Viad Corp. Supplemental Pension Plan v. Nasi , 586 F. App'x 451 ( 2014 )

FILED
NOT FOR PUBLICATION DEC 11 2014
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
VIAD CORPORATION No. 12-16892
SUPPLEMENTAL PENSION PLAN, an
employee pension benefit plan; VIAD D.C. No. 2:10-cv-01089-ROS
CORPORATION, a Delaware corporation,
Plaintiffs-counter-defendants- MEMORANDUM*
Appellees,
v.
JOHN R. NASI, an individual,
Defendant-counter-claimant -
Appellant.
Appeal from the United States District Court
for the District of Arizona
Roslyn O. Silver, Senior District Judge, Presiding
Argued and Submitted November 20, 2014
San Francisco, California
Before: GOULD and WATFORD, Circuit Judges, and OLIVER, Chief District
Judge.**
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Solomon Oliver, Jr., Chief District Judge for the U.S.
District Court for the Northern District of Ohio, sitting by designation.
John Nasi appeals the district court’s order granting Viad summary
judgment and declaring that Viad does not owe Nasi supplemental pension
benefits. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
1. Nasi contends that the district court erroneously reviewed the
administrator’s denial of benefits for abuse of discretion as opposed to de novo,
because Viad committed procedural violations by not reaching a timely resolution
and Viad operated under a structural conflict of interest. Where, as here, an ERISA
plan confers the plan administrator discretionary authority, a district court reviews
the administrator’s denial of benefits for abuse of discretion. Abatie v. Alta Health
& Life Ins. Co., 458 F.3d 955, 963 (9th Cir. 2006) (en banc). An administrator’s
procedural violations ordinarily “do not alter the standard of review unless those
violations are so flagrant as to alter the substantive relationship between the
employer and employee, thereby causing the beneficiary substantive harm.” Gatti
v. Reliance Standard Life Ins. Co., 415 F.3d 978, 985 (9th Cir. 2005). Here,
Viad’s delay in reaching a timely resolution was not a flagrant procedural
violation, especially when much of the delay was due to Nasi’s untimeliness in
producing documents and releasing records. Viad’s structural conflict of interest
does not alter the standard of review, but is a factor that courts must weigh when
2
applying the abuse of discretion standard of review. Abatie, 458 F.3d at 965. The
district court properly applied the abuse of discretion standard of review.
2. Nasi next contends that the letter agreement that he and Viad entered into
on May 28, 1993 is an unconditional guarantee from Viad to pay him lifetime
supplemental pension benefits, but the administrator at Viad reads Nasi’s
entitlement to supplemental pension benefits as subject to a condition precedent
that was never satisfied. The administrator’s interpretation is supported by the
plain terms of the letter agreement and by the circumstances that gave rise to the
letter agreement. Reviewing the administrator’s denial of benefits for abuse of
discretion, the district court properly granted Viad’s motion for summary
judgment.
AFFIRMED.
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FILED
Viad Corp. Supplemental Pension Plan v. Nasi, No. 12-16892 DEC 11 2014
MOLLY C. DWYER, CLERK
WATFORD, Circuit Judge, concurring: U.S. COURT OF APPEALS
I agree with my colleagues that the plan administrator didn’t abuse her
discretion in denying John Nasi’s pension claim. I write separately to offer an
alternative ground for affirmance: Even if Viad agreed to pay Nasi $193,397
annually for the rest of his life, as Nasi contends, it no longer has that obligation
because Nasi was significantly overpaid from 1996 to 2008.
In 1995, MCII funded a secular trust on Nasi’s behalf with $595,848. MCII
also sent a tax gross-up payment of $498,188 directly to the IRS. After Nasi
retired in March 1996, he received a check for $8,292 every month until September
2008, when MCII filed for bankruptcy. The key in this case was how that $8,292
figure was (mis)calculated. MCII started with $16,116, the monthly installment of
Nasi’s $193,397 annual pension. It then subtracted Nasi’s monthly tax-qualified
pension payment ($1,930) and, because Nasi had already received the value of his
secular trust up front, the monthly annuity value of his secular trust payment
($5,894). Nasi agrees that these offsets were proper.
What the calculation above doesn’t account for is the tax payment sent
directly to the IRS, a fact on which Viad relied in its denial letter. That Nasi never
saw that money is irrelevant—it was nonetheless his. He received a benefit of
$498,188, and his monthly pension checks should have been reduced by the
Page 2 of 2
monthly annuity value of that tax payment ($4,928) in addition to the monthly
annuity value of the amount paid to the secular trust ($5,894).
The most Nasi should have been paid per month was $3,332. That figure
reflects the monthly value of his $193,397 pension ($16,116) minus his qualified
benefit ($1,962, as adjusted in 2004) and the annuity values of his trust payment
($5,894) and tax payment ($4,928). Nasi was therefore overpaid $4,960 per month
for twelve and a half years, for a grand total of $744,033—even before factoring in
an appropriate discount rate, which would make that figure grow significantly.
By the time of his actuarially projected demise, in 2022, Nasi should have
received a total of $1,039,643, the sum of his $3,332 monthly payments. By
October 2008, however, he had already received $1,242,249.
In sum, even if Viad owes Nasi $193,397 per year—and its denial letter
states compelling reasons why it doesn’t—Nasi has already received more than the
benefit of his bargain.