Bankruptcy Nos. 91-1057 to 91-1059 | Bankr. D. Del. | Jun 29, 1995
MEMORANDUM OPINION AND ORDER
This is the court’s Opinion on a core matter.
I. Legal Standard
In considering Rexene’s motion, the court will view the record in the light most favorable to Seitz to determine whether Rexene is entitled to judgment as a matter of law. Hon v. Stroh Brewery Co., 835 F.2d 510" court="3rd Cir." date_filed="1988-02-09" href="https://app.midpage.ai/document/hon-nancy-m-administratrix-of-the-estate-of-william-hon-deceased-v-stroh-brewery-co-498724?utm_source=webapp" opinion_id="498724">835 F.2d 510, 512 (3d Cir.1987); Fed.R.Bankr.P. 7056(c). Given the nature of Rexene’s arguments, the relevant facts are undisputed.
II. Facts and Procedural History
The germane facts are those underlying the substance of Seitz’s claim, as well as prior procedural and substantive history relating to litigation on that claim in this court and in an appellate court. Discussion of these matters frames the issues presently before this court.
The claim of Bobby Seitz is for supplemental retirement benefits in the amount of $539,969.40. Seitz worked for El Paso Products Company (now known as Rexene) for four and one-half years beginning January 1, 1984. In June 1986, Seitz and El Paso entered into a participation agreement whereby Seitz became a participant in the Executive Security Plan of El Paso. To be eligible for retirement benefits under the Executive Security Plan (ESP), Seitz needed to satisfy a “retirement” clause as that term was defined by a retirement plan El Paso adopted in April 1984. That plan, as amended, required an employee to have completed a period of service of five years.
Seitz voluntarily terminated his employment with El Paso on June 30, 1988. Although at that time he had not worked five years, he left El Paso with the understanding that he would be eligible to receive retire
Rexene filed an objection to Seitz’s proof of claim. Rexene then filed a motion for summary judgment on that objection. Seitz filed a cross-motion for summary judgment. After completion of the briefing, this court issued an Opinion granting Rexene’s motion. In re Rexene Corp., 154 B.R. 430" court="Bankr. D. Del." date_filed="1993-05-19" href="https://app.midpage.ai/document/in-re-rexene-corp-8491662?utm_source=webapp" opinion_id="8491662">154 B.R. 430 (Bankr.D.Del.1993). On appeal, the United States District Court affirmed in part, and reversed in part. Seitz v. Rexene, C.A. No. 93-318 (SLR), slip op. (D.Del. April 13, 1994). In that decision, the District Court agreed with this court that Seitz did not work for five years and did not “retire” as defined by the 1984 retirement plan.
The next issue the District Court discussed was Seitz’s assertion that he was entitled to benefits under a promissory estoppel theory, because of the verbal representations he asserted were made to him concerning his eligibility for retirement benefits. The District Court ruled that the ESP was not subject to ERISA. Thus, while application of ERISA would have precluded oral modification of the employment benefits contract, the District Court concluded that Seitz’s claim of promissory estoppel could proceed. Because of the fact-specific nature of promissory estoppel, the District Court remanded for a determination of the appellant’s claim. An evidentiary hearing on that claim was scheduled for December 8, 1994; however, Rexene filed this second summary judgment motion, taking the hearing off the calendar.
III. Discussion
In the second summary judgment motion, Rexene again argues it is entitled to judgment on Seitz’s claim. It points out two cases decided after the briefing deadline in the District Court appeal which allegedly support Rexene and undercut Seitz’s position that the ESP is not subject to ERISA.
This court will not address the merits of those two cases, as Rexene’s reliance on the new case exception to the law of the case doctrine is wholly misplaced. Assuming that the District Court did not consider those eases, and assuming those cases constitute an intervening change in the case law, this court still has no jurisdiction to reevaluate the decision of a higher court. Only the United States District Court for the District of Delaware can reconsider its own rulings, and only the United States Court of Appeals for the Third Circuit can reverse a legal ruling of the United States District Court for the District of Delaware.
Rexene’s second request for relief on its present motion is to limit the amount of Seitz’s recoverable damages from the claimed amount of $539,969.40 to an amount
[T]he court ... shall allow [a] claim ..., except to the extent that—
íji íjí í}í í?;
(7) if such claim is the claim of an employee for damages resulting from the termination of an employment contract, such claim exceeds—
(A) the compensation provided by such contract, without acceleration, for one year following the earlier of—
(i) the date of the filing of the petition; or
(ii) the date on which the employer directed the employee to terminate, or such employee terminated, performance under such contract; plus
(B) any unpaid compensation due under such contract, without acceleration, on the earlier of such dates.
Based upon this section, Rexene argues that Seitz’s claim is a “claim of an employee for damages resulting from the termination of an employment contract,” and is thus limited by the value of one year of compensation.
In In re Prospect Hill Resources, Inc., 837 F.2d 453" court="11th Cir." date_filed="1988-02-11" href="https://app.midpage.ai/document/18-collier-bankrcas2d-324-v-prospect-hill-resources-500132?utm_source=webapp" opinion_id="500132">837 F.2d 453 (11th Cir.1988) (per curiam), a leading case relied upon by Seitz, the court was confronted with facts materially identical to those here. The Prospect Hill employee retired pre-petition and filed a claim for retirement benefits. The court held that the claim fell outside the scope of § 502(b)(7), reasoning:
Section 502(b)(7) limits claims arising out of the rejection of an executory employment contract. It also limits claims for future compensation, which conceivably would have been earned had the parties to the agreement performed under the terminated contract. On its face, section 502(b)(7) does not apply to vested retirement benefits. The statute, by its terms, refers to claims by employees, not by retired workers.
837 F.2d 453" court="11th Cir." date_filed="1988-02-11" href="https://app.midpage.ai/document/18-collier-bankrcas2d-324-v-prospect-hill-resources-500132?utm_source=webapp" opinion_id="500132">837 F.2d at 455. This court finds the reasoning of the Prospect Hill case persuasive.
Rexene attempts to distinguish this case by arguing that Seitz’s retirement benefits were not “vested.” First, this is incorrect within the context of the Prospect Hill court’s discussion. Seitz was vested in the ESP. Seitz v. Rexene, C.A. No. 93-318 (SLR), slip op. at 7 (D.Del. April 13, 1994).
Rexene relies primarily on one case it argues supports its position; however, this ease actually supports Seitz. In In re CPT Corporation, 1991 WL 255679 (Bankr.D.Minn. November 26, 1991), the debtor CPT terminated employee Sims pre-petition. Sims later filed a proof of claim for severance pay, and CPT sought to limit that claim through § 502(b)(7). The CPT court agreed with the debtor, reasoning that the severance pay was clearly a measure of damages from the termination of his employment contract The severance pay was designed to compensate Sims for the loss he would suffer upon being terminated without cause. The CPT court explicitly recognized that Sim’s claim was different from the claim in Prospect Hill, where retirement benefits were at issue. Id. at 3-4.
In summary, Seitz’s claim is not the claim of an employee for damages, but rather a claim for retirement benefits. Seitz’s claim falls outside the scope of 11 U.S.C. § 502(b)(7). Seitz’s alternative argument on the limit issue need not be reached. Trial
An order in accordance with this Memorandum Opinion is attached.
ORDER
AND NOW, June 29, 1995, for the reasons stated in the attached Memorandum Opinion,
IT IS ORDERED THAT:
1. The motion of Rexene Corporation for summary judgment disallowing or limiting claim no. 00445 (docket no. 867) is DENIED.
2. A hearing on Rexene’s objection to this claim shall commence on August 9, 1995 at 2:00 p.m.
. 28 U.S.C. § 157(b)(2)(B).
. Additional facts concerning the provisions of the retirement plan and the executive security plan are discussed in In re Rexene Corp., 154 B.R. 430" court="Bankr. D. Del." date_filed="1993-05-19" href="https://app.midpage.ai/document/in-re-rexene-corp-8491662?utm_source=webapp" opinion_id="8491662">154 B.R. 430, 431-34 (Bankr.D.Del.1993).
. Whether either of those courts would have reevaluated the preemption issue, or whether either of those courts will do so in the future, are not issues before this court.
. Those cases are McLellan v. Klein, 867 S.W.2d 953" court="Tex. App." date_filed="1994-01-06" href="https://app.midpage.ai/document/mclellan-v-klein-5084888?utm_source=webapp" opinion_id="5084888">867 S.W.2d 953 (Tex.App.1994), and Kemmerer v. ICI Americas, 842 F. Supp. 138" court="E.D. Pa." date_filed="1994-01-04" href="https://app.midpage.ai/document/kemmerer-v-ici-americas-inc-1461296?utm_source=webapp" opinion_id="1461296">842 F.Supp. 138 (E.D.Pa.1994).
. The exact amount is in dispute; however, that dispute is not material to the legal issue before the court.
. Rexene asserts in its reply memorandum that the District Court expressly held that Seitz has no "vested retirement benefits.” That court’s Opinion does not contain the quoted holding.