Cummings by Techmeier v. Briggs & Stratton Retirement Plan
| Decision Date | 21 July 1986 |
| Docket Number | No. 85-2871,85-2936,85-2871 |
| Parties | , 7 Employee Benefits Ca 1958 Barbara Jean CUMMINGS, a minor, by her Guardian ad Litem, Willard P. TECHMEIER, and Laverne H. Cummings, Special Administratrix of the Estate of Dennis G. Cummings, Plaintiff-Appellees, Cross-Appellants, v. BRIGGS & STRATTON RETIREMENT PLAN, the First Wisconsin Trust Company, Plan Trustee, and Briggs & Stratton Retirement Committee, Plan Administrator, Defendants- Appellants, Cross-Appellees. |
| Court | U.S. Court of Appeals — Seventh Circuit |
David R. Cross, Quarles & Brady, Milwaukee, Wis., for defendants-appellants, cross-appellees.
Willard P. Techmeier, Techmeier, Sheedy & Associates, Milwaukee, Wis., for plaintiff-appellees, cross-appellants.
Before BAUER and POSNER, Circuit Judges, and SWYGERT, Senior Circuit Judge.
The issue in this case is whether a district court has inherent or statutory equitable power to fashion a constructive trust in favor of a plaintiff who has no entitlement to benefits under ERISA. Although we do not deny that pension beneficiaries may bring civil actions under ERISA to obtain appropriate equitable relief, we cannot approve such relief where there is no violation of ERISA under the written terms of the plan. For the reasons set out below, we reverse the district court's grant of summary judgment, 606 F.Supp. 659, in favor of the plaintiffs.
The decedent, Dennis G. Cummings, was an employee of Briggs & Stratton Corporation, hired in 1952. He was a participant in the Briggs & Stratton Retirement Plan ("the Plan"), an employee-benefit program bargained for with the Allied Industrial Workers, Local 232 ("the Union"), and incorporated into the collective bargaining agreement. Defendant First Wisconsin Trust Company is trustee of the Plan. Defendant Briggs & Stratton Retirement Committee ("the Committee") is the administrator of the Plan. Defendant Frank Sprtel is a member of the Committee.
The Plan does not contain an automatic survivorship feature. Rather, participants must affirmatively elect a payment option that would include payment to a surviving spouse or beneficiary. Among the options available is a "Ten Year Certain and Life Option" (Article VI, Sec. 604(a) of the Plan). It provides that a Plan participant may elect to receive a reduced pension payable until death, and if the Plan participant's death occurs before the pension has been paid for ten years, payment of the pension will be made in the reduced amount to a beneficiary designated by the Plan participant for the balance of the ten-year period. The total benefits to the participant receiving a reduced monthly pension during his lifetime and the participant's beneficiary are actuarially equivalent to a single life pension without any provisions for his survivors.
The Union has sought to modify the Plan so that survivorship benefits are paid automatically, without election, at a participant's death. As it stands now, if a participant does not elect one of the survivorship options, no benefits are payable to anyone at the time of the participant's death. Briggs & Stratton has opposed an automatic survivorship benefit provision because of the substantial additional expense of funding this feature. Because Briggs & Stratton has prevailed on this bargaining point, the Plan does not provide for automatic survivorship benefits.
On May 15, 1982 Cummings was divorced in Milwaukee County Circuit Court. The decree of the divorce provided, in part:
9. That all of the rights of the defendant in his pension program at Briggs & Stratton Corporation are awarded to him and the plaintiff is divested of all right, title and interest therein providing, however, that the defendant shall change the beneficiary therein to the name of the minor children of the parties and each child shall be divested of such right when he or she reaches the age of eighteen (18) years.
At the time the divorce decree was entered into, Cummings was not eligible to designate his daughter, Barbara Jean, as a beneficiary. None of the defendants were parties to the divorce proceedings. Briggs & Stratton's employment record includes information that Cummings was divorced, but it is undisputed that none of the defendants had knowledge of the terms of the decree.
In 1978 when Cummings approached his sixtieth birthday, the Committee mailed him information about the "Fifty Percent Joint and Survivorship Pension Option" available under sections 6.1 and 6.2 of the Plan. This option provides for payment of a monthly annuity to the spouse of the Plan participant, if the participant should die before retiring from the Company. No other beneficiary could be named. Cummings replied that he would not elect the option, stating: "I am single and not eligible for this retirement plan."
On December 4, 1981, when Cummings approached his thirtieth year of service with Briggs & Stratton, the Committee mailed him a packet of information explaining the pre-retirement options for which he was now eligible. The options included the "Ten Year Certain and for Life" option which allowed him to choose someone as his beneficiary in the Plan in the event of his death; by choosing that option, Cummings would receive a reduced pension during his lifetime. Cummings did not respond to this mailing.
In May 1982 Cummings was diagnosed as having lung cancer. On May 13 Cummings was terminated by Briggs & Stratton because of his illness. Shortly thereafter, it was determined that his condition was terminal. He was hospitalized, but returned home in late June. Cummings gradually became mentally confused and disoriented.
On June 29, 1982 the Committee mailed Cummings the same information sent to him previously. Both packets of information contained the following warning notice: "NOTE: If you do not elect a survivorship option, no one will receive any pension benefits if you die while still employed." However, Cummings did not complete and return the application form for survivorship benefits.
Cummings died on August 1, 1982. To the date of his death, he had never received any benefits from the Plan. He had not designated his daughter, Barbara Jean, his only surviving minor child, as a pension beneficiary; had he done so, the beneficiary would have been entitled to a monthly payment of $642.58 commencing on the first day of the month following Cummings' death.
On August 11 Barbara Jean Cummings, through an attorney, wrote to the Committee requesting a statement of the amount of benefits due her. Frank Sprtel, representing the Committee, replied that no benefits were due; when Barbara Jean made a second request for information in March 1983, the Committee reiterated that no benefits would be paid.
Plaintiffs Barbara Jean and LaVerne Cummings (the former spouse and special administratrix of the Cummings' estate) filed an action for benefits and statutory penalties under the Employee Retirement Income Security Act of 1974 ("ERISA"). Plaintiffs contended that the Plan must pay survivorship benefits to Barbara Jean according to the provision in the divorce decree even though Cummings did not elect a survivorship option under the Plan. Plaintiffs also alleged that defendants filed to comply with requests for information in violation of ERISA, entitling them to statutory penalties.
Plaintiffs began their lawsuit on June 2, 1983. Defendants filed a motion for summary judgment dismissing the complaint on the grounds that under the written terms of the Plan, survivorship benefits are not payable automatically when a Plan participant dies. Plaintiffs also filed for summary judgment on the basis that defendants did not adequately inform Cummings of his rights to elect a survivorship option and that defendants knew or should have known of Cummings' state of mental confusion.
In its decision of April 19, 1985 the district court granted defendants' motion to dismiss Sprtel and denied plaintiff's motion for statutory penalties for the alleged failure to comply with a request for information. The district court, on the other hand, granted summary judgment for plaintiffs on the ground that the Plan would be "unjustly enriched" if it did not pay benefits to plaintiffs.
On September 27, 1985 the district court denied defendants' motion for reconsideration and entered judgment for the plaintiffs in the amount of $59,713.67, plus interest. Defendants appeal that judgment, and plaintiffs cross-appeal on the calculation of damages.
The issue here is initially straightforward. This is an action for benefits and statutory penalties under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Secs. 1001-1461. All employee benefit plans must be "established and maintained pursuant to a written instrument," section 1102(a)(1), and ERISA plan administrators are required to act consistently with the Plan's written terms. Plan fiduciaries are required to act solely in "accordance with the documents and instruments governing the plan." Section 1104(a)(1)(D). In fact, the 1984 amendment to ERISA specifically forbids the assignment or alienation of plan benefits unless called for under the Plan. 1
ERISA also requires that the description "be written in a manner calculated to be understood by the average plan participant and ... be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan." 28 U.S.C. Sec. 1022(a)(1). It is uncontested that the summary plan description for Briggs & Stratton was complete and accurate. In addition, Briggs & Stratton sent Cummings two letters, including clear warnings of the effect of not designating a surviving beneficiary.
There is no question that the written terms of the Briggs & Stratton Retirement Plan met the requirements of ERISA, or that under the terms of the Plan the plaintiffs were not entitled to...
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