Cross v. Bragg

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 07-1699
JAMES CROSS; CHARLES CALKINS; EDWARD HUYLEBROECK; JAMES
LEE; JERRY BUTLER; PAMELA WELLS; PATRICIA J. WILLIAMSON;
HEIDI SCHULLER, and all other similarly situated plan
participants and beneficiaries in the Fleet Reserve
Association Defined Benefit Pension Plan,
Plaintiffs – Appellees,
v.
NOEL BRAGG; FLEET RESERVE ASSOCIATION PENSION PLAN,
Defendants – Appellants,
and
RICHARD B. SMITH; RALPH A. SCHMIDT; LAWRENCE J. BOUDREAUX;
EUGENE SMITH; ROBERT E. KING; RUSSELL E. BELT; FOREST E.
HARRELL; VICTOR MIRANDA; LINDELL C. CLYMER; DEAN F. MILLER,
Defendants.
No. 07-1755
JAMES CROSS; CHARLES CALKINS; EDWARD HUYLEBROECK; JAMES
LEE; JERRY BUTLER; PAMELA WELLS; PATRICIA J. WILLIAMSON;
HEIDI SCHULLER, and all other similarly situated plan
participants and beneficiaries in the Fleet Reserve
Association Defined Benefit Pension Plan,
Plaintiffs – Appellants,
v.
NOEL BRAGG; FLEET RESERVE ASSOCIATION PENSION PLAN,
Defendants – Appellees,
and
RICHARD B. SMITH; RALPH A. SCHMIDT; LAWRENCE J. BOUDREAUX;
EUGENE SMITH; ROBERT E. KING; RUSSELL E. BELT; FOREST E.
HARRELL; VICTOR MIRANDA; LINDELL C. CLYMER; DEAN F. MILLER,
Defendants.
No. 08-1190
JAMES CROSS; CHARLES CALKINS; EDWARD HUYLEBROECK; JAMES
LEE; JERRY BUTLER; PAMELA WELLS; PATRICIA J. WILLIAMSON;
HEIDI SCHULLER, and all other similarly situated plan
participants and beneficiaries in the Fleet Reserve
Association Defined Benefit Pension Plan,
Plaintiffs – Appellants,
v.
NOEL BRAGG; FLEET RESERVE ASSOCIATION PENSION PLAN,
Defendants – Appellees,
and
RICHARD B. SMITH; RALPH A. SCHMIDT; LAWRENCE J. BOUDREAUX;
EUGENE SMITH; ROBERT E. KING; RUSSELL E. BELT; FOREST E.
HARRELL; VICTOR MIRANDA; LINDELL C. CLYMER; DEAN F. MILLER,
Defendants.
Appeals from the United States District Court for the District
of Maryland, at Baltimore. William D. Quarles, Jr., District
Judge. (1:05-cv-00001-WDQ)
Argued: March 24, 2009 Decided: July 24, 2009
2
Before MICHAEL, MOTZ, and KING, Circuit Judges.
Affirmed in part, vacated in part, and remanded by unpublished
opinion. Judge King wrote the opinion, in which Judge Michael
and Judge Motz joined.
ARGUED: Joseph Semo, SEMO LAW GROUP, Washington, D.C., for Noel
Bragg and Fleet Reserve Association Pension Plan. Richard Paul
Neuworth, LEBAU & NEUWORTH, LLC, Baltimore, Maryland, for James
Cross; Charles Calkins; Edward Huylebroeck; James Lee; Jerry
Butler; Pamela Wells; Patricia J. Williamson; Heidi Schuller,
and all other similarly situated plan participants and
beneficiaries in the Fleet Reserve Association Defined Benefit
Pension Plan.
Unpublished opinions are not binding precedent in this circuit.
3
KING, Circuit Judge:
The defendants, Fleet Reserve Association Pension Plan (the
“Plan”) and its Administrator, Noel Bragg, appeal from the
district court’s award of summary judgment to the plaintiffs in
this civil action, pursued under the Employee Retirement Income
Security Act of 1974, 29 U.S.C. §§ 1001-1461 (“ERISA”). More
specifically, the defendants contend that the court erred in
prohibiting them from altering the benefits calculation formula
of the Plan, thus rendering them liable to the plaintiffs for
additional benefits. By cross-appeal, the plaintiffs challenge
the court’s denial — on the basis of a timeliness ruling — of
their request for attorney’s fees. As explained below, we
affirm the award of summary judgment, vacate the denial of
attorney’s fees, and remand.
I.
A.
The Plan was established by the Fleet Reserve Association
(the “Association”) in 1972, and its terms were reissued in 1985
(the “1985 plan”). The 1985 plan included a benefits
calculation formula referred to by the parties and the district
court as the “Step Formula.” In 1996, the Association’s Board
of Directors (the “Board”) revised the 1985 plan and issued a
4
full restatement thereof (the “1996 plan”). 1 The 1996 plan
adopted a different benefits calculation formula — referred to
by the parties and the district court as the “Integrated
Formula” — that replaced the Step Formula. Importantly, the
Integrated Formula provides for substantially greater benefits
to the Plan’s participants and beneficiaries. 2 Between 1996 and
2002, the plaintiffs in this proceeding were paid benefits under
the 1996 plan, but those benefits were calculated under the Step
Formula of the 1985 plan, rather than under the Integrated
Formula of the 1996 plan.
The Association was apparently unaware of any issue
concerning the proper calculation of the plaintiffs’ benefits
until early 2002. At this point, Bragg, as the Plan’s
Administrator, undertook an investigation to determine the
correct benefits calculation formula. He concluded that the
1996 revision of the Plan — from the Step Formula to the
1
The “Plan,” as referred to herein, is the ERISA trust
named as a defendant. The terms “1985 plan” and “1996 plan” are
used to refer to differing versions of the Plan.
2
ERISA defines a plan “participant” as “any employee or
former employee of an employer, or any member or former member
of an employee organization, who is or may become eligible to
receive a benefit of any type from an employee benefit plan,” 29
U.S.C. § 1002(7), and a plan “beneficiary” as “a person
designated by a participant, or by the terms of an employee
benefit plan, who is or may become entitled to a benefit
thereunder,” id. § 1002(8).
5
Integrated Formula — had been a mistake, and that inclusion of
the Integrated Formula in the 1996 plan was simply a scrivener’s
error. Bragg explained the mistake to the Board at its July
2002 meeting, and the Association announced the scrivener’s
error at its National Convention later that year. In August
2002, Bragg, on behalf of the Plan, sought permission from the
IRS to revert to the Step Formula for tax purposes and thus not
be subjected to tax penalties. The Plan’s request to the IRS
contended that the Board should be authorized to so revise the
1996 plan because its inclusion of the Integrated Formula was a
scrivener’s error. The IRS granted the Plan’s request in
October 2003, and, in December 2003, the Board formally revised
the Plan to include the Step Formula.
On April 24, 2004, having ascertained that they were
entitled to benefits under the Integrated Formula rather than
the Step Formula, the plaintiffs filed claims with the Plan for
additional benefits. Bragg promptly denied these claims, and
the plaintiffs then pursued administrative appeals. In his
January 14, 2005 letter rejecting the plaintiffs’ final
administrative appeal, Bragg relied on three findings: first,
there was “no substantial evidence that the Integrated Formula
was written into the Plan before 1996”; second, there was “clear
and convincing evidence that the Integrated Formula was written
into the Plan in 1996 as a result of a scrivener’s error”; and
6
third, there had been no violation of “ERISA, . . . the Internal
Revenue Code, or any provision of the Plan” because inclusion of
the Integrated Formula was a scrivener’s error. J.A. 295. 3
B.
On January 3, 2005, the plaintiffs filed this civil action
in the District of Maryland. 4 The Complaint, as amended on April
12, 2005, alleged four ERISA violations: that the defendants
had violated ERISA’s reporting and disclosure requirements
(Count I); breached their fiduciary duties to the plaintiffs
(Count II); contravened the ERISA mandate on plan amendments and
notification (Count III); and, of importance here, erroneously
denied the plaintiffs’ claims for additional benefits under the
Integrated Formula (Count IV).
On August 11, 2005, in connection with a motion to transfer
venue, the defendants asserted that the claims of one plaintiff
3
Citations herein to “J.A. __” refer to the Joint Appendix
filed by the parties in this appeal.
4
The plaintiffs are James Cross, Charles Calkins, Edward
Huylebroeck, James Lee, Jerry Butler, Pamela Wells, Patricia J.
Williamson, and Heidi Schuller. The Complaint also named as
plaintiffs “all other similarly situated plan participants and
beneficiaries in the Fleet Reserve Association Defined Benefit
Pension Plan,” but, despite this allegation, certification of a
class action was never sought. J.A. 1. Although the individual
Board members were named as defendants in the Complaint, the
claims against them were voluntarily dismissed.
7
— James Cross — were time-barred under the applicable three-
year statute of limitations. In rejecting this contention, the
court explained that the limitations period “does not begin to
run until there has been a formal and final denial of a benefits
claim.” See Cross v. Fleet Reserve Ass’n Pension Plan, No.
1:05-cv-00001, slip op. at 12 (D. Md. Aug. 23, 2005) (the “Venue
Opinion”). 5 According to the Venue Opinion, the limitations
period had not been triggered when this litigation commenced, in
that the Complaint was filed on January 3, 2005, eleven days
before Bragg’s denial of the plaintiffs’ final administrative
appeal.
On May 26, 2006, the defendants sought summary judgment on
the four claims of the Complaint. With respect to Count IV —
the only claim disputed on appeal — the defendants contended
that the district court was obliged to defer to the “scrivener’s
error” determinations of Bragg, as the Plan’s Administrator, and
the IRS. The plaintiffs submitted a cross-motion for summary
judgment on Count IV, maintaining that the requirements for
correction of a scrivener’s error had not been satisfied, and
that the IRS ruling was irrelevant.
On September 28, 2006, the district court ruled on the
summary judgment motions. See Cross v. Fleet Reserve Ass’n
5
The Venue Opinion is found at J.A. 228-40.
8
Pension Plan, No. 1:05-cv-00001 (D. Md. Sept. 28, 2006) (the
“Summary Judgment Opinion” and the “Summary Judgment Order”). 6
The court awarded summary judgment to the plaintiffs on Count
IV, explaining in its Summary Judgment Opinion that they were
entitled to receive benefits under the Integrated Formula. In
so ruling, the court rejected the defendants’ contention that
inclusion of the Integrated Formula in the 1996 plan was a
correctable scrivener’s error. More specifically, the court
determined that the exceptional circumstances necessary for an
equitable reformation of the 1996 plan had not been shown, and
that Bragg had thus exceeded his authority in reforming the
Plan. The court did not address the defendants’ contention
regarding the IRS ruling. Finally, the court also granted
summary judgment to the plaintiffs on Count III, to the
defendants on Count I, and also to the defendants on Count II
(as to all plaintiffs save Charles Calkins). 7
On October 5, 2006, the defendants filed a motion to alter
or amend the district court’s judgment on Counts II, III, and
IV, pursuant to Rule 59(e) of the Federal Rules of Civil
6
The Summary Judgment Opinion is found at J.A. 921-41, and
the Summary Judgment Order is found at J.A. 942.
7
In the Summary Judgment Opinion, the district court found
that only plaintiff Calkins possessed standing to pursue the
claim in Count II.
9
Procedure. By their Rule 59(e) motion, the defendants
requested: (1) summary judgment on Count II with respect to all
plaintiffs; (2) clarification of whether the court’s rulings had
disposed of all claims; and (3) a more specific recitation of
the relief granted to the plaintiffs on Counts III and IV. The
plaintiffs responded to the Rule 59(e) motion on October 27,
2006, and at the same time submitted notice that they intended
to seek an attorney’s fee award under the provisions of 29
U.S.C. § 1132(g)(1). 8
On December 18, 2006, the district court disposed of the
Rule 59(e) motion and purported to enter final judgment. See
Cross v. Fleet Reserve Ass’n Pension Plan, No. 1:05-cv-00001 (D.
Md. Dec. 18, 2006) (the “First Reconsideration Opinion” and the
“First Reconsideration Order”). 9 First of all, the court ruled
that Calkins, as the sole remaining plaintiff in Count II,
lacked standing to pursue his claim; thus, the court entered
summary judgment for the defendants on Count II with respect to
all plaintiffs. The court ruled on Counts III and IV, however,
that the defendants were obliged to “pay the Plaintiffs all
8
In an ERISA civil action by a participant or beneficiary,
“the court in its discretion may allow a reasonable attorney's
fee and costs of action to either party.” 29 U.S.C.
§ 1132(g)(1).
9
The First Reconsideration Opinion is found at J.A. 943-52,
and the First Reconsideration Order is found at J.A. 953-54.
10
benefits owed under the terms of the Plan, together with
prejudgment interest.” First Reconsideration Order 2. As a
result, the court directed the parties to “determine the actual
dollar amount of pension benefits owed, including prejudgment
interest, and communicate the result to the Court no later than
30 days from the date of this Order.” Id. Finally, the First
Reconsideration Order set forth a timetable for attorney’s fee
claims and declared that “[t]his case BE, and HEREBY IS,
CLOSED.” Id.On January 8, 2007, the defendants filed a notice of appeal
from the First Reconsideration Order. On January 16, 2007,
while the appeal was pending, the plaintiffs filed their motion
for attorney’s fees. We dismissed the defendants’ appellate
effort as interlocutory on March 26, 2007, and our mandate on
the dismissal was issued on April 17, 2007. 10 On April 26, 2007,
the plaintiffs submitted a memorandum in support of their
attorney’s fee motion. The defendants replied to the
plaintiffs’ fee request on June 5, 2006, contending, inter alia,
that the plaintiffs’ supporting memorandum was untimely.
10
In disposing of the defendants’ interlocutory appeal, we
granted the plaintiffs’ motion to dismiss, which relied on the
fact that the district court had not entered a final judgment
because it had failed to determine individual award amounts and
prejudgment interest issues.
11
On June 1, 2007, the defendants filed yet another motion
for reconsideration, seeking an assessment of whether the
plaintiffs possessed standing to assert their claim in Count III
and alleging that all the claims in the Complaint were untimely.
In this second reconsideration motion, the defendants asserted
that the plaintiffs’ claims were time-barred by not only the
applicable statute of limitations, which had already been
asserted with respect to plaintiff Cross in the venue
proceedings, but also time-barred under the administrative
provisions of the 1996 plan, an assertion then raised for the
first time. The plaintiffs replied that both limitations
arguments had been waived, in that they should have been raised
prior to the issuance of the Summary Judgment Order.
On July 3, 2007, the district court issued its final
decision in this case. See Cross v. Fleet Reserve Ass’n Pension
Plan, No. 1:05-cv-00001 (D. Md. July 3, 2007) (the “Second
Reconsideration Opinion” and the “Second Reconsideration
Order”). 11 First, the court ruled that the plaintiffs’
attorney’s fee claim was untimely. Second, it revisited Count
III, vacated its earlier ruling in favor of the plaintiffs, and
instead granted summary judgment to the defendants because the
11
The Second Reconsideration Opinion is found at J.A. 955-
73, and the Second Reconsideration Order is found at J.A. 974-
76.
12
plaintiffs lacked standing to pursue the Count III claim.
Finally, the court rejected the defendants’ statute of
limitations contention on the reasoning of its Venue Opinion,
and it determined that the defendants’ administrative
limitations contention had been waived. As a result, the court
awarded summary judgment to the defendants on Counts I, II, and
III, and to the plaintiffs on Count IV. 12
On January 28, 2008, the district court denied the
plaintiffs’ fee request reconsideration motion. See Cross v.
Fleet Reserve Ass’n Pension Plan, No. 1:05-cv-00001 (D. Md. Jan.
28, 2008) (the “Final Fee Opinion”). 13 The parties filed timely
notices of appeal, and we possess jurisdiction pursuant to 28
U.S.C. § 1291. 14
12
Under the district court’s rulings, the plaintiffs were
entitled to a total award on Count IV of $460,009.19, plus post-
judgment interest. This amount was determined by calculating
the difference between the Step Formula and Integrated Formula
for each plaintiff, including prejudgment interest through
September 28, 2006. The individual awards were as follows:
Wilfred Butler, $27,693.88; Charles Calkins, $61,018.04; James
Cross, $123,215.31; Edward Huylebroek, $159,895.75; James Lee,
$65,556.25; Heidi Schuller, $935.41; Pamela Wells, $7,577.66;
and Patricia Wilson, $14,116.89. See Second Reconsideration
Order 2-3.
13
The Final Fee Opinion is found at J.A. 981-85.
14
In summary, there have been four appeals in these
proceedings, three of which are consolidated for disposition
here. The defendants’ first effort to appeal, filed on January
8, 2007 (No. 07-1031), was disposed of as interlocutory by our
March 26, 2007 dismissal order. Next, the defendants, on July
(Continued)
13
II.
In their appeal, the defendants challenge only the district
court’s award of summary judgment to the plaintiffs on Count IV
— the ERISA benefits claim. The plaintiffs contend in Count IV
that they should have been paid benefits under the Integrated
Formula of the 1996 plan rather than under the Step Formula of
the 1985 plan, and they have pursued their claim for additional
benefits due under 29 U.S.C. § 1132(a)(1)(B). We review de novo
a district court’s award of summary judgment. See Denzler v.
Questech, Inc., 80 F.3d 97, 101 (4th Cir. 1996).
Procedurally, the defendants assert on appeal that the
Count IV claim was untimely. They contend that the plaintiffs
failed to exhaust their administrative appeals within the
authorized time frame and, in the alternative, that the
20, 2007, filed a notice of appeal from the district court’s
summary judgment award to the plaintiffs on Count IV (No. 07-
1699). On August 2, 2007, the plaintiffs cross-appealed the
summary judgment award to the defendants on Count III (No. 07-
1755). Finally, the plaintiffs, on February 8, 2008, filed a
notice of appeal from the Final Fee Order (No. 08-1190).
Because the plaintiffs did not raise their Count III contentions
in their briefs or at oral argument, we deem the plaintiffs’
appeal in No. 07-1755 to be waived and thus decline to address
it. See Fed. R. App. P. 28(a)(9)(A) (“[T]he [appellant’s]
argument . . . must contain . . . appellant's contentions and
the reasons for them, with citations to the authorities and
parts of the record on which the appellant relies.”); see also
Carter v. Lee, 283 F.3d 240, 252 n.11 (4th Cir. 2002); Edwards
v. City of Goldsboro, 178 F.3d 231, 241 n.6 (4th Cir. 1999).
14
plaintiffs’ claims are barred by the applicable three-year
statute of limitations. On the merits, the defendants maintain
that they are entitled to equitable reformation of the
scrivener’s error in the 1996 plan for three reasons: (1) the
actuary who prepared the 1996 plan acknowledged that the
Integrated Formula was erroneously included therein; (2) the
defendants did not know of the inclusion of the Integrated
Formula until they were informed of it by the Plan; and (3) the
IRS determined that the Integrated Formula was a scrivener’s
error. As explained below, these contentions are unpersuasive.
A.
We first assess the defendants’ contention that the
plaintiffs’ Count IV claim is procedurally barred. The
defendants maintain that it is barred as untimely for two
reasons: first, that the plaintiffs failed to file their
administrative appeals within sixty days of receiving their
benefit payments, as required by the 1996 plan; and second, that
the Count IV claim was not filed within the applicable three-
year limitations period. We examine these contentions in turn.
1.
First, the defendants assert that the plaintiffs failed to
exhaust their administrative remedies because they did not
request an administrative review within the limitations period
established by the 1996 plan. In that respect, “internal appeal
15
limitations periods in ERISA plans are to be followed just as
ordinary statutes of limitations,” and “[f]ailure to file a
request for review within [a plan's] limitations period is one
means by which a claimant may fail to exhaust her administrative
remedies.” Gayle v. United Parcel Serv., Inc., 401 F.3d 222,
226 (4th Cir. 2005) (internal quotation marks omitted). These
principles, however, are of no assistance to the defendants in
this dispute.
Put succinctly, although an administrative limitations
defense might have had some merit, the defendants failed to
assert it in a timely fashion. The district court began its
analysis of this issue by correctly concluding that the
defendants’ second motion for reconsideration was filed under
Federal Rule of Civil Procedure 60(b). 15 As such, we review the
court’s denial of the reconsideration motion for abuse of
15
Pursuant to our precedent, “[i]n cases where a party
submits a motion [for reconsideration], which . . . does not
refer to a specific Federal Rule of Civil Procedure, [we will]
consider[] that motion either a Rule 59(e) motion to alter or
amend a judgment, or a Rule 60(b) motion for relief from a
judgment or order.” In re Burnley, 988 F.2d 1, 2 (4th Cir.
1992). Rule 59(e) provides that “[a] motion to alter or amend a
judgment must be filed no later than 10 days after the entry of
the judgment,” but the deadline for filing a Rule 60(b) motion
is at least a year after the entry of judgment, see Fed. R. Civ.
P. 60(c). Here, the defendants’ second motion for
reconsideration was submitted on June 1, 2007 — significantly
longer than ten days after the September 28, 2006 Summary
Judgment Order and the December 18, 2006 First Reconsideration
Order.
16
discretion. See Heyman v. M.L. Mktg. Co., 116 F.3d 91, 94 (4th
Cir. 1997) (recognizing that we review for abuse of discretion
court’s denial of Rule 60(b) motion for relief from judgment).
Rule 60 has long been recognized as an “attempt[] to strike
a proper balance between the conflicting principles that
litigation should be brought to an end and that justice must be
done.” 11 Charles Alan Wright, Arthur R. Miller & Mary Kay
Kane, Federal Practice and Procedure § 2851 (2d ed. 1995). In
disposing of the administrative limitations issue, the district
court concluded that the defendants did not present any
“exceptional circumstances” contemplated under Rule 60(b),
explaining that
[t]he contention that the Plaintiffs’ benefits claims
are barred because of their failure to file a timely
administrative appeal was cognizable prior to the
Court’s September 28, 2006 judgment, and the
Defendants waived that defense by failing to assert it
promptly in their Answer or motion for summary
judgment. See Peterson v. Air Line Pilots Ass’n,
Int’l., 759 F.2d 1161, 1164 (4th Cir. 1985) (“defense
of limitations is waived unless asserted promptly by
way of answer or motion”).
Second Reconsideration Opinion 8-9. Put simply, in waiting more
than eight months after the district court ruled on the summary
judgment motions to first assert its contention on the
administrative limitations issue, the defendants — as the court
ruled — waived the sixty-day limitations defense provided by the
1996 plan. We thus agree with the court’s analysis and are
17
unable to perceive an abuse of discretion in its denial of the
Rule 60(b) relief.
2.
The defendants next contend that Maryland’s three-year
statute of limitations for civil actions bars the plaintiffs’
Count IV claim. See Md. Code Ann., Cts. & Jud. Proc. § 5-101(“A civil action at law shall be filed within three years from
the date it accrues . . . .”). Because ERISA itself establishes
no limitations period for initiating a cause of action under 29
U.S.C. § 1132, “the federal courts look to state law for an
analogous limitation provision to apply.” Dameron v. Sinai
Hosp. of Baltimore, Inc., 815 F.2d 975, 981 (4th Cir. 1987).
When an ERISA plan is alleged to have breached its duty to
provide beneficiaries with the benefits due them, the analogous
state cause of action is breach of contract. See id.On this point, the parties agree: the three-year Maryland
statute of limitations for individual contract actions applies
in this dispute. Nonetheless, the parties disagree on when the
limitations period was triggered. The defendants maintain that
it was triggered when the plaintiffs received their lump-sum
benefit payments from the Plan. The plaintiffs, however,
contend that the three-year limitations period was not triggered
until they had exhausted the internal administrative appeals
18
provided by the 1996 plan. As explained below, we agree with
the plaintiffs.
Just as ERISA is silent on whether a plaintiff must exhaust
his administrative remedies before seeking relief in the courts,
it provides no explicit guidance as to when the limitations
period begins to run on a benefits claim. We have previously
examined this question, however, and recognized that “Congress
intended plan fiduciaries, not the federal courts, to have
primary responsibility for claims processing.” Makar v. Health
Care Corp. of Mid-Atlantic (Carefirst), 872 F.2d 80, 83 (4th
Cir. 1989). Because access to the courts is meant to be a fail-
safe for ERISA claims, “[a]n ERISA cause of action does not
accrue until a claim of benefits has been made and formally
denied.” Rodriguez v. MEBA Pension Trust, 872 F.2d 69, 72 (4th
Cir. 1989).
In this proceeding, the plaintiffs’ administrative appeals
were not finally denied until January 14, 2005, and their
request for reconsideration of such denial was rejected on April
11, 2005. The plaintiffs filed their Complaint in the district
court on January 3, 2005 — well before the 2008 limitations
deadline imposed under Maryland law. We thus reject the
defendants’ statute of limitations contention, and conclude that
the Complaint was timely filed.
19
B.
Next, we turn to the defendants’ contention that inclusion
of the Integrated Formula in the 1996 plan was simply a mistake
— a “scrivener’s error” — entitling them to equitable
reformation of the 1996 plan. We review a district court’s
denial of equitable relief “for abuse of discretion, accepting
the court's factual findings absent clear error, while examining
issues of law de novo.” Dixon v. Edwards, 290 F.3d 699, 710
(4th Cir. 2002). The defendants assert three bases for
equitable reformation of the 1996 plan due to a scrivener’s
error: first, the actuary who drafted the 1996 plan
acknowledged that the Integrated Formula was erroneously
included therein; second, the plaintiffs did not rely on the
Integrated Formula being a part of their pension plan; and
third, the IRS agreed that inclusion of the Integrated Formula
in the 1996 plan was a scrivener’s error. These issues each
turn on questions of law, and, assessing them de novo, we agree
with the district court that equitable reformation is not
warranted.
1.
In assessing the defendants’ “scrivener’s error”
contention, we are guided by the principle that “ERISA plans are
contractual documents which, while regulated, are governed by
established principles of contract and trust law.” Haley v.
20
Paul Revere Life Ins. Co., 77 F.3d 84, 88 (4th Cir. 1996); see
also Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111
(1989) (declaring that courts should be “guided by principles of
trust law” in determining standard of review for ERISA claims);
Wheeler v. Dynamic Eng’g, Inc., 62 F.3d 634, 638 (4th Cir. 1995)
(explaining that terms of ERISA plans are interpreted “under
ordinary principles of contract law”). In reviewing benefits
claims under ERISA, “we turn to the federal common law of
contracts.” Denzler, 80 F.3d at 101. We may, however, “use
principles of state common law to guide our analysis.” Wheeler,
62 F.3d at 638. Importantly, we have recognized that “‘a
scrivener’s error, like a mutual mistake, occurs when the
intention of the parties is identical at the time of the
transaction but the written agreement does not express that
intention because of that error; this permits a court acting in
equity to reform an agreement.’” Blackshear v. Reliance
Standard Life Ins. Co., 509 F.3d 634, 642 (4th Cir. 2007)
(quoting 27 Samuel Williston & Richard A. Lord, A Treatise on
the Law of Contracts § 70.93 (4th ed. 2003)). Further, the
power to recognize and correct a scrivener’s error in an ERISA
plan rests exclusively with the courts, and an “administrator
cannot simply ‘reform’ a plan to correct what it unilaterally
perceives to be a mistake or error contained in the plan’s
written terms.” Id.
21
A primary purpose of ERISA was to require that participants
and beneficiaries be fully advised of their rights under
employee benefit plans. See, e.g., 29 U.S.C. § 1102(a)(1)
(requiring benefit plans to be written); id. § 1021(a)
(requiring plan administrator to deliver summary plan
description to participants); id. § 1022(a) (requiring summary
plan descriptions to be “written in a manner calculated to be
understood by the average plan participant”). Consistent with
congressional intent, the Supreme Court has held that a “written
[benefit] plan is to be required in order that every employee
may, on examining the plan documents, determine exactly what his
rights and obligations are under the plan.” Curtiss-Wright
Corp. v. Schoonejongen, 514 U.S. 73, 83 (1995) (internal
quotation marks omitted). Thus, when the terms of an ERISA plan
are clear and unambiguous, a federal court is obliged to apply
it as written.
In limited circumstances, however, a court is entitled to
reform an ERISA plan to correct a mutual mistake or to mitigate
a fraud scheme. See Audio Fidelity Corp. v. Pension Benefit
Guarantee Corp., 624 F.2d 513, 518 (4th Cir. 1980). Such an
action requires that the party seeking reformation present clear
and convincing evidence showing that “the mistake [was] mutual,
or if unilateral, it [was] accompanied by fraud on the part of
the other contracting party.” Id.; see also Restatement
22
(Second) of Contracts § 155 (1979) (providing that reformation
is only available “[w]here a writing that evidences or embodies
an agreement in whole or in part fails to express the agreement
because of a mistake of both parties as to the contents or
effect of the writing”).
In order to establish a mutual mistake, the party seeking
reformation must show that the parties to the contract intended
to agree to terms that are different from those reflected in the
writing. See Restatement (Second) of Contracts § 152 (1979)
(providing that if “mistake of both parties at the time a
contract was made as to a basic assumption on which the contract
was made has a material effect on the agreed exchange of
performances, the contract is voidable by the adversely affected
party unless he bears the risk of the mistake”); Oliver Wendell
Holmes, Jr., The Common Law 280 (G. Edward White ed., Harvard
Univ. Press 2009) (1881) (explaining that a mutual mistake
exists when there is “a difference in kind between the actual
subject-matter and that to which the intention of the parties
was directed,” resulting in “the terms of the supposed contract,
although seemingly consistent, [being] contradictory in matters
that [go] to the root of the bargain”); Williston & Lord, supra,
§ 70:9 (“The law permits reformation of instruments to reflect
the true intention of the parties when . . . the party seeking
relief is able to establish to the court’s satisfaction that
23
both parties intended something other than what is reflected in
the instrument in question.”). By its very nature, mutual
intent requires a manifestation of will from both parties. See
Restatement (Second) of Contracts § 155 cmt. a (1979) (requiring
“some agreement between the parties prior to the writing” for
court reformation due to mutual mistake).
2.
Applying these principles to the dispute on the Integrated
Formula of the 1996 plan, the defendants have failed to show
that inclusion of that formula in the 1996 plan resulted from a
mutual mistake. They have asserted two bases for equitable
reformation of the 1996 plan — that the actuary admitted that
inclusion of the Integrated Formula was a mistake and that the
plaintiffs did not rely thereon — but neither of these
contentions demonstrates the intent of the plaintiffs. 16
The actuary’s discovery deposition in this case establishes
only that the defendants did not intend to alter the benefits
calculation formula — it says nothing about the intent of the
plaintiffs. Further, though each of the plaintiffs
“acknowledged by affidavit that he had not relied . . . upon the
16
The defendants do not allege fraud with respect to the
plaintiffs, which is essential to reformation of a contract due
to unilateral mistake. See Audio Fidelity, 624 F.2d at 518. We
therefore need only consider whether a mutual mistake — as
opposed to a unilateral one — existed.
24
unambiguous plan documents that included the error . . . , nor
[was he] aware of the erroneous Integrated Formula until the
plan sponsor announced its investigation into whether an error
existed in the plan documents,” Br. of Appellants 24, ignorance
of a mistake is insufficient proof of a party’s intent to the
contrary. See Williston & Lord, supra, § 70:9 (“[A] clear
mistake by one party, coupled with ignorance by the other party,
is not a mutual mistake and will not be corrected.”). Taken
together, the defendants’ assertions fail to establish a mutual
mistake. Put succinctly, the defendants have produced no
evidence of the plaintiffs’ intent, nor have they alleged or
shown that there were negotiations with respect to the benefits
calculation formula through which such intent could be
ascertained. Because its terms are unambiguous and there is a
patent lack of evidence of mutual mistake, the district court
committed no error by declining to equitably reform the 1996
plan.
3.
Finally, the defendants urge us to defer to the IRS
determination that inclusion of the Integrated Formula in the
1996 plan was a scrivener’s error, thus justifying an equitable
25
reformation of that provision. 17 Put simply, however, the IRS
determination is neither helpful nor controlling in this appeal.
A primary purpose of the IRS program — and the only purpose of
the IRS ruling on the 1996 plan — is to authorize an ERISA plan
to amend its provisions without losing the tax exemption
provided for by 26 U.S.C. § 501(a). 18 Notably, such IRS
proceedings are ex parte, predicated only on the submissions of
the ERISA plan seeking relief. The IRS determination thus only
resolves issues between the IRS and the ERISA plan — it is not a
formal adjudication, and it does not impact on the relationship
between an ERISA plan and its beneficiaries. Even though the
IRS may decide whether to tax an ERISA plan, it is not entitled
to alter the contractual rights of a plan beneficiary. Although
we accord great deference to the IRS with respect to tax policy
and regulation, the judiciary retains its dominion in ERISA
civil actions. See Blackshear, 509 F.3d at 642 (“[R]eformation
. . . is most decidedly a remedy available in a court of
17
The IRS ruling was made by the IRS Employee Plans
Compliance Resolution System (“EPCRS”). The Plan’s application
to EPCRS was governed by Rev. Proc. 2002-47, 2002-2 C.B. 133.
18
Section 411(d)(6)(A) of Title 26 provides that “[a] plan
shall be treated as not satisfying the requirements of this
section [and therefore will not constitute a qualified trust
under 26 U.S.C. § 401(a)] if the accrued benefit of a
participant is decreased by an amendment of the plan.” Section
501(a) provides that “[a]n organization described in . . .
section 401(a) shall be exempt from [income] taxation.”
26
equity.”). Thus, despite the defendants’ arguments to the
contrary, the IRS ruling relied on by the defendants is not
entitled to deference in this proceeding.
III.
Finally, we turn to the plaintiffs’ cross-appeal on the
attorney’s fee issue. In this regard, the plaintiffs seek a fee
award, pursuant to 29 U.S.C. § 1132(g)(1), for legal services
rendered in the district court. As explained below, we vacate
the district court’s rejection of the plaintiffs’ attorney’s fee
motion as untimely.
A.
The guidelines for the submission of motions for attorney’s
fees in the District of Maryland are spelled out in the court’s
Local Rule 109.2. That Rule, in relevant part, provides as
follows:
Unless otherwise . . . ordered by the Court, any
motion requesting the award of attorneys’ fees must be
filed within fourteen days of the entry of judgment.
The [supporting memorandum] must be filed within
thirty-five days from the date the motion is filed:
or (unless otherwise ordered by the Court) in the
event an appeal is taken from the underlying judgment,
within fourteen days of the issuance of the mandate of
the Court of Appeals. Any opposition to the motion
shall be filed within fourteen days of service of the
memorandum. Non-compliance with these time limits
shall be deemed to be a waiver of any claim for
attorneys’ fees.
27
D. Md. R. 109.2.a. The district court initially addressed the
attorney’s fee issue in its First Reconsideration Order of
December 18, 2006. The court then established a timetable for
the relevant submissions:
The parties [are ordered to] submit briefs on the
issue of attorneys fees and costs, including the
amount thereof, in accordance with the following
schedule:
a. Petition by the Plaintiffs, within 15
days of the date of this Order;
b. Response by the Defendants, within 25
days of the date of this Order; and
c. Reply by the Plaintiffs, within 30 days
of the date of this Order;
First Reconsideration Order 2. Finally, the Order concluded by
declaring that “[t]his case BE, and HEREBY IS, CLOSED.” Id.Two days thereafter, on December 20, 2006, the plaintiffs
filed an unopposed motion to extend the time for the filing of
their attorney’s fee motion until January 17, 2007. This
extension motion was premised on the assertion that, “[u]nder
Local Rule 109 (1) and (2), Plaintiffs Motion for Attorneys Fees
and Bill of Costs is due on January 2, 2007.” Cross v. Fleet
Reserve Ass’n Pension Plan, No. 1:05-cv-00001 (D. Md. Dec. 20,
2006). The court granted the unopposed extension request the
following day, directing that “Plaintiffs’ Motion for Attorneys
Fees and Bill of Costs is due on January 17, 2007.” Cross v.
Fleet Reserve Ass’n Pension Plan, No. 1:05-cv-00001 (D. Md. Dec.
28
21, 2006) (the “Extension Order”). Soon thereafter, however, on
January 8, 2007, the defendants filed their notice of appeal
from the First Reconsideration Order, incorrectly perceiving it
to be an appealable final decision under 28 U.S.C. § 1291.
The plaintiffs filed their motion for attorney’s fees on
January 16, 2007, explaining that their supporting memorandum
would follow. On January 22, 2007, the defendants filed an
opposition to the motion, asserting, inter alia, that the
plaintiffs had waived their attorney’s fee claim by failing to
file a supporting memorandum by January 17, 2007. The
plaintiffs replied on January 26, 2007, contending that, under
Local Rule 109.2.a, the defendants’ January 8, 2007 notice of
appeal served to reset the briefing schedule on the attorney’s
fee issue. Local Rule 109.2.a, if applicable here, would accord
the plaintiffs fourteen days after the mandate on that appeal to
file their supporting memorandum.
On March 26, 2007, we dismissed as interlocutory the
defendants’ effort to appeal from the First Reconsideration
Order. Our mandate on that appeal issued on April 17, 2007, and
the plaintiffs submitted their supporting memorandum on the
attorney’s fee motion nine days later, on April 26, 2007. The
defendants responded to the plaintiffs’ attorney’s fee
memorandum on May 11, 2007. In addition to briefing the merits
of the fee claim, the defendants reasserted their timeliness
29
contention, particularly with respect to legal services rendered
prior to the Summary Judgment Order of September 28, 2006. The
court, in its Second Reconsideration Opinion of July 3, 2007,
concluded that the plaintiffs had waived their attorney’s fee
claim, explaining that
[b]y failing to comply with the schedule dictated by
Court’s December 18, 2006 Order, as extended by the
Court on December [21], 2006, the Plaintiffs waived
their claim for attorneys’ fees. Accordingly, their
motion for attorneys’ fees will be denied.
Second Reconsideration Opinion 17.
B.
Generally speaking, we are obliged to accord deference to a
district court’s interpretation of its own order. See Saudi v.
Northrop Grumman Corp., 427 F.3d 271, 279 (4th Cir. 2005).
Importantly, however, the Extension Order can at best be
characterized as ambiguous. As such, we “must construe its
meaning, and in so doing may resort to the record upon which the
judgment was based.” In re Tomlin, 105 F.3d 933, 940 (4th Cir.
1997) (internal quotation marks omitted). Because this record
cannot be squared with the district court’s interpretation of
the Extension Order, we are constrained to conclude that the
court abused its discretion in denying the plaintiffs’
attorney’s fee request as untimely. See United States v.
Delfino, 510 F.3d 468, 470 (4th Cir. 2007) (recognizing that a
court may “abuse[] its discretion when it acts arbitrarily or
30
irrationally, . . . relies on erroneous factual or legal
premises, or commits an error of law”), cert. denied, 129 S. Ct.
41 (2008).
1.
First of all, in denying the attorney’s fee request as
untimely by its July 3, 2007 Second Reconsideration Order, the
district court failed to recognize that there had been no final
judgment in the case until that very Order, thus rendering any
attorney’s fee submissions by the plaintiffs prior to that date
premature. It is manifest that the federal courts prefer to
conduct attorney’s fee proceedings after the entry of a final
judgment. Indeed, the default mechanism in Federal Rule of
Civil Procedure 54(d)(2)(B)(i) requires attorney’s fee motions
“to be filed no later than 14 days after the entry of judgment.”
This mandate is predicated on the assumption that “the court
will want to consider attorneys’ fee issues immediately after
rendering its judgment on the merits of the case.” Fed. R. Civ.
P. 54 advisory committee’s note. Local Rule 109.2.a echoes this
preference, and, although there is no “legislative history” with
respect to Rule 109.2.a, we must assume that it is predicated on
the same bases as Rule 54(d).
Arguably, the district court possessed the authority under
Local Rule 109.2.a to direct the plaintiffs to file their
attorney’s fee motion and memorandum prior to the entry of a
31
final judgment. Nevertheless, this plainly is not what the
court intended when it set the briefing schedule on the
attorney’s fee issue in its December 18, 2006 First
Reconsideration Order. The court contemplated that Order as a
final judgment, declaring therein that “[t]his case BE, and
HEREBY IS, CLOSED.” First Reconsideration Order 2. As a result
of the First Reconsideration Order, summary judgment was granted
on all four claims in the Complaint — to the defendants on
Counts I and II, and to the plaintiffs on Counts III and IV.
The court also declined to reform the terms of the 1996 plan,
and it ordered the defendants to pay all benefits owed to the
plaintiffs, plus prejudgment interest. After entry of the First
Reconsideration Order, however, at least two unresolved issues
remained — the individual award amounts and prejudgment interest
issues.
When the defendants sought to appeal from the First
Reconsideration Order, we dismissed that appeal as
interlocutory. In so doing, we rejected the central premise for
establishing the attorney’s fee briefing schedule in the First
Reconsideration Order: that such Order constituted a final
judgment. Importantly, the final judgment was not entered until
the Second Reconsideration Order of July 3, 2007. Rather than
acknowledging in the Second Reconsideration Order that it had
directed the plaintiffs to prematurely submit their attorney’s
32
fee request, however, the district court abused its discretion
by denying such request as being briefed in a tardy fashion.
2.
Additionally, assuming final judgment had been entered by
way of the December 18, 2006 First Reconsideration Order, the
plaintiffs’ fee memorandum would nevertheless have been timely
filed in accordance with the December 21, 2006 Extension Order.
In so concluding, we have considered three possible
interpretations of the Extension Order, which granted the
plaintiffs’ unopposed motion for an extension of time.
Significantly, that motion explicitly referenced Local Rule
109.2.a as the governing authority for the attorney’s fee
proceedings, and the court declared in its single-sentence
Extension Order only that “Plaintiffs’ Motion for Attorneys Fees
and Bill of Costs is due on January 17, 2007.” Extension Order
1 (emphasis added). Moreover, the Extension Order makes no
reference to the December 18, 2006 briefing schedule, nor the
new due dates of the plaintiffs’ supporting memorandum, the
defendants’ response, and the plaintiffs’ reply.
First, the Extension Order could be read to extend the due
date of the plaintiffs’ attorney’s fee motion only, leaving the
December 18, 2006 briefing schedule in place for all other
submissions. Such an interpretation, however, leads to the
nonsensical result that the plaintiffs’ supporting memorandum
33
was due fifteen days prior to their motion. Further, the
defendants would have been obliged to file their response brief
by January 12, 2007 — five days before the plaintiffs were to
file their attorney’s fee motion.
Second, the Extension Order could be read as the district
court interpreted it — as simply having “extended the [December
18, 2006] briefing schedule by fifteen days.” Second
Reconsideration Opinion 16. But this interpretation is also
untenable because it requires too much supposition. The
Extension Order contains no reference to the December 18, 2006
briefing schedule, any “fifteen-day extension” thereof, or any
document other than the plaintiffs’ attorney’s fee motion.
Indeed, the Extension Order establishes just one deadline:
January 17, 2007, as the due date for the plaintiffs’ motion.
The Extension Order simply does not convey that the plaintiffs’
supporting memorandum — in addition to their motion — was due
on January 17, 2007. And the Extension Order by no means
implies that fifteen days should also be added to the due dates
for the defendants’ response and the plaintiffs’ reply as a
result of the plaintiffs being granted a fifteen-day extension
from the December 18, 2006 briefing schedule.
The only reasonable reading of the Extension Order is the
third one: that the Order invalidated the December 18, 2006
briefing schedule in favor of the timetable set forth in Local
34
Rule 109.2.a. Indeed, the plaintiffs’ unopposed motion for an
extension of time explicitly referenced Rule 109.2.a as the
governing authority for the attorney’s fee proceedings — a
notion uncontroverted at that time by either the district court
or the defendants. Under Rule 109.2.a, a supporting memorandum
“must be filed within thirty-five days from the date the motion
is filed.” In the event an appeal is taken, the Rule
specifically extends the deadline for the memorandum to “within
fourteen days of the issuance of the mandate of the Court of
Appeals.” Here, the plaintiffs filed their attorney’s fee
motion on January 16, 2007 — a day before they were required to
do so under the Extension Order. Eight days earlier, however,
the defendants filed their notice of appeal, which, pursuant to
Rule 109.2.a, extended the plaintiffs’ supporting memorandum
deadline to fourteen days from the issuance of our mandate.
When the plaintiffs filed their supporting memorandum on April
26, 2006 — nine days after the mandate issued — they were thus
in compliance with Rule 109.2.a. In such circumstances, the
district court abused its discretion in ruling that the
plaintiffs’ memorandum was untimely. 19
19
The plaintiffs also seek an award of attorney’s fees for
their work on appeal. Because this request is premature, we
reject it without prejudice.
35
IV.
Pursuant to the foregoing, we affirm the district court’s
summary judgment award on the Count IV ERISA claim. We vacate
its denial of an attorney’s fees award to the plaintiffs,
however, and remand for further proceedings.
AFFIRMED IN PART,
VACATED IN PART,
AND REMANDED
36