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Denton v. First Nat'l Bank

United States Court of Appeals for the Fifth Circuit

July 22, 1985

No. 84-1760


 [*1297]  JOHN R. BROWN, Circuit Judge:


The issue before us in this ERISA case is whether the district court erred in ordering the trustees of a Bank's retirement plan 1 to make a lump sum payment to a long-term employee who left to work for a competing bank. The district court ordered such a lump sum payment -- despite the employee's failure to pursue his administrative remedies under the Plan -- after the employee's request for a lump sum payment was denied by the committee charged with approving [**3]  the payment of retirement benefits. The district court ordered this payment, even though the Plan did not provide for lump sum payments as one of its regular options, because some other employees who had retired had received lump sum payments. We hold the district court erred in not applying ERISA's arbitrary and capricious legal standard to its evaluation of the Plan fiduciary's denial of lump sum benefits; accordingly, we reverse. To preserve the integrity of ERISA, we hold as a matter of law that the doctrine of exhaustion of remedies is applicable to the denial of benefits by Plan trustees. Additionally, since we believe the district court's interpretation of the evidence presented at trial to be clearly erroneous, we render judgment for the Plan.

 [**4]  How it all Began 

Jack Denton, long time employee of the First National Bank of Waco (Bank), brought suit for early payment of retirement benefits, which he claimed pursuant to the retirement plan for employees of the Bank. The Plan is administered by a retirement committee appointed by the Bank's Board of Directors. The Bank sponsors the Plan and is the trustee of the Plan, but the funds held by the Bank belong irrevocably to the Plan.

Denton decided to discontinue his employment with the Bank and go to work for a competing Bank. By letter he requested a single lump sum payment of his retirement benefits. The evidence at trial 2  [*1298]  showed that several prior employees who had left the Bank had been paid by means of a lump sum if they had requested it. It is undisputed, however, that Denton's lump sum request was over two and one-half times larger than any other lump sum payment made under the Plan. To receive approval for a lump sum request, the Plan called for signatures from five of the eight committee members charged with administering the Plan. The evidence showed that the practice was informally to circulate a lump sum request form among committee members.  [**5]  Three committee members initially signed, thus agreeing to Denton's lump sum request, but one of these shortly asked that her name be removed, which was done. Denton's request never received more than three approval signatures, even though one of these signatures was from the President of the Bank who earlier had attempted to convince Denton to remain at the Bank.

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765 F.2d 1295 *; 1985 U.S. App. LEXIS 20562 **; 6 Employee Benefits Cas. (BNA) 1980

Jack D. DENTON, Plaintiff-Appellee, v. FIRST NATIONAL BANK OF WACO, TEXAS, Defendant-Appellant

Subsequent History:  [**1]   Rehearing En Banc Denied August 28, 1985.

Prior History: Appeal from the United States District Court for the Western District of Texas.


benefits, retirement, lump sum, lump sum payment, district court, actuaries, fiduciary, administrative remedy, arbitrary and capricious, retirement income, exhaustion, contributions, employees, claimant, early retirement, required to exhaust, trial court, retirement benefits, committee member, retirement plan, federal court, provisions, hostility, survivor, annuity, monthly, options, futile, rights, monthly amount

Tax Law, Federal Taxpayer Groups, Exempt Organizations, Conditions & Restrictions, Federal Income Tax Computation, General Overview, Tax Accounting, Retirement Plans, Qualified Retirement Plans, Contributions to Plans, Distributions From Plans, Qualified Retirement Plans, Pensions & Benefits Law, ERISA, Civil Litigation, Administrative Law, Judicial Review, Governments, Fiduciaries, Standards of Review, De Novo Standard of Review, Reviewability, Exhaustion of Remedies, Civil Procedure, Justiciability, Exhaustion of Remedies, Administrative Remedies, Appeals, De Novo Review, Environmental Law, Administrative Proceedings & Litigation, Judicial Review, Civil Litigation, Remedies, Exhaustion of Administrative Remedies, Handling of Claims, Scope of Review, Arbitrary & Capricious Review, Labor & Employment Law, Collective Bargaining & Labor Relations, Enforcement of Bargaining Agreements, Causes of Action, Suits to Recover Plan Benefits, Fiduciaries, Claim Procedures, Costs & Attorney Fees, Damages