Barker v. American Mobil Power Corp.
| Decision Date | 15 November 1995 |
| Docket Number | No. 93-15598,93-15598 |
| Citation | 64 F.3d 1397 |
| Parties | 19 Employee Benefits Cas. 2051, 95 Cal. Daily Op. Serv. 7107, 95 Daily Journal D.A.R. 12,157, 95 Daily Journal D.A.R. 15,140, Pens. Plan Guide P 23914A Robert V. BARKER; Calvin A. Brown; Local 39 International Union of Operating Engineers, Stationary Engineers, in its representative capacity, Plaintiffs-Appellants, v. AMERICAN MOBIL POWER CORPORATION, Defendant, and John A. Ayres, individually; William Bro; W. Douglass Smith, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
M. Catherine Jones, Van Bourg, Weinberg, Roger & Rosenfeld, San Francisco, CA, for plaintiffs-appellants.
Vernon M. Winters, Cooley, Godward, Castro, Huddleson & Tatum, San Francisco, CA, for defendants-appellees W. Douglas Smith and L. William Bro.
Eric O. Nieman, Moore, Sizoo & Nieman, Walnut Creek, CA, for defendant-appellee John A. Ayres.
Appeal from the United States District Court for the Northern District of California.
Before: FARRIS, BOOCHEVER, and BRUNETTI, Circuit Judges.
Per Curiam; Dissent by Judge FARRIS.
The plaintiffs brought this action against three former fiduciaries of an employee retirement plan. The plaintiffs alleged that the fiduciaries breached their duties under Section 404 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. Sec. 1104. Finding that ERISA's statute of limitations had run on the plaintiffs' claims with respect to two of the former fiduciaries, the district court granted summary judgment in favor of those two. After a bench trial on the plaintiffs' remaining claim against the third fiduciary, the district court held that no breach had been committed and entered judgment in the fiduciary's favor. The plaintiffs appeal from both judgments. We affirm in part and reverse in part.
In 1970, Spartan Associates, an air conditioner service and repair company, created the Spartan Service Associates Profit Sharing and Retirement Plan and Trust (the "Plan") for the benefit of its employees. The Plan established an Administrative Committee composed of Spartan officers or employees. The Trustees of the Plan were given discretionary authority to manage and invest Plan funds but were obligated to follow the directions of the Administrative Committee.
The Plan Agreement required the Administrative Committee to "establish and maintain an account in the name of each participant" and to "credit all allocations to each such participant pursuant to the provisions of [the Plan]." The Plan specified that employer contributions to the Plan were to be made from "current or accumulated net profit." The Plan also afforded employee participants the opportunity to make voluntary contributions to their accounts.
Defendants William Bro and Douglass Smith were appointed Trustees of the Plan in 1973. In 1979, both Bro and Smith wrote letters to Spartan stating that they were resigning from their positions at Spartan, although neither letter specifically mentioned their posts as Trustees. Defendant John Ayres was a member of the Administrative Committee and served as president of Spartan Plaintiffs Robert Barker and Calvin Brown both had been employed by Spartan as service technicians for approximately twenty years. By virtue of their long-time employment with Spartan, each had fully vested in the Plan. While all other employees with vested rights under the Plan were fully paid, Barker and Brown never received their benefits despite repeated requests that they be paid from the Plan. The Plan's funds had apparently been depleted and there was no longer any money in the trust to pay Barker and Brown.
from 1981 to 1989, when the company went out of business.
The plaintiffs filed this action alleging that the defendants breached their fiduciary duties under ERISA Sec. 404 by mismanaging Plan funds. 1 The plaintiffs' complaint also asserted claims under ERISA Sec. 502(c) for failure to furnish benefit information to a participant who requests such information. 2
The district court granted summary judgment to defendants Bro and Smith on the plaintiffs' breach of fiduciary duty claims. The court held that the claims were time barred by ERISA's statute of limitations. With respect to the plaintiffs' claim against Ayres, however, the court conducted a bench trial to determine whether Ayres had breached his fiduciary duty by assuring the plaintiffs at various times that their benefits were secure and available upon retirement, when in fact they were not. After the trial, the district court held that the plaintiffs had not demonstrated that Ayres breached his fiduciary duties. The court therefore entered judgment in his favor. The plaintiffs now appeal both the summary judgment in favor of defendants Bro and Smith, and the judgment for defendant Ayres.
A grant of summary judgment is reviewed de novo. Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir.1994). A district court's findings of fact are reviewed for clear error; conclusions of law are reviewed de novo. Rozay's Transfer v. Local Freight Drivers, 850 F.2d 1321, 1326 (9th Cir.1988), cert. denied, 490 U.S. 1030, 109 S.Ct. 1768, 104 L.Ed.2d 203 (1989). We may affirm on any ground supported by the record. United States v. Washington, 969 F.2d 752, 755 (9th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 1945, 123 L.Ed.2d 651 (1993).
ERISA imposes a statute of limitations on claims alleging a breach of fiduciary duty. Section 413 provides:
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 (B) in the case of an omission, the latest date on which (2) three years after the earliest date on which the plaintiff had actual knowledge of the breach or violation;
the fiduciary could have cured the breach or violation, or
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. Sec. 1113 (emphasis added).
The plaintiffs filed their breach of fiduciary claim against Bro and Smith in 1990 after discovering that there were no longer any funds in the Plan to pay them their benefits. The district court found that Bro and Smith had resigned as Trustees of the Plan in 1979. The district court reasoned that because the plaintiffs did not bring their action within six years of Bro and Smith's resignation, their claim would be barred, unless they could show that Bro and Smith's alleged breach involved "fraud or concealment." Finding no evidence that Bro and Smith affirmatively concealed any alleged fraud, the court concluded that the plaintiffs' claim did not fall within the "fraud or concealment" exception to ERISA's statute of limitations and that therefore, the claim was barred.
The plaintiffs maintain that the district court erred in both its factual finding that Bro and Smith resigned in 1979, and in its legal conclusion that the statute of limitations barred their claim. We find that no error occurred.
According to the plaintiffs, Bro and Smith could not have resigned in 1979 because their resignation letters made no mention of the Trustee positions. Although the plaintiffs are correct that neither resignation letter specifically references the Plan Trustee posts, each indicates an intention to resign from all positions related to Spartan. Moreover, Bro and Smith submitted declarations which stated that: (1) they resigned from their Trustee positions in 1979; (2) it was understood by Spartan management that they had resigned; and (3) successor Trustees were named following each resignation. The plaintiffs did not offer evidence to rebut the defendants' declarations. We find that the district court did not err in finding that Bro and Smith effectively resigned in 1979.
The plaintiffs argue that even if Bro and Smith resigned in 1979, ERISA's statute of limitations does not bar the plaintiffs' breach of fiduciary claim because the "fraud or concealment" exception tolls the running of the limitations period for six years from the date of discovery. See 29 U.S.C. Sec. 1113.
We find, however, that the plaintiffs' claim does not fall within the "fraud or concealment" exception to the statute of limitations, because the plaintiffs have not produced specific evidence of fraudulent activity or concealment on the part of Bro and Smith.
Neither the plaintiffs' complaint nor the memorandum in support of their motion for summary judgment sets forth specific facts to establish that Bro and Smith committed fraud. The plaintiffs point to the fact that in the early 1970's, funds were transferred from the Plan to Spartan's parent company and replaced with promissory notes executed by the parent company. This "loan" of Plan funds apparently was never repaid. While these facts may allege a mismanagement of Plan funds and therefore a breach of fiduciary duty, they do not establish fraud. There is no indication that Bro and Smith themselves made knowingly false misrepresentations with the intent to defraud the plaintiffs. The plaintiffs simply have not presented any specific evidence of fraudulent activity by Bro and Smith.
Likewise, the plaintiffs have failed to produce any evidence of affirmative steps by Bro or Smith to conceal any alleged fiduciary breaches. As a result, the plaintiffs cannot rely on the "fraud or concealment" exception to the statute of limitations. See Radiology Ctr., S.C. v. Stifel, Nicolaus & Co., 919 F.2d 1216, 1220 (7th Cir.1990) (...
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