Rossi v. Boston Gas Co.

• Decision Date: 24 September 1993
• Docket Number: Civ. A. No. 88-0079-Y.
• Citation: 833 F. Supp. 62
• Parties: Robert P. ROSSI, Plaintiff, v. BOSTON GAS COMPANY, Defendant.
• Court: U.S. District Court — District of Massachusetts

833 F. Supp. 62

Robert P. ROSSI, Plaintiff, v. BOSTON GAS COMPANY, Defendant.

Civ. A. No. 88-0079-Y.

United States District Court, D. Massachusetts.

September 24, 1993.

Matthew J. McDonnell, Quincy, MA, for plaintiff.

Lawrence E. McCormick, Boston Gas Co., Boston, MA, for defendant.

MEMORANDUM AND ORDER

YOUNG, District Judge.

This case arises under 29 U.S.C. § 1144(a), the Employee Retirement Income Security Act of 1974 ("ERISA"), with jurisdiction additionally predicated on 28 U.S.C. § 1332(a).¹

I. FACTS AND PRIOR PROCEEDINGS

A. Procedural History

The plaintiff, Robert P. Rossi ("Rossi"), filed this action against his former employer, the Boston Gas Company ("Boston Gas"), on January 11, 1988, alleging violation of ERISA, 29 U.S.C. § 1001 et seq. In its Answer to the Complaint, Boston Gas denied Rossi's allegations and urged the Court to dismiss the Complaint pursuant to Fed. R.Civ.P. 12(b)(6) because the requisite privity of contract does not exist between Rossi and Boston Gas.²

Neither party pursued this case beyond basic pleading for the first three years. Then, when Boston Gas moved to dismiss, Rossi moved to amend his complaint to add Boston Gas Company Union Employees' Pension Plan ("the Plan") as a defendant. At an April 3, 1991 hearing, the Court allowed the motion to amend and the parties agreed that the motion to dismiss might be treated as a motion for summary judgment. The Court granted Rossi a continuance pursuant to Fed.R.Civ.P. 56(f) to oppose the newly minted motion for summary judgment.

Thereafter, Rossi neither served the amended complaint on the Plan³ nor adequately opposed the motion for summary judgment. On November 8, 1991, this Court denied Boston Gas' Motion for Summary Judgment without prejudice to its renewal upon a more complete record. At a pre-trial conference held January 31, 1992, this Court and counsel for Rossi and Boston Gas decided that counsel would file an agreed statement of facts, whereupon the Court would resolve the case upon the papers as a case stated.⁴

B. Factual History

The facts of this case, having spanned a number of years, are long and complicated,⁵ but since the Court is disposing of the matter on procedural grounds, no more than a bare minimum need be recounted.

In May, 1982, chronic lower back pain forced Rossi to retire from Boston Gas after 21 years employment. Pursuant to the disability retirement option he selected, Rossi, a Plan member, began receiving a monthly pension check in the amount of $369.43 and an additional allowance ("Additional Allowance") of $679.00 to supplement his pension. This Additional Allowance approximated Rossi's anticipated monthly benefit from the Department of Health and Human Services Social Security Administration ("Social Security"). The Plan would continue paying Rossi the Additional Allowance until he began receiving Social Security or died, whichever occurred first.⁶ Rossi received the Additional Allowance from June, 1982 through and including June, 1984.

While still receiving his monthly pension and Additional Allowance, Rossi applied for Social Security benefits. On or about January 13, 1984, he received a letter from Social Security stating that his application for disability benefits had been approved, retroactive to November 1982. On or about May 7, 1984 Rossi was awarded Social Security benefits. In June 1984, Rossi, his wife, and his children, received a retroactive lump sum Social Security award covering the period from November 1982 through March 1984, totaling $10,995.70 — $7883.95 payable to Robert P. Rossi; $2074.50 payable to Robert P. Rossi for his children; and $1037.25 payable to Philomena Rossi, his wife.

In July 1984, as a result of an internal audit, the Plan became aware that Rossi was receiving monthly Social Security benefits. Thereafter, Rossi's attorney notified the Benefits Coordinator of Boston Gas that Rossi's Social Security benefits had commenced. Since Rossi received a retroactive Social Security award, the Plan took the position that Rossi had begun to receive benefits effective November 1982. Accordingly, the Plan concluded he was ineligible for, and not entitled to retain, the Additional Allowance paid to him since his benefits began. On July 27, 1984, Boston Gas informed Rossi that, in accordance with the terms of his chosen retirement option, his monthly Additional Allowance would cease immediately.

On August 27, 1984, the Plan, acting in response to the retroactive lump sum Social Security award, requested that Rossi return $13,580 ($679 per month × 20 months, covering the period from November 1982 to June 1984) in Additional Allowance overpayment. Rossi was informed that these payments "duplicated" his Social Security benefits for the period covering November 1982 through June 1984. Over the next year, the Plan repeated its request and warned that if necessary it would reduce Rossi's monthly pension and assess interest charges retroactively and prospectively as a means of recovering overpayment. Rossi did not respond to the Plan's requests that he pay back the double payments.

Rossi's position, at this time, was to reimburse the Plan only for the June 1984 Additional Allowance payment of $679, since it was received during the same month of his Social Security lump sum receipt. Having been made aware of Rossi's position, Boston Gas reiterated its intention to recoup the duplicate payments. On June 14, 1985, the Plan notified Rossi that it would reduce his monthly pension check by 25% and charge him interest at a rate of 15% annually on the outstanding balance beginning June, 1985. On June 28, 1985, nearly one year after the Plan's discovery of the overpayment, a Senior Pension Trust Officer of Shawmut Bank notified Rossi of the same.

Pursuant to Article 12.021 of the summary description of employee's benefits, Rossi appealed the Plan's decision to recoup the overpayment through an offset of his monthly pension check. His attorney's June 28, 1985 request that the Plan's Joint Pension Committee hear and conduct a formal review of his appeal was granted on September 10, 1985.⁷

At the September 24, 1985 hearing, Rossi's attorney presented his position on the two issues for review; viz. whether there existed any provision in Rossi's pension plan for repayment to the Plan of any retroactive lump sum funds received from Social Security, and whether there existed any provision in Rossi's pension plan for reduction in his monthly pension for purposes of collecting the alleged everpayment.

By letter dated September 29, 1985, the Joint Pension Committee denied Rossi's appeal stating that Rossi was obligated to reimburse the Plan for Additional Allowance overpayment. In so holding, the Joint Pension Committee upheld the Plan's right to recoup the overpayment by offset.

ERISA provides in pertinent part:

A civil action may be brought —

(1) by a participant or beneficiary —

(A) ...

(B) to recover benefits due him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.

29 U.S.C. § 1132(a)(1)(B). Rossi filed the present suit pursuant to this authorization. The threshold question is whether either Boston Gas or the Plan, or both, violated ERISA with respect to the matters just recited.

Rossi here alleges that withholding 25% of his monthly pension check to recover an overpayment resulting from his lump sum receipt of retroactive Social Security Disability Benefits, and accruing interest on the unpaid balance, is unlawful and without authorization by the Plan. Further, he contends that the relevant language of the Plan is ambiguous. Finally, he claims that the Plan calculated the overpayment and the Additional Allowance arbitrarily and unlawfully. Rossi asserts that these actions violate 29 U.S.C. § 1053, the "non-forfeiture" provision of ERISA. In this action, Rossi seeks recovery of monies and a preliminary restraining order to prevent both defendants from interfering with his monthly pension. In addition, he requests that the Court interpret the applicable provisions of the Plan and determine the rights of the parties with respect to Rossi's monthly pension check and any alleged overpayment arrangement existing between the parties.

To date, Rossi has not voluntarily repaid any portion of the overpayment. Boston Gas continues to deduct 25% from Rossi's monthly pension check, and to accrue interest on the unpaid balance.

II. ANALYSIS

Count I of the Amended Complaint charges a cause of action against Boston Gas in violation of ERISA. 29 U.S.C. § 1001 et seq. The count against Boston Gas is based on its alleged de facto representation of the Plan. Specific actions alleged to this effect include: Rossi's being awarded disability retirement by Boston Gas under the Plan, receiving correspondence written on Boston Gas' letterhead, directing telephone contact to Boston Gas' general business number, and other direct interaction with Boston Gas regarding Rossi's disability retirement. Further alleged evidence of this de facto representation includes the fact that responses to Rossi's attorney came from Boston Gas' General Counsel. Rossi alleges that even if the Plan is a separate legal entity, as stated in the Affidavit of Mary Kinnear, the two defendants here have acted as one entity throughout this matter.

Count II of the Amended Complaint charges a cause of action against defendant Boston Gas Company Union Employees' Pension Plan in violation of 29 U.S.C. § 1001 et seq. The count against this defendant is based on Rossi's having been a member of the Plan through his employer Boston Gas.

Counts I and II differ only with respect to the party named as the defendant. Both counts specifically allege that the actions of the defendants violate of 29 U.S.C. § 1053, the "non-forfeiture provision" of ERISA. Both counts also allege that there is no provision in the Plan for repayment of...