Opinion ID: 795275
Heading Depth: 4
Heading Rank: 2

Heading: the party to be estopped must be aware of the true facts;

Text: 47 (3) the party to be estopped must intend that the representation be acted on, or the party asserting the estoppel must reasonably believe that the party to be estopped so intends; 48 (4) the party asserting the estoppel must be unaware of the true facts; and 49 (5) the party asserting the estoppel must reasonably or justifiably rely on the representation to his detriment. 50 Sprague, 133 F.3d at 403 (list formatting not in original). 51 Typically, estoppel actions occur when a plan fiduciary misrepresents the actual meaning of plan terms in a situation where the plan itself is ambiguous. See id. at 404. Plaintiffs cannot recover under an estoppel theory for misrepresentations which contradict unambiguous, written plan terms because their reliance on the subsequent representation would be unreasonable. See id. The district court found that Plaintiff had failed to base his promissory estoppel claim on a premise that the plan terms were ambiguous. Because, in the district court's determination, Plaintiff did not allege that the plan documents were ambiguous, the district court granted judgment for Defendants on Plaintiff's promissory estoppel theory. 1 52 This Court can affirm a district court on any basis supported by the record. See City Mgt. Corp. v. U.S. Chem. Corp., 43 F.3d 244, 251 (6th Cir.1994). Plaintiff did properly allege that the plan documents were ambiguous, insofar as Plaintiff was arguing over the meaning of employee under the plan. Nonetheless, Plaintiff cannot prove at least one element of promissory estoppel with respect to each Defendant and therefore cannot prevail. 53 Plaintiff cannot show that his reliance on any alleged misrepresentations by MTA management was reasonable, as required by the Supreme Court and this Circuit. See Sprague, 133 F.3d at 403; Gregg v. Transp. Workers of Am. Int'l, 343 F.3d 833, 841 (6th Cir.2003). Plaintiff admits to being more knowledgeable about insurance coverage issues than anyone in management at MTA. Plaintiff was the self-acknowledged expert in welfare benefits coverage for MTA. Plaintiff admitted that he sold the policy at issue to MTA and likewise explained the policy terms to MTA officers, including the term on covered employees. Plaintiff admitted that he was the go to guy for insurance questions held by MTA and its member companies. (J.A. at 1031-32.) Plaintiff had worked in insurance for over 30 years. Under the 1972 MOU between Plaintiff and MTA, Plaintiff handled all questions and claim problems for MTA's group life and disability insurance plans. Any reliance by Plaintiff on representations by MTA management going to insurance coverage, therefore, would have been unreasonable under the circumstances of this case and in light of Plaintiff's acknowledged superior expertise on the specific insurance policies at issue. 54 This is not to say that an insurance expert can never prevail in an ERISA action under a promissory estoppel theory, only that reasonable reliance by Plaintiff would require a representation from someone with better or more specific knowledge than Plaintiff, or at least from someone who Plaintiff reasonably believed to have better or more specific knowledge. Under the circumstances of this case, for example, had Lafayette known the terms of Plaintiff's relationship with MTA under the CSA and then represented to Plaintiff that Plaintiff was covered under the plan, Plaintiff's promissory estoppel theory might be viable. Under the facts of this case, however, Lafayette did not know the terms of the CSA and therefore did not know whether Plaintiff was an employee under the plan. See infra, Part II.C. Consequently, any alleged representations by Lafayette were not made while Lafayette was aware of the true facts (criteria two for a promissory estoppel claim), and Plaintiff therefore cannot assert promissory estoppel against Lafayette. 55 B. The District Court Properly Limited the Scope of Discovery for the Remaining Claims Under Wilkins 56 Plaintiff argues that the district court improperly limited the scope of discovery for his remaining benefits and breach of fiduciary duty claims. We disagree. 1. Standard of Review 57 This Court reviews the district court's conclusions as to the applicability of Wilkins de novo. Cf. Putney v. Medical Mut., 111 Fed.Appx. 803, 806 (6th Cir. 2004) (unpublished opinion). 58 2. Wilkins Applies to All ERISA Benefit Cases 59 In Wilkins, this Court clarified the permissible scope of discovery in an ERISA action in federal district court. 150 F.3d at 618-19. This Court instructed district courts to follow a two-step process in adjudicating an ERISA benefit action: 60 1. As to the merits of the action, the district court should conduct a de novo review based solely upon the administrative record, and render findings of fact and conclusions of law accordingly. The district court may consider the parties' arguments concerning the proper analysis of the evidentiary materials contained in the administrative record, but may not admit or consider any evidence not presented to the administrator. 61 2. The district court may consider evidence outside of the administrative record only if that evidence is offered in support of a procedural challenge to the administrator's decision, such as an alleged lack of due process afforded by the administrator or alleged bias on its part. This also means that any prehearing discovery at the district court level should be limited to such procedural challenges. 62 Id. 63 Plaintiff argues that because he alleged that Defendants denied him due process in adjudicating his claim for benefits, Plaintiff was entitled to discovery into his denial of benefits claim. Plaintiff argues that his case is distinct from the action in Wilkins because, among other things: 1) the claimant in that case did not allege violations of due process, 2) there was no confusion in the Wilkins case about which documents actually constituted the applicable ERISA plan, and 3) there was no confusion in Wilkins about who was the plan administrator. 64 While Plaintiff is correct about the factual dissimilarities between Wilkins and his case, these dissimilarities do not make the Court's instructions in Wilkins any less applicable to the case at bar. Plaintiff's arguments about the inapplicability of Wilkins all come back to whether Plaintiff had sufficient opportunity to present evidence and arguments to Defendants and to respond to Defendants contentions—in essence, all due process issues. The Wilkins panel foresaw occasions in which the procedural process of gathering all pertinent information may have broken down at the administrative level and directed the courts to permit discovery in those cases. Wilkins, 150 F.3d at 619. (The district court may consider evidence outside of the administrative record only if that evidence is offered in support of a procedural challenge to the administrator's decision.) If discovery into the alleged procedural defects supports a plaintiff's allegations of due process denial, then a district court is obligated to permit discovery into more substantive areas of a plaintiff's claim. See id. If a court finds that due process was not denied, however, then it is appropriate for the district court to deny further discovery into substantive areas, or else a plaintiff could circumvent the directive of Wilkins merely by pleading a due process problem. Cf. id. 65 3. The District Court Properly Applied Wilkins 66 The district court permitted discovery into whether Plaintiff was actually denied due process. The district court noted that the court will not expand discovery until it is proven that such a denial of due process occurred. (J.A. at 44.) This order was entirely consistent with the intent and letter of Wilkins. 2 Plaintiff argues that the district court's ruling on Wilkins somehow held Plaintiff to a higher standard than this Court requires under Wilkins. ( See Pl. Br. 23-24 (In neither Vanderlock nor Wilkins did this Court require that plaintiff prove the alleged denial of due process before it permitted both expanded discovery and consideration of additional evidence outside of the administrative record.).) We find Plaintiff's argument without merit. The Vanderlock panel found, as a matter of law, that the evidence before the court established that the plaintiff in that action had been substantially denied the procedural protections afforded by ERISA. Vanderklok v. Provident Life & Accident Ins. Co., 956 F.2d 610, 617 (6th Cir.1992). After reaching such a conclusion, this Court remanded to the district court for discovery. Id. In the instant action, the district court deferred discovery into Plaintiff's substantive claims until it had enough evidence to determine whether Plaintiff had been substantially denied ERISA's procedural protections. There is no inconsistency between the district court's actions and this Court's holding in Vanderlock. Moreover, the only logical reading of this Court's instructions in Wilkins is that until a due process violation is at least colorably established, additional discovery beyond the administrative record into a plaintiff's denial of benefits claim is impermissible. Wilkins was properly followed. 67 C. The District Court Properly Granted Summary Judgment for Defendants on Plaintiff's Claims for Breach of Fiduciary Duty and § 1132(c) Monetary Penalties 68 Plaintiff argues that the district court improperly granted Defendants summary judgment on his breach of fiduciary duty and § 1132(c) claims. We conclude that the district court properly found that Plaintiff had failed to present evidence of either a due process violation or a breach of fiduciary duties. In addition, the district court did not abuse its discretion in refusing to grant penalties under 29 U.S.C. § 1132(c). 1. Standard of Review 69 This Court reviews summary judgment de novo. Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 466 n. 10, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992). Summary judgment is appropriate when there is no genuine issue of material fact, thereby entitling the movant to a judgment as a matter of law. Kocsis v. Multi-Care Mgt., Inc., 97 F.3d 876, 882 (6th Cir.1996). This Court's inquiry, therefore, unavoidably asks whether reasonable [fact-finders] could find by a preponderance of evidence that the plaintiff is entitled to a [judgment]. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). 70 This Court reviews de novo `the question of whether the procedure employed by the fiduciary in denying the claim meets the requirements of Section [503].' Marks v. Newcourt Credit Group, Inc., 342 F.3d 444, 459 (6th Cir. 2003) (quoting Kent v. United of Omaha Life Ins. Co., 96 F.3d 803, 806 (6th Cir. 1996)). 71 Because a district court has discretion in the award of monetary penalties under 29 U.S.C. § 1132(c), this Court reviews a district court's decision under that section for an abuse of discretion. Bartling v. Fruehauf Corp., 29 F.3d 1062, 1068 (6th Cir.1994). An abuse of discretion exists when the reviewing court is firmly convinced that a mistake has been made. In re Bendectin Litig., 857 F.2d 290, 307 (6th Cir.1988). 72 2. The District Court Properly Dismissed Plaintiff's Breach of Fiduciary Duties Claim 73 The district court allowed Plaintiff's breach of fiduciary duties claim to proceed, with discovery, to the extent that the claim alleged 1) that Defendants had made material misrepresentations to Plaintiff about Plaintiff's eligibility for benefits, and 2) that Defendants had failed to provide Plaintiff with requested plan documentation. (J.A. at 40-45.) Inherent in these allegations was Plaintiff's assertion that Defendants had denied Plaintiff due process in the adjudication of his denial of benefits claim, and the district court reached Plaintiff's due process allegations in ruling on Plaintiff's claim for breach of fiduciary duty. 74
75 This Court has recognized an equitable claim by a participant against an ERISA plan fiduciary arising out of 29 U.S.C. § 1132(a)(3) when a fiduciary misleads a participant or beneficiary. See Krohn v. Huron Mem. Hosp'l, 173 F.3d 542, 546 (6th Cir.1999). Pursuant to § 1002(21)(A) of ERISA: 76 [A] person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets . . . or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan. 77 29 U.S.C. § 1002(21)(A). ERISA also provides that a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries. 29 U.S.C. § 1104(a)(1). 78 A fiduciary breaches his duty by providing plan participants with materially misleading information, regardless of whether the fiduciary's statements or omissions were made negligently or intentionally. Krohn, 173 F.3d at 547 (internal quotation and citation omitted). Misleading communications to plan participants regarding plan administration (for example, eligibility under a plan, the extent of benefits under a plan) will support a claim for a breach of fiduciary duty. Drennan v. Gen. Motors Corp., 977 F.2d 246, 251 (6th Cir.1992) (internal quotation and citation omitted). A lower court in this Circuit has applied the fiduciary duty/misrepresentation case law of this Court to a plaintiff's claim that a misrepresentation precluded her from seeking alternative sources of disability coverage. See Parks v. Fin. F.S.B., 345 F.Supp.2d 889, 897 (W.D.Tenn.2004). 79 To establish a claim for breach of fiduciary duty based on alleged misrepresentations concerning coverage under an employee benefit plan, a plaintiff must show: 80 (1) that the defendant was acting in a fiduciary capacity when it made the challenged representations; 81 (2) that these [representations] constituted material misrepresentations; and 82