Leonard L. Finz v. Stuart A. Schlesinger, Julien, Schlesinger and Finz, P.C., Julien and Schlesinger, P.C., Julien and Schlesinger, Stuart A. Schlesinger D/B/A Julien and Schlesinger P.C., the Julien and Schlesinger Employee Retirement Fund, the Julien and Schlesinger P.C. Employees Retirement Trust, and Plan Doe

Citations: 957 F.2d 78; 15 Employee Benefits Cas. (BNA) 1132; 1992 U.S. App. LEXIS 2776Docket: 585

Court: Court of Appeals for the Second Circuit; February 24, 1992; Federal Appellate Court

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Leonard L. Finz appealed a judgment from the Southern District of New York, which granted summary judgment to defendants, including Julien, Schlesinger and Finz, P.C., and related entities, dismissing his complaint. Finz claimed that the defendants unlawfully deprived him of pension benefits under the Employee Retirement Income Security Act (ERISA), asserting that they fraudulently induced him to sign a waiver, leading him to believe he was not covered by their retirement plans. The district court rejected his claim, finding that his waiver indicated he understood he might have been covered, thus barring his ERISA damages claim. The court also dismissed his common law fraud and conspiracy claims for the same reason.

Finz, who left his position as a state supreme court justice in January 1978 to join the law firm, alleged that he was motivated to join due to promised pension benefits. After leaving the firm in April 1984, he claimed a conflict regarding his pension eligibility led to his departure. On May 4, 1984, he entered into an agreement with the defendants that aimed to resolve his disputes, which included clarifying his claims about pension benefits. The agreement explicitly stated that Finz had not received any stock or pension interests during his employment with the firm, addressing his pension claims directly.

Disputes arose between Finz and Julien, Schlesinger, J S. F regarding claims and denials, leading to a resolution through general releases executed by the parties, attached as Appendix "A." Finz received $75,000 upon signing the agreement and releases. His partner, Michael Wolin, affirmed he had no ownership interest in the firm or its pension plan. Years later, Finz found a check to Wolin from the firm's retirement fund, prompting him to assert he was fraudulently deprived of his retirement benefits, leading to an ERISA claim, along with allegations of common law fraud and conspiracy.

The defendants moved to dismiss, citing the release agreement and statute of limitations. The district court ruled the releases did not prevent Finz from pursuing the case since he claimed fraudulent inducement. The statute of limitations argument was also rejected pending discovery. Upon reconsideration, the court determined that Finz had executed the release knowingly and with substantial consideration, despite his belief regarding pension coverage. It found his claims of fraud and conspiracy to be without merit, granting the defendants summary judgment and dismissing the complaint. Finz subsequently appealed. The appellate review affirmed the district court's conclusion that Finz had knowingly waived potential ERISA claims, stating that his later discovery of pension eligibility did not invalidate his waiver.

Defendants argue for a traditional contract analysis regarding Finz' waiver of pension benefits, asserting that it should be evaluated as part of a general settlement agreement made after the end of the parties' relationship. However, both the court and the district court reject this approach, emphasizing that waivers of pension benefits require stricter scrutiny than general contract claims due to ERISA's intent to protect such rights. A waiver of ERISA benefits is only valid if made knowingly and voluntarily. The court refers to a previous case, Laniok, which outlines six factors to assess if a waiver meets this standard: the individual's education and experience, the time allowed to review the agreement, the individual's involvement in the agreement's terms, the agreement’s clarity, legal representation, and the adequacy of consideration given for the waiver. 

The district court had previously evaluated these factors and determined that Finz, a well-educated former judge, had knowingly and voluntarily waived his pension benefits, having had sufficient time to consider the agreement and receiving substantial consideration. The court found no evidence that Finz was denied the opportunity to consult legal counsel. Finz contests this finding, claiming that his waiver was not made knowingly due to defendants' failure to provide plan documents, which he argues violates ERISA and invalidates his waiver. The court disagrees with Finz's assertion.

Trustees of pension plans are required to provide summary plan descriptions to participants upon request, as mandated by 29 U.S.C. § 1132(c) and § 1104. This obligation extends to "potential plan participants," such as individuals like Finz, whose eligibility is uncertain. Although ERISA does not explicitly address this, it is inferred that trustees should offer sufficient information to assist potential participants in assessing their rights under the plan. The defendants in this case allegedly failed to respond to Finz's requests for plan documents, neglecting their responsibilities. However, the district court concluded that Finz waived his right to information by entering into a settlement agreement, which was meant to resolve his disputes regarding coverage. 

The circumstances suggest that Finz was aware of his potential coverage when he relinquished his benefits, as indicated by the language of the settlement agreement, which aimed to resolve the existing claims and denials regarding his pension rights. Past testimony from Finz reinforced his belief that he was covered under the plan, thus undermining any later claims that the defendants' actions negated his waiver. The principle established in Bellefonte Re Ins. Co. v. Argonaut Ins. Co. applies, indicating that a plaintiff cannot later challenge a settlement by claiming reliance on undisclosed fraud once a settlement has been made. Finz, believing he was misled about his benefits, cannot now seek to renegotiate his agreement based on those past misrepresentations.

A plan trustee's failure to provide requested documents to a potential participant does not automatically invalidate a waiver of benefits under certain circumstances, particularly when there is a significant disparity in education or bargaining power. The burden shifts to the trustee to demonstrate compliance with such requests. In this case, the court found that Finz, an experienced lawyer, understood the terms of his agreement, validating his waiver of pension benefits and negating his ERISA claim. Additionally, the district court's decision to retain jurisdiction over state law claims after dismissing the federal claim was not an abuse of discretion, as the findings on the ERISA claim were relevant to the state claims, making it efficient to address both. Consequently, all of Finz's arguments were deemed meritless, and the district court's judgment was affirmed.