Itpe Pension Fund v. Hall, No. 02-12779.

• Decision Date: 19 June 2003
• Docket Number: No. 02-12779.
• Citation: 334 F.3d 1011
• Parties: ITPE PENSION FUND, Plaintiff-Appellant, ITPE Health and Welfare Fund, Plaintiff, v. Roger HALL, Hope Hall, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

334 F.3d 1011

ITPE PENSION FUND, Plaintiff-Appellant ITPE Health and Welfare Fund, Plaintiff, v. Roger HALL, Hope Hall, Defendants-Appellees.

No. 02-12779.

United States Court of Appeals, Eleventh Circuit.

June 19, 2003.

Frank McRight, Taylor Brooks, Lanier, Ford, Shaver & Payne, P.C., Huntsville, AL, for Plaintiff-Appellant.

Nancy F. Rigby, Daniel M. Shea, Smith, Currie & Hancock, Atlanta, GA, for Defendants-Appellees.

Appeal from the United States District Court for the Northern District of Alabama.

Before ANDERSON, BIRCH and BARKETT, Circuit Judges.

BIRCH, Circuit Judge:

The Employee Retirement and Income Security Act ("ERISA"), 18 U.S.C.A. § 1001 et seq., imposes strict fiduciary duties on certain persons with control over assets of covered employee benefit plans. Under these provisions, when unpaid contributions to a plan are identified as immediate assets of a plan, officers of the nonpaying corporation with control and authority over the unpaid contributions may be held liable for the amount of nonpayment.

This appeal requires us to determine whether corporate officers may be imputed fiduciary duties and, consequently, held personally liable for unpaid contributions, when the governing agreement between the corporation and the plan does not clearly state, but could be interpreted to state, that such contributions are assets of the plan. We find that either clear contractual language or clear, shared intent of the parties is a necessary prerequisite to imposing fiduciary responsibility on officers who otherwise would be unsure of their increased responsibilities under ERISA. Though we conclude that the language of the agreement is not sufficiently clear to impose fiduciary duty, we must VACATE and REMAND to the district court to determine whether the parties clearly intended unpaid employer contributions to be assets of the Fund.

I. BACKGROUND

Roger Hall and Hope Hall are the general manager and president, respectively, of H & R Services, a company that supplies management and labor for the operation of dining facilities on military bases. Pursuant to collective bargaining agreements with the Industrial, Technical, and Professional Employees Union, AFL-CIO ("ITPE"), H & R Services is obligated to contribute funds to the ITPE Pension Fund ("the Fund") for the future security of its unionized employees.

H & R Services failed to make these contributions. On 18 November 1999, the ITPE Pension Fund, among other funds, filed suit in the Northern District of Alabama for the recovery of this delinquency. The district court entered summary judgment for the Fund on 30 March 2001, assessing damages in the amount of $123,767.27 against H & R Services. The court also entered a permanent injunction that required H & R Services to remit in a timely fashion the future contributions owing under its agreement with the Fund.

Even after this proceeding, H & R Services failed to remit payment to the Fund. The judgment amount went uncollected, and the terms of the permanent injunction went unheeded. Faced with this continued intransigence, the Fund filed suit directly against Hope and Roger Hall. Citing the Employee Retirement Income Security Act ("ERISA"), the Fund now argues that Hope and Roger Hall are in violation of the fiduciary duty that statute places on persons with control over the assets of a ERISA plan. See 29 U.S.C. § 1002(21)(A).

The dispute on which this appeal centers is whether these unpaid contributions to the Plan are "assets," legally speaking, of the Plan, such that Roger and Hope Hall could be considered fiduciaries of the Plan. The district court limited its consideration of the summary judgment motion to that legal issue. The district court found, focusing exclusively on the language of the Agreement, that unpaid employer contributions are not assets of the ITPE Fund within the meaning of § 1002(21)(A), and granted summary judgment on that basis for Roger and Hope Hall. ITPE filed a timely notice of appeal.

II. DISCUSSION

Our review of a district court's grant of summary judgment is de novo, applying the same standards employed by the district court. Dahl v. Holley, 312 F.3d 1228, 1233 (11th Cir.2002). Thus, we will not affirm unless, viewing the evidence in the light most favorable to the non-moving party, there is no genuine issue of material fact which requires a jury determination of the merits. Gary v. City of Warner Robins, Ga., 311 F.3d 1334, 1337 (11th Cir.2002).

The parties agree that the Fund is governed by ERISA, because it is indisputably a "plan, fund, or program ... maintained by an employer or by an employee organization [that] ... provides retirement income to employees." § 1002(2)(A). Certain persons, including those who "exercise[] any authority or control respecting management or disposition of [fund] assets," bear fiduciary responsibility to an ERISA fund. Id. § 1002(21)(A). The responsibility attaching to fiduciary status has been described as "`the highest known to law.'" Herman v. Nationsbank Trust Co. (Georgia), 126 F.3d 1354, 1361 (11th Cir.1997) (quoting Donovan v. Bierwirth, 680 F.2d 263, 272 n. 8 (2d Cir.1982)). If a person breaches their fiduciary duties to an ERISA fund, he or she "shall be personally liable to make good to such [fund] any losses ... resulting from each such breach." 29 U.S.C. § 1109(a).

The central item of dispute in this case is whether unpaid employer contributions are assets of the ITPE Fund, such that the Halls could conceivably be held personally liable for breach of their fiduciary duty with respect to those assets. The text of ERISA does not give a relevant definition for what constitutes an "asset" of an ERISA fund. The proper rule, developed by caselaw, is that unpaid employer¹ contributions are not assets of a fund unless the agreement between the fund and the employer specifically and clearly declares otherwise.² See, e.g. NYSA-ILA Med. & Clinical Servs. Fund v. Catucci ex rel. Capo, 60 F.Supp.2d 194, 200-01 (S.D.N.Y.1999) (collecting cases); Connors v. Paybra Mining Co., 807 F.Supp. 1242, 1245-46 (S.D.W.V.1992); Galgay v. Gangloff, 677 F.Supp. 295, 301 (M.D.Pa.1987). The effect of language that makes unpaid contributions assets of the fund is that "when a corporation is delinquent in its contributions, the fund has a sufficient priority on the corporation's available resources that individuals controlling corporate resources are controlling fund assets." Catucci, 60 F.Supp.2d at 201. This effect places "heavy responsibilities on employers, but only to the extent that ... an employer freely accepts those responsibilities in collective bargaining." Id.

Hope and Roger Hall argue that the Agreement in this case affirmatively evidences the fact that unpaid employer contributions are not Fund assets. They point to the definitions section of the Agreement and Declaration of Trust, which states that "[t]he terms `Pension Fund' or `Fund' shall mean all property of every kind held or acquired under the provisions of this instrument." R2-44, Ex. 2, Ex. A at § 1.02 (emphasis added). According to the Halls, unpaid contributions, because they are unpaid, are not yet "held" or "acquired" by the Fund, and therefore cannot be assets of the fund.

We cannot accept the full extent of the Halls' interpretation of § 1.02. The idea of "acquiring" property is not limited to possession³ of the item in question. To "acquire" means "to come into possession or ownership of; get as one's own," Random House Dictionary of the English Language 18 (2d ed.1987) (emphasis added), or "[t]o gain possession or control of; to get or obtain," Black's Law Dictionary 24 (7th ed.1999). Thus, even property which has not yet formally been transferred to the Plan's physical control, but which the Plan owns or controls in a contractual sense by virtue of the Agreement, has been "acquired" by the Plan. Section 1.02 is not conclusive of the Plan's treatment of unpaid employer contributions.

The Fund argues that the Agreement establishes by its language that unpaid employer contributions are assets of the Fund. It points to language in the "Establishment of Fund" section of the Agreement that states:

the ITPE Pension Fund ... shall be comprised of all monies received and held by the Trustees from employer contributions..., all income from investments made and held by the Trustees,... or any other property received and held or receivable by the Trustees for the uses and purposes set forth in this Agreement.

R2-44, Ex. 2, Ex. A at § 2.01 (emphasis added). The argument is that because the unpaid contributions are receivable, and because property that is receivable is property of the Fund, unpaid contributions properly are considered assets of the Fund.⁴

The Halls assert that § 2.01 does not itself make unpaid employer contributions assets of the Fund. In the Halls' view, three distinct types of property are made assets of the Fund by virtue of § 2.01: (1) "all monies received and held by the Trustees from employer contributions"; (2) "all income from investments made and held by the Trustees," and (3) "any other property received or held or receivable by the Trustees for the uses and purposes set forth in this Agreement". R2-44, Ex. 2, Ex. A at § 2.01 (emphasis added). The Halls stress "other property," which they deem to mean any type of property other than employer contributions, which are covered by the first category, and investment income, which is covered by the second category. Thus, only "received and held" employer contributions are assets of the fund, and the asset-status of unpaid employer contributions is precluded by the first category, with no recourse to the inapplicable third category. In contrast, the Fund argues that the third category is a catch-all provision. According to the Fund, "all other property" means all property not made an asset by the first two categories.

Both of these interpretations of § 2.01 are credible. We conclude that it...