Lead Opinion
In 2013, Appellee John Paul, Jr. (“Paul”) filed suit as a pro se litigant against Detroit Edison Company (“DTE”) and Michigan Consolidated Gas Company Pension Plan (“Michcon”), seeking relief from the reduction of his benefits two years after his retirement. The district court granted summary judgment to Paul on grounds of equitable estoppel. On appeal, DTE and Michcon raise three issues: (1) whether the district court violated due process by relying on unsworn testimony given by Paul at the summary judgment hearing; (2) whether the district court erred by not reviewing the pension plan administrator’s record under an arbitrary and capricious standard; and (3) whether the district court erred by finding that Paul proved sufficient facts to support a claim of equitable estoppel. We find no error in the district court’s decision and therefore AFFIRM.
Paul began working for DTE in 1984. From 1984 to 1988, he was employed as a temporary employee, not as a regular employee and mеmber of the union. In 1988, he became a regular employee represented by the union, and became eligible for the company’s pension plan for union workers.At the time of his retirement in 2009, Paul had worked for DTE for 23.970100 years, but he had accrued only 20.96645 years of credited service under the pension plan. Thus, 3.00365 years of his employment should not have been counted toward his benefit service years.
In 2009, when Paul began considering early retirement, he met with representatives from Michcon in order to determine the benefits for which he was eligible. Michcon provided Paul with a written “Pension Calculation Statement.” The calculations contained in this statement were compiled for Michcon by Aon Hewitt, which served as the third-party administrator of the plan. Each statement shown and discussed with Paul stated his benefit service years at 23.970100. As Paul stated in a letter to Michcon, “On 4 separate ocсasions Michcon provided me with a[sic] pension statements^] [0]n all of these statements all the dates were generated by your staff and they all were the same.” Moreover, Paul was given explicit verbal assurances that the calculations given to him were correct. During his meeting with a company representative to sign the final pension plan papers, Paul specifically noted that he had worked part of his time as a non-uniоn employee and most of his time as a union employee. When he asked whether this would make a difference in the calculation of his benefit level, he was assured that there was no problem and that the date on the written statements was correct.
Written and spoken assurances notwithstanding, the Michcon “Pension Cаlculation Statement” included an important disclaimer:
DTE Energy reserves the right to correct any errors. If it’s determined at any time that the information provided-on this statement conflicts with the benefit defined by the Michcon Retirement Plan, the MichCon Retirement Plan will prevail. Under the law, a plan must be operated in accordance with its terms.
This disclaimer appeared at the end of each copy of the statement given to Paul.
In 2011, two years after Paul’s retirement, Michcon discovered an error in the calculation of Paul’s benefit service years. •On December 27, 2011, Michcon notified Paul that his benefits should have been calculated from the time that he joined the union employees under the pension plan in 1988, not from the time that he began work for DTE as a temporary employee in 1984. [M] In order to correct this error, Michcon reduced Paul’s monthly retirement benefits by $54.42 and informed him that he would have to repay a lump sum of $14,429.36.
On February 3, 2012, Paul informed Michcon that he objected to their Pension Plan Overpayment Notice of December 27, 2011. He explained that “[tjhis oversight
On March 3, 2012, Paul sent a letter to the Department of Labor, explaining his dilemma and requesting assistance. And on June 13, 2012, the Employee Benefits Security Administration (EBSA) sent a letter to DTE, instructing the company to inform Paul of the reasons for its decision. In the meantime, DTE and Michcon had responded to Paul’s objection letter, explained their rationale, denied responsibility, and referred him to the Qualified Plan Aрpeals Committee (“Committee”). Paul filed an appeal with the Committee, and DTE and Michcon informed the EBSA that his claim was under administrative review and appeal.
In Paul’s appeal to the Committee, he requested that he be granted a complete restoration of his original benefits or, alternatively, that he be reinstated in his employment with all seniority and back pay benefits. The Committee upheld Michcon’s recalculation оf Paul’s benefits, but reversed Michcon’s decision to force Paul to repay the amount overpaid from 2009 to 2011. The Committee explained that “[a]fter reviewing all of the circumstances of your situation, the Committee determined that it would be more appropriate for the third-party who incorrectly calculated your benefits to repay the excess benefits to the Plan.” This decision, however, was contingent upon Paul’s commitment not to claim any portion of the Michcon “Special Lump Sum Severance Benefit” to which he would otherwise be entitled. The Committee concluded its decision by informing Paul of his right to file suit under ERISA Section 502(a) if he disagreed with the outcome of the appeal.
On August 30, 2013, Paul filed suit in state court. His complaint in its entirety read:
Detroit Edison without my consent modified a retirement agreement 2 years after the original agreement. In their modification they alsо violated Local 223/Local 80 retirement provisions in the labor agreement in force at the time of the original agreement. I am requesting that all monies owed me to [sic] be paid and any over payment be charged to the company contractor who made the error also all cost and damages in the amount of 25,000.00 U.S. dollars.
DTE and Michcon immediately removed to federal court and filed their answers and affirmative defenses. Michcon also filed a crossclaim for repayment of $14,439.36, which it claims represents the amount by which Aon Hewitt miscalculated Paul’s original lump sum benefit payment. In July 2014, both sides filed motions for summary judgment. Relying on Bloemker v. Laborers’ Local 265 Pension Fund,
II.
A.
DTE and Michcon raise three issues in this appeal. First, DTE and Mich-con assert that the district court “unexpectedly and without notice, elicited new ‘evidence’ by engaging Mr. Paul in an un-
Second, in reaching its decision, the district court relied on facts already established by the record and known by DTE and Michcon. In the district court’s analysis of the case, it cited to only two pages of the hearing transcript. At those points in the transcript, the judge asked Paul to describe his reliance on the representations and calculations of DTE and Mich-con, and then asked DTE and Michcon to clarify how the benefits were calсulated and who was responsible for those calculations. A review of the record reveals that, prior to the summary judgment hearing, it contained evidence of Paul’s reliance on the written and oral calculations and assurances that he received from DTE and Michcon. In fact, the evidence of his reliance was submitted to the district court by DTE and Michcon in an exhibit supporting their motion for summary judgment. Furthermore, the district court asked DTE and Michcon’s counsel — not Paul — for clarification regarding who was responsible for calculating Paul’s benefits. It is impossible for DTE and Michcon to show that they lacked proper notice of the facts relied on by the district court when they were the ones who first submitted those facts to the district court and relied on those facts in their argument.
B.
Next, DTE and Michcon assert that the district court erred by failing to apply an arbitrary-and-caprieious standard of review in its consideration of the Committee’s decision on Paul’s appeal. We have previously held that “[generally, federal courts review a plan administrator’s decision to deny benefits de novo. But, where the plan administrator reserves discretionary authority to determine eligibility and construe policy terms, the more deferential arbitrary and capricious standard of review applies.” Schwalm v. Guardian Life Ins. Co.,
C.
This brings .us to the third and primary issue of this appeal, namely, whether Paul has satisfied the heightened requirements for the application of equitable estoppel within the context of ERISA. Our analysis of this issue is controlled by our precedent in Bloemker v. Laborers’ 265 Pension Fund,
“Under our precedent, the elements of an equitable estoppel claim are: 1) conduct or language amounting to a representation of material fact; 2) awareness of the true facts by the party to be estopped; 3) an intention on the part of the party to be estopped that the representation be acted on, or conduct toward the party asserting the estoppel such that the latter has a right to believe that the former’s conduct is so intended; 4) unawareness of the true facts by the party asserting the estoppel; and 5) detrimental and justifiable reliance by the party asserting estoppel on the representation.”
Bloemker,
Paul satisfies both the original five es-toppel elements and the additional three elements for the ERISA context. First, DTE and Michcon, made repeated material representations to Paul, in both word and deed, by issuing written statеments to him and by having, a representative meet with him to answer his questions and to formalize his retirement. This is directly parallel to the representations made by the Union in Bloemker. In both cases, the pension plan administrator issued written statements to the prospective retirees, certifying that their monthly payments would stay at a certain level. These are material representations made by the party to be estopped. See Bloemker,
Second, as Bloemker states, this element “rеquires the plaintiff to demonstrate that the defendant’s actions contained an element of fraud, either intended deception or such gross negligence as to amount to constructive fraud.” Id. at 443 (quoting Crosby v. Rohm & Haas, Co.,
Third, DTE and Michcon invited Pаul to act in response to their representations. In fact, DTE and Michcon were actively inviting employees to consider early retirement by offering new incentives and modifications to the pension plan. Moreover, in his individualized dealings with DTE and Michcon regarding his own retirement, Paul had every right to believe that the repeated representations made to him were inviting him to retire. See id. at 442-43. The assurances given by DTE and Michcon would not make аny sense unless they were backed by the understanding and intention that Paul would act upon them and retire.
Fourth, Paul was completely unaware that there was an error in his benefits calculation, he had no reason to believe that there was an error, and he had no way of double-checking the calculation to find an error. See id. As with Bloemker, so also with Paul — it would have been impossible for him “to determine the amount of pension benefit owed tо him because of the complex actuarial calculations required to determine the amount and his lack of knowledge of relevant actuarial assumptions.” Haviland v. Metropolitan Life Ins. Co.,
Fifth, Paul detrimentally relied on the representations that were made to him. He suffered appreciable economic damages and would not have accepted the early retirement offer if his benefits had been properly represented to him. See id. His relianсe was reasonable for the same reasons that Bloemker’s reliance was reasonable. See Bloemker,
Paul also satisfies the three additional elements prescribed in Bloemker. First, there was a written representation from DTE and Michcon to Paul regarding his benefit levels. In fact, there were multiple written representations, all of which indicated that his date of hire was 1984, not 1988. Second, even though the plan provisions were unambiguous insofar as they allowеd for DTE and Michcon to make corrections to benefit calculations, Paul— like Bloemker — was unable “to determine his correct pension benefit given the complexity of the actuarial calculations and his lack of knowledge about the relevant actuarial assumptions.” See Bloemker,
III.
Quite simply, we find that this case directly parallels Bloemker. Although equitable estoppel is a rare remedy in an ERISA context, Paul’s case presents the same extraordinary circumstances that we
Notes
. The details of this meeting were summarized by Paul before the district court during the summary judgment hearing. DTE and Michcon declared that they had no reason to dispute the fact of Paul’s meeting with a company representative. They raised no objection to any of the facts presented by Paul regarding that meeting. [R, 32 at Pg. ID# 1132] DTE and Michcon now argue against the use of these facts, but as we explain at II. A. of this opinion, their arguments fail.
Dissenting Opinion
dissenting.
Although I join the majority regarding the first two issues, I respectfully disagree that defendants’ actions constituted constructive fraud as a matter of law. Summary judgment is not warranted because there are genuine issues of material fact. I would reverse and remand for further proceedings.
I respectfully take issue with the majority’s application of equitable estoppel’s second element under Bloemker v. Laborers’ Local 265 Pension Fund, the “awareness of the true facts by the party to be es-topped.”
The majority concludes the facts here are indistinguishаble from those in Bloem-ker. After all, both involve union employees who retired based on a calculation of retirement benefits by a third-party administrator, and when those calculations turned out to be wrong, the employers sought to reduce benefits and recover overpayments. However, although the facts of our case and Bloemker are indistinguishable, the procedural posture — and more specifically, the remedy upon remand — is very different.
In Bloemker, our court reversed the grant of a motion to dismiss in favor of the defendant and remanded for further proceedings.
Here, rather than holding that plaintiffs complaint alleged facts sufficient to survive a motion to dismiss, the district court granted summary judgment in plaintiffs favor. On the second element, the district court reasoned that the representative’s assurances regarding the correctness of his credited years of service were “so grossly negligent as to amount to constructive fraud upon Plaintiff,” and that the representative’s “failure to properly investigate the concern raised by Plaintiff was not an honest mistake but was precisely the sort of malfeasance that may give rise to constructive fraud.” In agreeing, the majority cоncludes defendants must “bear responsibility” for these misrepresentations because they were the “only ones in a
However, a reasonable trier of fact could arrive at an alternative verdict — defendants’ reliance on Aon Hewitt, while perhaрs negligent, did not rise to the level of gross negligence so as to constitute constructive fraud upon Paul. There' is no record evidence that defendants had reason to know Aon Hewitt made a miscalculation, that they unreasonably relied upon Aon Hewitt’s certifications that Paul’s benefit service years were what it purported them to be, or that the representative acted with such disregard to Paul that his actions constituted gross negligеnce. Defendants’ awareness of the true facts is material and in dispute — a reasonable person could conclude their conduct was not grossly negligent. When reasonable persons “might reach different conclusions” as to whether there is negligent conduct, our legal system “emphasize[s] the appropriateness of leaving the question to the [trier of fact].” Bailey v. Central Vermont Ry.,
I join the majority opinion in its resolution of the other issues.