Mealey's (July 13, 2016, 2:09 PM EDT) -- DENVER — A 10th Circuit U.S. Court of Appeals panel on July 11 affirmed dismissal of claims that a pension plan consultant breached a fiduciary duty by misstating the amount of pension payments that a member could expect upon retirement for failure to state a valid claim (Trent Lebahn, et al. v. National Farmers Union Uniform Pension Plan, et al., No. 15-3201, 10th Cir.; 2016 U.S. App. LEXIS 12708).
(Opinion available. Document #54-160810-005Z.)
The appeals panel affirmed U.S. Judge Monti L. Belot of the District of Kansas’ ruling dismissing claims against National Farmers Union Uniform Pension Plan, its plan committee and National Farmers Union Pension Consultants, finding that a pension consultant does not exercise discretionary authority simply by making a calculation of benefits at the request of a plan participant.
Invoking the Employee Retirement Income Security Act, Trent Lebahn and his wife, Wendy, claimed that a pension plan consultant breached a fiduciary duty by misstating the amount of monthly pension payments Trent Lebahn would receive if he retired. Under ERISA, a plan consultant can be considered a fiduciary only if she exercised discretionary authority over the plan’s administration.
Discretionary Authority
Hoping to retire, Lebahn contacted Eloise Owens, a consultant hired by his company’s pension plan, to ask what his monthly pension payment would be. Owens told Lebahn that if he retired soon, he would be entitled to $8,444.18 a month. At Lebahn’s request, Owens checked her calculations and assured Lebahn that the figure was correct. Lebahn then retired and soon began receiving monthly checks of $8,444.18.
But Owens’ calculations proved to be incorrect. Shortly after Lebahn retired, representatives of the pension plan contacted Lebahn and told him that he was being overpaid by almost $5,000 a month. A pension plan attorney then told Lebahn that he would need to return more than $43,000 in overpayments that he had already received. Unable to retire on his true pension benefit of $3,653.78 a month, Lebahn tried to go back to work but was unable to find a suitable job.
Lebahn and his wife then sued under ERISA, alleging that in incorrectly representing Lebahn’s benefits and failing to pay Lebahn in accordance with those representations, the pension plan, the pension committee and National Farmers Union Pension Consultants incurred ERISA liability under theories of breach of fiduciary duty and equitable etoppel. Judge Belot dismissed the complaint for failure to state a valid claim.
Fiduciary Duty Claim
On appeal, the appeals panel said the Lebahns’ claim for breach of fiduciary duty fails because they needed to show that the defendants were ERISA fiduciaries. Although Owens was not named as a defendant, the Lebahns argued that she was a fiduciary of the plan, rendering the defendants liable for Owens’ breach of her fiduciary duty. Judge Belot rejected this argument on the ground that Owen was not acting as an ERISA fiduciary when calculating pension benefits.
“We agree: Because Ms. Owens lacked discretionary authority in administering the pension plan, she lack fiduciary status,” Circuit Judge Robert E. Bacharach wrote for the appeals panel. “And in the absence of fiduciary status of the wrongdoer, the claim for breach of fiduciary duty was properly dismissed.”
Judge Bacharach also wrote that the Lebahns’ claim of equitable estoppel was also properly dismissed.
“In dismissing this claim, the district court reasoned that the Lebahns had failed to plead facts satisfying two of the five elements of equitable estoppel: awareness of the true facts and justifiable reliance,” the judge wrote. “On appeal, the Lebahns do not challenge the district court’s conclusion that they failed to adequately plead justifiable reliance. Because the Lebahns fail to challenge one of the grounds relied on by the district court, we affirm the dismissal of the equitable estoppel claim.”
Counsel
Randall K. Rathun of Depew Gillen Rathbun & McInteer LC represent the Lebahns. Jessica l. Skladzien and Alan L. Rupe of Lewis Brisbois Bisgaard & Smith represent National Farmers. All are in Wichita, Kan.
(Additional documents available: Appellant brief. Document #54-160810-006B. Appellee brief. Document #54-160810-007B. Appellant reply brief. Document #54-160810-008B.)...