Dame v. First National Bank of Omaha, UNITED-A
| Decision Date | 10 January 2000 |
| Docket Number | No. 99-2718,UNITED-A,99-2718 |
| Citation | 217 F.3d 1018 |
| Parties | (8th Cir. 2000) JOHN DAME, PLAINTIFF - APPELLANT, v. FIRST NATIONAL BANK OF OMAHA, AS TRUSTEE OF THEG. COOPERATIVE, INC., EMPLOYEES RETIREMENT PLAN;G. COOPERATIVE, INC., DEFENDANTS - APPELLEES. Submitted: |
| Court | U.S. Court of Appeals — Eighth Circuit |
Appeal from the United States District Court for the District of Nebraska.
Before Bowman and Loken, Circuit Judges, and Alsop, * District Judge.
After ceasing business operations, United-A.G. Cooperative, Inc. ("United"), announced it would terminate its single-employer defined benefit pension plan ("the Plan"). First National Bank of Omaha ("First National") is the Plan trustee. The Plan is over-funded, that is, due to actuarial miscalculations it has $2.1 million more than will be needed to pay all pension benefits owing to Plan participants, who are United employees. John Dame, a Plan participant, commenced this action, seeking a declaration that the excess funds belong exclusively to Plan participants. United contends that the employer-contributed excess funds should be distributed to United. First National seeks judicial guidance so it may distribute the excess funds without liability. Following trial on stipulated facts, the district court 1 ruled in favor of United. Dame appeals, arguing the court erred in interpreting the Plan and in refusing to "defer" to arbitration. We affirm.
The Plan is governed by a complex federal statute, the Employee Retirement Income Security Act, known as ERISA. Enacted to protect pension and welfare benefits promised to employees, ERISA provides, with limited exceptions, that "the assets of a plan shall never inure to the benefit of any employer." 29 U.S.C. 1103(c)(1). One exception is found in 29 U.S.C. 1344(d), which deals with the distribution of residual assets after a single-employer plan has been terminated and all its liabilities have been satisfied. Such assets may be distributed to the employer if they did not come from employee contributions, if that distribution is not contrary to law, and if the plan so provides. See Hawkeye Nat'l Life Ins. Co. v. Avis Indus. Corp., 122 F.3d 490, 500-01 (8th Cir. 1997). The issue in this case is whether the Plan so provides.
Dame relies on Section 6.8 of the Plan. Tracking the anti-reversion language in 29 U.S.C. 1103(c)(1), 6.8 provides:
All contributions paid by a participating Employer to the Trustee pursuant to this Article shall constitute irrevocable contributions to the Trust Fund . . . and no part shall at any time revert to any Employer or participating Employer.
United relies on 16.10 of the Plan. Located in Article XVI, entitled "Amendment and Termination," 16.10 provides:
. . . after the allocation and distribution of Plan assets to Participants and Beneficiaries and the satisfaction of all Plan liabilities, fixed and contingent, any remaining excess funds in the Trust Fund shall be referred to Employer.
The district court concluded that 16.10 requires distribution of the excess funds to United, and that this specific directive is an exception to the more general anti-reversion mandate in 6.8. This construction is consistent with the principle that when a specific provision and a general provision in a contract potentially conflict, the specific is construed as modifying the general. See Burk v. Nance Petroleum Corp., 10 F.3d 539, 543 (8th Cir. 1993); Parrett v. American Ship Bldg. Co., 990 F.2d 854 (6th Cir. 1993); Panwitz v. Miller Farm-Home Oil Serv., Inc., 422 N.W.2d 63, 66 (Neb. 1988). But Dame contends the district court has misread 16.10.
Dame argues on appeal, as he did in the district court, that 16.10 of the Plan does not mandate distribution of the excess funds to United. Dame notes that 16.10 provides that excess funds "shall be referred to Employer," and that "refer" is not synonymous with "revert." To give proper effect to the broad anti-reversion language in 6.8, Dame argues that "referred to Employer" should be construed as meaning only that "excess Plan assets [are] to be reviewed by United in order to make a determination of how to distribute the plan excess." Like the district court, we disagree.
The Plan is a defined benefit plan, entitling employee-participants to a pre-determined, fixed level of benefits. See generally Hughes Aircraft Co. v. Jacobson, 525 U.S. 432 (1999). Section 6.3 of the Plan expressly provides that "[n]o part" of any excess contributions "shall be applied to increase the benefits of the Participants or their Beneficiaries." Dame argues that 6.3 applies only to United's "initial contributions," but that is contrary to its plain language. If 6.3 bars distribution of excess funds to participants and beneficiaries, and if, as Dame argues, 16.10 does not direct distribution to United, then the Plan lacks clear or even intelligible instructions that will allow First National as trustee to distribute residual Plan assets without inviting litigation. And under Dame's construction of 16.10, when this question is "referred to Employer," what input should United provide regarding the appropriate disposition of excess Plan assets? Thus, Dame's construction of 16.10 is plainly deficient.
Returning to the language of 16.10, we conclude that it will sustain the district court's sensible construction that excess funds should be distributed to United. In the context of this ERISA plan, "referred to Employer" was a terrible choice of words. A person is normally referred somewhere to obtain, for example, information or a decision, whereas 16.10 deals with how the Plan trustee should distribute excess assets. Without doubt, "reverted" or "returned" or "transferred" to Employer would have been far preferable to convey the meaning urged by United. Indeed, it may well be that the word "referred" was a drafting or typographical error in preparing the Plan. Nevertheless, the word is there and must be rationally interpreted, unless to do so would create a total absurdity, an escape hatch in the construction of contracts that c...
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