McAllister v. Resolution Trust Corp.

• Decision Date: 21 January 2000
• Docket Number: No. 98-50471,98-50471
• Citation: 201 F.3d 570
• Parties: (5th Cir. 2000) WALTER W. MCALLISTER, III, an Individual; GERRY SOLCHER, an Individual; ROBERT CUYLER, an Individual, Plaintiffs-Appellants, v. RESOLUTION TRUST CORPORATION, as Receiver for San Antonio Savings Association, F.A., Defendant-Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

Page 570

201 F.3d 570 (5th Cir. 2000)

WALTER W. MCALLISTER, III, an Individual; GERRY SOLCHER, an Individual; ROBERT CUYLER, an Individual, Plaintiffs-Appellants, v. RESOLUTION TRUST CORPORATION, as Receiver for San Antonio Savings Association, F.A., Defendant-Appellee.

No. 98-50471

IN THE UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT

January 21, 2000

REVISED, FEBRUARY 14, 2000

[Copyrighted Material Omitted] Appeal from the United States District Court for the Western District of Texas

Before GARWOOD, SMITH, and BENAVIDES, Circuit Judges.

BENAVIDES, Circuit Judge:

Appellants, three former executives of the now-defunct San Antonio Savings Association, appeal from the district court's grant of summary judgment to the Resolution Trust Corporation¹ ("RTC") with respect to their claimed right to receive payment under a Supplemental Executive Retirement Plan ("SERP"). Because we find that the district court correctly determined the legal issues in this case, and appellants have failed to raise any genuine issues of material fact in support of their position, we affirm.

I. Factual and Procedural Background

The background facts in this case are largely undisputed.² This controversy is born of the demise of what was formerly known as the San Antonio Savings Association ("SASA"), a federally insured thrift. Appellants each held executive positions at the thrift. Walter McAllister was Chairman of the Board and Chief Executive Officer; Gerry Solcher was SASA's President; and Robert Cuyler was the thrift's Operations Officer. As executives employed by SASA, appellants each participated in a Supplemental Executive Retirement Plan ("SERP"), designed to provide benefits to top management in addition to those available to all eligible employees under the usual qualified pension plans.

The SERP plan differed from usual pension plans in that the executives made no contribution to it. The plan was funded exclusively by an Umbrella Trust, containing life insurance policies on the lives of the executives. As SASA owned the policies and paid all policy premiums, SASA was able to structure the SERP as an unfunded "grantor" or "rabbi" trust. As an unfunded, non-contributory plan, initial payments to the trust, and income generated by the trust, remained taxable to the employer rather than to the employee. This trust structure allowed the participants to defer tax liability on their individual shares until asset distribution under the terms of the plan.

The thrift began experiencing financial difficulty in late 1988. These difficulties led to the transformation of the thrift a number of times. The first such transformation occurred on February 28, 1989, when SASA was placed in conservatorship. At this time, the RTC chose to carry on SASA's operations, and requested SASA's senior executives, appellants in this matter, stay on in their former positions. As a result, appellants managed the thrift in conservatorship for about six months, until July 1989, when regulators decided to close SASA and replace the conservator with a receiver.

A new institution, San Antonio Savings Association, Federal Association ("SASA, FA"), was established at that time. SASA, FA was chartered and placed in conservatorship by federal regulators on July 13, 1989, to acquire substantially all of SASA's assets and deposit liabilities. The executives again stayed on as employees of the successor conservatorship from July 1989, until March 1990, when regulators closed SASA, FA, and appointed the RTC as the thrift's Receiver. The Receiver then proceeded to liquidate SASA, FA's assets for the benefit of depositors and creditors.

Two executives, not appellants in this matter, opted for early retirement during the first conservator phase. As the thrift was not yet in insolvency and was not yet at the phase of distribution, these executives received their vested SERP benefits in full, without controversy.

It is clear that no written contract governed the employment relationship between appellants and the SASA and SASA, FA conservatorships. The RTC maintains that the conservatorships continued to pay appellants their salaries, as well as their health, vacation, and pension benefits, in the ordinary course of business, as orally agreed to by the parties. Appellants do not disagree with this contention, although there is some factual dispute as to the amount of salary received.³

The factual recitations of the opposing parties diverge when the discussion turns to representations made concerning the legal status of the SERP benefits. The RTC maintains, as stated above, that the only representation made concerning these benefits was that the Conservator was committed to continue payment of all salary and benefits in full, throughout the conservatorship phase.

Appellants paint a different picture. Specifically, they maintain that the Conservator orally contracted to pay their SERP benefits in full, as an expense of administration, as an inducement for appellants to continue employment with the SASA conservatorship and its successors.

Regardless of how these benefits were characterized by the parties, it is clear that the SASA, FA conservatorship adopted the SERP benefit plan as it existed prior to regulatory intervention. Specifically, the Conservator executed documents entitled "Adoption by San Antonio Savings Association, FA of the Supplemental Executive Retirement Plan, The Executive Deferred Compensation Plan, and the Umbrella Trust." Importantly, however, the document of adoption does not modify the plan's language in any respect, except with regard to the grantor-employer: SASA, FA is substituted for SASA in the old document. Additionally, loans on the various policies supporting the plan were authorized to maintain the trust.

When SASA, FA was placed in receivership, the RTC notified the trustee for the Umbrella trust that the policies in the trust should be liquidated so the assets could be used to pay SASA, FA's creditors. Appellants received notice in December 1991, after the placement of SASA, FA in receivership, as to the status of their claims for payment under the SERP. Specifically, the notice letter reminded all plan participants that the SERP was a "nonqualified" retirement plan and all plan participants remained unsecured general creditors. As such, continued the notice, participants never acquired any rights to these policies and accordingly would not receive any benefit from them, as the assets were needed to pay creditors. Participants were invited, however, to submit any claims or questions concerning the plan to the Receiver.

Appellants each filed claims. McAllister claimed $1,871,209.53; Solcher claimed $1,049,811.50; and Cuyler claimed $457,234.57. In March 1993, the Receiver allowed the claims and issued receiver's certificates to each of the executives in the full amount claimed. Following a Freedom of Information Act request for information on the creditors of SASA, FA, Cuyler learned that there were approximately $103,000.00 in outstanding unsecured claims and that there would be several million dollars available after all superior claims against the failed institution were paid in full. However, this estimate proved incorrect and in fact the RTC was still owed over one billion dollars to pay depositors in full upon exhaustion of all existing funds.

Appellants persisted, and filed new proofs of claims approximately one year later. Again, in a letter dated April 4, 1994, Appellants were informed that although they held valid certificates, "[a]ll claims of the depositors and all claims subrogated to the RTC must be paid in their entirety before any payment can be made on the claims of the general trade creditors. . . [i]f deposit claims are paid in full, then [you] will be in line with other unsecured creditors to begin receiving [your] pro rata share of dividend payments. . . ."

Appellants filed suit, in November 1994, challenging the RTC's determination of the proper priority status to be accorded their claims for payment under the SERP. The district court granted the RTC's motion to dismiss under Fed. R. Civ. P. 12(b)(6), in May 1995, as untimely, and thus for lack of jurisdiction. This Court reversed the dismissal and remanded the case to the district court for further proceedings. See McAllister, 87 F.3d at 766.

On remand, upon conducting extensive discovery, the district court granted summary judgment in favor of the RTC. This timely appeal followed.

II. Standard of Review

This Court reviews the grant of summary judgment de novo, evaluating the case under the same standards employed by the district court. S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 494 (5th Cir. 1996).

Summary judgment is proper, "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Disputed facts preclude summary judgment if the evidence would allow a reasonable jury to return a verdict for the non-movant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). "Although we consider the evidence and all reasonable inferences to be drawn therefrom in the light most favorable to the nonmovant, the nonmoving party may not rest on the mere allegations or denials of its pleadings, but must respond by setting forth specific facts indicating a genuine issue for trial." Rushing v. Kansas City S. Ry. Co., 185 F.3d 496, 505 (5th Cir. 1999), petition for cert. filed (Dec. 28, 1999) (No. 99-1090).

III. Analysis

In this case, appellants assert several grounds upon which summary judgment was improper. As their primary objection, appellants assert that an oral contract existed which classified the SERP benefits as an expense of administration. Such a classification, they further...