Negley v. Breads of the World ( 2007 )

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES CO URT O F APPEALS
March 2, 2007
FO R TH E TENTH CIRCUIT Elisabeth A. Shumaker
Clerk of Court
SH A U N N N EG LEY ,
Plaintiff-Appellant,
v. No. 05-1415
(D.C. No. 02-cv-840-ZLW -PAC)
BREA DS OF THE W OR LD (D . Colo.)
M ED ICAL PLA N ; B REA D S O F THE
W ORLD, L.L.C., doing business as
Panera Bread,
Defendants-Appellees.
OR D ER AND JUDGM ENT *
Before HO LM ES, M cKA Y, and BROR BY, Circuit Judges.
Shaunn Negley appeals the district court’s grant of judgment as a matter of
law in favor of Breads of the W orld M edical Plan (BOW Plan or Plan) and Breads
of the W orld, L.L.C. (BOW ). W e exercise jurisdiction pursuant to 28 U.S.C.
§ 1291 and A FFIR M .
*
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. It may be cited, however, for its persuasive value consistent
with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
I. Background
M r. Negley began employment with BOW in June 2001. BOW told M r.
Negley his eligibility date for health insurance through the BOW Plan was July 1,
2001. Benefits under the BOW Plan were fully insured by M edical M utual of
Ohio (M M O). M M O is not a party to this action. BOW forwarded health plan
enrollment materials to M r. Negley on several different occasions at various
addresses, but he did not receive the materials until September 28. After
submitting his enrollment form to M M O on October 8, M r. Negley was enrolled
in the BOW Plan effective November 1, according to the terms of the Plan
documents. Based on that effective date, M r. Negley was subject to a preexisting
condition exclusion under the Plan for a number of months and, as a result, he
incurred medical expenses that were not covered by his health insurance.
M r. Negley filed this lawsuit against BOW and the BOW Plan, seeking
damages for his lost medical benefits under § 502(a) of the Employee Retirement
Income Security Act of 1974 (ERISA ), 29 U.S.C. § 1132(a). He alleged that
BOW , as an ERISA fiduciary, violated its duties to properly transmit health plan
enrollment materials to him, to advise him of applicable deadlines for submitting
his enrollment materials, and to promptly enroll him in the BOW Plan by
submitting those materials to M M O within the deadlines. As a result of BOW ’s
alleged breach of fiduciary duty, M r. Negley sought damages, including but not
limited to medical and related expenses, as well as costs, attorneys’ fees,
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prejudgment interest, statutory penalties authorized by ERISA , and such other and
further relief as the district court deemed fit.
M r. Negley’s case was tried to the court in April 2004. Defendants moved
for judgment as a matter of law after the close of plaintiff’s evidence and again
following the submission of all of the evidence. They argued, in relevant part,
that the money damages M r. Negley sought were not recoverable on a breach of
fiduciary duty claim under ERISA § 502(a)(3), which provides only for
“appropriate equitable relief.” The district court initially denied the motions and
proceeded to make oral findings of fact and conclusions of law, concluding that
BOW had breached its fiduciary duty by failing to provide complete and accurate
information about when M r. Negley’s benefits began under the BOW Plan and the
deadlines related to his enrollment. The district court asked the parties to confer
and agree on the amount of damages and a manner by which the money could be
disbursed directly to M r. N egley’s medical providers, rather than paid to him.
The court deferred entry of judgment pending resolution of the damages issues.
W hile the post-trial briefing proceeded, defendants renewed their motions
for judgment as a matter of law and submitted supplemental authority, including a
Tenth Circuit decision that had issued since the conclusion of the trial: Callery v.
United States Life Insurance Co. in the City of New York, 392 F.3d 401 (10th Cir.
2004). Relying on Callery, the district court granted defendants’ motions for
judgment as a matter of law and M r. Negley appealed.
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II. Discussion
In a trial to the court, a motion for judgment as a matter of law is governed
by Fed. R. Civ. P. 52(c). See Nieto v. Kapoor, 268 F.3d 1208, 1217 (10th Cir.
2001) (noting motion for judgment in bench trial is governed by Rule 52(c),
rather than Rule 50). On appeal of a Rule 52(c) motion, “[w]e review the district
court’s fact findings for clear error and its legal conclusions de novo.” Id.A. Compensatory D amages
In Callery, we held that compensatory damages are not recoverable under
§ 502(a)(3). 392 F.3d at 404-06. The district court held that Callery precluded
the damages relief sought by M r. Negley in his claim based upon that same
ERISA section. M r. Negley contends that the district court failed to properly
construe § 502(a)(3) consistent with Congress’s primary intent to provide a set of
broad, flexible and comprehensive remedies–what M r. Negley refers to as a safety
net that permits make-whole relief. Specifically, he argues that § 502(a)(3)
should be interpreted consistent with the principles of trust law, under which
equity courts traditionally could remedy a breach of fiduciary duty by ordering
the payment of money. Thus, M r. Negley asserts that the district court erred by
failing to award damages for his lost medical benefits as appropriate equitable
relief under § 502(a)(3). As the district court noted, however, these arguments
were thoroughly addressed–and rejected–in this court’s opinion in Callery. W e
will not revisit them here.
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Nor do we believe the district erred by failing to find Callery factually
distinguishable from this case. M r. Negley asserts that the relief the plaintiff
sought in Callery was not benefits under the policy, but money damages for the
lost opportunity to obtain other coverage. This is a distinction without a
difference for purposes of the district court’s ruling.
In Callery we explicitly stated, “To the extent M s. Callery seeks payment
of the policy proceeds, such relief is barred under § 502(a)(3).” 392 F.3d at 405.
The fact that M r. Negley’s measure of damages w as the value of his lost benefits,
rather than the lost opportunity to obtain the same benefits elsewhere, does not
change the analysis. He, like the plaintiff in Callery, sought money damages
from defendants due to a breach of fiduciary duty. See Calhoon v. Trans W orld
Airlines, Inc., 400 F.3d 593, 598 (8 th Cir. 2005) (applying the reasoning of
Callery and concluding that plaintiffs, who sought “to recover the equivalent of
full plan coverage” due to an alleged breach of fiduciary duty, could not recover
under § 502(a)(3); they were not seeking “appropriate equitable relief”).
M r. Negley also argues that the district court erred in holding that monetary
relief is never available under § 502(a)(3). But the district court made no such
ruling, and in fact it specifically noted that restitution is one remedy a plaintiff
could pursue under that section. However, the district court recognized that
restitution was not available in this case because M r. Negley did not seek return
of any amounts he had paid. Nor did he alternatively seek to recover particular
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funds in defendants’ possession. See Callery, 392 F.3d at 406 (noting restitution
available under § 502(a)(3) through constructive trust or equitable lien w here
money can be traced to particular funds in defendant’s possession).
W e therefore affirm the district court’s conclusion that the compensatory
damages M r. Negley sought are not recoverable under § 502(a)(3) for
substantially the reasons stated in the district court’s order and judgment of
dismissal dated August 17, 2005.
B. Alternative Equitable Remedies
M r. Negley argues that even if the district court properly rejected his claim
for damages, it failed to consider and grant his proposed alternative equitable
remedies. He asserts that his claim was really for reinstatement in and/or
reformation of the BOW Plan, with the goal of returning him to his rightful
position in the Plan. He claims that he could recover money damages in
conjunction with an equitable order, relying on Adams v. Cyprus Amax M inerals
Co., 149 F.3d 1156, 1162 (10th Cir. 1998) (holding under ERISA § 502(a)(1) that
the remedy sought is equitable w hen a “claim for monetary relief is inextricably
intertwined with equitable relief”).
The district court did address the possibility of reinstatement in its order
and we find no error in its conclusion that reinstatement would not have provided
M r. Negley with the ultimate relief he sought. Indeed, the evidence established
that he was enrolled in the Plan as of November 2001. The district court did not
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expressly address M r. Negley’s request for reformation of Plan documents in its
order. However, despite pressing for this relief in his opening brief, M r. Negley
ultimately concedes in his reply brief that reformation of the BOW Plan would be
improper. See Reply Br. at 13. W e agree.
Reformation is an equitable remedy used to reframe written contracts
to reflect accurately [the] real agreement between contracting parties
when, either through mutual mistake or unilateral mistake coupled
with actual or equitable fraud by the other party, the writing does not
embody the contract as actually made.
Fischer Imaging Corp. v. Gen. Elec. Co., 187 F.3d 1165, 1169-70 (10th Cir.
1999) (quotation omitted) (alteration in original). There has been no such
allegation or evidence in this case with respect to the BOW Plan. See Nechis v.
Oxford Health Plans, Inc., 421 F.3d 96, 103 (2d Cir. 2005) (finding no error in
district court’s failure to grant reformation under § 502(a)(3) where plaintiff did
not allege any proper basis, including fraud, mutual mistake or terms violative of
ERISA).
Nonetheless, M r. Negley asserts that the district court’s interpretation of
the remedies available under § 502(a)(3) still left open one equitable remedy that
the court should have granted: correction of his enrollment date in the Plan. The
district court did note that, to be eligible for benefits under the Plan, M r. Negley
would need “an order requiring MM O to make Plaintiff’s enrollment date
retroactive.” A plt. App. at 179 (emphasis added). M r. Negley does not dispute
that the court could not order M M O to do anything, or otherwise take action
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purporting to bind M M O, because it was never a party to this action. It appears
M r. Negley believes the district court should have simply entered something in
the nature of a nunc pro tunc order deeming his enrollment to have occurred on
July 1, 2001, several months earlier than it actually did. He contends that such an
order w ould give him grounds to attempt to persuade M M O to reconsider its
denial of his claims for medical benefits. He cites no case in which such a
remedy has been granted under similar (or any) circumstances. See Phillips v.
Calhoun, 956 F.2d 949, 953-54 (10th Cir. 1992) (noting party must support its
argument with legal authority). 1
W e conclude that the district court did not err in failing to grant this relief
because it had no authority to do so. First, M r. N egley lacked standing to seek it.
It is appropriate for this court to consider a standing issue sua sponte because it
directly implicates our A rticle III jurisdiction. See United States v. Parker, 362
F.3d 1279, 1284 (10th Cir. 2004). Under the redressibility requirement of
1
Defendants contend that the district court did not err in failing to grant this
relief because M r. Negley never sought it or any other equitable remedy until
after the trial. But they do not assert that the proof at trial failed to support this
relief or that they would have offered other testimony or evidence had M r. Negley
raised it earlier in the proceedings. See Fed. R. Civ. P. 54(c) (“[E]very final
judgment shall grant the relief to which the party in whose favor it is rendered is
entitled, even if the party has not demanded such relief in the party’s
pleadings.”); Reynolds v. Slaughter, 541 F.2d 254, 255-56 (10th Cir. 1976)
(rejecting defendant’s assertion that plaintiff elected irrevocably to sue only for
damages and specific performance and affirming district court’s grant of
restitution consistent with the proof under Rule 54(c)).
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standing, a plaintiff must demonstrate “a substantial likelihood that the relief
requested will redress its injury in fact.” Nova Health Sys. v. Gandy, 416 F.3d
1149, 1158 (10th Cir. 2005). In Nova Health Systems this court held that it was
“entirely speculative” w hether a judgment against the defendants would redress
the plaintiff’s injury by deterring non-parties from taking similar action. Id. at
1159. “M ore fundamentally, it overlooks the principle that it must be the effect
of the court’s judgment on the defendant that redresses the plaintiff’s injury,
whether directly or indirectly.” Id. (emphasis added). M r. Negley’s requested
remedy would be similarly speculative in terms of its ability to provide redress
for his injury. Such a remedy also would run afoul of the limitation that the
district court could only enter an order directed to affecting the behavior of BOW
and the Plan, the only defendants before it. Thus, M r. Negley had no standing to
seek, and the district court had no authority to enter, such an order, the purpose of
which was to assist M r. Negley in possibly gaining redress for his injury from a
non-party.
In any event, the district court had no authority to enter an order which
would have amounted to a rewriting of history. See Patton v. Denver Post Corp.,
326 F.3d 1148, 1153 (10th Cir. 2003) (holding that nunc pro tunc state court order
was qualified domestic relations order under ERISA because, among other
reasons, it did not “attempt to rew rite historical facts”); W.N.J. v. Yocom,
257 F.3d 1171, 1172 (10th Cir. 2001) (holding that nunc pro tunc order “cannot
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be used to rewrite history”) (quotation omitted); see also In re Di Franco,
339 F. Supp. 414, 414-15 (S.D.N.Y. 1972) (denying petitioner’s motion to
antedate the actual occurrence of his naturalization). As the court stated in
Di Franco, “it is not the function of a nunc pro tunc order to antedate the actual
performance of an act, to supply facts which never existed, or to embody a fiction
that something which never happened did actually occur.” 339 F. Supp. at 414.
Therefore, we hold that the district court did not err in failing to grant M r.
Negley’s request to “correct” his enrollment date in the Plan. 2
C. Prejudgment Interest, Attorneys’ Fees and Costs
M r. Negley also contends that the district court should have granted his
requests for prejudgment interest, attorneys’ fees, and costs, despite the fact that
he was not awarded any damages and judgment w as entered against him.
Defendants are correct that M r. Negley never made this argument in the district
court. He did file post-trial motions for attorneys’ fees and costs, after the district
court indicated its intention to enter judgment in his favor. Defendants assert that
M r. Negley actually waived his claim for interest at trial. Regardless of M r.
2
M r. Negley maintains in his reply brief that his case differs from Callery
because the BOW Plan is a defendant. He asserts that the district court should
have ordered the BOW Plan to pay him his lost benefits, in conjunction with
revision of his enrollment date, and that the court should then have further
ordered BOW to reimburse the Plan pursuant to 29 U.S.C. § 1109(a). W e decline
to address these arguments made for the first time in his reply brief. See Stump v.
Gates, 211 F.3d 527, 533 (10th Cir. 2000) (refusing to consider issue raised
initially in reply brief).
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Negley’s initial arguments to the district court on all of these issues, it is clear
that once the district court changed course and entered judgment against him, he
never sought this relief again before the district court as a non-prevailing party, or
as he argues on appeal, a partially-prevailing party. Therefore, we decline to
consider his arguments with respect to prejudgment interest, attorneys’ fees, and
costs that he raises for the first time on appeal. See Tele-Commc’ns, Inc. v.
Comm’r, 104 F.3d 1229, 1233 (10th Cir. 1997) (“[A]n issue must be presented to,
considered and decided by the trial court before it can be raised on appeal.”)
(quotations and brackets omitted).
III. Conclusion
The judgment of the district court is AFFIRM ED. M r. Negley’s motion to
supplement the appendix is GR ANTED ; and defendants’ motion to file a surreply
brief is DENIED as moot.
Entered for the Court
Jerome A. Holmes
Circuit Judge
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