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Parties Involved:
John Erwin
Appellee
Matlack Systems, Inc. Employee Benefits Trust
Appellee
Matlack, Inc.
Appellee
Willis H. Wilcott
Appellant

Document Text:

PUBLISH 

FILED 

Unlted States Court or Appeals 

Tenth Circuit 

AUG 3 0 1995 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

WILLIS H. WILCOTT, 

v. 

Plaintiff-Appellee and 

Cross-Appellant 

MATLACK, INC., doing business as 

Matlack Systems, Inc., a Pennsylvania 

corporation; MATLACK SYSTEMS, INC. 

EMPLOYEE BENEFITS TRUST; JOHN ERWIN, 

Defendants-Appellants and 

Cross-Appellees. 

PATRICK FISHER 

Clerk 

Nos. 94-1296 

& 

94-1583 

Appeals from the United States District Court 

for the District of Colorado 

(D.C. No. 92-C-339) 

Submitted on the briefs: 

Gregg C. McReynolds, P.C., Englewood, Colorado, for DefendantsAppellants and Cross-Appellees. 

Nathan Davidovich and Steven W. Moore of Nathan Davidovich & 

Associates, Denver, Colorado, for Plaintiff-Appellee and CrossAppellant. 

Before TACHA, LOGAN, and BRISCOE, Circuit Judges. 

LOGAN, Circuit Judge. 

Appellate Case: 94-1583 Document: 01019280007 Date Filed: 08/30/1995 Page: 1 
These appeals arise from an action plaintiff Willis H. Wilcott initially filed in state court seeking redress for the denial 

of employee disability benefits, wrongful discharge, and associated contract and tort claims. After the case was removed to 

federal court, the district court dismissed all state claims as 

preempted by the Employee Retirement Income Security Act (ERISA), 

which "supersede[s] any and all State laws insofar as they may now 

or hereafter relate to any employee benefit plan," 29 U.S.C. 

§ 1144(a). Three federal claims were then tried to the court: 

(1) denial of short and long-term disability benefits due under 

defendants' ERISA plan, see 29 u.s.c. § 1132(a) (1) (B); (2) interference with ERISA rights (i.e., termination of employment in an 

attempt to avoid paying benefits), see 29 U.S.C. § 1140; and 

(3) failure to provide requested information about the ERISA plan, 

see 29 U.S.C. § 1132(c). The court entered judgment for plaintiff 

on the first claim and for defendants on the others. On appeal, 

defendants challenge the award of long-term disability benefits 

(appeal No. 94-1296),1 and plaintiff objects to the decision not 

to impose a penalty under§ 1132(c) and the dismissal of his state 

law claims (cross-appeal No. 94-1583) .2 

1 We deny plaintiff's motion to dismiss defendants' appeal for 

filing an untimely opening brief. See Mullen v. Household BankFederal Sav. Bank, 867 F.2d 586, 588 (lOth Cir. 1989). 

2 After examining the briefs and appellate record, this panel 

has determined unanimously to grant the parties' request for a 

decision on the briefs without oral argument. See Fed. R. App. P. 

34(f) and lOth Cir. R. 34.1.9. The cases are therefore ordered 

submitted without oral argument. 

2 

Appellate Case: 94-1583 Document: 01019280007 Date Filed: 08/30/1995 Page: 2 
I 

Most of the pertinent facts are undisputed. In January 1990, 

plaintiff's treating physician recommended that he take time off 

from work in an attempt to alleviate debilitating chest pains. 

Upon being advised of the situation, defendant Erwin (who was 

defendant Matlack, Inc.'s Western Regional Vice President) told 

plaintiff he could take a short-term disability leave of six 

months at half salary or several weeks at full pay. (Plaintiff 

alleges Erwin also assured him at this time that he would have his 

job for as long as he wished.) Plaintiff agreed to the shorter 

leave, wound up some pending matters, and went on disability commencing January 27, 1990. Five days later, plaintiff was notified 

that he had been terminated as a part of a general reduction in 

force. 

Thereafter, plaintiff attempted to secure long-term disability benefits under defendants' ERISA plan, but his requests and 

inquiries elicited no response. He tried a position with another 

employer in April 1990, but this effort ended with his hospitalization a month later. After one more unsuccessful attempt at 

employment, plaintiff applied for and was awarded social security 

disability benefits retroactive to May 1990. He did not, however, 

ever receive long-term disability benefits from defendants. 

Defendants assert that plaintiff did not satisfy the criteria 

for total disability benefits under the ERISA plan, i.e., that he 

did not 11 require[] regular medical supervision11 and was not 11 in a 

continuous state of [vocational] incapacity11 for the requisite 

time period, see App., Pl. ex. 1 (Employee Benefits Plan) at 29. 

3 

Appellate Case: 94-1583 Document: 01019280007 Date Filed: 08/30/1995 Page: 3 
Defendants also contend that plaintiff's post-termination employment undercuts any evidence that might otherwise indicate the 

requisite disability. 

Defendants characterize these contentions as involving the 

construction of the ERISA plan and, accordingly, insist on de novo 

review of the district court's interpretation. We disagree. The 

dispositive issue is "not really the interpretation of the [ERISA 

plan], but rather a question of fact: whether [plaintiff] was 

totally and permanently disabled from any kind of work." Delaney 

v. Union Carbide Corp., 749 F.2d 17, 19 (8th Cir. 1984); see Kirwan v. Marriott Corp., 10 F.3d 784, 790 (11th Cir. 1994) (reversing summary judgment against ERISA plaintiff because of dispute 

over factual question of total disability) . Thus, we will not 

disturb the district court's determination absent clear error. 

See, ~' Hopkins v. Seagate, 30 F.3d 104, 106 (lOth Cir. 1994) 

(applying clear error standard to factual findings dispositive of 

ERISA claim) . 3 

The district court rejected defendants' position on long-term 

disability for several reasons. First, the prerequisites for such 

disability were established by plaintiff's treating physician, who 

3 Defendants also assert, without any supporting citation to 

the record, that "the plan administrator had discretion to deny 

[plaintiff] benefits" and, consequently, the denial of benefits is 

subject to judicial review under a deferential "arbitrary and 

capricious" standard, pursuant to Firestone Tire & Rubber Co. v. 

Bruch, 489 u.s. 101 (1989). Reply Br. of Defendants-Appellants at 

7. The appellate record, however, contains "no evidence that 

under [defendants' ERISA] plan the administrator has the power to 

construe uncertain terms or that eligibility determinations are to 

be given deference." Bruch, 489 U.S. at 111. Hence, no deference 

is due to defendants' proffered rationale for the denial of benefits. See id. at 115. 

4 

Appellate Case: 94-1583 Document: 01019280007 Date Filed: 08/30/1995 Page: 4 
testified that he had provided regular medical supervision to 

plaintiff and that plaintiff was totally and continuously disabled 

from and after January 1990. Supp. App. 47-50. Moreover, echoing 

the physician's own views, see id. at 49, the district court 

deemed plaintiff's subsequent aborted attempts at employment to be 

consistent with this disability, rather than, as defendants contend, evidence of an unused capacity for work. Cf. Washington v. 

Shalala, 37 F.3d 1437, 1442-43 (lOth Cir. 1994) (recognizing same 

point in social security context). Finally, the court noted that 

under the ERISA plan, plaintiff's social security award, retroactive to May 1990, constitutes conclusive proof of his total disability thereafter. App., Pl. ex. 1 (Employee Benefits Plan) at 

32 ("Notwithstanding the above [provisions regarding substantiation of total disability] , the awarding of a primary Social Security Disability Benefit will be accepted by the Trust as proof of 

total disability and the continuation of such Social Security 

Disability Benefit will be accepted as proof of a continuing total 

disability."). 

The record fully supports the district court's finding of a 

continuing total disability compensable under the ERISA plan. 

Accordingly, we affirm its award of long-term disability benefits 

pursuant to § 1132(a) (1) (B). 

II 

On cross-appeal, plaintiff asserts the district court should 

have imposed a penalty under 29 U.S.C. § 1132(c), which grants the 

district court discretion to impose a penalty on any ERISA plan 

administrator "who fails or refuses to comply with a request for 

5 

Appellate Case: 94-1583 Document: 01019280007 Date Filed: 08/30/1995 Page: 5 
any information which such administrator is required . . . to 

furnish to a participant or beneficiary (unless such failure or 

refusal results from matters reasonably beyond the control of the 

administrator) by mailing the material requested . . . within 30 

days after such request." 29 U.S.C. § 1132(c). Plaintiff invoked 

this statutory remedy in conjunction with his allegations of 

repeated, unanswered requests regarding disability application 

procedures. The district court deemed the penalty unwarranted 

under the circumstances, particularly in light of plaintiff's 

failure to address his communications directly to the plan administrator. We must accept that determination absent an abuse of 

discretion. Boone v. Leavenworth Anesthesia, Inc., 20 F.3d 1108, 

1111 (lOth Cir. 1994). 

Plaintiff requested information and forms relating to longterm disability benefits under the ERISA plan by (1) a letter, 

concededly misaddressed, to the plan administrator, (2) a copy of 

that letter sent to the particular office where plaintiff had 

worked, and (3) personal communications with his sales manager, 

the regional vice president, and the head of human resources. 

Under appropriate circumstances, a§ 1132(c) penalty may be based 

on information requests such as plaintiff's that were not directed 

to the plan administrator. See Boone, 20 F.3d 1009 n.2 (letter 

addressed to company's counsel who "handled the business of the 

plan"); McKinsey v. Sentry Ins., 986 F.2d 401, 404-05 (lOth Cir. 

6 

Appellate Case: 94-1583 Document: 01019280007 Date Filed: 08/30/1995 Page: 6 
1993) (if other personnel routinely answer requests from participants, their actions may be imputed to plan administrator). However, such circumstances have not been demonstrated here. Moreover, the district court did not deny relief on the legal ground 

that plaintiff had not made an enforceable request, but because in 

its judgment a penalty was not warranted. The record does not 

show that judgment to be an abuse of discretion. 

III 

Finally, plaintiff asserts the district court erred in 

determining that his state law claims were preempted by ERISA. 

This court recently summarized the general principles governing 

ERISA preemption: 

Before preemption will be found, 

must be met. There must be a state 

benefit plan, and the state law 

employee benefit plan. . 

three requirements 

law, an employee 

must relate to the 

A law relates to an employee benefit plan, in the 

normal sense of the phrase, if it has a connection with 

or reference to such a plan. Thus, even if a state law 

is not specifically directed toward the regulation of an 

ERISA plan or affects such a plan only indirectly, it 

can still be found to relate to a plan. 

There is no simple test for determining when a law 

relates to a plan. This circuit has recognized four 

categories of laws which have been held preempted 

because they relate to ERISA plans. . . . First, laws 

that regulate the type of benefits or terms of ERISA 

plans. Second, laws that create reporting, disclosure, 

funding, or vesting requirements for ERISA plans. 

Third, laws that provide rules for the calculation of 

the amount of benefits to be paid under ERISA plans. 

Fourth, laws and common-law rules that provide remedies 

for misconduct growing out of the administration of the 

ERISA plan. 

Airparts Co. v. Custom Benefit Servs. of. Austin. Inc., 28 F.3d 

1062, 1064-65 (lOth Cir. 1994) (citations and quotations omitted). 

7 

Appellate Case: 94-1583 Document: 01019280007 Date Filed: 08/30/1995 Page: 7 
Application of these principles to particular state law claims is 

a legal matter that we review de novo. Id. at 1064. 

The question here is whether the state contract and tort 

claims asserted by plaintiff seek to redress actions somehow 

associated with defendants' ERISA plan and, thus, fall into the 

fourth preemption category identified in Airparts. The district 

court stated: "A careful reading of the amended complaint reveals 

that the plaintiff's state law claims are in fact based on the 

proposition that the defendants discharged him to avoid paying 

disability benefits." Supp. App. 23. If this is a fair characterization of plaintiff's state law claims, preemption is indeed 

required because "'the factual basis of the cause[s] of action 

involves an employee benefit plan.'" Milton v. Scrivner. Inc., 53 

F.3d 1118, 1121 n.3, (lOth Cir. 1995) (quoting Settles v. Golden 

Rule Ins. Co., 927 F.2d 505, 509 (lOth Cir. 1991)); see IngersollRand Co. v. McClendon, 498 U.S. 133, 139-40 (1990) (wrongful discharge claim preempted because it required plaintiff to prove 

"that an ERISA plan exists and the employer had a [benefit]-

defeating motive in terminating the employment"). 

On the other hand, an employee may rely on state law to 

redress the breach of an employment contract, notwithstanding the 

presence of an ERISA plan, if the factual basis of the suit is 

independent of the rights and duties created by the plan. See 

Krause v. Dresser Indus., Inc., 910 F.2d 674, 676, 680 (lOth Cir. 

1990). Our preemption analysis turns, then, on the factual basis 

of plaintiff's state law claims, which we construe with a strict 

8 

Appellate Case: 94-1583 Document: 01019280007 Date Filed: 08/30/1995 Page: 8 
focus on substance rather than form, see Alessi v. RaybestosManhattan, Inc., 451 U.S. 504, 525 (1981). The critical factual 

allegations of these claims are set out below, grouped by legal 

affinity for purposes of analysis. 

The claims in the first group seek redress for the alleged 

breach of plaintiff's contract of employment: 

[Wrongful Discharge] 

23. [Plaintiff] was wrongfully discharged from 

employment in breach of Matlack's and Erwin's assurance 

that [plaintiff] would have a job at Matlack for as long 

as he wished. That agreement was for adequate consideration and created an employment contract between 

[plaintiff] and Matlack. 

[Breach of Contract] 

26. [Plaintiff] and Defendant Matlack, were parties to an employment agreement, as stated above. 

27. The arbitrary termination of [plaintiff's] 

employment, without regard to his job performance, is a 

breach of this employment agreement. 

28. [Plaintiff] undertook and continued employment 

and duly performed all conditions of the agreement to be 

performed by him until prevented by the Defendant, Matlack, from further performance, as stated herein. 

Supp. App. 4. The basis for relief here is an employment agreement enforceable independently of any additional legal rights 

plaintiff may have had under the ERISA plan. Thus, it cannot be 

said that "the existence of a[n] [ERISA] plan is a critical factor 

in establishing [defendants'] liability," Ingersoll-Rand Co., 498 

U.S. at 139-40, or that plaintiff is simply "resorting to state 

law to avail [himself] of an alternative cause of action to collect [ERISA] benefits," Airparts Co., 28 F.3d at 1065. On the 

contrary, these "run-of-the-mill state-law claims," Mackey v. 

Lanier Collection Agency & Serv., Inc., 486 u.s. 825, 833 (1988), 

9 

Appellate Case: 94-1583 Document: 01019280007 Date Filed: 08/30/1995 Page: 9 
are essentially indistinguishable from the contract claim this 

court held not preempted in Krause, 910 F.2d at 680. 

The claims in the second category arise out of the same 

alleged employment contract breach, but sound in tort: 

[Interference with Prospective Financial Advantage] 

31. Through the actions of Defendant Erwin, which 

actions were intentional and exceeded the scope of his 

official duties, [plaintiff] was deprived of prospective 

financial advantages to be gained through his continued 

employment with Matlack. 

[Outrageous Conduct] 

34. Defendants Matlack and Erwins' course of conduct towards [plaintiff], as described above, is so 

extreme in degree as to go beyond the bounds of decency 

and is regarded as atrocious and intolerable in a civilized community. 

35. Defendants Matlack and Erwins' acts were 

extreme and outrageous and were done with the intent to 

cause Plaintiff severe emotional distress. 

Supp. App. 5. Because these tort allegations share the same 

ERISA-independent factual basis as the contract claims with which 

they overlap, the analysis set out above applies. 

The third class of claims seeks damages resulting from 

plaintiff's reliance on defendants' alleged misrepresentations 

that utilizing disability leave benefits would not jeopardize his 

job: 

[Negligent Misrepresentation] 

44. Defendant Matlack, through its agents, made 

representations to [plaintiff] that [plaintiff] would be 

permitted to take a six-week leave of absence, on full 

salary, from Matlack, and that this would not in any way 

interfere with his ability to remain employed with Matlack. 

45. The aforementioned representations to [plaintiff], were made in the course of business, profession 

10 

Appellate Case: 94-1583 Document: 01019280007 Date Filed: 08/30/1995 Page: 10 
and employment of the agent making the representations, 

and as an employee and agent of Defendant, Matlack. 

46. 

47. 

competence 

tiff] . 

48. 

expected 

tations. 

Such representations were false. 

Matlack failed to exercise reasonable care and 

in communicating said information to [plainDefendant Matlack, should reasonably have 

that [plaintiff] would rely on said represen49. [Plaintiff] relied on said representations 

when he agreed to a leave of absence from his employment, and such reliance was justified. 

[Fraudulent Misrepresentation] 

52. The aforesaid representations by 

described in Paragraph 44, were false. 

Matlack, 

53. At the time said representations were made, 

Defendants Matlack and Erwin knew that they were false 

or were indifferent as to their truth or falsity. 

54. Said representations were material to [plaintiff] in deciding whether or not to accept the offer of 

a leave of absence. 

55. Matlack and Erwin made said representations 

with the intent of inducing [plaintiff] to rely on them 

and accepting a leave of absence from work. 

56. [Plaintiff], did in fact, rely on the representations, and acted in accordance therewith in 

accepting a leave of absence from Matlack, and such 

reliance was justifiable. 

Id. at 6-7. The tie between these allegations and the ERISA plan 

is plain and substantial. Defendants' alleged misrepresentations 

relate directly to the nature of plaintiff's rights under the 

plan--i.e., whether employee disability benefits are secured by 

guarantees against adverse employment consequences. Further, to 

establish defendants' liability, plaintiff would have to show the 

reasonableness of his reliance on the alleged misrepresentations 

regarding disability-leave rights, which would require resort to 

11 

Appellate Case: 94-1583 Document: 01019280007 Date Filed: 08/30/1995 Page: 11 
the terms of the ERISA plan. "Because the court's inquiry must be 

directed to the plan, th[ese] ... cause[s] of action 'relate[] 

to' an ERISA plan" and, therefore, are preempted. Ingersoll-Rand 

Co., 498 U.S. at 140. 

The fourth and final category consists of a single contract 

claim with multiple factual bases, some related to the ERISA plan 

like the claims in the third group, some independent of the plan 

like those in the first and second: 

[Promissory Estoppel] 

38. Defendant Erwin, while in the scope of his 

employment with Defendant Matlack, and on behalf of 

Matlack, made the following promises to [plaintiff] : 

a. That [plaintiff] would be permitted to 

take a six-week leave of absence from Matlack, which 

leave of absence would not in any way interfere with 

[plaintiff's] right to continued employment with Matlack; 

b. That [plaintiff's] job would not be in 

jeopardy as a result of taking time off; and, 

c. That [plaintiff] would have a job at 

Matlack for as long as he wished. 

39. Defendant Erwin, should 

expected that these promises would 

reliance thereon by [plaintiff] . 

have reasonably 

induce material 

40. [Plaintiff], in fact, reasonably believed and 

justifiably relied upon these promises when he undertook 

a six-week leave of absence with Matlack. 

41. The doctrine of Promissory estoppel must be 

applied in order to prevent injustice under the circumstances alleged herein. 

Supp. App. 5-6. Insofar as this claim rests on the alleged promises of noninterference/nonretaliation referred to in paragraphs 

38a and 38b, it is clearly preempted, although it is not preempted 

12 

Appellate Case: 94-1583 Document: 01019280007 Date Filed: 08/30/1995 Page: 12 
to the extent it is based on the ERISA-independent promise of continued employment per se alleged in paragraph 38c. See, ~' 

Sorosky v. Burroughs Corp., 826 F.2d 794, 800 (9th Cir. 1987) 

(reflecting similarly discriminating preemption analysis of single 

breach of contract claim, holding ERISA-related theories of 

recovery preempted and ERISA-independent theories viable). 

In finding preemption the district court may have been influenced by the fact that plaintiff's first complaint (not in the 

appellate record) apparently included the factual contentions 

underlying the tort and contract claims in counts alleging only 

ERISA violations. We hold that in his second, more artfully 

pleaded complaint, plaintiff avoided preemption by separating the 

contract and tort claims from entanglement with the ERISA claims. 

Although the district court erred in dismissing these claims as 

preempted by ERISA, we may affirm the district court on any legal 

ground supported by the record. See Jetcraft Corp. v. Flight 

Safety Int'l, 16 F.3d 362, 364 (lOth Cir. 1993). 

Plaintiff bases his employment contract claim on a single 

oral statement by defendant Erwin at a time when plaintiff was 

totally disabled. We are satisfied, based on the pleadings alone, 

that plaintiff could not prevail on the contract claims. First, 

there are statute of fraud problems. See Colo. Rev. Stat. § 38-

10-112(1) ("agreement that by the terms is not to be performed 

within one year after the making thereof" must be "in writing and 

subscribed by the party charged therewith"); Chidester v. Eastern 

Gas & Fuel Assocs., 859 P.2d 222, 224 (Colo. App. 1992) (in oral 

employment contract, neither partial performance nor payment of 

13 

Appellate Case: 94-1583 Document: 01019280007 Date Filed: 08/30/1995 Page: 13 
compensation sufficient to avoid statute of frauds defense) . 

Further, what consideration supports an employment contract agreed 

to by one totally disabled and unable to perform? Even assuming a 

valid contract, because plaintiff was totally and permanently disabled he could not perform--hence, no damages. Plaintiff's 

inability to perform would also support dismissal of the aspects 

of the promissory estoppel claim unrelated to the employee benefits. 

Plaintiff's tort claims also fail. Aside from interfering 

with plaintiff's right to employee benefits (preempted by ERISA), 

there can be no "unlawful interference with prospective financial 

advantages to be gained through [plaintiff's] continued employment," Supp. App. 5, if plaintiff's total disability would prevent 

him from working. Finally, plaintiff did not plead or produce 

evidence of actions by defendants that rise to the level of 

"atrocious and utterly intolerable" conduct required for an outrageous conduct claim. See Rugg v. McCarty, 476 P.2d 753, 756 

(Colo. 1970). 

For the reasons stated we AFFIRM the judgment of the district 

court. 

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