McConnell v. MEBA Medical & Benefits Plan

• Decision Date: 07 May 1985
• Docket Number: No. 84-1858,84-1905.,84-1858
• Parties: William A. McCONNELL, Plaintiff-Appellant/Cross-Appellee, v. MEBA MEDICAL AND BENEFITS PLAN, Defendant-Appellee/Cross-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

778 F.2d 521

William A. McCONNELL, Plaintiff-Appellant/Cross-Appellee, v. MEBA MEDICAL AND BENEFITS PLAN, Defendant-Appellee/Cross-Appellant.

Nos. 84-1858, 84-1905.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 14, 1985.

Decided May 7, 1985.

As Amended December 11, 1985.

David M. Salentine, San Francisco, Cal., for plaintiff-appellant/cross-appellee.

Dennis Daniels, San Francisco, Cal., for defendant-appellee/cross-appellant.

Before PREGERSON and FERGUSON, Circuit Judges, and GILLIAM,^* District Judge.

GILLIAM, District Judge:

Plaintiff-Appellant William McConnell appeals from an order of the United States District Court for the Northern District of California, denying his motions for attorneys' fees under Section 502(g)(1) of the Employee Retirement Income and Security Act (ERISA), 29 U.S.C. § 1132(g)(1), for punitive damages, and for prejudgment interest at a rate greater than 7%. Defendant-appellee, the MEBA Medical and Benefits Plan (hereinafter "MEBA District 1" or "District 1") cross-appeals the district court's granting of summary judgment for William McConnell. We affirm the district court's grant of plaintiff's motion for summary judgment and denial of his motions for punitive damages and for prejudgment interest at a rate greater than 7%. We reverse and remand the court's denial of plaintiff's motion for attorneys' fees.

FACTS

Decedent, Robert McConnell, became a member of the Marine Engineers Beneficial Association (hereinafter "MEBA"), a national labor organization divided into several districts, on December 16, 1976. Decedent was employed in MEBA District 2 on the East Coast for more than 400 days. He then transferred to the West Coast and MEBA District 1, where he worked for 147 days until he died in an auto accident on March 3, 1979.

Both MEBA Districts 1 and 2 offer identical benefit plans to their employees. Each provides for basic and supplemental accidental death benefits. Each requires thirty days of employment for eligibility for the $10,000 basic benefit and 400 days of employment for the $30,000 supplemental benefit. The two districts entered into a reciprocal agreement to assure that an individual would not lose benefits by moving from one district to another. Prior to his death, Robert McConnell designated plaintiff William McConnell as his sole beneficiary under the benefit plans of both Districts 1 and 2.

Plaintiff submitted a claim for the basic and supplemental benefits to District 2 after Robert McConnell's death but the Trustees of District 2 rejected the claim, stating that, under the terms of the reciprocal agreement between Districts 1 and 2, District 1 was responsible for payment. Plaintiff thereafter submitted a claim for basic and supplemental benefits to District 1. The Trustees of District 1 paid the $10,000 basic benefit, saying decedent had worked the necessary thirty days in the district to be eligible for the benefit, but refused to pay the $30,000 supplemental benefit. Defendant District 1 stated that decedent had not worked 400 days in the district and thus had not met the eligibility requirements for the supplemental benefit paid by District 1 and that, under the aforementioned reciprocal agreement, District 2 was responsible for payment of the supplemental benefit.

Plaintiff filed suit under ERISA against District 1 in California Superior Court, County of San Francisco on April 27, 1981. Defendant removed the action to the United States District Court for the Northern District of California on July 22, 1981. Plaintiff amended his complaint on February 19, 1982, to add District 2 as a party but the court on June 15, 1982 granted the motion of District 2 to transfer the action against it to the U.S. District Court for the Eastern District of New York.

On September 1, 1982, defendant District 1 moved for summary judgment and shortly thereafter plaintiff cross-moved for summary judgment. The district court granted plaintiff's cross-motion for summary judgment and denied defendant's motion for summary judgment. The court held that plaintiff was entitled to the supplemental benefit from District 1 on the basis of the reciprocal agreement entered into between Districts 1 and 2 and that the action of the District 1 trustees in denying plaintiff the supplemental benefit was per se arbitrary and capricious and thus reversible under Rehmar v. Smith, 555 F.2d 1362, 1371 (9th Cir.1976). The court reasoned that, as decedent's place of last employment, District 1 was responsible for payment of the supplement benefit under Paragraph 1 of the reciprocal agreement.¹ Further, the court reasoned that Paragraph 5 of the reciprocal agreement required aggregation of decedent's days of employment in Districts 1 and 2, thus providing decedent with more than the requisite 400 days of covered employment for eligibility for the supplemental benefit from District 1.

On February 28, 1983, plaintiff filed a timely motion to amend the judgment seeking prejudgment interest at the rate of 7%, compensatory damages, and attorneys' fees and costs. In a court hearing on April 20, 1983, the court heard argument from the parties and stated that it would grant prejudgment interest but would not grant compensatory damages and would tentatively deny attorneys' fees.

On January 24 and January 26, 1984, plaintiff filed a motion and supplemental motion which he characterized as one for "entry of final judgment," requesting that the court assess prejudgment interest at a rate greater than 7% (the rate at which the court initially granted prejudgment interest), requesting attorneys' fees and also requesting punitive damages. On March 13, 1984, the District Court denied plaintiff's motions, characterizing them as motions to vacate or modify the judgment that had previously been entered on February 17, 1983. These appeals followed.

I. SUMMARY JUDGMENT

The first issue for determination in the instant case is whether the district court properly granted summary judgment for plaintiff based on its interpretation of the reciprocal agreement between Districts 1 and 2. This court reviews the evidence de novo in deciding the propriety of a summary judgment motion. Bower v. Bunker Hill Company, 725 F.2d 1221, 1223 (9th Cir.1984). We will affirm the district court's grant of summary judgment if it appears from the record after viewing all evidence and factual inferences in the light most favorable to the adverse party, that there are no genuine issues of material fact and that the moving party is entitled to prevail as a matter of law. Heiniger v. City of Phoenix, 625 F.2d 842, 843 (9th Cir.1980).

A review of the relevant evidence in the instant case, the individual benefit documents of District 1 and 2 (hereinafter "the District 1 Plan" and "the District 2 Plan") and the reciprocal agreement between the districts, indicates the absence of a genuine issue of fact and that as a matter of law, District 1 rather than District 2 is required to pay plaintiff for the supplemental benefit at issue. Review of the evidence also indicates that the action of District 1 in denying plaintiff's claim was arbitrary and capricious and thus reversible. Rehmar v. Smith, 555 F.2d 1362, 1371 (9th Cir.1976).

District 2 is not responsible for paying plaintiff the supplemental benefit, as District 1 argues, for under Article I, Paragraph 3 of the District 2 Plan plaintiff's eligibility for any benefits from that Plan terminated automatically upon plaintiff's eligibility in District 1 for the basic benefit. Article I, Paragraph 3 of the District 2 Plan provides:

The eligibility of an employee (for benefits) shall terminate on the earliest of the following dates:

....

(d) the date the employee becomes eligible for benefits under any other welfare plan established between the union and shipowners, provided, however, that said termination shall be subject to the provisions of any reciprocal agreement that may be outstanding between this plan and any other plan.

Id. Plaintiff was initially eligible for benefits in District 2 and upon transferring to District 1 became eligible for the basic benefit from District 1 after employment in that district for thirty days. Thus, under Article I, Paragraph 3 of the District 2 Plan, plaintiff's eligibility for any benefits from District 2, including the supplemental benefit, terminated upon plaintiff's employment in District 1 for thirty days.²

Paragraph 5 of the reciprocal agreement between Districts 1 and 2 clearly requires that District 1 pay plaintiff the supplemental benefit. That paragraph provides:

In the case of an employee who is a member of any MEBA District who has insufficient days of employment for eligibility in any one of the aforesaid Plans the following rule shall apply: If he has sufficient days of covered employment under all Plans to qualify for eligibility under the provisions or Regulations of the Plan in which his District participates, he shall be entitled to the benefits provided by the Plan in which his District participates and shall be entitled to no other benefits.

Id. Decedent was employed in District 1 for only 147 days, far fewer than the 400 days required for eligibility for the supplemental benefit from District 1. Paragraph 5 nonetheless requires that District 1 pay plaintiff for the supplemental benefit because decedent's days of employment in both Districts 1 and 2 totaled more than 400 days.

Because the District 1 and 2 Plans and the reciprocal agreement between Districts 1 and 2 clearly require that District 1 pay plaintiff for the supplemental benefit, the district court properly granted plaintiff summary judgment.³ We therefore affirm the district court's order granting plaintiff summary judgment.

II. ATTORNEYS' FEES

Section 502(g)(1) of ERISA, 29 U.S.C. § 1132(g)(1), gives the district court discretion to award attorneys' fees to a party to an ERISA action. Although such award is discretionary, a decision...