Simmons v. Southern Bell Tel. & Tel. Co.

• Decision Date: 30 August 1991
• Docket Number: No. 90-3192,90-3192
• Citation: 940 F.2d 614
• Parties: 14 Employee Benefits Ca 1370 Vicki Jo SIMMONS, Cynthia Simmons, By and Through her mother and best friend, Vicki Jo Simmons, Plaintiffs-Appellees, Cross-Appellants, v. SOUTHERN BELL TELEPHONE AND TELEGRAPH COMPANY, Defendant-Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 614

940 F.2d 614

14 Employee Benefits Ca 1370

Vicki Jo SIMMONS, Cynthia Simmons, By and Through her mother and best friend, Vicki Jo Simmons, Plaintiffs-Appellees, Cross-Appellants, v. SOUTHERN BELL TELEPHONE AND TELEGRAPH COMPANY,

Defendant-Appellant, Cross-Appellee.

No. 90-3192.

United States Court of Appeals, Eleventh Circuit.

Aug. 30, 1991.

Gregory D. Artis, Keith W. Kochler, Atlanta, Ga., Christopher K. Kay, Swann & Haddock, P.A., Orlando, Fla., for Southern Bell Tel. & Tel. Co.

Tobe Lev, Egan, Lev & Siwica, David R. Baker, Orlando, Fla., for Vicki Jo Simmons.

Appeals from the United States District Court for the Middle District of Florida.

Before JOHNSON and COX, Circuit Judges, and GODBOLD, Senior Circuit Judge.

GODBOLD, Senior Circuit Judge:

In this ERISA ¹ case Vicki Jo Simmons contends that Southern Bell Telephone and Telegraph Co., the employer of her late husband, Charles Simmons, is liable to her for damages caused by its failure to carry out Charles' intention to name her as the beneficiary of his company-provided life insurance policy. The district court ruled that Southern Bell breached its fiduciary duty to Vicki and awarded her damages. We vacate the judgment for Vicki and remand for further proceedings.

I. BACKGROUND

Both Charles and Vicki worked for Southern Bell and were enrolled in its life insurance plan. Charles joined the plan in May 1970, before he met Vicki and only three months after he obtained his divorce from Gail Miller. On enrollment he named Miller as the beneficiary of his life insurance policy. Charles and Vicki were married in August 1970. In January 1971 they received in the mail a certificate of insurance that listed Miller as the beneficiary of Charles' life insurance policy. Vicki testified at trial that she and Charles agreed that he should name her as the beneficiary of his policy, and Charles took the certificate of insurance to work with him the same day that they received it.

The enrollment card that Charles filled out when he joined the plan read, in part: "I have designated my beneficiary on the reverse side of this enrollment card. If I desire to change such designation I will complete a change of beneficiary form." He later received a plan description booklet from the company that provided "... you may change your beneficiary at any time by completing the proper form." The booklet also said that supervisors would provide additional information to employees with questions regarding the plan.

Charles took the certificate of insurance to his supervisor, Norman Gray. The certificate contained a table entitled "Change of Beneficiary Record." A note on the same page read "Note: Entries Below Are To Be Made Only By The Employer. No Other Entries Will Be Valid." Charles wrote Vicki's name in the space on the Change of Beneficiary Record labeled "New Beneficiary or Beneficiaries," dated the entry in the space marked "Effective Date," and presented the certificate to Gray, who signed his name in the space marked "Entered By." Gray testified that Charles believed that Gray's signing of the certificate of insurance was sufficient to accomplish the change of beneficiaries.

Charles died in 1983 while still married to Vicki and a member of the Southern Bell life insurance plan. Because both Vicki and Gail Miller claimed the policy proceeds, Southern Bell's insurance carrier filed an interpleader action in state court, and the state court ordered that the proceeds be paid to Miller. Vicki then brought this action to enforce her rights as a beneficiary of the plan under 29 U.S.C. Sec. 1132(a)(1)(B) (permitting plan participants and beneficiaries to bring civil actions to recover benefits due under the plan).

After a bench trial the district court held that Southern Bell, acting through Gray, breached its fiduciary duties to Vicki in violation of 29 U.S.C. Sec. 1104(a)(1)(B) (imposing "prudent man" standard of care on plan fiduciaries). The court found that Gray breached the fiduciary duty because he signed the certificate knowing that Charles believed his signature was sufficient to make Vicki Charles' beneficiary and then took no further action. The court also held that Charles followed the procedure for changing his beneficiary set out in the plan booklet and the certificate of insurance. It awarded Vicki $119,000, an amount equal to the policy proceeds, plus simple prejudgment interest. Southern Bell appeals from the judgment in favor of Vicki, and she cross-appeals, contesting the district court's award of simple rather than compound prejudgment interest. ²

II. DISCUSSION

Southern Bell contends that the district court erred by awarding Vicki damages under 29 U.S.C. Sec. 1132(a)(1)(B) arising from its breach of the fiduciary duties imposed by 29 U.S.C. Sec. 1104(a)(1)(B). It says that a cause of action for breach of fiduciary duties arises under 29 U.S.C. Sec. 1109(a), rather than Sec. 1132(a)(1)(B), and that under Sec. 1109(a) only the plan, and not individual beneficiaries, may recover damages. The company also asserts that Vicki has no right to any recovery because Charles failed to follow the proper procedures for a change of beneficiaries.

Vicki contends in response that we should affirm the district court's judgment in her favor on the basis of our decision in Kane v. Aetna Life Insurance, 893 F.2d 1283 (11th Cir.) (decided after the district court rendered its decision in this case), cert. denied, --- U.S. ----, 111 S.Ct. 232, 112 L.Ed.2d 192 (1990). She says that in Kane this court articulated a federal common law rule of equitable estoppel under which a plan beneficiary may bring an action under ERISA to enforce a plan fiduciary's or administrator's interpretation of ambiguous plan provisions. She asserts that: (1) the plan's change of beneficiary provision was ambiguous, (2) Gray "interpreted" the ambiguous change of beneficiary provision as permitting Charles to change his beneficiary by means of the certificate of insurance when he signed the certificate that Charles presented to him (3) and the Kane rule estops Southern Bell from renouncing Gray's interpretation.

We review a district court's factual findings in a bench trial for clear error, Keefe v. Bahama Cruise Line, Inc., 867 F.2d 1318, 1321 (11th Cir.1989), but the court's legal conclusions are subject to de novo review. Kirkland v. National Mortgage Network, Inc., 884 F.2d 1367, 1370 (11th Cir.1989). Because the district court erroneously concluded that Sec. 1132(a)(1)(B) permits beneficiaries to recover damages for a breach of fiduciary duty, we vacate the district court's judgment for Vicki based on a breach of fiduciary duties and remand the case so that the parties may present to the district court their contentions concerning Kane and other possible theories of recovery.

A. Breach of Fiduciary Duty

The district court held that Vicki was entitled to recover damages from Southern Bell under 29 U.S.C. Sec. 1132(a)(1)(B) based on the company's breach of its fiduciary duties. A cause of action for an ERISA fiduciary's breach of its duties arises under 29 U.S.C. Sec. 1109 rather than Sec. 1132(a)(1)(B), and Sec. 1109 does not permit an individual beneficiary to recover damages for breach of fiduciary duties. Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134, 140, 105 S.Ct. 3085, 3089, 87 L.Ed.2d 96 (1985).

Section 1109, entitled "Liability for breach of fiduciary duty," provides in pertinent part:

(a) Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter shall be personally liable to make good to such plan any losses to the plan resulting from such breach, and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary, and shall be subject to such other equitable or remedial relief as the court may deem appropriate, including removal of such fiduciary.

29 U.S.C. Sec. 1109(a) (emphasis added). The plain language of Sec. 1109(a) makes it clear that only the plan, and not an individual beneficiary, may recover damages for a breach of fiduciary duties. The Court in Russell noted that:

A fair contextual reading of the statute makes it abundantly clear that its draftsmen were primarily concerned with the possible misuse of plan assets, and with remedies that would protect the entire plan, rather than with the rights of the individual beneficiary.

473 U.S. at 142, 105 S.Ct. at 3090 (footnote omitted).

Other courts have held that Sec. 1109 provides the sole basis for a suit alleging breach of fiduciary duties,...