Opinion
Case No. 5:00-CV-99
January 16, 2001
ORDER AND JUDGMENT
In accordance with the Opinion filed this date,
IT IS HEREBY ORDERED that Defendants' Motion For Summary Judgment Of Dismissal (docket no. 6) is
DENIED.
IT IS FURTHER ORDERED that Plaintiff's Motion For Summary Judgment (docket no. 12) is GRANTED. Plaintiff is entitled to a pro-rata share of the 1998 contribution by Defendant to its profit sharing plan. Defendant shall make the contribution of Plaintiff's share, plus interest, to a "rollover IRA" designated by Plaintiff. Plaintiff shall inform Defendant of the rollover IRA within fourteen (14) days of the date of this Order and Defendant shall make the contribution within thirty (30) days thereafter.
IT IS FURTHER ORDERED that Plaintiff is not entitled to recover attorney fees under 29 U.S.C. § 1132(g). However, Plaintiff may recover his costs pursuant to Fed.R.Civ.P. 54(d)(1) and Local Rule 54.1.
This case is closed.
OPINION
Plaintiff, Richard J. Bryan ("Bryan"), has sued Defendant, Michigan Funeral Directors Association, Inc. ("MFDA"), alleging a claim for benefits under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 to 1461. Now before the Court are MFDA's Motion for Summary Judgment of Dismissal and Bryan's Motion for Summary Judgment.
I. Facts
From October 1, 1983, to May 6, 1998, Bryan was employed as MFDA's Executive Director. During Bryan's tenure as Executive Director, MFDA had a profit sharing plan in place known as the Michigan Funeral Directors Association, Inc. Employee Profit Sharing Plan (the "Plan"). The Plan was a "defined contribution" plan, meaning that each year the MFDA board of directors would determine the percentage of employees' compensation to be contributed to the Plan by MFDA. Bryan was a participant in the Plan as well as a trustee of the Plan.
On May 6, 1998, Bryan's employment relationship with MFDA, which was governed by the terms of a written agreement dated March 4, 1997 (the "Employment Agreement"), terminated pursuant to the terms contained in a document entitled "Settlement Agreement and Mutual Release" (the "Settlement Agreement"). Paragraph 2 of the Settlement Agreement provided, in part:
[MFDA] agrees to pay to Mr. Bryan, or to his heirs, in partial settlement of any rights to future payments and benefits Mr. Bryan would have received under the [Employment Agreement] had it been continued beyond the Effective Date of this Agreement, and in consideration as well for Mr. Bryan's paragraph 15 releases, the sum of Six Hundred Fifty Seven Thousand Two Hundred Twenty Five and no/100 ($657,225) Dollars.
(Settlement Agreement ¶ 2, Def.'s Mot. Ex. K.) Paragraph 15 of the Settlement Agreement provided:
In consideration of the covenants and agreements by the parties to be performed hereunder, (a) Mr. Bryan irrevocably and unconditionally releases, waives and forever discharges [MFDA], the Services Corporation, the VEBA, the Profit Sharing Plan and Mr. Curtin, together with their predecessors, successors, heirs, executors, administrators and personal representatives . . . from any and all claims, actions, causes of action, suits, debts, charges, complaints, liabilities, obligations, promises, agreements, controversies, damages and expenses (including attorneys fees and costs actually incurred), of any nature whatsoever, known or unknown, in law or in equity, including, without limitation of the foregoing general terms, any claims against Mr. Bryan or [MFDA] arising out of or related to Mr. Bryan's employment with [MFDA] or its termination, and any claims arising from any alleged violation by [MFDA] or by Mr. Bryan of any federal, state or local statutes, ordinances, or common laws, including, but not limited to . . . the Employee Retirement Income Security Act . . . provided, further, this release shall not apply to the following (a "Reserved Claim" or the "Reserved Claims"):
. . . . (b) Mr. Bryan's right to . . . enforce his rights with respect to his interest in the Profit Sharing Plan, including, without limitation, the right to withdraw his account therein.
(Id. ¶ 15.)
On May 20, 1999, MFDA voted to make a contribution to the Plan for the 1998 Plan year. Pursuant to the terms of the Plan, Bryan was eligible to receive a pro-rata share of the 1998 contribution because he worked at least 500 hours during 1998. After learning of the distribution, Bryan filed a claim with MFDA for a proportionate share of the 1998 contribution. MFDA denied Bryan's claim at every stage of the administrative process. Bryan thereafter filed this action.
Normally, where a plaintiff seeks benefits under an ERISA plan, the court should decide the matter on the administrative record. See Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 619 (6th Cir. 1998). However, the summary judgment standard is more appropriate in this case because there is no dispute that requires interpretation of the Plan. The question presented by the parties is whether the Settlement Agreement negates Bryan's right to receive a share of the 1998 contribution to the Plan, which presents an issue of state law contract interpretation. There is no issue of whether MFDA properly interpreted the Plan or whether its decision to deny benefits was arbitrary and capricious.
Summary judgment is appropriate if there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56. The rule requires that the disputed facts be material. Material facts are facts which are defined by substantive law and are necessary to apply the law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510 (1986). A dispute over trivial facts which are not necessary in order to apply the substantive law does not prevent the granting of a motion for summary judgment. Id. at 248, 106 S.Ct. at 2510. The rule also requires the dispute to be genuine. A dispute is genuine if a reasonable jury could return judgment for the non-moving party. Id. This standard requires the non-moving party to present more than a scintilla of evidence to defeat the motion. Id. at 251, 106 S.Ct. at 2511 (citing Improvement Co. v. Munson, 14 Wall. 442, 448, 20 L.Ed. 867 (1872)).
A moving party who does not have the burden of proof at trial may properly support a motion for summary judgment by showing the court that there is no evidence to support the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 324-25, 106 S.Ct. 2548, 2553-54 (1986). If the motion is so supported, the party opposing the motion must then demonstrate with "concrete evidence" that there is a genuine issue of material fact for trial. Id.; Frank v. D'Ambrosi, 4 F.3d 1378, 1384 (6th Cir. 1993). The court must draw all inferences in a light most favorable to the nonmoving party, but may grant summary judgment when "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Agristor Financial Corp. v. Van Sickle, 967 F.2d 233, 236 (6th Cir. 1992) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356 (1986)).
III. Discussion
MFDA's motion for summary judgment presents two issues. First, MFDA argues that this Court does not have jurisdiction over Bryan's claim because his claim does not arise under ERISA, but rather depends upon interpretation of the Settlement Agreement, specifically, whether Bryan released any claim to a future distribution for the 1998 year — a matter requiring the exclusive application of state law. MFDA asserts that Bryan's reliance on ERISA's non-alienation clause, 29 U.S.C. § 1056 (d)(1), must be rejected because that provision does not preclude a knowing, voluntary waiver of retirement benefits in connection with a compromise and/or release of claims. Second, MFDA argues that even if the Court finds it has jurisdiction, Bryan released any claim he may have had to a future distribution.
Bryan argues in his motion for summary judgment that he did not release his claim to a future distribution and that even if MFDA's interpretation of the Settlement Agreement is correct, ERISA's non-alienation clause bars MFDA's reliance on the Settlement Agreement to deprive him of his entitlement to a pro-rata share of the distribution.
In resolving the instant motions, the Court will first address the subject matter jurisdiction issue raised by MFDA. The Court will then address whether Bryan released his claim to a distribution for 1998 from the Plan under the Settlement Agreement. Because the Court concludes that Bryan did not release his claim for a pro-rata share of the 1998 contribution in the Settlement Agreement, the Court need not consider whether ERISA's anti-alienation provision invalidates the waiver. Finally, although not raised in his instant motion, the Court will address Bryan's request for an award of attorney fees under ERISA.
A. Subject Matter Jurisdiction
Although not raised as a separate issue, MFDA argues that the Court does not have subject matter jurisdiction because Bryan's claim, in essence, is that MFDA breached the Settlement Agreement by not providing him his pro-rata share of the 1998 contribution and ERISA's anti-alienation provision does not apply in this case. Thus, MFDA contends, resolution of this dispute requires only application of state law and raises no issues under ERISA for purposes of this Court's federal question jurisdiction.
This Court has subject matter jurisdiction over Bryan's claim regardless of whether ERISA's anti-alienation provision applies. "In determining whether a court has federal subject matter jurisdiction, the court ordinarily begins by examining the plaintiff's well-pleaded complaint." Cmty. Ins. Co. v. Rowe, 85 F. Supp.2d 800, 812 (S.D.Ohio 1999) (citing Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 1546 (1987)). Under the well-pleaded complaint rule, the plaintiff is master of the claim and is free to rely exclusively on either federal or state law where both provide a basis for recovery. See Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425-2429 (1987). Thus, where an issue of federal law appears on the face of the plaintiff's well-pled complaint, federal question jurisdiction is present. See Am. Fed'n of Television Radio Artists, AFL-CIO v. WJBK-TV (New World Communications of Detroit, Inc.) 164 F.3d 1004, 1007 (6th Cir. 1999). Furthermore, federal question jurisdiction, as established by a plaintiff's well-pleaded complaint, cannot be ousted by a state law defense, even if the defense is anticipated by the plaintiff in his complaint. Cf. Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 10, 103 S.Ct. 2841, 2846 (1983) (stating that a federal court does not have jurisdiction over a complaint alleging a state law claim even though the complaint alleges that a federal defense the defendant may raise is insufficient to defeat the claim or that federal law deprives the defendant of a state law defense). Although the well-pleaded complaint rule is generally invoked by courts in examining whether federal jurisdiction exists in removed cases alleging state law claims, it applies as well to original filings where the plaintiff relies on federal law. See Lowe v. Ingalls Shipbuilding, 723 F.2d 1173,1179 (5th Cir. 1984) (stating that "the well-pleaded complaint rule applies fully as much where the party invoking federal jurisdiction relies on federal law to preclude an anticipated state law defense as where he merely anticipates his adversary's invocation of a federal defense").
In this case, Bryan's complaint relies solely upon federal law, i.e., ERISA, to support his claim for benefits from the Plan. The sole basis for Bryan's claim is that he is entitled to a contribution from the Plan pursuant to ERISA. Although Bryan alleges in his complaint that MFDA's reliance on the settlement agreement — a state law defense — is precluded by ERISA's antialienation provision, Franchise Tax Board and other Supreme Court precedent teaches that Bryan's claim is controlled by federal law, notwithstanding the potential availability of a state law defense. See Caterpillar, Inc., 482 U.S. at 393, 107 S.Ct. at 2430 (discussing well-pleaded complaint rule in connection with a federal defense). MFDA's assertion that Bryan's claim "is no more than a claim that his entitlement to a profit sharing contribution for plan year 1998 . . . was not terminated by the Settlement Agreement," (Def.'s Br. Supp. at 3), is incorrect because the Settlement Agreement is an issue solely because MFDA has raised it as a defense to Bryan's claim under ERISA. Thus, Bryan's claim is still a federal claim, and this Court has jurisdiction, regardless of whether Bryan's claim is barred by the Settlement Agreement or the anti-alienation provision applies to this case.
B.Scope of Settlement Agreement
Although MFDA contends that the Court may reach the issue of whether Bryan released his right to a pro-rata share of the 1998 contribution only after it addresses whether the anti-alienation provision applies in this case, the Court's analysis must begin with the scope of the release in the Settlement Agreement because the anti-alienation provision becomes an issue only if the Court concludes that Bryan's claim is barred by the Settlement Agreement.
Bryan does not contend that ERISA preempts MFDA's state law release defense. See Auslander v. Helfand, 988 F. Supp. 576, 580 (D.Md. 1997) (holding that ERISA does not preempt state law waiver and release principles).
Settlement agreements are contracts and, thus, are subject to the rules of construction applicable to contracts generally. See Sweeney v. Walter E. Heller Co.(In re American Plastics Corp.), 102 B.R. 609, 611 (Bankr.W.D.Mich. 1989); Gramer v. Gramer, 207 Mich. App. 123, 125, 523 N.W.2d 861, 862 (1994). The primary goal of contract interpretation is to give effect to the intentions of the parties, according to the plain and ordinary meaning of the words used in the contract. See NBD Bancorp Inc. v. FDIC, 643 F. Supp. 1119, 1121 (E.D.Mich. 1986). "Accordingly, a written contract is construed according to the intentions therein expressed, when those intentions are clear from the face of the instrument." Zurich Ins. Co. v. CCR Co., 226 Mich. App. 599, 604, 576 N.W.2d 392, 395 (1997). In construing a contract, all provisions should be given effect if possible. See Cutler v. Spens, 191 Mich. 603, 616, 158 N.W. 224, 228 (1916). A construction which negates particular language must be rejected if there is another reasonable construction which gives effect to all provisions. See De Boer v. Geib, 225 Mich. 542, 544, 238 N.W. 226, 226 (1931).
MFDA relies upon paragraphs 2 and 15 of the Settlement Agreement as establishing that Bryan agreed to give up his rights to any future payments from MFDA or the Plan in exchange for a lump sum payment. In particular, paragraph 2, which governs payment for termination of the Employment Agreement, provides for a payment of $657,225 "in partial settlement of any rights to future payments and benefits Mr. Bryan would have received under the [Employment Agreement] had it been continued beyond the Effective Date of" the Settlement Agreement. (Settlement Agreement ¶ 2.) Paragraph 15, which contains a broad release, specifically provides that Bryan releases MFDA, the Plan, and others from all claims "of any nature whatsoever, known or unknown . . . including . . . any claims against . . . [MFDA] arising out of or related to Mr. Bryan's employment with [MFDA] or its termination, and any claims arising from any alleged violation by [MFDA] . . . of. . . [ERISA] . . . ." (Id. ¶ 15.) However, Paragraph 15 carves out an exception to the release, as a "Reserved Claim", "Bryan's right to . . . enforce his rights with respect to his interest in the [Plan], including, without limitation, the right to withdraw his account therein." (Id. ¶ 15(b).) Resolution of this case thus boils down to one simple inquiry based upon Paragraph 15(b) of the Settlement Agreement: did Bryan's "interest" in the Plan, as of the date the Settlement Agreement was signed, include the right to receive a pro-rata share of any contribution for the 1998 Plan year?
MFDA concedes that at the time Bryan signed the Settlement Agreement, he had worked a sufficient number of hours (500) to qualify for a pro-rata share of the 1998 contribution to the Plan if the board of directors decided to make a contribution for that year. Whether or not Bryan would receive anything was dependent solely upon action by the board of directors. This was true even though Bryan's employment was terminated, as indicated by the Summary Plan Description, which states:
You will share in the Employer's contribution for the Plan Year, even if you complete less than 1,000 hours of service during a Plan Year. However, if you terminate employment during a Plan Year in which you complete 500 or fewer hours of service, you will not share in the Employer's contribution for such Plan Year.
(Summary Plan Description ¶ 8, Def's Br. Supp. Ex. A.) Although not expressly stated, the obvious implication of the quoted language is that any Plan participant who works 500 or more hours in a Plan year will be entitled to share in the contribution for that year, even though the participant terminates his or her employment during the year. In fact, MFDA admits that two other participants who, like Bryan, terminated their employment with MFDA during the 1998 Plan year, received a pro-rata share of the 1998 contribution. (See Answer 1st Am. Compl. ¶ 10.) Thus, Bryan had a contingent right to a pro-rata share of the 1998 contribution.
MFDA acknowledges that Paragraph 15(b) reserved rights to Bryan other than the right to withdraw his account from the Plan, even though not expressly mentioned in Paragraph 15(b):
Those reserved rights, on electing to continue in the plan, in addition to the right of withdrawal, included the right to continue to share in the investment performance of the plan; the right to obtain a special valuation reflecting account investment performance to the date of any withdrawal; the right to elect the form of withdrawal in either a lump sum, or various annuity options; the right to designate a beneficiary; the right to receive annual valuation statements; and the right to roll his continuing account into an individual retirement account or another qualified retirement plan.
(Def's Br. Supp. at 7.) MFDA contends, however, that the term "interest" only encompasses the amount in Bryan's account at the time Bryan signed the Settlement Agreement. However, nothing in Paragraph 15(b) supports MFDA's interpretation. The use of the term "interest" without any qualification is broad enough to include any extant right Bryan had under the Plan at the time he signed the Settlement Agreement. Although the term "interest" is not defined in the Settlement Agreement, Blacks Law Dictionary states that "interest" is "[t]he most general term that can be employed to denote a right, claim, title, or legal share in something . . . . More particularly it means a right to have the advantage accruing from anything; any right in the nature or property, but less than title."Black's Law Dictionary812 (6th ed. 1990). Under this definition, Bryan's "interest" in the Plan included his contingent right to a share of any contribution for 1998.
Because paragraph 15(b) specifically addresses Bryan's rights with respect to his interest in the Plan, that language takes precedence over the more general language in paragraphs 2 and 15 regarding settlement and release. See Wait v. Newman, 284 Mich. 1, 4, 278 N.W. 742, 743 (1938).
Paragraph 15(b) does not limit Bryan's rights under the Plan. Rather, in all-inclusive terms ("including, without limitation"), that provision allows Bryan to enforce any right he had when the Settlement Agreement was signed. Therefore, contrary to MFDA's assertion, it is irrelevant that the Settlement Agreement does not expressly provide that Bryan is entitled to a pro-rata share of any contribution for 1998 because that right was reserved among all his rights under the Plan in paragraph 15(b). Had MFDA desired to restrict Bryan's right to participate in a contribution for the 1998 year, it could have done so by specifically exempting the right from the scope of paragraph 15(b).
C. Attorney Fees
The Court notes that Bryan has requested that he be awarded his reasonable costs and attorneys' fees pursuant to paragraph 23 of the Summary Plan Description. However, the Summary Plan Description does not create a separate basis for an award of attorney fees but only summarizes the attorney fee provision set forth in section 504(g) of ERISA, 29 U.S.C. § 1132(g). Although Bryan is a prevailing party and an attorney, the Court concludes that Bryan is not entitled to an award of attorneys' fees because pro se litigants are not entitled to recover attorneys' fees in an ERISA action. See Boyadjian v. Cigna Companies, 973 F. Supp. 500, 503-04 (D.N.J. 1997). In other contexts, federal courts have held that pro se litigants who are attorneys are not entitled to attorneys' fees under similar fee-shifting provisions. For example, inKay v. Ehrler, 499 U.S. 432, 111 S.Ct. 1435 (1991), the Supreme Court held that pro se litigants, including attorneys, are not entitled to attorney's fees under 42 U.S.C. § 1988. The Court reasoned that "[a]lthough [section 1988] was no doubt intended to encourage litigation protecting civil rights, it is also true that its more specific purpose was to enable potential plaintiffs to obtain the assistance of competent counsel in vindicating their rights." Id. at 436, 111 S.Ct. at 1437. InKooritzky v. Herman, 178 F.3d 1315 (D.C. Cir. 1999), the court held that pro se litigants who are attorneys are not entitled to attorney's fees under the fee-shifting provision of the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412(d)(1)(a). The court noted that the EAJA fee-shifting provision was similar to section 1988 and found that the Court's reasoning in Kay, that section 1988 contemplated the existence of an attorney-client relationship to enable the plaintiff to obtain assistance of competent legal counsel, was equally applicable to the EAJA. See Kooritzky, 178 F.3d at 1317-19. Similarly, in Ray v. United States Department of Justice, 87 F.3d 1250 (11th Cir. 1996), the court held that because the language of and policy behind the fee-shifting provision of the Freedom of Information Act ("FOIA") is substantially similar to that of section 1988, pro se litigants who are also attorneys are not entitled to recover attorney fees under FOIA. See id. at 1251-52.
The language of the provision at issue, "[i]n any action under this title . . . by a participant, beneficiary, or fiduciary, 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), is similar to the language of section 1988. See 42 U.S.C. § 1988(b)("the court, in its discretion, may allow the prevailing party . . . a reasonable attorney's fee as part of the costs"). Furthermore, there is no indication in the language of ERISA's fee-shifting provision that the congressional policy behind that provision differs in any respect from the policy behind section 1988 or the fee-shifting provisions under FOIA or EAJA. Therefore, Bryan is not entitled to an award of attorney fees. However, he may still recover his costs. See Boyadjian, 973 F. Supp. at 504. If Bryan seeks to recover his costs, he should do so pursuant to Fed.R.Civ.P. 54(d)(1) and Local Rule 54.1.
Conclusion
For the foregoing reasons, the Court will grant Bryan's motion for summary judgment and deny MFDA's motion for summary judgment.
An Order consistent with this Opinion will be entered.