Court Opinion

ID: 3001108
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:12:52.559465+00
Date Added: 2024-06-11T12:11:30.592428
License: Public Domain

NONPRECEDENTIAL DISPOSITION
                          To be cited only in accordance with
                                  Fed. R. App. P. 32.1

             United States Court of Appeals
                                For the Seventh Circuit
                                Chicago, Illinois 60604

                               Submitted November 7, 2007*
                                Decided November 9, 2007

                                           Before

                       Hon. MICHAEL S. KANNE, Circuit Judge

                       Hon. TERENCE T. EVANS, Circuit Judge

                       Hon. ANN CLAIRE WILLIAMS, Circuit Judge

No. 07-1983

GEORGE DUMAS and ROZOLA                            Appeal from the United States District
DUMAS,                                             Court for the Northern District of
    Plaintiffs-Appellants,                         Indiana

       v.                                          No. 2:05-cv-00100

PENSION BENEFIT GUARANTEE                          Rudy Lozano,
CORPORATION                                        Judge.
    Defendant-Appellee.

                                         ORDER

       George and Rozola Dumas sued the Pension Benefit Guarantee Corporation
(“PBGC”), claiming that it understated the amount of benefits due to them under
their former employer’s pension plan. PBGC now administers that plan under Title
IV of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §

       *
        After an examination of the briefs and the record, we have concluded that oral argument
is unnecessary. Thus, the appeal is submitted on the briefs and the record. See Fed. R. App. P.
34(a)(2).
No. 07-1983                                                                       Page 2

1302. They appeal from the district court’s grant of summary judgment in favor of
PBGC. We affirm.

       The facts in this case are undisputed. George Dumas worked for the
Youngstown Sheet and Tube Company until his retirement in 1978 at age 56, and
participated in its pension plan, the LTV Steel Hourly Pension Plan. George and
Rozola Dumas, his wife, are beneficiaries under the plan, which began paying them
monthly benefits after his retirement. George is also eligible for Social Security
disability benefits.

       In 2002 the LTV Corporation went bankrupt and PBGC, which insured the
Dumases benefits, became the statutory trustee of the plan, effective March 31,
2002. See Pension Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633, 637-638 (1990)
(describing the PBGC role under ERISA). In April 2003, the PBGC confirmed that
it would continue to pay George the same benefit that he received under the pension
plan before its demise, which at that time was $471.70 per month. Around the
same time as they received this confirmation, the Dumases also received an
information brochure from the PBGC. Under a section entitled “PBGC’s Maximum
Guaranteed Benefit, the brochure described the maximum benefit payable to
disabled retirees:

      For plans terminating in 2002, the maximum monthly benefit paid by the
      PBGC is $3,579.55 payable as a Straight Line Annuity at age of 65. We
      adjust the maximum benefit paid for options other than Straight Life
      Annuity. Except for disabled members receiving Social Security
      disability benefits, we also adjust the maximum benefit for
      commencement ages other than 65.

       George appealed to the PBGC, arguing that this statement entitled him to
the maximum monthly benefit for the plan, $3,579.55, because he is a disabled
retiree. The PBGC denied George’s appeal, explaining that he was receiving the
amount he accrued under the plan, and that the $3,579.55 amount in the brochure
was a cap, not an individual entitlement. The Dumases sued in federal court,
continuing to insist that, based on this brochure, they were entitled to an extra
$3,000 per month in pension benefits. The district court ruled for the PBCG on
summary judgment.

      We will set aside a final agency decision only if it is “arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with the law.” 5 U.S.C. §
706(2)(A). See also Dycus v. Pension Ben. Guar. Corp., 133 F.3d 1367 (10th Cir.
1998). The PBGC’s decision to pay the Dumas’s the same benefit that they had
been receiving under their now-terminated pension plan, rather than the maximum
amount payable to pensioners in general, comports with this standard. The
No. 07-1983                                                                     Page 3

Dumases do not dispute that $471.70 is all that they are entitled to under George’s
pension plan. Further the PBGC does not create new pension rights. It merely
guarantees that the benefits in existing pension plans continue after the
termination of underfunded pension plans. See LTV Corporation, 496 U.S. at 637.
Furthermore, the statement that the Dumases seize on to seek a windfall of over
$3,000 per month does not purport to expand their pension rights. It simply sets
out the statutory maximum for pensioners, and ensures that if one is entitled to the
maximum, the PBGC will not reduce it for those who retired early and receive
Social Security disability benefits. The Dumases’ are not entitled to the maximum,
so the cap does not affect them even though George is a disabled retiree.

       The Dumases also argue on appeal that the district court abused its
discretion in not granting their motion for default judgment. The PBGC is a wholly
government-owned corporation, United States v. Hook, 195 F.3d 299, 304 (7th Cir.
1999). Under Federal Rule of Civil Procedure 55(e), as an agency of the United
States the PBGC is not subject to a default judgment. See also Mommaerts v.
Hartford Life and Accident Ins. Co., 472, F.3d 967, 969 (7th Cir. 2007) (explaining
that absent a showing of prejudice from the default, an appellate court would create
“a pointless windfall” if it preferred a default judgment to an already-decided merits
determination). Accordingly there was no abuse of discretion in denying their
motion for a default judgment.
                                                                          AFFIRMED