Goldstein v. Associates in Gastroenterology of Pittsburgh Amended & Restated Pension Plan

Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit
4-29-2005
Goldstein v. Gastroenterology Pgh
Precedential or Non-Precedential: Non-Precedential
Docket No. 04-2252
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 04-2252
____________
MORTON L. GOLDSTEIN, M.D.,
an individual
v.
ASSOCIATES IN GASTROENTEROLOGY OF PITTSBURGH AMENDED AND
RESTATED PENSION PLAN; ASSOCIATES IN GASTROENTEROLOGY OF
PITTSBURGH AMENDED AND RESTATED PROFIT SHARING PLAN;
ASSOCIATES IN GASTROENTEROLOGY OF PITTSBURGH PENSION PLAN
TRUST; ASSOCIATES IN GASTROENTEROLOGY OF PITTSBURGH PROFIT
SHARING PLAN TRUST; ASSOCIATES IN GASTROENTEROLOGY, INC.,
a corporation; GEORGE L. ARNOLD, M.D.; LEE M. WEINBERG, M.D.,
as Trustees of the Associates in Gastroenterology of
Pittsburgh Pension Plan Trust and the Associates in
Gastroenterology of Pittsburgh Profit Sharing Plan Trust,
Appellants
____________________
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
Dist. Court No. 02-cv-00311
District Judge: The Honorable Terrence F. McVerry
___________________
Submitted pursuant to LAR 34.1(a)
March 29, 2005
Before: ALITO, SMITH, and ROSENN, Circuit Judges
(Filed: April 29, 2005)
____________________
OPINION OF THE COURT
____________________
PER CURIAM:
Dr. Morton Goldstein (“Plaintiff”), a licensed physician and the co-founder of
Associates in Gastroenterology, Inc. (“Associates”), a medical practice based in
Pittsburgh, Pennsylvania, filed this action for wrongful denial of retirement benefits
against Associates, two retirement plans established and administered by Associates on
behalf of its employees (the “Pension Plan” and the “Profit Sharing Plan”), related entities
created to invest and maintain the assets of the Plans, and two trustees of the related
entities (collectively, “Defendants”).
We conclude that there is no genuine issue as to any material fact and that Plaintiff
was entitled to judgment as a matter of law. We therefore affirm the judgment of the
District Court.
I.
We exercise plenary review over the District Court’s grant of summary judgment.
Int’l Union, UMWA v. Racho Trucking Co., 897 F.2d 1248, 1252 (3d Cir. 1990).
Federal Rule of Civil Procedure 56(c) states that summary judgment may be granted only
if the record shows “that there is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of law.”
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II.
The Supreme Court has identified the standard of review to be used in considering
actions under 29 U.S.C. § 1132(a)(1)(B) for denial of ERISA benefits. Where a plan
document does not give the fiduciary the specific authority to determine eligibility for
benefits or to construe the terms of the plan, a court should review the denial of plan
benefits de novo. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). A
court should use the more deferential “arbitrary and capricious” standard only if the plan
grants the fiduciary specific authority. Id. at 115.
The language of the Plans at issue here does not grant the trustees specific
authority to determine benefits or construe the Plans’ terms. The trustees have broad
administrative authority to “control, manage and administer” the Plans, and to “oversee
and insure to the extent possible that the procedures established by the Plan[s] . . . are
carried out,” but this language does not amount to a specific grant of authority. See Luby
v. Teamsters Health & Welfare & Pension Trust Funds, 944 F.2d 1176, 1180-81 (3d Cir.
1991) (holding that plan authorizing trustees to “consider and decide upon a program for
payment of benefits from the Trust Fund” and to amend the system of trust administration
nevertheless did not grant trustees the specific authority to determine benefits or construe
terms). We therefore apply a de novo standard of review in considering the denial of
Plaintiff’s claim for benefits. See Id., 944 F.2d at 1184.
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III.
The parties dispute the date that should be used to set the value of Plaintiff’s
benefit accounts. Plaintiff contends that he was entitled, not only to receive distribution
of his benefits on any date after his 65th birthday, but also to choose the day by which the
value of his benefits would be set. Defendants counter that the value of Plaintiff’s
benefits must be set by the date on which Plaintiff became entitled to benefits, and that,
under the terms of the Plans, Plaintiff did not become entitled to benefits until September
20, 2001, when he returned his executed participant distribution election forms.
As the District Court noted, the pertinent provisions and language of the Plans are
not ambiguous, and the issues here presented may be determined as a matter of law.
Defendants’ position is unreasonable. The terms of the Plans do not condition an interim
valuation of assets upon the receipt of completed participant distribution election forms,
and the parties did not agree to such a condition independent of the Plans.
Defendants are correct insofar as they contend that Plaintiff’s “interim valuation
date” is equivalent to his “benefit entitlement date.” Section 5.05 provides as much:
If, based upon facts and circumstances, there is reason to believe that there has
been substantial change in the fair market value of the Plan assets from the
preceding valuation date to the Participant’s benefit entitlement date, then, at the
request of any Participant, the assets of the Plan shall be revalued as of the
Participant’s benefit entitlement date. In such event, the value of the Participant’s
account(s) shall be determined, for purposes of distribution, as of that interim
valuation date, and this Section 5.05 shall be applied, for the balance of the Plan
Year, as if the interim valuation date were the preceding annual valuation date.
Notwithstanding the foregoing, in no event shall more than 2 interim valuations be
required in any Plan Year.
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(emphasis added). However, the date on which Plaintiff submitted his distribution
election form does not necessarily determine his valuation date. For although the Plans
require participants to make certain distribution choices in writing on forms furnished by
the Plan Administrator, the Plans never provide that these distribution election forms
address or control the valuation of benefits. See Article VII §§ 7.01, 7.02, 7.03 and 7.08
(Pension Plan) and §§ 7.01 and 7.09 (Profit Sharing Plan).
Moreover, the terms of the Plans make plain that valuation may be set by a day
other than the day on which distribution begins. In fact, according to the terms of
Sections 5.05 and 1.21 of the Plans, even if a participant elected to receive his full
retirement benefit when he turned 65 years-old and accepted the annual valuation date of
March 31, the participant’s benefit entitlement date would, unless he were born on March
31, fall upon a different date than his annual valuation. Thus the most straightforward
participant choice possible would still create a situation in which the value of a
participant’s assets would be set by a different day than the day on which they were
distributed. Consider, for example, a man who turns 65 on December 7, 2006. His assets
would be valued according to the annual valuation date immediately preceding December
7, 2006. See § 5.05(a). The annual valuation date is the last day of each Plan Year. Id.
A Plan Year is the 12 consecutive month period beginning on April 1 of each year and
ending on the following March 31. See § 1.21. The annual valuation date immediately
preceding December 7, 2006, would therefore be March 31, 2006. The value of the
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man’s assets, and those of the fund as a whole, could change a great deal in those eight
months.
In addition to not being in accord with the terms of the Plans, Defendants’ position
is also in conflict with what the parties agreed to. On August 27, 2001, Plaintiff received
a letter dated August 6, 2001, purportedly from the Plans’ attorney, Kabala, but signed by
the two Defendant trustees. In the August 6th letter, the Defendant trustees
acknowledged Plaintiff’s request for an interim valuation date of August 31, 2001, but
offered that July 31, 2001 be used instead. The letter then stated that Plaintiff’s funds
would be distributed as soon as possible after the receipt of the distribution election forms
and after completion of the interim valuation process. By letter of September 7, 2001,
Plaintiff advised the Defendant trustees that he accepted their proposal: “I would like to
value the assets as of that July 31, 2001 date, and make the distribution as soon as
possible.”
Defendants now claim that they actually accepted the alternative “true-up”
valuation method proposed by Plaintiff’s accountant in a letter of August 14, 2001.
Under the true-up valuation method, Plaintiff’s percentage of the Plans’ assets would be
calculated as of August 31, 2001, but the percentage would be applied to (meaning
multiplied by) the assets as of September 30, 2001, and Plaintiff would receive the
product of this calculation. There is no evidence to support Defendants’ claim, and
acceptance was not even possible given the actual terms of the proposal put forth by
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Plaintiff’s accountant: The offer of the true-up valuation method was only available if the
standard valuation method — using the July 31, 2001, valuation date — could not be
completed by the third week of September. Because the Plans’ accountant completed the
standard valuation on September 15, 2001 (before the third week of September),
Defendants could not comply with the terms of Plaintiff’s true-up valuation offer.
Accordingly, we affirm the District Court’s decision that Plaintiff is entitled to
distribution of the assets of his benefit accounts at the interim values as of July 31, 2001.
IV.
Section 502(g)(1) of ERISA provides that the court, in its discretion, may allow a
reasonable attorney’s fee and costs of action. 29 U.S.C. § 1132(g)(1). This Court has
held that, in analyzing whether to award attorney’s fees, courts should examine: “the
offending party’s culpability or bad faith; the ability of the offending party to satisfy the
award . . .; the deterrent effect of an award; the benefit conferred on members of the
pension plan as a whole; and the relative merits of the parties’ position.” Ursic v.
Bethlehem Mines, 719 F.2d 670, 673 (3d Cir. 1983) (numbering of factors omitted).
Because the District Court weighed these factors appropriately, we affirm the District
Court’s decision regarding attorney’s fees.
V.
Interest on delayed ERISA benefits is an equitable remedy left to the discretion of
the trial court. Holmes v. Pension Plan of Bethlehem Steel Corp., 213 F.3d 124, 131 (3d
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Cir. 2000). Prejudgment interest on delayed ERISA benefits is also “presumptively
appropriate.” Id. (citation omitted). It is to be awarded “when the amount of underlying
liability is reasonably capable of ascertainment and the relief granted would otherwise fall
short of making the claimant whole because he or she has been denied the use of the
money which was legally due.” Anthius v. Colt Indus. Operating Corp., 971 F.2d 999,
1010 (3d Cir. 1992). The District Court was within its discretion when it concluded that
Plaintiff’s damage claim was liquidated and that an award of prejudgment interest was
justified to compensate Plaintiff under the facts of the case.
VI.
For the foregoing reasons, we affirm the judgment of the District Court.