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Golen v. Chamberlain Manufacturing Corp.

OPINION FILED DECEMBER 13, 1985.

JOHN F. GOLEN, PLAINTIFF-APPELLEE AND CROSS-APPELLANT,

v.

CHAMBERLAIN MANUFACTURING CORPORATION, DEFENDANT-APPELLANT AND CROSS-APPELLEE.



Appeal from the Circuit Court of Cook County; the Hon. Arthur L. Dunne, Judge, presiding.

PRESIDING JUSTICE MEJDA*FN1 DELIVERED THE OPINION OF THE COURT: *FN1 THIS OPINION WAS AUTHORED AND CONCURRED IN PRIOR TO THE RETIREMENT OF PRESIDING JUSTICE MEJDA FROM THE COURT.

Plaintiff, John Golen, a former employee of the defendant, Chamberlain Manufacturing Corporation, brought this action seeking a declaratory judgment that the defendant is contractually obligated to pay him pension benefits equivalent to those pension benefits he would have accrued under Chamberlain's pension plan. Plaintiff moved for partial summary judgment on the issue of liability. Defendant filed a cross-motion for summary judgment based on the preemptive effect of the Employee Retirement Income Security Act (ERISA) (29 U.S.C.A. sec. 1001 et seq. (1985)) on plaintiff's pension claim and the deficiencies of plaintiff's claim under contract law. The trial court granted the plaintiff's motion but denied the defendant's motion. At the conclusion of the hearings on damages, the trial court entered judgment for the plaintiff in the amount of $50,000.

On appeal, defendant contends that the trial court should have denied plaintiff's motion for summary judgment because (1) ERISA preempts plaintiff's State law claim for pension benefits; (2) plaintiff failed to establish the existence of an enforceable contract binding on the defendant and (3) the trial court relied on testimony barred by the Dead Man's Act (Ill. Rev. Stat. 1983, ch. 110, par. 8-201). Plaintiff cross-appeals the amount of damages awarded by the trial court. We affirm.

Plaintiff began working for Sears Roebuck & Company (Sears) on July 6, 1965. He later left Sears and on March 12, 1973, accepted a position with the defendant. During his interview with defendant's president, Walter Petersen, plaintiff was offered credit for the seven years and eight months of employment with Sears, to be applied toward his vesting date in defendant's pension plan. Plaintiff wrote a memorandum to Petersen on July 6, 1973, reminding Petersen of his offer of pension credits and asking Petersen for written documentation of the agreement. After writing "O.K.W.R. Petersen 7/9/73" after each paragraph of the memorandum, Petersen wrote "use a copy of this for your file" to document the agreement. Plaintiff wrote to Petersen again on September 7, 1973, requesting Petersen's approval of special pension credits for himself and another employee. Petersen initialed the memorandum instructing the plaintiff to "file a copy of this with the individual records." The authenticity of Petersen's handwriting is not in dispute.

When Petersen died in May 1976, John Sommers became the defendant's president. Plaintiff spoke with Sommers about the agreement and showed him the memoranda documenting the agreement. Sommers expressed doubts concerning the validity of the agreement. After conferring with defendant's general counsel, Sommers told the plaintiff that Petersen did not have the authority to agree to grant plaintiff pension credit for past service without the approval of the board of directors. Because defendant was undergoing a reorganization at this time, plaintiff submitted his resignation on September 22, 1981. Plaintiff had then worked for the defendant for 8 1/2 years, just 1 1/2 years short of the 10 years required to vest in defendant's pension plan. If defendant had credited plaintiff with the time he worked for Sears, plaintiff would have vested in the plan.

Prior to submitting his resignation, plaintiff discussed with Sommers two possible ways to enable him to vest in defendant's pension plan: Sommers could recommend to defendant's parent company that defendant honor its contract with the plaintiff to credit him with his time at Sears or Sommers could recommend that plaintiff be placed on a leave of absence or do consulting work while remaining on defendant's payroll until plaintiff vested in the pension plan independent of the pension credit agreement. The parent company rejected both suggestions. Plaintiff was formally notified of the decision to reject these requests on December 3, 1982.

In January 1983, plaintiff filed this action against the defendant seeking a declaratory judgment that defendant is contractually obligated to pay the plaintiff pension benefits equivalent to those pension benefits he would have been entitled to under defendant's pension plan, assuming the term of plaintiff's employment with Sears was added to the term of his employment with the defendant. On motion of the plaintiff, the trial court granted summary judgment on the issue of defendant's liability. The court found that Petersen, as president of the company, had both actual and apparent authority to enter into the pension credit agreement with the plaintiff and that plaintiff had relied on the promise. The trial court denied defendant's motion for summary judgment because it found that plaintiff's action was to enforce his employment contract with defendant and was not a pension claim under ERISA. At a later hearing on damages, the trial court awarded the plaintiff $50,000. Defendant appeals.

OPINION

The first issue defendant raises is whether plaintiff's State law claim is preempted by ERISA and, therefore, Federal law should apply.

Section 1144(a) of ERISA provides:

"Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title. This section shall take effect on January 1, 1975." (29 U.S.C.A. sec. 1144(a) (1985).)"

Congress also granted exclusive jurisdiction to the Federal courts over all actions arising under the subchapter of ERISA dealing with the protection of employee benefit rights. (29 U.S.C.A. sec. 1132(e)(1) (1985).) It, however, granted concurrent jurisdiction to the States over actions brought by a participant or beneficiary to recover benefits due him under the terms of that plan, or to enforce or clarify his rights under the terms of that plan. 29 U.S.C.A. sec. 1132(a)(1)(B) (1985).

Defendant contends that section 1144(a) constitutes a comprehensive preemption provision that supersedes all State laws that "relate to" employee benefit plans. The alleged contract involved here, defendant maintains, unquestionably relates to its pension plan and cannot be understood without a detailed reference to the plan.

Section 1144(a) specifically provides that the provisions of the subchapter dealing with the protection of employee benefit rights "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." (Emphasis added.) Thus, the question confronting us is whether plaintiff's State law claim for a ...


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