Plaintiff claims that Defendants’ alleged mishandling of Guy Barnette’s request to port his life insurance and failure to inform him of his other options under the Policy constitute breaches of fiduciary duty. She has alleged a claim solely pursuant to § 502(a)(3), 29 U.S.C. § 1132(a)(3), of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. Barnette v. Sun Life Assurance Co. of Canada, No. CV 4:15-3720, 2016 WL 1384688, at *2 (S.D. Tex. Apr. 7, 2016)
Guy Barnette was employed by KenMor Electric Co., LP (“KenMor”) for almost 28 years. KenMor is a subsidiary of Defendant Heico Holding, Inc.. During Guy Barnette’s employment, he maintained life insurance coverage through the Plan.The policy, which was provided by Defendant Sun Life, included “Basic Life Insurance coverage in the amount of $92,000, and Employee Optional Voluntary Life or Supplemental Life insurance coverage in the amount of $122,000.” Guy Barnette’s employment was terminated on January 1, 2013, because his deteriorating health prevented him from performing his job duties. Guy Barnette subsequently died on October 29, 2013.Carolene Barnette alleges that Defendants improperly impeded Guy Barnette from shifting his employer-based life insurance policy under the Plan to an individual policy following the termination of his employment.Defendants allegedly also failed to inform the Barnettes of three additional options available under the Policy: the Accelerated Benefit provision, the Continuation of Life Insurance Coverage provision, and the Conversion Privilege.
(1) an equitable surcharge for unjust enrichment to recover the benefits loss [sic] or withheld and to make the ERISA beneficiary whole, (2) reformation of the Plan to the extent needed to equitably address and pay her claim for the entirety of the life insurance benefits that she should be entitled to, and (3) waiver or equitable estoppel preventing Sun Life, Heico, and the Plan from relying on the misinformation or the failure to give correct and accurate information to the Barnettes as grounds for denial [of] her claim for life benefits.
Recast Claim For Benefits?
Plaintiff does not allege that any term of the Plan entitles her to benefits. To the contrary, she acknowledges that, under the written Plan documents, her husband was not covered by a Sun Life insurance policy at the time of his death. See Amended Complaint [Doc. # 9], at 5, ¶ 18. She instead seeks redress because of alleged failures by Defendants’ employees in dealing with her requests to exercise rights under the Plan to obtain post-employment coverage for her husband.4 Her only option is resort to § 502(a)(3).
The Fifth Circuit has made clear that a party may not rely on an oral modification of a written plan’s terms. Such reliance is, as a matter of law, not “reasonable and detrimental reliance” for purposes of ERISA estoppel.
Since the plaintiff’s complaints were based on provisions written in the policy that was available to the Barnettes, the plaintiff’s estoppel argument failed.
Ultimately, among other issues, the Court must address whether Defendants through their employees acted as fiduciaries against whom equitable monetary relief may be available or as non-fiduciaries who are subject to legal monetary damages. This distinction is crucial.
Estoppel and Surcharge Distinguished – ERISA estoppel and equitable surcharge are distinct theories and forms of relief. Detrimental reliance is not essential to a claim for equitable surcharge for breach of fiduciary duty by a trustee.