Court Opinion

ID: 28182
Source: CourtListenerOpinion
Date Created: 2010-04-25 09:20:23+00
Date Added: 2024-06-11T08:04:03.032745
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                      FOR THE FIFTH CIRCUIT

                   __________________________

                          No. 01-30174
                   __________________________

RELIABLE HOME HEALTH CARE, Inc.; LOUIS T. AGE, Jr.,

                           Plaintiffs-Appellants-Cross Appellees,

versus

UNION CENTRAL INSURANCE COMPANY; Et Al,

                           Defendants,

GLAPION GROUP, Inc.; ROBERT JODY SANDERSON; WALTER A. GLAPION,
Jr.; AMERICAN AUTOMOBILE INSURANCE COMPANY,

                           Defendants-Appellees-Cross-Appellants.

                   __________________________

                          No. 01-30331
                   __________________________

RELIABLE HOME HEALTH CARE, Inc.; LOUIS T. AGE, Jr.,

                           Plaintiffs-Appellants,

versus

UNION CENTRAL INSURANCE COMPANY; Et Al,

                           Defendants,

GLAPION GROUP, Inc.; ROBERT JODY SANDERSON; WALTER A. GLAPION,
Jr.; AMERICAN AUTOMOBILE INSURANCE COMPANY,

                           Defendants-Appellees.
       ___________________________________________________

          Appeals from the United States District Court
              for the Eastern District of Louisiana
       ___________________________________________________

                            July 10, 2002

Before DUHÉ, DeMOSS, and CLEMENT, Circuit Judges.

CLEMENT, Circuit Judge:

     Reliable   Home   Health   Care,   Inc.    (“Reliable”)    filed   suit

against the Glapion Group, Inc. (“Glapion”) for breach of its

fiduciary duties arising out of a deferred compensation plan

created by Glapion for Reliable.        This case involves a claim of

breach of fiduciary duty under ERISA.           Prior to trial, Reliable

settled with Union Central Insurance Co. (“Union Central”) for

$165,000.   Following a bench trial, the district court found that

Glapion breached its fiduciary duty to Reliable by failing to

advise Reliable it would lose the cash surrender value in its

insurance policies if it stopped paying premiums or by failing to

recover the money after it was lost.            The court found Glapion

liable for $58,075.87, the cash surrender value of the policies.

However, no damages were awarded because the court held that

Reliable was made whole by its settlement with Union Central.            The

court also held that each party was to bear its own costs but did

award Glapion costs and attorneys’ fees in the amount of $8,264.75

for an unsuccessful attempt to take trial testimony via video

conference due to plaintiff’s lack of cooperation.             Both parties

timely appealed the court’s decision.          For the following reasons,

                                   2
we AFFIRM in part and REVERSE in part.

                       I.   Facts and Proceedings

           Louis Age (“Age”) is the CEO for Reliable, a Medicare

certified home health care agency doing business in and around New

Orleans. Reliable’s services include in-home nursing, nursing aid,

and rehabilitation services.    Age was a licensed insurance broker

formerly employed by Union Central. Glapion, owned and operated by

Walter A. Glapion, Jr. and Robert J. Sanderson (“Sanderson”), was

an agent for Union Central.     Mr. Glapion was the general manager

for Union Central and wrote insurance for it in addition to other

insurance companies.

     In 1992, Age contacted Mr. Glapion, a former colleague,

concerning having Glapion create deferred compensation plans for

Age and other executive employees of Reliable.      Age forwarded a

copy of a deferred plan seeking one similar to it.      He also sent

copies of the Medicare regulations for such plans which preclude

the use of whole life policies as funding mechanisms.   Age informed

Glapion that he wanted a deferred compensation plan containing

group insurance in addition to a cash product, preferably an

annuity.

     As a Medicare provider, Reliable was entitled to reimbursement

for necessary and reasonable costs which included premiums for

payment of policies, including the policies which provided the

funding mechanism for the deferred compensation plan. Pursuant to

the Medicare cost reimbursement system, Medicare reimburses its

                                   3
providers, such as Reliable, through interim payments throughout

the course of the provider’s fiscal year.            At the end of each

fiscal year, the provider prepares and submits a cost report and

trial balance to an intermediary, an organization under contract to

the Department of Health and Human Services, for approval.           Blue

Cross/Blue Shield of New Mexico was designed by the Health Care

Financing    Administration    (“HCFA”)   as   its    intermediary   for

Louisiana.    David Fiedler was the intermediary who audited and

approved Reliable’s cost reports.

     Glapion wrote a pension plan for Reliable which was rejected

in February 1993 by Fiedler because it included a whole life

insurance policy.    As a result, Glapion employed an attorney to

create an adequate deferred compensation plan for Reliable.          The

attorney created a prototype for Glapion in September 1993.           In

March 1994, Fiedler approved the prototype.            Glapion used the

prototype to make the plan for Reliable and used Selectex as a

funding mechanism. The prototype, completed in 1993, was backdated

and signed to reflect a November 1992 date, the date on which the

Plan was initially created for Reliable.       The Plan was signed by

Sanderson on behalf of Age.1

     Despite assertions that he did not sign nor ever see the

     1
      Age argues that Sanderson was not authorized to sign any
documents on his behalf. However, testimony elicited at trial
indicated that Age did give other people authority to sign his
name.

                                   4
deferred compensation plan, Age paid the premiums from 1992 until

April 1994.    Additionally, from 1992 to 1997, Reliable submitted

cost reports detailing costs for which it sought reimbursement.

The cost reports were submitted to Fiedler who issued a Notice of

Program Reimbursement (“NPR”) and reimbursed Reliable for costs

incurred through the payment of premiums for these years.                 Age

signed the reports certifying that all costs claimed on the reports

were permissible under Medicare regulations.

      Sanderson was told by Union Central that Reliable’s policy was

paid up to date with a credit of $39,858.29 on February 22, 1996.

A   check   from   Union   Central   was   received   in   the   amount    of

$15,490.93, made payable to Liberty Bank and Trust, the custodian

of Reliable’s plan on October 7, 1996.2        Sanderson advised Age to

discontinue payments until a determination could be made as to the

whereabouts of approximately $24,000, the difference between the

credit Reliable was told it had and the $15,000 check it received.3

On December 31, 1996, Age was informed by Union Central that he

owed $135,418.78 and would be terminated retroactive to April 1,

1994, the date of the last payment, unless the Plan was made

      2
      While Liberty was the designated custodian and owner of the
policies by the Plan, no money was ever deposited with Liberty on
behalf of Reliable. No escrow account was ever opened. Dividend
checks sent from Union Central to Liberty on behalf of the
Reliable participants were endorsed by Liberty and then delivered
to the participants.
      3
      Unbeknownst to Sanderson, Age had stopped paying premiums
to Union Central in April 1994.

                                     5
current    by   June    1,   1997.     Once    Union    Central   conducted    the

accounting, Glapion advised Age to resume paying the premiums in

order to make the Plan current.             Age did not resume payment of the

premiums. When the policy was terminated, its cash surrender value

was severely depleted because Union Central had instituted the

automatic loan provisions of the policies to pay for the delinquent

premiums.       Age claims he was unaware of the existence of this

provision.

     Reliable filed suit against Glapion and Union Central, but

prior to trial Reliable settled with Union Central for $165,000.

The case was then tried before the district court against Glapion

for the breach of fiduciary duty claim.            Following the bench trial,

the court concluded that Glapion had breached its fiduciary duty to

Reliable by failing to advise Reliable of the loss of its cash

surrender values or negligently failing to cease the relationship

with Union Central prior to the depletion of its assets.                       The

district    court      concluded     that    Reliable    suffered   a   loss    of

$58,075.87, the cash surrender value of the policies when the

automatic loan provision took effect.                   However, Reliable was

precluded from recovering the loss because it had been fully

compensated through its settlement with Union Central.                        Both

Glapion and Reliable appealed the district court’s decision.

                                        II. Analysis

A.   Standard of Review

     As a threshold matter, we address the appropriate standard of

                                         6
review.    The existence of an ERISA plan is a question of fact.     See

Gahn v. Allstate Life Ins. Co., 926 F.2d 1449 (5th          Cir. 1991).

Accordingly, we review the district court’s determination for clear

error. See Fed.R.Civ.Pro. 52(a). The legal conclusions reached by

the district court in applying those facts is de novo.          The issue

of fiduciary status is a mixed question of law and fact.         Reich v.

Lancaster, 55 F.3d 1034, 1044 (5th Cir. 1995).

B.   Did a Valid Plan Exist?

            The parties dispute whether a plan ever existed.         The

district court held that a plan did exist.        Reliable submits that

there is no evidence to support the district court’s conclusion

that a deferred compensation plan was created specifically for

Reliable, while Glapion asserts that there is ample evidence that

a plan did in fact exist based on Reliable’s actions. We conclude

that the district court was correct in finding that a plan did

exist.4

     1.     Was a Deferred Compensation Plan Created for Reliable?

     Age    first   commissioned   Glapion   to    create   a   deferred

compensation plan for Reliable’s executive employees in 1992.

Reliable requested a plan containing group insurance and a cash

product, preferably an annuity.        The initial plan submitted to

Fiedler for approval contained an LFP policy, which is a whole life

     4
      Because there was a valid plan, ERISA clearly governs this
action. See Title 29 U.S.C. §§1002(A), 1003(a).

                                   7
policy.    Fiedler denied approval of the Plan for failure to comply

with Medicare regulations.    In 1993, Glapion retained the services

of an attorney to draft a new plan prototype to replace the initial

plan.     The prototype was approved by Fiedler in March 1994.       The

prototype was applied to the Reliable Plan adding Selectex as the

funding    mechanism.   Reliable   argues   that   the   Reliable   Plan,

although similar to the prototype approved by Medicare, was never

actually approved.      The prototype was submitted for approval

without the funding mechanism.         Glapion maintains that Fiedler

specifically approved Selectex as a funding mechanism. Because the

Plan was not ultimately approved until 1994, Glapion had the Plan

back-dated to reflect a November 1992 date, the date when the

initial Plan was signed by Age. The district court concluded that

a plan was created and approved.5      We agree.

     Reliable submits that, if the Plan was valid, it needed to be

reviewed by an intermediary before it could be approved.        Because

this was never done, no plan existed.       The problem with this line

of reasoning is that HCFA and the intermediary, Fiedler, assumed a

plan to be in effect.       Reliable submitted annual cost reports

beginning in 1992 and was reimbursed for the premiums paid into the

Plan. Whether it was appropriate for the intermediary to reimburse

     5
      The district court concluded that: “the credible evidence
demonstrates that the Medicare approved plan consisted of the
prototype plan, the plan description, and the participation
agreements. Moreover, the Fiedler and Booth letters show
acceptance of the plan by Medicare pursuant to its regulations.”

                                   8
Reliable because no plan existed until 1994 is not an issue

reviewable by this Court.       For, under Medicare regulations, an

intermediary’s decision as to the total amount of reimbursement

owed to a provider is final and binding and cannot be revisited

after three years.     See 42 C.F.R. §§ 405.1803, 405.1885.             Any

negligence on the part of Glapion in not creating a valid plan

until two years after Reliable began paying premiums was negated by

the fact that HCFA and the intermediary assumed that a plan existed

as reimbursements were issued for the premiums paid by Reliable

into the nonexistant plan. Reliable was reimbursed by Medicare for

the premiums it paid into the plan whether it existed or not prior

to 1994.

           2.   Was Selectex a Permissible Funding Mechanism for
                Deferred Compensation Plans?

     The   district   court   concluded   that   Selectex6   was   a   valid

funding mechanism for the Reliable Plan.           Reliable claims that

Selectex was a whole life policy precluded by the Plan and by

Medicare regulations.7    As a result, the Plan was invalid.           While

     6
      The record indicates that Seletex is a form of whole life
policy with a rapid cash value growth akin to a retirement income
contract. Robert Lindenberger, a senior field sales vice-
president for Union Central, testified that, while it was a
limited pay whole life policy, it fit the definition of a
retirement income contract, permissible under Medicare.
     7
      Reliable relies on the Provider Reimbursement Manual, an
interpretive guideline published by the HCFA, the agency within
HHS that administers Medicare. The manual does not have the
effect of law. It is persuasive at best. See Sta-Home Home

                                   9
there does not seem to be a dispute that whole life policies were

precluded by the Plan and by Medicare, the parties dispute whether

Selectex was a whole life policy.     There is no doubt that the

funding mechanism used was not one desired by Reliable.   However,

that does not make it an invalid funding mechanism for purposes of

the existence of a valid plan under Medicare.   Whether HCFA or the

intermediary actually approved the specific Reliable Plan and its

funding mechanism, the fact is that it was deemed permissible.

Reliable sought and received reimbursements for the premiums it

paid into a nonexistant plan and subsequently into an existent plan

albeit one with an undesirable funding mechanism.    The fact that

the funding mechanism used was not the one specified by Reliable

does not make it invalid under Medicare.     Whole life insurance

policies can be used to fund deferred compensation plans. However,

in a case such as this, a regulatory agency has excluded the use of

certain types of policies to fund deferred compensation plans.

Medicare expressly precludes the use of whole life policies to fund

deferred compensation plans.   For five years, Age submitted cost

reports and reimbursement requests for the premiums paid into the

Selectex policies, and, for five years, Fiedler approved Reliable’s

cost reports and reimbursement requests.     Had Selectex been an

Health Agency, Inc., v. Shalala, 34 F.3d 305, 310 (5th Cir.
1994).

                                10
improper funding mechanism under Medicare, Reliable would not have

been reimbursed for the premiums paid into the policies.       Because

reimbursements were made for a plan funded by Selectex, Selectex

cannot be considered an ordinary whole life policy.

C.   Whether the Reliable Plan is an Unfunded Deferred Compensation
     Plan for Executive Level Employees Exempting Glapion from the
     Fiduciary Duties of ERISA.

     ERISA’s coverage provisions provide that ERISA shall apply to

any employee benefit plan with certain enumerated exceptions.       A

plan falling within such exceptions is one “which is unfunded

and...maintained by an employer primarily for the purpose of

providing deferred compensation for a select group of management or

highly compensated employees.”        29 U.S.C. §1101(a)(1).     These

plans, also known as “top hat” plans are exempt from ERISA’s

fiduciary provisions as well as its participation, vesting, and

funding provisions.   See 29 U.S.C. §§ 1051(2), 1081(a)(3), and

1101(a)(1).

     In order to establish whether a plan qualifies as a top hat

plan exempt from ERISA’s fiduciary duties it must be (1) unfunded

and (2) maintained by an employer primarily for the purpose of

providing deferred compensation for a select group of management or

highly compensated employees.     See Demery v. Extebank Deferred

Compensation Plan, 216 F.3d 283, 287 (2nd Cir. 2000).    There is no

doubt that the Reliable Plan was created to provide deferred

                                 11
compensation to high level employees.            The issue remains whether

the Plan was unfunded.          ERISA does not define what makes a plan

funded or unfunded for determining qualification in a top hat plan

nor has this Circuit directly addressed whether a plan is funded

for purposes of exemption from ERISA’s fiduciary provisions.8

       The Second Circuit recently addressed the issue in Demery.

Bank officers filed suit against the bank for breach of fiduciary

duty in relation to a deferred compensation plan. The issue before

the court was whether the plan was maintained primarily for a

select group of high level employees.           The plan was found to be a

“top       hat”   plan,   and   the   court’s   discussion   on   funding   is

instructive.        The Second Circuit had previously held that a plan

was unfunded in a situation where the benefits were paid “solely

from the general assets of the employer.” 216 F.3d at 287, quoting

Gallione v. Flaherty, 70 F.3d 724, 725 (2nd Cir. 1995).             Adopting

a standard set forth in Miller v. Heller, 915 F. Supp. 651 (S.D.N.Y.

1996), the court asked whether the beneficiary could “‘establish,

through the plan documents, a legal right any greater than that of

an unsecured creditor to a specific set of funds from which the

employer is, under the terms of the plan, obligated to pay the

       8
      In Spacek v. The Maritime Association, I L A Pension Plan,
134 F.3d 283, 296 (5th Cir. 1998), we noted, in dicta, that top
hat plans “are not subject to ERISA’s full panoply of
regulations.”

                                        12
deferred compensation.’” Demery, 216 F.3d at 287, quoting Miller at

660.   Looking at the plan, the court concluded that it did not give

the plaintiffs any greater legal right to the funds than that

possessed by an unsecured creditor.

       The Eighth Circuit has also addressed the issue. “Funding

implies the existence of a res separate from the ordinary assets of

the corporation. All whole life insurance policies which have a

cash value with premiums paid in part by corporate contributions to

an insurance firm are funded plans.” Dependahl v. Falstaff Brewing

Corp.,     653 F.2d 1208, 1214 (8th Cir. 1981).               In Dependahl, the

insurance    policy   purchased       by    the   company    was   owned   by    the

employee.    The Dependahl plan was a whole life insurance plan by

which the named beneficiaries of the participant would receive

annuity income benefits upon the participant’s death, and the

employer    would   recover    annual       premiums   previously     paid      plus

interest.    Id. at 1213.

       In Belsky v. First National Life Insurance Co., 818 F.2d 661

(8th Cir. 1987), the Eighth Circuit held that a plan funded through

life insurance policies could still be considered unfunded as long

as the policies were not separated from the general assets of the

company.     The    Belsky    court    distinguished        between   funded     and

unfunded plans by finding that a plan was “funded when benefits are

paid through a specific insurance policy and unfunded when they are

                                           13
paid from the employer’s general assets.” 818 F.2d at 663.      The

Belsky    policy   provided   retirement     and      disability   benefits    in

addition to death benefits.       The policy also specifically provided

that the rights of the executive would be those of an unsecured

creditor.    Id.   The language of the Belsky plan explicitly stated

that the policy became an asset of the bank with no separate res.

     The Department of Labor (“DOL”), in an advisory opinion, has

also provided guidance on the issue.         Op. Dep’t Labor 92-13 A (May

19, 1992).    “[A]ny determination of the ‘unfunded’ status of an

‘excess    benefit’   or   ‘top   hat’    plan   of    deferred    compensation

requires an examination of the surrounding facts and circumstances,

including the status of the plan under non-ERISA law.”                 DOL has

indicated that great weight should be given to the tax consequences

of such plans.     See Op. Dep’t Labor 92-13 A; Miller, 915 F. Supp.
651, 659 (holding that a “plan is more likely than not to be

regarded as unfunded if the beneficiaries under the plan do not

incur tax liability during the year that the contributions to the

plan are made.”)

     Therefore, in determining whether a plan is “funded” or

“unfunded” under ERISA, a court must first look to the surrounding

facts and circumstances, including the status of the plan under

non-ERISA law. Second, a court should identify whether a policy is

funded by a res separate from the general assets of the company.

                                     14
In so doing, the mere fact that a plan is funded through an

insurance policy is not dispositive of a plan’s status as funded or

unfunded for ERISA purposes.

     Glapion maintains that the Plan was unfunded while Reliable

asserts that the Plan was funded.      Citing the language of the

Plan, Reliable asserts that it has a res separate from the assets

of the company such that it cannot be considered unfunded. Section

3.1 of the Plan provides:

     This Plan is intended to be a welfare benefit plan that
     provides either a Death Benefit or Separation Benefit
     (but not both) to each Participant. All benefits under
     the Plan shall be provided through the Policy or Policies
     selected by the Administrator for purchase on the life of
     each Participant. Each Policy shall be issued to and
     held by the Custodian for the purpose of providing
     benefits payable under the Plan to the Participant
     insured under such Policy. All Employer Contributions
     shall be applied to the cost of such Policies, and in no
     event shall the employer be liable for the payment of
     benefits not paid by the Insurer under the Policy(s).
     The particulars of the Policy(s) issued for each
     Participant in connection with this Plan shall be
     reflected on a schedule to the enrollment application for
     such Participant.

Reliable is of the opinion that the fact that benefits were funded

and paid through an insurance policy makes the Plan “funded” for

ERISA purposes.   We disagree.   See Demery, 216 F.3d 283(finding a

plan funded with life insurance contracts to be unfunded).

     Section 3.2 of the Plan states:

     For each Plan Year and in lieu of payment of additional
     compensation to the Participant, the Employer shall

                                 15
     contribute to the applicable Insurer, on behalf of each
     Participant whose participation has not ceased during the
     Plan Year, the amount required to maintain in effect the
     Policy(s) purchased on the life of the Participant for
     the purpose of funding the Plan benefits payable to such
     Participant, less any Plan forfeitures available to
     reduce Employer Contributions. The total contributions
     made under this Plan on behalf of a Participant for a
     Plan Year shall not exceed twenty percent (20%) of the
     Participant’s Compensation for the year.     In no event
     shall a Participant be required or permitted to make
     contributions to the Plan.

The language of the Plan in addition to the jurisprudence and the

DOL advisory opinion lead us to the conclusion that the Reliable

Plan was an unfunded top hat plan and therefore exempt from ERISA’s

fiduciary duties.

     The policies purchased by Reliable were not owned by the

participants.    The only right afforded to the participants under

the Plan was to designate death beneficiaries.      Participants did

not make contributions to the Plan.   In fact, they were prohibited

from so doing.   See Section 3.2, supra.   In addition, the Plan does

not intend for participants to incur tax liability in conjunction

with the payment of premiums.9

D.   Whether Reliable’s Fraud Claims are Preempted by ERISA.

     Even though top hat plans are exempt from certain ERISA

requirements, they are not exempt from its reporting, disclosure,

     9
      Section 3.3 provides a mechanism by which the employer can
request a cash distribution be made to a participant from the
policy in an amount necessary to pay any tax costs incurred as a
result of Reliable’s payment of premiums.

                                 16
administration, or enforcement provisions.    See 29 U.S.C. §§ 1021-

1045.    Reliable argues that, if a valid plan did exist, the fraud

allegations are not preempted because they do not directly “relate

to” the Plan.    Reliable argues that Glapion’s liability depends on

whether it fraudulently induced Reliable to pay premiums to Union

Central based on Reliable’s belief, caused by Glapion, that Union

Central had expertise in the executive benefit market which was

false.     Glapion argues that Reliable’s fraud claims are mere

disguises for its breach of fiduciary duty claims.       The claims

concern the creation, operation, and subsequent failure of the Plan

and are therefore directly “related to” the Plan making it subject

to preemption.

     ERISA expressly “supercede[s] any and all State laws insofar

as they may now or hereafter relate to any employee benefit plan.”

29 U.S.C. § 1144(a).   “A state law ‘relates to’ an employee benefit

plan 'if it has a connection with or reference to such plan.’”

Rozzell v. Security Servs., Inc., 38 F.3d 819, 821 (5th Cir.1994)

(quoting Shaw v. Delta Air Lines, 463 U.S. 85, 96-97 (1983)).

ERISA preempts a state law claim “if (1) the state law claim

addresses an area of exclusive federal concern, such as the right

to receive benefits under the terms of an ERISA plan; and (2) the

claim directly affects the relationship between the traditional

ERISA entities--the employer, the plan and its fiduciaries, and the

                                  17
participants and beneficiaries.” Hubbard v. Blue Cross & Blue

Shield Ass'n, 42 F.3d 942, 945 (5th Cir. 1995).                  It is “well-

established that the ‘deliberately expansive’ language of [Section

514(a)]...is    a   signal   that   it    is   to    be   construed   extremely

broadly.” Corcoran v. United Healthcare, Inc., 965 F.2d 1321, 1328

(5th Cir. 1992)(citations omitted).

     Reliable cites Smith v. Texas Children’s Hospital, 84 F.3d 152

(5th Cir. 1996), and Hook v. Morrison Milling Co, 38 F.3d 776 (5th

Cir. 1994) in support of its position that ERISA does not preempt

its fraud claims.     In Smith, we held that preemption did not apply

to the plaintiff’s     fraudulent    inducement claim because the claim

was not necessarily dependent upon Smith’s rights under the ERISA

plan. 84 F.3d at 155.      Smith alleged that she relinquished her

accrued benefits with her previous employer in reliance upon Texas

Children's alleged misrepresentations.              Because her claim was not

based solely on Texas Children’s denial of benefits, we concluded

that she could have a claim based on the benefits she lost as a

result of being induced to leave her former employer.

     In Hook, we concluded that a plaintiff’s unsafe workplace

claim did not relate to her ERISA plan and was therefore not

preempted.     The plaintiff in Hook was injured in an accident at

work, and the ERISA plan paid her medical expenses.             Subsequently,

she filed a claim for wrongful discharge and negligence against her

                                     18
employer.      We considered whether “the underlying conduct...[could]

be divorced from its connection to the employee benefit plan."

Hook, 38 F.3d   at   783,    quoting,            Christopher      v.    Mobil   Oil

Corporation, 950 F.2d 1209, 1220 (5th Cir.1992).                       Hook’s cause of

action was based on her allegation that the employer failed to

maintain      a    safe    workplace,    not       from       a    dispute     over   the

administration of the ERISA plan or the disbursement of benefits

therefrom.        Hook, 38 F.3d at 783.

       The    fraud   claims   asserted      by    Reliable         involve    Glapion’s

failure to inform Reliable that the Plan was not implemented in

1992 when Age signed the Trust Agreement and whether an invalid

funding mechanism was used.             We find this Court’s decision in

Christopher more analogous to the present facts than Smith or Hook.

The allegations in Christopher of fraud, negligence, and breach of

contract were based on “Mobil’s amendment of an ERISA-governed

employee benefit plan and Mobil’s disclosure to its employees of

the terms of the plan.” 950 F.2d at 1218.           We noted that the plan

as it existed prior to the amendment and the language of the

amendment would have to be examined in order to adjudicate the

plaintiffs’ claims.         The Court found that such analysis, given the

expansiveness of Section 514(a) warranted preemption.                        We conclude

that    the   same    reasoning     applies       to    the       instant    case.    The

underlying conduct alleged by Reliable cannot be severed from its

                                        19
connection to the Plan.     Therefore, we affirm the district court’s

determination that Reliable’s state law claims are preempted.

E.   Remaining Claims.

     1.   Costs and Attorneys’ Fees

     The district court entered judgment ordering each party to

bear its own costs.       We have taken the position that when a

district court does not award costs to a prevailing party, it must

give reasons for so doing.    Walters v. Roadway Exp., Inc., 557 F.2d
521, 526-27 (5th Cir. 1977); See also Schwarz v. Folloder, 767 F.2d
125, 131 (5th Cir. 1985).    In light of our reversal on the merits,

on remand, if the district court concludes not to award costs,

reasons should be given.

     2.   Costs and Attorneys’ Fees Related to the Taking of Trial

Depositions.

           During trial, the district court allowed counsel for

Glapion to take the testimony of two Union Central employees via

video conference.    The effort was unsuccessful due to plaintiff

counsel’s lack of cooperation.     The court ordered the depositions

to be taken in person and indicated that the plaintiffs would be

taxed costs and expenses for the depositions.     Glapion submitted a

cost summary of the taking of the depositions totaling $8,264.75.

We affirm the district court’s decision to tax costs and expenses

against   Reliable   in    conjunction   with   the   taking   of   the

                                   20
depositions.10

                        III.   Conclusion

     We conclude that a valid funding mechanism and plan existed

and that Reliable’s state law fraud claims are preempted.    We also

conclude that Glapion is exempt from ERISA’s fiduciary duties

because the Reliable Plan is an unfunded top hat plan.           We

therefore reverse the district court’s determination that Glapion

was a fiduciary and that it breached its duty to Reliable.   We also

reverse and remand the district court’s decision not to award

attorney’s fees and costs in a manner consistent with this opinion.

     10
      Reliable argues that it was forced to pay Glapion for
items which are not compensable by statute or the Federal Rules.
We disagree. The record clearly indicates that Reliable forced
the added expense of taking trial depositions after agreeing to a
video examination during trial. While not all the items listed
by Glapion in submitting its costs in conjunction with the
deposition are taxable under Title 28 U.S.C. §1920, they were
nonetheless appropriate and within the court’s discretion on
alternative grounds.

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