Salvador Martin v. Construction Laborer's Pension Trust for Southern California

Citations: 947 F.2d 1381; 91 Cal. Daily Op. Serv. 8561; 91 Daily Journal DAR 13186; 138 L.R.R.M. (BNA) 2726; 1991 U.S. App. LEXIS 25042; 1991 WL 215079Docket: 88-5927

Court: Court of Appeals for the Ninth Circuit; October 28, 1991; Federal Appellate Court

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Salvador Martin filed a lawsuit against the Construction Laborers Pension Trust for Southern California (CLPT) seeking declaratory and injunctive relief under sections 301 and 302(c) of the Labor Management Relations Act (LMRA), citing issues regarding his pension credits. The district court granted summary judgment in favor of CLPT, ruling that Martin's claims were barred by the statute of limitations. Martin appealed the decision.

CLPT is an employee pension plan established in 1962 through an agreement between the Construction Laborers Union and participating employers, designed to provide retirement pensions based on years of credited service. Service credits prior to vesting are voided if the employee experiences a "break in service," as defined by the plan.

Martin accrued service credits from 1955 to 1961 but did not work enough hours to gain credit from 1962 to 1964. After applying for a determination of his pension credits in 1979, he learned that his pre-1962 credits were canceled due to the break in service. Following an appeal in 1982, the Appeals Committee upheld the denial, and no further review was permitted under the plan.

In 1983, Martin sought to reopen his case with new evidence regarding an alleged disability, but the Pension Committee denied his request. In 1987, he appealed again, during which an Appeals Committee member noted that the statute of limitations had expired since the original denial. However, they indicated a willingness to review new evidence without waiving the statute of limitations defense. The court ultimately affirmed the summary judgment in favor of CLPT.

Martin's appeal was denied by the Appeals Committee on grounds of being untimely and due to a break in service. Subsequently, on January 7, 1988, Martin filed a lawsuit in the Los Angeles County Superior Court seeking declaratory and injunctive relief under sections 301 and 302(c) of the Labor Management Relations Act (LMRA). The case was removed to the United States District Court for the Central District of California, where CLPT filed a motion to dismiss based on statute of limitations or laches. The district court converted this motion into a motion for summary judgment, which was granted on March 24, 1988, after a hearing on March 14. Martin filed a timely notice of appeal.

The central issue on appeal is when a cause of action to enforce pension plan rights accrues. The review is de novo. The lawsuit falls under LMRA sections 301 and 302, governed by California's four-year statute of limitations. While the state law sets the time frame for filing, federal law dictates when the cause of action accrues. A cause of action accrues when a clear and continuing repudiation of rights under the pension plan is communicated to the beneficiary. 

Martin contends his cause of action did not accrue until his application for benefits was denied, asserting that CLPT's reconsideration in 1987 signified there was no clear repudiation of his claim until then. Conversely, CLPT maintains that the cause of action accrued when the Appeals Committee denied Martin's claim in November 1982, and the 1987 reassessment does not reset the statute of limitations. The court agrees with CLPT's position.

Martin asserts that, based on Morgan v. Laborers Pension Trust Fund, a cause of action for enforcing pension plan rights accrues upon the denial of an application for benefits. He contends that because he sought a determination of his pension credits rather than benefits, the statute of limitations has not started. The Morgan case determined that the statute begins when an application for benefits is denied, rather than at the time of the original issue or when employment ends. However, the cases cited did not address claims prior to a benefits application, which is Martin's situation. The court clarifies that Martin's cause of action accrues upon a clear repudiation of his claim, similar to Held v. Manufacturers Hanover Leasing Corp. The reasoning in Morgan is applicable beyond just benefits applications, as it aims to prevent individuals from circumventing the statute of limitations by reapplying. The court concludes that Martin's claims accrued in November 1982 when his internal remedies were exhausted, asserting the need for a consistent rule across all pension fund claims. The court rejects the idea of applying different rules based on the nature of the application, emphasizing that all claims, whether for benefits or credit determinations, should be treated uniformly to maintain fairness and finality.

In Cowan v. Keystone Employee Profit Sharing Fund, the First Circuit determined that a plaintiff’s cause of action regarding pension benefits accrued when the pension plan was amended in 1974, not when his application for increased benefits was denied in 1977. The court emphasized that the clarity of the pension plan's terms negated the possibility of a complaint until benefits were explicitly denied. In Martin's case, the Appeals Committee's decision in 1982 was a definitive ruling denying him credit for years prior to 1962, thus starting the statute of limitations. Martin's lawsuit, filed more than four years after this denial, was dismissed correctly by the district court.

Martin’s argument that a 1987 reopening of his case by CLPT constituted a continuing repudiation was rejected. Unlike the precedent set in Kosty v. Lewis, where ongoing consideration of a claim was evident, Martin's record showed no such engagement between the 1982 decision and his 1987 request. CLPT explicitly stated that the 1987 hearing did not waive the statute of limitations defense. The court concluded that the 1982 decision remained final, and the 1987 hearing did not revive Martin's stale claims, thus reinforcing the dismissal of his suit.

Martin's legal claim under LMRA sections 301 and 302(c) for declaratory and injunctive relief stems from a denial of pension credit for years worked prior to 1962, with the cause of action accruing upon the Appeals Committee's denial of his claim in 1982. This denial effectively repudiated Martin's assertion that the Pension Committee's decision was incorrect. The reopening of his case in 1987 did not create a new cause of action or reset the statute of limitations, which barred his suit since it was not filed within four years of the 1982 denial. 

A dissenting opinion argues that the limitations period should not have begun when Martin inquired about his pension credits and the Trust denied his appeal. The dissent suggests equitable considerations should prevent the Trust from invoking the statute of limitations. It posits that under contract law principles, Martin should be allowed to pursue claims for both declaratory and injunctive relief. The dissent emphasizes the difference between coercive relief and declaratory judgment, asserting that the limitations period for Martin's declaratory relief has not commenced. 

Furthermore, the dissent contends that Martin has a contractual right to pension benefits upon retirement, and can seek a breach of contract remedy if the Trust fails to perform. The key issue is whether Martin can seek judicial clarification of his rights before the Trust's performance is due. An actual controversy exists regarding the parties' rights, making a declaratory judgment appropriate. The dissent concludes that the four-year limitations period does not start until the Trust's performance is due, which occurs after Martin retires, thus allowing him to seek a declaratory judgment even without a current cause of action for breach of contract.

Martin sought both declaratory relief and injunctive relief in a contract action against the Trust. To obtain injunctive relief, he typically would need to demonstrate that the Trust breached its duty to perform; however, he did not allege any breach since the triggering event for performance—his retirement and application for pension benefits—had not yet occurred. Martin could, nonetheless, invoke the doctrine of anticipatory repudiation, which allows a party to treat a preemptive declaration of non-performance as a breach of contract. This means Martin could consider the Trust's stance on his pre-1962 credits as a repudiation of its obligations, enabling him to sue for breach of contract before the performance date.

Martin had the option to either treat the repudiation as a final breach or wait for the scheduled performance before acting. The statute of limitations typically begins to run only when a contractual obligation is not fulfilled. In this scenario, the question was whether the statute commences upon anticipatory repudiation. The court concluded it does not; applying the statute in this manner would unfairly limit Martin’s rights. Citing case law, the court affirmed that Martin was not required to consider the Trust's 1982 repudiation a final breach, allowing him to seek performance until the Trust reiterated its position in 1987. At that point, Martin could rightfully claim a breach and seek specific performance, aligning his action with the four-year statute of limitations. Consequently, the judgment barring Martin's request for injunctive relief on statute of limitations grounds was to be reversed.

Equitable considerations may prevent the Trust from invoking the four-year statute of limitations concerning Martin's suit, even if the majority's ruling on the limitations period is upheld. The doctrines of equitable tolling and equitable estoppel can modify statutes of limitations; equitable tolling applies if Martin was "excusably ignorant" of the limitations, while equitable estoppel focuses on the Trust's actions. The majority view suggests that Martin's inquiries about pension credits trigger the limitations period earlier than retirement, disadvantaging those who seek information. The Trust had a fiduciary duty to inform Martin of his four-year timeframe to challenge its denial of his appeal in 1982 and failed to do so, which should estop the Trust from relying on the limitations defense. Alternatively, this breach of fiduciary duty should toll the limitations period until Martin became aware of it or the Trust's intent to rely on it. Despite having counsel, Martin should not be held to constructive knowledge of the limitations period, as the court's decision to trigger it upon inquiry constitutes a new legal development. Had the Trust communicated its position in 1982, the outcome would differ. The dissenting opinion concludes with a recommendation to reverse the district court's judgment. Additionally, the excerpt provides definitions and procedural context regarding the break in service and the pension plan's claim review requirements, emphasizing Martin's representation and evidence during the hearing.

Section 302(c) mandates that pension plan trustees act solely for the benefit of employees, imposing a fiduciary duty based on traditional equitable principles. While the cases under the Employee Retirement Income Security Act (ERISA) provide interpretative guidance for similar actions under section 301 of the Labor Management Relations Act (LMRA), Martin's claim cannot assert an ERISA violation, as it is based on events predating ERISA's effective date. Consequently, his action is considered premature if his cause of action has not accrued, rendering it not ripe for judicial review. In a referenced case, a plaintiff was allowed to proceed without a formal benefit application due to the pension fund's treatment of his request and the futility of internal remedies, establishing that his cause of action had accrued. Martin's argument for equitable estoppel regarding the statute of limitations was not raised in lower courts, and thus, it will not be considered on appeal. The district court focused solely on the statute of limitations and did not address the merits of Martin's claim, which this court will also refrain from doing since it agrees with the lower court's decision on the statute of limitations.