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Titus v. Operating Engineers' Local 324 Pension Fund

United States District Court, E.D. Michigan, Southern Division

June 28, 2017

Robert E Titus, Jr., Plaintiff,
Operating Engineers' Local 324 Pension Fund, Defendant.

          United States Magistrate Judge Anthony P. Patti


          Gershwin A. Drain United States District Court Judge

         I. Introduction

         This is a denial of benefits case under the Employee Retirement Income Security Act (“ERISA”). Plaintiff moves to amend his complaint, one year after filing his original complaint and twenty-two days after the Court issued an opinion and order granting Defendant's Motion for Partial Judgment on the Pleadings. For the reasons that will follow, Plaintiff's 1st Motion for Leave to Amend Complaint is DENIED.

         II. Factual Background

         Robert Titus (“Plaintiff” or “Titus”) worked for Connelly Crane, a crane rental company. Dkt. No. 14, p. 8 (Pg. ID 473). Plaintiff operated and maintained construction cranes. Plaintiff became a member of the Operating Engineers' Local 324 Pension Plan (“the Plan”) in August 1978. Dkt. No. 1, p. 3 (Pg. ID 3). The Plan offers a Service Pension for active participants who are at least 55 years old and have at least 30 years of credited service. Id. In February 2014, Plaintiff became eligible for a Service Pension. Id., p. 4 (Pg. ID 4). That same month, Plaintiff explored retiring and pursuing his own sales and consulting company (BJ Crane Consulting).

         Id. There were risks to starting his own company. Plaintiff knew he might lose his retirement income. Id. Plaintiff sought to embark on running his own company only if he could still receive his pension benefits. Id., p. 5 (Pg. ID 5). According to ERISA and its regulations:

A right to an accrued benefit derived from employer contributions shall not be treated as forfeitable solely because the plan provides that the payment of benefits is suspended for such period as the employee is employed, subsequent to the commencement of payment of such benefits--
(i) in the case of a plan other than a multiemployer plan, by an employer who maintains the plan under which such benefits were being paid; and
(ii) in the case of a multiemployer plan, in the same industry, in the same trade or craft, and the same geographic area covered by the plan, as when such benefits commenced.
The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subparagraph, including regulations with respect to the meaning of the term “employed”.

29 U.S.C. § 1053 (a)(3)(B).

Status determination. If a plan provides for benefits suspension, the plan shall adopt a procedure, and so inform employees, whereunder an employee may request, and the plan administrator in a reasonable amount of time will render, a determination of whether specific contemplated employment will be section 203(a)(3)(B) service for purposes of plan provisions concerning suspension of benefits. Requests for status determinations may be considered in accordance with the claims procedure adopted by the plan pursuant to section 503 of the Act and applicable regulations.

29 C.F.R. § 2530.203-3 (b)(6).

         In February 2014, Plaintiff requested a Status Determination from the Pension Plan regarding whether his proposed new business would result in suspension of his retirement benefits. Dkt. No. 1, p. 6 (Pg. ID 6). Plaintiff spoke with the Pension Plan's Manager, Duane Menter. Dkt. No. 14, p. 9 (Pg. ID 474). Menter informed the Plaintiff that establishing BJ Crane Consulting and working as a sales representative and consultant would not result in the loss of his retirement benefits provided that he was not operating and maintaining cranes (also called bargaining unit work) or paid directly by his former employer. Id., p. 10 (Pg. ID 475). The conversation with Menter was later confirmed in a March 28, 2014 letter:

As Mr. Titus described this opportunity to me, he would be establishing a consulting company, recognized by the IRS and with a unique Tax Identification Number and as proprietor of this Consulting Company would be doing work within the construction industry. I explained to him that as long as he was not personally working for an employer obligated to contribute to the Local 324 Pension and that the work he would be performing would not be that which would be covered under a Collective Bargaining Agreement (Bargaining Unit Work) that he would not be in violation of the Pension Fund's rules regarding retirees who return to work.

Dkt. No. 14-2.

         According to the Plaintiff, the Plan also allowed retirees to perform less than 40 hours per month of bargaining unit work without having their retirement benefits suspended. Dkt. No. 14, p. 10 (Pg. ID 475). Plaintiff relied on his conversation with Mr. Menter, retired, applied for a Service Pension, and opened BJ Crane Consulting. Id., p. 11 (Pg. ID 476). Plaintiff maintains that he did occasional bargaining unit work, but never exceeded 40 hours per month. Id.

         On February 6, 2015, approximately ten months after starting BJ Crane Consulting, the Plan informed the Plaintiff that his retirement benefits were being suspended. Dkt. No. 14-6, p. 2 (Pg. ID 508). According to the Plan, Plaintiff was working “forty (40) or more hours in the same trade or craft in which [he was] employed while participating in the [Plan].” Id.

         Plaintiff filed his original Complaint on March 16, 2016. Plaintiff's original Complaint asserted three claims: (1) illegal suspension of benefits pursuant to ERISA § 502(a)(3) (Count I), (2) failure to provide a full and fair review pursuant to ERISA § 502(a)(3) (Count II), and (3) recovery of suspended benefits pursuant to ERISA § 502(a)(1)(B) (Count III). Dkt. No. 1.

         On October 31, 2016, the Plan filed a Motion for Partial Judgment on the Pleadings. Dkt. No. 19. The critical issue in deciding the Motion for Partial Judgment was whether Count I and Count II of the original Complaint failed as a matter of law.

         On February 27, 2017, the Court granted the Plan's motion, in part, and found that Count I and Count II of the original Complaint failed to state a claim under ERISA § 502(a)(3). Dkt. No. 34. After the Court's decision, only Plaintiff's recovery of suspended benefits claim (pursuant to ERISA § 502(a)(1)(B)) remained viable. On March 22, 2017, Plaintiff filed a Motion for Leave to Amend Complaint. Dkt. No. 35. Attached to the motion is an amended Complaint (hereinafter “Proposed Complaint”). Compared to the original Complaint, the Proposed Complaint adds new factual allegations and alleges four Counts. Proposed Count I seeks to enjoin the Plan from future ERISA violations, pursuant to ERSIA § 502(a)(3). Dkt. No. 35-2, p. 15 (Pg. ID 1204). Proposed Count II seeks to reform the Plan to comply with ERISA, pursuant to ERISA § 502(a)(3). Id., p. 22 (Pg. ID 1211). Proposed Count III seeks to equitably estop the Plan from suspending benefits inconsistently with its representations, pursuant to ERISA § 502(a)(3). Id., p. 24 (Pg. ID 1213). Proposed Count IV seeks recovery of Plaintiff's suspended benefits, pursuant to ERISA 502(a)(1)(B). Id., p. 27 (Pg. ID 1216).

         Put simply, the Plaintiff's original Complaint sought two types of remedies, injunctive relief pursuant to ERISA § 502(a)(3) and recovery of benefits pursuant to ERISA § 502(a)(1)(B). This Court found that the original Complaint failed to state a proper claim for injunctive relief, and dismissed the injunctive relief claims brought under ERISA § 502(a)(3). After reading the Court's opinion and order, the Plaintiff revised his Complaint to compensate for the deficiencies with respect to injunctive relief.

         III. Legal Standard for Amending Complaint

         Under Federal Rule of Civil Procedure 15(a), leave to amend pleadings “shall be freely given when justice so requires.” Fed.R.Civ.P. 15(a). “The decision whether or not to permit the amendment is committed to the discretion of the trial court.” Gen. Elec. Co. v. Sargent & Lundy, 916 F.2d 1119, 1130 (6th Cir. 1990) (citing Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330-32 (1971). This discretion, however, is limited by Rule 15(a)'s liberal policy of permitting amendments to ensure the determination of claims on their merits. Id. The Sixth Circuit usually reviews a district court's denial of leave to amend for abuse of discretion. Miller v. Champion Enterprises Inc., 346 F.3d 660, 671 (6th Cir. 2003).

         IV. Discussion and Analysis

         The Defendant argues that amendment should be denied due to delay and futility.

         1. ...

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