Opinion ID: 2566850
Heading Depth: 2
Heading Rank: 1

Heading: the advisors' entitlement to welfare benefits contributions under the fpa

Text: ¶ 8 The first issue is whether the trial court correctly granted partial summary judgment for the Advisors in ruling that AEFA breached the FPA by refusing to make welfare benefits contributions on behalf of the Advisors. There is no dispute that AEFA's Platform Rollout prospectively terminated AEFA's obligation to subsidize the Advisors' welfare benefits under the BFA. The key question is whether the refusal to make contributions contemplated by the FPA constituted a breach. The parties agree that Minnesota law applies to this case. The trial court found that under Minnesota law, [e]ven if more than a tender of performance were required, the Advisors earned their benefits contributions. Earned benefits cannot be taken away. ¶ 9 [S]ummary judgment is only appropriate where `there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law.' Utah R. Civ. P. 56(c). Smith v. Four Corners Mental Health Ctr., Inc., 2003 UT 23, ¶ 13, 70 P.3d 904. Therefore, when we review a trial court's decision granting summary judgment, we need review only whether the trial court erred in applying the relevant law and whether a material fact was in dispute. WebBank v. Am. Gen. Annuity Serv. Corp., 2002 UT 88, ¶ 13, 54 P.3d 1139. We give the trial court's legal conclusions no deference, and instead review them for correctness. Smith, 2003 UT 23 at ¶ 10, 70 P.3d 904. ¶ 10 AEFA challenges the trial court's legal conclusions that the Advisors earned their benefits contributions, and [e]arned benefits cannot be taken away. It asserts that the FPA did not give the Advisors a guaranteed right to [benefits contributions] irrespective of whether they continued working under the FPA. The Advisors counter that they earned their benefits contributions by meeting the production goals set out in the FPA, and AEFA simply refused to honor the terms of its promise to pay the contributions. We agree with the trial court and the Advisors, and conclude that the Advisors had earned the benefits contributions pursuant to the plain terms of the FPA, and that AEFA's termination of the benefits contributions constituted a breach of the FPA. ¶ 11 AEFA's offer of welfare benefits contributions in exchange for the Advisors' work and meeting of certain production levels constituted a unilateral contract that AEFA was not at liberty to revoke or modify once the Advisors began fulfilling their contractual obligations. An offeror of a unilateral contract always retains the power to modify or revoke the offer so long as the offeree has not begun performance, but retention of that power does not preclude the offer from becoming a contract once accepted by the offeree by tender of performance. Feges v. Perkins Rests., Inc., 483 N.W.2d 701, 708 (Minn.1992) (citation omitted). [A]n offer for a unilateral contract may neither be changed nor revoked once the offeree begins the performance requested by the offer. Peters v. Mut. Benefit Life Ins. Co., 420 N.W.2d 908, 914 (Minn.Ct.App.1988). Where an employer represents in a written document distributed to employees that an employee will receive benefit payments in certain specified circumstances as an incentive for continued service, those benefits are part of the employee's compensation which the employer is contractually obligated to pay. Melin v. Northwestern Bell Tel. Co., 266 N.W.2d 183, 186 (Minn.1978) (overruling previous case that treat[ed] benefits under a noncontributory plan as gratuities rather than contractual obligations). ¶ 12 AEFA makes no effort to refute these basic principles of law regarding unilateral contracts, or to assert that they have no application here. Rather, AEFA argues that we should find that the Advisors were not entitled to welfare benefits contributions after the termination of the FPA, even though they had achieved the required production levels, unless the FPA expressly provided that the contributions would continue after AEFA terminated the FPA. AEFA relies on several cases for this proposition, but each of them is distinguishable from the case before us. ¶ 13 The first case, Knudsen v. Northwest Airlines, Inc., exemplifies the unexceptional rule that where an employee enters into a stock option agreement that is granted on certain terms and conditions, he is bound by those conditions. 450 N.W.2d 131, 133 (Minn.1990); see also Pillsbury v. Elston, 283 N.W.2d 370, 374 (Minn.1979) (holding stock option repurchase provision enforceable because it was a condition to which the parties expressly agreed). The employee in Knudsen had been terminated, and he sued his employer to exercise stock option rights after his termination despite contractual language expressly prohibiting such action. Knudsen, 450 N.W.2d at 132-33. The instant case does not involve terminated employees, as Knudsen did. More importantly, unlike Knudsen, the contract here does not contain express language requiring that it be in effect in order for the Advisors to receive the benefits contributions they earned by fulfilling their contractual obligations. As we explain further below, the Advisors' rights to welfare benefits contributions were of course granted on certain terms and provisions, as were the stock option rights in Knudsen, but continued work under the FPA after earning the contributions was not one of those terms and provisions. ¶ 14 AEFA also cites Sonneman v. Blue Cross & Blue Shield, 403 N.W.2d 701, 705 (Minn.Ct.App.1987). In Sonneman, the plaintiff argued that a contract providing for a lifetime aggregate maximum of insurance benefits evidenced Blue Cross's intent to provide coverage for the duration of medical treatment so long as that treatment was commenced while the policy was in effect. Id. at 704-05. The court found for the insurer based on provisions that clearly and unambiguously specified that coverage ended when the contract terminated, unless the plaintiff was totally disabled. Id. at 706. As with Knudsen, the distinction here is that the FPA contains no provision specifying that the Advisors' right to already-earned benefits contributions ended when the FPA terminated. ¶ 15 Finally, we reject AEFA's request that we follow the ERISA-based analysis of Hughes v. 3M Retiree Medical Plan, 134 F.Supp.2d 1062 (D.Minn.2001). The essence of the Hughes plaintiffs' claim was that their medical benefits had vested for purposes of ERISA. Id. at 1068. The question of whether vesting has occurred is a legal issue governed by ERISA itself, id. at 1068-69, and therefore the court applied case law and legal rules that focused on ERISA specifically. See id. at 1069-70. We view the law of vested benefits under ERISA as the proverbial round hole into which AEFA urges us to squeeze this square peg of a case. Consequently, while we could probably distort this case sufficiently to render it recognizable in an ERISA context, we see no reason to do so and therefore decline. ¶ 16 The keystone of AEFA's argument is its assertion that the FPA contained a requirement that the Advisors continue working under the FPA in order to earn their benefits contributions. AEFA goes so far as to assert that the FPA is clear and unambiguous on this point, and supports this assertion with two citations to the record. Far from supporting AEFA's argument, however, examination of these citations exposes fatal flaws in AEFA's construction of the FPA. AEFA points to trial testimony of class representative Jerry Ford, in which Mr. Ford repeatedly states that he knew over the course of his years with AEFA that he had to elect benefits in order to receive them. This does not in our view support AEFA's assertion that Mr. Ford and the other plaintiff class members understood and agreed that they had to continue working under the FPA in order to earn the welfare benefits contributions; indeed, it does not support AEFA's assertion at all. AEFA also directs us to a section spanning two pages of the Benefits Handbook for 1999. This section is headed Termination of Coverage: When will my personal coverage terminate? The section is directed toward the question of coverage under the benefit plans generally, and not to the question of the circumstances in which AEFA will contribute to or stop contributing to the cost of such coverage. Thus, we find no language in the FPA stating that the Advisors had to continue working under the FPA in order for AEFA's promise to make welfare benefits contributions to be enforceable. ¶ 17 AEFA's other arguments for such a requirement attempt to infer a requirement of continued work under the FPA from the FPA's references to eligibility for benefits contributions, rather than entitlement thereto, and from AEFA's reservations of rights in the FPA. The chart of [q]ualification levels and payouts for the Star Quest program provides: To remain eligible for a company contribution to group benefits, advisors must meet the minimum weighted production requirement in any given year. Additionally, it states that fulfillment of production requirements is necessary for the Advisors to become eligible to receive a Company contribution toward the cost of welfare benefits. There is no other reference in the contract to any further condition or requirement that must be met. Having examined the FPA as a whole, therefore, we are not convinced that the use of the word eligible rather than entitled evidences an intent to make benefits contributions contingent on continued employment under the FPA. Rather, we interpret these provisions, as did the trial court, as meaning simply that, upon meeting the specified production requirements, the Advisors would have earned and would be qualified to receive the benefit contributions. We note that the Star Quest plan provides that [a]t Star Level 1, you earn a company contribution to your group benefits, and details the calculations performed to determine what you earn once you reach a Star level. (Emphasis added.) Thus, when read in light of all the promises contained in the FPA, the mere use of the word eligible comes nowhere close to signaling, as the Knudsen and Sonneman contracts signaled, that employees' already-earned contractual rights terminated when the defendant terminated the contract. ¶ 18 AEFA argues that the following provision in the FPA constitutes an express reservation of rights: [AEFA] make[s] no promise to continue these benefits in the future and ha[s] the right to amend or terminate any coverage for active plan participants or retired covered individuals at any time. Rights to future benefits will never vest. AEFA asserts that this provision unambiguously reserves its rights to amend or terminate the FPA. If we agreed with this reading, it would serve as a strong indicator that AEFA had expressly reserved the right to terminate benefits contributions, similar to the defendant in Sonneman. See Sonneman, 403 N.W.2d at 706. ¶ 19 The only reasonable reading of this provision, however, is that it applies only to ERISA benefits for employees who are not parties to this lawsuit. The provision is located in a section of the FPA that begins with the statement, [e]xcept for the claims review procedure, this section applies only to first year financial advisors, district managers within the State of New York, field vice presidents and group vice presidents. AEFA argues that the termination provision exists in the claims review procedure subsection, and that it therefore applies not just to employees' ERISA benefits, but to everyone. We believe that this interpretation is unreasonable. [3] Although this section could be clearer, we are convinced that the claims review procedure consists of the single paragraph with the heading claims review procedure, and that paragraph does not include the termination provision. ¶ 20 Finally, AEFA emphasizes FPA language providing that [w]hen this Agreement terminates, you will not, except as provided by the Sales Compensation Plan, be entitled to ... [a]ny further commissions, fees, overwriting or other compensation. (Emphasis added.) The benefits at issue however, are provided for in the Sales Compensation Plan. Consequently, the clause except as provided by the Sales Compensation Plan, defeats AEFA's argument. We therefore conclude that AEFA's cancellation of the FPA could not also cancel its already matured obligations under the FPA, and affirm the trial court's grant of summary judgment on this issue.