Court Opinion

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Date Created: 2015-10-13 22:14:50.484318+00
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Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

4-29-2005

Goldstein v. Gastroenterology Pgh
Precedential or Non-Precedential: Non-Precedential

Docket No. 04-2252

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"Goldstein v. Gastroenterology Pgh" (2005). 2005 Decisions. Paper 1294.
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                                                         NOT PRECEDENTIAL

                 UNITED STATES COURT OF APPEALS
                      FOR THE THIRD CIRCUIT
                           ____________

                               No. 04-2252
                              ____________

                     MORTON L. GOLDSTEIN, M.D.,

                               an individual

                                     v.

ASSOCIATES IN GASTROENTEROLOGY OF PITTSBURGH AMENDED AND
 RESTATED PENSION PLAN; ASSOCIATES IN GASTROENTEROLOGY OF
   PITTSBURGH AMENDED AND RESTATED PROFIT SHARING PLAN;
ASSOCIATES IN GASTROENTEROLOGY OF PITTSBURGH PENSION PLAN
TRUST; ASSOCIATES IN GASTROENTEROLOGY OF PITTSBURGH PROFIT
 SHARING PLAN TRUST; ASSOCIATES IN GASTROENTEROLOGY, INC.,
    a corporation; GEORGE L. ARNOLD, M.D.; LEE M. WEINBERG, M.D.,
                as Trustees of the Associates in Gastroenterology of
                Pittsburgh Pension Plan Trust and the Associates in
             Gastroenterology of Pittsburgh Profit Sharing Plan Trust,

                                               Appellants

                         ____________________

       ON APPEAL FROM THE UNITED STATES DISTRICT COURT
          FOR THE WESTERN DISTRICT OF PENNSYLVANIA

                         Dist. Court No. 02-cv-00311
             District Judge: The Honorable Terrence F. McVerry
                            ___________________

                     Submitted pursuant to LAR 34.1(a)
                              March 29, 2005

           Before: ALITO, SMITH, and ROSENN, Circuit Judges
                                  (Filed: April 29, 2005)
                                    ____________________

                                OPINION OF THE COURT
                                 ____________________
PER CURIAM:

       Dr. Morton Goldstein (“Plaintiff”), a licensed physician and the co-founder of

Associates in Gastroenterology, Inc. (“Associates”), a medical practice based in

Pittsburgh, Pennsylvania, filed this action for wrongful denial of retirement benefits

against Associates, two retirement plans established and administered by Associates on

behalf of its employees (the “Pension Plan” and the “Profit Sharing Plan”), related entities

created to invest and maintain the assets of the Plans, and two trustees of the related

entities (collectively, “Defendants”).

       We conclude that there is no genuine issue as to any material fact and that Plaintiff

was entitled to judgment as a matter of law. We therefore affirm the judgment of the

District Court.

                                              I.

       We exercise plenary review over the District Court’s grant of summary judgment.

Int’l Union, UMWA v. Racho Trucking Co., 897 F.2d 1248, 1252 (3d Cir. 1990).

Federal Rule of Civil Procedure 56(c) states that summary judgment may be granted only

if the record shows “that there is no genuine issue as to any material fact and that the

moving party is entitled to judgment as a matter of law.”

                                             -2-
                                              II.

       The Supreme Court has identified the standard of review to be used in considering

actions under 29 U.S.C. § 1132(a)(1)(B) for denial of ERISA benefits. Where a plan

document does not give the fiduciary the specific authority to determine eligibility for

benefits or to construe the terms of the plan, a court should review the denial of plan

benefits de novo. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). A

court should use the more deferential “arbitrary and capricious” standard only if the plan

grants the fiduciary specific authority. Id. at 115.

       The language of the Plans at issue here does not grant the trustees specific

authority to determine benefits or construe the Plans’ terms. The trustees have broad

administrative authority to “control, manage and administer” the Plans, and to “oversee

and insure to the extent possible that the procedures established by the Plan[s] . . . are

carried out,” but this language does not amount to a specific grant of authority. See Luby

v. Teamsters Health & Welfare & Pension Trust Funds, 944 F.2d 1176, 1180-81 (3d Cir.

1991) (holding that plan authorizing trustees to “consider and decide upon a program for

payment of benefits from the Trust Fund” and to amend the system of trust administration

nevertheless did not grant trustees the specific authority to determine benefits or construe

terms). We therefore apply a de novo standard of review in considering the denial of

Plaintiff’s claim for benefits. See Id., 944 F.2d at 1184.

                                              -3-
                                             III.

       The parties dispute the date that should be used to set the value of Plaintiff’s

benefit accounts. Plaintiff contends that he was entitled, not only to receive distribution

of his benefits on any date after his 65th birthday, but also to choose the day by which the

value of his benefits would be set. Defendants counter that the value of Plaintiff’s

benefits must be set by the date on which Plaintiff became entitled to benefits, and that,

under the terms of the Plans, Plaintiff did not become entitled to benefits until September

20, 2001, when he returned his executed participant distribution election forms.

       As the District Court noted, the pertinent provisions and language of the Plans are

not ambiguous, and the issues here presented may be determined as a matter of law.

Defendants’ position is unreasonable. The terms of the Plans do not condition an interim

valuation of assets upon the receipt of completed participant distribution election forms,

and the parties did not agree to such a condition independent of the Plans.

       Defendants are correct insofar as they contend that Plaintiff’s “interim valuation

date” is equivalent to his “benefit entitlement date.” Section 5.05 provides as much:

       If, based upon facts and circumstances, there is reason to believe that there has
       been substantial change in the fair market value of the Plan assets from the
       preceding valuation date to the Participant’s benefit entitlement date, then, at the
       request of any Participant, the assets of the Plan shall be revalued as of the
       Participant’s benefit entitlement date. In such event, the value of the Participant’s
       account(s) shall be determined, for purposes of distribution, as of that interim
       valuation date, and this Section 5.05 shall be applied, for the balance of the Plan
       Year, as if the interim valuation date were the preceding annual valuation date.
       Notwithstanding the foregoing, in no event shall more than 2 interim valuations be
       required in any Plan Year.

                                             -4-
(emphasis added). However, the date on which Plaintiff submitted his distribution

election form does not necessarily determine his valuation date. For although the Plans

require participants to make certain distribution choices in writing on forms furnished by

the Plan Administrator, the Plans never provide that these distribution election forms

address or control the valuation of benefits. See Article VII §§ 7.01, 7.02, 7.03 and 7.08

(Pension Plan) and §§ 7.01 and 7.09 (Profit Sharing Plan).

       Moreover, the terms of the Plans make plain that valuation may be set by a day

other than the day on which distribution begins. In fact, according to the terms of

Sections 5.05 and 1.21 of the Plans, even if a participant elected to receive his full

retirement benefit when he turned 65 years-old and accepted the annual valuation date of

March 31, the participant’s benefit entitlement date would, unless he were born on March

31, fall upon a different date than his annual valuation. Thus the most straightforward

participant choice possible would still create a situation in which the value of a

participant’s assets would be set by a different day than the day on which they were

distributed. Consider, for example, a man who turns 65 on December 7, 2006. His assets

would be valued according to the annual valuation date immediately preceding December

7, 2006. See § 5.05(a). The annual valuation date is the last day of each Plan Year. Id.

A Plan Year is the 12 consecutive month period beginning on April 1 of each year and

ending on the following March 31. See § 1.21. The annual valuation date immediately

preceding December 7, 2006, would therefore be March 31, 2006. The value of the

                                             -5-
man’s assets, and those of the fund as a whole, could change a great deal in those eight

months.

       In addition to not being in accord with the terms of the Plans, Defendants’ position

is also in conflict with what the parties agreed to. On August 27, 2001, Plaintiff received

a letter dated August 6, 2001, purportedly from the Plans’ attorney, Kabala, but signed by

the two Defendant trustees. In the August 6th letter, the Defendant trustees

acknowledged Plaintiff’s request for an interim valuation date of August 31, 2001, but

offered that July 31, 2001 be used instead. The letter then stated that Plaintiff’s funds

would be distributed as soon as possible after the receipt of the distribution election forms

and after completion of the interim valuation process. By letter of September 7, 2001,

Plaintiff advised the Defendant trustees that he accepted their proposal: “I would like to

value the assets as of that July 31, 2001 date, and make the distribution as soon as

possible.”

       Defendants now claim that they actually accepted the alternative “true-up”

valuation method proposed by Plaintiff’s accountant in a letter of August 14, 2001.

Under the true-up valuation method, Plaintiff’s percentage of the Plans’ assets would be

calculated as of August 31, 2001, but the percentage would be applied to (meaning

multiplied by) the assets as of September 30, 2001, and Plaintiff would receive the

product of this calculation. There is no evidence to support Defendants’ claim, and

acceptance was not even possible given the actual terms of the proposal put forth by

                                             -6-
Plaintiff’s accountant: The offer of the true-up valuation method was only available if the

standard valuation method — using the July 31, 2001, valuation date — could not be

completed by the third week of September. Because the Plans’ accountant completed the

standard valuation on September 15, 2001 (before the third week of September),

Defendants could not comply with the terms of Plaintiff’s true-up valuation offer.

        Accordingly, we affirm the District Court’s decision that Plaintiff is entitled to

distribution of the assets of his benefit accounts at the interim values as of July 31, 2001.

                                              IV.

       Section 502(g)(1) of ERISA provides that the court, in its discretion, may allow a

reasonable attorney’s fee and costs of action. 29 U.S.C. § 1132(g)(1). This Court has

held that, in analyzing whether to award attorney’s fees, courts should examine: “the

offending party’s culpability or bad faith; the ability of the offending party to satisfy the

award . . .; the deterrent effect of an award; the benefit conferred on members of the

pension plan as a whole; and the relative merits of the parties’ position.” Ursic v.

Bethlehem Mines, 719 F.2d 670, 673 (3d Cir. 1983) (numbering of factors omitted).

Because the District Court weighed these factors appropriately, we affirm the District

Court’s decision regarding attorney’s fees.

                                              V.

       Interest on delayed ERISA benefits is an equitable remedy left to the discretion of

the trial court. Holmes v. Pension Plan of Bethlehem Steel Corp., 213 F.3d 124, 131 (3d

                                              -7-
Cir. 2000). Prejudgment interest on delayed ERISA benefits is also “presumptively

appropriate.” Id. (citation omitted). It is to be awarded “when the amount of underlying

liability is reasonably capable of ascertainment and the relief granted would otherwise fall

short of making the claimant whole because he or she has been denied the use of the

money which was legally due.” Anthius v. Colt Indus. Operating Corp., 971 F.2d 999,

1010 (3d Cir. 1992). The District Court was within its discretion when it concluded that

Plaintiff’s damage claim was liquidated and that an award of prejudgment interest was

justified to compensate Plaintiff under the facts of the case.

                                             VI.

       For the foregoing reasons, we affirm the judgment of the District Court.