was not asleep and could tell that the vehicle was still moving when it was hit from behind. Contrary to every other witness’ testimony that Ms. Andrews’ car was in the far left-hand lane, he described the Andrews’ vehicle as being in the right-hand lane. (Ms. Andrews testified in her deposition that she thought that Mr. Acker was sleeping.) After the accident, Mr. Acker told the investigating police officer that he did not know what happened. Ford points out that in his deposition, Mr. Acker admitted that he was drunk. Ms. Andrews said that he appeared to be drunk, and the police officer described Mr. Acker as being intoxicated.

Ms. Dufour’s Oldsmobile slammed into the rear of the Granada, under riding the bumper for nearly three and one-half feet. The impact caused heavy damage to the Granada. The tip of the Oldsmobile’s frame rail rammed about two feet beneath the rear bumper, into the Granada’s gas tank, where it lifted it upwards and tore a hole in the tank. The collision moved the Granada 25 to 35 feet from its position into the far right-hand lane.

Gasoline, which leaked from the Granada’s fuel tank, ignited. Mr. Acker pulled Ms. Andrews out of the vehicle on the driver’s side. Ms. Andrews sustained burns over 35 percent of her body. She was taken to Methodist Hospital where she |4was treated in the emergency room. She was transferred to Tulane Medical Center the next morning. She remained hospitalized at Tulane for 29 days and did not work for the next six months. She then returned to work at the Sewerage and Water Board.

Procedural History

Ms. Andrews filed suit against Ford, Ms. Dufour and Ms. Dufour’s insurer, GEICO General Insurance Company (“GEICO”), as defendants, alleging negligence by Ms. Dufour, and improper design giving rise to strict liability against Ford. Ford answered the petition, alleging that the accident and Ms. Andrews’ resulting injuries were caused by Ms. Dufour’s comparative negligence and comparative negligence, assumption of the risk, and failure to mitigate damages on the part of Ms. Andrews.

GEICO filed its answer and third-party demand, naming Mr. Acker and his insurer’s successor, Louisiana Insurance Guaranty Association (“LIGA”) as third party defendants. GEICO alleged that the accident was caused solely or in part by Mr. Acker’s negligent operation of a vehicle while under the influence of illegal substances and riding in a vehicle with á person who was under the influence of illegal substances. GEICO also claimed subrogation rights for payments made to Ms. Dufour under her GEICO insurance policy.

United Healthcare later intervened to recover health benefits of $175,249.86 that it paid to Ms. Andrews.

|BFollowing trial on the merits, the jury awarded Ms. Andrews $12,000,000.00. The jury apportioned the following percentages of fault:

Ms. Andrews 0%
Ms. Dufour 20%
Ford 80%

The trial court judgment rendered in accord with the jury’s verdict also awarded United Healthcare $175,249.86 for the health benefits it paid to Ms. Andrews.

Ms. Dufour and GEICO filed a motion to amend- the judgment and/or for new trial and Ford moved for a JNOV and a new trial. Following hearings on the motions, the trial judge rendered a JNOV and apportioned fault as follows:

Ms. Andrews 50%
Ms. Dufour 25%
Ford 25%

The trial court reduced the jury’s damage award from $12,000,000.00 to $4,000,000.00, together with judicial interest and court costs. The judgment limited GEICO’s liability to the face amount of the insurance policy it issued to Ms. Dufour and confirmed the earlier award of $175,249.86 to United Healthcare on its intervention.

Ford and Ms. Andrews appealed and United Healthcare answered Ford’s appeal.

Issues

On appeal, Ms. Andrews contends that the trial court erred in: (1) misinterpreting this court’s previous rulings and granting Ford’s motion for JNOV; (2) assigning comparative fault to her; (3) reducing the jury’s allocation of fault to | fiFord; (4) excluding portions of Dr. Leslie Ball’s exhibits and deposition testimony; and (5) reducing the jury’s damage award.

On appeal, Ford argues that the trial court erred in: (1) finding that the fuel system of the 1976 Ford Granada was defective in its design; (2) permitting the plaintiffs experts, Dr. Ball and Mr. Arndt, to give opinion testimony on the allegedly defective design; and (3) failing to find that the jury deliberations were- tainted.

JNOV — Standard of Review

A motion for a JNOV may be granted on the issue of liability or on the issue of damages or on both issues. La. C.C.P. art. 1811(F). As the Louisiana Supreme Court stated in Davis v. Wal-Mart Stores, Inc., 2000-0445, pp. 4-5 (La.11/28/00), 774 So.2d 84, 89:

A JNOV is warranted when the facts and inferences point so strongly and overwhelmingly in favor of one party that the court believes that reasonable jurors could not arrive at a contrary verdict. The motion should be granted only when the evidence points so strongly in favor of the moving party that reasonable men could not reach different conclusions, not merely when there is a preponderance of evidence for the mover. If there is evidence opposed to the motion which is of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions, the motion should be denied. In making this determination, the court should not evaluate the credibility of the witnesses and all reasonable inferences or factual questions should be resolved in favor of the non-moving party. Smith v. Davill Petroleum Company, Inc. d/b/a/ Piggly Wiggly, 97-1596 (La.App. 1 Cir. 12/9/98), 744 So.2d 23. See also Powell v. RTA, 96-0715 (La.6/18/97), 695 So.2d 1326; Anderson v. New Orleans Public Service, [Inc,], 583 So.2d 829 (La.1991); State of Louisiana, DOTD v. Scramuzza, 95-786 (La.App. 5 Cir. 4/3/96), 673 So.2d 1249; Seagers v. Pailet, 95-52 (La.App. 5 Cir. 5/10/95), 656 So.2d 700; Engolia v. Attain, 625 So.2d 723, 728 (La.App. 1 Cir.1993); Adams v. Security Ins. Co. [o]f Hartford, 543 So.2d 480, 486 (La.1989).
The standard of review for a JNOV on appeal is a two[-]part inquiry. In reviewing a JNOV, the appellate court must first determine if the trial court erred in granting the JNOV. This is done by using the aforementioned criteria just as the trial judge does in deciding whether or not to grant the motion. After determining that the trial court correctly applied its standard of review as to the jury verdict, the appellate court reviews the JNOV using the manifest error standard of review. Anderson v. New Orleans Public Service, Inc., at p. 832.

See also, Joseph v. Broussard Rice Mill, Inc., 2000-0628, p. 5 (La.10/30/00), 772 So.2d 94.

Appellate review of questions of law is simply a review of whether the trial court was legally correct or incorrect. O’Niell v. Louisiana Power & Light Co., 558 So.2d 1235, 1238 (La.App. 1 Cir.1990). Where the facts are not in dispute, the reviewing court must consider whether the trial court came to the proper legal determination under the undisputed facts. La. C.C.P. art. 2164; Maryland Cas. Co. v. Dixie Ins. Co., 622 So.2d 698 (La.App. 1 Cir.1993); Mallery v. International Har vester Co., 96-321 (La.App. 8 Cir. 11/6/96), 690 So.2d 765.

Ms. Andrews’ fault

In the present case, Ms. Andrews contends the trial court erred in granting Ford’s motion for JNOV and finding her fifty percent (50%) at fault. Ford, on the other hand, contends the trial court was correct in granting the JNOV as no treasonable jury could have found that Ms. Andrews was not at fault in the accident. Ford notes that Mr. Acker was the only witness who testified that Ms. Andrews was moving when the collision occurred. The plaintiffs witnesses, Mr. Burkhart, an accident reconstruction expert, and Dr. Oscar Griffith, a physics expert, assumed for purposes of their calculations that, Ms. Andrews’ car was stopped. . Mr.. Burkhart and Dr. Griffith did not provide calculations based on other assumptions. Ford submits that Dr. Griffith calculated from the physical damage to the vehicles that Ms. Dufour’s Oldsmobile was going 45 miles per hour faster than Ms. Andrews’ vehicle was moving at the moment of impact. Dr. Griffith concluded that Ms. Dufour’s Oldsmobile had to be going another ten miles per hour faster than that, ie., 55 miles per hour faster than Ms. Andrews’ vehicle, just before Ms. Dufour slammed on her brakes. ' In her brief, Ms. Andrews asserted that Ms. Duf-our was traveling 55 miles per hour at the time of the accident. Ms. Dufour testified and the police report stated that Ms. Duf-our was traveling about 55 miles an hour. Ford points out that Ms. Andrews’ car could not have ‘ been moving more than a few miles per hour or was not moving at all in order for it to be hit from the rear at 45 miles per hour, which was the speed calculated by the experts to create the physical damage that occurred in the accident.

Based on the Griffins’ estimate that Ms. Dufour was driving 75 miles per hour, Ms. Dufour would have slowed down ten miles per hour, to 65 miles per hour, by the moment of impact according to the plaintiffs expert. At impact, Ms. Dufour’s Oldsmobile was going at least 45 miles per hour faster than Ms. Andrews’ car was moving according to her own experts. Under this scenario, Ms. Andrews’ car would have been going 20 miles per hour.

|aThe overwhelming evidence in this case (both physical and testimonial) is that Ms. Dufour’s vehicle was going over 70 miles per hour when she realized that she was faced with a very slow moving or stopped vehicle in the left-hand lane of the interstate highway. She was able to decelerate to approximately 65 miles per hour before her car contacted the rear of Ms. Andrews’ car. The clear evidence is that the difference in speeds of the vehicles at the moment of impact was between 45 and 65 miles per hour. In such circumstances, substantial damage was going to occur and it was certainly foreseeable that the gas tank would rupture.

La. R.S. 32:64 states in pertinent part:

§ 64. General speed law
A. No person shall drive a vehicle on the highway within this state at a speed greater than is reasonable and prudent under the conditions and potential hazards then existing, having due regard for the traffic on, and the surface and width of, the highway, and the condition of the weather, and in no event at a speed in excess of the maximum speeds established by this Chapter or regulation of the department made pursuant thereto.
B. Except when a special hazard exists that requires lower speed for compliance with paragraph A of this section, no person shall operate or drive a motor vehicle upon the highways of this state at such a slow speed as to impede the normal and reasonable movement of traffic. (Emphasis added.)

La. R.S. 32:71(B)(2) provides in pertinent part:

§ 71. Driving on right side of road; exceptions (2) In addition to the requirement of Paragraph 1 hereof, any vehicle proceeding on a multilane highway at a speed slower than ten miles per hour less than the posted maximum speed limit shall be driven in the right hand lane then available for traffic, or as close as practicable to the right hand curb or edge of the roadway, except when overtaking and passing a vehicle proceeding in the same direction or when preparing for a left turn at an intersection or into a private road or driveway. Persons in violation of this Paragraph shall be punished by a fine |inof not more than one hundred dollars, or by imprisonment for not more than thirty days, or both.

Considering that Ms. Andrews was in the far left lane and was moving slower than ten miles below the posted maximum speed limit, she was not complying with the above statutes. Further, two independent witnesses, John Griffin and Emily Griffin, testified that the Granada had no lights on.

In light of the record before us, we find reasonable minds could not arrive at a conclusion that Ms. Andrews was not at fault in the accident. Thus, we find the trial court was correct in granting the JNOV finding Ms. Andrews 50% at fault.

Ford’s Fault

Ms. Andrews contends that the trial court erred in granting the JNOV and reducing Ford’s fault from 80%, as assessed by the jury, to 25%. Ford, on the other hand, contends that the trial court, in granting the JNOV, erred in holding Ford strictly liable for a defect in the design of the Ford Granada gasoline tank.

Under the Louisiana Products Liability Act, La. R.S. 9:2800.56 states:

§ 2800.56. Unreasonably dangerous in design A product is unreasonably dangerous in design if, at the time the product left its manufacturer’s control:
(1) There existed an alternative design for the product that was capable of preventing the claimant’s damage; and
(2) The likelihood that the product’s design would cause the claimant’s damage and the gravity of that damage outweighed the burden on the manufacturer of adopting such alternative design and the adverse effect, if any, of such alternative design on the utility of the product. An adequate warning about a product shall be considered in evaluating the likelihood of damage when the manufacturer has used reasonable care to provide the adequate warning to users and handlers of the product.

Additionally, La. R.S. 9:2800.59 provides:

ln§ 2800.59. Manufacturer knowledge, design feasibility and burden of proof
A. Notwithstanding R.S. 9:2800.56, a manufacturer of a product shall not be liable for damage proximately caused by a characteristic of the product’s design if the manufacturer proves that, at the time the product left his control:
(1) He did not know and, in light of then-existing reasonably available scientific and technological knowledge, could not have known of the design characteristic that caused the damage or the danger of such characteristic; or
(2) He did not know and, in light of then-existing reasonably available scientific and technological knowledge, could not have known of the alternative design identified by the claimant under R.S. 9:2800.56(1); or'
(3) The alternative design identified by the claimant under R.S. 9:2800.56(1) was not feasible, in light of then-existing reasonably available scientific and technological knowledge or then-existing economic practicality. B. Notwithstanding R.S. 9:2800.57(A) or (B), a manufacturer of a product shall not be liable for damage proximately caused by a characteristic of the product if the manufacturer proves that, at the time the product left his control, he did not know and, in light of then-existing reasonably available scientific and technological knowledge, cpuld not have known of the characteristic that caused the damage or the danger of such characteristic.

Ms. Andrews asserts that her expert, Mr. Arndt, a mechanical engineer, testified that his proposed available alternative designs would have prevented Ms. Andrews’ injuries. He made the following suggestions:

(1) The fuel tank should be placed in and over the axle location. Mr. Arndt pointed out that axle tanks in some foreign cars were sold in the United States in 1976;
11g(2) Ford could have put a shield on the bottom of its gas tank. Mr. Arndt explained that the shield would have prevented the subject explosion by taking the brunt of the impact;
(3) A thicker tank was preferable; and
(4)The filler neck should have been moved from its location behind the tank so that the fire would not have occurred.

She also claims that Dr. Ball, a systems engineer, testified that feasible alternative designs existed at the time that the 1976 Granada was manufactured, which would have prevented Ms. Andrews’ burns. Ms. Andrews asserts that Dr. Ball referred to the Ford “Caprice” with an over the axle tank, and the Ford Bronco and a BMW, which had polyethylene gas tanks. He said that the amount of money saved and the amount of weight saved was less than ten dollars and five pounds, respectively. He found that it did not justify the known risk that a rear end collision would cause the gas tank of the 1976 Granada, located near the rear bumper, to explode. Dr. Ball testified that the system design defects were unreasonably dangerous.

Ms. Andrews also contends that the trial 'court erred in not admitting into evidence exhibits attached to Dr. Ball’s deposition because the exhibits were Ford’s business records, kept in the regular course of Ford’s business. Ford points out that the exhibits were Dr. Ball’s notes based on his review of Ford’s, business records. Our review of the record on appeal satisfies us that Ms. Andrews did not provide Ford’s actual business records. Therefore, trial court did not abuse its vast | ^discretion in finding that Dr. Ball could testify about the Ford documents, but the exhibits of his notes from the documents were inadmissible.

Ms. Andrews argues that an expert witness can base his or her opinion on experience and training as an engineer, rather than on any particular scientific methodology, citing Talkington v. Atria Reclamelucifers Fabrieken BV, 152 F.3d 254 (4th Cir.1998), cert. dismissed sub nom. Atria Reclamelucifers Fabrieken BV v. Talkington, 525 U.S. 1062, 119 S.Ct. 634, 142 L.Ed.2d 653 (1998). In Talking-ton, an electrical engineer was permitted to testify that fire in a sofa was caused by the exposure to an open flame. However, the expert’s conclusion in Talkington was more obvious than the degree of reliability necessary to support an expert’s opinion in the present case. An expert is not exempt from proving that an objective rehable basis existed to support his or her conclusions.

Ford maintains that Ms. Andrews submitted no proof of the two required elements under La. R.S. 9:2800.56(1). The first element required proof that a suggested feasible alternative design would have prevented the plaintiffs injuries. Mr. Arndt did not show that the proposed plastic shield would have prevented the puncture of the gas tank. He could not say what the shield would look like. He did not know how thick the metal of the gas tank would have had to be to prevent a puncture in the gas tank from the force of the accident. Ford asserts that there was no showing that the alternative designs would have made any difference.

Ms. Andrews’ expert witnesses referred to other vehicles with a version of their suggested designs. However, in Jaeger v. Automotive Cas. Ins. Co., 95-2448 (La. App. 4 Cir. 10/9/96), 682 So.2d 292, 298, this court held that the failure to offer specific evidence of an alternative design was “insufficient to establish that a feasible alternative design existed at the time the product left the manufacturer’s | ucontrol that would have prevented the plaintiffs injury.” This court noted that the inference of the existence of a vice or defect in a product is not found merely on the basis of the fact that the accident occurs. Id. In the present case, Ms. Andrews did not show that an alternative design of the fuel system could have prevented the plaintiffs injury. See also, Seither v. Winnebago Industries, Inc., 2002-2091 (La.App. 4 Cir. 7/2/03), 853 So.2d 37, writ den. 2003-2797 (La.2/13/04), 867 So.2d 704, and 2003-2799 (La.2/13/04), 867 So.2d 705.

Ford points out that the Granada gas tank was not crushed, but that a hole was punctured in the tank, gas leaked out, and the gas ignited. Mr. Arndt, Ms. Andrews’ expert, confirmed that the gas tank did not explode. He answered the following question:

Q. And the tank did not explode in this accident, did it?
A. That’s correct, it did not.

When Mr. Arndt was questioned about the shield he suggested could be placed on the bottom of the gas tank, he answered as follows:

Q.... Now, you haven’t calculated the forces or the energy to determine whether a plastic shield on the bottom of the tank would have prevented the puncture in this accident, have you?
A. Well, I haven’t done any calculations to try to figure that out. I’m not sure that is something you would do calculations to figure out, but I have done analyses to satisfy myself that would, in fact, be an appropriate design improvement.
Q. What I am specifically asking is, you have not obtained one of these components and done testing with a plastic shield to determine what the puncture resistance is, have you?
A. No, I have not done that. That is true.

lifiMr. Arndt did not provide proof that the plastic shield would have prevented the accident. See, Seither v. Winnebago Industries, Inc., supra.

Ford claims that Ms. Andrews presented no evidence or percentages to show how susceptible the Ford Granada was to the risk of fire. Ford asserts that there were 45,000 Granadas and 170,000 Mercury Mo-narks, an equivalent vehicle, with the same fuel system design. There was nothing showing other fires caused by rear-end collision accidents with vehicles containing the same fuel tank system. Ford maintains that the risk of such an occurrence is minuscule. Ford claims that the bulk of the foreign cars that at one time had their gas tanks above the rear axle were redesigned to move the tank from that location.

The manifest error rule relates exclusively to questions of fact. The sufficiency of the evidence is a question of law. Roberson v. August, 2001-1055 (La.App. 4 Cir. 5/29/02), 820 So.2d 620. The standard for determining the sufficiency of evidence relates to questions of law, or a mixed question of law and fact. Vignette Publications, Inc. v. Harborview Enterprises, Inc., 2000-1711, pp. 2-3 (La.App. 4 Cir. 9/12/01), 799 So.2d 531, 533, citing Ambrose v. New Orleans Police Dept. Ambulance Service, 93-3099 (La.7/5/94), 639 So.2d 216, 223-24 (Lemmon J. concurring) and Rosell v. ESCO, 549 So.2d 840 (La.1989).

|1fiUpon review of the record in the present case, based not on a credibility determination (a factual issue), but on a sufficiency of evidence determination (a question of law), Ms. Andrews failed to bear her burden of proof. As a matter of law, she failed to prove that an existing feasible alternative design could have prevented her injuries. See, Seither v. Winnebago Industries Inc., supra. Thus, as a matter of law, the trial court erred in finding Ford at fault in this accident.

The finding that Ms. Andrews failed to prove the first element under La. R.S. 9:2800.56 pretermits a review of the sufficiency of proof of the second element. A finding that Ford is not at fault pretermits a review of Ford’s other assignments of error.

Ms. Dufour’s Fault

It was incumbent upon Ms. Andrews to establish by a preponderance of the evidence that Ms. Dufour was negligent and that this negligence caused her damages. See Cay v. State, Dept. of Transp. & Dev., 93-0887 (La.1/14/94), 631 So.2d 393. Ms. Andrews testified that she could not remember what happened at the time of the collision. Mr. Acker, however, testified that Ms. Andrews’ vehicle was moving when it was struck from behind. Contradicting Mr. Acker’s testimony, Ms. Dufour testified that Ms. Andrews’ vehicle was stopped in the left-hand lane of the interstate when she struck it in the rear. Also, Ms. Dufour testified and the police report indicated that she was traveling at 55 miles per hour, the posted speed 117limit, at the time. The Griffins testified otherwise, stating she was traveling between 70 and 75 miles per hour. In any event, it is undisputed that Ms. Dufour struck Ms. Andrews’ vehicle in the rear, under riding the bumper for nearly three and one-half feet and moving the vehicle 30 to 36 feet into the far right-hand lane of the interstate. The reasonable inference that the jury could have drawn from this evidence was that Ms. Dufour was traveling too fast and could have avoided the accident had she kept a proper lookout. Certainly, the evidence was sufficient for the jury to have reasonably found Ms. Dufour to be 20% at fault. As made clear in Joseph, the trial court should not evaluate the credibility of witnesses, and all reasonable inferences or factual questions should be resolved in favor of the non-moving party. Joseph, 2000-0628, p. 12, 772 So.2d at 103. Thus, we conclude the trial judge improperly granted the JNOV as to Ms. Dufour and reinstate the jury’s verdict of 20% of fault to her.

Allocation of Fault

Having found the trial court properly granted the JNOV finding Ms. Andrews comparatively negligent and assessing her with 50% of the fault, having reinstated the jury’s verdict of 20% of fault to Ms. Dufour, and in view of our finding that Ford was not at fault for the accident, we must reallocate the remaining 30% of the fault to either or both remaining parties. The Louisiana Supreme Court, in Joseph v. Broussard Rice Mill, Inc., supra, reallocated fault using the factors it previously set forth in Watson v. State Farm Fire & Cas. Ins. Co., 469 So.2d 967 (La.1985). These factors include: whether the conduct resulted from inadvertence or involved awareness of the danger, how great a risk was created by the conduct, the significance of what was sought by the conduct, the capacities of the actors, |1swhether superior or inferior, and any extenuating circumstances which might require the actor to proceed in haste, without proper thought. Watson, 469 So.2d at 974. Considering the Watson factors, as well as the provisions of La. R.S. 32:64 and La. R.S. 32:71, we find that the remaining 30% of fault should be allocated to Ms. Dufour. Thus, the total fault in the case is to be divided equally, 50% percent to Ms. Andrews and 50% to Ms. Dufour.

Damages

Ms. Andrews contends that the trial court erred in granting a JNOV and reducing the damage award from $12,000,000.00 to $4,000,000.00. Ford, on the other hand, maintains that there was no evidence that Ms. Andrews lost any future earning potential as a result of the accident, and her lost wages were less than $8,000.00. It asserts that there was insufficient evidence that she would incur future medical expenses or that the pain and suffering would account for the $12,000,000.00 damage award.

A general damage award assigned by a jury, although high or low, that does not shock the conscience should not be touched by an appellate court in light of the vast discretion that a finder of fact is granted in matters of general damages. Youn v. Maritime Overseas Corp., 623 So.2d 1257 (La.1993). The same applies to a general damage award of a trial judge. The quantum of general damages is entirely subjective. The quantum of special damages, however, has an aspect of objectiveness to them because they are in part based upon actual known dollars.

As was done in both Anderson v. New Orleans Public Service, Inc., supra, and Joseph v. Broussard Rice Mill, Inc., supra, an appellate court'may separately determine whether a trial court was correct in granting a JNOV on the issue of |19damages and on the issue of liability. Applying the JNOV standard as discussed infra, we find that the trial court improperly granted the JNOV on the issue of damages, as reasonable minds could differ on the valuátion of Ms. Andrews’ damages. Therefore, as was done in Anderson and Joseph, we are required to decide whether the jury’s award of $12,000,000.00 in damages was manifestly erroneous or clearly wrong.

Ms. Andrews asserts that she was nearly burned to death because she was trapped inside the burning vehicle. She had continued embarrassment from her injuries, and she had to change her wardrobe ánd hobbies. She had a lengthy hospitalization, and had permanent multiple scars. Dr. Samuel Parry, Ms. Andrews’ expert in plastic and reconstructive surgery, testified that the type of injuries suffered by Ms. Andrews were almost always lethal. ■ She was- severely burned. Upon arriving at the hospital she had trouble breathing and was placed on a ventilator. She remained on the ventilator for two weeks. She suffered third degree burns over 35% of her body, including her chest, back, arms, left foot, neck and jaw. The third degree burns killed nerve cells; evidence was presented that persons suffering third degree burns are more susceptible to squamous cancer. Ms. Andrews endured multiple skin grafts, including to the neck and face, which left visible scars. Her wounds required debridement. Keloi-dal scarring is present. She wore splints, a hand cast and a Jobst’s cast. - She had to undergo occupational and physical therapy. She developed folliculitis on the back of her neck in the area of a skin graft following discharge from the hospital; folliculitis is a serious infection of the sweat glands. Dr. Parry said that over time, the scars would contract. He explained that the scar on her arm could pull her elbow to where it 12ocould result in a useless hand. Webbing of the skin is present. Moreover, Ms. Andrews has psychological problems as a result of the injuries.

Ms. Andrews tragically suffered painful injuries as a result of the accident. In view of the evidence and the extent of her physical and psychological injuries, we cannot say that the award of $12,000,000.00 shocks the conscience or is beyond the vast discretion vested in the trier of fact when setting an award for general damages. See, Youn v. Maritime Overseas Corp., supra.

United Healthcare’s Answer to the Appeal

United Healthcare answered the appeal, assigning as error the issues raised by Ms. Andrews regarding the trial court’s grant of the JNOV as to Ford’s liability and the reduction of the damage award. None of the parties raised any issue regarding the trial court’s award of $175,249.86 to United Healthcare for the amounts it paid for medical expenses incurred by Ms. Andrews as a result of the accident. The record reflects that the award was based on the amount the parties stipulated to prior to trial. Thus, the award will not be disturbed.

Motion to Dismiss

Ms. Dufour has filed a motion to dismiss her from this case based upon a decree of the United States Bankruptcy Court discharging her as a debtor. Since the decree is self-operating, we find no need to formally render a judgment dismissing her from this litigation.

| ^Conclusion

For the foregoing reasons, we affirm the part of the JNOV that found Ms. Andrews 50% at fault. We reverse the portion of the JNOV that increased Ms. Dufour’s fault and reinstate the jury’s verdict as to her. We reverse the portion of the JNOV that held Ford at fault and, as a result, amend the JNOV to reassign the remaining fault to Ms. Dufour, thereby allocating total fault for the accident at 50% to Ms. Dufour and 50% to Ms. Andrews. We also reverse, in part, the JNOV on the issue of damages and reinstate the jury’s damage award of $12,000,000.00. We affirm the award of $175,249.86 to United Healthcare on its intervention.

REVERSED IN PART; AFFIRMED, AS AMENDED, IN PART.

TOBIAS, J., Concurs in the Result and Assigns Reasons.

| TOBIAS, J.,

concurs in the result and assigns reasons.

I respectfully concur in the result reached by the majority.

The majority correctly states the law respecting the standard of review of a judgment notwithstanding the verdict (“JNOV”) as set forth in Davis v. Wal-Mart Stores, Inc., 2000-0445, pp. 4-5 (La.11/28/00), 774 So.2d 84, 89, and Anderson v. New Orleans Public Service, Inc., 583 So.2d 829 (La.1991), but then errs in its attempt to give deference to both the jury’s verdict and trial court’s JNOV on the issue of fault. Where the majority and I part views is whether this court must give any validity or deference to the jury’s verdict once we determine that the trial court was correct in granting the JNOV. In the case at bar, reasonable jurors could not find (a) that Ms. Andrews was not partially at fault or (b) that Ford was at fault (as discussed below); therefore the trial court was correct in granting the JNOV. The trial court was clearly wrong/manifestly erroneous in finding Ford at fault (as discussed below). Therefore, this court is required to recast the percentages of fault anew without giving any deference to either the jury’s or trial judge’s allocation of fault.

|2Since this case was argued and while it was under advisement, a different panel of this court decided Seither v. Winnebago Industries, Inc., 2002-2091 (La.App. 4 Cir. 7/2/03), 853 So.2d 37, writ den. 2003-2797 (La.2/13/04), 867 So.2d 704 and 2003-2799 (La.2/13/04), 867 So.2d 705. Seither is now the rule of law in this, circuit and we are required to adhere to. it. Seither requires that we find that Ford was not responsible for the accident or injuries based upon the evidence in the record before us as explained in the majority’s opinion.

110RDER

It is hereby ordered that rehearing is granted for the limited purpose of amending page 4 of our opinion and to further amend the trial court judgment to reflect the correct name of GEICO General Insurance company. In all other respects, rehearing is denied.

/s/ Tobias, J. Concurs in Part and Dissents in Part :

MAX N. TOBIAS, JR., Judge

/s/ Leon A. Cannizzaro, Jr.

LEÓN A. CANNIZZARO, JR., Judge

/s/ Roland L. Belsome ROLAND. L. BELSOME, Judge

hTOBIAS, J.,

concurs in part and dissents in part.

I respectfully concur in the granting of the rehearing to correct the name of GEI-CO to read “GEICO General Insurance Company.” I respectfully dissent from the failure to grant an en banc rehearing.

      . We note that in Anderson v. New Orleans Public Service, Inc., 583 So.2d 829 (La.1991), the Supreme Court analyzed the trial court’s grant of the JNOV separately on the issues of liability and damages, concluding that the trial court erred in granting the JNOV on the issue of liability but not on the issue of damages.

      . Ford explained that the vehicle was a Ford Capri manufactured in' Europe.

      . The strongest evidence in the record respecting the ability of a shield to protect the tank is that one might have prevented the tank from rupturing; no evidence is present that a reasonable shield would have prevented the tank from rupturing.

      . Obviously, the size, weight, speed, and angle of a vehicle striking the rear of a Granada can and will vary from accident to accident. We doubt that it is reasonable to require a manufacturer to design an appropriate crash-resistant, totally safe vehicle that anticipates a rear-end collision with every vehicle ever made in the past or that might be made in the future. The difference in age between the Andrews and Dufour vehicles was 9 years, Ms. Andrew's having the older. We ponder what would have happened if Ms. Dufour had been driving a smaller or larger vehicle or a vehicle whose design would not have caused a piece of metal to puncture the gas tank.

      . That virtually every car manufactured in the United States and the world at the time (1976) had a gas tank located in essentially the same location as the 1976 Granada and that the thickness of the metal of automobile gas tanks of the time ranged between 0.026 and 0.032 inches (with the Granada’s falling within that range) clearly preponderates to the reasonableness of design.

      . This accident involved a vehicle constructed in either 1975 or 1976 (the vehicle model was a 1976 Ford Granada) and the accident occurred approximately 15 years later. Reasonableness in design in this case entails what was reasonably known at the time of construction (and for years thereafter if a duty existed to warn of a defect; no claim for failure to warn is made in this case). The evidence is lacking in this case to show that the 1976 Granada was unreasonably dangerous for a severe rear-end impact such as occurred in this case.

      . As Anderson demonstrates, one may analyze the issues of liability and damages separately for purposes of review of whether the trial court was wrong as a matter of law in granting the JNOV.

      . The majority places reliance on Joseph v. Broussard Rice Mill, Inc., 2000-0628 (La.10/30/00), 772 So.2d 94. That which Joseph added to our jurisprudence is: "Because of the exacting requirements for granting a JNOV, it is theoretically possible for a JNOV to have been improvidently granted, and yet the jury verdict may be manifestly erroneous.” Id. at p. 16, 722 So.2d at 105. The Joseph court's analysis of the facts, however, failed to adhere to its own ruling therein and reinstated in part the jury's verdict on the issue of liability. I, therefore, find that the Davis holding is the one to be applied to this case. We are required to reallocate fault between Ms. Andrews and Ms. Dufour because the trial court’s JNOV was manifestly erroneous/ clearly wrong in assigning any fault to Ford.


author: JjMICHAEL E. KIRBY, Judge. h ARMSTRONG, C.J.,

text:
    BANK ONE v. Carolyn JOHNSON.
    No. 2004-CA-0508.
    Court of Appeal of Louisiana, Fourth Circuit.
    Aug. 11, 2004.
    Pierre M. Legrand, Shannon M. Bruno, Ungarino & Eckert, L.L.C., Metairie, LA, for Plaintiff/Appellant.

      Frank-A. Bruno, New Orleans, LA, for Defendant/Appellee.
    (Court composed of Chief Judge JOAN BERNARD ARMSTRONG, Judge PATRICIA RIVET MURRAY, Judge MICHAEL E. KIRBY).
   JjMICHAEL E. KIRBY, Judge.

Appellant, Bank One, appeals a judgment of the Office of Workers’ Compensation (OWC), maintaining an Exception of Prematurity in favor of appellee, Carolyn Johnson (Johnson). For the reasons assigned, we affirm.

STATEMENT OF FACTS AND PROCEDURAL HISTORY:

Johnson is currently receiving workers’ compensation benefits resulting from an injury she sustained on September 22, 2000, while employed by Bank One. On September 23, 2003, Bank One filed a disputed claim for compensation (Form 1008) to controvert Johnson’s entitlement to future benefits and obtain a declaratory judgment addressing its obligation to continue paying benefits. Bank One claims its action is based on physicians’ opinions that Johnson is capable of returning to work.

In response to the Form 1008, Johnson filed an Exception of Prematurity. On December 8, 2003, Judge Gwendolyn Johnson granted the exception and dismissed Bank One’s claim with prejudice. Bank One’s appeal followed.

\ .ARGUMENT:

Bank One argues that the OWC erred in granting the Exception of Prematurity. Specifically, Bank One maintains that the jurisprudence supports the conclusion that an employer may initiate a Form 1008. Bank One cites the case of Snelling Personnel Services v. Duhon, 00-0661 (La.App. 3 Cir. 11/2/00), 772 So.2d 350, wherein the employer was allowed to discontinue paying benefits after filing a Form 1008 to contest benefits. • The court, in Smiling recognized the employer’s right to file the Form 1008, “to avoid the possibility of unilaterally, and possibly erroneously, terminating benefits and as a result being subject to penalties and attorney fees for arbitrary termination.”

Bank One further asserts that the right of the employer to initiate a Form 1008 is found in Louisiana Workers’ Compensation, 2nd Edition, by Denis Paul Juge. Section 4.4 of the treatise states:

Before the establishment of the hearing officer system, the case law recognized the right of the employer to file a declaratory judgment. There developed some question as to this right after the institution of the new administrative process. To clarify this confusion, the legislature amended the law in 1991, recognizing the “controversion of benefits” as a basis for initiating a claim.
While the employer may initiate a claim, it will not be required to assume the burden to prove non-entitlement to benefits.

Bank One submits that allowing an employer to file a Form 1008 in circumstances such as this, ultimately protects the employee from an- improper termination of benefits. In particular, it is argued that if Bank One had terminated benefits instead of filing a Form 1008, the claimant would have then been without benefits pending resolution of the disputed claim. Additionally, Bank One points |aout that in terminating benefits to the claimant, they would be exposed to an assessment of penalties and attorney’s fees.

DISCUSSION:

Workers’ compensation law allows an employer or employee to file a claim with the Office of- Workers’ Compensation to resolve a dispute between the employer and the claimant. See La. R.S. 23:1310(A). The statute provides that “[i]f ... a bona fide dispute occurs, the employee ... or the employer or insurer may file a claim ... on a form to be provided by the director.” Id. La. R.S. 23:1310.3(A) further provides, in pertinent part, that “[a] claim for benefits, the controversion of entitlement to benefits, or other relief under the Workers’ Compensation Act shall be initiated by the filing of the appropriate form with the office of workers’ compensation administration.”

While we recognize the employer’s right to file a disputed claim pursuant to La. R.S. 23:1310, we also recognize that La. R.S. 23:1314 requires that an action filed under La. R.S. 23:1310.3 is premature unless the petition includes one of four factors. Jim Walter Homes v. Long, 02-0950 (La.App. 4 Cir. 12/18/02), 835 So.2d 877. La. R.S. 23:1314 provides:

A. The presentation and filing of the petition under R.S. 23:1310.3 shall be premature unless it is alleged in the petition that:
(1) The employee or dependent is not being or has not been paid, and the employer has refused to pay, the maximum percentage of wages to which the petitioner is entitled under Chapter; or
(2) The employee has not been furnished the proper medical attention, or the employer or insurer has not paid for medical attention furnished; or
(3) The employee has not been furnished copies of the reports of examination made by the employer’s Rmedical practitioners after written request therefore has been made under this Chapter; or
(4) The employer or insurer has not paid penalties or attorney’s fees to which the employee or his dependent is entitled.

In the factually similar case of Jim Walter Homes, the employer filed a disputed claim, seeking a declaratory judgment that the claimant was no longer entitled to workers’ compensation benefits. The claimant filed an Exception of Prematurity based on La. R.S. 23:1314, and the court granted that exception. On review, this Court affirmed the decision of the lower court and made the following analysis:

The employer’s argument that the Workers’ Compensation Court erred in dismissing its Form 1008 because La. R.S. 23:1314 does not apply to employer-initiated litigation is without merit. This Court has already held that La. R.S. 23:1314 applies to LDOL-WC-1008 forms filed by employers. Michaels Store, Inc. v. Hart, 2001-0655 (La.App. 4 Cir. 3/20/02), 815 So.2d 201, citing and attaching as an appendix, Labor Ready Inc. v. Mark Lorick, 2000-1559 (La.App. 4 Cir. 9/6/00), writ denied, 2000-2801 (La.12/8/00), 776 So.2d 461. The Workers’ Compensation Court did not err in dismissing the employer’s Form 1008 as premature because it does not contain any of the four allegations required by La. R.S. 23:1314. Absent compliance with that statute, all of the employer’s claims in the Form 1008 were premature, including the claims that claimant is no longer entitled to SEB benefits and that the employer is entitled to offsets for federal retirement and disability benefits.
The employer in this case argues, as did the employer in the Michaels Store, Inc. case, that the only way an employer can make one of the allegations required by La. R.S. 23:1314 is if it fails to meet its obligations under the workers’ compensation laws. The employer suggests that requiring the provisions of La. R.S. 23:1314 to apply to an employer’s claim under La. R.S. 23:1310.3 leads to absurd consequences. While we recognize the anomaly created by the current versions of La. R.S. 23:1310.3 and 23:1314 as they apply to | .¡employers, we find that this, is a matter for the Legislature to correct, and not the courts.

Bank One does not cite jurisprudence contrary to Jim Walter Homes. Rather, Bank One takes the position that this Court’s analysis and conclusions are an erroneous interpretation of the Louisiana Workers’ Compensation provisions. We disagree. We further find that the Smiling case, cited by Bank One, is not controlling here. In Smiling, the issue of prematurity was never raised, and the employer’s disputed claim for compensation was, therefore, allowed to proceed to trial.

In light of our holding in Jim Walter Homes, we affirm the granting of the Exception of Prematurity in the present case.

CONCLUSION:

For the foregoing reasons, we affirm the judgment of the OWC.

AFFIRMED.

ARMSTRONG, C.J., CONCURS.

h ARMSTRONG, C.J.,

concurs.

While I agree with the result reached by the majority, I write separately to note that Bank One makes a valid argument that employers should have the prerogative to file a LDOL-WC-1008 form in cases where an employee is receiving benefits to which he or she may not be entitled. However, as we noted in Michaels Store, Inc. v. Hart, 2001-0655 (La.App. 4 Cir. 3/20/02), 815 So.2d 201, that is something that must be dealt with by the legislature’s amending the Workers’ Compensation statute or by the Supreme Court’s holding that La.R.S. 23:1314 does not apply to LDOL-WC-1008 forms filed by employers.