Danecker v. Board of Trustees of the Service Employees 32BJ North Pension Fund

Citations: 882 F. Supp. 2d 606; 53 Employee Benefits Cas. (BNA) 2866; 2012 U.S. Dist. LEXIS 108595; 2012 WL 3133608Docket: No. 12 Civ. 1475(PAE)

Court: District Court, S.D. New York; August 2, 2012; Federal District Court

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Plaintiffs Johann Danecker and J and A Heritage Realty Corp. filed a lawsuit against The Board of Trustees of the Service Employees 32BJ North Pension Fund for violations of the Employee Retirement Income Security Act (ERISA), specifically regarding the denial of pension benefits to Danecker. Danecker, a building superintendent who retired in September 2001 after 18 years of service with J. A, claims that pension contributions were made on his behalf. After receiving benefits for 14 months, the Fund suspended his payments, asserting that he was ineligible due to J. A's non-signatory status to a collective bargaining agreement since 1991, which allegedly prohibited the Fund from accepting contributions. Danecker contends that contributions continued to be made to the Fund on his behalf despite this status and cites letters from Local 32E and J. A to support his claim. He alleges that Local 32E's president promised him a pension provided he paid union dues and J. A continued contributions. Despite seeking reinstatement after the termination letter on October 23, 2002, the Fund upheld its decision in a subsequent letter, inviting Danecker to appeal. The Fund moved to dismiss all counts of the lawsuit, and the court granted the motion in its entirety.

On February 26, 2003, Danecker appealed to the Fund’s Board regarding the denial of his benefits. The Board acknowledged J. A’s contributions to the Fund but denied the appeal on June 13, 2003, stating there were no valid agreements requiring contributions. The Board requested the return of $8,246 in pension payments, claiming Danecker did not meet the required 10-year service period once his post-1991 service was excluded. On February 28, 2012, Danecker and J. A filed a lawsuit under ERISA (29 U.S.C. 1132(a)(1)(B)), seeking reinstatement of benefits or a return of contributions, along with attorneys’ fees. The Fund moved to dismiss the case under Rule 12(b)(6), arguing Danecker's claim was barred by the statute of limitations, which is six years for contract claims. The court noted a split among district courts about when a claim accrues under ERISA but determined that even under the most favorable interpretation for Danecker, the limitations period expired on June 13, 2009, before the lawsuit was filed. The plaintiffs contended that equitable tolling was applicable due to the Fund’s alleged failure to notify Danecker of his right to sue, referencing the Second Circuit's Veltri case. However, the court found Veltri inapplicable and concluded that the plaintiffs did not demonstrate that the Fund failed to provide legally required notice. Additionally, the regulation cited by the plaintiffs, 29 C.F.R. 2560.503-1(g)(1)(iv), was found not to apply to Danecker’s pension benefits claim.

In November 2000, the Secretary of Labor amended 29 C.F.R. 2560.503-1 to enhance procedures for benefit claims, mandating clearer notifications for claimants regarding review processes, time limits, and the right to civil action after adverse determinations. The amended regulations apply solely to claims filed on or after January 1, 2002. Courts uniformly interpret that these amendments do not extend to claims filed prior to this date. The Fund’s February 12, 2003 letter, which denied Danecker’s claim, adhered to the regulations in effect before January 1, 2002, adequately informing him of his right to appeal to the Board of Trustees. Plaintiffs concede the adequacy of this notice under the applicable regulations. 

In discussing equitable tolling, plaintiffs reference the Second Circuit’s Veltri case, which allowed tolling due to the defendant's failure to notify the claimant of his rights. However, the current case differs significantly as there is no evidence of the Fund failing to comply with notice requirements. Unlike in Veltri, where the pension fund did not inform the claimant of his appeal rights, the Fund provided Danecker with sufficient notice as per the regulations in place. Thus, the circumstances in Veltri do not apply, and the Fund’s compliance with the relevant notice regulations negates any claim for equitable tolling.

The Fund responded to each of Danecker's letters in a timely manner, addressing his concerns, while Danecker was inactive for over eight years before filing suit. The Second Circuit has established that a plaintiff's right to equitable tolling may be forfeited if they do not exercise due diligence, rendering Danecker's reliance on the Veltri case inappropriate. Additionally, district courts in the Circuit have refused to apply new notice regulations to claims filed before January 1, 2002. Consequently, Danecker’s claim is deemed time-barred as it was filed beyond the six-year statute of limitations, and equitable tolling does not apply since the Fund did not violate federal notice regulations or conceal the cause of action.

Regarding J. A's ERISA claim, it is dismissed for lack of standing, as established by the Second Circuit. Although plaintiffs requested a dismissal without prejudice to allow J. A to pursue a restitution claim, the Court found this futile due to the claim being similarly time-barred. The six-year statute of limitations for restitution claims in New York began on June 13, 2003, and the suit was filed over two and a half years later. Thus, the Complaint is dismissed with prejudice, and the request for attorneys’ fees is denied. The Court grants the defendant's motion to dismiss the lawsuit in its entirety and instructs the Clerk of Court to close the case.

Section 1133 mandates that employee benefit plans provide written notice to participants or beneficiaries when their claims for benefits are denied, detailing the specific reasons for the denial in an understandable manner. It also requires that participants be given a reasonable opportunity for a full and fair review of the denial by the appropriate fiduciary. Section 1135 empowers the Secretary to establish implementing regulations. The plaintiffs did not claim any violation of separate regulations that mandate the summary plan description to inform participants of their right to bring a civil action in response to denied claims. The relevant regulation, effective January 1, 2002, was not highlighted in the Second Circuit opinion, nor was it raised by any party during the case. The plaintiffs' focus is on the alleged inadequacy of the Fund's letter regarding its adverse benefits determination. The case of Strom v. Siegel Fenchel is distinguished as it involved a failure to notify a claimant of the right to an administrative appeal, which is not the issue at hand here, as no such informational lapse occurred in this instance.