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Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

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Fl LED 

Uaited States Court of Appeals 

Tenth Circuit 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

AUG 12 1991 

ROBERT L. HOECKER 

Clerk 

FRED P. LEIDING, 

Plaintiff/Appellant, 

v. 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, THE KEMPTON 

COMPANY, as Plan Administrator, 

OKLAHOMA BANKERS ASSOCIATION 

INSURANCE TRUST, and as 

Trustees, ROBERT HOLLIS, 

GEORGE HAUGER, HARRY LEONARD, 

JOHN LOWRY, RALPH McCALMONT, 

F.A.A. SEWELL, III, 

Defendants/Appellees. 

FRED P. LEIDING, 

Plaintiff/Cross Appellee, 

v. 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, THE KEMPTON 

COMPANY, as Plan Administrator, 

OKLAHOMA BANKERS ASSOCIATION 

INSURANCE TRUST, and as 

Trustees, ROBERT HOLLIS, 

GEORGE HAUGER, HARRY LEONARD, 

JOHN LOWRY, RALPH McCALMONT, 

F.A.A. SEWELL, III, 

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Defendants/Cross Appellants.) 

No. 90-5078 

(N. Dist Okla. 

No. 88-C-1567-B) 

No. 90-5154 

90-5180 

(N. Dist Okla. 

No. 88-C-1567-B) 

Appellate Case: 90-5180 Document: 010110131496 Date Filed: 08/12/1991 Page: 1 
ORDER AND JUDGMENT* 

Before EBEL and McWILLIAMS, Circuit Judges, and 

NOTTINGHAM,** District Judge. 

This appeal involves a dispute over employee medical 

coverage. Appellant Fred P. Leiding argues that the district 

court for the Northern District of Oklahoma erred in granting 

summary judgment to defendants. We disagree and accordingly 

affirm the lower court's rulings in all particulars. 

FACTS 

Fred P. Leiding served as the Chief Executive Officer of the 

Bixby Town and Country Bank ("Bixby") until it was placed in 

receivership on September 15, 1988. While employed at Bixby, 

Leiding received health plan coverage through Bixby's 

participation in the Oklahoma Bankers Association Insurance Trust 

("OBA"). The OBA, like similar trusts, developed a group medical 

and dental insurance plan which it made available to eligible 

Oklahoma banks to adopt as their individual employee welfare 

benefit plan. The plan was administered by the Kempton Company 

("Kempton") and was regulated under the Employment Retirement 

* This order and judgment has no precedential value and shall not 

be cited, or used by any court within the Tenth Circuit, except 

for purposes of establishing the doctrines of the law of the case, 

res judicata, or collateral estoppel. 10th Cir. R. 36.3. 

** Honorable Edward W. Nottingham, District Judge for the 

District of Colorado, sitting by designation. 

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Appellate Case: 90-5180 Document: 010110131496 Date Filed: 08/12/1991 Page: 2 
Income Security Act ("ERISA"). On April 7, 1986, an ERISA 

continuation coverage obligation was signed into law. This new 

provision -- known as COBRA -- provides that an employee whose 

employment terminates, other than for gross misconduct, is 

entitled to continued coverage under his employer's ERISA plan for 

18 months after his employment terminates or until the "date on 

which the employer ceases to provide any group health plan to any 

employee." 29 u.s.c. § 1162(2)(B). In July of 1986, Kempton 

notified all individuals covered by the Plan 

of these new continuation rights. 

including Leiding 

On September 15, 1988, the Oklahoma State Banking 

Commissioner, pursuant to state law, found Bixby to be insolvent 

and appointed the Federal Deposit Insurance Corporation ("FDIC") 

as Receiver/Liquidating Agent. Bixby went into receivership at 

that time and officially ceased operations. Bixby additionally 

ceased to be a member of the OBA and ceased to pay premiums to 

maintain its plan as required by the contract with the OBA. 

Leiding's employment -- like that of all Bixby employees --

terminated at this time. 

Rather than institute a liquidation of Bixby's assets, the 

FDIC entered into a purchase and assumption transaction ("P&A") 

with Brookside State Bank ("Brookside"), which allowed Brookside 

to purchase certain assets of the insolvent Bixby and to assume 

depositor liability from the FDIC. The P&A provided that: 

[Brookside] shall have no obligation nor 

responsibilities under defunct bank's employee benefit 

plans including pension or profit sharing plans, if any, 

unless liquidating agent and assuming bank subsequently 

agree otherwise. 

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Appellate Case: 90-5180 Document: 010110131496 Date Filed: 08/12/1991 Page: 3 
Brookside, which is a separate banking entity of long standing, 

hired a number of former Bixby employees and began to operate a 

branch, under the name of Brookside, at the old Bixby location. 

Leiding, however, was not taken on by Brookside. As a result, 

Leiding's medical coverage terminated on September 15, 1988 -- the 

date on which Bixby ceased to exist. 

Both before and after termination, Leiding suffered from 

various heart ailments, and he unsuccessfully sought continuation 

coverage under the OBA plan for the 18 months following his 

termination. He eventually brought suit against the OBA, Kempton, 

the FDIC, and Brookside, arguing that he was wrongfully denied 

continuation coverage under the provisions of the OBA plan and 

under the ERISA statutes, 29 u.s.c. § 1161(a) and 26 u.s.c. 

§ 4908B(f)(3). The district court for the Northern District of 

Oklahoma rejected Leiding's claims and granted summary judgment 

for the defendants in three separate orders. 1 Leiding appeals 

those rulings and raises two principal theories to support his 

claim to continued medical coverage. First, he argues that he 

relied on the oral assurances of plan administrators that he would 

continue to receive coverage in the event of Bixby's demise and 

that he accordingly is entitled to coverage on equitable grounds. 

Second, he contends that the ERISA statutes contemplated and 

authorized the extension of continuation coverage to employees 

like Leiding. He additionally appeals from the district court's 

rulings on attorney's fees. We affirm the district court in all 

1 The district court dismissed Brookside as a defendant under a 

12(b)6 motion. Leiding does not appeal that dismissal. 

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Appellate Case: 90-5180 Document: 010110131496 Date Filed: 08/12/1991 Page: 4 
respects. 2 

EQUITABLE ESTOPPEL 

Leiding contends that he "continually asked the plan 

administrator's representatives whether the OBA Trust provided 

COBRA coverage to the former employees of a member bank that fails 

and is taken over." Appellant's Br. at 5. According to Leiding, 

he "was told on many occasions by the plan administrator's 

representatives that yes his COBRA coverage will be available." 

Id. Leiding claims that he relied on these statements to his 

detriment and that he accordingly should be entitled to 18 months 

of continued coverage. This is an argument commonly known as 

"equitable estoppel." 

Although we are certainly sympathetic to Leiding's claim, 

this court has clearly stated that equitable estoppel cannot be 

used to hold plan fiduciaries to oral promises or modifications 

not incorporated into the written terms of the ERISA plan. Straub 

v. Western Union Telegraph Co., 851 F.2d 1262 (10th Cir. 1988). 

There we held that under ERISA "all employee benefit plans must be 

2 Leiding raises a number of additional issues on appeal, 

including: whether it was error for the district court to grant 

summary judgment on the claim that the OBA failed to disclose a 

material restriction or disqualification feature of the plan; 

whether it was an abuse of discretion for the district court to 

deny Leiding leave to amend his complaint to include a claim under 

ERISA § 503 against the OBA; whether it was an abuse of discretion 

for the district court to deny Leiding's Rule 59(e) motion 

regarding new evidence of employment with Brookside; whether the 

district court erred in denying Leiding's claim for legal 

remedies, including civil penalties and other extra-contractual 

damages, against the OBA. We affirm each of these rulings for the 

reasons stated in the district court's orders. We also deny 

defendants-appellees' motion to strike Leiding's citation of 

supplemental authority. 

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Appellate Case: 90-5180 Document: 010110131496 Date Filed: 08/12/1991 Page: 5 
established and maintained pursuant to a written instrument . 

. This requirement that ERISA plans be maintained in writing 

precludes oral modifications of the Plans; the common law doctrine 

of estoppal cannot be used to alter this result." Id. at 1265 

(quotations and citations omitted). As we noted in Straub: 

A central policy goal of ERISA is to protect the 

interests of employees and their beneficiaries in 

employee benefit plans. This goal would be undermined 

if we permitted oral modifications of ERISA plans 

because employees would be unable to rely on these plans 

if their expected retirement benefits could be radically 

affected by funds dispersed to other employees pursuant 

to oral agreements. This problem would be exacerbated 

by the fact that these oral agreements often would be 

made many years before any attempt to enforce them. 

851 F.2d at 1265 (quoting Nachwalter v. Christie, 805 F.2d 956, 

960 (11th Cir. 1986)). Obviously, such a strict adherence to the 

language of the written plan is imperative to maintaining a lowcost and dependable insurance system. 

Leiding attempts to distinguish Straub by arguing that 

equitable estoppal may be applied to an ERISA fiduciary's 

interpretation of an otherwise ambiguous or undefined provision of 

the plan. Leiding relies primarily on two cases for this 

proposition. Kane v. Aetna Life Ins. Co., 893 F.2d 1283, 1286 

(11th Cir.), cert. denied,_ U.S._, 111 S.Ct. 232 (1990) and 

Anderson v. Pittsburgh-Des Moines Corp., 893 F.2d 638, (3rd Cir. 

1990). Without adopting or addressing the logic or holding of 

these cases, we simply note that these cases turn on the ambiguous 

nature of the relevant contract provision. We find no such 

ambiguity in the plan provisions at issue here. 

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Appellate Case: 90-5180 Document: 010110131496 Date Filed: 08/12/1991 Page: 6 
Leiding attempts to create an ambiguity by arguing that the 

term "employer" used in both the contractual and statutory 

language -- may be interpreted to include successor employers such 

as Brookside. We find no such ambiguity in the contract and note 

that the OBA summary plan3 description makes no provision for 

successor employers or for the transfer of employer obligations in 

the event of a participant's demise. In fact, the plan explicitly 

states that "the employer has retained the right under the plan 

document to terminate the plan at any time" and that continuation 

coverage terminates on the date the employer terminates the plan. 

There is absolutely nothing in the Summary Plan Description to 

suggest that the obligations thereunder would outlive the 

existence of Bixby or any other participant who had, for whatever 

reason, opted to terminate the plan. Since it is beyond dispute 

that Bixby ceased operation on September 15, 1988 

time terminated its participation in the OBA plan 

and at that 

we fail to 

see any contractual language which might revive or salvage the 

terminated coverage. In addition, we note that Brookside is a 

wholly separate legal entity which at no time bargained to assume 

OBA coverage for all unretained Bixby employees; in fact, 

Brookside explicitly excluded such obligations in its P & A 

agreement. Brookside merely acquired certain assets of Bixby from 

3 The record does not include a copy of the actual insurance plan 

entered into between Bixby and the OBA. Rather, the record 

includes only a "Summary Plan Description." As that document 

expressly states: "This is a summary plan description ONLY. The 

plan itself is the document on which benefits are based and is 

available for your review upon request." However, because the 

Summary Plan Description is the only document before us, we must 

rely on it. 

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Appellate Case: 90-5180 Document: 010110131496 Date Filed: 08/12/1991 Page: 7 
the FDIC after Bixby had shut down and terminated the plan, and 

Brookside did not acquire or continue the former Bixby legal 

entity. 4 Based on these findings, we think it is clear that the 

insurance contract provides no toehold for Leiding's equitable 

estoppel arguments. 

ERISA STATUTORY PROVISIONS 

Undeterred by the lack of support in the contract, Leiding 

next argues that the statutory ERISA provisions trump the specific 

contract provisions and support a broader definition of "employer" 

one which could be read to include a "successor employer" such 

as Brookside. Leiding "invites the [Tenth Circuit] to review the 

statute, the IRS proposed COBRA regulations, the legislative 

4 Leiding makes a strained attempt to argue alternatively that he 

was in fact an employee of Brookside for about three hours on the 

evening of September 15, 1988. We reject that argument and find 

nothing in the record to support that contention. We think it is 

quite clear from the record that Leiding was terminated by Bixby 

on September 15, 1988 and that he was not employed by Brookside. 

5 Leiding's final argument for contractual ambiguity turns on a 

clause in the summary plan which specifies that "[t]he rules 

governing continuation of coverage are subject to change by 

governmental regulatory authority." Leiding asserts that the 

contractual language of the plan has been trumped and an ambiguity 

created by the contractual reference to the overriding authority 

of the statutory provisions of ERISA and COBRA. While we 

acknowledge that statutory ERISA and COBRA provisions will be 

controlling over the specific terms of the contract, we note that 

this is not an argument for contractual interpretation. Rather, 

it is an argument for a legislatively mandated policy. If Leiding 

is correct in asserting that Congress intended continuation 

coverage to extend to employees like himself, then the contract 

terms are all but irrelevant and we must determine whether 

Brookside or any other entities were indeed "successor employers." 

This argument is therefore properly considered in this section, 

not the "Equitable Estoppel" section. 

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Appellate Case: 90-5180 Document: 010110131496 Date Filed: 08/12/1991 Page: 8 
history, the application of other federal labor and tax statutes 

in analogous situations ... "to conclude that ERISA and COBRA 

contemplated an expansive definition of "employer." Appellant's 

Br. at 15. We decline Leiding's invitation on the grounds that 

even if COBRA does extend coverage obligations to successor 

employers, the undisputed facts of this case make it clear as a 

matter of law that neither Brookside nor any of the named 

defendants here could be considered a successor employer. 

As noted above, the COBRA statute confers continuation 

coverage on employees who lose coverage under a plan as a result 

of a qualifying event. Such coverage "must extend for at least 

the period beginning on the date of the qualifying event and 

ending not earlier than the earliest of the following: . the 

date which is 18 months after the date of the qualifying event .. 

. . [or] [t]he date on which the employer ceases to provide any 

group health plan to any employee." 29 u.s.c. § 1162(2)(A)-(B). 

All parties agree that the qualifying event the termination of 

Leiding's employment with Bixby -- occurred September 15, 1988. 

The dispute surrounds whether and when the "employer cease[d] to 

provide any group health plan for any employee." According to 

Leiding, the employer here never ceased to provide group health 

coverage since the employer, Bixby, was merely reconstituted as a 

successor corporation, Brookside. Leiding relies on a number of 

NLRB cases for the proposition that Brookside is indeed a 

successor employer. See Appellant's Br. at 19 (citing Fall River 

Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 43 (1986); NLRB v. 

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Appellate Case: 90-5180 Document: 010110131496 Date Filed: 08/12/1991 Page: 9 
Burns, 406 U.S. 272, 278-79 (1972)). 6 We disagree with his 

assessment of the undisputed facts and conclude that Brookside, 

upon these facts and for purposes of deciding the issue on this 

appeal, is not a successor employer to Bixby. 

According to the Supreme Court's opinion in Fall River, 

the determination of whether a new company is a successor to the 

old focuses on whether the new company has "acquired substantial 

assets of its predecessor and continued, without interruption or 

substantial change, the predecessor's business operations." 482 

U.S. at 43 (quoting Golden State Bottling Co. v. NLRB, 414 U.S. 

168, 184 (1973)) (emphasis added). We think it obvious that the 

bank in question here underwent serious interruption and 

substantial change. Unlike the employers in the NLRB cases cited 

by Leiding, the bank here was declared insolvent and involuntarily 

liquidated by the Oklahoma State Banking Commissioner under the 

authority of the state banking law. Okla. Stat. Ann. tit. 6, § 

1202. As provided under that statute, the Commissioner took 

possession of the bank and was "vested with the full and exclusive 

power of management and control, including the power to continue 

or to discontinue the business, to stop or to limit the payment of 

its obligations, ... and to reorganize or liquidate the bank in 

6 The criteria for determining whether an employer is a successor 

employer in the NLRB context may not be wholly applicable to the 

ERISA context. The National Labor Relations Act and ERISA are 

designed to serve different policy goals. Further, in Fall River, 

482 U.S. at 40, the Supreme Court held only that the successor 

corporation had a duty to bargain with the union that represented 

the employees of the predecessor company. The Supreme Court 

acknowledged that the successor employer was not bound by the 

terms of the labor contract between the predecessor company and 

the union. 

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Appellate Case: 90-5180 Document: 010110131496 Date Filed: 08/12/1991 Page: 10 
accordance with the Code." Id. The Commissioner thereupon named 

the FDIC as Receiver/Liquidator, cedeing to the FDIC "possession 

of all the assets, business and property of such bank of every 

kind and nature whatsoever " Id. at§ 1205(c). Upon 

acceptance of this charge, the FDIC assumed "all the powers and 

privileges provided by the laws of this state with respect to the 

liquidation of a bank .... " Id. at§ 1205(d). 

Rather than liquidate Bixby's assets in piecemeal fashion as 

it had the authority to do, the FDIC reached an agreement with 

Brookside whereby Brookside assumed certain Bixby assets and 

liabilities. Brookside expressly declined to assume any 

obligations under Bixby's employee benefit plans. Rather, 

Brookside continued to operate its own benefit program for its 

employees. Brookside ceased providing a group health plan of its 

own when it was terminated on September 15, 1988. We agree with 

the district court that "Leiding's employer ceased doing business 

on September 15, 1988, when the Oklahoma State Banking 

Commissioner declared the bank to be insolvent and appointed the 

FDIC as Receiver and Liquidating Agent .... [O]n that date the 

employer 'ceased to provide any group health plan to any 

employee.'" Order Sustaining Motion for Summary Judgment, Nov. 

22, 1989 (quoting 29 u.s.c. § 1162(2)(B)). Since, on the facts of 

this case, neither the Commissioner, the FDIC, nor Brookside can 

be considered to have been a successor employer, we affirm the 

district court's granting of summary judgment. 

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Appellate Case: 90-5180 Document: 010110131496 Date Filed: 08/12/1991 Page: 11 
ATTORNEYS' FEES AND SANCTIONS 

Both Leiding and appellees appeal from the district court's 

July 13, 1990 order denying their motions for attorneys' fees, 

costs, and sanctions. we affirm for the reasons given by the 

district court. 

According to ERISA § 502(g)(l): "in 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." However, an award of attorney's fees 

under ERISA § 502(g) is discretionary in nature and need not be 

granted as a matter of course. To find that the district court 

abused its discretion, we have held that "we must have a definite 

conviction that the court, upon weighing relevant factors, clearly 

erred in its judgment." Gordon v. United States Steel Corp., 724 

F.2d 106, 108 (10th Cir. 1983). We are satisfied that the 

district court here properly applied the five-prong test 

enunciated in Eaves v. Penn, 587 F.2d 453, 465 (10th Cir. 1978), 

and reiterated in Gordon. Since Leiding did not prevail on any 

issue in this litigation, we have no difficulty affirming the 

district court's denial of plaintiff's motion for fees and costs. 

Moreover, we do not believe that the district court abused its 

discretion in concluding that its denial of Leiding's motion for 

attorney fees and costs would have no significant effect on 

plaintiffs' "ready access to the Federal Courts." Leiding's 

motion for attorney fees and costs were appropriately denied. 

Appellees Kempton, OBA, and the various trustees cross-appeal 

the district court's denial of their motion for Rule 11 sanctions 

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Appellate Case: 90-5180 Document: 010110131496 Date Filed: 08/12/1991 Page: 12 
against Leiding. They contend that Leiding's claims for state law 

causes of action, jury trial, and extracontractual and punitive 

damages were factually and legally baseless. We find no abuse of 

discretion in the district court's order. Although the district 

court noted in its order that "Plaintiff's conduct in this case 

leaves much to be desired," it nevertheless concluded that 

"Plaintiff's counsel's conduct [did not] rise[] to the level of 

Rule 11 sanctions .... " Order, July 13, 1990. We cannot say 

that this was an abuse of discretion. We accordingly affirm the 

district court's denial of Rule 11 sanctions. 

CONCLUSION 

For the reasons stated above, we AFFIRM the district court in 

all particulars. 

Entered for the Court 

David M. Ebel 

Circuit Judge 

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