Corbin v. Blankenburg

• Decision Date: 04 November 1994
• Docket Number: No. 92-1540,92-1540
• Citation: 39 F.3d 650
• Parties: , 30 Fed.R.Serv.3d 1068, 18 Employee Benefits Cas. 2537, Pens. Plan Guide P 23903H Gary CORBIN, Plaintiff-Appellant, v. Karl BLANKENBURG; John Cruz; Charles Furlotte; Robert Kuschel; Joseph Laughhunn; Robert Ledbetter; David Margolis; David McEachin; Robert Stephens; Jerome Wilson; Robert Udell, Present or Former Trustees of the Pattern & Model Makers Association of Warren & Vicinity Pension Fund (Defined Benefit); Mid-Continental Claim Service and Administrators, Inc.; Gary Novara; and Laurence Breskin, Defendants-Appellees. . Re
• Court: U.S. Court of Appeals — Sixth Circuit

Page 650

39 F.3d 650

63 USLW 2302, 30 Fed.R.Serv.3d 1068,

18 Employee Benefits Cas. 2537,

Pens. Plan Guide P 23903H

Gary CORBIN, Plaintiff-Appellant, v. Karl BLANKENBURG; John Cruz; Charles Furlotte; Robert

Kuschel; Joseph Laughhunn; Robert Ledbetter; David

Margolis; David McEachin; Robert Stephens; Jerome Wilson;

Robert Udell, Present or Former Trustees of the Pattern &

Model Makers Association of Warren & Vicinity Pension Fund

(Defined Benefit); Mid-Continental Claim Service and

Administrators, Inc.; Gary Novara; and Laurence Breskin,

Defendants-Appellees.

No. 92-1540.

United States Court of Appeals, Sixth Circuit.

Reargued June 15, 1994.

Decided Nov. 4, 1994.

A. Read Cone, III (briefed) and R. Ian Hunter (argued and briefed), Dean & Fulkerson, Troy, MI, for plaintiff-appellant.

Leo Nouhan (briefed), Lorrey Michela (argued), H. David Kelly, Jr., and Ronald A. Weglarz, Novara & Tesija, Southfield, MI, for defendants-appellees.

Before: MERRITT, Chief Judge; and CELEBREZZE, KEITH, KENNEDY, MARTIN, JONES, MILBURN, GUY, NELSON, RYAN, BOGGS, NORRIS, SUHRHEINRICH, SILER, BATCHELDER and DAUGHTREY, Circuit Judges.

NELSON, J., delivered the opinion of the court, in which MERRITT, C.J., and KENNEDY, JONES, MILBURN, GUY, RYAN, BOGGS, NORRIS, SUHRHEINRICH, SILER, BATCHELDER and DAUGHTREY, JJ., joined. CELEBREZZE, J. (pp. 655-58), delivered a separate dissenting opinion, in which KEITH and MARTIN, JJ., joined, with BOYCE F. MARTIN, Jr., J. (p. 658), also delivering a separate dissenting opinion.

DAVID A. NELSON, Circuit Judge.

Where a trustee commences a lawsuit in his fiduciary capacity and later resigns from office, a successor trustee will normally be allowed to step into the plaintiff's shoes and take over the prosecution of the action; the resignation of the original trustee is not deemed to abate the lawsuit without possibility of revival. The question presented in the case at bar is whether the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. Sec. 1001 et seq., requires a different result with respect to trustees of employee benefit plans governed by that statute.

The district court answered the question in the affirmative. The present action, commenced in federal court by an ERISA trustee who was authorized by statute to bring the suit, was dismissed for want of jurisdiction following the trustee's resignation from office. Dismissal was ordered notwithstanding the pendency of a motion to substitute as plaintiff a successor trustee who was prepared to go forward with the litigation.

We think that the dismissal was unwarranted. ERISA, as we read it, does not mandate abatement of the action under the circumstances presented here. We shall therefore reverse the order of dismissal and direct that the successor trustee be substituted as plaintiff.

I

Alleging that he was a trustee of a defined benefit pension plan established in accordance with the requirements of Secs. 402 and 403 of ERISA, 29 U.S.C. Secs. 1102 and 1103, plaintiff Gary Corbin brought suit against a group of defendants that included, among others, nine former trustees and two current trustees. Mr. Corbin's complaint, which asserted claims for breaches of fiduciary duty that were said to have caused substantial losses to the pension plan, was filed in the United States District Court for the Eastern District of Michigan. Federal question jurisdiction was asserted on the basis of Sec. 502 of ERISA, 29 U.S.C. Sec. 1132, which authorizes ERISA fiduciaries to bring civil actions in federal court. After an amended complaint was filed, the defendants filed an answer in which they admitted plaintiff Corbin's status as a fiduciary and admitted that the district court had subject matter jurisdiction by virtue of ERISA.

The action was commenced in May of 1991. Extensive discovery proceedings ensued, and the defendants eventually filed a voluminous motion for summary judgment.

Effective December 20, 1991--a date prior to the filing of the defendants' summary judgment motion--Mr. Corbin resigned his trusteeship. He was replaced in February of 1992 by a man named Paul Gard.

On March 19, 1992, the defendants moved to dismiss the complaint pursuant to Rules 12(b)(1) and 12(h)(3), Fed.R.Civ.P. The theory of the defendants' motion was that Mr. Corbin had lost standing to continue the lawsuit when he resigned as trustee and that the district court irretrievably lost subject matter jurisdiction once Mr. Corbin ceased to qualify, under 29 U.S.C. Sec. 1132, as a person entitled to bring this type of action.

On March 24, 1992--three working days after the filing of the defendants' motion to dismiss--Mr. Corbin moved to substitute Paul Gard as plaintiff. The motion was accompanied by an affidavit in which Mr. Gard swore that he had succeeded Mr. Corbin as trustee on February 25, 1992; that he (Gard) desired to pursue the allegations of the amended complaint on behalf of and for the benefit of the pension plan; and that he was prepared to act as party plaintiff. The defendants immediately objected to the substitution on the ground that there had been no "transfer of interest" from Corbin to Gard within the meaning of Rule 25(c), Fed.R.Civ.P., a rule that allows the court, upon motion, to direct substitution of the person to whom an interest has been transferred.

Two days after the filing of the motion to substitute Mr. Gard as plaintiff, the district court heard oral argument on the defendants' motion to dismiss. At the conclusion of the argument the court announced its decision from the bench. The gist of the court's oral ruling was that although Plaintiff Corbin had possessed standing to bring the suit in May of 1991, when he was still a plan fiduciary, he lost his standing as a fiduciary when he resigned his trusteeship the following December; that with the plaintiff's loss of standing, the district court immediately lost subject matter jurisdiction over the case; that the subsequent motion to substitute Mr. Gard as plaintiff should be "ignore[d]" by the court, notwithstanding that "Mr. Gard has standing under ERISA to bring a claim," because jurisdiction had been lost before Mr. Gard even became a trustee; that Rule 25(c) "cannot be used to restore jurisdiction once it is lost," cf. Rule 82, Fed.R.Civ.P., and the lawsuit was abated by Corbin's resignation unless the action was one that survived as a matter of substantive law, cf. Hilbrands v. Far East Trading Co., 509 F.2d 1321, 1323 (9th Cir.1975); and that while the court had "no quarrel" with Blackmar v. Lichtenstein, 468 F.Supp. 370 (E.D.Mo.1979), aff'd, 603 F.2d 1306 (8th Cir.1979), where successor trustees were substituted as plaintiffs in a lawsuit that had been brought by a profit-sharing plan trustee prior to his removal as trustee, Blackmar was not dispositive because jurisdiction had not been predicated on ERISA there. ¹ A written order of dismissal was entered on April 1, 1992, and the plaintiff perfected a timely appeal.

A divided panel of this court affirmed the dismissal. A petition for rehearing en banc was subsequently granted, the panel's judgment thereupon being vacated. The matter has been briefed and argued before the full court, and it is now ripe for decision.

II

If Gary Corbin had not been a plan fiduciary when this lawsuit was originally filed, he would have had no authority to bring the action under ERISA in the first place. See Pressroom Unions-Printers League Income Security Fund v. Continental Assurance Co., 700 F.2d 889, 891-92 (2d Cir.), cert. denied, 464 U.S. 845, 104 S.Ct. 148, 78 L.Ed.2d 138 (1983), holding that an ERISA action may be brought only by a member of one of the categories of people (the Secretary of Labor, a plan participant, a plan beneficiary, a plan fiduciary, or (for suits against the Secretary) a plan administrator) specifically named in 29 U.S.C. Sec. 1132. And if the action had been brought by a person not statutorily authorized to bring it, the absence of subject matter jurisdiction could not have been cured by substituting an authorized plaintiff for the unauthorized plaintiff. "The longstanding and clear rule is that 'if jurisdiction is lacking at the commencement of [a] suit, it cannot be aided by the intervention of a [plaintiff] with a sufficient claim.' " Pressroom Unions, 700 F.2d at 893 (quoting Pianta v. H.M. Reich Co., 77 F.2d 888, 890 (2d Cir.1935)).

In the case at bar, however, jurisdiction was not lacking at the commencement of the suit. As a plan fiduciary, Gary Corbin was unquestionably authorized by 29 U.S.C. Sec. 1132(a) to bring the action. The district court unquestionably had subject matter jurisdiction ab initio, and the issue presented here was thus similar to that presented in Blackmar v. Lichtenstein, 603 F.2d 1306 (8th Cir.1979): whether abatement of an action properly commenced by an employee benefit plan trustee is required when the trustee leaves office.

As far as what the Supreme Court has referred to as "the common law of trusts" is concerned, see Central States, Southeast and Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559, 570, 105 S.Ct. 2833, 2840, 86 L.Ed.2d 447 (1985), it is hornbook law that an action brought by a trustee "is not ordinarily abated by his failure to continue in his office." 1 C.J.S., Abatement and Revival Sec. 111(a). When a trustee party leaves office, "an action is ordinarily revived in the name of the successor representative." 1 Am.Jur.2d, Abatement, Survival, and Revival, Sec. 121. Congress could have prescribed a different rule for ERISA trustees, of course, but it did not do so. Nothing in 29 U.S.C. Sec. 1132 or any other section of ERISA suggests that a civil action brought by an ERISA trustee is personal to the particular individual who held the office when the suit was filed and must therefore be abated, without possibility of revival in the name of another representative, when the original trustee leaves office.

The declaration of policy adopted by ...