[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR TH E ELEV ENTH C IRCUIT
FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
JUNE 19, 2003
No. 02-12779
THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 01-00381-CV-H-NE
ITPE PEN SION FUN D,
Plaintiff- Appe llant,
ITPE HEA LTH AND WEL FAR E FU ND,
Plaintiff,
versus
ROG ER H ALL ,
HOP E HA LL,
Defen dants-A ppellees.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
_________________________
(June 19, 2003)
Before AN DERS ON, BIR CH and B ARKE TT, Circuit Judges.
BIRCH, Circuit Judge:
The Employee Retirement and Income Security Act (“ERISA”), 18 U.S.C.A.
§ 1001 et seq., imposes strict fiduciary duties on certain persons with control over
assets of c overed employee benef it plans. U nder the se prov isions, w hen un paid
contributions to a plan are identified as immediate assets of a plan, officers of the
nonpaying corporation with control and authority over the unpaid contributions
may be h eld liable fo r the amo unt of n onpaym ent.
This appeal requires us to determine whether corporate officers may be
imputed fiduciary duties an d, conse quently, h eld perso nally liable f or unp aid
contributions, when the governing agreement between the corporation and the plan
does not clearly state, but could be interpreted to state, that such contributions are
assets of the plan. We find that either clear contractual language or clear, shared
intent of th e parties is a necessar y prereq uisite to im posing fiduciary respon sibility
on officers who otherwise would be unsure of their increased responsibilities under
ERIS A. Th ough w e conclu de that the languag e of the ag reemen t is not suf ficiently
clear to impose fiduciary duty, we must VACA TE and REM AND to the district
court to determine whether the parties clearly intended unpaid employer
contribu tions to b e assets of the Fun d.
I. BACKGROUND
Roger Hall and Hope Hall are th e genera l manag er and p resident,
2
respectively, of H & R Services, a company that supplies management and labor
for the operation of dining facilities on military bases. Pursuant to collective
bargaining agreements with the Industrial, Technical, and Professional Employees
Union, AFL-CIO (“ITPE”), H & R Services is obligated to contribute funds to the
ITPE Pen sion Fund (“the Fun d”) for the future security of its unionized employees.
H & R Services failed to make these contributions. On 18 November 1999,
the ITPE Pension Fund, among other funds, filed suit in the Northern District of
Alabama for the recovery of this delinquency. The district court entered summary
judgment for the Fund on 30 March 2001, assessing damages in the amount of
$123,767.27 against H & R Services. The court also entered a permanent
injunction that required H & R Services to remit in a timely fashion the future
contributions owing under its agreement with the Fund.
Even after this proceeding, H & R Services failed to remit payment to the
Fund. The judgment amount went uncollected, and the terms of the permanent
injunction went unheeded. Faced with this continued intransigence, the Fund filed
suit directly against Hope and Roger Hall. Citing the Employee Retirement
Incom e Secur ity Act (“E RISA ”), the Fu nd now argues th at Hop e and R oger H all
are in violation of the fiduciary duty that statute places on persons with control
over the assets of a ERIS A plan . See 29 U.S .C. § 10 02(21 )(A).
3
The dis pute on which this appe al centers is wheth er these u npaid
contributions to the Plan are “assets,” legally speaking, of the Plan, such that Roger
and Hope Hall could be considered fiduciaries of the Plan. The district court
limited its consideration of the summary judgment motion to that legal issue. The
district court found, focusing exclusively on the language of the Agreement, that
unpaid employer contributions are not assets of the ITPE Fund within the meaning
of § 1002(21)(A), and granted summary judgment on that basis for Roger and
Hope Hall. IT PE filed a timely no tice of app eal.
II. DISCUSSION
Our review of a d istrict court’s grant of summary judgment is de novo,
applying the same standard s emplo yed by th e district co urt. Dahl v. Holley, 312
F.3d 1228, 1233 (11th Cir. 2002). Thus, we will not affirm unless, viewing the
evidence in the light most favorable to the non-moving party, there is no genuine
issue of m aterial fact w hich req uires a jur y determ ination o f the mer its. Gary v.
City of Warner Robins, Ga., 311 F.3d 1334, 1337 (11th Cir. 2002).
The pa rties agree that the F und is g overne d by ER ISA, b ecause it is
indisputably a “plan, fund, or program . . . maintained by an employer or by an
employee organization [that] . . . provides retirement income to employees.” §
1002(2)(A). Certain persons, including those who “exercise[] any authority or
4
control respecting management or disposition of [fund] assets,” bear fiduciary
respon sibility to an ERIS A fun d. Id. § 1002(21)(A). The responsibility attaching
to fiduciary status has been described as “‘the highest known to law.’” Herman v.
Nationsbank Trust Co. (Georgia), 126 F.3d 1354, 1361 (11th Cir. 1997) (quoting
Dono van v. B ierwirth , 680 F.2d 263, 272 n.8 (2d Cir. 1982)). If a person breaches
their fidu ciary dutie s to an E RISA fund, h e or she “s hall be pe rsonally lia ble to
make good to such [fund] any losses . . . resulting from each such breach.” 29
U.S.C . § 1109 (a).
The central item of dispute in this case is whether unpaid employer
contributions are assets of the ITPE Fund, such that the Halls could conceivably be
held per sonally liab le for bre ach of th eir fiducia ry duty w ith respec t to those a ssets.
The text of ERISA does not give a relevant definition for what constitutes an
“asset” of a n ERI SA fu nd. Th e prope r rule, dev eloped b y caselaw , is that unp aid
employer1 contributions are not assets of a fund unless the agreement between the
fund and the employer specifically and clearly declares otherwise.2 See, e.g.,
1
By regulation and without the requirement of a particularized agreement, unpaid
employee contributions to ERISA funds are assets of those funds. 29 C.F.R. § 2510.3-102
(2002). No such regulation exists for employer contributions, which are at issue in this case.
2
In Local Union 2134, United Mine Workers of America v. Powhatan Fuel, Inc., 828
F.2d 710 (11th Cir. 1987), the president of a troubled corporation opted to spend corporate assets
to pay employee salaries and to otherwise try to keep the corporation afloat, to the detriment of
the ERISA plan. We decided in that case that these decisions were made in the president’s role
as president, and not in his role as an ERISA-plan fiduciary, and that no personal liability could
5
NYSA-ILA M ed. & Clinical Servs. Fund v. Catucci ex rel. Capo, 60 F.Supp.2d
194, 20 0-01 (S .D.N.Y . 1999) (collecting cases); Connors v. Paybra Mining Co.,
807 F .Supp . 1242, 1 245-4 6 (S.D .W.V . 1992) ; Galgay v. Gangloff, 677 F.Supp.
295, 30 1 (M.D . Penn. 1 987). T he effect o f language that m akes un paid
contribu tions asse ts of the fu nd is that “w hen a corporatio n is delinq uent in its
contribu tions, the f und ha s a sufficie nt priority on the co rporatio n’s availab le
resources that individuals controlling corporate resources are controlling fund
assets.” Catucci, 60 F.Supp.2d at 201. This effect places “heavy responsibilities
on employers, but only to the extent that . . . an employer freely accepts those
responsibilities in collective bargaining.” Id.
Hope and Ro ger Ha ll argue th at the Ag reemen t in this case affirmativ ely
evidences the fact that unpaid employer contributions are not Fund assets. They
point to the definitions section of the Agreement and Declaration of Trust, which
states that “[t]he terms ‘Pension Fund’ or ‘Fund’ shall mean all property of every
kind held or acquired under the provisions of this instrument.” R2-44, Ex. 2, Ex.
attach therefore under ERISA. Id. at 714. Another way of making this point is to say that the
assets over which the president had control were not plan assets. See id. (“Indeed, until monies
were paid by the corporation to the [ERISA] plan there were no assets in the plan under the
provisions of ERISA.”). However, Powhatan does not stand for the proposition that unpaid
employer contributions are never assets of an ERISA plan until those contributions are actually
paid into the plan. Our decision in Powhatan concerned the general rule, that unpaid employer
contributions are not assets of an ERISA plan, and we had no occasion to consider in that case
the effect of contrary plan language, which, as we have stated supra, is the exception to the rule.
6
A at § 1.02 (emph asis added). According to the H alls, unpaid contributions,
because they are unpaid, are not yet “held” or “acquired” by the Fund, and
therefor e canno t be assets o f the fun d.
We cannot accept the full extent of the Halls’ interpretation of § 1.02. The
idea of “acquiring” property is not limited to possession3 of the item in questio n.
To “acquire” means “to come into possession or own ership of; get as one’s own,”
Random House Dictionary of the English Language 18 (2d ed. 198 7) (emp hasis
added), or “[t]o gain possession or control of; to get or obtain,” Black’s Law
Dictionary 24 (7th ed. 1999). Thus, even property which has not yet formally been
transferred to the Plan’s physical control, but which the Plan owns or controls in a
contractu al sense b y virtue o f the Ag reemen t, has been “acquired ” by the P lan.
Section 1.02 is not conclusive of the Plan’s treatment of unpaid employer
contributions.
The F und arg ues that th e Agre ement es tablishes b y its langu age that u npaid
employer contributions are assets of the Fund. It points to language in the
“Establishment of Fund” section o f the Agreement that states:
the ITPE Pension Fund . . . shall be comprised of all monies received and
held by the Trustees from employer contributions . . ., all income from
investments made and h eld by the Trustee s, . . . or any o ther pro perty
3
That is to say, whatever passes for physical possession of funds in this age of largely
paperless transfers of currency.
7
received and held or receivab le by the Trustees for the uses and purposes
set forth in this Ag reemen t.
R2-44, Ex. 2, Ex. A at § 2.01 (emphasis added). The argument is that because the
unpaid contributions are receivab le, and bec ause pro perty that is receivab le is
property of the Fund, unpaid contributions properly are considered assets of the
Fund.4
The Halls assert that § 2.01 does not itself make unpaid employer
contributions assets of the Fund. In the Halls’ view, three distinct types of
property are made assets of the Fund by virtue of § 2.01: (1) “all monies received
and held by the Trustees from employer contributions; (2) “all income from
investments made and held b y the Trustees,” and (3) “any other property received
or held o r receivab le by the T rustees fo r the uses and pu rposes s et forth in this
4
The language of section 2.01, if we were to accept the Fund’s interpretation, makes
receivable property an asset of the Fund. We want to make clear the distinction between
receivable property being an asset of the Fund, and receivables being assets of the fund. An
agreement which only makes receivables assets may not provide a predicate for holding a
corporate officer personally responsible for nonpayment of contributions. A receivable is a
contractual or legal claim for payment of the money due, in contrast to the actual money due.
Even assuming that the receivable is an asset of a plan, a corporate officer would generally not
exercise any authority or control over the disposition of that asset – the legal claim for payment.
The officer may have had control over the funds on which that claim would draw for satisfaction,
but those funds are conceptually distinct from the claim itself. See, e.g., Chapman v. Klemick, 3
F.3d 1508, 1510 (11th Cir. 1993). Without any control over plan assets, there is no predicate
upon which to declare the officer a fiduciary of the Plan, and, without fiduciary status, no basis
on which to hold him liable under ERISA.
When receivable property is made an asset of the fund, the unpaid funds themselves
become assets of the fund at the moment they become due. The corporate officer who uses these
funds for purposes other than payment of the fund exercises control over plan assets and,
therefore, can be held personally liable for breach of his fiduciary responsibility under ERISA.
8
Agreement. R2-44, Ex. 2, Ex. A at § 2.01 (emphasis added ). The Halls stress
“other property,” which they deem to mean any type of property other than
employer contributions, which are covered by the first category, and investment
income, which is covered by the second category. Thus, only “received and held”
employer contributions are assets of the fund, and the asset-status of unpaid
employer contributions is precluded by the first category, with no recourse to the
inapplicable third category. In contrast, the Fund argues that the third category is a
catch-all p rovision . Accor ding to th e Fund , “all other proper ty” mean s all prop erty
not mad e an asset b y the first tw o catego ries.
Both o f these inte rpretation s of § 2.0 1 are cred ible. We conclud e that it
would be unfair for us to now apply principles of contract construction to decide
that such contribu tions are in deed ass ets and th at person al liability is ap propria te
for those with control over those newly clarified assets. A person should not be
attributed fiduciary status under ERISA and held accountable for performance of
the strict responsibilities required of him in that role, if he is not clearly aware of
his status a s a fiducia ry:
If ERISA did not limit the definition of fiduciaries to those with
knowledge of their au thority and dis cretion, then persons or entities
could becom e subject to fiduciary liability withou t notice. S uch a res ult
would not only be unfair, but it would also disserve a core purpose of
ERISA, which is to create a system whereby accountable fiduciaries are
motivated by their accountability to protect the interests of participan ts
9
in ERISA plans.
Herman, 126 F .3d at 13 66.
We appreciate that ERISA is a remedial statute deserving of broad
constru ction, see Teamsters Joint Council No. 83 v. Centra, Inc., 947 F.2d 115, 123
(4th Cir. 199 1), and that this b road constru ction may w ell extend to ER ISA’s
definition of the pe ople w ho are fid uciaries o f a plan. See Connors, 807 F.Supp. at
1245. But we cannot employ this broad construction to render ambiguous
contractu al langua ge clear, an d witho ut clear co ntractual la nguag e it is impro per to
impute fiduciary responsibility. Preservation of the purposes of ERISA does not
require that we ambush corporate officers with stringent fiduciary duties and
person al liability bas ed on co nvolute d contra ctual lang uage tha t requires a court to
parse an d interpr et.
We do not have before us any evidence regarding the intent of the parties as
to § 2.01, given the district court’s limited ruling on summary judgment based
solely on the language of the Agreement. Therefore, we must remand to allow the
district court to supervise such discovery or argument necessary to discern the
intent of the parties as to § 2.01. If the district court finds that this section was
clearly intended by the parties to make unpaid employer contributions assets of the
Fund, then summary judgment for the Halls is not appropriate. If there is no clear
10
intent, then the district c ourt sho uld reins tate summ ary judg ment fo r the Ha lls.
III. CONCLUSION
When contractual language is facially ambiguous and not anchored by the
clear, shared intent of the parties, then fiduciary responsibility under ERISA
predicate d on su ch langu age is imp roper. W e find tha t the Fun d Agr eement is
susceptible of two readings, and that we cannot by reference to only the
Agree ment’s lan guage d etermine wheth er unpa id emplo yer contr ibutions are assets
of the Fund. If this ambiguity cannot be resolved through reference to the clear
intent of the parties, then the district court was correct to enter summary judgment
for the Halls. Therefore, we VACATE the district court’s grant of summary
judgment and REMAND for the purpose of allowing discovery and argument of
the parties’ intent as to § 2.01 of the Agreemen t, and for the resolution of this case
under the principles explained in this opinion.
11
BARKETT , Circuit Judge, specially concurring:
I agree th at the lang uage of the Ag reemen t and D eclaration of Tru st is
sufficiently ambiguous to require reversal of the summary judgment awarded by
the district court. The relevant provision of this instrument specifically states that
the Fund includes paid employer contributions and investment income. It then
adds to this enumeration “any other proper ty received and held or receivab le by the
Trustee s for the u ses and p urpose s set forth in this A greeme nt.”
In all likelih ood, the quoted clause sim ply establis hes the u nremar kable
propo sition that th e Fund ’s assets inc lude all pr operty n ot specific ally design ated in
the preceding clauses, but nonetheless subject to the trustees’ control. One such
form of property would be receivables, which is to say legal claims for payment of
money due. An employee pension plan that identifies receivables as a type of asset
does not thereby create fiduciary obligations on the part of persons with control
over the actual fun ds out o f which obligor s might s atisfy these outstand ing claim s.
Therefore, if the Agreement here reflects only an intent to designate receivables as
a type of Fund asset, the Halls cannot be personally liable as fiduciaries for the
nonpayment of delinqu ent employer contributions.
As Jud ge Birch points o ut, how ever, the A greeme nt refers n ot simply to
“receivables,” a well-worn term of art, but to “proper ty received and held or
12
receivable,” a less familiar construction that gives me enough pause to agree that
remand is appropriate. If the Fund is able to produce evidence showing that the
parties, which included employer H & R Services, clearly intended by these words
to define H&R’s own corporate holdings as Fund “assets” up to any amount due
and ow ing in un paid em ployer co ntributio ns, then th e Fund ’s benefic iaries sho uld
have the benefit o f this barg ain. See NYSA-ILA M edical & Clinical Servs. Fund
v. Catucci, 60 F. Supp. 2d 194, 201 (S.D.N.Y. 1999). In this instance, fiduciary
status would rightly extend to the Halls inasmuch as they exercised control over
corporate funds available to satisfy outstanding contribution obligations. Even so,
the Halls would not automatically be personally liable for any and all non-
paymen t. See Local Union 2134, United Mine Wo rkers of America v. Powhatan
Fuel, 828 F.2d 710, 714 (11th Cir. 1987) (shielding company president from
person al liability, des pite his statu s as ER ISA f iduciary, b y holdin g that he a cted in
his corporate rather than fiduciary capacity when he made the “business decision”
to pay ex penses o ther than employ ees’ health insuran ce prem iums “in a n attemp t to
keep the corporation from financial collapse”).
I would also clarify that, whatever the intent given effect by the ph rase
“property received and held or receivable,” the Agreement of course does not
accord fiduciary status to persons who never assented to the collective bargaining
13
agreements underlying the Fu nd’s creation and operation. Yet I believe w e must
allow for the possibility that employer and employee representatives did intend for
fiduciary status to attach in some circumstances to officers with control over the
corporate accounts of employers delinquent in their contribution obligations. To
assume as a matter of law that no such agreement could be negotiated ignores the
unique relationship between employers and the pension funds to which they
contribute for the benefit of their employees. Because employers are so often the
guarantors of expected retirement incomes, it is easy to understand why unions and
other employee organizations might wish to devise a forceful means of holding
corpor ate officer s to accou nt for m issed pay ments. I b elieve it is at lea st possib le
that the ag reemen t before u s represe nts one s uch effo rt, and I th erefore c oncur in
the decision to reverse and remand for the district court to make that determination.
14
ANDERS ON, Circuit Judge, dissenting:
I respectf ully dissen t. I agree w ith the test ad opted in the majo rity opinio n.
However, I do not agree with the application of that test in this case. I do not
believe th at the lang uage of the ER ISA P lan is amb iguous or that a re mand is
approp riate.
Section 2.01 of the ER ISA P lan descr ibes the as sets of the Fund as follow s:
“[a] all monies received and held by the Trustees from employer
contribu tions pu rsuant to collective b argainin g agreem ent, [b] all
income from investments made and held by the trustees or otherwise,
[c] or any other property received and held or receivable by the
Trustees for the uses and purposes set forth in this Agreement and
Declara tion of T rust.”
R2-44 , Ex. 2, E x. A at § 2.01 (d ivision in to catego ries a, b, an d c adde d). With
respect to employ er contrib utions, I r espectfu lly subm it that the lan guage “a ll
monies received and held” unambiguously includes only employer contributions
which have actually been paid over to the Fund and are thus “received and held”
by the F und.
I do no t agree w ith the ma jority that th e langua ge – “any other pr operty
received and held or receiv able” – in troduce s ambig uity. To h old that th is
language in category (c) introduces ambiguity with respect to whether or not
unpaid employer contributions are Plan assets, as the majority does, ignores the
fact that cate gory (a) deals w ith emplo yer contr ibutions , where as this lang uage in
15
category (c) deals with “any other property,” other than employer contributions
and inco me from investm ents. Fu rthermo re, I subm it that the on ly plausib le
reading of the term “receivable” is as a contractual or legal claim for payment of
money due. I do not believe it is plausible to construe that term to embrace the
money actually due in the hands of the account debtor. If that were the case, then,
any run-of-the-mill contractual claim would convert the person against whom the
claim was held into a fiduciary. In other words, the debtor owing the Fund any
account receivable would b e converted into a fiduciary. 1 For example, if the Fund
were en titled to a de posit reim bursem ent from its utility com pany, the utility
company would be converted into a fiduciary. I respectfully submit that the
“receivab le” term ca nnot be stretched to such a meanin g.
For the foregoing reasons, I conclude that the Fund has a mere contractual
claim aga inst the H alls for the unpaid contribu tions, and thus the u npaid
contribu tions are n ot assets o f the ER ISA P lan. Chapman v. Klemick, 3 F.3d 1508,
1514 (11th Cir. 199 3); Local Union 2134, UM W of America v. Powhatan Fuel, 828
F.2d 710, 714 (1987). 2
1
This is because the account debtor would control the money in its own hands (i.e.,
before it is paid over to discharge the account), and under 19 U.S.C. § 1002(21)(A)(i) “a person
is a fiduciary with respect to a plan to the extent (i) he ... exercises any authority or control
respecting management or disposition of its assets.”
2
I agree with Judge Barkett that we cannot, as a matter of law, exclude “the
possibility that employer and employee representatives did intend for a fiduciary status to attach
16
in some circumstances to officers with control over the corporate accounts of employers
delinquent in their contribution obligations.” Opinion of Judge Barkett, specially concurring, at
3. I do not so hold here. All I would hold here is that the language of the instant Plan cannot be
construed to embrace that possibility, and is not ambiguous in that regard.
17