Barrs v. Lockheed Martin Corp.

• Decision Date: 24 April 2002
• Docket Number: No. 01-1203.,01-1203.
• Parties: Nancy BARRS, Plaintiff, Appellant, v. LOCKHEED MARTIN CORPORATION (a/k/a Loral Western Development Labs), and John Hancock Mutual Life Insurance Company, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 202

287 F.3d 202

Nancy BARRS, Plaintiff, Appellant, v. LOCKHEED MARTIN CORPORATION (a/k/a Loral Western Development Labs), and John Hancock Mutual Life Insurance Company, Defendants, Appellees.

No. 01-1203.

United States Court of Appeals, First Circuit.

Heard February 7, 2002.

Decided April 24, 2002.

COPYRIGHT MATERIAL OMITTED

Michael J. Traft with whom Carney & Bassil, P.C. and Donald Peter Welch were on brief for appellant.

Jean M. Kelley with whom Morrison, Mahoney & Miller, LLP was on brief for appellee Lockheed Martin Corporation.

Edward S. Rooney, Jr. with whom Eckert Seamans Cherin & Mellott, LLC was on brief for appellee John Hancock Mutual Life Insurance Company.

Before BOUDIN, Chief Judge, SELYA and LIPEZ, Circuit Judges.

BOUDIN, Chief Judge.

We are asked principally to determine whether the plaintiff-appellant, Nancy Barrs, was entitled under ERISA, 29 U.S.C. § 1001 et seq. (1994), to notice of certain changes made by her ex-husband, James Barrs, to two life insurance policies maintained by him through his employer, Ford Aerospace Communications Corp. ("Ford"). Ford eventually became part of defendant-appellee Lockheed Martin ("Lockheed"). The facts are undisputed except as otherwise indicated.

Pursuant to a separation agreement executed by the Barrses in September 1989 and adopted by Maryland court decree in December 1989, James Barrs promised to make Nancy Barrs the irrevocable beneficiary of all of his then-existing life insurance policies. Included in the list of policies were a basic policy and an optional policy issued by defendant-appellee John Hancock Mutual Life Insurance Company ("Hancock") and administered by Ford as part of its employee benefits plan. The decree also required James Barrs to make all premium payments on both policies.

In February 1990, the Barrses informed Ford of the decree and executed a document provided by Ford which assigned to Nancy Barrs the absolute right to designate the beneficiary under both policies. On February 28, 1990, Ford acknowledged receipt of the assignment and returned a copy to Nancy Barrs at her existing Maryland address with a letter stating that her husband's file had been "flagged for this information" and promising to notify her "within 24 hours by registered mail" if his employment was terminated. Hancock later endorsed the assignment, and Nancy Barrs then sent Hancock a form designating herself as primary beneficiary of both policies.

Loral Western Development Labs ("Loral") acquired Ford in October 1990 and replaced the previous Hancock policies with new Hancock basic and optional policies issued to Loral, which retained the status of all irrevocable assignees under the old policies. Then, in January 1992, Loral replaced the Hancock optional policy with one offered by Connecticut General Life Insurance Company ("CIGNA") while retaining the Hancock basic policy. James Barrs, as a plan participant, received notice of the change; he then applied for the new CIGNA policy, designating his then-fiancee Elaine as beneficiary. No notice of the change in policy or the new beneficiary designation was sent to Nancy Barrs.

James Barrs was terminated from Loral on January 29, 1993. Upon his termination, he opted to continue the CIGNA optional policy with Elaine (now his wife) as beneficiary but declined to continue the Hancock basic policy. The next business day, February 1, 1993, Loral sent to Nancy Barrs' Maryland address a letter notifying her of her former husband's termination and indicating that she could convert the Hancock basic policy to an individual policy within 31 days. The letter was sent by certified mail (rather than registered mail as promised in the February 28, 1990, letter); in any event, Nancy Barrs never received the letter because she had moved to Florida in June 1990.

Nancy Barrs did not discover that her former husband had been terminated until a conversation with her daughter nearly two months later, in March 1993. When Nancy Barrs confronted James Barrs about the policies, he falsely assured her that he had continued both policies and kept her as the beneficiary. Relying on these assurances, Nancy Barrs did not seek to verify the status of either policy with either Loral or Hancock until after James Barrs' death on April 2, 1994. Only then did she discover that the Hancock optional policy had been replaced by the CIGNA policy listing Elaine Barrs as the beneficiary and that the Hancock basic policy had not been continued after James Barrs' termination.

In April 1997, Nancy Barrs brought suit in federal court in Massachusetts against both Hancock and Loral; Loral merged into Lockheed, which has assumed the defense of the case. Excluding counts later dropped, Nancy Barrs' complaint sought payment of benefits under both policies, 29 U.S.C. § 1132(a)(1)(B); damages for failure to provide requested plan information, id. § 1132(c); and equitable redress for defendants' breach of their fiduciary duty, id. § 1132(a)(3). In rulings unchallenged on appeal, the district court granted summary judgment to Hancock and Lockheed on the first two claims.¹

The district court also held that Nancy Barrs' fiduciary breach claim against Hancock was precluded because she had an express remedy against Hancock for denial of benefits under 29 U.S.C. § 1132(a)(1)(B).² Nancy Barrs does not contest this ruling in her initial brief on appeal, instead arguing only that Hancock is liable as a co-fiduciary, see id. § 1105. We need not deal with this claim given Nancy Barrs' failure to address the district court's independent and sufficient ground for barring the fiduciary duty claim against Hancock. See Keeler v. Putnam Fiduciary Trust Co., 238 F.3d 5, 10 (1st Cir.2001).

This left open Nancy Barrs' claim for breach of fiduciary duty against Lockheed based on its failure to notify her when the Hancock optional policy was replaced by the CIGNA policy and, separately, its failure to assure her receipt of notice of her husband's termination. On summary judgment, the district court held that Lockheed had no obligation to provide Nancy Barrs with notice of either event, beyond its affirmative promise in the February 28, 1990, letter. After a bench trial, it held that the company had substantially fulfilled this promise by its certified mailing to Nancy Barrs' Maryland address.

Nancy Barrs now appeals, challenging the district court's ruling on both of her fiduciary obligation claims against Lockheed and on her claim that the company did not comply with its promise to notify her by registered mail.³ Further, she contests the district court's finding at the bench trial that the company did not receive a change of address card. We review de novo the district court's determinations on summary judgment; its factual findings at the bench trial are reviewed under the clearly erroneous standard. Nat'l Educ. Ass'n — R.I. v. Ret. Bd. of the R.I. Employees' Ret. System, 172 F.3d 22, 26 (1st Cir.1999).

The optional policy. Nancy Barrs first argues that Lockheed had a fiduciary duty to inform her of the substitution of the CIGNA optional policy for the Hancock optional policy. The CIGNA policy was not covered by the divorce decree or the assignment form, so Lockheed's change in policy effectively eliminated any rights she had as an assignee-beneficiary of the Hancock policy. Nancy Barrs argues, on several different theories, that as an assignee-beneficiary she had the same right as her husband, the plan participant, to be informed of a change that could result in her loss of benefits.

At the threshold, Lockheed argues that such a claim is not permitted by the enforcement provision invoked by Nancy Barrs, namely, 29 U.S.C. § 1132(a)(3), which allows only suits seeking "other appropriate equitable relief." Traditionally a court of equity could require a fiduciary to pay damages to repair a breach of trust. See, e.g., Scott & Fratcher, III Scott on Trusts § 199.3 (1988). But in Mertens v. Hewitt Associates, 508 U.S. 248, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993), the Supreme Court read the statutory phrase more narrowly as limited to forms of relief "traditionally viewed as `equitable'" such as mandamus or injunctions and as excluding money damages. Id. at 255, 113 S.Ct. 2063.

The district court said that Nancy Barrs' claim could be viewed as one for equitable reinstatement of beneficiary status, cf. Langdon v. Maryland Cas. Co., 357 F.2d 819, 821 (D.C.Cir.1966); in the alternative, Nancy Barrs says that she is entitled to equitable restitution. There are problems with both theories — as to the latter, see Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 122 S.Ct. 708, 714-15, 151 L.Ed.2d 635 (2002) — but we need not definitively resolve the Mertens remedy issue. This is so because we conclude that no breach of fiduciary duty occurred.

It is common ground that the life insurance policies at issue were part of a welfare benefit plan governed by ERISA. 29 U.S.C. § 1002(1)(A). Lockheed, as the named administrator of the plan, is a fiduciary under ERISA. Id. § 1102(a). And both sides agree that Nancy Barrs has standing as a prospective beneficiary under ERISA, id. § 1002(8), to enforce whatever fiduciary duty may be owed to a beneficiary. Id. §§ 1104, 1132(a)(3). The disputed issue as to the optional policy is whether ERISA obligated Lockheed to inform Nancy Barrs of the replacement of the Hancock optional policy by the CIGNA policy.

In arguing that ERISA does impose such a duty, Nancy Barrs employs three different theories. First, ERISA imposes specified obligations on fiduciaries, mostly regarding the management of plan assets, 29 U.S.C. §§ 1101-1114, and the disclosure of general plan information, id. §§ 1021-1031. Among the latter is a requirement that the plan administrator publish within a specified period "all modifications and changes" to the plan "to each participant, and each beneficiary receiving benefits under the plan." Id. § 1024(...