IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

__________________________

No. 01-30174

__________________________

RELIABLE HOME HEALTH CARE, Inc.; LOUIS T. AGE, Jr.,

Plaintiffs-Appellants-Cross Appellees,

versus

UNION CENTRAL INSURANCE COMPANY; Et Al,

Defendants,

GLAPION GROUP, Inc.; ROBERT JODY SANDERSON; WALTER A. GLAPION,

Jr.; AMERICAN AUTOMOBILE INSURANCE COMPANY,

Defendants-Appellees-Cross-Appellants.

__________________________

No. 01-30331

__________________________

RELIABLE HOME HEALTH CARE, Inc.; LOUIS T. AGE, Jr.,

Plaintiffs-Appellants,

versus

UNION CENTRAL INSURANCE COMPANY; Et Al,

Defendants,

GLAPION GROUP, Inc.; ROBERT JODY SANDERSON; WALTER A. GLAPION,

Jr.; AMERICAN AUTOMOBILE INSURANCE COMPANY,

Defendants-Appellees.2 ___________________________________________________

Appeals from the United States District Court

for the Eastern District of Louisiana

___________________________________________________

July 10, 2002

Before DUHÉ, DeMOSS, and CLEMENT, Circuit Judges.

CLEMENT, Circuit Judge:

Reliable H ome Health Care, Inc. (“Reliable”) filed suit

against the Glapion Group, Inc. (“Glapi on”) for breach of its

fiduciary duties arising out of a deferred comp ensation plan

created by Glapion for Reliable. This case involves a claim of

breach of fiduciary duty under ERISA. Prior to trial, Reliable

settled with Union Central Insurance Co. (“Union Central”) for

$165,000. Following a bench trial, the district court found that

Glap ion breached its fiduciary duty to Reliable by failing to

advise Reliable it would lose the cash surrender value in its

insurance policies if it stopped paying premiums or by failing to

recover the money after it was lost. The court found Glapion

liable fo r $58,075.87, the cash surrender value of the policies.

However, no damages were aw arded because the court held that

Reliable was made whole by its settlement with Union Central. The

court also held that each party was to bear its own costs but did

award Glapion costs and attorneys’ fees in the amount of $8,264.75

for an unsuccessful attempt to take trial t estimony via video

confe rence due to plaintiff’s lack of cooperation. Both parties

timely appealed the court’s decision. For the following reasons,3

we AFFIRM in part and REVERSE in part.

I. Facts and Proceedings

Lou is Age (“Age”) is the CEO for Reliable, a Medicare

certified home health care agency doing business in and around New

Orleans. Reliable’s services include in-home nursing, nursing aid,

and rehabilitation services. Age was a licensed insurance broker

formerly employed by Union Central. Glapion, owned and operated by

Walter A. Glapion, Jr. and Robert J. Sanderson (“Sanderson”), was

an agent for Un ion Central. Mr. Glapion was the general manager

for Union Central and wrote insurance for it in addition to other

insurance companies.

In 1992, Age contacted Mr. Glapion, a former colleague,

concerning having Glapion create deferred compensation plans for

Age and other executive employees of Reliable. Age forwarded a

copy of a d eferred plan seeking one similar to it. He also sent

copies of the Medicare regulations for such plans whi ch preclude

the use of whole life policies as funding mechanisms. Age informed

Glapion that he wanted a deferred compensation plan containing

group insurance in addition to a cash product, preferably an

annuity.

As a Medicare provider, Reliable was entitled to reimbursement

for necessary and reasonable costs which included premiums for

payment of policies, including the policies which provide d the

funding mechanism for the deferred compensation plan. Pursuant to

the Medicare cost reimbursement s ystem, Medicare reimburses its1 Age argues that Sanderson was not authorized to sign any

documents on his behalf. However, testimony elicited at trial

indicated that Age did give other people authority to sign his

name.

4 p roviders, such as Reliable, through interim payments throughou t

the course of the provider’s fiscal year. At the end of each

fiscal year, the provider prepares and submits a cost report and

trial balance to an intermediary, an organization under contract to

the Department of Health and Human Services, for approval. Blue

Cross/Blue Shield of New Mexico was designed by the Health Care

Financing Administration (“HCFA”) as its intermediary for

Louisiana. David Fiedler was the intermediary who audited and

approved Reliable’s cost reports.

Glapion wrote a pension plan for Reliable which was rejected

in February 1993 by Fiedler because it included a whole life

insurance policy. As a result, Glapion employed an attorney to

create an adequate deferred compensation plan for Relia ble. The

attorney created a prototype for Glapion in September 1993. In

March 1994, Fiedler approved the prototype. Glapion used the

prototype to make the plan for Reliable and used Selectex a s a

funding mechanism. The prototype, completed in 1993, was backdated

and signed to reflect a November 1992 date, the date on which the

Plan was initially created for Reliable. The Plan was signed by

Sanderson on behalf of Age. 1

Despite assertions that he did not sign nor ever see the2 While Liberty was the designated custodian and owner of the

policies by the Plan, no money was ever deposited with Liberty on

behalf of Reliable. No escrow account was ever opened. Dividend

checks sent from Union Central to Liberty on behalf of the

Reliable participants were endorsed by Liberty and then delivered

to the participants.

3 Unbeknownst to Sanderson, Age had stopped paying premiums

to Union Central in April 1994.

5 deferred compensation plan, Age paid the premiums from 1992 until

April 1994. Additionally, from 1992 to 1997, Reliable submitted

cost reports detailing costs for which it sought reimbursement.

The cost reports were submitted to Fiedler who issued a Notice of

Program Reimbursement (“NPR”) and reimbursed Reliable f or costs

incurred through the payment of premiums for these years. Age

signed the reports certifying that all costs claimed on the reports

were permissible under Medicare regulations.

Sanderson was told by Union Central that Reliable’s policy was

paid up to date with a credit of $39,858.29 on February 22, 1996.

A check from Union Central was received in the amount of

$15,490.93, made payable to Liberty Bank and Trust, the custodian

of Reliable’s plan on Octo b er 7, 1996. 2 Sanderson advised Age to

discontinue payments until a determination could be made as to the

whereabouts of approximately $24,000, the difference between the

credit Reliable was told it had and the $15,000 check it received. 3

On D ecember 31, 1996, Age was informed by Union Central that he

owed $135 ,418.78 and would be terminated retroactive to April 1,

1994, the date of the last payment, unless the Plan was made6

current by June 1, 1997. Once Union Central conducted the

accounting, Glapion advised Age to resume paying the premiums in

order to make the Plan current. Age did not resume payment of the

premiums. When the policy was terminated, its cash surrender value

was sever ely depleted because Union Central had instituted the

automatic loan provisions of the policies to pay for the delinquent

premiums. Age claims he was unaware of the existence of this

provision.

Reliable filed suit against Glapion a nd Union Central, but

prior to trial Reliable settled with Union Central for $1 65,000.

The case was then tried before the district court against Glapion

for the breach of fiduciary duty claim. Following the bench trial,

the court concluded that Glapion had breached its fiduciary duty to

Reliable by failing to advise Rel iable of the loss of its cash

surrender values or negligently failing to cease the relationship

with Union Central prior to the d epletion of its assets. The

district court concluded that Reliable suffered a loss of

$ 58,075.87, the cash surrender value of the policies when the

automatic loan provision to ok effect. However, Reliable was

precluded fro m recovering the loss because it had been fully

compensated through its settlement with Union Central. Both

Glapion and Reliable appealed the district court’s decision.

II. Analysis

A. Standard of Review

As a threshold matter, we address the appropriate standard of4 Because there was a valid plan, ERISA clearly governs this

action. See Title 29 U.S.C. §§1002(A), 1003(a).

7 review. The existence of an ERISA plan is a question of fact. S ee

Gahn v. Allstate Life Ins. Co.

, 926 F.2d 1449 (5 th Cir. 1991).

Accordingly, we review the district court’s determination for clear

error. S ee Fed.R.Civ.Pro. 52(a). The legal conclusions reached by

the district court in applying those facts is de novo . The issue

of fiduciary status is a mixed question of law and fact. R eich v.

Lancaster , 55 F.3d 1034, 1044 (5 th Cir. 1995).

B. Did a Valid Plan Exist?

The parties dispute w hether a plan ever existed. The

district court held that a plan did exist. Reliable submits that

there is no evid ence to support the district court’s conclusion

that a deferred compensat ion plan was created specifically for

Reliable, while Glapion asserts that there is ample evidence that

a plan did in fact exist based on Reliable’s actions. We conclude

that the district court was corre ct in finding that a plan did

exist. 4

1. Was a Deferred Compensation Plan Created for Reliable?

Age first commission ed Glapion to create a deferred

compensation plan for Reliable’s executive employees in 1992.

Reliable requested a plan containi ng group insurance and a cash

product, preferably an annuity. The initial plan submitted to

Fiedler for approval contained an LFP policy, which is a whole life5 The district court concluded that: “the credible evidence

demonstrates that the Medicare approved plan consisted of the

prototype plan, the plan description, and the participation

agreements. Moreover, the Fiedler and Booth letters show

acceptance of the plan by Medicare pursuant to its regulations. ”

8 policy. Fiedler denied approval of the Plan for failure to comply

with Medicare regulations. In 1993, Glapion retained the services

of an attorney to draft a new plan prototype to replace the initial

plan. The prototype was approved by Fiedler in March 1994. The

prototype was applied to the Reliable Plan adding Selectex as the

funding mechanism. Reliable argues that the Reliable Plan,

although similar to the prototype approved by Medicare, was never

a ctually approved. The prototype was submitted for approval

w ithout the funding mechanism. Glapion maintains that Fiedler

specifically approved Selectex as a funding mechanism. Because the

Plan was not ultimately approved until 1994, Glapion had the Plan

back-dated to reflect a November 1992 date, the date when the

initial Plan was signed by Age. The district court concluded that

a plan was created and approved. 5 We agree.

Reliable submits that, if the Plan was valid, it needed to be

reviewed by an intermediary before it could be approved. Because

this was never done, no plan existed. The problem with this line

of reasoning is that HCFA and the intermediary, Fiedler, assumed a

plan to be in effect. Reliable submitted annual cost reports

beginning in 1992 and was reimbursed for the premiums paid into the

Plan. Whether it was appropriate for the intermediary to reimburse6 The record indicates that Seletex is a form of whole life

policy with a rapid cash value growth akin to a retirement income

contract. Robert Lindenberger, a senior field sales vicepresident for Union Central, testified that, while it was a

limited pay whole life policy, it fit the definition of a

retirement income contract, permissible under Medicare.

7 Reliable relies on the Provider Reimbursement Manual, an

interpretive guideline published by the HCFA, the agency within

HHS that administers Medicare. The manual does not have the

effect of law. It is persuasive at best. See Sta-Home Home

9 Reliable because no plan existed until 1994 is not an issue

reviewable by this Court. For, under Medicare regulations, an

intermediary’s decision as to the total am ount of reimbursement

owed to a provider is final and binding and cannot be revisited

after three years. S ee 42 C.F.R. §§ 405.1803, 40 5.1885. Any

negligence on the part of Glapion in not creating a valid plan

until two years after Reliable began paying premiums was negated by

the fact that HCFA and the intermediary assumed that a plan existed

as reimbursements wer e issued for the premiums paid by Reliable

into the nonexistant plan. Reliable was reimbursed by Medicare for

the premiums it paid into the plan whether it existed or not prior

to 1994.

2. Was Selectex a Permissible Funding Mechanism for

Deferred Compensation Plans?

The d istrict court concluded that Selectex 6 was a valid

funding mechanism for the Reliable Plan. Reliable claims that

Selectex was a whole life policy precluded by the Plan and by

Medicare regu l ations. 7 As a result, the Plan was invalid. WhileHealth Agency, Inc., v. Shalala , 34 F.3d 305, 310 (5 th Cir.

1994).

10 there does not seem to be a dispute that whole life policies were

precluded by the Plan and by Medicare, the parties dispute whether

Selectex was a whole life policy. There is no doubt that the

funding mechanism used was not one desired by Reliable. However,

that does not make it an invalid funding mechanism for purposes of

the existence of a valid plan under Medicare. Whether HCFA or the

intermediary actually approved the specific Reliable Plan and its

funding mechanism, the fact is that it was deemed permissible.

Reliable sought and received reimbursements for the premiums it

paid into a nonexistant plan and subsequently into an existent plan

albeit one with an undesirable funding mechanism. The fact that

the funding mechanism used was not the one specified by Reliable

does not make it invalid under Medicare. W hole life insurance

policies can be used to fund deferred compensation plans. However,

in a case such as this, a regulatory agency has excluded the use of

certain types of policies to fund deferred compensation plans.

Medicare expressly precludes the use of whole life policies to fund

deferred compensation plans. F or five years, Age submitted cost

reports and reimbursement requests for the premiums paid into the

Selectex policies, and, for five years, Fiedler approved Reliable’s

cost reports and reimbursement requests. Had Selectex been an11

improper funding mechanism under Medicare, Reliable would not have

been reimbursed for the premiums paid into the policies. Because

reimbursements were made for a plan funded by Selectex, Selectex

cannot be considered an ordinary whole life policy.

C. Whether the Reliable Plan is an Unfunded Deferred Compensation

Plan for Executive Level Employees Exempting Glapion from the

Fiduciary Duties of ERISA.

ERISA’s coverage provisions provide that ERISA shall apply to

any employee benef it plan with certain enumerated exceptions. A

plan falling within such exceptions is one “which is unfunded

and...maintained by an emplo yer primarily for the purpose of

providing deferred compensation for a select group of management or

highly compensated employees.” 29 U.S.C. §1101(a)(1). These

plans, also known as “top hat” plans are exempt from ERISA’s

fiduciary pro visions as well as its participation, vesting, and

funding provisions. S ee 29 U.S.C. §§ 1051(2), 1081(a)(3), and

1101(a)(1).

In order to establish whether a plan qualifies as a top hat

plan exempt from ERISA’s fiduciary duties it must be (1) unfunded

and (2) maintained by an employer primarily for the purpose of

providing deferred compensation for a select group of management or

highly compensated employe es. S ee Demery v. Extebank Deferred

Compensation Plan , 216 F.3d 283, 287 (2 nd Cir. 2000). There is no

doubt that the Reliable Plan was created to provide deferred8 In Spacek v. The Maritime Association, I L A Pension Plan

,

134 F.3d 283, 296 (5 th Cir. 1998), we noted, in dicta, that top

hat plans “are not subject to ERISA’s full panoply of

regulations.”

12 compensation to high level employees. The issue remains whether

the Plan was unfunded. ERISA does not define what makes a plan

funded or unfunded for determining qualification in a top hat plan

nor has this Circuit directly addressed whether a plan is funded

for purposes of exemption from ERISA’s fiduciary provisions. 8

The Second Circuit recently addres sed the issue in D emery

.

Bank officers filed suit against the bank for breach of fiduciary

duty in relation to a deferred compensation plan. The issue before

the court was whether the plan was maintained primarily for a

select group of high level employees. The plan was found to be a

“top hat” plan, and the court’s discussion on funding is

instructive. The Second Circuit had previously held that a plan

was unfunded in a situation where the benefits were paid “solely

from the general assets of the employer.” 216 F.3d at 287, q uoting

Gallione v. Flaherty

, 70 F.3d 724, 725 (2 nd Cir. 1995) . Adopting

a standard set forth in Miller v. Heller

, 915 F.Supp. 651 (S.D.N.Y.

1996), the court asked whether the beneficiary could “‘establish,

through the plan documents, a legal right any greater than that of

an unsecured creditor to a specific set of funds from which the

employer is, under the ter ms of the plan, obligated to pay the13

deferred compensation.’” Demery

, 216 F.3d at 287, quoting Miller at

660. Looking at the plan, the court concluded that it did not give

the plaintiffs any greater legal right to the funds than that

possessed by an unsecured creditor.

The Ei ghth Circuit has also addressed the issue. “Funding

implies the existence of a res separate from the ordinary assets of

the corporation. All whole life insurance policies which have a

cash value with premiums paid in part by corporate contributions to

an insurance firm are funded plans.” Dependahl v. Falstaff Brewing

Corp.

, 653 F.2d 1208, 1214 (8 t h Cir. 1981). In D ependahl

, the

insurance polic y purchased by the company was owned by the

employee. The Dependahl plan was a whole life insurance plan by

which the named beneficiaries of the participant would receive

annuity income benefits upon the participant’s death, and the

employer would r ecover annual premiums previously paid plus

interest. Id . at 1213.

In Belsky v. First National Life Insurance Co. , 818 F.2d 661

(8 th Cir. 1987), the Eighth Circuit held that a plan funded through

life insurance policies could still be considered unfunded as long

as the policies were not separated from the general assets of the

company. The B elsky court distin guished between funded and

unfunded plans by finding that a plan was “funded when benefits are

paid through a specific insurance policy and unfunded when they are14

paid from the employer’s general assets.” 818 F.2d at 663. The

Belsky policy provided retirem ent and disability benefits in

addition to death benefits. The policy also specifically provided

that the rights of the exec utive would be those of an unsecured

creditor. Id . The language of the Belsky plan explicitly stated

that the policy became an asset of the bank with no separate res.

The Department of Labor (“DOL”), in an advisory opinion, has

also provided guidance on the issue. Op. Dep’t Labor 92-13 A (May

19, 1992). “[A]ny determination of the ‘unfunded’ status of an

‘excess benefit’ or ‘top hat’ plan of deferre d compensation

requires an examination of the surrounding facts and circumstances,

including the status of the plan under non-ERISA law.” DOL has

indicated that great weight should be given to the tax consequences

of such plans. S ee Op. Dep’t Labor 9 2-13 A; M iller

, 915 F.Supp.

651, 659 (holding that a “plan is more likely than not to be

regarded as unfunded if the beneficiaries under the plan do not

incur tax liability during the year that the contributions to the

plan are made.”)

The refore, in determining whether a plan is “funded” or

“unfunded” under ERISA, a court must first look to the surrounding

facts and circumstances, inclu ding the status of the plan under

non-ERISA law. Second, a court should identify whether a policy is

funded by a res separate from the general assets of the company.15

In so doing, the mere fact that a plan is funded through an

insurance policy is not dispositive of a plan’s status as funded or

unfunded for ERISA purposes.

Glapion maintains that the P lan was unfunded while Reliable

asserts that the Plan was fun ded. Citing the language of the

Plan, Reliable asserts that it has a res separate from the assets

of the company such that it cannot be considered unfunded. Section

3.1 of the Plan provides:

This Plan is intended to be a welfare benefit plan that

provides either a Death Benefit or Sepa ration Benefit

(but not both) to each Participant. All benefits under

the Plan shall be provided through the Policy or Policies

selected by the Administrator for purchase on the life of

each P articipant. Each Policy shall be issued to and

held by the Custodian for the purpose of providing

benefits payable under the Plan t o the Participant

insured under such Policy. All Employer Contributions

shall be applied to the cost of such Policies, and in no

event shall the employer be lia ble for the payment of

benefits not paid by the Insurer und er the Policy(s).

The particulars of the Policy(s) issued for each

Participant in connection with this Plan shall be

reflected on a schedule to the enrollment application for

such Participant.

Reliable is of the opinion that the fact that benefits were funded

and paid through an insurance policy makes the Plan “funded” for

ERISA purposes. We disagree. See Demery , 216 F.3d 283(finding a

plan funded with life insurance contracts to be unfunded).

Section 3.2 of the Plan states:

For each Plan Year and in lieu of payment of additional

compensation to the Participant, the Employer shall9 Section 3.3 provides a mechanism by which the employer can

request a cash distribution be made to a participant from the

policy in an amount necessary to pay any tax costs incurred as a

result of Reliable’s payment of premiums.

16 contribute to the applicable Insurer, on behalf of each

Participant whose participation has not ceased during the

Plan Year, the amount required to maintain in effect the

Policy(s) purchased on the life of the Partic ipant for

the purpose of funding the Plan benefits payable to such

Participant, less any Plan forfeitures available to

reduce Employer Contributions. The total contributions

made under this Plan on behalf of a Participant for a

Plan Year s hall not exceed twenty percent (20%) of the

Participant’s Compensation for the year . In no event

shall a Participa nt be required or permitted to make

contributions to the Plan.

The language of the Plan in addition to the jurisprudence and the

DOL advisory opinion lead us to the conclusion that the Reliable

Plan was an unfunded top hat plan and therefore exempt from ERISA’s

fiduciary duties.

The policies purchased by Reliable were not o wned by the

participants. The only right afforded to the participants under

the Plan wa s to designate death beneficiaries. Participants did

not make contributions to the Plan. In fact, they were prohibited

from so doing. S ee Section 3.2, supra. In addition, the Plan does

not intend for participants to incur tax liability in conjunction

with the payment of premiums. 9

D. Whether Reliable’s Fraud Claims are Preempted by ERISA.

Even though top hat plans are exempt from certain ERISA

requirements, they are not exempt from its reporting, disclosure,17

administration, or enforcement provisions. S ee 29 U.S.C. §§ 1021-

1045. Reliable argues that, if a valid plan did exist, the fraud

allegations are not preempted because they do not directly “relate

to” the Plan. Reliable argues that Glapion’s liability depends on

whether it fraudulently induced Reliable to pay premiums to Union

Central based on Reliable’s belief, caused by Glapion, that Union

Central had expertise in the executive benefit mark et which was

false. Glapion argues that Reliable’s fraud claims are mere

disguises for its breach of fiduciary duty claims. The claims

concern the creation, operation, and subsequent failure of the Plan

and are therefore directly “related to” the Plan making it subject

to preemption.

ERISA expressly “supercede[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). “A state law ‘relates to’ an employee benefit

plan 'if it has a connection with or reference to such plan.’”

Rozzell v. Security Servs., Inc. , 38 F.3d 819, 821 (5th Cir.1994)

(quoting Shaw v. Delta Air Lines

, 463 U.S. 85, 96-97 (1983)).

ERI SA preempts a state law claim “if (1) the state law claim

addresses an area of exclusive federal concern, such as the right

to receive benefits under the terms of an ERISA plan; and (2) the

claim directly affects the relationship between the traditional

ERISA entities--the employer, the plan and its fiduciaries, and the18

participants and beneficiaries.” Hubbard v. Blue Cross & Blue

Shield Ass'n

, 42 F.3d 942, 945 (5th Cir. 1995). It is “wellestablished that the ‘deliberately expansive’ language of [Section

514(a)]...is a signal that it is to be const rued extremely

broadly.” C orcoran v. United Healthcare, Inc.

, 965 F.2d 1321, 1328

(5 th Cir. 1992)(citations omitted).

Reliable cites Smith v. Texas Children’s Hospital

, 84 F.3d 152

(5 th Cir. 1996), and Hook v. M orrison Milling Co , 38 F.3d 776 (5 t h

Cir. 1994) in support of its position that ERISA does not preempt

its fraud claims. In S mith

, we held that preemption did not apply

to the plaintiff’s fraudulent inducement claim because the claim

was not necessarily dependent upon Smith’s rights under the ERISA

plan. 84 F.3d at 155. Smith alleged that she relinquished her

accrued benefits with her previous employer in reliance upon Texas

Children's alleged misrepresentations. Because her claim was not

based solely on Texas Children’s denial of benefits, we concluded

that she could have a claim based on the benefits she lost as a

result of being induced to leave her former employer.

In Hook

, we con cluded that a plaintiff’s unsafe workplace

claim did not relate to her ERISA plan and was t herefore not

preempted. The plaintiff in H ook was injured in an accident at

work, and the ERISA plan paid her medical expenses. Subsequently,

she filed a claim for wrongful discharge and negligence against her19

employer. We considered whether “the underlying conduct...[could]

be divorced from its connection to the employee benefit plan."

Hook

, 38 F.3d at 783, quoting

, C hristopher v. Mobil Oil

Corporation , 950 F.2d 1209, 1220 (5th Cir.1992). Hook’s cause of

action was based on her allegation that the employer failed to

maintain a s afe workplace, not from a dispute over the

administration of the ERISA pla n or the disbursement of benefits

therefrom. Hook , 38 F.3d at 783.

The fraud claims asserted by Reliable involve Gl apion’s

failure to inform Reliable that the Plan was not implemented in

1992 when Age signed the Trust Agreement and whether an invalid

funding mechanism was used. We find this Court’s decision in

Christopher more analogous to the present facts than Smith or Hook

.

The allegations in Christopher of fraud, negligence, and breach of

contract were based on “Mobil ’s amendment of an ERISA-governed

employ ee benefit plan and Mobil’s disclosure to its employees of

the terms of the plan.” 950 F.2d at 1218. We noted that the plan

as it existe d prior to the amendment and the language of the

amendment would have to be examined in order to adjudicate the

plaintiffs’ claims. The Court found that such analysis, given the

expansiveness of Section 514(a) warranted preemption. We conclude

that the same reasoning applies to the instant case. The

underlying conduct alleged by Reliable cannot be severed from its20

connection to the Plan. Therefore, we affirm the district court’s

determination that Reliable’s state law claims are preempted.

E. Remaining Claims.

1. Costs and Attorneys’ Fees

The district court entered judgment ord ering each party to

bear its own costs. We have taken the position that when a

district court does not award costs to a prevailing party, it must

give reasons for so doing. W alters v. Roadway Exp., Inc

., 557 F.2d

521, 526-27 (5 th Cir. 1977); See also Schwarz v. Folloder

, 767 F.2d

125, 131 (5 th Cir. 1985). In light of our reversal on the merits,

on remand, if the district court concludes not to award costs,

reasons should be given.

2. Costs and Attorneys’ Fees Related to the Taking of Trial

Depositions.

During trial, t he district court allowed counsel for

Glapion to take the testimony of two Union Central employees via

video conference. The effort was unsuccessful due to plaintiff

counsel’s lack of cooperation. The court ordered the depositions

to be taken in pers on and indicated that the plaintiffs would be

taxed costs and expenses for the depositions. Glapion submitted a

cost summary of the taking of the depositions totaling $8,264.75.

We affirm the district court’s decision to tax costs and expenses

against R eliable in conjunction with the taking of the10 Reliable argues that it was forced to pay Glapion for

items which are not compensable by statute or the Federal Rules.

We disagree. The record clearly indicates that Reliable forced

the added expense of taking trial depositions after agreeing to a

video examination during trial. While not all the items listed

by Glapion in submitting its costs in conjunction with the

deposition are taxable under Title 28 U.S.C. §1920, they were

nonetheless appropriate and within the court’s discretion on

alternative grounds.

21 depositions. 10

III. Conclusion

We conclude that a valid funding me chanism and plan existed

and that Reliable’s state law fraud claims are preempted. We also

conclude that Glapion is exempt from ERISA’s fiduciary duties

because the Reliable Plan is an un f unded top hat plan. We

therefore reverse the district court’s determination that Glapion

was a fiduciary and that it breached its duty to Reliable. We also

re verse and remand the district court’s decision not to award

attorney’s fees and costs in a manner consistent with this opinion.