Unpublished Disposition, 922 F.2d 844 (9th Cir. 1986)

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US Court of Appeals for the Ninth Circuit - 922 F.2d 844 (9th Cir. 1986)

Tom HWANG, David M. Chisholm, Plaintiffs-Appellants,v.James R. DANIEL, Pousto Inc., Unitronics Stock Bonus Plan,Trust Consultants Inc., SCI Systems Inc.,Defendants-Appellees.

No. 89-15755.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 18, 1990.Decided Jan. 10, 1991.

Before TANG, NOONAN and RYMER, Circuit Judges.


Tom Hwang and David M. Chisholm brought suit under ERISA, 29 U.S.C. § 1101 (1988), for benefits they contend had vested under Pousto Corporation's Stock Bonus Plan ("the Plan"). Both Hwang and Chisholm appealed the district court's summary judgment in favor of defendants James R. Daniel; Pousto, Inc.; its acquirer, SCI Systems Corporation; and Trust Consultants, Inc. However, Hwang dismissed his appeal, and only Chisholm now remains as an appellant. We affirm.

* As employees of Pousto, Inc., Hwang and Chisholm were beneficiaries of a Stock Bonus Plan, which was governed by ERISA. 29 U.S.C. § 1003. Chisholm was the Plan Administrator and trustee until late 1987. In March 1986, SCI Systems purchased Pousto, and the Plan was terminated.

Chisholm and Hwang were vested beneficiaries with 4.7 percent and 1.115 percent interests, respectively, in Plan assets. On October 8, 1986, Chisholm, as Plan Administrator, distributed $6,792.84 to himself and $1,616.46 to Hwang. These were their shares based on the valuation of plan assets on the last annual Valuation Date, July 31, 1986. No checks were issued to other beneficiaries at this time.

In December 1987, Daniel replaced Chisholm as trustee, and in January 1988, the remaining trust assets were distributed to the other beneficiaries. In June 1988, Hwang and Chisholm filed suit, claiming they were entitled to additional funds because the value of Plan assets increased from June 1986 to October 1986, and this increase was not taken into account in determining the amount distributed to them. They also claimed interest and statutory penalties against Daniel, whom they alleged refused to comply with a request for a statement in writing as to Hwang's and Chisholm's entitlements under the Plan, as required by 29 U.S.C. § 1132(c) (1) (B).

The district court granted defendants' motion for summary judgment, from which Chisholm now appeals.


Chisholm did not raise a genuine issue of material fact as to whether he valued the Plan in October 1986. The Plan provides that the amount distributable to participants is "the value of the Account determined as of the Valuation Date immediately preceding or coincident with the date of distribution." Stock Bonus Plan, art. II, Sec. 2.01. The Valuation Date is in turn defined as the last day of the Plan year, July 31, or any interim date as of which the Fund is valued by the trustee. Stock Bonus Plan, art. II, Sec. 2.27.

Chisholm presented no evidence indicating that there was any Valuation Date other than July 31, 1986. The Chisholm declaration indicates that the trustee conducted only an accounting of assets in October, measuring the gain to the Fund from "interest, sales of securities and interest maturities." (Declaration of David Chisholm at 4, p 9).1  According to article II, section 2.27 of the Plan, however, conducting a valuation triggers a Valuation Date. According to article V, section 5.01(b), moreover, a Valuation Date occurs only when the trustee, using fair market value, determines "the net earnings, gains and losses of the Trust Fund" and makes proportionate allocations to the participants' accounts reflecting the net change in the value of the Fund. Chisholm introduced no evidence indicating either that he computed the net changes in the Trust Fund's value or that he reallocated the participants' accounts in October 1986. The question, after all, is not whether Chisholm's actions can, in the abstract, be labelled a valuation, but whether Chisholm's activities constituted a valuation as that term is defined by this specific Plan. For this reason, the district court did not err in concluding that the only possible Valuation Date under the Plan was July 31, 1986.

Nor did Chisholm show that he was entitled to supplemental distribution after the initial distribution under the terms of the Plan.2  On appeal he argues that the terms of the Plan (article 5, Sec. 5.01(b); 1982 amendments to the Plan, paras. 17.3, 17.4; and 1984 amendments to the Plan, article X, section 3 and article V, section 4), as well as the past practices of the employer, show a policy of allowing supplemental distributions. Before the district court, however, Chisholm contended only that article V and prior practice evidenced a policy of permitting partial disbursements. Because the other Plan provisions were not argued below, we will not consider them for the first time on appeal. Bolker v. Commissioner, 760 F.2d 1039, 1042 (9th Cir. 1985).3 

With respect to the article V argument, we agree with the district court's conclusion that this provision of the Plan simply does not speak to the forms of disbursements permitted under the Plan. Article V concerns only what transpires on a Valuation Date. Article V is thus irrelevant to a determination of what types of disbursements the Plan sanctions.

Chisholm failed to introduce sufficient evidence to create a factual dispute concerning the company's prior practice of permitting partial disbursements. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); T.W. Electrical Service, Inc. v. Pacific Electrical Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). The only evidence on the point consists of Chisholm's declaration, referring to cancelled checks to three former employees, and the checks themselves. Nothing about the checks indicates why the checks were issued, or raises a reasonable inference that Pousto had a practice of making partial benefit distributions. Absent some further evidence, the district court as the trier of fact in this case was entitled to conclude that Chisholm could not sustain his burden of proof.

Neither the terms of the Plan nor the employer's past practices (as evidenced from the materials submitted in opposition to the motion for summary judgment) support Chisholm's claim that he was entitled to additional payments. Because Chisholm has not presented evidence raising a triable issue of fact as to whether he valued the account in the manner prescribed by the Plan in October 1986, the distribution was properly based on the July 1986 valuation under the terms of the Plan, and he has no further claim.

Even were we to conclude that the district court erred in finding that Chisholm had not presented a triable issue of fact, we would still be compelled to affirm the dismissal due to Chisholm's failure to exhaust the Plan's dispute resolution procedure (article XIII) prior to commencing his federal court action. Exhaustion of intra-plan remedies is generally considered a prerequisite to federal jurisdiction in ERISA cases. See Amato v. Bernard, 618 F.2d 559, 566-68 (9th Cir. 1980).


Chisholm also claims appellees are liable for statutory penalties for "failure to provide a statement, in writing, as to the entitlement of plaintiffs to benefits under the plan." 29 U.S.C. § 1132(c) (1) (B). Chisholm claims he put Daniel, the successor trustee, on notice of his claim. However, he does not appear to have alleged, or offered any proof, that he requested information in writing concerning the Plan's application to his claims for supplemental benefits.4  Chisholm therefore does not put himself within the terms of the statute. The district court properly found that Chisholm was not entitled to statutory penalties.



This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Cir.R. 36-3


Article XI, Sec. 11.03, requiring an annual valuation of the Trust Fund at fair market value as of the Anniversary Date or at any time upon direction of the Plan Administrator, contemplates a valuation as of a date certain. Chisholm never cited a specific date upon which his accounting took place


Appellant cites Amalgamated Clothing & Textile Workers Union v. Murdock, 861 F.2d 1406 (9th Cir. 1988), to support his argument that a beneficiary who has received preliminary distribution under a plan can sue to recover additional benefits

In Kuntz v. Reese, 785 F.2d 1410 (9th Cir.), cert. denied, 479 U.S. 916 (1986), the Ninth Circuit held that plan participants do not have standing to sue a fiduciary for damages after they have received the full amount of vested benefits under the Plan. Amalgamated stated an exception to this rule: participants may sue for equitable relief (in that case, imposition of a constructive trust on funds which resulted from the fiduciary's breach of obligation) when the trustee has profited from his breach of fiduciary duty.

Neither of these cases is relevant here. Appellants are not claiming any breach of fiduciary obligation. Instead, they claim they never received the full amount due to them under the terms of the Plan. The plaintiffs in Kuntz, by contrast, " [did] not allege that their vested benefits were improperly computed." Kuntz, 785 F.2d at 1411. Chisholm, unlike the plaintiffs in Kuntz, had at least "a colorable claim to vested benefits." Id. Neither Kuntz nor Amalgamated involved a partial distribution of benefits.


Because it was not urged below, we need not consider whether the Plan permits the kind of partial payments made in this case. However, it is Article VII which governs distribution of plan benefits. Section 7.01 of the Stock Bonus Plan allows for distribution in a lump sum payment, an annuity, or in installments. If payments are made in any form other than lump sum, the payments are required "to be distributed each year ... [in] at least an amount equal to the quotient obtained by dividing the participant's entire interest by the life expectancy of the participant." Article 7.01(d). The Plan also provides that " [n]o distribution need be made, or a lesser amount may be made, if the aggregate amounts distributed by the end of a Plan year are at least equal to the aggregate of the minimum amounts required to be distributed" by section 7.01(c), which states that non-lump sum distributions may only be made over certain periods measured by the life or life expectancy of the participant. Chisholm made no showing that the installments he claims he is entitled to fit within these terms of the Plan


Though some of their letters refer to the appellant's claims for additional funds, the letters do not request information in writing about those claims or the Plan

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