## The Honorable Donald D. Alsop, United States District Judge for the District 1 

## of Minnesota, sitting by designation. United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________ No. 97-2291

___________ George J. Clough, Jr., * Plaintiff- * Appellant, *

v. * Voyager Group, Inc., a * District Court for the Corporation; Transport Life * Eastern District of Missouri. Insurance Company, a Corporation; * Primerica Life Insurance Company, * formerly known as Massachusetts * Indemnity and Life Insurance * Company; Travelers Group, Inc., *
Defendants- * Appellees. * *

*

* Appeal from the United States

*

___________ Submitted: January 12, 1998 Filed: March 23, 1998

___________ Before LOKEN and MURPHY, Circuit Judges, and ALSOP, District Judge

. 1

___________ MURPHY, Circuit Judge.

## The Honorable E. Richard Webber, United States Distr ict Judge for the Eastern 2 

## District of Missouri. In May of 1988, American was purchased by Commercial Credit and its name 3 

## was changed to Primerica Corporation. In 1991, Voyager’s business was transferred to Transport Life Insurance Company, another Primerica subsidiary. Primeric a eventually purchased Travelers Group, Inc. and adopted the name Travelers. -2- Geo rge Clough was an executive in an insurance business whic h underwent several changes over the years due to corporate reorganizationand relocation, and he ultimately had responsibil ity for downsizing and phasing out the St. Louis operation of the business. He sued appellee companie s under the Employee Retirement Income Security Act, 29 U.S.C. § 1001, et seq. (ERISA), after they denied his claim for seve rance benefits. After a trial to the court, judgment was entered in favor of the companies. He appeals 2 from the judgment, and we affirm.
Clough began working for Penn Life Insurance Company (Penn) in 197 2
as an executive vice president in its St. Louis division. Penn was a sub sidiaryof American Can Company (American). Over time the corporat e str ucture changed as Penn merged with Massachusetts Indemnity and Lif e Insurance Company and then with several other American subsidiaries in an umbrella holding company called PennCorp Group Management. Clough becam e the ch ief operating officer of PennCorp and handled the company’s credi t insurance business, its training programs, oversight of the finance an d credit departments, marketing and administrat ion for a car rental insurance division, and all daily operations of some three hundred employees in St. Louis.

In 198 7 American began transferring most of the functions of the St. Louis office to another subsidiary, Voyager Group, Inc. (Voyager), i n Jacksonville, Florida. In order to encourage the managers and officers in 3 the St. Louis offi ce to remain during the transition, PennCorp established in1987 a severance award program and “stay bonus” plan that would become payable when a recipient’s position was eliminated.

## -3-

The parties stipul ated that Clough was eligible for the PennCorp severance plan at the time it was initiated. At the beginning of 1988, however , Clo ughentered into a new two year employment contract with Voyager tha t included an entitlement to all the benefits the company provided but didnot
me ntionany predecessor company. In June 1990 he entered into a secon d emp loyment contract with Voyager for a five year term. Neither contrac t mentioned the 1987 severance plan, and neither Clough nor Voyager’s agent, Gary Pridgen, brought up the plan during their negotiations.

Under Clough’s second employment contract his responsibilities an d salary gradually decreased as his numerous duties began to be shifted to Jim Moore in Ft. Worth, Texas and to other Voyager employees elsewhere. Near the end of the five year contract term, all of Clough’s duties had bee n shiftedto other employees and he came to the office only two days a week and had no actual responsibilities. This contract terminated on May 31 , 1995 and was not renewed. On August 8, 1995, Clough sent a letter t o Transport Life Insurance Company, which had meanwhile taken up Voyager’ s business, requesting severance benefits under the 1987 plan. Transpor t replied with a denial letter stating that his employment contracts had been intended to supersede the earlier severance plan.
Clough then brought this suit against all the companies in hi s employment line. The parties presented a sti pulation to the district court whichalso heard additional evidence before it determined that Clough was not entitled to severance benefits under the 1987 plan. The court foun d tha t Clough never became eligible for those benefits because his job wa s never eliminated and his employment contracts with Voyager were intended to superse de his eligibility for the plan. Clough was the only PennCor p carryover employee who received such contracts, and they did not refer to the seve rance plan. Moreover, during his seven years of continue d employment Clough never asserted that he was entitled to payments under the plan, nor did he r equest certification from the company that he was. Both contracts also had integration clauses

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stating that they expressed the full agreement of the parties as to their rights and obligations.

The district court’s factual find ings in this ERISA case are reviewed for clear error an d its legal conclusions are reviewed de novo. Donatelli v. Home Insurance Co. , 992 F.2d 763, 765 (8th Cir. 1993). Although Clough was covered by the severance plan at the time of its creation as agreed in the parties’ stipulation, under the plan entitlement to payment did no t ari se until the employee’s position was eliminated. The district cour t specifically found that Clough’s position was never eliminated, but that his duties were shifted to Jim Moore and other employees. His employmen t contra ct provided for a gradual decrease during the transition period i n both annual salary (from $162,000 the first t wo years to $129,600 the third year and $97,200 for the last two years) and responsibility (his required work days decrease d to four days a week, then three, and finally two). At the time Voyager t ook control of PennCorp, Clough had circulated a memo to employees eligible for the 1987 severance plan which stated that if their positions were eliminated, severance benefits would accrue “at the time such a change becomes effective.” This suggests not only that eligible emplo yees had no enforceable right to benefits under the 1987 package prior t o elimination of their positions, but also that Clough was well aware of that fact.
Clough remained employed with Voy ager and its successor Transport for
seven years to help familiarize the new officials with the existin g operation, its loc al contacts, and the employees who would remain involved in the work. A severance benefit plan does not vest while an employe e continues to work for the creator of a benefi t plan or for its successor in compar able employment. Parker v. Bankamerica Corp. , 50 F.3d 757, 766-6 7 (9th Cir. 1995); Harper v. R.H. Macy, & Co., Inc. , 920 F.2d 544, 545-46 (8th Cir. 1990). Clough testified at trial that h e was retained because he was, “the mos t knowledgeable in it [sic] I knew most of the customers...the y needed som eone who would hold the hands, if you like, of the brokers an d agents so that the business was moved smoothly.” Clough also testified that in the final phases of his second contract

## -5-

with Voyager, his primary task was introducing Moore to the customers inthe St. Louis area so Moore could assume Clough’s former duties. By th e beginning of 1994, Clough’s only service to t he company was consulting with its lawyers about lawsuits involving files with which he was familiar. As of 1995 he had no employees reporting to him and no duties to discharge

. Severance benefits under the 1987 plan never vested in Clough because his pos itionwas never eliminated. Schunholz v. Long Island Jewish Medica l Center , 87 F.3d 72, 77 (2nd Cir. 1996); Ander son v. John Morrell & Co. , 830 F.2d 872, 877 (8th Cir. 1987).

Clo ughargues that his continued eligibility for benefits under th e 1987 plan is demonstrated by paragraph six of his 1990 contract which st ated that he was entitled to participate in all benefit programs of “the comp any” (defined elsewhere in the contract as Voyager). Gary Pridgen, wh o neg otiatedthe contracts with Clough, testified that the purpose of th e contracts was to phase Clough out of the business gradually and that th e severance plan was never considered by Voyager and never raised by Clough. Paragraph six only refers to benefit programs of Voyager and does not show that Clough is entitled to benefits under the 1987 plan. The paragraph also specifically provides that it is subject to p aragraph four which spells out the gradual reduction of Clough’s duties and compensation.
Clough ’s contracts with Voyager do not show any clear intent that he be eligible for payments under the 1987 severance plan drawn up by PennC orp. They provided for his continuing employment w ith ensured compensation while he facilitated the corporate transition. This type of agreement was no t reached with any o ther employee originally eligible under the plan. Seven oth er individuals still employed in the business inquired in 1991 abou t their continued eligibility for the 1987 severance plan, and thei r eligibility was confirmed in a memo from Moor e. Clough was not included in the names of the eligible employees, but he was copied on the memo and n ever objected to not be ing included and never suggested to Moore that he should have been.

## -6- Base don this record, the district court did not err in concludin g that Clough was no t entitled to severance benefits under the 1987 PennCorp plan. The judgment is therefore affirmed.
A true copy.

Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.