Cuchara v. Gai-Tronics Corp. ( 2005 )

Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit
5-4-2005
Cuchara v. Gai Tronics Corp
Precedential or Non-Precedential: Non-Precedential
Docket No. 04-2268
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 04-2268
___________
STEPHEN WILLIAM CUCHARA, CPA;
RONALEEN CUCHARA, R.N., h/w,
Appellants,
v.
GAI-TRONICS CORPORATION; HUBBELL INCORPORATED
___________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil No. 03-cv-06573)
District Judge: The Honorable Franklin S. Van Antwerpen
___________
Submitted Under Third Circuit LAR 34.1(a)
March 11, 2005
Before: NYGAARD, McKEE, and RENDELL, Circuit Judges.
(Filed : May 4, 2005)
___________
OPINION OF THE COURT
___________
NYGAARD, Circuit Judge.
Appellants Stephen William Cuchara (“Cuchara”) and his wife Ronaleen
appeal from the District Court’s grant of a motion to dismiss in favor of Appellees Gai-
Tronics Corporation and Hubbell Incorporated. We have jurisdiction pursuant to 28
U.S.C. § 1291 and will affirm.
I.
Cuchara was diagnosed with the neuromuscular disorder Guillian Barre
Syndrome in 1971. The disorder causes him to suffer from numbness, tingling, muscle
pain, and fatigue. Appellees were aware of Cuchara’s medical condition when they hired
him on January 7, 2002 to work as a Certified Public Accountant at Gai-Tronics. Shortly
after Cuchara began working at Gai-Tronics, he complained to his supervisors that his
long hours exacerbated his disability. It does not appear that Gai-Tronics took any steps
to address Cuchara’s concerns. On several other occasions during the course of his
employment, Cuchara complained that his workload was having a deleterious effect on
his health, and as a result he sought various accommodations. Each of his requests went
unfulfilled.
On December 10, 2002, Appellees notified Cuchara that he would be fired.
Appellees offered him a severance package that consisted of: (1) four week’s salary; (2)
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two week’s of vacation pay; (3) an option for continuation of medical and dental health
benefits through January 2003; and (4) the potential to continue COBRA coverage for an
additional seventeen months after January 2003. In exchange for the severance package,
however, Appellees required Cuchara to sign an Agreement and General Release
(“Release”) waiving all existing claims against Appellees, including but not limited to any
claims under Title VII, the Americans with Disabilities Act (“ADA”), the Pennsylvania
Human Relations Act (“PHRA), the Employee Retirement Income Security Act
(“ERISA”), and the common law of any state. The Release provided Cuchara a twenty-
one day period to consider whether to sign and advised him to consult an attorney before
signing. (App. at 65a). Specifically, it noted in capital letters on the signature page:
“EMPLOYEE HAS BEEN ADVISED THAT HE HAS AT LEAST TWENTY-ONE (21)
CALENDAR DAYS TO CONSIDER THIS AGREEMENT AND GENERAL RELEASE
AND HAS BEEN ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY
PRIOR TO EXECUTION OF THIS AGREEMENT AND GENERAL RELEASE.” (Id.).
Cuchara signed the Release on December 31, 2002, twenty-one days after receiving it,
apparently without consulting an attorney. In addition, although the precise date is
unclear, at some point more than seven days after he signed, Cuchara executed a second
document admitting that he signed the Release, had been advised to retain counsel, and
did not wish to revoke the Release.
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On December 4, 2003, Appellants filed the present action against
Appellees, alleging violations of Title VII, the ADA, the PHRA, and ERISA. The
Complaint also alleged state law claims for breach of the Release, fraudulent inducement,
and loss of consortium on behalf of Ronaleen Cuchara. Appellees filed a motion to
dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). The District Court granted
that motion and this appeal followed.
II.
We exercise plenary review over a district court’s grant of a motion to
dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Storey
v. Burns Int’l Sec. Sys., 390 F.3d 760, 762 (3d Cir. 2004). A 12(b)(6) motion to dismiss
“may be granted only if, accepting all well-pleaded allegations in the complaint as true,
and viewing them in the light most favorable to the plaintiff, plaintiff is not entitled to
relief.” Oatway v. American Int’l Group, Inc., 325 F.3d 184, 187 (3d Cir. 2003).
III.
The District Court granted the motion to dismiss because it held that the
Release, signed by Cuchara, barred all his claims against Appellees. Cuchara disagrees.
He first argues that because he did not knowingly and willfully sign the Release, it is
invalid. Next, he contends that the Release does not preclude his claims because
Appellees are in breach. Finally, Cuchara argues, the Release is invalid because
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Appellees fraudulently induced him to sign. We find each of these arguments
unpersuasive for the reasons explained below.
A.
Employees may waive employment claims against their employers so long
as the waiver is made “knowingly and willfully.” Coventry v. United States Steel Corp.,
856 F.2d 514, 522 (3d Cir. 1988) (quotation omitted); see Alexander v. Gardner-Denver
Co., 515 U.S. 36, 52 n.15 (1974) (holding that an employee may waive Title VII claims if
the waiver is “voluntary and knowing”). To determine whether such a purported release
is valid, we use a totality of the circumstances test. Coventry, 856 F.2d at 522–23.
Among the factors we consider are:
(1) the clarity and specificity of the release language; (2) the
plaintiff’s education and business experience; (3) the amount
of time plaintiff had for deliberation about the release before
signing it; (4) whether plaintiff knew or should have known
his rights upon execution of the release; (5) whether plaintiff
was encouraged to seek, or in fact received the benefit of
counsel; (6) whether there was an opportunity for negotiation
of the terms of the Agreement; and (7) whether the
consideration given in exchange for the waiver and accepted
by the employee exceeds the benefits to which the employee
was already entitled by contract or law.
Cirillo v. Arco Chem. Co., 862 F.2d 448, 451 (3d Cir. 1988). We may also consider
“whether there is evidence of fraud or undue influence, or whether enforcement of the
agreement would be against the public interest.” W.B. v. Matula, 67 F.3d 484, 497 (3d
Cir. 1995) (citing Coventry, 856 F.2d at 522–23).
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Examination of these factors reveals that Cuchara’s waiver was knowing
and willful. The language of the Release was clear and specific. Under the heading
“General Release of Claims” it states that the employee “releases and forever discharges
Employer . . . of and from any and all claims, known and unknown, which the Employer
has or may have against Employer as of the date of the execution of this Agreement and
General Release.” (App. at 63a). It then contains a bulleted list of the claims waived,
which includes each of the claims brought by Cuchara. Although Cuchara is not an
attorney, he is an educated professional and there is no evidence that he was unable to
comprehend the language of the Release or the implication of waiving his claims.
Cuchara concedes that in exchange for waiving these claims, he received compensation to
which he was not otherwise entitled: four week’s salary.
Cuchara was not rushed into signing the Release. He was given twenty-one
days. Moreover, we find particularly significant the fact that Cuchara was repeatedly
advised in writing—in the Release and in a separate letter from Appellees—to obtain the
services of counsel. Unfortunately, he appears to have disregarded this advice. Had he
actually sought the advice of an attorney Cuchara very well may not have signed the
Release, which does not provide him with much compensation in exchange for the release
of several potentially meritorious claim. Nevertheless, he had the opportunity to obtain
counsel and chose not to do so, and we hold that the totality of the circumstances
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demonstrate that Cuchara knowingly and willfully waived his claims by signing the
Release.
We do not agree with Cuchara that there is sufficient evidence of undue
influence to compel a contrary conclusion. Under Pennsylvania law, absent a threat of
actual bodily harm, there can be no claim of duress “where the contracting party is free to
consult with counsel.” Carrier v. William Penn Broad. Co., 233 A.2d 519, 521 (1967)
(quotation omitted). Cuchara not only had the opportunity to obtain counsel, Appellees
twice explicitly advised him to hire an attorney. Because Cuchara has not alleged any
threats of bodily harm by Appellees, he cannot prove duress under these facts.
Nor can Cuchara demonstrate fraud. Cuchara argues that he believed he
would receive Long Term Disability (“LTD”) benefits as part of the COBRA benefits
clause under the Release. He did not receive LTD. Thus, he contends, there is evidence
of fraud. Cuchara’s argument is undercut, however, by the fact that he knew he was not
entitled to COBRA benefits as a matter of law because he had no medical or dental
coverage. By extension, therefore, he should have known that he was not entitled to LTD
through COBRA because he was not entitled to COBRA benefits in the first place. To
the extent Cuchara argues that he expected to receive LTD in lieu of COBRA, that
argument is unpersuasive. The Release contains a reference to COBRA but no references
to LTD. Thus, there is insufficient evidence to demonstrate that Appellees defrauded
Cuchara into believing he would receive a benefit that he has not received. That his
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assumptions about the consideration in the Release were mistaken is reason enough why
he should have hired an attorney. It is not grounds to invalidate the Release. We hold
that under the totality of the circumstances test Cuchara signed the Release knowingly
and willfully and that it validly waived his federal claims.1
B.
Cuchara argues that he may circumvent the Release and assert his claims
because Appellees are in breach. He contends that Appellees failed to provide him with
all the consideration provided for by the Release—namely, LTD and COBRA benefits.
We disagree. The Release provides for payment of COBRA benefits only “if Employee
elects to continue medical and dental coverage . . . in accordance with the continuation
requirements of COBRA.” (App. at 62a). Cuchara’s entitlement to continuation of
COBRA benefits was conditioned on his continuation of medical and dental coverage.
Having elected LTD instead of medical and dental coverage, Cuchara had no medical or
dental coverage to continue and the condition precedent to payment of COBRA benefits
has not occurred. Moreover, at least one other Circuit has held that election of LTD
benefits does not invoke the protections of COBRA, see Austell v. Raymond James &
1. Cuchara’s state law claims are also waived. Under Pennsylvania law, even an
imprudent release is valid absent fraud, accident, or mutual mistake. Taylor v. Solberg, 778
A.2d 664, 667–68 (2001) (citations omitted). Cuchara may not have made a wise decision by
signing the Release, but that alone does not save his claims from waiver. Thus, the state
law claims—including Ronaleen’s derivative loss of consortium claim—are waived.
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Assocs., Inc. (4th Cir. 1997), and we decline to hold otherwise. Therefore, Appellees are
not in breach.
C.
Cuchara’s final argument is that the Release is invalid because he was
fraudulently induced into signing. Again, we disagree. Under Pennsylvania law, an
individual bringing a claim for fraudulent inducement “must either return [the]
consideration or abandon the claim.” Allied Erecting & Dismantling Co. v. USX Corp,
249 F.3d 191, 199 (3d Cir. 2001). It is undisputed that Cuchara has not returned the four
week’s salary he received under the Release. Nevertheless, Cuchara argues he should be
permitted to maintain his fraudulent inducement claim under the exception set forth in
Greenan v. Ernst, 143 A.2d 32 (Pa. 1957). Under the Greenan exception, a plaintiff may
pursue a fraudulent inducement claim while retaining the consideration if the plaintiff is
in an “insecure financial condition.” Id. at 34. We have held, however, that this
exception is a rare one, to be applied only in cases in equity. Allied Erecting &
Dismantling Co., 249 F.3d at 200. Because this is not such a case, Cuchara may not
invoke the Greenan exception. His failure to return the four week’s salary, therefore,
dooms his fraudulent inducement claim. In any event, Cuchara cannot prove each
element of a fraudulent inducement claim.
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IV.
We hold that Cuchara knowingly and voluntarily signed the Release.
Similarly, we hold that Appellees neither breached the Release nor fraudulently induced
Cuchara into signing. Accordingly, the Release precludes Cuchara from asserting his
claims against Appellees. We affirm the District Court’s grant of the motion to dismiss.
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