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Niehoff v. Shankman & Assoc.

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MAINE SUPREME JUDICIAL COURT					Reporter of Decisions
Decision:	2000 ME 214
Docket:	Cum-00-282
Argued:	November 8, 2000
Decided:	December 21, 2000




	[¶1]  Michael Niehoff appeals from a judgment of the Superior Court
(Cumberland County, Delahanty, J.) denying his motion for partial summary
judgment and granting Shankman & Associates Legal Center's motion for
summary judgment as to all claims.  Niehoff contends that the court erred
in: (1) ruling that Niehoff would not have been entitled to severance benefits
if L.L. Bean, Inc.'s severance pay policy was considered to be a welfare plan
under the Employee Retirement Income Security Act of 1974 (ERISA), 29
U.S.C. §§ 1001-1461 (1985 & Supp. 1993); (2) ruling in the alternative that
the L.L. Bean policy did not constitute an ERISA-covered plan; and (3) failing
to hold Shankman liable to Niehoff for legal malpractice.  Because we
determine that Niehoff failed to show he would have recovered had
Shankman pled a claim under ERISA, we affirm the judgment.
	[¶2] Niehoff was employed by L.L. Bean beginning in November 1985. 
In October 1988, Niehoff stopped working and went on leave for a nonwork-
related disability.  He received short-term disability benefits from L.L. Bean
during this period.  Niehoff then returned to work.  Due to the same
disability, he once again went on leave in 1991 and received short-term
disability benefits.  After six months, and in accordance with L.L. Bean's then
existing employment practices, Niehoff's position was terminated and he
began receiving long-term disability benefits.  By February 1992, Niehoff had
not worked for a year.  Pursuant to company policy, Niehoff's employment
was terminated at that time.
	[¶3]  When L.L. Bean refused to grant him severance benefits, Niehoff
retained Shankman & Associates Legal Center to represent him.  Shankman
filed an action against L.L. Bean in Superior Court, asserting claims of breach
of contract, misrepresentation and unjust enrichment (Niehoff I).  The
Superior Court (Sagadahoc County, Saufley, J.) granted summary judgment to
L.L. Bean on all counts.  In its order, the Superior Court sua sponte raised
the issue of ERISA preemption, stating that even if Niehoff had presented
material facts in dispute, ERISA preempted the state law claims because the
L.L. Bean policy on severance benefits was a plan under ERISA.
	[¶4]  We affirmed the Superior Court's decision on the common law
claims by a memorandum of decision in which we stated that there was no
need to discuss the ERISA issue.  Niehoff v. L.L. Bean, Inc., No. 7122 (Niehoff
I) (Me. Feb. 1, 1995) (mem.).  Niehoff then filed another lawsuit in Superior
Court pleading claims under ERISA (Niehoff II).  In that suit, he was
represented by an attorney unaffiliated with Shankman.  The Superior Court
(Cumberland County, Saufley, J.) granted L.L. Bean's motion for summary
judgment, finding that res judicata barred Niehoff's claims.  Niehoff did not
appeal from that judgment.
	[¶5]  Niehoff then brought the present action for legal malpractice
against Shankman, alleging legal malpractice and breach of contract (Niehoff
III).  The Superior Court (Delahanty, J.) denied Niehoff's motion for
summary judgment on the issue of liability and for partial summary judgment
on the issue of damages applicable to severance pay.  The court granted
Shankman's cross-motion for summary judgment on all claims.   This appeal
	[¶6]  The entry of summary judgment must be reviewed
independently "for errors of law, viewing the evidence in the light most
favorable to the party against whom the judgment was entered."  Steeves v.
Bernstein, Shur, Sawyer & Nelson, P.C., 1998 ME 210, ¶ 11, 718 A.2d 186,
190 (citation omitted).  A summary judgment will be upheld "if the evidence
demonstrates that there is no genuine issue as to any material fact and that
the moving party is entitled to judgment as a matter of law."  Id.  Where the
defendant properly challenges all elements of plaintiff's claim, the "plaintiff
must establish a prima facie case for each element of his cause of action." 
Id.   See also Dumont v. Fleet Bank of Maine, 2000 ME 197, ¶ 10, 760 A.2d
1049, 1053.  
	[¶7]  In legal malpractice cases, the plaintiff must show (1) a breach
by the defendant attorney of the duty owed to the plaintiff to conform to a
certain standard of conduct; and (2) that the breach of the duty proximately
caused an injury or loss to the plaintiff.  See Corey v. Norman, Hanson &
DeTroy, 1999 ME 196,  10, 742 A.2d 933, 938-39 (citing Steeves, 1998
ME 210,  12, 718 A.2d at 190).
	[8]  The same rules of causation generally apply whether the cause
of action sounds in contract, negligence, or breach of fiduciary duty. 
Steeves, 1998 ME 210,  10 n.8, 718 A.2d at 190 (citations omitted). 
Proximate cause exists in professional malpractice cases where "evidence
and inferences that may reasonably be drawn from the evidence indicate
that the negligence played a substantial part in bringing about or actually
causing the injury or damage and that the injury or damage was either a
direct result or a reasonably foreseeable consequence of the negligence." 
Merriam v. Wanger, 2000 ME 159,  8, 757 A.2d 778, 780-81. "The mere
possibility of such causation is not enough, and when the matter remains
one of pure speculation or conjecture, or even if the probabilities are evenly
balanced, a defendant is entitled to judgment."  Id. at  8, 757 A.2d at 781. 
See also Steeves, 1998 ME 210,  12-13, 718 A.2d at 190.  Accordingly,
the same analysis as to causation applies to Niehoff's claims for breach of
contract and legal malpractice.  To succeed on appeal, Niehoff must identify
facts which indicate that Shankman's negligence in not bringing the ERISA
claim proximately caused his loss.  See Corey, 1999 ME 196,  14, 742 A.2d
at 940.
	[9]  We have indicated that to prevail in a legal malpractice action, a
plaintiff must demonstrate that he or she would have achieved a more
favorable result but for the defendant's alleged legal malpractice.  See  id.,
 13-14, 742 A.2d at 940; Steeves, 1998 ME 210,  12-13, 718 A.2d at
190.  However, such statements have been made in the context of actions
asserting legal malpractice in advice or tactics which preceded a final result
on the merits of an underlying action.  This is a different case.  Here, the
alleged negligence is in failing to plead or timely plead so that plaintiff's
opportunity to get before the factfinder is lost.  Requiring a plaintiff to
demonstrate that a more favorable result would have been achieved is more
problematic in this context.  Few results from a factfinder in a civil case can
be predicted as "more likely than not."  Cf. Corey, 1999 ME 196,  14, 742
A.2d at 940.  A factfinder can disbelieve a key witness or award plaintiff
nothing for reasons that may not be explained.   
	[10]  On appeal from a grant of summary judgment, a plaintiff-
appellant in a "failure to plead" legal malpractice action must demonstrate
that there are facts in dispute which are sufficient to allow a jury to conclude
that: (1) the defendant attorney was negligent in representation of the
plaintiff; and (2) the attorney's negligence caused the plaintiff to lose an
opportunity to achieve a result, favorable to the plaintiff, which (i) the law
allows; and (ii) the facts generated by plaintiff's M.R. Civ. P. 7(d){1} statements
would support, if the facts were believed by the jury.  Where a plaintiff
generates fact disputes on these issues, summary judgment must be denied
and plaintiff is entitled to proceed to trial.
	[¶11]  According to Niehoff, his state law claims were preempted by
ERISA pursuant to 29 U.S.C. § 1144 (1985 & Supp. 1993).{2}  See, e.g.,
Carpenters Local Union No. 26 v. U.S. Fid. & Guar. Co., 215 F.3d 136, 139
(1st Cir. 2000).  The governing statute, 29 U.S.C. § 1002(1) (Supp. 1993)
defines a welfare plan as "any plan, program or fund" established or
maintained by an employer that provides certain benefits to employees.{3} 
These benefits include, for example, benefits in the event of disability,
death, unemployment, vacation benefits, health benefits, day care centers
and prepaid legal services.  1 Lee T. Polk, Erisa Prac. & Lit. § 2.04 (2000
	[¶12]  L.L. Bean's severance benefits plan may fit the statutory
requirements of an ERISA welfare plan, as interpreted by the Supreme
Court in Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1 (1987) (in which
a Maine statute providing for a one-time, lump-sum payment triggered by a
single event, a plant closing, was found not to be a preempted ERISA plan). 
In Fort Halifax, the Court stated:
The requirement of a one-time, lump-sum payment triggered by
a single event requires no administrative scheme whatsoever to
meet the employer's obligation.  The employer assumes no
responsibility to pay benefits on a regular basis, and thus faces no
periodic demands on its assets that create a need for financial
coordination and control.
Id. at 12.  The Court also held that the purpose of preemption is to ensure
that the administrative practices of a benefit plan are governed by only a
single set of regulations, and this concern arises only when there is an
"ongoing administrative program."  Id. at 11.  See also Belanger v. Wyman-
Gordon Co., 71 F.3d 451, 455 (1st Cir. 1995).
	[¶13]  Fort Halifax established that the timing and the number of
payments are factors in analyzing whether an employer's obligation amounts
to an ongoing administrative plan.{4}  Section 1.11D of the L.L. Bean Policy and
Procedures Manual, entitled "Severance Benefits" and dated 8/1/87,
addresses the conditions under which an employee is eligible for severance
	[¶14]  Under the L.L. Bean plan, not all dismissed or laid-off employees
will be eligible to receive severance pay.  Eligibility depends on the type of
position held and the reason for termination, and exclusions apply for
discharge for disciplinary reasons or discharge for gross misconduct.  The
payments are made once, lump-sum, at the time the last paycheck is issued. 
However, the severance payment plan is administered with some elements
of discretion and on an ongoing basis as employees terminate and their
eligibility for severance pay must be evaluated.  Thus, it appears that the L.L.
Bean severance payment plan surpasses the "theoretical possibility of a one-
time obligation in the future" that the Fort Halifax Court held "simply
creates no need for an ongoing administrative program for processing
claims and paying benefits."  Fort Halifax, 482 U.S. at 12.  See also Simas v.
Quaker Fabric Corp. of Fall River, 6 F.3d 849, 854 (1st Cir. 1993) (where a
one-time severance payment authorizing severance pay for employees
required the employer to make a case-by-case determination of each
employee's eligibility based on several discreet factors and was held to
impose ongoing administrative obligations beyond Fort Halifax); Tischmann
v. ITT/Sheraton Corp., 145 F.3d 561, 566 (2d Cir. 1998) (existence or
nonexistence of administrative discretion in maintaining plan is relevant to
ERISA applicability). 
	[¶15]  If we assume that the L.L. Bean plan was a welfare plan for the
purposes of ERISA, cases decided pursuant to ERISA indicate that Niehoff
would not have been eligible for benefits under L.L. Bean's severance pay
policy.  "Contract language in an ERISA action is to be given its plain
meaning."  Rodriguez-Abreu v. Chase Manhattan Bank, N.A., 986 F.2d 580,
586 (1st Cir. 1993) (citation omitted). 
	[¶16]  The L.L. Bean manual provides for severance pay for employees
who are dismissed because of "continued poor attendance or tardiness due
to documented disability, illness or family illness/problems."  Niehoff claims
he falls within this provision.  However, when he was terminated, Niehoff
had no position at L.L. Bean and thus no job he could poorly attend.  The
term "poor attendance" can be reasonably interpreted to imply that benefits
are not awarded to an employee who has lost his position and is on long­p;term 
disability leave.  Rather, the employee must be presently in a position
of employment at L.L. Bean, although the employee is repeatedly absent or
late while attempting to continue working.  Niehoff was not presently
working at his position because he was on medical leave, and entirely absent
from work.  
	[¶17]  Even if the manual terms are considered to be ambiguous,
Niehoff's legal malpractice claim fails under ERISA case law and the
applicable summary judgment standard.  If contract language is ambiguous or
uncertain, its interpretation is a question of fact to be determined by a
factfinder.  See Kandlis v. Huotari, 678 A.2d 41, 43 (Me. 1996); Town of
Lisbon v. Thayer Corp., 675 A.2d 514, 516 (Me. 1996).  However, while "an
argument between parties about the meaning of a contract is typically an
argument about a 'material fact,' summary judgment is not necessarily
foreclosed."  Allen v. Adage, Inc., 967 F.2d 695, 698 (1st Cir. 1992) 
(citations omitted) (an ERISA action affirming a grant of summary judgment
for an employer that denied severance pay to its employees).  
	[¶18]  In ERISA cases, the usual rule that ambiguities in contracts are
construed against the drafter does not apply.  "Even if there is ambiguity in
the language . . . the evidence presented about the parties' intended
meaning may be so one-sided that no reasonable person could decide the
contrary" (citations omitted).  Furthermore, "[w]hen interpreting severance
pay plans in the ERISA context, ambiguous terms are generally not
construed against the employer."  Rodriguez-Abreu, 986 F.2d at 586 (citing
Allen, 967 F.2d at 701).  In Allen, the court decided that where the
defendant offered "uncontroverted proof of past practice" under the plan,
the "extrinsic evidence, though not robust, is one-sided and points
unerringly in the same direction."  Allen, 967 F.2d at 702.  The court noted
that past practice is "still frequently used by courts as a device for
deciphering the meaning of ambiguous plan provisions."  Id.
	[¶19]  Shankman addressed the issue of L.L. Bean's past practices by its
Rule 7(d) statement that "[s]ince the early 1980's it has consistently been
the practice at L.L. Bean not to award severance pay to employees on long
term disability."  Shankman cites the affidavit of L.L. Bean's Director of Total
Quality Human Resources, who stated:
Since at least 1983, L.L. Bean, Inc.'s policy has been that persons
who cannot return to work within one year due to disability do
not receive severance benefits after their employee status has
ended . . . .  Since Mr. Niehoff was unable to return to work
within six months [of receiving long term benefits], his position
was filled.  L.L. Bean did agree to allow Mr. Niehoff to return to
another position if he did so prior to February 19, 1992.  Mr.
Niehoff did not return to work prior to February 19, 1992, and,
consistent with company policy, his status as an employee of L.L.
Bean, Inc. ceased.
The director cited provisions from L.L. Bean's manual, dated 3/1/92 (after
Niehoff's termination), in support of her statements that this was L.L. Bean's
continuing practice.  
	[¶20]  Rule 7(d) statements, supported by appropriate record
references, are "deemed to be admitted unless properly controverted by the
statement required to be served by the opposing party."  M.R. Civ. P. 7(d)(2). 
For Niehoff to prevail under the applicable summary judgment standard,
which requires that we not construe the plan terms against L.L. Bean,
Niehoff had to produce evidence of past practices placing Shankman's
evidence in dispute.  Niehoff did not do so.  The uncontroverted evidence
points to a past practice by L.L. Bean of not granting severance pay to
individuals such as Niehoff, who lose their positions after six months of
disability leave, and are subsequently terminated due to their inability to
return to work a year after the leave commenced.  This uncontroverted
evidence governs interpretation of the severance plan pursuant to ERISA. 
See Allen, 967 F.2d at 702.  
	[¶21]  In conclusion, Niehoff has not shown that he could have
recovered had Shankman brought his claims under ERISA, even when we
presume L.L. Bean's policy to be an ERISA welfare plan.  Because we
presume that the L.L. Bean severance pay plan is an ERISA covered plan, we
need not address Niehoff's claim that ERISA preemption is established by
collateral estoppel.  We also do not reopen examination of the state law
claims resolved in the prior actions.
	[¶22]  Because disputes of material fact are not generated to support
the claim that Shankman's actions constituted legal malpractice, Niehoff's
claims fail. 
	The entry is:
			Judgment affirmed.
Attorney for plaintiff: Francis M. Jackson, Esq., (orally) Jackson & MacNichol P O Box 17713 Portland, ME 04112-8713 Attorneys for for defendant: Wendell G. Large, Esq., (orally) Anne H. Cressey, Esq. Richardson Whitman Large & Badger, P.C. P O Box 9545 Portland, ME 04112-9545
FOOTNOTES******************************** {1} . Effective January 1, 2001, the Maine Rules of Civil Procedure are amended to move the statement of material fact requirements for summary judgment motions from M.R. Civ. P. 7(d) to M.R. Civ. P. 56(h). {2} . The relevant portion of section 1144 is as follows: § 1144. Other laws (a) Supersedure; effective date Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title. This section shall take effect on January 1, 1975. . . . . 29 U.S.C. § 1144 (1985 & Supp. 1993). {3} . The relevant portion of section 1002 is as follows: § 1002. Definitions For purposes of this subchapter: (1) The terms "employee welfare benefit plan" and "welfare 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 such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, or (B) any benefit described in section 186(c) of this title (other than pensions on retirement or death, and insurance to provide such pensions). 29 U.S.C. § 1002 (Supp. 1993). {4} . See, e.g., James v. Fleet/Norstar Fin. Group, Inc., 992 F.2d 463, 468 (2d Cir. 1993) (employer's undertaking to give employees 60 days additional pay following their last day of work if employees would remain on the job until internal consolidation was complete did not require an ongoing administrative program); Bogue v. Ampex Corp., 976 F.2d 1319, 1323 (9th Cir. 1992) (employer's obligation was one-time, lump-sum, and occurred at different times, requiring the administrator of the plan to determine whether the employee had been offered "substantially equivalent employment" upon acquisition of employer, but was nondiscretionary because the application of the plan was not "unthinking" and therefore comprised a plan under ERISA); Angst v. Mack Trucks, Inc., 969 F.2d 1530, 1539 (3d Cir. 1992) (no ERISA plan found where employees were permitted to retire pursuant to "buyout plan" and receive lump-sum payment plus "continued benefits"). {5} . Section 1.11D provides as follows: General Policy Under specific circumstances severance benefits will be paid to regular employees whose employment with L.L. Bean is terminated. The purpose of severance pay is to ease the financial burden of the terminated employee while in transition from the company to other employment alternatives. Specific Terms of the Policy Eligibility for Severance Pay A non-exempt employee with at least 6 months of employment in a regular position or any regular exempt employee is eligible for severance pay under the following circumstances: Dismissal This results when an employee is unable to meet the requirements of his job, but has made every reasonable effort to do so. In other words, the cause for the dismissal is considered beyond the employee's control. For example: . . . . · Continued poor attendance or tardiness due to documented disability, illness or family illness/problems. L.L. Bean Policy and Procedures Manual, § 1.11D.