Opinion
No. 58248-8-I.
April 23, 2007.
Appeal from a judgment of the Superior Court for King County, No. 05-2-15411-0, Dean Scott Lum, J., entered April 19, 2006.
Affirmed by unpublished opinion per Agid, J., concurred in by Coleman and Becker, JJ.
Harbors Home Health Hospice (Harbors) executed two agreements with Retail Drug Employees Welfare Trust (Trust) for its employee benefits: one for its union employees and another for its non-union employees. Harbors overpaid its nonunion fund by $10,501 in October 2004. When the Trust denied a refund for this amount because it did not recognize the payment as an overpayment, Harbors exercised self-help and underpaid its union fund by the disputed amount. The Trust sued Harbors for the union fund underpayment. On summary judgment the trial court dismissed all of the Trust's claims because Harbors proved that the October check was in fact an overpayment.
Because Harbors successfully refuted the Trust's claim that it had not made an overpayment, the trial court properly dismissed all claims against them. The Trust did not argue that Harbors could not offset payments between funds until after the court granted summary judgment, so we will not consider it on appeal. We deny the Trust's request for attorney fees and costs because they did not prevail below or on appeal and affirm.
FACTS
The Trust is a jointly administered multiemployer union-management employee benefit trust fund, organized and operated under the Employment Retirement Income Security Act (ERISA), created under section 302(c) of the Labor Management Relations Act. Harbors is a participating employer. From 1997, Harbors paid contributions to the Trust for its union employee benefits under a series of collective bargaining agreements (CBAs) and for its non-union employees under a Special Contributions Agreement (SCA). Beginning in August 1997, Harbors paid the premium for both the union and non-union groups with a single check.
Harbors notified the Trust that it was terminating its non-union employees fund effective October 31, 2004. But on October 10, 2004, it erroneously paid a $10,501 premium that would have applied to its non-union employee November 2004 premiums. On November 1, 2004, Harbors requested a refund, but the Trust denied its request because it believed the payment was for the September 2004 period. Rather than appeal this decision or file a complaint to receive a refund, Harbors deducted the overpayment amount from its next contribution to the union employees' fund. On May 6, 2005, the Trust filed a complaint against Harbors to collect the $10,501 underpayment plus liquidated damages, interest, and attorney fees for the delinquent month of November 2004.
Under the terms of the Trust Agreements, the Trust sought $10,501 in unpaid contributions to the union employees fund, $2,100.20 in liquidated damages, $1,677.77 in interest (calculated through March 15, 2006), $2,482 in reasonable attorney fees, and $193.50 in costs.
On March 22, 2006, the Trust moved for summary judgment on the ground that Harbors had wrongfully withheld monies from its union fund and had not made an overpayment to its non-union fund. To support its motion, the Trust submitted a declaration from Gregory Giles, the Trust's Account Executive, who stated that Harbors' October payment was for its September premiums. In response, Harbors explained that its October payment was for the November 2004 premium because the premium for each month's coverage (coverage month) was due one month in advance (accounting month) based on the compensated hours worked in the second month preceding coverage (work period). On March 30, 2006, Harbors filed a cross motion for summary judgment seeking dismissal of the Trust's action. In support of its motion, Harbors offered payment statements to show that its contributions were paid through September. It also submitted a letter from the Trust to prove that it paid its premiums on the month after eligibility, thus establishing that its October payment to the nonunion fund was an overpayment. In response, the Trust reiterated the arguments presented in its summary judgment motion.
When the Trust filed its summary judgment motion, Harbors had not filed its answer to their complaint.
Harbors submitted a January 10, 2006 letter from the Trust regarding a rate change that stated: "The Board of Trustees has advised this office that effective with February 2006 hours due in March for April eligibility, your employer contribution rate will change as follows."
On April 19, 2006, the trial court granted Harbors' cross motion for summary judgment and dismissed all of the Trust's claims. In its motion for reconsideration, the Trust asserted for the first time that offset for overpayments could not be applied to unpaid contributions. It also argued that Harbors was not entitled to bring a cross motion for summary judgment because it did not file a counterclaim or declaratory judgment based on self-help. In response, Harbors asserted that the Trust could not raise a new theory on a motion for reconsideration and that its response to the Trust's summary judgment motion notified the Trust of the affirmative defense it would raise in its answer and affirmative response. On May 2, 2006, Harbors filed its answers and affirmative defenses, asserting that it was entitled to offset its overpayment as an affirmative defense. The trial court denied the Trust's motion for reconsideration on May 4, 2006. The Trust appeals.
DISCUSSION
Summary Judgment
Summary judgment orders are reviewed de novo and are proper if, after reviewing all the documents on file, there is no genuine issue about any material fact, and the moving party is entitled to judgment as a matter of law. All facts and inferences are viewed in the light most favorable to the nonmoving party. Summary judgment is proper when reasonable persons could only reach the conclusion that the nonmoving party is unable to establish any facts that would support an essential element of its claim.
CR 56(c); Lybbert v. Grant County, 141 Wn.2d 29, 34, 1 P.3d 1124 (2000).
Reid v. Pierce County, 136 Wn.2d 195, 201, 961 P.2d 333 (1998).
Young v. Key Pharms., 112 Wn.2d 216, 225, 770 P.2d 182 (1989) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)).
The Trust argues that there is no defense to an ERISA action. It asserts it is entitled to recover the delinquent contribution to the union employee fund as well as liquidated damages, interest, attorney fees and costs, unless Harbors shows that the claimed unpaid contributions are illegal or the collective bargaining agreement is void. It contends that refunds for overpayments are permissive, not mandatory, under ERISA § 403(c)(2)(A), and that merely establishing the fact of overpayment is not sufficient for Harbors to prevail unless Harbors shows that the equities favor restitution and denying the refund was arbitrary and capricious.
Harbors admits that it underpaid the union fund to offset an overpayment to the non-union fund. It also acknowledges that it would have been a better practice to have gone through the Trust's administrative channels. Harbors recognized that it risked incurring liquidated damages, interest, fees and costs had it not prevailed below. But it asserts the trial court did not err because the Trust arbitrarily and capriciously denied the refund.
Craig Goodwin also stated in his declaration that during his conversation with Colleen Kincannon concerning the procedure for obtaining a refund that she told him Harbors "would `just loose [sic] it."
On appeal, the Trust concedes that the October 8 payment was an overpayment, but it argues that it properly exercised its discretion when denying the refund. While courts generally recognize that fund administrators are in the best position to determine whether the equities of a case require a refund or setoff, a pension fund acts arbitrarily and capriciously when it denies a refund unless it must retain the money to assure the financial soundness of the plan or for some other compelling reason.
See Brown v. Health Care Retirement Corp. of Am., 25 F.3d 90, 93 (2d Cir. 1994).
See Whitworth Bros. Storage Co. v. Cent. States, 982 F.2d 1006 (6th Cir.), cert. denied, 510 U.S. 816 (1993); see also B B Elec. Co., Inc. v. Elec. Workers Local Union No. 369 Ret. Fund, 249 F. Supp. 2d 865 (W.D. Ky. 2003).
We reject the Trust's argument that it has unfettered discretion to deny a refund and is entitled to judgment even where an employer overpaid. One purpose of ERISA is to ensure that pension funds are reimbursed for delinquent contributions and that they receive significant extra funding at the delinquent employer's expense. 29 U.S.C. § 1132 sets forth ERISA's civil enforcement mechanism which empowers a participant, beneficiary, or fiduciary of a benefit plan to bring a civil action to enforce the terms of the plan. But ERISA neither commands nor precludes a fund from paying refunds. "[I]it merely permits the return of contributions mistakenly made.'" While Harbors did not bring a separate action for reimbursement, we may affirm the trial court on any ground supported in the record, even if that ground was not considered by the trial court. Here, the Trust's claim centered on an underpayment of $10,501 to one fund and an assertion that Harbors had not made an overpayment. Harbors admitted to the underpayment. The only material fact was the overpayment, which Harbors proved to the trial court on summary judgment. The Trust did not have unfettered discretion to retain the overpayment and had no basis to deny a refund given the prompt notice provided by Harbors. Under the circumstances, there was no basis for the trial court to rule in the Trust's favor. It arbitrarily denied a refund for $10,501 overpayment and did not assert that refunding it would in any way damage the fiscal integrity of the fund.
29 U.S.C. § 1145; see also N.Y. State Teamsters Conference Pension Ret. Fund by Bush v. Fratto Curbing Co., 875 F. Supp. 129, 131 (N.D.N.Y. 1995).
Brown, 25 F.3d at 93 (emphasis omitted) (quoting Dumac Forestry Servs. Inc. v. Int'l Bhd. of Elec. Workers, 814 F.2d 79, 82 (2d Cir. 1987)).
McClarty v. Totem Elec., 157 Wn.2d 214, 137 P.3d 844 (2006).
In its motion for reconsideration and on appeal, the Trust argued that the trial court erred as a matter of law because ERISA § 403(c)(2)(A), precluded Harbors from offsetting an overpayment. It also contended Harbors was not entitled to restitution or any other equitable remedy because it did not have clean hands, exhaust its administrative remedies, or file a counterclaim for a refund.
But the Trust's only argument to the trial court was that Harbors did not mistakenly overpay. Harbors denied this assertion and presented unrefuted evidence in its cross motion for summary judgment that it overpaid its account. Accordingly, the trial court did not make an error of law by denying the Trust's motion for reconsideration because the law governing summary judgments limits a party to the arguments raised during the summary judgment motions. Civil Rule 59 does not permit a plaintiff, finding a judgment unsatisfactory, to suddenly propose a new theory of the case. We will not consider this argument on appeal for the same reason. RAP 2.5(a).
See Wilcox v. Lexington Eye Inst., 130 Wn. App. 234, 241, 122 P.3d 729 (2005).
ATTORNEY FEES, COSTS, LIQUIDATED DAMAGES, INTEREST
The Trust seeks attorney fees on appeal under RAP 18.1(b) and fees, costs, interest or liquidated damages under 29 U.S.C. § 1132. Under 29 U.S.C. § 1132(g)(2)(D), the Trust, as a fiduciary, would be entitled to attorney fees, costs, interest and/or liquidated damages on appeal if we reversed the trial court. Because we affirm the trial court's order, we deny the Trust's request.
Attorney's fees and costs; awards in actions involving delinquent contributions.
(1) In any action under this subchapter (other than an action described in paragraph (2) by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party.
(2) In any action under this subchapter by a fiduciary for or on behalf of a plan to enforce section 1145 of this title in which a judgment in favor of the plan is awarded, the court shall award the plan —
(A) the unpaid contributions,
(B) interest on the unpaid contributions,
(C) an amount equal to the greater of —
(i) interest on the unpaid contributions, or
(ii) liquidated damages provided for under the plan in an amount not in excess of 20 percent (or such higher percentage as may be permitted under Federal or State law) of the amount determined by the court under subparagraph (A),
(D) reasonable attorney's fees and costs of the action, to be paid by the defendant, and
(E) such other legal or equitable relief as the court deems appropriate. For purposes of this paragraph, interest on unpaid contributions shall be determined by using the rate provided under the plan, or, if none, the rate prescribed under section 6621 of Title 26.
We affirm.