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

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No. 97-2291

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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

*

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Submitted: January 12, 1998

Filed: March 23, 1998

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

1

___________

MURPHY, Circuit Judge.
The Honorable E. Richard Webber, United States District 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. Primerica

eventually purchased Travelers Group, Inc. and adopted the name Travelers. 

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George Clough was an executive in an insurance business which

underwent several changes over the years due to corporate reorganization and

relocation, and he ultimately had responsibility for downsizing and phasing

out the St. Louis operation of the business. He sued appellee companies

under the Employee Retirement Income Security Act, 29 U.S.C. § 1001, et seq.

(ERISA), after they denied his claim for severance 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 1972

as an executive vice president in its St. Louis division. Penn was a

subsidiary of American Can Company (American). Over time the corporate

structure changed as Penn merged with Massachusetts Indemnity and Life

Insurance Company and then with several other American subsidiaries in an

umbrella holding company called PennCorp Group Management. Clough became

the chief operating officer of PennCorp and handled the company’s credit

insurance business, its training programs, oversight of the finance and

credit departments, marketing and administration for a car rental insurance

division, and all daily operations of some three hundred employees in St.

Louis.

In 1987 American began transferring most of the functions of the St.

Louis office to another subsidiary, Voyager Group, Inc. (Voyager), in

Jacksonville, Florida. In order to encourage the managers and officers in 3

the St. Louis office to remain during the transition, PennCorp established

in 1987 a severance award program and “stay bonus” plan that would become

payable when a recipient’s position was eliminated. 
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The parties stipulated that Clough was eligible for the PennCorp severance

plan at the time it was initiated. At the beginning of 1988, however,

Clough entered into a new two year employment contract with Voyager that

included an entitlement to all the benefits the company provided but did not

mention any predecessor company. In June 1990 he entered into a second

employment contract with Voyager for a five year term. Neither contract

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 and

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 been

shifted to 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 to

Transport Life Insurance Company, which had meanwhile taken up Voyager’s

business, requesting severance benefits under the 1987 plan. Transport

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 his

employment line. The parties presented a stipulation to the district court

which also heard additional evidence before it determined that Clough was

not entitled to severance benefits under the 1987 plan. The court found

that Clough never became eligible for those benefits because his job was

never eliminated and his employment contracts with Voyager were intended to

supersede his eligibility for the plan. Clough was the only PennCorp

carryover employee who received such contracts, and they did not refer to

the severance plan. Moreover, during his seven years of continued

employment Clough never asserted that he was entitled to payments under the

plan, nor did he request 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 findings in this ERISA case are reviewed

for clear error and 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 not

arise until the employee’s position was eliminated. The district court

specifically found that Clough’s position was never eliminated, but that his

duties were shifted to Jim Moore and other employees. His employment

contract provided for a gradual decrease during the transition period in

both annual salary (from $162,000 the first two years to $129,600 the third

year and $97,200 for the last two years) and responsibility (his required

work days decreased to four days a week, then three, and finally two). At

the time Voyager took 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 employees

had no enforceable right to benefits under the 1987 package prior to

elimination of their positions, but also that Clough was well aware of that

fact. 

Clough remained employed with Voyager and its successor Transport for

seven years to help familiarize the new officials with the existing

operation, its local contacts, and the employees who would remain involved

in the work. A severance benefit plan does not vest while an employee

continues to work for the creator of a benefit plan or for its successor in

comparable employment. Parker v. Bankamerica Corp., 50 F.3d 757, 766-67

(9th Cir. 1995); Harper v. R.H. Macy, & Co., Inc., 920 F.2d 544, 545-46 (8th

Cir. 1990). Clough testified at trial that he was retained because he was,

“the most knowledgeable in it [sic] I knew most of the customers...they

needed someone who would hold the hands, if you like, of the brokers and

agents so that the business was moved smoothly.” Clough also testified that

in the final phases of his second contract
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with Voyager, his primary task was introducing Moore to the customers in the

St. Louis area so Moore could assume Clough’s former duties. By the

beginning of 1994, Clough’s only service to the 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

position was never eliminated. Schunholz v. Long Island Jewish Medical

Center, 87 F.3d 72, 77 (2nd Cir. 1996); Anderson v. John Morrell & Co., 830

F.2d 872, 877 (8th Cir. 1987). 

Clough argues that his continued eligibility for benefits under the

1987 plan is demonstrated by paragraph six of his 1990 contract which stated

that he was entitled to participate in all benefit programs of “the company”

(defined elsewhere in the contract as Voyager). Gary Pridgen, who

negotiated the contracts with Clough, testified that the purpose of the

contracts was to phase Clough out of the business gradually and that the

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 paragraph 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 PennCorp.

They provided for his continuing employment with ensured compensation while

he facilitated the corporate transition. This type of agreement was not

reached with any other employee originally eligible under the plan. Seven

other individuals still employed in the business inquired in 1991 about

their continued eligibility for the 1987 severance plan, and their

eligibility was confirmed in a memo from Moore. Clough was not included in

the names of the eligible employees, but he was copied on the memo and never

objected to not being included and never suggested to Moore that he should

have been. 
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Based on this record, the district court did not err in concluding

that Clough was not 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.