Court Opinion

ID: 9488369
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:43:02.475563+00
Date Added: 2024-06-11T17:52:50.381518
License: Public Domain

*606MORRIS SHEPPARD ARNOLD, Circuit Judge,
dissenting.
This case is before us for the second time. In our first opinion, Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915 (8th Cir.1994), we reversed the district court’s grant of summary judgment and remanded for a reconsideration of certain legal issues. Among the legal issues that we identified for exploration on remand was the question of whether the plaintiffs could demonstrate that the plan had suffered a loss, for if it had not, no action would lie. See 29 U.S.C. § 1109(a). The court rather pointedly noted that “plaintiffs have never proffered evidence of loss to the plan,” Roth, 16 F.3d at 920, a statement that the district court quite understandably took to mean that on remand plaintiffs were going to have to adduce some additional evidence or lose.
On remand, plaintiffs did not offer any additional evidence, though they were of course given the opportunity to do so. Instead, they stood on their original motion papers in which they maintained simply that the “trustees’ failure to provide adequate security” to support the promissory notes given by the Sawyer-Cleator ESOP to the plaintiffs constitutes a breach of fiduciary duty. This under-collateralization theory was the only one that plaintiffs advanced in their effort to resist summary judgment on remand. As a result, they have forfeited other theories, if any, that they might have had to support their claim that the plan had suffered a loss. See, e.g., Marion County Cooperative Association v. Carnation Co., 214 F.2d 557, 561-62 (8th Cir.1954), and Durasteel Co. v. Great Lakes Steel Corp., 205 F.2d 438, 441 (8th Cir.1953).
Indeed, plaintiffs had years ago already abandoned any other theory of liability for loss to the plan when they responded to defendants’ original summary judgment motion. In that response, plaintiffs devoted considerable space to defending their assertion that defendants “failed in their non-delegable duty to provide adequate security to support the terms of payment upon exercise of Plaintiffs’ put options.” Plaintiffs advanced no other theory in support of their complaint. It is true that in paragraph 45 of their complaint they had said that the trustees committed a breach of fiduciary duty “when they improperly implemented the put options by naming the Plan, rather than the Company, as the obligated party on the Promissory Note under the Ammon Agreement.” It is not at all clear what this means: It would seem on its face to mean that there was something fundamentally illegal about *607the Plan assuming the Company’s responsibilities under the put option; but, as the court points out, this is specifically permitted by law. Whatever the claim may mean, defendants moved for summary judgment on it and the plaintiffs made no response whatever to that portion of defendants’ motion. The only claim that survived, therefore, was that contained in paragraph 46 of the complaint, namely, the inadequate collateralization of the note given in exchange for the exercise of the put option. And it was on this basis that the court below rendered its judgment after remand.
This is the posture in which the case came back to us on appeal. In their brief, appellants repeatedly stated that they were complaining only about improper collateralization of the note. On page 8, for instance, they say that “the wrong complained of by the Plaintiffs is that the individual trustees failed to provide adequate security to support payments from promissory notes given from the plan to the Plaintiffs.” On page 10, they repeat that defendants “breached their fiduciary duties to the plan by failing to provide adequate security for the promissory notes given by the plan to the Plaintiffs.” On page 18, they reiterate that it is “this failure to provide adequate security, and not failures in administration or investment which leads to the wrong which should be remedied by ERISA” (emphasis supplied). Finally, on page 16, they state that “the breach of fiduciary duty results from the simple failure to provide adequate security for the promissory notes given by the plan to the Plaintiffs in payment for their retirement benefits.” All of the citations provided by the plaintiffs in their brief are to statutes and regulations having -to do with the duty to provide adequate security. See, e.g., 26 U.S.C. § 409(h)(6)(B) and 29 C.F.R. § 2550.408b-3(Z)(4).
Despite all this, the court resuscitates plaintiffs’ five-year-old case by recasting their claim as a complaint about purchasing worthless stock. Plaintiffs never complained about that: Their vague asseverations in paragraph 45 of their complaint cannot reasonably be characterized as making such a complaint. Even if they could be so characterized, that claim, as the tedious rehearsal above was aimed at demonstrating, has been forfeited by plaintiffs’ arguments in the court below and in this court.
The court reverses this case on grounds that were never addressed to the trial court and never even argued to this court on appeal. Not only did the trial court not have an opportunity to respond to the theory of the case adopted here, see, e.g., Vaughn v. Sexton, 975 F.2d 498, 503 (8th Cir.1992), cert. denied, — U.S. —, 113 S.Ct. 1268, 122 L.Ed.2d 664 (1993), see also 10 C. Wright, A. Miller, and M. Kane, Federal Practice and Procedure: Civil 2d § 2716 at 650-54 (1983), the appellees did not either. As the court quite correctly observes, the fact (if it is one) that there was inadequate security given to the plaintiffs for their notes simply cannot support a claim of loss to the Plan, since the Plan would have suffered the same loss, whatever the security, because of the company’s bankruptcy. The inadequacy, if any, of the security simply did not cause a loss to the plan. It merely caused a loss to the plaintiffs, a loss that is not remediable under 29 U.S.C. § 1109(a). That being the ease, I would affirm the district court.
I therefore respectfully dissent.