Nichols v. CHICAGO TRANSIT AUTH. HARDSHIP

• Decision Date: 25 February 2003
• Docket Number: No. 1-02-0210.,1-02-0210.
• Citation: 273 Ill.Dec. 859,790 N.E.2d 1,338 Ill. App.3d 829
• Parties: Brian G. NICHOLS, Plaintiff-Appellant, v. CHICAGO TRANSIT AUTHORITY HARDSHIP COMMITTEE, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

790 N.E.2d 1

338 Ill. App.3d 829

273 Ill.Dec. 859

Brian G. NICHOLS, Plaintiff-Appellant, v. CHICAGO TRANSIT AUTHORITY HARDSHIP COMMITTEE, Defendant-Appellee.

No. 1-02-0210.

Appellate Court of Illinois, First District, Second Division.

February 25, 2003.

Rehearing Denied June 10, 2003.

Brian G. Nichols, Chicago, pro se.

Richard W. Burke and Stephen R. Meinertzhagen, Burke, Warren, MacKay & Serritella, P.C., Chicago, for Defendant-Appellant.

Presiding Justice McBRIDE delivered the opinion of the court:

Plaintiff Brian G. Nichols, a Chicago Transit Authority (CTA) employee, requested a withdrawal of his funds from the CTA Employees' Deferred Compensation Plan (Plan). Nichols' applications were denied by the committee (Committee) that administers the Plan and he appealed to the circuit court. The circuit court found that the Committee did not abuse its discretion in denying Nichols' request for funds. Nichols appeals to this court, pro se, contending that the Committee erred in failing to acknowledge his status as an eligible participant for the Plan's emergency hardship withdrawal.

At the time of the hearing, Nichols had been employed as a bus operator with the CTA for over 20 years. He participated in the Plan from 1987 or 1988 through January 1999. Nichols testified that in addition to his employment with the CTA, he held a second job with the Beverly Bus Federal Credit Union as an assistant treasurer. Nichols held this job with the credit union starting in 1990. He was not rehired by the credit union in March of 1999. Nichols testified that his termination by the credit union caught him by surprise as he expected to be employed with it until he eventually became the treasurer. At the time his employment from the credit union was terminated, Nichols' monthly net salary with the credit union was approximately $1,100.

Nichols' first application to withdraw funds from the Plan was February 17, 1999. Nichols characterized the loss of his second job with the credit union as an "unforeseeable emergency." This application was denied by the Committee on February 24, 1999. The Committee noted that "[n]o specific event which was extraordinary, unforeseeable and beyond the control of the Participant was identified." Nichols appealed the denial of his application. On March 30, 1999, his appeal to the Committee was denied on the basis that his application failed to identify a "correct hardship reason." Nichols made additional application for distribution of funds on June 23, 1999, and August 24, 1999. Both additional applications were subsequently denied.

The CTA's Employees' Deferred Compensation Plan is intended to qualify as an eligible "State Deferred Compensation Plan" under section 457(b) of the Internal Revenue Code of 1986. 26 U.S.C. § 457(b) (2000). The purpose of the Plan is to provide an optional benefit to CTA employees whereby a designated amount of the participant's compensation is withheld each month by the employer and placed into a trust. The employee may withdraw funds from the Plan in the event of an "unforeseeable emergency." Under section 5.12 of the Plan:

"a distribution of Deferred Compensation credited to a Participant's account shall be permitted in the event the Participant experiences an unforeseeable emergency, determined in the sole discretion of the Committee, creating severe financial hardship as a result of sudden and unexpected illness or accident of the Participant or of a dependent of the Participant (as defined in Section 152(a) of the Code), loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Payment may not be made to the extent that such hardship is or may be relieved: (1) through reimbursement or compensation by insurance or otherwise; (2) by liquidation of the Participant's assets to the extent the liquidation of those assets would not itself cause severe financial hardship; or (3) by cessation of deferrals under the Plan. The need to send a child to college or the desire to purchase a new home shall not be considered unforeseeable emergencies. All distributions under this subparagraph shall be in a lump sum and shall be permitted only to the extent reasonably needed to satisfy the emergency need, taking into account the amount of any income tax withholding or other income tax liability resulting from the distribution. Application for distributions under this subparagraph must be approved by the Committee. The Committee shall have authority to require such evidence as it may need to determine whether a Participant is experiencing an unforeseeable emergency."

Under the Administrative Review Law, we review the final decision of the administrative agency and not the decision of the circuit court. 735 ILCS 5/3-101 et seq. (West 2000). When deciding a mixed question of law and fact, we review the agency's decision under a clearly erroneous standard. City of Belvidere v. Illinois State Labor Relations Board, 181 Ill.2d 191, 205, 229 Ill.Dec. 522, 692 N.E.2d 295 (1998). As articulated by the Illinois Supreme Court: "because this case involves an examination of the legal effect of a given set of facts, it involves a mixed question of fact and law. Given the mixed nature of the [Committee's] decision, we find that the applicable standard of review should be between a manifest weight of the evidence standard and a de novo standard so as to provide some deference to the [Committee's] experience and expertise. We therefore hold that a clearly erroneous standard of review is appropriate to examine the [Committee's] decision." City of Belvidere,181 Ill.2d at 205,229 Ill.Dec. 522,692 N.E.2d 295.

It is undisputed that Nichols' alleged severe financial hardship was not the result of a sudden and unexpected illness or accident of Nichols or of a dependent, or loss of his property due to casualty. Nichols argues that his severe financial hardship due to the loss of his second job with the Beverly Bus Federal Credit Union falls under the category of "other similar extraordinary and unforeseeable circumstances arising as a result of events beyond [his] control." The Plan specifically states that sending a child to college or buying a new home is not an expense that qualifies as an "unforeseeable emergenc[y]." Except for these two specific examples, the Plan does not delineate what would or would not qualify as "unforeseeable emergencies." Likewise, the Plan does not provide examples of "other similar extraordinary and unforeseeable circumstances." Schmitt v. Review Committee (The Copeland Cos.), 179 A.D.2d 959, 960, 579 N.Y.S.2d 217, 218 (1992), noted that by operation of the rule of ejusdem generis, the language of "`other similar extraordinary and unforeseeable circumstances' is limited in its effect by the specific examples preceding it."

The Plan does state that the distribution of funds from the participant's account is determined in the sole discretion of the Committee. Courts have noted that the language "sole discretion" does not command complete judicial deference. Cutting v. Jerome Foods, Inc., 993 F.2d 1293, 1296 (7th Cir.1993). However, it has been held that the language "sole discretion" is an "unambiguous vesting of discretion" requiring the rejection of the contention that the language is "uncertain and ambiguous." Quinn v. Non-Contributory National Long Term Disability Program, 113 F.Supp.2d 1216, 1221 (N.D.Ill.2000). See also, Gatto v. St. Richard School, Inc., 774 N.E.2d 914 (Ind.App.2002); Hackett v. Xerox Corp. Long-Term Disability Income Plan, 177 F.Supp.2d 803 (N.D.Ill.2001). While we do not give the Committee unfettered discretion on appellate review, we do appreciate the importance of the Plan's meaning and intent. We find that discretion is vested in the Committee to make determinations for distribution under the Plan and we review the Committee's decision with an eye toward deference to its unique experience.

When Nichols' application for distribution was denied on March 30, 1999, the Committee...