Crews v. Central States, Southeast and Southwest Areas Pension Fund

• Decision Date: 14 April 1986
• Docket Number: No. 85-1317,85-1317
• Citation: 788 F.2d 332
• Parties: , 7 Employee Benefits Ca 1642 James P. CREWS, Plaintiff-Appellant, v. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 332

788 F.2d 332

54 USLW 2643, 7 Employee Benefits Ca 1642

James P. CREWS, Plaintiff-Appellant, v. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND,

Defendant-Appellee.

No. 85-1317.

United States Court of Appeals, Sixth Circuit.

Argued March 10, 1986.

Decided April 14, 1986.

Otis M. Underwood, Jr. (argued), Oxford, Mich., for plaintiff-appellant.

Marci B. McIver, Charles J. Taunt (argued), Russell N. Luplow, Russell N. Luplow, P.C., Bloomfield Hills, Mich., for defendant-appellee.

Before ENGEL, CONTIE and MILBURN, Circuit Judges.

CONTIE, Circuit Judge.

James P. Crews appeals from an order of the district court dismissing, pursuant to Fed.R.Civ.P. 41(b), his complaint seeking a refund of contributions made on his behalf to defendant Central States, Southeast and Southwest Areas Pension Fund pursuant to ERISA, 29 U.S.C. Sec. 1001 et seq., and state law. Finding that, in light of the parties' contractual limitations on recovery of mistakenly paid contributions, the Fund trustees did not act in an arbitrary and capricious manner in denying a refund, we affirm.

I.

On December 17, 1983, James P. Crews filed a complaint against defendant Central States asserting jurisdiction pursuant to 28 U.S.C. Secs. 1331, 1337, 29 U.S.C. Secs. 1132(e)(1), 1451(a)(1). Crews alleged that between January 1945 and August 31, 1979, he was an employee of Jim's Lumber as "an operation manager in the company's bargaining unit," and owned 50 percent of the company. Crews alleged that the President of the Teamsters, James Hoffa, informed him that the Teamsters would represent his employees and that Crews himself would be required to join the union. Crews alleged that from January 1950 to June 24, 1978, Crews paid union dues and contributed to health and pension funds, including defendant, Central States. Crews alleged that the union knew of his ownership interest in Jim's Lumber and "subsequently assured him he would be paid a pension upon retiring."

In early 1978, Crews applied for retirement, and, on May 22, 1978, was informed that his application was rejected "because his conditions of employment with Jim's Lumber were not recognized as proper under their Collective Bargaining Agreement." Crews also alleged that he was informed "that his claim would be forwarded to the Refund Department of said Trust Fund so that all contributions made in his behalf might be returned." On December 8, 1978, Crews was notified that his request for a refund had been denied due to restrictions in ERISA and the Internal Revenue Code. On March 19, 1980, the Fund specifically notified Crews that 29 U.S.C. Sec. 1103(c)(2)(A) barred refund. Crews alleged that the 1980 amendments to the statute "retroactively allow[ed] the kind of refund requested by Plaintiff," and that he was damaged in the amount of $66,000 by the Fund's refusal to refund the contributions.

On March 30, 1984, Central States answered denying the allegations of the complaint and asserting failure to state a claim, lack of subject-matter jurisdiction, lack of standing, laches, waiver, and estoppel. On November 30, 1984, Central States moved to strike plaintiff's demand for a jury trial on the grounds that no statutory basis for a jury trial existed, and that the case "falls within the Court's judicial equity jurisdiction over matters of trust administration and is not a proper subject for jury trial." In response to the motion to strike the jury demand, Crews argued that his claim from 1955 to 1975 was a state law contract action, and that the United States Constitution and Michigan Constitution granted him the right to a jury trial.

On December 12, 1984, the case was referred to a magistrate pursuant to 28 U.S.C. Sec. 636(b)(1)(A), and Central States moved to dismiss the complaint on the grounds that Crews as an individual could not seek a refund on behalf of his employer, that federal law precluded a refund of contributions made due to a mistake of law, that the terms of the trust agreement prohibited the refund, and that Central States' refusal to refund the contributions was not arbitrary and capricious. The motion was also styled as one seeking summary judgment. Central States attached the affidavit of George Psaras, director of the Central States Contributions Receivable Division and Chairman of the Refund Committee. Psaras indicated that Crews' pension application was received on October 6, 1976, and that it was later determined that he was not a covered employee pursuant to the collective bargaining agreement between Jim's Lumber and the Teamsters. On May 22, 1978, Crews was notified of his ineligibility and that his application was being treated as a request for a refund by Jim's Lumber. On October 26, 1978, the Refund Committee determined that the contributions had been made due to a mistake of law and that the refund should be denied. On November 21, 1978, the Fund's Board of Trustees approved this result. Psaras also indicated that the trustees uniformly refused to refund contributions made as a result of a mistake of law.

The Trust Agreement, effective December 31, 1974, defined an employer as one who is bound by a collective bargaining agreement with a union or one "who satisfied the requirements for participation as established by the trustees and agrees to be bound by this Agreement." Art. I Sec. 1. The agreement defined an employee as:

A person who is employed under the terms and conditions of a collective bargaining agreement entered into between an Employer as herein defined and a Union as herein defined, and on whose behalf payments are required by such collective bargaining agreement or applicable law to be made to the Fund by the Employer.

Art. I, Sec. 3(a). Article IV, Sec. 17 provided that "[t]he Trustees ... shall have the power to construe the provisions of this Agreement and the terms and regulations of the Pension Plan; and any construction adopted by the Trustees in good faith shall be binding upon the Union, Employees and Employers." Article XIV, Sec. 1 provided:

In no event shall the Employers, directly or indirectly, receive any refund on contributions made by them to the Trust, except in case of bona fide mistake, and as to which contributions are returned within one year after payment of the contributions, nor directly or indirectly participate in the disposition of the Trust Fund or receive any benefits from the Trust Fund. Upon transfer of each contribution to the Trustees, all responsibilities of the Employers for such contributions shall cease, and the Employers shall have no responsibilities for the acts of the Trustees. No employee shall have any individual right, title, interest, or claim against any Employer, Employer's contribution, or the Trust Fund, except as may be expressly provided for in this Agreement or under federal law.

Crews, in his answer to the motion to dismiss, admitted that he was "convinced that the law will not support a claim for a pension," that he had standing as a "beneficiary" to maintain the action, that his action for a refund from 1955 to 1975 was based on the common law, and that the payments were made pursuant to a mistake of fact, not law. Crews contended that he never saw a copy of the Trust Agreement until this litigation. Correspondence between Crews and Central States indicated a retirement date of December 31, 1976. On January 26, 1977, the Fund sought clarification of this date in light of correspondence from the company indicating that Crews was still employed. On February 7, 1977, Crews responded that he would retire on June 1, 1977. On May 16, 1977, Crews informed Central States that he would retire on December 23, 1977.

The exhibits submitted by the parties to the district court indicate that Central States sent Crews two checks, dated February 1 and March 1, 1978. On March 2, 1978, Allen L. Cole, Crews' accountant, wrote to Central States returning the two checks.

The reason for the above is due to the fact that Mr. Crews had his business up for sale and the sale was not consummated. In order to keep the business for sale, he must continue to operate. Consequently, we will have to change the retirement until such time as he disposes of the business.

As a result of this letter, Central States, on April 24, 1978, made inquiries to Teamsters Local Union No. 458 regarding Crews' status as a covered employee with copies to Crews. On May 5, 1978, Cole responded that Crews owned 50 percent of the business, collected a salary, had two employees who were paid in accord with the collective bargaining agreement, and Crews had the right to hire and fire employees. Further, "[y]our union insisted that Mr. James P. Crews pay into the funds and all the other requirements as per the other members of his staff." On May 8, 1978, Cole returned another check to the Fund. On May 22, 1978, Central States informed Crews that:

[Y]ou were never properly employed under the terms and conditions of the Collective Bargaining Agreement. We have no alternative than to place your application in the Fund's rejection file.

Due to the above facts, we are forwarding your claim to our Refund Department, so that all contributions made in your behalf during your employment at Jim's Lumber may be returned to that firm.

On December 8, 1978, the refund was denied "based upon the applicable provisions of the Internal Revenue Code and the Employee Retirement Income Security Act of 1974. These provisions are very restrictive in terms of those conditions under which refunds are permissible." On December 14, 1978, Crews telephoned Central States that he did not request a refund and wished to collect his pension. On October 3, 1979, Cole wrote to Central States that Crews retired August 31, 1979.

On February 28, 1980, Crews again sought a refund. On March 19, 1980, George Psaras replied to Cole that the refund had been denied in accord with decisions of the Refund Committee of October 26, 1978, and the Board of Trustees of...