Laurie Futral v. Paul Chastant , 564 F. App'x 117 ( 2014 )

Case: 13-30856 Document: 00512601364 Page: 1 Date Filed: 04/18/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 13-30856 April 18, 2014
Lyle W. Cayce
LAURIE ANNE FUTRAL, Clerk
Plaintiff - Appellant
v.
PAUL T. CHASTANT, individually and as Trustee on behalf of Robert B
Chastant D D S Defined Benefit & Profit Sharing Plans,
Defendant - Appellee
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 6:12-CV-2653
Before JONES, SMITH, and OWEN, Circuit Judges.
PER CURIAM:*
The widow of Dr. Robert Chastant sued to recover attorney’s fees that
were allegedly illegally deducted from the dentist’s ERISA plans to contest her
status as beneficiary. The district court entered summary judgment against
Futral and awarded Defendant Paul Chastant additional legal fees. We affirm
the district court’s summary judgment against Futral, and reverse the award
of additional legal fees.
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 13-30856 Document: 00512601364 Page: 2 Date Filed: 04/18/2014
No. 13-30856
Dr. Robert Chastant was murdered on December 13, 2010. Prior to his
death, he established an ERISA qualified defined benefit plan and profit
sharing plan through his dental practice, which was the plans’ sponsor. He
also purchased several life insurance policies. The sole remaining beneficiary
under the plans and insurance policies was Laurie Futral, Dr. Chastant’s
widow. Dr. Chastant’s brother, Paul Chastant (“Chastant”), was named
executor of Dr. Chastant’s will and also the trustee of the ERISA plans. Shortly
after her husband’s death, Futral filed a suit against the insurance companies
and Chastant to recover the insurance proceeds and plan benefits. By the time
the suit was filed, Chastant and the insurance companies had become aware
of allegations that Futral had a hand in her husband’s death, which would have
disqualified her from receiving benefits under the Louisiana Slayer Statute.
LA. R. S. 22:901(D). In light of the allegations, the insurance companies
interpled the insurance proceeds, and Chastant answered Futral’s complaint
and asserted the Slayer Statute as an affirmative defense. On May 21, 2012,
a jury found that Futral had not participated in the murder. The verdict was
not appealed, and both the insurance proceeds and the ERISA plan benefits
were released to Futral.
During the course of the litigation, and allegedly in accord with the
provisions of the ERISA plans, Chastant paid the majority of his attorney’s
fees from their corpus. Futral brought this suit to recover the funds – over
$80,000 – Chastant expended on attorney’s fees in the previous action. She
alleged that using plan funds in this way was a breach of the fiduciary duty
that Chastant owed her as the plans’ trustee. On cross motions for summary
judgment, the district court denied Futral’s motion and granted Chastant’s
motion for additional attorney’s fees relating to the previous suit and expenses
and attorney’s fees defending the instant suit. The court held that Chastant
did not breach his fiduciary duty.
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No. 13-30856
STANDARD OF REVIEW
This court reviews a grant of summary judgment de novo, applying the
same standards as the district court. Greater Houston Small Taxicab Co.
Owners Ass’n v. City of Houston, Tex., 660 F.3d 235, 238 (5th Cir. 2011). 1
DISCUSSION
Futral contends that Chastant violated his fiduciary duty by defending
against her suit to determine benefits and by paying his attorney’s fees out of
the corpus of the plans. She asserts that he had a conflict of interest because
he acted as both the trustee of the plans and the executor under the will.
Futral first argues that this case is governed by Gibbs v. Gibbs, 210 F.3d
491 (5th Cir. 2000). In Gibbs, we reversed the district court, which held under
similar circumstances that an insurer who defended against a claim for
benefits was entitled to attorney’s fees under the ERISA attorney’s fees
provision, 29 U.S.C. § 1132(g)(1). Gibbs is distinguishable. Here, Chastant did
not seek attorney’s fees under § 1132(g)(1) but rather withheld attorney’s fees
from the corpus of the plans pursuant to provisions in the plans. Accordingly,
Gibbs is not relevant.
Futral next contends that Chastant’s decision to defend Futral’s suit and
to pay his attorney’s fees from the corpus of the plans violated his fiduciary
duties under ERISA. In support of this argument before the district court and
on appeal, Futral cites the general description of a trustee’s fiduciary duties
under ERISA: “the proper management, administration, and investment of
1 Chastant maintains that when he paid the attorney’s fees he was construing the
terms of the plan and that under Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115,
109 S. Ct. 948, 956-57 (1989) his actions should be reviewed only for an abuse of discretion.
See also Vega v. Nat’l Life Ins. Servs., Inc., 188 F.3d 287, 297 (5th Cir. 1999) (en banc).
Firestone held that an abuse of discretion standard governs challenges to a denial of benefits
under 29 U.S.C. § 1132(a)(1)(B). Because this is a suit for a breach of fiduciary duty rather
than a suit for denial of benefits, Firestone does not apply and the proper standard of review
is de novo.
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[plan] assets, the maintenance of proper records, the disclosure of specified
information, and the avoidance of conflicts of interest.” Laborers Nat. Pension
Fund v. N. Trust Quantitative Advisors, Inc., 173 F.3d 313, 317 (5th Cir. 1999)
(citation omitted). She also cites 29 U.S.C. § 1104(a)(1) to reiterate the
proposition that trustees have a fiduciary duty to discharge their duties
“solely” in the interest of plan participants and beneficiaries. Finally, she notes
that transfers of plan benefits to the fiduciary are “prohibited transactions”
under 29 U.S.C. § 1106(a)(1)(D).
Other than these citations, Futral provides no authority for the
proposition that Chastant’s actions breached his fiduciary duties. Futral has
provided no evidence that Chastant was actually conflicted, but relies instead
on his dual roles as trustee of the plans and executor under the will. While it
is undisputed that Chastant was wearing two hats, in this context, having dual
roles, without more, is not a breach of fiduciary duty.
It should be noted that ERISA approves a similar arrangement where
employers operate as both plan sponsors and administrators, even though
there is a potential conflict of interest. Varity Corp. v. Howe, 516 U.S. 489,
526-27, 116 S. Ct. 1065, 1084-85 (1996) (Thomas, J., dissenting). This
structural arrangement would not have been permitted under the traditional
law of trusts, but it is a common feature under ERISA plans. Id.Chastant confronted a serious question regarding the eligibility of the
beneficiary under Louisiana law. It is undisputed that Chastant owed a duty
of loyalty to the beneficiary of the plans, but only several weeks after his
brother’s murder, the allegations against Futral made it unclear whether
Chastant could pay her claims without violating state law. Consequently,
Chastant used plan funds to defend against a suit seeking to compel
disbursement to a potentially ineligible beneficiary. When the issue was
resolved, he released the balance of the funds after paying most of his
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attorney’s fees and costs. We agree with the district court that Chastant did
not breach his fiduciary duty.
Futral also asserts that Chastant should have deposited the plan monies
in the court’s registry and notes that this court has approved of interpleader in
a prior case. See Tittle v. Enron Corp., 463 F.3d 410, 423 (5th Cir. 2006). But
Futral has not shown that the plans require interpleader under these
circumstances, and she has cited no authority for the argument that failure to
interplead the funds is a per se breach of a trustee’s fiduciary duty.
Interpleader is common in insurance cases where there is a dispute among
potential beneficiaries because it is a relatively straightforward matter to
deposit a sum certain in the court’s registry. Here, however, Chastant had a
continuing duty as trustee to maintain the corpus to pay ongoing
administrative fees associated with the plans. Because of the recurring
financial obligations, which existed independent of the cost of defending
Futral’s suit, it would be impossible to require interpleader at the outset of the
litigation.
In his cross-motion for summary judgment, Chastant sought any
remaining balance of attorney’s fees and costs from both of Futral’s lawsuits.
The court awarded him these expenses. The only basis for Chastant’s claim
for additional attorney’s fees is the terms of the plans. While these documents
authorize payment of legal expenses from the corpus of the plans in some
situations, Chastant has not explained how they authorize recovery from a
beneficiary after the plans’ funds have been dispersed. Neither has he
attempted to demonstrate that any trusts associated with the plans are still
extant or that the plans have assets to meet his additional requests for fees.
Given these facts, there was no basis to award Chastant attorney’s fees from
Futral above those already paid from the corpus of the plans.
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For the foregoing reasons, we AFFIRM the judgment exonerating
Chastant from any breach of fiduciary duty but REVERSE the award of his
legal costs.
AFFIRMED in part, REVERSED in part.
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