Marks v. Newcourt Credit Group, Inc., 01-1921.

Citation342 F.3d 444
Decision Date04 September 2003
Docket NumberNo. 01-1921.,01-1921.
PartiesLloyd MARKS, Plaintiff-Appellant, v. NEWCOURT CREDIT GROUP, INC. et al., Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

Stephen F. Wasinger, WASINGER KICKHAM AND HANLEY, Royal Oak, Michigan, for Appellant.

Patrick F. Hickey, DYKEMA GOSSETT, Detroit, Michigan, for Appellees.

ON BRIEF:

Stephen F. Wasinger, Timothy O. McMahon, WASINGER KICKHAM AND HANLEY, Royal Oak, Michigan, for Appellant.

Patrick F. Hickey, Jeffrey S. Kopp, DYKEMA GOSSETT, Detroit, Michigan, for Appellees.

Before: BATCHELDER and MOORE, Circuit Judges; COLLIER, District Judge.*

OPINION

KAREN NELSON MOORE, Circuit Judge.

Plaintiff-Appellant Lloyd Marks appeals the district court's dismissal of his state law equitable estoppel claim and his claims that Defendant-Appellee Newcourt Credit Group, Inc., CIT Group, Inc., and Newcourt Financial USA, Inc. (collectively "Newcourt"), violated state law and the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. He also appeals the district court's entry of judgment against him with respect to his claims that Newcourt arbitrarily and capriciously denied him benefits, failed to comply with ERISA § 503, and fraudulently induced him to purchase stock options.

Marks participated in the "AT & T Capital Leadership Severance Plan" ("plan"), under which Marks would be entitled to substantial benefits if he experienced a qualifying termination by October 1, 1998. Marks filed a claim for these benefits in June 1999, arguing that he had been constructively terminated before the October deadline due to reductions in his duties and compensation unknown to him at the time. Newcourt denied Marks's claims for benefits both initially and on appeal, concluding that he had not experienced a qualifying termination before October 1, 1998.

Marks filed a claim in state court alleging breach of contract, fraudulent misrepresentation, innocent misrepresentation, fraudulent inducement to purchase stock options, and breach of the plan. Newcourt removed the case to federal district court, where the district judge liberally construed Marks's complaint to state ERISA claims and therefore dismissed the state-law claims as preempted. The district judge also dismissed Marks's equitable estoppel claim and his claims under ERISA §§ 404, 502, and 510, and entered judgment against Marks with respect to the denial of benefits and Newcourt's alleged procedural violations of ERISA § 503. Finally, the district court entered summary judgment for Newcourt as to Marks's claim that Newcourt fraudulently induced him to purchase stock options. Marks timely filed this appeal.

We REVERSE the district court's dismissal of Marks's state-law claims to the extent that they are not related to the plan, and REMAND for further proceedings on these grounds. We AFFIRM the district court on all other grounds.

I. FACTS AND PROCEDURAL HISTORY

Marks was employed by AT & T Capital Corporation ("AT & T Capital") in a senior management position. In this capacity, Marks participated in a severance plan that entitled him to a substantial cash payment if he was terminated without just cause. In the event of a change of control, Marks would also be entitled to benefits if he suffered a "Qualifying Termination" of employment during the following two years:

(i) A termination of a Participant's employment by the Company and its Subsidiaries ... other than a termination for Cause; or

(ii) A termination of employment by a Participant prior to the second anniversary of the Closing Date for one or more of the following reasons: (a) a reduction in base salary; (b) a significant reduction in annual cash target bonus; (c) an elimination or reduction of the Participant's eligibility to participate in the Company's benefit plans or programs that is inconsistent with the eligibility of similarly situated employees ... to participate therein; (d) a significant reduction in the Participant's duties as they exist immediately after the Closing Date; or (e) an obligation to relocate....

Joint Appendix ("J.A.") at 116-17 (Plan).

Newcourt purchased all outstanding shares of AT & T Capital on January 12, 1998. Prior to the acquisition, Newcourt offered Marks continued employment, with duties, responsibilities, authority, and compensation that were substantially identical to his duties and compensation with AT & T Capital. Marks accepted Newcourt's offer, and agreed to purchase 14,665 shares of the company's stock as part of his employment contract. He borrowed $453,258 to finance the stock purchase. Marks continued to be employed in a senior management position that was substantially similar to the position he held with AT & T. He was still covered by the plan, but he would have to make a claim by October 1, 1998 to be entitled to benefits for suffering a qualifying termination.

During 1998, Newcourt allegedly began making changes to Marks's business unit. Marks sought and received assurances through and after October 1, 1998, that these modifications were not intended to reduce his duties or his compensation. He continued to be actively employed by Newcourt until February 1999, when he suffered a heart attack and took disability leave.

Marks did not assert any rights under the plan before October 1, 1998. In March 1999, Marks learned that Newcourt had awarded him a bonus that was significantly lower than bonuses he typically received from AT & T. According to Marks, Newcourt changed its methods for calculating performance goals before October 1, 1998, but did not make clear that these changes were intended to and did materially reduce Marks's job responsibilities until May 1999.

Marks first sought to exercise his rights under the plan on June 1, 1999, when his attorney informed Newcourt that Marks was entitled to plan benefits because he had been constructively terminated. Marks's claim alleged that his job responsibilities had changed in 1998 and that Newcourt had misrepresented the nature of these changes. The plan administrators, who are responsible for reviewing all claims for benefits, sent Marks written notification that his claim had been denied.1 According to the administrators, Marks was not entitled to benefits because the plan required an actual termination before October 1, 1998.

Marks protested the denial of his claim, arguing that the administrators had imposed a condition — termination before October 1, 1998 — on the receipt of benefits that was not contained in the plan. The administrators referred Marks's protest to the benefits committee, which has "sole and complete discretionary authority to determine conclusively for all parties ... all questions relating to participation of eligible members and eligibility for benefits, determination of all relevant facts, the amount and type of benefits payable to any participant, and construction of all terms of the Plan." J.A. at 437 (Plan Summ.). The committee denied Marks's appeal, reasoning that he had no claim because Newcourt had not terminated his employment and because he had not resigned prior to October 1, 1998. Furthermore, the committee reasoned, Marks had accepted compensation and benefits for several months after October 1998.

Marks filed an action in state court, claiming that Newcourt had fraudulently induced him to become employed by Newcourt, breached his employment agreement, and wrongfully deprived him of benefits under the plan. Marks also alleged that Newcourt engaged in fraudulent conduct that reduced his duties and compensation, while continually assuring him that neither was being reduced. Marks did not raise any claims under ERISA.

Newcourt removed the action to federal district court on grounds that ERISA preempted Marks's state law claims and that there was diversity of citizenship. Marks then filed an amended complaint stating claims for (1) breach of contract and constructive discharge, (2) fraud and silent fraud, (3) innocent misrepresentation, (4) fraudulent inducement of stock purchase and loan agreement; and (5) breach of the AT & T Leadership Plan, breach of contract, and breach of fiduciary duties.

Newcourt moved for an order upholding the administrators' denial of Marks's claim for plan benefits pursuant to Federal Rule of Civil Procedure 52. Newcourt also moved to dismiss three of Marks's common-law claims pursuant to Rule 12(b)(6).

Marks filed a motion to amend his complaint a second time. He wanted to add an estoppel claim and claims under ERISA, alleging violations of §§ 502, 29 U.S.C. § 1132; 503, 29 U.S.C. § 1133; 504, 29 U.S.C. § 1134; 510, 29 U.S.C. § 1140; and 404, 29 U.S.C. § 1104. The magistrate judge denied Marks's motion to amend, but granted his motion to add CIT Group, Inc., as a defendant. The magistrate judge's order said that the first amended complaint should be broadly construed to state claims for the denial of benefits under ERISA. The district court later construed Marks's first amended complaint to include ERISA claims.

Marks filed his opposition to Newcourt's Rule 52 motion for judgment and, in doing so, referred to several alleged ERISA violations that had not been addressed in the complaint or any earlier briefs. At this point, the parties stipulated that Newcourt could voluntarily withdraw its initial Rule 52 motion and file a renewed motion that would address Marks's newly asserted claims and issues.

Marks filed a motion for summary judgment as to his ERISA claims. Newcourt filed a response, and then a renewed motion for entry of judgment. Newcourt sought an affirmance of the denial of benefits under the various provisions of ERISA and moved that all but one of Marks's common-law claims be dismissed as preempted by ERISA.

"[F]or the purposes of Defendant's Revised Rule 52 and 12(b)(6...

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