Kirkindoll v. Nat'l Credit Union Admin. Bd.
| Decision Date | 17 December 2014 |
| Docket Number | Civil Action No. 3:11-CV-1921-D |
| Parties | GARY KIRKINDOLL, Plaintiff, v. NATIONAL CREDIT UNION ADMINISTRATIVE BOARD, AS CONSERVATOR OF TEXANS CREDIT UNION, et al., Defendants. |
| Court | U.S. District Court — Northern District of Texas |
This suit arises from the termination of an ERISA1 "top hat" plan and the repudiation by the conservator for an insured credit union of the contract that terminated the plan and purported to vest a plan participant with partial plan benefits. The parties' cross-motions for summary judgment present several questions, including issues of ERISA preemption, the power of the conservator to repudiate a contract that in its discretion it deemed burdensome, and the consequences of that repudiation, and the availability of state-law claims against the conservator. For the reasons explained, the court denies plaintiff's motion, grants in part and denies in part defendants' motion, raises sua sponte that summary judgment should be granted in defendants' favor on other grounds, and concludes that three of plaintiff's state-law claims remain for trial.
Because this case has been the subject of several prior opinions,2 the court will focus on the background facts that are pertinent to this decision.
In 2005 plaintiff Gary Kirkindoll ("Kirkindoll") was hired as President of defendant Texans CUSO Services, LLC d/b/a Texans Financial ("Texans"), a credit union service organization owned by defendant Texans Credit Union ("TCU").3 As a tool to retain certain key company executives, TCU created and implemented the Texans Credit Union Section 457(f) Executive Deferred Compensation Plan ("Plan")—a "top hat" plan—which was offered to Kirkindoll and two other TCU executives.
In 2010, after TCU began experiencing severe financial distress, its Board of Directors determined there was no longer a need to continue the "executive retention" strategy intended by the Plan, and the Board decided to terminate the Plan. In March 2011 TCU's then-President and Chief Executive Officer, Mike Sauer ("Sauer"), proposed to Kirkindoll that his interest in the Plan be partially vested in exchange for Kirkindoll's surrender and cancellation of any rights he had under the Plan. In a March 15, 2011 letter(the "March 2011 Agreement") Sauer proposed that the Plan terminate on April 1, 2011 and that Kirkindoll receive $234,068.184 within 30 days. Kirkindoll signed the March 2011 Agreement, and, by unanimous consent, the Board of Directors terminated the Plan effective April 1, 2011.
On April 15, 2011 the National Credit Union Administration Board ("NCUAB") placed TCU into conservatorship and appointed itself as conservator. NCUAB notified Kirkindoll in a May 11, 2011 letter (the "Repudiation Letter") that, in accordance with its federal regulatory powers, it was repudiating the March 2011 Agreement. It cited, among other reasons, that the TCU Board of Directors had acted outside its allowable authority in purporting to partially vest Kirkindoll's account, and that continuation of the March 2011 Agreement would be burdensome and hinder the orderly administration of TCU's affairs. The Repudiation Letter also stated, in relevant part:
The [NCUAB] as Conservator is not liable for damages for the repudiation of a contract, 12 U.S.C. § 1787(c)(3), except for certain actual and direct compensatory damages. Damages are determined from the date of the appointment of the Conservator and may not include punitive damages, damages for lost profits or opportunity, or damages for pain and suffering. Please direct any inquiries regarding actual and direct damages to [name of contact person] at [telephone number of contact person].
P. 6/28/12 App. 65. Kirkindoll neither telephoned nor otherwise contacted NCUAB. Nor did he make any claim for benefits under the Plan's administrative provisions.
On May 18, 2011 NCUAB adopted a resolution ratifying the TCU Board of Directors' termination of the Plan and nullifying any payments that were to be made to Kirkindoll. On May 23, 2011 Kirkindoll's employment was terminated as part of a reduction in force.
Kirkindoll filed the instant lawsuit in Texas state court against TCU, Texans, Texans CUSO Partners, LLC ("Texans Partners"), and Texans CUSO Insurance Group, LLC ("TIG").5 He asserted state-law claims for breach of contract, promissory estoppel, debts, fraudulent misrepresentation, negligent misrepresentation, fraudulent inducement, and breach of fiduciary duty. Defendants removed the case to this court, and on defendants' unopposed motion, the court ordered that NCUAB be substituted in place of TCU as a defendant. After the court denied Kirkindoll's motion to remand based on NCUAB's status as a party-defendant, he amended his complaint to add an alternative claim under ERISA.
From the time the court denied the motion to remand until the court's decision in Kirkindoll v. NCUAB, 2013 WL 6164093 (N.D. Tex. Nov. 20, 2013) (Fitzwater, C.J.) ("Kirkindoll IV"), the parties have primarily disputed whether the Plan is an ERISA plan. Following a bench hearing, the court held in Kirkindoll IV that it is. The parties have now filed the instant cross-motions for summary judgment that address the merits of Kirkindoll'sstate-law claims and his alternative ERISA claim.
When parties move for summary judgment on a claim on which the opposing party will bear the burden of proof at trial, the moving parties can meet their summary judgment obligation by pointing the court to the absence of admissible evidence to support the opposing party's claim. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once the moving parties do so, the opposing parties must go beyond their pleadings and designate specific facts showing there is a genuine issue for trial. See id. at 324; Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam). An issue is genuine if the evidence is such that a reasonable jury could return a verdict in the opposing party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The opposing party's failure to produce proof as to any essential element of a claim renders all other facts immaterial. See TruGreen Landcare, L.L.C. v. Scott, 512 F.Supp.2d 613, 623 (N.D. Tex. 2007) (Fitzwater, J.). Summary judgment is mandatory if the opposing party fails to meet this burden. Little, 37 F.3d at 1076.
When parties move for summary judgment on a claim or defense on which they will have the burden of proof at trial, the parties "must establish 'beyond peradventure all of the essential elements of the claim or defense.'" Bank One, Tex., N.A. v. Prudential Ins. Co. of Am., 878 F. Supp. 943, 962 (N.D. Tex. 1995) (Fitzwater, J.) (quoting Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986)). This means that the moving parties must demonstrate that there are no genuine and material fact disputes and that the parties areentitled to summary judgment as a matter of law. See Martin v. Alamo Cmty. Coll. Dist., 353 F.3d 409, 412 (5th Cir. 2003). "The court has noted that the 'beyond peradventure' standard is 'heavy.'" Carolina Cas. Ins. Co. v. Sowell, 603 F.Supp.2d 914, 923-24 (N.D. Tex. 2009) (Fitzwater, C.J.) (quoting Cont'l Cas. Co. v. St. Paul Fire & Marine Ins. Co., 2007 WL 2403656, at *10 (N.D. Tex. Aug. 23, 2007) (Fitzwater, J.)).
Kirkindoll asserts two categories of claims in this lawsuit: those "regarding the Plan," 2d Am. Compl. ¶¶ 4.01-4.23, and those "regarding the March 2011 Agreement," id. at ¶¶ 4.24-4.44. Before the court considers the merits of the parties' motions related to the claims "regarding the March 2011 Agreement," it must address a threshold matter: defendants' contention that these claims are completely preempted under ERISA.
There are two types of ERISA preemption: conflict and complete preemption. See Ellis v. Liberty Life Assur. Co. of Bos., 394 F.3d 262, 275 n.34 (5th Cir. 2004) (). Conflict (or ordinary) preemption occurs (1) when there is a direct conflict between the operation of federal and state law so that it is impossible to comply with both, or (2) when the state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress" in the federal statute. Boggs v. Boggs, 520 U.S. 833, 844 (1997) (quoting Gade v. Nat'l Solid Wastes Mgmt. Ass'n, 505 U.S. 88, 98 (1992)) (internal quotation marks omitted); see also Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363, 372-73 (2000). Complete preemption, on theother hand, "exists when a remedy falls within the scope of or is in direct conflict with [29 U.S.C. § 1132(a)], and therefore is within the jurisdiction of federal court." Haynes v. Prudential Health Care, 313 F.3d 330, 333 (5th Cir. 2002) (citing Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 66 (1987)).
Defendants contend that Kirkindoll's state-law claims regarding the March 2011 Agreement are completely preempted by ERISA.6 Complete preemption is available under ERISA § 502, the statute's civil-enforcement provision, which "Congress intended to be the exclusive vehicle for suits by a beneficiary to recover benefits from a covered plan." Mem'l Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236, 250 (5th Cir. 1990). A state-law claim that is completely preempted under § 502 is transformed into a new federal claim. See Aetna Health Inc. v. Davila, 542 U.S. 200, 207-08 (2004). Section 502(a)(1)(B) preempts all suits involving ERISA-governed plans "brought . . . by a participant or beneficiary . . . to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of theplan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). A cause of action falls within the scope of § 502(a)(1)(B), and is therefore completely preempted, if (1) the "individual, at some point in time, could have brought his claim under...
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