Opinion ID: 1967327
Heading Depth: 2
Heading Rank: 3

Heading: Recovery of Amounts Deposited in Corporate Pension Plan Account

Text: Plaintiff alleged in her trial brief that, on June 9, 1982, the Bank improperly transferred from the Keogh Plan account to the corporate pension plan account funds in the amount of $8,000, which had originally been deposited by the Bank, acting as trustee, into the Keogh Plan account in March of 1981. Plaintiff alleged that this transfer of funds violated the specific prohibition against such transfers contained in 29 U.S.C. § 1106(a)(1)(D), [5] and constituted a breach of the Bank's fiduciary obligations imposed by 29 U.S.C. § 1104. The trial court agreed with plaintiff, concluded that § 1104 had been violated, and ordered that plaintiff was entitled to an appropriate allocation of all payments made by Dr. Brannen or his corporation to any of the three Plans, regardless of their designation, during the period of plaintiff's eligible employment. Since the $8,000 payment was the only one made during this period of time, it is the only one at issue. We agree with defendants that the trial court lacked the jurisdiction to make this part of its order. Plaintiff's claim relating to the improper transfer of $8,000 between Plans places directly into question the propriety of certain conduct by the trustee and calls for a construction and implementation of standards of conduct established by ERISA. [6] As such, it is clearly the type of claim Congress intended to come within the exclusive jurisdiction of the federal courts. See Young, 112 Misc.2d at 701, 447 N.Y. S.2d at 803. The same conclusion applies to plaintiff's allegation of violations of 29 U.S.C. § 1104. This claim essentially raises the question of the propriety of certain conduct which ERISA directly regulates. ERISA provides specific penalties for violations of the duties imposed by § 1104. See 29 U.S.C. § 1109. Since a claim alleging breach of fiduciary obligations is not within the exception to exclusive federal jurisdiction contained in 29 U.S.C. § 1132(a)(1)(B), it follows that only federal courts have jurisdiction to adjudicate such claims under § 1132(e). The express language of ERISA thus contradicts plaintiff's argument in support of state court jurisdiction over these claims, which is derived from the holding in Hoffman v. Chandler, 431 So.2d 499, 503-04 (Ala.1983). In Hoffman, the plaintiff brought an action to recover benefits allegedly due her under the terms of an employee benefit welfare plan governed by ERISA. The plaintiff subsequently amended her complaint alleging that the individual defendants had breached certain fiduciary duties under ERISA. On appeal, the Alabama Supreme Court held that the trial court had jurisdiction over all claims because the gravamen of plaintiff's complaint was for recovery of benefits due [her]. Id. at 504. We decline to follow Hoffman because it gives insufficient weight to the express language of ERISA jurisdictional provisions, as well as the policies underlying these provisions. We think that the language of and policy underlying ERISA's jurisdictional provisions mandates a restrictive interpretation of the words under the terms of the plan contained in 29 U.S.C. § 1132(a)(1)(B). We hold, therefore, that a state court's jurisdiction under this provision is limited to claims like those discussed in Part IIB of this opinion, where the sole issue is whether, as a matter of contract law, a plaintiff is entitled to benefits under the terms of the plan. Any pendent claim, related or unrelated to the main contract claim, and challenging the propriety of conduct otherwise regulated by ERISA, is beyond the jurisdiction of state courts. Our restrictive interpretation of the words under the terms of the plan is supported by the holdings of the majority of courts that have addressed the question. See Lembo v. Texaco, Inc., 182 Cal.App.3d at 306, 227 Cal.Rptr. at 293 (actions involving breaches of fiduciary duties ... are within the exclusive jurisdiction of the federal courts.); Young, 112 Misc.2d at 700, 447 N.Y.S.2d at 803 (actions alleging breach of fiduciary duty are within the exclusive jurisdiction of federal courts); Smith v. Crowder Jr. Co., 280 Pa.Super. 626, 636, 421 A.2d 1107, 1112 (1980) (exclusive jurisdiction of an action against the fiduciaries of an employee benefit plan for breach of their duties under ERISA lies in `the district court of the United States.'); Goldberg v. Caplan, 277 Pa.Super. 47, 54, 419 A.2d 653, 657 (1980) (ERISA does not confer jurisdiction upon state courts to determine actions ... against fiduciaries for the breach of their duties under ERISA.); see also H.R.Conf.Rep. No. 1280, 93d Cong., 2d Sess., reprinted in 1974 U.S. Code Cong. & Ad.News 4639, 5038, 5107 (The U.S. district courts are to have exclusive jurisdiction with respect to actions involving breach of fiduciary responsibility . . . .) Lastly, the trial court also found that the two corporate plans were shams created for the purposes of defrauding plaintiff of benefits due her. Based on our holding above, it follows that the court lacked the jurisdiction to make this part of its order as well. Absent jurisdiction to make the orders discussed in this part of the opinion, the orders are void. Fisher v. Town of Marlboro, 132 Vt. at 534, 323 A.2d at 578.