Flacche v. Sun Life Assur. Co. of Canada (U.S.)

• Decision Date: 11 March 1992
• Docket Number: No. 91-3462,91-3462
• Citation: 958 F.2d 730
• Parties: , 14 Employee Benefits Cas. 2689 Joseph J. FLACCHE and Ella M. Flacche, Plaintiffs-Appellants, v. SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.), Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 730

958 F.2d 730

60 USLW 2620, 14 Employee Benefits Cas. 2689

Joseph J. FLACCHE and Ella M. Flacche, Plaintiffs-Appellants, v. SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.), Defendant-Appellee.

No. 91-3462.

United States Court of Appeals Sixth Circuit.

Argued Feb. 7, 1992.

Decided March 11, 1992.

Kenneth Andrew Gamble, Theodore F. Claypoole (argued and briefed), Gamble, Hartshorn & Alden, Columbus, Ohio, for plaintiffs-appellants.

Charles H. Walker (briefed), Catherine M. Ballard (argued and briefed), Bricker & Eckler, Columbus, Ohio, for defendants-appellees.

Before KENNEDY and JONES, Circuit Judges; and BROWN, Senior Circuit Judge.

BAILEY BROWN, Senior Circuit Judge.

Plaintiffs, Joseph and Ella Flacche, appeal from the district court's grant of summary judgment in favor of Defendant, Sun Life Assurance Company of Canada ("Sun Life"), in this ERISA action. The Flacches assert a claim for greater pension benefits under a plan funded by an annuity contract sold by Sun Life. For the following reasons, we affirm the decision of the district court.

I

Joseph Flacche worked for SCOA Industries, Inc. ("SCOA") from 1944, when he began as a stock boy, until June of 1986, when he retired as a Senior Vice President. He participated in SCOA's employee pension and retirement plan (the "plan"), and he met the eligibility requirements for early retirement benefits. If her husband were to predecease her, Mrs. Flacche would qualify for a residual benefit.

In March of 1986, Tishkoff Enterprises ("Tishkoff") acquired SCOA, which subsequently did business as Shoe Corporation of America. ¹ On March 13, 1986, Flacche notified SCOA of his intention to take early retirement. On April 29, however, he withdrew his request for early retirement. The withdrawal was short lived. On May 22, Flacche again advised SCOA of his intention to take early retirement, effective June 1, 1986. SCOA informed Flacche, by letter of June 18, 1986, that his retirement income would be $2,861 per month. Flacche retired from SCOA effective June 1, 1986, but he accepted employment with the parent corporation, Tishkoff, where he worked until January 21, 1988.

Flacche began receiving pension benefits effective June 1, 1986. The payments at that time were sent by Irving Trust, which distributed the funds at the direction of SCOA. Instead of receiving payments in the amount of $2,861, as SCOA had indicated he would receive, however, Flacche began receiving monthly payments in the amount of $3,959.

During May of 1986, SCOA agreed to purchase a single-premium, group annuity contract from Sun Life to pay the pension plan benefits due SCOA's former employees. In October of 1986, Sun Life began the payment of the monthly benefits, a task previously performed by Irving Trust. From the base amount of $3,959, which figure Irving Trust provided and SCOA's Employee Retirement Plan Committee approved, Sun Life calculated a monthly bonus of $887 due Flacche, for a total monthly benefit of $4,846. ² Sun Life, at that time, issued to Flacche a "Summary of Benefits Certificate," which reflected the $4,846 figure. One month later, Flacche's bonus benefit was reduced to $470.94 to reflect his early retirement (for a total monthly benefit of $4,429.94). ³ Sun Life advised Flacche of this change.

Sun Life then began the reconciliation and collation of data concerning the over three thousand former SCOA employees covered by the plan. During October of 1988, it discovered that, although it had adjusted Flacche's bonus amount, his base benefit was incorrect. Sun Life contacted SCOA's successor, Hills, which directed Sun Life to reduce Flacche's future benefit payments accordingly. The corrected total for the monthly base benefit and monthly bonus amounted to $3,312.74, ⁴ to which Sun Life reduced Flacche's monthly checks effective January 1, 1989.

In the meantime, Flacche had retired from his position at Tishkoff on January 31, 1988. At that time, Flacche had been receiving $4,429.94 per month from Sun Life for over a year. Flacche claims that he relied on the $4,429.94 benefit amount in making his decision to retire from Tishkoff. He claims that he retired because the $4,429.94 sufficiently sustained his family's quality of life.

After receiving notice that his monthly benefits would be reduced from $4,429.94 to $3,312.74, Flacche filed an action in the Court of Common Pleas of Franklin County, Ohio. He asserted state law claims of breach of contract and promissory estoppel against Sun Life. Sun Life removed the case, based on diversity, to federal district court. Sun Life then filed a third-party complaint naming Tishkoff and Hills as third-party defendants. The parties subsequently agreed to the dismissal of Tishkoff. On July 26, 1990, the district court denied Flacche's motion for summary judgment and granted Sun Life's motion for summary judgment. It held that Flacche's claims were preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"). See 29 U.S.C. §§ 1001 et seq. Mr. Flacche did not appeal that holding, but, adding his wife as a plaintiff, he obtained leave to file amended complaints asserting claims under ERISA.

On August 7, 1990, Flacche filed a first amended complaint, asserting claims on behalf of his wife and himself, against Sun Life and Hills, for breach of fiduciary duty under ERISA. The Flacches later filed a second amended complaint, repeating the breach of fiduciary duty claims in Counts One and Two and asserting promissory estoppel claims in Counts Three and Four, also under ERISA. On February 21, 1991, the district court stayed this action with regard to Hills, which had filed for bankruptcy under Chapter 11 of the Bankruptcy Code.

Finally, on April 10, 1991, the district court granted summary judgment in favor of Sun Life. Pursuant to Fed.R.Civ.P. 54(b), the district court entered final judgment in favor of Sun Life. The Flacches appeal.

II

We review the district court's grant of summary judgment de novo. See Kraus v. Sobel Corrugated Containers, Inc., 915 F.2d 227, 229 (6th Cir.1990).

The Flacches first assert that a claim under 29 U.S.C. § 1132(a)(3)(B), an ERISA civil enforcement provision, may be based on any violation of ERISA or the terms of the plan. They then argue that Sun Life breached fiduciary duties imposed by ERISA, violated 29 U.S.C. § 1001, which is ERISA's statement of "Congressional findings and declaration of policy," and violated the terms of the plan. Sun Life, in response, contends that the district court correctly concluded that relief is unavailable to the Flacches under 29 U.S.C. § 1132(a)(3)(B). It asserts that the Flacches have failed to support a claim against it either as a fiduciary or as a non-fiduciary.

It is clear that a cause of action will lie under 29 U.S.C. § 1132(a)(3)(B) for any violation of ERISA or the terms of a pension plan. The statute provides as follows:

A civil action may be brought--

. . . . .

(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan.

29 U.S.C. § 1132(a)(3)(B). The plain language of the statute supports such a claim, and Sun Life does not contend otherwise. Sun Life does argue, however, that the Flacches have failed to support such a claim against Sun Life.

A. The Breach-of-Fiduciary-Duty Theory

The Flacches contend that Sun Life breached fiduciary duties in violation of ERISA. The fiduciary duties applicable under ERISA are codified at 29 U.S.C. § 1104, and breach of these duties constitutes a violation of 29 U.S.C. § 1109, which can support a claim under 29 U.S.C. § 1132(a)(3)(B). The district court, however, held that Sun Life was not a plan fiduciary. It concluded that Sun Life could not be liable for breach of a fiduciary duty that it did not have.

The Flacches contend that Sun Life acted as a fiduciary with respect to the administration of the plan. They contend that Sun Life qualifies as a fiduciary under 29 U.S.C. § 1002(21), ERISA's statutory definition of a fiduciary. Alternatively, the Flacches contend that Sun Life acted as a common-law fiduciary with respect to the plan.

The relevant provision of ERISA, 29 U.S.C. § 1002(21), defines a fiduciary as follows:

[A] person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan.

The Flacches contend that Sun Life qualifies under all three of ERISA's definitions of a fiduciary, but they focus their arguments on (ii), regarding the provision of investment advice for a fee. They claim that Sun Life, by the affidavit of its Group Manager of Pension Administration, Robert Kenney, admits that it provided investment advice with respect to the plan. They further claim that the plan administrator followed this advice. At the least, they contend, this issue presents a material question of fact.

The Flacches also claim that Sun Life qualifies as a fiduciary under definitions (i) and (iii) in the statute. They contend that, by selling and managing the annuity contract, Sun Life showed that it had discretionary authority and exercised that discretionary authority.

In response, Sun Life asserts that there is absolutely no evidence to support the Flacches' argument. It quotes the portion of Kenney's affidavit upon which the Flacches rely: "In May of 1986, ...