CARL J. BARBIER, United States District Judge.
Before the Court are cross- Motions for Sunmary Judgment. Rec. Doc. 48 (plaintiff's motion); Rec. Doc. 32 (defendants' motion). The motions, set for hearing on March 26, 2003, are before the Court on briefs without oral argument. Having considered the record, the memoranda of the parties, and applicable law, the Court finds that plaintiff's motion should be granted, and defendants' motion should be denied, for the reasons which follow.
BACKGROUND
The background facts in this case are undisputed. Plaintiff Ray Acosta began working for the Bank of the South as a loan officer on April 14, 1971. Nearly 13 years later, on September 23, 1983, Mr. Acosta entered into a Deferred Compensation Agreement ("Agreement") with Bank of the South. Because analysis of the instant motions requires consideration of the Agreement, significant portions are reproduced here:
1. The Bank agrees that the undersigned upon reaching his 65th birthday and being employed or in service as a Director or Officer of the Bank will be entitled to the following benefits:
. . . .
Any Officer . . . who has been in the continuous full time employ of the Bank for 10 years or more shall be entitled to the sum of $200,00 payable in 120 equal monthly installments;. . . .
The Bank agrees that if the undersigned Director or Officer shall have been retired and shall have commenced to receive benefits but shall have died before receiving 120 monthly payments, monthly payments shall be continued to his spouse and/or to such other person as he may have designated in the same amount as he was receiving as a retirement payment. . . .
2. If the undersigned Director or Officer shall have continued in the employ as a Director or Officer of the Bank beyond his 65th birthday, then benefits as provided in "1" thereof [sic] shall be payable if said recepient [sic] desires to receive it or its payment may be delayed until a later date as requested by the recepient [sic]. If this benefit is delayed by request of recepient [sic] then interest shall be paid in an amount to be negotiated between the parties but if agreement cannot be reached then the interest shall be in accordance with the 5 year T-note rate.
. . . .
4. In the event of termination of employment or as a Director of the undersigned prior to his 65th birthday, other than by death, whether by resignation or discharge,
(a) The Bank shall be obligated to pay, commencing upon the 65th birthday of the undersigned Director or officer, a percentage of the benefits pursuant to "1" as follows, depending on his attained age at such termination of employment:
Age %
60 to 64 50%
55 to 59 25%
Less than 55 0%
. . . .
(c) In the event the termination of employment or of service as a Director involves a termination for cause . . . no benefit shall be paid. . . .
. . . .
8. The rights of the undersigned . . . under this Agreement shall be in existence and continue solely and only at the discretion of the Bank of the South acting through its Board of Directors . . . all benefits provided herein may be revoked, rescinded, and cancelled at any time by a simple majority vote of the Board of Directors, . . . except that the benefits stipulated herein shall be due Directors and Officers who have served as such for 10 years and said benefits cannot be limited, reduced, or terminated by the Board of Directors, despite the provisions of paragraph "4(c)".
9. [A]ny dispute, difference, or disagreement concerning this Agreement or any construction or interpretation of this Agreement regarding benefits . . . shall be decided upon solely and only by the board of Directors upon a simple majority vote, and said decision by the Board shall be totally binding on the parties hereto. . . .
Exh. 1.
In connection with the cross-motions, plaintiff submitted an indexed set of "un-objected to exhibits," which are attached to Record Document 48, and to which all exhibit references herein are made.
In May, 1988, the Bank of the South merged into the Bank of Louisiana, and the Bank of Louisiana ("BOL") assumed all of Bank of the South's deferred compensation liabilities. Subsequently, on November 22, 1988, Mr. Acosta received a letter from G. Harrison Scott, Chairman of the Board of Directors, informing him that BOL was terminating the Agreement, and that BOL considered Mr. Acosta to have been vested 25% or $50,0000.00 at the time of termination of the plan. Exh. 3.
In 1995, when Mr. Acosta reach the age of 65, he informed BOL that he wished to defer acceptance of payments under the Agreement until his retirement. Mr. Acosta continued working at BOL until August, 2000, when he suffered a severe heart attack. He informed BOL on September 25, 2000, at the age of 70, that he was retiring for medical reasons and desired to begin receiving his monthly payments of $1666.67 based on a total benefit of $200,000 in accordance with the Agreement, and in the event of his death, he designated his wife, Joy Acosta, as his beneficiary. Exh. 5. Defendant responded by letter dated November 7, 2000 that its research indicated that Mr. Acosta was due $416.67, based on a benefit of $5000 per year. Exh. 7. Following various correspondence between the parties, on March 22, 2001, G. Harrison Scott, Chairman of the Board of BOL, again wrote to Mr. Acosta to inform him that BOL considered the Agreement to permit BOL to terminate the Agreement at any time, that it had done so in 1988 at a time when Mr. Acosta was vested only 25%, and that payments made to him under the plan were a gratuity. Exh. 10. Following this final denial of benefits, Mr. Acosta filed the instant suit on June 7, 2001. Mr. Acosta died on February 1, 2002, and his wife was properly substituted as plaintiff.
In the cross-motions before the Court, Mrs. Acosta argues that under any standard of review, she is due payments calculated on the full $200,000. Because Mr. Acosta voluntarily deferred receiving payments until his retirement, plaintiff also contends that under Paragraph 2 of the Agreement, she is entitled to interest at a rate equal to the five-year treasury note for the period spanning Mr. Acosta's 65th birthday through the date of the initiation of payments, on the full amount he should have been receiving (i.e., payments calculated based on his full vesting at $200,000). In contrast, defendant argues that the Court should apply an abuse of discretion standard, and applying that standard, the plan administrator's decision cannot be overturned. Defendant further argues that plaintiff failed to exhaust administrative remedies, and that the claim is barred by prescription and laches.
JURISDICTION
The "Deferred Compensation Agreement" appears to be a "top hat" plan, that is, a plan which is "unfunded and . . . maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees." 29 U.S.C. § 1101 (a)(1). Although top hat plans are exempt from ERISA's fiduciary provisions as well as its participation, vesting, and funding provisions, they are not exempt from ERISA's enforcement provisions. See 29 U.S.C. § 1051 (2), 1081(a)(3), 1101(a)(1), 1021-1054; Reliable Home Health Care, Inc. v. Union Central Ins. Co., 295 F.3d 505, 516 (5th Cir. 2002). While plaintiff's claim was originally pled as a state law cause of action, through it plaintiff seeks "to recover benefits due to [Mr. Acosta] under the terms of his plan, [and] to enforce his rights under the terms of the plan." 29 U.S.C. § 1131 (A)(1)(B). Thus, the claim is one for ERISA enforcement and it therefore "arises under" federal law.
STANDARD OF REVIEW
In Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948 (1989), the Supreme Court resolved a circuit conflict by setting forth the appropriate analysis to determine whether a plan administrator's decision to deny benefits should be reviewed by the district court de novo, or under a deferential abuse of discretion standard. Observing that "ERISA abounds with the language and terminology of trust law," the Court directed that trust law should be referenced in determining the appropriate standard of review. 489 U.S. at 110-11, 109 S.Ct. at 954. Because trust law dictates a deferential standard of review only when a trustee is exercising discretionary powers, the Firestone Tire court held that "a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." 489 U.S. at 115, 109 S.Ct. at 956-57. Moreover, a grant of discretionary authority as to some provisions of a plan does not confer discretion over an entire plan; "[r]ather, one is a fiduciary to the extent he exercises any discretionary authority or control." 489 U.S. at 113, 109 S.Ct. at 955 (citation omitted); see also, Anderson v. Great West Life Assur. Co., 942 F.2d 392, 395 (6th Cir. 1991) ("[D]iscretion is not an all-or-nothing proposition. A plan can give an administrator discretion with respect to some decisions, but not others."). Additionally, as the Third Circuit has recognized, Firestone Tire supports an inference that denials of benefits under top hat plans should always be reviewed de novo, even when the plan administrator has explicitly been granted broad discretionary authority, because top hat plan administrators do not have fiduciary duties under ERISA, and thus such plans are more fairly characterized as unilateral contracts than trusts. Goldstein v. Johnson Johnson, 251 F.3d 433 (3rd Cir. 2001). Given this, the Goldstein court found that in analyzing a top hat plan, there should be no presumption in favor of any interpretation (either the administrator's or the beneficiary's), except in conformity with ordinary contract principles, especially when the plan exempts the administrator from personal liability. Id. at 442-43.
Applying these principles to the case at bar, it is clear that the denial of benefits in this case is subject to de novo review. While paragraph 9 of the Agreement contains a broad grant of discretionary authority in favor of the Board of Directors, the plain language of the Agreement also reveals that discretion is completely curtailed when the benefits due to "Directors and Officers who have served as such for 10 years" are at issue, "and said benefits cannot be limited, reduced, or terminated by the Board. of Directors, despite the provisions of paragraph "4(c)"." Agreement, ¶ 8. It is undisputed that Mr. Acosta was a member of the class covered by this provision — i.e., he had served as a bank officer for ten years at the time the Agreement was executed. Accordingly, under the Agreement, the plan administrator had no discretion with respect to decisions affecting his benefits, and thusFirestone Tire mandates a de novo review of the decision to deny benefits. And, as observed by the court in Goldstein, the fact that this is a top hat plan means that the policy considerations relied upon in Firestone Tire for applying an abuse of discretion standard in some instances are simply not present here.
As will be discussed more fully infra, a deferential abuse of discretion review of the decision would not affect the outcome of this case.
PRESCRIPTION
ERISA does not include a statute of limitations applicable to enforcement claims brought under § 1132(a)(1)(B); thus, courts look to the most analogous state law limitations period to determine if a claim is time-barred. The Fifth Circuit has held that claims under § 1132(a)(1)(B) are governed by Louisiana's ten-year prescription period.Kennedy v. Electricians Pension Plan, IBEW No. 995, 954 F.2d 1116 (5th Cir. 1992). "A cause of action under ERISA accrues when a request for benefits is denied." Hall v. National Gypsum Co., 105 F.3d 225, 230 (5th Cir. 1997), citing Hogan v. Kraft Foods, 969 F.2d 142, 145 (5th Cir. 1992); see also, Paris v. Profit Sharing Plan for Employees of Howard B. Wolf, Inc., 637 F.2d 357 (5th Cir.), cert. denied, 454 U.S. 836, 102 S.Ct. 140 (1981). In this case, plaintiff's application for benefits was first denied in November, 2000, and suit was filed on June 7, 2001, well within the ten-year prescriptive period, and is therefore timely.
Notwithstanding these precedents, defendant argues that the claim should be time-barred because plaintiff's claim accrued in November, 1988 when he received a letter from G. Harrison Scott informing him of BOL's position that Mr. Acosta was only 25% vested in the plan and that the Bank had terminated the plan. Essentially, BOL asks the Court to apply a "discovery rule" for the accrual of ERISA enforcement claims, and to find that plaintiff knew or should have known of his claim when he received G. Harrison Scott's letter in November, 1988. However, while the Court acknowledges that other circuits have applied a "discovery rule" in determining the accrual date of ERISA enforcement claims, this circuit has stated unequivocally that "[w]e hold that for purposes of ERISA a cause of action does not accrue until an application is denied."Paris, 637 F.2d at 361. "To hold otherwise would put an almost intolerable burden on employees covered by pension plans. It would require individuals who are unversed in the law to be constantly vigilant. Moreover, claims filed before a pension actually has been denied might be challenged for lack of ripeness." Id. Further, "[r]equiring piecemeal challenges before an actual denial has occurred would also result in a great waste of judicial resources." Id.
See, e.g., Carey v. Electrical Workers Local 363 Pension Plan, 201 F.3d 44 (2d Cir. 1999); Union Pac. R.R. v. Beckham, 138 F.3d 325, 330-31 (8th Cir.), cert. denied, 525 U.S. 817, 119 S.Ct. 56 (1998); Daill v. Sheet Metal Workers' Local 73, 100 F.3d 62, 65 (7th Cir. 1996)
Moreover, it is not clear that the Scott letter, which does acknowledge that a benefit is owed, would amount to the "clear repudiation of benefits" required by the "discovery rule" cases from other circuits. While one can infer from the letter that BOL viewed Mr. Acosta's benefits to be capped at 25%, it is also possible to read the letter as merely informing Mr. Acosta that if he chose to retire at the time the letter was written he would be vested 25%. The reference in the letter to the termination of the Agreement is merely confusing, given that the record reflects that BOL did not attempt to terminate the plan until December 28, 1993, five years after the letter to Mr. Acosta. Exh. 4.
Thus, controlling law is clear that an ERISA enforcement cause of action does not accrue until a claim for benefits is denied. Because plaintiff's benefits were denied at the earliest in November, 2000 and suit was filed in June, 2001, plaintiff's claim has not prescribed.
LACHES
BOL also argues that plaintiff's claim is barred by laches. Laches is an equitable doctrine which bars a plaintiff's claim when the passage of time will prejudice the defendant's ability to defend the claim. Kennedy v. Electricians Pension Plan, IBEW No. 995, 954 F.2d 1116, 1121 (5th Cir. 1992). However, defendant has not demonstrated that it is prejudiced in its ability to defend the claim by the usual hazards of the passage of time, such as the death of needed witnesses, failing memories, or lost records. Instead, BOL argues it was prejudiced because had it known that Mr. Acosta would pursue his rights under the Agreement, it would have terminated him before they could fully vest. However, as plaintiff's counsel has pointed out, following such a course would violate the provision of ERISA which declares that "[i]t shall be unlawful for any person to discharge . . . a participant or beneficiary . . . for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan, this subchapter, or the Welfare and Pension Plans Disclosure Act. . . ." 29 U.S.C. § 1140.
Thus, it appears to the Court that BOL has failed to show any legitimate prejudice that it has suffered as the result of the passage of time, and its laches argument is unavailing.
FAILURE TO EXHAUST
BOL also contends that Mr. Acosta failed to exhaust his administrative remedies, a prerequisite to bringing an ERISA enforcement claim.Bourgeois v. Pension Plan for Employees of Santa Fe Int'l Corps., 215 F.3d 475, 479 (5th Cir. 2000) ("This court requires that claimants seeking benefits from an ERISA plan must first exhaust available administrative remedies under the plan before brining suit to recover benefits."). A review of the Agreement indicates that the following procedure is prescribed for those taking issue with a benefit decision under the Agreement:
any dispute, difference, or disagreement concerning this Agreement or any construction or interpretation of this Agreement regarding benefits . . . shall be decided upon solely and only by the board of Directors upon a simple majority vote, and said decision by the Board shall be totally binding on the parties hereto. . . .
Accordingly, the only administrative procedure in place is to apply to the Board of Directors, of which G. Harrison Scott is the Chairman. On September 25, 2000, Mr. Acosta applied for benefits by letter to G. Harrison Scott. After various correspondence between the parties, which included a delay of several months caused by BOL's loss of Mr. Acosta's file, Mr. Scott, in his capacity of Chairman of the Board, rendered a decision on March 22, 2001, setting forth BOL's position based on language contained in the Agreement — that BOL viewed the Deferred Compensation Agreement to have been terminated at a point when Mr. Acosta was 25% vested, and that benefits would be paid accordingly ($5000 per year) — and concluding with the observation, based on paragraph 9 of the Agreement (supra), that the decision was final. On this record, the Court finds that Mr. Acosta did exhaust his limited administrative remedies.
See Depo. of G. Harrison Scott (2/26/03), at 19:22-25.
MERITS
Finally, the Court considers what benefits plaintiff is entitled to under the Agreement. "Eligibility for benefits under any ERISA plan is governed in the first instance by the plain meaning of the plan language." Tucker v. Shreveport Transit Management Inc., 226 F.3d 394, 398 (5th Cir. 2000) (internal quotations omitted). Courts "interpret ERISA plans in [the] ordinary and popular sense as would a person of average intelligence and experience." Id. (internal quotations omitted). Considering the plain language of the plan in this case as a whole, the Court concludes that plaintiff is entitled to the full benefits claimed.
At the time the Agreement was executed, Mr. Acosta was an officer of the Bank who had "been in the continuous full time employ of the Bank for 10 years or more" and under its terms was "entitled to the sum of $200,000 payable in 120 equal monthly installments," subject to vesting requirements set forth in paragraph 4(a). Agreement, ¶ 1. Paragraph 4(a) specifies that beneficiaries who retired after reaching age 65 are fully vested, and therefore entitled to the full $200,000 benefit. Mr. Acosta retired at age 70, so according to the plain language of the Agreement, he was entitled to the full benefit.
However, BOL argues that by its terms, the Agreement was subject to being "revoked, rescinded, and cancelled at any time by a simple majority vote of the Board of Directors." Id. at ¶ 8. The Bank further contends that consistent with this provision, the Agreement was terminated in 1988, prior to Mr. Acosta reaching age 60, and thus at the time of termination of the Agreement, Acosta was only 25% vested. However, that contention completely overlooks the portion of paragraph 8 which provides that "the benefits stipulated herein shall be due Directors and Officers who have served as such for 10 years and said benefits cannot be limited, reduced, or terminated by the Board of Directors." (Emphasis added.) Thus, while the Bank may have attempted to terminate the Agreement in 1988, and it may well have done so for participants with less than ten years' service as an officer or director, by the very terms of the Agreement, it could not be terminated with respect to Mr. Acosta. Thus, plaintiff is entitled to the full benefit sought, i.e., $200,000 payable in 120 monthly installments, which should have commenced in October, 2000.
The Court notes that BOL's position on this point is also undermined by the fact that minutes of the Board of Directors' meeting reflect that they did not attempt to formally terminate the Deferred Compensation Agreement until December 28, 1993. Exh. 4. It is also curious that the Board of Directors, who were mostly over age 65 at the time of the merger (and thus fully vested), waived their rights to benefits when the merger took place to facilitate the merger, based on the belief that the new bank would be unwilling to pick up that liability. Depo. of G. Harrison Scott, at 43:7 — 44:11. If it were true that the Board was entitled to unilaterally terminate the Agreement, it seems that this gesture would have been unnecessary.
In conformity with the Agreement, upon reaching the age of 65, Mr. Acosta elected to delay receipt of payments under the Agreement. Id. at ¶ 2. The Agreement provides that if the payments are "delayed by request of recepient [sic] then interest shall be paid in an amount to be negotiated between the parties but if agreement cannot be reached then the interest shall be in accordance with the 5 year T-note rate." Id. Because no interest rate was negotiated between the parties, Mr. Acosta is entitled to interest in an accordance with the five-year treasury note rate prevailing at the applicable time.
The Court also observes that even if it reviewed the plan administrator's decision under an abuse of discretion standard, the result would be the same. As the Fifth Circuit observed, "[c]learly, if an administrator interprets an ERISA plan in a manner that directly contradicts the plain meaning of the plan language, the administrator has abused his discretion even if there is neither evidence of bad faith nor of a violation of any relevant administrative regulations." Gosselink v. American Tel. Tel., Inc., 272 F.3d 722, 727 (5th Cir. 2001). In this case, the plan administrator's interpretation of the plan directly contradicts the plain meaning of the plan: while the Agreement specifies it cannot be terminated with respect to officers with over ten years' service, BOL (through its Board of Directors) interprets the Agreement to have allowed it to terminate the Agreement insofar as it related to plaintiff, an officer with over ten years' experience. Further, while the Agreement specifies that a beneficiary who retires after age 65 is entitled to the full $200,000 benefit, and that those who retire between ages 50 and 55 are entitled to 25% of that benefit, BOL construes the agreement to require payment of 25% of the benefit to Mr. Acosta, who retired at age 70. Thus, even applying the more deferential "abuse of discretion" standard of review, plaintiff is entitled to summary judgment in her favor. Accordingly,
IT IS ORDERED that plaintiff's Motion for Summary Judgment (Rec. Doc. 48) should be and is hereby GRANTED; IT IS FURTHER ORDERED that defendant's Motion for Summary Judgment (Rec. Doc. 32) should be and is hereby DENIED; IT IS FURTHER ORDERED that counsel shall submit a proposed judgment in accordance with this order within 15 days of entry of this order.