184 F.3d 938 (8th Cir. 1999), 98-1677, Kerr v Vatterott & Co.

Docket Nº:98-1677
Citation:184 F.3d 938
Case Date:July 12, 1999
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit

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184 F.3d 938 (8th Cir. 1999)




No. 98-1677

United States Court of Appeals, Eighth Circuit

July 12, 1999

Submitted: March 8, 1999

Appeal from the United States District Court for the Eastern District of Missouri.

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[Copyrighted Material Omitted]

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Michael P. Stephens, St. Louis, MO, argued (Paula L. Colman, St. Louis, MO, on the brief), for Appellant.

John E. Hilton, St. Louis, MO, argued (Donald R. Carmody, Michael J. Parnas, St. Louis, MO, on the brief), for Appellee.

Before Richard S. Arnold and Hansen, Circuit Judges, and STROM,1 District Judge.

Hansen, Circuit Judge.

Gerald Kerr, a participant in a pension plan, brought this ERISA action against Charles F. Vatterott & Co. (Vatterott & Co.) (the plan's administrator) and Commerce Bank, the plan's trustee. Though Vatterott & Co. eventually paid Kerr all of the accumulated funds in his account, Kerr sought a remedy for the three-and-a-half year delay in payment of the account and sought imposition of statutory penalties for failure to timely provide requested plan documents. Following a bench trial, the district court granted judgment in favor of Vatterott & Co. and Commerce Bank on Kerr's ERISA claims, as well as his supplemental state law claims. Kerr appeals only the judgment in favor of Vatterott & Co. on the ERISA claims. We affirm in part, reverse in part, and remand.


Gerald Kerr Homes Corp. (Kerr Homes), of which Kerr is the president and sole shareholder, formed a partnership called Legacy Homes with Vatterott & Co. to acquire, develop, and market real estate. Kerr Homes managed the daily operations

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of the Legacy Homes partnership and Vatterott & Co. provided the financial backing for the enterprise. Vatterott & Co. maintained the bank account for the partnership. Unbeknownst to Vatterott & Co., Kerr opened a separate bank account in the Legacy Homes partnership name, eventually depositing over $260,000 of partnership funds into the account and disbursing $153,000 to Kerr Homes.

Legacy Homes employees, including Kerr, worked on Vatterott & Co. projects as well as Legacy Homes projects and thus were eligible to participate in Vatterott & Co.'s 401(k) pension plan. Vatterott & Co. made matching employer contributions to the plan on behalf of Legacy Homes employees. On July 12, 1991, Vatterott & Co. notified all Legacy Homes employees, including Kerr, that they would be terminated effective July 14, 1991, because Vatterott & Co. could no longer fund Legacy Homes' payroll and benefit accounts.

Vatterott & Co. is the plan administrator and Commerce Bank is the trustee of the Vatterott & Co. 401(k) plan. The plan entitles a plan participant who is terminated prior to retirement to receive the net credit balance in his individual plan account. Under the plan, the trustee must distribute a terminated employee's account as soon as practicable after his termination, but the trustee may not distribute any funds until so instructed by the plan administrator. The trustee determines the disbursement amount as the value of the individual's account on the last date of the quarter immediately preceding request and authorization for the disbursement.

Kerr was fully vested in the 401(k) plan at the time of his termination from Legacy Homes. He submitted a withdrawal request to Vatterott & Co. on October 28, 1991, but received no response. The value in Kerr's 401(k) account as of September 30, 1991 (the valuation date based on Kerr's October request) was $16,968. Kerr again requested of Vatterott & Co. that his withdrawal form be forwarded to Commerce Bank for distribution in December 1991, and again received no response. On February 8, 1993, Kerr mailed a letter to Vatterott & Co. requesting instructions and documents to facilitate a transfer of his 401(k) account. He also requested a copy of the latest plan description. Again, Kerr received no response. Finally, on July 15, 1993, Gregory Vatterott informed Kerr that Vatterott & Co. would not distribute Kerr's 401(k) funds until Kerr paid Vatterott & Co. $5,902 to reimburse Vatterott & Co. for Kerr's half of employer matching contributions that Vatterott & Co. had made on behalf of the Legacy Homes partnership employees. Kerr refused to pay the matching funds and Vatterott & Co. refused to distribute Kerr's personal 401(k) account.

In January 1995, Kerr's attorney demanded that Vatterott & Co. and Commerce Bank provide a full and complete accounting of Kerr's plan account, provide a copy of the plan, and effect a trustee-to-trustee transfer of Kerr's funds. Vatterott & Co. responded with information about Kerr's account, including the amount of Kerr's contributions; the amount of employer matching contributions; the investment vehicles in which the account had been invested; and the amount of earnings on the account. Vatterott & Co. also stated that Commerce Bank would send a copy of the plan to Kerr, which Commerce Bank did within approximately one week of Kerr's request. Vatterott & Co. still refused to disburse Kerr's personal 401(k) funds until it received Kerr's share of the employer matching funds that Vatterott & Co. had made to other Legacy Homes employees' accounts. Commerce Bank informed Kerr that it could not distribute his account until it received authorization from Vatterott & Co. as the plan administrator.

On March 22, 1995, Gregory Vatterott advised Kerr's counsel that Vatterott & Co. sought the matching employer contributions from Kerr Homes (the corporation) as Vatterott & Co.'s partner in the Legacy Homes partnership rather than

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from Kerr personally and provided Kerr with a withdrawal request form. Kerr submitted the distribution request on April 11, 1995, and Vatterott & Co. authorized distribution of Kerr's plan account on April 17, 1995. On May 4, 1995, Commerce Bank made a trustee-to-trustee transfer of $22,490, the value of Kerr's account as of March 31, 1995, the last date of the quarter immediately preceding the April request and authorization. The district court found that Kerr's account earned $5,522, resulting in an 8.6 percent annualized rate of return for the period between September 30, 1991, the valuation date for Kerr's first requested disbursement, and March 31, 1995.

Kerr filed suit on April 10, 1995, the day before his final request for disbursement, seeking actual damages and interest under 29 U.S.C. § 1132(a)(1)(B); statutory penalties pursuant to section 1132(c); and an award of attorney's fees and costs under section 1132(g). Kerr also sought punitive damages based on supplemental state law claims. Kerr amended his complaint by interlineation immediately prior to trial, adding a claim for equitable relief under 29 U.S.C. §1132(a)(3). Following a bench trial, the district court dismissed the state law claims as pre-empted by ERISA; found Kerr's claim for actual damages under section 1132(a)(1)(B) for the amount in his 401(k) account moot because Kerr received the full amount of his account prior to trial; denied the claim for interest as an inappropriate remedy under either section 1132(a)(1)(B) or section 1132(a)(3); and declined to award a statutory penalty under section 1132(c) because Kerr did not prove that Vatterott & Co. had received his request for ERISA documents. The district court also declined Kerr's request for attorney's fees and costs because Kerr was unsuccessful on his ERISA claims. Kerr appeals the judgment, arguing that lost interest is an appropriate equitable remedy under section 1132(a)(3) and proof of receipt is not an element of his claim under section 1132(c).


This appeal involves primarily issues of law, which we review de novo. We review any issues regarding the district court's factual findings for clear error. See Greater Kansas City Laborers Pension Fund v. Superior Gen. Contractors, Inc., 104 F.3d 1050, 1054 (8th Cir. 1997). Kerr's appeal involves three ERISA provisions: §§ 1132(a)(1)(B), 1132(a)(3), and 1132(c), which we take up in order.

A. § 1132(a)(1)(B): Recovery for Amounts Due

Section 1132(a)(1)(B) allows a participant or beneficiary to bring suit "to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." Kerr does not dispute that he has received the funds in his account to which he is entitled under the plan, but argues instead that his recovery was inadequate because he had to wait three-and-a-half years for his money and had to file suit before Vatterott & Co. finally paid the account over. The plain language of the statute precludes Kerr's argument that his remedy under this section is inadequate. Section 1132(a)(1)(B) provides Kerr a cause of action "to enforce his rights under the terms of the plan;" it does not provide recourse for extracontractual damages related to a breach of the plan. See Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 144 (1985) ("[T]he statutory provision explicitly authorizing a beneficiary to bring an action to enforce his rights under the plan -- § [1132](a)(1)(B)...--says nothing about the recovery of extracontractual damages, or about the possible consequences of delay in the plan administrators' processing of a disputed claim."); Medina v. Anthem Life Ins. Co., 983 F.2d 29, 32 (5th Cir. 1993) (holding that section 1132(a)(1)(B) does not provide recovery for extracontractual damages). We agree with the district court that Kerr has recovered all that he is entitled to recover

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under this section and that his appeal in this regard is moot.

B. § 1132(a)(3): Recovery for Breach of Fiduciary Duties

Section 1132(a)(3) allows a participant or beneficiary to...

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