797 F.

2d 383
55 USLW 2166, 7 Employee Benefits Ca 1958

Barbara Jean CUMMINGS, a minor, by her Guardian ad

Litem,
Willard P. TECHMEIER, and Laverne H. Cummings, Special
Administratrix of the Estate of Dennis G. Cummings,
Plaintiff-Appellees, Cross-Appellants,
v.
BRIGGS & STRATTON RETIREMENT PLAN, the First
Wisconsin Trust
Company, Plan Trustee, and Briggs & Stratton
Retirement Committee, Plan
Administrator,
DefendantsAppellants,
Cross-Appellees.
No. 85-2871, 85-2936.

United States Court of Appeals,

Seventh Circuit.
Argued May 29, 1986.
Decided July 21, 1986.

David R. Cross, Quarles & Brady, Milwaukee, Wis., for defendantsappellants, cross-appellees.
Willard P. Techmeier, Techmeier, Sheedy & Associates, Milwaukee,
Wis., for plaintiff-appellees, cross-appellants.
Before BAUER and POSNER, Circuit Judges, and SWYGERT, Senior
Circuit Judge.
SWYGERT, Senior Circuit Judge.

The issue in this case is whether a district court has inherent or statutory
equitable power to fashion a constructive trust in favor of a plaintiff who has no
entitlement to benefits under ERISA. Although we do not deny that pension
beneficiaries may bring civil actions under ERISA to obtain appropriate
equitable relief, we cannot approve such relief where there is no violation of
ERISA under the written terms of the plan. For the reasons set out below, we
reverse the district court's grant of summary judgment, 606 F.Supp. 659, in
favor of the plaintiffs.

* The decedent, Dennis G. Cummings, was an employee of Briggs & Stratton

Corporation, hired in 1952. He was a participant in the Briggs & Stratton
Retirement Plan ("the Plan"), an employee-benefit program bargained for with
the Allied Industrial Workers, Local 232 ("the Union"), and incorporated into
the collective bargaining agreement. Defendant First Wisconsin Trust
Company is trustee of the Plan. Defendant Briggs & Stratton Retirement
Committee ("the Committee") is the administrator of the Plan. Defendant Frank
Sprtel is a member of the Committee.

The Plan does not contain an automatic survivorship feature. Rather,

participants must affirmatively elect a payment option that would include
payment to a surviving spouse or beneficiary. Among the options available is a
"Ten Year Certain and Life Option" (Article VI, Sec. 604(a) of the Plan). It
provides that a Plan participant may elect to receive a reduced pension payable
until death, and if the Plan participant's death occurs before the pension has
been paid for ten years, payment of the pension will be made in the reduced
amount to a beneficiary designated by the Plan participant for the balance of the
ten-year period. The total benefits to the participant receiving a reduced
monthly pension during his lifetime and the participant's beneficiary are
actuarially equivalent to a single life pension without any provisions for his
survivors.

The Union has sought to modify the Plan so that survivorship benefits are paid
automatically, without election, at a participant's death. As it stands now, if a
participant does not elect one of the survivorship options, no benefits are
payable to anyone at the time of the participant's death. Briggs & Stratton has
opposed an automatic survivorship benefit provision because of the substantial
additional expense of funding this feature. Because Briggs & Stratton has
prevailed on this bargaining point, the Plan does not provide for automatic
survivorship benefits.

On May 15, 1982 Cummings was divorced in Milwaukee County Circuit Court.
The decree of the divorce provided, in part:

6 That all of the rights of the defendant in his pension program at Briggs & Stratton
9.
Corporation are awarded to him and the plaintiff is divested of all right, title and
interest therein providing, however, that the defendant shall change the beneficiary
therein to the name of the minor children of the parties and each child shall be
divested of such right when he or she reaches the age of eighteen (18) years.
7

At the time the divorce decree was entered into, Cummings was not eligible to
designate his daughter, Barbara Jean, as a beneficiary. None of the defendants
were parties to the divorce proceedings. Briggs & Stratton's employment record
includes information that Cummings was divorced, but it is undisputed that
none of the defendants had knowledge of the terms of the decree.

In 1978 when Cummings approached his sixtieth birthday, the Committee

mailed him information about the "Fifty Percent Joint and Survivorship
Pension Option" available under sections 6.1 and 6.2 of the Plan. This option
provides for payment of a monthly annuity to the spouse of the Plan participant,
if the participant should die before retiring from the Company. No other
beneficiary could be named. Cummings replied that he would not elect the
option, stating: "I am single and not eligible for this retirement plan."

On December 4, 1981, when Cummings approached his thirtieth year of

service with Briggs & Stratton, the Committee mailed him a packet of
information explaining the pre-retirement options for which he was now
eligible. The options included the "Ten Year Certain and for Life" option which
allowed him to choose someone as his beneficiary in the Plan in the event of his
death; by choosing that option, Cummings would receive a reduced pension
during his lifetime. Cummings did not respond to this mailing.

10

In May 1982 Cummings was diagnosed as having lung cancer. On May 13

Cummings was terminated by Briggs & Stratton because of his illness. Shortly
thereafter, it was determined that his condition was terminal. He was
hospitalized, but returned home in late June. Cummings gradually became
mentally confused and disoriented.

11

On June 29, 1982 the Committee mailed Cummings the same information sent
to him previously. Both packets of information contained the following
warning notice: "NOTE: If you do not elect a survivorship option, no one will
receive any pension benefits if you die while still employed." However,
Cummings did not complete and return the application form for survivorship
benefits.

12

Cummings died on August 1, 1982. To the date of his death, he had never
received any benefits from the Plan. He had not designated his daughter,
Barbara Jean, his only surviving minor child, as a pension beneficiary; had he
done so, the beneficiary would have been entitled to a monthly payment of
$642.58 commencing on the first day of the month following Cummings' death.

13

On August 11 Barbara Jean Cummings, through an attorney, wrote to the

Committee requesting a statement of the amount of benefits due her. Frank
Sprtel, representing the Committee, replied that no benefits were due; when
Barbara Jean made a second request for information in March 1983, the
Committee reiterated that no benefits would be paid.

14

Plaintiffs Barbara Jean and LaVerne Cummings (the former spouse and special
administratrix of the Cummings' estate) filed an action for benefits and
statutory penalties under the Employee Retirement Income Security Act of
1974 ("ERISA"). Plaintiffs contended that the Plan must pay survivorship
benefits to Barbara Jean according to the provision in the divorce decree even
though Cummings did not elect a survivorship option under the Plan. Plaintiffs
also alleged that defendants filed to comply with requests for information in
violation of ERISA, entitling them to statutory penalties.

15

Plaintiffs began their lawsuit on June 2, 1983. Defendants filed a motion for
summary judgment dismissing the complaint on the grounds that under the
written terms of the Plan, survivorship benefits are not payable automatically
when a Plan participant dies. Plaintiffs also filed for summary judgment on the
basis that defendants did not adequately inform Cummings of his rights to elect
a survivorship option and that defendants knew or should have known of
Cummings' state of mental confusion.

16

In its decision of April 19, 1985 the district court granted defendants' motion to
dismiss Sprtel and denied plaintiff's motion for statutory penalties for the
alleged failure to comply with a request for information. The district court, on
the other hand, granted summary judgment for plaintiffs on the ground that the
Plan would be "unjustly enriched" if it did not pay benefits to plaintiffs.

17

On September 27, 1985 the district court denied defendants' motion for
reconsideration and entered judgment for the plaintiffs in the amount of
$59,713.67, plus interest. Defendants appeal that judgment, and plaintiffs crossappeal on the calculation of damages.

II

18

The issue here is initially straightforward. This is an action for benefits and
statutory penalties under the Employee Retirement Income Security Act of
1974 ("ERISA"), 29 U.S.C. Secs. 1001-1461. All employee benefit plans must
be "established and maintained pursuant to a written instrument," section
1102(a)(1), and ERISA plan administrators are required to act consistently with
the Plan's written terms. Plan fiduciaries are required to act solely in
"accordance with the documents and instruments governing the plan." Section
1104(a)(1)(D). In fact, the 1984 amendment to ERISA specifically forbids the
assignment or alienation of plan benefits unless called for under the Plan.1

19

ERISA also requires that the description "be written in a manner calculated to
be understood by the average plan participant and ... be sufficiently accurate
and comprehensive to reasonably apprise such participants and beneficiaries of
their rights and obligations under the plan." 28 U.S.C. Sec. 1022(a)(1). It is
uncontested that the summary plan description for Briggs & Stratton was
complete and accurate. In addition, Briggs & Stratton sent Cummings two
letters, including clear warnings of the effect of not designating a surviving
beneficiary.

20

There is no question that the written terms of the Briggs & Stratton Retirement
Plan met the requirements of ERISA, or that under the terms of the Plan the
plaintiffs were not entitled to receive benefits. The Plan lacks an automatic
survivorship feature; therefore, the option for payment to a surviving
beneficiary under Article VI, Sec. 6.14(a), the "Ten Year Certain and Life
Option," requires affirmative election. Under the technical terms of the Plan,
defendants violated no provisions of ERISA and committed no legal wrong.

21

There is also no question that the Plan administrators had not violated any
fiduciary responsibility mandated by ERISA. Briggs & Stratton took the steps it
was required to make under the law: it printed an accurate plan summary for its
10,000 Plan participants, made an office available, and mailed information with
respect to the elective options. In a similar case, where the decedent did not
make any effort to contact a knowledgeable company employee for further
information or explanation, the district court held that the plan administrator
satisfied the fiduciary obligation owed to the decedent. The court explicitly
stated that "fiduciaries are not expected to provide individualized attention to
participants." Lee v. Union Elec. Co., 606 F.Supp. 316, 321 (E.D.Mo.1985). An
opposite interpretation would impose an almost impossible burden on ERISA
plan administrators to seek out and maintain sufficient current information
about the health and individual needs of each plan member to enable the
administrators to render personal service. Allen v. Atlantic Richfield
Retirement Plan, 480 F.Supp. 848, 850 (E.D.Pa.1979), aff'd, 633 F.2d 209 (3d

Cir.1980).
22

In the instant case, the district court acknowledged that the Plan administrators
had fulfilled their fiduciary duty, concluding:

23 the present case, the Retirement Committee has been essentially passive with
In
respect to the benefits in question. If there has been any wrongdoing, it is
attributable to Dennis Cummings.
24

Cummings by Techmeier v. Briggs & Stratton Ret., 606 F.Supp. 659, 664
(E.D.Wis.1985). The defendants had clearly complied with both the written
terms of the Plan and their fiduciary duties. That should have ended the matter.

25

However, the district court based its opinion on the "unusual circumstances" of
this case. A second written document conflicted with the Plan: the divorce
decree negotiated between Dennis Cummings and his former wife, LaVerne
Cummings (now special administratrix of the Cummings' estate), in which she
divested herself of all right, title, and interest in Dennis Cummings' pension in
exchange for his promise to change the beneficiary under the pension to name
his minor children. At the time Cummings signed the decree, he was not yet
eligible to designate a wife or child. When he reached his thirtieth year of
employment and was offered the chance to respond and elect to name his child
as a beneficiary, he did not do so.

26

Therein lies the difficulty with this case. The district judge was faced with a
situation where the technical written requirements of ERISA had been satisfied
by the defendants, as had their fiduciary responsibilities. But the equally
compelling written terms of the divorce decree had been violated. Dennis
Cummings had not done for his child what he had promised to do, and what his
former wife had bargained for in the course of the divorce proceedings. The
minor child consequently lost financial benefits she would have been entitled to
receive from her father's estate.

27

The recent amendments to ERISA of the 1984 Act explicitly deal with this
dilemma, recognizing a "qualified domestic relations order" and allowing
payments of benefits pursuant to it.2 That new provision contains requirements:
the domestic relations order must specify the participant's payee, the amount to
be paid, and the plan to which the order applies. Most importantly, the
amendments allow payment only if the domestic relations order does not
require a benefit not otherwise provided for under the plan. The divorce order
cannot create a new pension benefit where none existed, increase benefits, or

require an alternate payee.3

28

It is true that a judge may treat domestic orders entered before the 1985
effective date of the amendments as "qualified" domestic orders even though
the documents do not meet the new requirements;4 there are, however, strong
reasons why we should not treat the Cummings' decree as overriding the
written terms of the Briggs & Stratton Plan. Notice of Cummings' divorce was
never made part of the records at Briggs & Stratton. Plaintiffs concede that the
Plan administrators had no knowledge of the decree's provisions. Briggs &
Stratton had no legitimate reason to expect to pay benefits to any beneficiary
named by Cummings; benefits made payable to Cummings' minor child
ordered by the court would be created where none existed before.

29

The funding for the Briggs & Stratton Plan, like any pension plan's funding,
depends on stability and predictability. Sound administration of a pension plan
demands advance planning. Forcing trustees of a plan to pay benefits which are
not part of the written terms of the program disrupts the actuarial balance of the
Plan and potentially jeopardizes the pension rights of others legitimately
entitled to receive them. As the Eighth Circuit has emphasized in Phillips v.
Kennedy, 542 F.2d 52, 55 n. 8 (8th Cir.1976), there is danger when courts
tamper with the written terms of a pension plan: "The actuarial soundness of
pension funds is, absent extraordinary circumstances, too important to permit
trustees to obligate the fund to pay pensions to persons not entitled to them
under the express terms of the pension plan."

30

The doctrine of "unjust enrichment," which was invoked by the district court,
does not make sense in this context of actuarial planning. A pension fund is not
"unjustly enriched" where a pensioner dies early with no benefits payable to his
survivor. That eventuality simply offsets cases where a pensioner lives well
into old age and more benefits are paid to him than were statistically
predictable. There are sound reasons why Cummings' divorce decree should not
alter the written terms of his pension plan to create a beneficiary where none
existed before.

31

At this point, however, we must address the most troublesome aspect of this
case: the unresolved ambiguity concerning the reason why Cummings failed to
elect the survivorship option. Our discussion to date has assumed that
Cummings made a conscious rational choice to trade higher lifetime pension
payments for himself by not electing to designate a surviving beneficiary. But
plaintiffs have argued in district court that Cummings made his choice out of
mistake or confusion, aided and abetted by Briggs & Stratton. In opposing the
grant of summary judgment in favor of Briggs & Stratton, plaintiffs alleged that

the plan administrators did not adequately inform Cummings of his right to
elect a survivorship option, that he was confused about his rights under the
Plan, and that defendants knew or should have known of his confusion.
32

At the district court proceedings, plaintiffs' counsel alleged that Dennis

Cummings was unsophisticated in business matters, relied on the personnel at
Briggs & Stratton, and should have been made aware by a telephone call of his
options. Counsel also raised a question as to the degree of awareness of Briggs
& Stratton as to the divorce decree and its terms. Finally, counsel alleged that at
the time Cummings was mailed the second notice in May 1982, he was
incapacitated and could not accept the certified letter at his door; therefore, the
letter was returned to Briggs & Stratton as undeliverable. Dist.Ct.Tr., pp. 14,
17, 20, 21.

33

All of the above allegations amount to a serious charge of breach of fiduciary

duty against Briggs & Stratton. Yet, because plaintiffs' motion to compel
discovery on this issue was made in an untimely fashion and denied by the
district court, we are given no hard, factual material to prove that Briggs &
Stratton's plan administrators did less than they would normally do, much less
that they affirmatively misled Cummings. Plaintiffs do not raise this issue in
their appeal. Indeed, at oral argument, plaintiffs' counsel agreed that no
additional notice to Cummings was required. Were such evidence of fiduciary
breach before us, this would be a different case, but in its absence we cannot
find that Briggs & Stratton acted in an unusual or unfair manner so as to justify
a constructive trust.

34

The district court concluded, nevertheless: "Yet the mere fact that the
defendants may have received the proceeds innocently is itself no bar to the
imposition of a constructive trust." Id. We disagree. There is no property
"owned" by the third-party beneficiary, Barbara Cummings, illegally retained
by the pension fund. Thus, we distinguish the insurance cases relied on by the
district court where there is a settlement due someone and the issue is whether
the property is justly being held in the right hands.5 See, e.g., Richards v.
Richards, 58 Wis.2d, 290, 297, 206 N.W.2d 134, 137 (1973).

35

Enrichment is not "unjust" where it is allowed by the express terms of the

pension plan. Craig v. Bemis Co., 517 F.2d 677, 684 (5th Cir.1975). The
Restatement of Restitution makes clear that "a person is not entitled to
compensation on the ground of unjust enrichment if he received from the other
that which it was agreed ... the other should give in return." Section 107, &
Comment 1. We conclude that the basic elements that make up a claim of
unjust enrichment are simply not present in the case before us.

36

This is not to suggest that when a legal wrong has occurred that a district court
does not have a full panoply of equitable powers to fashion appropriate relief.
Imposition of a constructive trust may be an appropriate remedy where pension
administrators are guilty of a breach of fiduciary responsibility. The Supreme
Court has historically emphasized the inherent equitable jurisdiction of district
courts. See, e.g., Mitchell v. DeMario Jewelry, 361 U.S. 288, 291, 80 S.Ct. 332,
334, 4 L.Ed.2d 323 (1960), which states explicitly that "unless otherwise
provided by statute, all the inherent equitable powers of the District Court are
available for the proper and complete exercise of that jurisdiction."

37

The district court also has statutory equitable jurisdiction; ERISA provides that
a pension beneficiary may bring a civil action to obtain "appropriate equitable
relief." 29 U.S.C. Sec. 1132(a)(3)(B). The enforcement provisions of ERISA
are intended to provide broad, flexible remedies to redress or prevent statutory
violations. Donovan v. Estate of Fitzsimmons, 778 F.2d 298, 302 (7th
Cir.1985). In appropriate circumstances, courts may develop a federal common
law governing employee benefit plans in order to supplement the statutory
scheme. Amato v. Western Union Intern., Inc., 773 F.2d 1402, 1419 (2d
Cir.1985); Menhorn v. Firestone Tire & Rubber Co., 738 F.2d 1496, 1499 (9th
Cir.1984).

38

However, where Congress has established an extensive regulatory network and

expressly announced its intention to occupy the field, federal courts should not
create additional rights under the rubric of federal common law. We are
particularly reluctant to fashion a federal commonlaw doctrine of unjust
enrichment when such a right would override a contractual provision in a
pension plan. The existence of such a contract, negotiated between the parties,
requires a particularly strong indication that the unjust enrichment doctrine will
vindicate an important statutory policy. Van Orman v. American Ins. Co., 680
F.2d 301, 306, 310-13 (3d Cir.1982). In only limited circumstances will courts
need to supplement the specific statutory sections. Amato, 773 F.2d at 1419.
The case at bar does not present one of those circumstances.

39

By this decision, we do not diminish the inherent and statutory equitable power
of the federal courts in ERISA cases. Instead, we restrict that power to its
proper use--to remedy violations of the Act. For the reasons given above, we
reverse the district court's grant of summary judgment in favor of plaintiffs and
grant the summary judgment dismissing the complaint in favor of the
defendants.

40

REVERSED.

The Retirement Equity Act of 1984 (effective January 1, 1985) amends section
206(d) of ERISA, 29 U.S.C. Sec. 1056(d), as follows:
Assignment or alienation of plan benefits.
(1) Each pension plan shall provide that benefits provided under the plan may
not be assigned or alienated.

The prohibition on assignment or alienation of plan benefits of section 206 of

ERISA, 29 U.S.C. Sec. 1056, Retirement Equity Act of 1984 (effective January
1, 1985) has an exception for:
3(A) Paragraph (1) shall apply to the creation, assignment, or recognition of a
right to any benefit payable with respect to a participant pursuant to a domestic
relations order, except that paragraph (1) shall not apply if the order is
determined to be a qualified domestic relations order. Each pension plan shall
provide for the payment of benefits in accordance with the applicable
requirements of any qualified domestic relations order.

Section 206(D) of ERISA, 29 U.S.C. Sec. 1056, reads:

A domestic relations order meets the requirements of this subparagraph only if
such order-(i) does not require a plan to provide any type or form of benefits, or any
option, not otherwise provided under the plan.
(ii) does not require the plan to provide increased benefits (determined on the
basis of actuarial value), and
(iii) does not require the payment of benefits to an alternate payee which are
required to be paid to another alternate payee under another order previously
determined to be a qualified domestic relations order.

In the case of a domestic relations order entered before January 1, 1985 (such
as the Cummings' divorce decree), the pension plan administrator "shall" treat
such order as a qualified domestic relations order if the administrator is paying
benefits pursuant to "such order on such date" (which does not apply here), or
"may so" treat the order even though it does not meet the requirements of such
amendments

We disagree with the district court that the pension setting is analogous to the
insurance setting. See Cummings by Techmeier v. Briggs & Stratton Ret., 606

F.Supp. at 664. In an insurance case where a party designates a beneficiary

under a policy agreement and ignores a final divorce decree requiring that a
different party be so designated, there is a definite settlement due some person.
Because the insurance company is obligated to pay benefits, the divorce decree
has created an equitable right in those funds to one party. Designation of a
beneficiary other than the one contemplated by the divorce decree causes
unjust enrichment and is properly remedied by a constructive trust. However, in
the pension case before us, there are no benefits due any third party under the
written terms of the Plan, because the Plan participant failed to elect those
benefits. Thus, there is no equitable right and no proper place for a constructive
trust