United States Court of Appeals,
Fifth Circuit.
No. 95-31107.
Willie HALL, Plaintiff-Appellee,
v.
NATIONAL GYPSUM CO., as Plan Administrator of the Pension Plan
for Hourly-Paid Employees of the Gold Bond Products Division of
National Gypsum Co., Located in New Orleans, La., # 667, Defendant-
Appellant.
Feb. 6, 1997.
Appeal from the United States District Court for the Eastern
District of Louisiana.
Before REYNALDO G. GARZA, JOLLY and DeMOSS, Circuit Judges.
REYNALDO G. GARZA, Circuit Judge:
In a case presenting an unusual factual context, the National
Gypsum Company appeals from a judgment ordering it, as the
administrator of a pension plan, to pay disability benefits to an
alleged plan participant and former employee, Willie Hall.1 For the
reasons discussed below, we vacate the district court's judgment
and remand the case with instructions.
I.
Willie Hall served as an employee at a building-products
manufacturing plant in New Orleans from July 19, 1965 until
November 29, 1981, when he underwent a below-the-knee amputation of
his left leg due to complications from diabetes. When he began his
employment, the plant was owned and operated by National Gypsum,
1
The benefits are now owing to Hall's wife, as Hall died
during the course of this litigation.
1
which established the Retirement Plan for Hourly-Paid Employees of
the Gold Bond Products Division of National Gypsum ("the Plan").
The Plan included provisions for retirement pension benefits as
well as disability pension benefits. Under the terms of the Plan,
Hall's pension rights had vested as of March 10, 1981. On March
11, 1981, National Gypsum sold the plant to International Building
Products, Inc. ("IBP").
National Gypsum assured its employees that those who continued
to work at the plant were not considered terminated for purposes of
the Plan. IBP did not have a plan of its own, so as part of the
sale, National Gypsum apparently maintained control over the
pension plan for the employees at the plant.2 The collective
bargaining agreement in place between IBP and Hall's union, Local
No. 667 of the Laborers International Union, stated:
For vesting purposes, under any pension plan adopted by
International Building Products, Inc., employees formerly
employed by National Gypsum Company who have not elected
retirement under the National Gypsum Company pension plan
shall be given credit for years of employment with National
Gypsum Company. In addition, International Building Products,
Inc. has arranged for its continuing employees to receive
credit for vesting purposes under the National Gypsum Company
pension plan for years of employment with International
Building Products, Inc., provided however that the full
responsibility for the payment of any benefits under any
National Gypsum Company pension plan shall be solely that of
National Gypsum Company.
The Plan provided for disability benefits to those who met the
required term of service and "who shall have become, through some
unavoidable cause, permanently incapacitated, and who shall at such
2
The district court's resolution of this disputed fact is an
issue of this appeal. See Part II.E of this opinion.
2
time be in the employ of the Company."
On September 28, 1982, Hall submitted a claim for disability
benefits to IBP premised on his amputation. IBP referred the claim
to National Gypsum which refused to pay on the claim because Hall's
doctor had not declared Hall "totally and permanently disabled" as
required by the language of the Plan. When Hall subsequently
provided a statement from his doctor stating that he was in fact so
disabled, National Gypsum again refused to pay, this time stating
that his disability occurred after his termination as an employee
of National Gypsum, thereby making him ineligible under the Plan.
Correspondence between National Gypsum and Hall continued, but
National Gypsum refused to pay Hall's disability benefits. When
Hall contacted the company that coordinated the annuity payments
made to recipients of Plan benefits, Canada Life Assurance, he was
told that it exercised no control over who received benefits under
the Plan. All of those decisions, Canada Life stated, were made by
National Gypsum.
On October 28, 1990, National Gypsum filed for bankruptcy
protection under Chapter 11 in the Bankruptcy Court for the
Northern District of Texas. On March 9, 1993, that court confirmed
a plan of reorganization that discharged all claims against
National Gypsum arising prior to the confirmation or resulting from
conduct occurring prior to the confirmation, excepting certain
asbestos-related claims. The assets of the Plan were not included
in National Gypsum's bankruptcy estate, but were apparently
transferred to Morgan Guaranty Trust for credit to the account of
3
Canada Life Assurance Company, "in order to purchase annuities for
all benefits accrued as of March 10, 1981." Hall did not file any
claim with the bankruptcy court.
He did, however, sue National Gypsum, as the administrator of
the Plan, in federal district court in New Orleans on May 7, 1993.
His complaint alleged that his claim for disability benefits was
wrongfully denied, thereby stating a cause of action under §
502(a)(1)(B) of the Employee Retirement Income Security Act
(ERISA), 29 U.S.C. § 1132(a)(1)(B). He did not include the Plan as
a party to the suit although ERISA does provide for this. As
discussed below, however, a suit against the Plan would have been
futile because the Plan's administrator, National Gypsum, claims
the Plan no longer exists. National Gypsum claimed that suit was
barred because of the running of the applicable period of
prescription, because Hall failed to exhaust administrative
remedies under the Plan, and because of the discharge it received
in bankruptcy. It also stated that Hall was not entitled to
benefits under the Plan because the Plan ceased to exist and
because Hall did not qualify as an "employee" under the Plan.
The district court denied the parties' motions for summary
judgment and set the case for a bench trial. The court and the
parties then decided to forego a trial and the court decided the
case based on "the briefs, stipulations, and depositions already
received in the record." On January 31, 1995, the court ordered
National Gypsum's "Pension Committee" to hold a hearing "to
determine whether plaintiff is totally and permanently disabled and
4
eligible for benefits under the Plan." National Gypsum petitioned
the court for clarification as to what it meant by "Pension
Committee," but the motion was denied. National Gypsum never held
any hearing on Hall's disability status and Hall moved for entry of
final judgment and for attorney's fees and costs. The district
court granted his motion, awarding disability pension payments to
Hall in accordance with the terms of the Plan and awarding him
attorney's fees and costs. National Gypsum appeals.
II.
Our review of the district court's conclusions of law is
plenary. We will uphold the district court's findings of fact so
long as they are not clearly erroneous. This applies to findings
based on oral as well as documentary evidence. Fed.R.Civ.P. 52(a).
When, as is the case here, the evidence relied upon by the district
court in making its findings consists solely of documents in the
record, the burden of establishing clear error is not so great as
where the court engaged in the judging of witness credibility or in
some other way was in a superior vantage point for finding facts.
E.g., Cooper v. Department of the Navy, 594 F.2d 484, 486 (5th
Cir.), cert. denied, 444 U.S. 926, 100 S.Ct. 266, 62 L.Ed.2d 183
(1979). This does not, however, mean that our review is de novo,
as National Gypsum suggests; the language of Rule 52(a)
unmistakably sets forth the clear-error standard.
National Gypsum asserts that the district court erred in
holding that its bankruptcy discharge did not bar Hall's claim,
that the prescription period had not expired, and that Hall's claim
5
was not barred for failing to exhaust administrative remedies.
Moreover, it claims that the district court erred in determining
that Hall was an employee of National Gypsum for purposes of the
Plan and that the district court erred in finding that the Plan did
not terminate on March 10, 1981. We have engaged in a thorough
review of the record and now address its contentions in turn.
A.
National Gypsum first contends that Hall should be barred
from recovering any benefits in this suit because he failed to file
a proof of claim in its bankruptcy proceeding. Bankruptcy Rule
3003(c)(2) provides as follows:
Any creditor or equity security holder whose claim or interest
is not scheduled or scheduled as disputed, contingent, or
unliquidated shall file a proof of claim or interest within
the time prescribed by subdivision (c)(3) of this rule; any
creditor who fails to do so shall not be treated as a creditor
with respect to such claim for the purposes of voting and
distribution.
The Code defines a "creditor" as an "entity that has a claim
against the debtor that arose at the time of or before the order
for relief concerning the debtor." 11 U.S.C. § 101(10)(A). It
defines a "claim" as a right to payment or to an equitable remedy
for breach of performance if such breach gives rise to a right to
payment, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, or undisputed. 11 U.S.C. § 101(5). Construing Hall's
claim as one for payment of damages from National Gypsum, the claim
would clearly be barred as he would satisfy the definition of a
creditor. As such, Rule 3003 would have prevented him from
6
recovering out of the bankruptcy estate.
The order of the bankruptcy court specified that "the
discharge herein provided operates as an injunction against the
prosecution of the debtors ... of any Claim or Interest so
discharged." In other words, all then-existing claims against
National Gypsum that were not brought to the attention of the
bankruptcy court in the form of a proof of claim were essentially
extinguished upon the court's confirmation of the reorganization
plan. This would include any claim against National Gypsum itself.
We cannot say, however, that this bars Hall's suit. His suit
seeks to collect benefits to which he claims entitlement under the
Plan. As National Gypsum admits, the Plan assets were not part of
its estate in bankruptcy but were segregated from it. It stated
that the Plan assets were given to Morgan Guaranty Trust and
credited to the account of Canada Life Assurance for the payment of
annuities to Plan beneficiaries. Moreover, Canada Life stated that
it exercises no control over the assets. All determinations as to
who receives benefits are made by National Gypsum. In requesting
National Gypsum to order an annuity payment, Hall does not collide
with the bankruptcy court's discharge order as money payments will
not come from National Gypsum itself, but from the assets of the
Plan. In fact, had Hall filed a claim in National Gypsum's
bankruptcy proceeding, the trustee would surely have successfully
argued that the assets of the bankruptcy estate were not subject to
Hall's claim, since he was seeking collection from the assets of
the Plan.
7
As we stated in Matter of Edgeworth, 993 F.2d 51, 53 (5th
Cir.1993), a discharge in bankruptcy does not extinguish the debt
itself, but merely releases the debtor from personal liability for
the debt. We there noted that Bankruptcy Code Section 524(e)
specifies that the debt still exists and can be collected from any
other entity that might be liable. There, the debtor claimed that
a creditor's claim against an insurance policy was barred because
of its discharge in bankruptcy. We noted, however, that the
crucial inquiry was whether the proceeds of the policy were part of
the bankruptcy estate. Because we found they were not, the
debtor's general discharge did not bar the creditor's suit for
recovery from the proceeds of the policy. Id. at 55-56. Likewise
here, Hall's claim is for assets from the Plan, assets not included
in National Gypsum's bankruptcy estate. National Gypsum cannot
raise the discharge as a defense to its obligation to pay Hall
benefits he is owed from the Plan assets.
National Gypsum asserts in its reply brief that Hall cannot
receive this relief because it claims his complaint did not request
this relief. The complaint asked that National Gypsum, as plan
administrator, pay the benefits. Even construing this as National
Gypsum does and as the district court apparently did, we cannot
agree with its conclusion that this bars Hall from receiving this
relief. Federal Rule of Civil Procedure 8(f) requires that all
pleadings be construed to do substantial justice. "The Federal
Rules reject the approach that pleading is a game of skill in which
one misstep by counsel may be decisive to the outcome and accept
8
the principle that the purpose of a pleading is to facilitate a
proper decision on the merits." Conley v. Gibson, 355 U.S. 41, 48,
78 S.Ct. 99, 103, 2 L.Ed.2d 80 (1957). The record evidence
demonstrates that National Gypsum continued to make eligibility
determinations long after it claims the Plan terminated; it is
apparent that it is the entity which today controls the
distribution of funds from the Plan's assets.
Given the confusion attendant to this unique factual
situation, much of which only came to light during discovery, we
find no defect in Hall's complaint that bars him from recovering
from the assets of the Plan. We conclude that, in light of National
Gypsum's position throughout this dispute with Hall that the Plan
no longer exists, this suit against National Gypsum, as
administrator of the Plan, is the equivalent of an action against
the Plan itself and that Hall is therefore entitled to recover from
the assets of the Plan in accordance with 29 U.S.C. § 1132(d).
Accordingly, we vacate the district court's judgment ordering
National Gypsum to pay Hall's benefits out of its own coffers and
remand with instructions that National Gypsum, as administrator of
the Plan, be ordered to provide benefits to Hall from the Plan's
assets.
B.
National Gypsum asserts that the district court erred in
determining that Hall's claim was not barred by prescription. The
court ruled that the prescription period began to run on February
13, 1984, when Hall received notice that his request for benefits
9
was denied because he was not an active employee at the time of his
disability. Applying Louisiana's ten-year prescriptive period, the
court found Hall's May 7, 1993 suit to be timely.
ERISA does not set forth a statute of limitations to govern
actions to clarify rights to benefits under 29 U.S.C. §
1132(a)(1)(B). We therefore look to the state statute of
limitations most analogous to the claim being advanced. In Kennedy
v. Electricians Pension Plan, IBEW No. 995, 954 F.2d 1116 (5th
Cir.1992), we held that these claims are governed by Louisiana's
ten-year prescription period, the period applied by the district
court.
A cause of action under ERISA accrues when a request for
benefits is denied. E.g., Hogan v. Kraft Foods, 969 F.2d 142, 145
(5th Cir.1992). National Gypsum asserts that the district court's
finding that Hall's claim was conclusively denied on February 13,
1984 is clearly erroneous. It states that Hall's claim was denied
at an earlier occasion, either on October 19, 1982 when Hall's
application was returned to him or, at the latest, on February 24
1983 when Hall's attorney inquired into the reasons behind the
administrator's decision. Hall argues that the return of his
request in October 1982 did not give rise to a cause of action
because the language of the letter did not suggest a conclusive
denial of benefits. Hall contends that a conclusive denial did not
occur until late in 1993 or early in 1994.
We find that this suit is timely. The October letter simply
stated that, as Hall had not provided the requisite statement of
10
total and permanent disability, the request could not be
considered. This does not amount to a denial, as proved by a
subsequent letter on March 3, 1983 stating that if Hall provided
this statement, National Gypsum would reconsider the request.
Subsequent correspondence from National Gypsum suggested that Hall
should be making its request to IBP rather than to National Gypsum.
To clarify matters, Hall's attorneys wrote to National Gypsum
informing it that Hall was now totally and permanently disabled and
wanted his benefits. They also sought clarification, in the form
of documentation, as to which company—National Gypsum or IBP—owed
the disability benefits, since each claimed the other was on the
hook.
On December 7, 1983, National Gypsum replied that Hall did
have a vested benefit, but because Hall's disability occurred after
his termination as an employee of National Gypsum he was not
entitled to any benefits. The letter stated that this was due to
a recent administrative decision from National Gypsum's corporate
offices that "no disability benefits will be granted to former
employees who were not disabled while employed" by National Gypsum.
We find, contrary to the district court, that this letter
constituted a conclusive denial of Hall's claim. It plainly and
unmistakably denies Hall's claim and does not try to pass
responsibility for Hall's claim to IBP nor does it dispute that
Hall has otherwise made out a proper claim. Counting this event as
the starting point for prescription purposes, however, does not
11
change the fact that Hall's May 7, 1993 suit was timely.3
C.
National Gypsum claims that Hall's claim should be barred
because, it states, Hall failed to exhaust available administrative
remedies. The exhaustion doctrine is applicable to suits brought
under ERISA. Denton v. First Nat'l Bank of Waco, 765 F.2d 1295
(5th Cir.1985) (citing Amato v. Bernard, 618 F.2d 559 (9th
Cir.1980)). This requirement is not one specifically required by
ERISA, but has been uniformly imposed by the courts in keeping with
Congress' intent in enacting ERISA. In the seminal case on the
issue of exhaustion, Amato, the court stated that the purposes of
the exhaustion requirement included minimizing the number of
frivolous ERISA suits, promoting the consistent treatment of
benefit claims, providing a nonadversarial dispute resolution
process, and decreasing the time and cost of claims settlement.
Amato, 618 F.2d at 567. In Denton, we additionally noted that the
requirement also serves to provide a clear record of administrative
action if litigation should ensue, and to assure that judicial
review is made under the arbitrary and capricious standard, not de
novo. 765 F.2d at 1300. We stated this was necessary "to keep
from turning every ERISA action, literally, into a federal case."
3
The confusing factual context of this case makes it difficult
to determine the precise date on which the prescriptive period
began to run. This is so because of the absence of an available
administrative appeals process at the time the claim was denied.
In any event, the prescriptive period began no earlier than
December 7, 1983—the date of the first definite denial—and
consequently had not run at the time Hall filed suit. The district
court, therefore, did not commit clear error in finding that the
suit was not barred by prescription.
12
Id. We review the district court's decision to allow suit to
proceed for abuse of discretion. E.g., Curry v. Contract
Fabricators Inc. Profit Sharing Plan, 891 F.2d 842, 846 (11th
Cir.1990).
The Summary Plan Description (SPD) provided for review of an
adverse determination as follows:
Upon receipt of denial of claim by you ... an appeal
requesting further review may be submitted to the Benefits
Coordinator within 60 days. You may review any pertinent
documents held by the Company and you may submit issues and
comments in writing. Upon receipt for review, the Benefits
Coordinator will request a review by the Pension Committee
which will render a decision by no later than 60 days
following receipt of the request and such decision will be
submitted to you ... in writing, setting forth all specific
information on which such decision was based.
Hall does not claim that he formally followed this process to have
his claim reviewed. National Gypsum claims that this failure bars
the prosecution of this suit.
The district court found that the repeated letters and phone
calls to National Gypsum were sufficient to trigger the appeals
process, but that National Gypsum did not follow the appropriate
procedures under the Plan for review of a denied claim. Hall
requested, per the SPD, the documents upon which National Gypsum
was relying for its determination, particularly the recent
administrative order from its corporate offices. He was told, in
response, that this "new" order was really an old policy, merely a
confirmation of what had always been its policy. He was sent only
what he already had: language from the Plan. The court noted that
there was neither evidence that a hearing was held to determine
Hall's eligibility for benefits nor that the Pension Committee
13
engaged in any form of review of the denial of his benefits.
Accordingly, it sent the case back into the Plan apparatus and
requested that the Pension Committee review the matter, a perfectly
appropriate request. See, e.g., Makar v. Health Care Corp. of the
Mid-Atlantic, 872 F.2d 80, 84 (4th Cir.1989) (failure to exhaust
remedied by "remand" to the plan).
The reason no review was had in the first place was
inadvertently provided by National Gypsum in a clarification motion
it filed after the district court entered its order. National
Gypsum asked the court what it meant by "Pension Committee,"
stating, inter alia, that this review body does not exist and, in
fact, has not existed since 1981, long before Hall's dispute over
benefits began. When the Plan did not act on the court's request
to review its denial of Hall's claim, the court entered judgment in
favor of Hall.
As we note above, the claim was in fact denied on December 7,
1983. Following the denial, Hall communicated with National Gypsum
twice more to request the documents supporting its decision and to
seek clarification of the decision to deny. His requests were
unsuccessful. We believe, like the district court, that these
attempts at nonlitigious resolution of the matter, combined with
the elimination of the Plan's appeal body, National Gypsum's
ever-changing story of why benefits could not be paid, and its
failure to follow the appropriate procedures under the Plan result
in Hall not being barred under the exhaustion requirement.
As Judge Tjoflat stated for the Eleventh Circuit, "there are
14
occasions when a court is obliged to exercise its jurisdiction and
is guilty of an abuse of discretion if it does not, the most
familiar examples perhaps being when resort to administrative
remedies is futile or the remedy inadequate." Curry, 891 F.2d at
846 (quoting Amato, 618 F.2d at 568). The court noted in that case
that none of the purposes served by the exhaustion requirement
would be met by denying the applicant access to the courts. The
same is true here. As other courts have recognized, when a plan's
review apparatus has been abolished there is no need for a claimant
to go through the formalities. E.g., Hutchinson v. Wickes Cos.,
726 F.Supp. 1315, 1321 (N.D.Ga.1989). We cannot say the district
court's finding that Hall should not be barred under the exhaustion
requirement was error.
D.
The next issue with which we are confronted is the district
court's finding that Hall constituted an "employee" for purposes of
the Plan, contrary to National Gypsum's contentions. The parties,
below and on appeal, have spent a great deal of time debating
whether it is the terms of the SPD or those of the Plan itself that
control this definition, with the SPD containing the broader
definition. We, like the district court, see no need to wade into
the issue of when the terms of an SPD take precedence over those of
the Plan, or vice versa, because even under the stricter definition
National Gypsum's actions demonstrate that it considered Hall, and
all other IBP employees who began work with National Gypsum, to be
employees for purposes of the Plan.
15
The district court concluded that "the manner in which the
defendant handled plaintiff's claim, as detailed below, and the
obvious intent to continue the Plan for the IBP employees is
conclusive evidence that plaintiff was considered an employee for
purposes of the Plan." It apparently based its finding, at least in
part, on statements made by a National Gypsum representative to IBP
employees that those employees who transferred from National Gypsum
to IBP were not considered terminated for purposes of the Plan.
National Gypsum's Director of Employee Benefits confirmed this
position in a memo in which he stated, "I feel you have expressed
our position fully and nothing more should be said." We cannot say
the district court's finding is clearly erroneous. Because the
Plan denied Hall his benefits based upon an erroneous
interpretation of who counted as an employee, its denial of
benefits to Hall was error. Accordingly, we agree with the
district court that the benefits must be paid.
E.
The court also found that the Plan did not terminate on March
10, 1981, as National Gypsum claims. National Gypsum claims this
finding is clearly erroneous. It argues that the only evidence
before the court on this issue supported a finding that the Plan
was nonexistent. We disagree.
The court's memorandum in support of its order relied in part
on the collective bargaining agreement in effect between IBP and
Laborers Local 667. That agreement, as reprinted above in relevant
part, indicated that the Plan was being continued, that National
16
Gypsum was responsible for it, and that former National Gypsum
employees who continued service as employees of IBP would receive
credit for vesting purposes under this Plan. Hall's rights under
the Plan had already vested so this provision does nothing for him
in that sense. This language does, however, support a finding that
the Plan continued to exist. Moreover, ERISA contains detailed
requirements that must be met before a Plan may be terminated. See
29 U.S.C. § 1341. For instance, the Pension Benefit Guaranty
Corporation must be notified before a Plan can be terminated. 29
U.S.C. § 1341(a). Yet, there is nothing in the record suggesting
the PBGC was ever notified of the Plan's termination. Nor, for
that matter, is there anything in the record in the form of a
notice that the assets of the Plan were sufficient to cover all
claims, required by 29 U.S.C. § 1341(b), or of a notice that the
Plan was underfunded, as provided in 29 U.S.C. § 1341(e). The
evidence upon which National Gypsum relies, its own answers to
certain interrogatories, does not mandate a finding that the Plan
no longer exists. We therefore conclude that the district court
did not err in finding that the Plan did not terminate.
III.
In conclusion, we find that, in the particular circumstances
presented here, Hall's suit against National Gypsum, as
administrator of the Plan, is equivalent to a suit against the Plan
under 29 U.S.C. § 1132(a)(1)(B) and that he is therefore entitled
to recover from the assets of the Plan. In that light, we hold that
Hall's claim is not affected by National Gypsum's discharge in
17
bankruptcy. We also hold that this suit is timely because the
denial of benefits occurred no earlier than December 1983, less
than ten years prior to the filing of Hall's complaint in May 1993.
Additionally, we find that, because the mechanism for
administrative appeal was, according to National Gypsum, not in
place at the time of the denial of Hall's claim and because Hall
made efforts to secure review of the denial, National Gypsum is
equitably estopped from defending this action based upon an alleged
failure to exhaust administrative remedies. We hold that Hall was
covered under the Plan at the time he became disabled because the
evidence demonstrates that National Gypsum had assured its
employees that, for purposes of the Plan, they were not considered
terminated upon the sale of the plant to IBP. Furthermore, we
conclude that the Plan never terminated, that it continues to exist
and that National Gypsum, administrator of the Plan, is the entity
with the authority to direct payments from the Plan's assets.
Finally, because there is no dispute that Hall is vested under the
Plan and that he is disabled under the Plan, we hold that he is
entitled to benefits thereunder.
We therefore affirm the bulk of the district court's opinion,
but vacate the judgment ordering National Gypsum itself to pay
benefits to Hall. We remand the case with directions that the court
order National Gypsum, as the administrator of the Plan, to secure
from the Plan's assets the payment of benefits, as well as
attorney's fees and costs of this appeal. We are aware that the
Plan's assets are no longer in the hands of National Gypsum. If
18
appropriate, the district court may order National Gypsum, at its
own costs, to take whatever legal steps are required to secure the
payment of benefits to Hall from the Plan's assets.
AFFIRMED in part, VACATED in part, and REMANDED with
directions.
19