Court Opinion

ID: 159188
Source: CourtListenerOpinion
Date Created: 2010-08-14 06:19:29+00
Date Added: 2024-06-11T17:15:03.475842
License: Public Domain

203 F.3d 733 (10th Cir. 2000)
EDWARD G. TRUJILLO,  Plaintiff-Appellant,v.CYPRUS AMAX MINERALS  COMPANY RETIREMENT PLAN  COMMITTEE and CYPRUS AMAX  MINERALS COMPANY  RETIREMENT PLAN,  Defendants-Appellees.
No. 99-1008
UNITED STATES COURT OF APPEALS TENTH CIRCUIT
February 8, 2000

APPEAL FROM UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO. D.C. No. 96-S-2130Ralph Ogden of Wilcox & Ogden, P.C., Denver, Colorado, for the appellant.
David R. Hammond (Janet A. Savage, with him on the brief) of Davis, Graham &  Stubbs LLP, Denver, Colorado, for the appellees.
Before BRISCOE and PORFILIO, Circuit Judges, and ROGERS, Senior  District Judge.1
BRISCOE, Circuit Judge.

1
Plaintiff Edward Trujillo, a former employee of Cyprus Amax Minerals  Company (Amax), filed suit under the Employee Retirement Income Security Act  of 1974 (ERISA), 29 U.S.C. §§ 1001-1461, challenging a decision by defendant  Cyprus Amax Minerals Company Retirement Plan Committee (the Committee) to  reduce Trujillo's disability retirement benefits by the total amount of a workers'  compensation settlement without paying a pro rata share of attorney fees incurred  in obtaining the settlement.  The district court granted summary judgment in  favor of the Committee and Trujillo appeals.  We exercise jurisdiction pursuant  to 28 U.S.C. § 1291 and affirm.

I.

2
Trujillo began working for Amax in 1976 as a hard rock miner.  He  suffered work-related injuries to his arms in March 1985, and a work-related  injury to his lower back on November 21, 1985.  Although Trujillo continued  working on and off until 1991, the injuries ultimately rendered him totally and  permanently disabled.  On July 31, 1991, he was discharged from his employment  and instructed by Amax to apply for retirement-disability benefits under Amax's  Henderson Mine Non-Contributory Retirement Income Plan (the Plan).

3
Trujillo sought, and eventually received, workers' compensation benefits as a result of his 1985 injuries.  On December 13, 1993, he settled all of his  outstanding workers' compensation claims for a lump sum payment of $45,000  and monthly payments of $372.45 for the remainder of his life.  Out of the  $45,000 lump sum payment, Trujillo paid his attorneys $7,000 in fees and  reimbursed them $2,826.99 for costs advanced on his behalf.

4
Trujillo also sought benefits under the Plan.  On January 31, 1995, the  coordinator of the Plan sent Trujillo a letter outlining the specific benefits he  would receive.  The letter indicated that his benefits would be reduced, in part,  by the total amount of his workers' compensation benefits.  On July 17, 1995,  Trujillo appealed the determination of his benefits, arguing the Plan, as a  beneficiary of the settlement of Trujillo's workers' compensation claims, should  pay a proportionate share of the attorney fees incurred in obtaining the  settlement, thus reducing the amount of the reduction.  On November 14, 1995,  the Director of the Committee rejected Trujillo's argument that the Plan was  responsible for any portion of his attorney fees:

5
You assert that the Plan must assume a portion of the responsibility  for attorneys' fees, which were incurred in obtaining the settlement  of [your] workers' compensation benefits.  The Plan document does  not authorize the payment of the attorneys' fees you seek.

6
You cite two Colorado state court cases in support of your  claim for attorneys' fees.  As you have acknowledged, the Plan is  governed by the federal Employee Retirement Income Security Act  of 1974, as amended ("ERISA").  ERISA is a comprehensive statute  and contains provisions that make it clear that ERISA preempts any  state regulation which relates to an employee benefit plan.  ERISA  § 514(a).  We believe that the Colorado state case law you rely upon  as authority for your position does not govern the operation of the  Plan because it is preempted by ERISA.  Under ERISA, the Plan  administrator is required to discharge its duties with regard to the  Plan in accordance with the terms of the Plan document.  Thus, this  portion of [your] claim is denied.

7
App. at 126.

8
On December 8, 1995, Trujillo appealed the Director's decision to the  entire Committee.  The Committee, on February 6, 1996, issued a letter addressed  to Trujillo's counsel affirming the Director's decision.  In pertinent part, that  letter provided:

9
With respect to the aspect of the appeal relating to any  apportionment of attorneys' fees incurred by Claimant in obtaining  the workers' compensation settlement, you stated that common law  equitable principles of unjust enrichment support the claim.  Again,  we are constrained by the plain terms of the Plan, which do not  provide for reimbursement of attorneys' fees under these  circumstances.  See Plan Section 9.4(b).  Accordingly, we . . .  uphold the [Director's] decision . . . and deny the instant appeal.

10
It is well settled that common law claims premised on  equitable theories of recovery are preempted by the Employee  Retirement Income Security Act of 1974, as amended ("ERISA"), 29  U.S.C. § 1144(a) (ERISA "shall supersede any and all State laws  insofar as they may now or hereafter relate to any employee benefit  plan . . .").  This provision has been construed by the courts broadly  to preempt any and all state law claims for benefits, particularly  where, as here, the claim would in some way modify the written  terms of an employee benefit plan.  See, for example, Straub v.  Western Union Telegraph Co., 851 F.2d 1262 (10th Cir. 1988)  (ERISA preempts state law claims premised on common law  doctrines of estoppel).

11
As stated above, the Claimant's assertion that he is entitled to  an apportionment of attorneys' fees with the Plan is contrary to the  terms of the Plan.  The Committee, therefore, respectfully disagrees  with your assertion that cases applying state common law equitable  theories of recovery . . . are applicable to an ERISA employee  benefit plan.  Any such alleged legal bases for recovery are  preempted by ERISA.

12
In your December 8, 1995 letter, you also offer the  representation that the amount of attorneys' fees is not properly  offset because it was not actually received by the Claimant . . . , but  rather was deposited in a trust account maintained by your law firm  on behalf of the Claimant.  You correctly note that the Plan provides  for offset only for amounts actually paid to a participant.  Plan  Section 9.4(b)(2).

13
The fact that you or your law firm may have elected to deposit  the settlement check in a trust account and to withdraw some portion  of the settlement prior to releasing the funds to Claimant does not  change the fact that the full settlement was payable to and actually  paid to Claimant.  The Stipulation for Full and Final Settlement and  Release of All Claims executed by the Claimant specifically states  that the insurer agreed to "pay to Claimant" the total amount of the  settlement.  Moreover, it is reasonable for the Committee to assume  (and Claimant has presented no evidence to the contrary) that any  subsequent release of the settlement proceeds paid to Claimant, for  example to his legal counsel, was with the full knowledge and  consent of Claimant.  The Committee believes that, to interpret the  Plan provisions as urged by Claimant, such that any subsequent  division of settlement proceeds between a participant and other  parties reduces the actual amount of proceeds paid to the participant,  is neither an accurate statement of the events that transpired nor  consistent with the plain language of Plan Section 9.4(b)(2). Accordingly, this aspect of the appeal also is denied.

14
Id. at 133-34.

15
After receiving the Committee's letter, Trujillo filed this action in the  District Court for the City and County of Denver.  Defendants removed the case  to federal district court.  The parties filed cross-motions for summary judgment. The district court granted summary judgment in favor of defendants, concluding  they did not act arbitrarily or capriciously in refusing to reduce the amount of the  benefit reduction to account for a proportionate share of the attorneys' fees  expended by Trujillo in obtaining his workers' compensation settlement.

II.

16
Although the district court granted summary judgment in favor of  defendants, the underlying facts were uncontroverted and the district court's  decision hinged solely on its determination that defendants' decision to deny  relief to Trujillo was neither arbitrary nor capricious.  Because this determination  involved a legal conclusion, our "review of the district court's decision, although  not the underlying administrator's decision, is plenary."  Sandoval v. Aetna Life  and Cas. Ins. Co., 967 F.2d 377, 380 (10th Cir. 1992).

17
"A court reviewing a challenge to a denial of employee benefits under 29  U.S.C. § 1132(a)(1)(B) applies an 'arbitrary and capricious' standard to a plan  administrator's actions if the plan grants the administrator discretionary authority  to determine eligibility for benefits or to construe the plan's terms."  Charter  Canyon Treatment Ctr. v. Pool Co., 153 F.3d 1132, 1135 (10th Cir. 1998) (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)); seealsoMillensifer v. Retirement Plan for Salaried Employees of Cotter Corp., 968 F.2d  1005, 1009 (10th Cir. 1992) ("[I]f the Plan gives the retirement committee  discretion to construe doubtful provisions of the plan itself, the committee's  decision must be upheld unless it was arbitrary and capricious, not supported by  substantial evidence or erroneous on a question of law.") (internal quotations  omitted).  Here, the parties agree that the Plan gives the Committee such  discretionary authority, see App. at 56-57 (indicating the Committee "shall have  sole discretion in carrying out its responsibilities," and "has full discretion to  deny or grant a claim in whole or in part"), and that the standard of review is  whether the Committee's determination was arbitrary and capricious.  Under this  standard of review, we will not set aside a benefit committee's decision if it was  based on a reasonable interpretation of the plan's terms and was made in good  faith.  See Jones v. Kodak Med. Assistance Plan, 169 F.3d 1287, 1292 (10th  Cir.  1999); Averhart v. U.S. West Management Pension Plan, 46 F.3d 1480, 1485  (10th Cir. 1994).

18
The Committee's decision, and hence this appeal, center around Section  9.4 of the Plan, entitled "Disability Retirement Benefits," which provides:

19
The Disability Retirement Benefits payable to any Member shall be  reduced by the amount of any worker's compensation benefits  (except fixed statutory payment for the loss of any bodily member)  payable to him with respect to his disability; provided that deduction  for all such benefits shall be made only with respect to the period in  which such benefits (A) are actually paid to such Member, and (B)  have not been deducted from a disability insurance benefit payable  to him under the Federal Insurance Contributions Act, as now in  effect or hereafter amended.  In the case of lump sum settlements  under worker's compensation, the lump sum shall be divided by the  weekly payment to which he was entitled under worker's  compensation in order to determine the period with respect to which  worker's compensation benefits are payable for the purpose of this  Section 9.4.

20
App. at 74 (Section 9.4(b)(2) of the Plan).2

21
Trujillo contends the Committee's interpretation of Section 9.4 was  arbitrary and capricious because it reduced his benefits by amounts which he did  not receive and which were not payable to him.  More specifically, Trujillo  argues that "[a]ttorneys fees and expenses incurred in obtaining workers'  compensation disability benefits . . . are amounts due and payable by the injured  worker to his attorney and must be paid from the worker's lump sum settlement  before the worker is paid anything."  Aplt.'s Opening Br. at 19.  Thus, Trujillo  argues, "only the net settlement, i.e., the settlement amount minus fees and  expenses, is 'payable' to the worker."  Id.

22
Although Trujillo's argument is not without appeal, we are unable to  conclude the Committee acted arbitrarily and capriciously when it adopted an  interpretation different from the one espoused by Trujillo.  The Plan does not  define the word "payable."  According to Black's Law Dictionary, "payable"  means "[c]apable of being paid; suitable to be paid; admitting or demanding  payment; justly due; legally enforceable."  Black's Law Dictionary 1128 (6th ed.  1990).3  Analyzing the language of the Plan  in light of these definitions, we  believe the phrase "worker's compensation benefits . . . payable to him with  respect to his disability" can reasonably be interpreted to encompass any amounts  "capable of being paid," "justly due," or "legally enforceable" that arise out of a  worker's disability.  In turn, the workers' compensation settlement agreement  negotiated by Trujillo provided, in part, that "[a]ll sums set forth herein  constitute damages on account of personal injuries and sickness, within the  meaning of Section 104(a)(1) of the Internal Revenue Code of 1986, as  amended."  App. at 167.  Because the statute cited in the settlement agreement,  26 U.S.C. § 104(a)(1) of the Internal Revenue Code, excludes from gross income  "amounts received from workmen's compensation acts as compensation for  personal injuries or sickness," the settlement agreement effectively indicated that  all of the amounts set forth therein, i.e., the $45,000 lump sum payment and the  $372.45 monthly payments, constituted "compensatory damages" for Trujillo's  injuries.  See generally Reese v. United States, 24 F.3d 228, 231 (Fed.  Cir. 1994)  (indicating that 26 U.S.C. § 104 encompasses only compensatory damages, i.e.,  damages for "the replacement of losses resulting from injury or sickness").  There  was no mention of the amount of Trujillo's attorneys' fees in the settlement  agreement.  Thus, as in most attorney fee arrangements, it appears that Trujillo  agreed to pay fees out of the total damage award he received from defendants. The fact that he agreed to do so, however, did not prevent the Committee, in  determining the benefits due under the Plan, from deducting the total amount  payable to him under the settlement agreement.

23
Trujillo offers two policy-based arguments presumably aimed at persuading  us to overturn the Committee's decision and effectively rewrite the language of  the Plan.  First, he points out that the Committee's decision in effect required him  to pay the cost of reducing his own benefits under the Plan.  Second, he argues  the Committee's decision will create irreconcilable conflicts between workers'  compensation attorneys and their clients and "make it impossible for injured  workers to obtain adequate, conflict-free representation."  Aplt.'s Opening Br. at  21.  Notably, however, Trujillo has not cited any cases, and our independent  research has not produced any, that would allow such policy arguments to trump  the Committee's reasonable interpretation of the Plan language.4  See Pitcher v.  Principal Mut. Life Ins. Co., 93 F.3d 407, 411 (7th Cir. 1996) (noting that  interpretation of ERISA health insurance contract requires court to look to the  plain language of the contract, rather than public policy); Hardester v. Lincoln  Nat'l Life Ins. Co., 33 F.3d 330, 336 (4th Cir. 1994) (same).

24
Finally, Trujillo suggests we should invoke the doctrine of unjust  enrichment to preclude the Committee from offsetting the entire amount of the  workers' compensation settlement without paying a pro rata share of his  attorneys' fees.  In Member Services Life Insurance Co. v. American National  Bank and Trust Co., 130 F.3d 950, 957 (10th Cir. 1997), cert. denied, 523 U.S.  1139 (1998), we placed strict limits on the use of the doctrine of unjust  enrichment in ERISA cases.  Specifically, we held that the doctrine can be  utilized only when it does not "override a contractual plan provision," and where  its application "'would be consistent with ERISA's scheme and further its  purposes.'"  Id. (quoting Diduck v. Kaszycki & Sons Contractors, Inc., 974  F.2d  270, 280 (2d Cir. 1992)).

25
Given our holding in Member Services, application of the doctrine of  unjust enrichment would clearly be improper in this case.  Aside from the fact  that ERISA says nothing about the issue raised by Trujillo, application of the  doctrine of unjust enrichment would effectively rewrite the Plan and thereby  violate "a primary purpose of ERISA," which "is to ensure the integrity and  primacy of the written plans."  Health Cost Controls v. Isbell, 139 F.3d 1070,  1072 (6th Cir. 1997) (holding that ERISA plan's right to reimbursement for  medical benefits was not subject to equitable reduction for proportional share of  participant's legal costs in obtaining third-party recovery); see also Ward v.  Wal-Mart Stores, Inc., 194 F.3d 1315, 1999 WL 801532 at *3-4 (6th Cir.1999) (table)  (holding that application of unjust enrichment doctrine, relied upon by district  court to prevent ERISA plan from obtaining reimbursement for settlement  agreement without paying a pro rata share of plaintiffs' attorneys' fees, was  improper where plan administrator's interpretation of plan language regarding  extent of reimbursement was neither arbitrary nor capricious).

III.

26
The judgment of the district court is AFFIRMED.

Notes:

1
 The Honorable Richard D. Rogers, Senior  United States District Judge  for the District of Kansas, sitting by designation.

2
 The summary plan description, which Amax  distributed to its employees,  likewise provided:  "Your Plan benefit is reduced by amounts you may receive  from:
Workers' Compensation (except payments for loss of any bodily member)." App.  at 140.

3
 In his appellate brief, Trujillo suggests that  because his workers'  compensation benefits were paid pursuant to Colorado law, "the question of  whether the attorneys fees and expenses were either 'payable to' or 'received' by  him must be decided under state law."  Trujillo's Opening Br. at 18.  He provides  no authority in support of this proposition.  For the reasons discussed above, the  controlling question is whether the Committee's interpretation of the Plan was  arbitrary or capricious; thus, the two Colorado cases cited by Trujillo in his brief,  neither of which are ERISA cases, are of little value.

4
 Because the appendix does not include the  parties' summary judgment  motions, it is unclear if Trujillo presented all of these arguments to the district  court.  See Farmers Ins. Co. v. Hubbard, 869 F.2d 565, 570 (10th Cir. 1989)  ("This court will generally not address issues that were not considered and ruled  upon by the district court.").