Radford v. General Dynamics Corp.

• Decision Date: 18 August 1998
• Docket Number: No. 97-10689,97-10689
• Citation: 151 F.3d 396
• Parties: 22 Employee Benefits Cas. 1577, Pens. Plan Guide (CCH) P 23945G Harriman G. RADFORD, Plaintiff-Appellant, v. GENERAL DYNAMICS CORPORATION, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 396

151 F.3d 396

22 Employee Benefits Cas. 1577,

Pens. Plan Guide (CCH) P 23945G

Harriman G. RADFORD, Plaintiff-Appellant, v. GENERAL DYNAMICS CORPORATION, et al., Defendants-Appellees.

No. 97-10689.

United States Court of Appeals Fifth Circuit.

Aug. 18, 1998.

Rehearing and Suggestion for Rehearing En Banc Denied Sept. 21, 1998.

David Lynn Fielding, Nathan Butler Schattman, Fort Worth, TX, for Plaintiff--Appellant Harriman G. Radford.

Michael A. Doornweerd, Craig C. Martin, Jenner & Block, Chicago, IL, for Defendants-Appellees General Dynamics Corp., General Dynamics Plan for Salaried Employees and General Dynamics Plan for Hourly Employees.

James Robert Griffin, Jeffrey Jack Wolf, Jackson & Walker, Fort Worth, TX, for Defendants-Appellees Lockheed Retirement Plan for Certain Salaried Employees and Retirement Plan Committee of Lockheed Retirement Plan for Certain Salaried Employees.

Appeal from the United States District Court for the Northern District of Texas.

Before KING, BARKSDALE and PARKER, Circuit Judges.

PER CURIAM:

Appellant Harriman G. Radford appeals from the order of the district court granting Appellees' motion to dismiss on statute of limitations grounds in this ERISA case. Finding no error, we affirm.

Background

Harriman Radford worked for General Dynamics in Fort Worth for 33 years and 9 months. On November 4, 1988, Radford went to Employee Services at General Dynamics to inquire about the effect of retiring a few months prior to age fifty-five, the first age at which General Dynamics employees can take "early retirement." The benefits office employee provided Radford a booklet entitled "General Dynamics Retirement Plan for Salaried Employees" dated June 1984. The booklet provided that if an employee retired prior to age fifty-five, the employee would experience an actuarial reduction in benefits; however, the booklet did not state the amount of the actuarial reduction in benefits.

General Dynamics provided Radford with an out-of-date booklet. A current booklet with the same title, but dated September 1988, was available and in stock, but was not given to Radford. The 1988 Booklet contained information that would have apprised Radford of the drastic reduction in benefits which would occur if he were to retire prior to age fifty-five.

In order to ascertain the amount of the reduction, Radford returned to Employee Services on November 9, 1988, and spoke with a different benefits office employee. Radford told the benefits office employee that he was considering retiring prior to age fifty-five and that he needed to determine the amount of his monthly retirement benefit he would receive at age fifty-five if he retired at age fifty-four and five months. The benefits office employee informed him that the actuarial reduction would be 4.5%.

On December 20, 1988, Radford received from General Dynamics two Retirement Benefits Payment Election forms: one for salaried employees and one for hourly employees. Radford was eligible for benefits under both plans. By electing a monthly benefit under a life annuity, the salaried employee plan form advised that Radford would receive a monthly benefit of $617.92, and the hourly employee plan form advised that Radford would receive a monthly benefit of $215.00. Both forms indicated that the approximate benefits shown were based on an anticipated retirement age of fifty-five years. Attached to these payment election forms was a post-it note to call "Billie" in Employee Services.

Radford called Billie and discussed his date of retirement and the fact that the monthly benefit amounts indicated on the election forms were the same amount if he were to retire at age fifty-five. Radford advised Billie that another benefits office employee had advised him that this amount would be reduced actuarially by 4.5%. Billie advised Radford that the other employee must have calculated the amount under the alternate benefit formula as opposed to the regular benefits formula, and that under the rules Radford would receive the higher of the two.

Based upon these written and oral representations, Radford retired from General Dynamics at age 54 years and 4 months on January 6, 1989. He was under the impression that he would be receiving a total monthly income of over $800.00. Instead, "on January 9, 1989, Radford learned that the General Dynamics Corporation benefits office employees had misrepresented to him what his benefits would be under the General Dynamics Plans if he retired prior to age fifty-five." ¹ His monthly income amounted to $301.00, and he lost his medical insurance. Radford elected not to receive any benefit until this matter was fully adjudicated.

Radford immediately initiated an administrative claim for higher benefits with General Dynamics Corporation and its Plans. Some years later, Radford also filed an administrative claim with Lockheed, ² seeking relief on the basis of the alleged misrepresentations made by General Dynamics Corporation benefits employees. Lockheed denied Radford's appeal on December 16, 1994.

Radford filed his Original Complaint on October 17, 1996, alleging breach of fiduciary duty under ERISA. General Dynamics and Lockheed moved to dismiss Radford's ERISA claim as time-barred. The district court granted the motions to dismiss, holding that the last action which constituted a part of the breach or violation occurred prior to January 9, 1989, and that Radford's complaint filed on October 17, 1996, was barred by § 413 of ERISA's six-year statute of limitations. Radford timely filed a notice of appeal.

Analysis

We review a district court's ruling on a motion to dismiss for failure to state a claim de novo. Morin v. Caire, 77 F.3d 116, 120 (5th Cir.1996). The parties do not dispute that Radford has asserted a breach of fiduciary duty claim under § 502(a)(3) of ERISA as recognized in Varity v. Howe, 516 U.S. 489, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996). ³ In Varity, the Supreme Court recognized that § 502(a)(3) of ERISA, 29 U.S. C § 1132(a), authorizes lawsuits for individualized equitable relief for breach of fiduciary obligations. In order to review the district court's ruling, we must address the following issues of first impression: (1) what is the statute of limitations for a Varity claim; and (2) if the lawsuit was filed outside the limitations period, should the statute of limitations be tolled while administrative remedies are being exhausted.

I. Statute of Limitations for a Varity Claim

The district court found, and Appellees Lockheed and General Dynamics maintain, that the limitations period for a Varity claim can be found in § 413 of ERISA. Section 413 provides in pertinent part:

No action may be commenced under this subchapter with respect to a fiduciary's breach of any responsibility, duty, or obligation under this part, or with respect to a violation of this part, after the earlier of--

(1) six years after (A) the date of the last action which constituted a part of the breach or violation, or ...

(2) three years after the earliest date on which the plaintiff had actual knowledge of the breach or violation;

except that in the case of fraud or concealment, such action may be commenced not later than six years after the date of discovery of such breach or violation.

29 U.S.C. § 1113 (amd. 1989)(Supp. 1997)(emphasis added).

The court agrees. The plain language of § 413 of ERISA indicates that its statute of limitations would apply to a Varity claim pursuant to § 502(a)(3). The Varity court explained that the fiduciary duties which were violated arose under § 404(a) of ERISA. 116 S.Ct. at 1074-75. Section 413 provides that any action "commenced under this subchapter with respect to a fiduciary's breach of any responsibility, duty, or obligation under this part" is subject to either the six-year or three-year statute of limitations, whichever is earlier. Both § 413 and § 404(a) are contained in Subchapter I, subtitle B, Part 4 of ERISA. A Varity claim for breach of fiduciary duty arises under § 404(a) and § 502(a)(3), both within Subchapter I of ERISA.

Radford stated in his complaint that he "learned to his dismay" that the information was incorrect on January 9, 1989. Thus Radford had actual knowledge of the breach on January 9, 1989, and under § 413 he had to file suit within three years. Further, the last act which constituted part of the breach occurred prior to January 9, 1989. Thus under either the three year or six year limitations period, Radford's claim filed on October 17, 1996, is time-barred. However, it is clear that the three-year period applies because it is the earlier of the two periods outlined in § 413. In a similar case, the Seventh Circuit concluded that § 413 provides the limitations period for a case assumed to lie under Varity. See Librizzi v. Children's Memorial Med. Ctr., 134 F.3d 1302 (7th Cir.1998).

II. Tolling the Statute of Limitations

The next question we must answer is whether the statute of limitations should be tolled while administrative remedies are being exhausted. This question presupposes that a requirement exists to exhaust administrative remedies in cases under Varity. If there is no exhaustion requirement, there is no need to toll the statute. See Lindahl v. American Telephone & Telegraph, 609 F.Supp. 267 (N.D.Ill.1985)

Radford maintains that exhaustion is required before a Varity claim can be filed, citing Denton v. First Nat'l Bank of Waco, 765 F.2d 1295 (5th Cir.1985). In Denton, this court adopted the rule that a plaintiff generally must exhaust administrative remedies afforded by an ERISA plan before suing to obtain benefits wrongfully denied.

During oral argument, General Dynamics argued that there should be no exhaustion requirement in fiduciary breach cases under ERISA and that fiduciary breach cases are distinguishable from benefit denial cases like Denton. However, this court held in Simmons v. Willcox, 911 F.2d 1077, 1081 (5th Cir.1990), that a...