United States District Court, D. Massachusetts
MEMORANDUM AND ORDER ON DEFENDANT'S MOTION TO
Dennis Saylor IV United States District Judge
a dispute concerning the distribution of payments from a
deferred compensation plan. Plaintiff Paul Hoffman was an
executive for defendant Textron, Inc., who retired in 1996
after 34 years with the company and a predecessor. He was the
payee of a deferred compensation plan, of which his wife Lynn
was the primary beneficiary. Because Lynn was approximately
14 years younger than Paul, he opted for the plan's
benefits to be paid out in 32 annual installments between
2000 and 2031 to provide for her after his death. However, in
2015, he learned that Textron had amended the plan so that
upon his death the remaining benefits would instead be paid
out in a lump sum to Lynn.
Hoffmans have brought suit under the Employee Retirement
Income Security Act, 29 U.S.C. § 1001, et seq.
(“ERISA”) to reinstate the annual payments.
Textron has moved to dismiss the complaint as unripe and for
failure to state a claim. For the following reasons, the
motion will be denied.
facts are set forth as described in the complaint and certain
documents provided by defendant, to the extent they were
“sufficiently referred to in the complaint.”
Watterson v. Page, 987 F.2d 1, 3 (1st Cir.
1993). The Court will not consider documents not
discussed in the complaint, such as the plan's terms in
effect as of October 5, 2015. (See, e.g., Def. Ex.
Hoffman worked for Textron and a predecessor, AVCO, for 34
years before retiring in May 1996. (Compl. ¶ 12). On the
day the complaint was filed, Paul was 83 years old, and his
wife, Lynn, was 68. (Id. ¶ 13).
a participant in Textron's “Deferred Income Plan
for Textron Key Executives, ” a benefit plan for
company executives. (Id. ¶ 1). In 1999, he
worked with Gary Piscione, Textron's then-Director of
Executive Benefits, to determine a payment schedule for the
plan benefits. (Id. ¶ 14). When Paul retired,
he did so in accordance with the terms of the plan in effect
as of 1995 (the “1995 Plan”). The 1995 Plan was a
“top-hat” plan, which is an unfunded plan
“maintained by an employer primarily for the purpose of
providing deferred compensation for a select group of
management or highly compensated employees.”
(Id. ¶ 15); Cogan v. Phoenix Life Ins.
Co., 310 F.3d 238, 242 (1st Cir. 2002) (quoting 29
U.S.C. § 1101(a)(1)).
5.01 of the 1995 Plan provided that Textron's Benefits
Committee could “choose in its sole discretion the
methods in Section 5.02 by which benefits payable . . . shall
be distributed.” (Def. Ex. A § 5.01). Section 5.02
provided that benefits would be payable (1) in a single sum;
(2) in annual installments over a period “not exceeding
the life expectancy of the payee or his primary beneficiary;
or (3) through a combination of those two methods.
(Id. § 5.02). Because Lynn was approximately 14
years younger, Paul opted for annual payments over the course
of 32 years. (Compl. ¶ 17). The payments were to begin
in 2000 and end in 2031 to correspond to Lynn's life
expectancy. (Id. ¶¶ 14, 18). Textron approved
the request. Through January 2017, all payments were timely
made in accordance with the plan. (Id. ¶ 14).
The annual payments were guaranteed to increase by a minimum
of 11 percent per year. (Def. Ex. A § 3.04(a)).
1995 Plan did not state that upon the plan participant's
death, his beneficiary would receive the remaining benefits
in a lump sum. (Compl. ¶ 18). Nor did the 1995 Plan
explicitly state whether Textron could change the annual
installment payment schedule. (Id. ¶ 20).
However, Section 9.03 did permit Textron to amend the plan
document. (Id. ¶ 21; Def. Ex. A § 9.03)
(“The Board or its designee shall have the right to
amend, modify, suspend or terminate this Plan at any time by
written ratification of such action [subject to certain
limitations].”). And, Section 6.01 provided that upon
the payee's death, the plan's benefits would be
payable to the beneficiary. (Def. Ex. A § 6.01).
1995 Plan was subsequently amended, effective January 1,
2008, to provide that “any payment to a beneficiary
shall be made in a lump sum.” (Compl. ¶ 22).
Specifically, Section 6.04 of the plan was amended to read:
“If a Participant dies before his Account has been
fully distributed, any amount remaining . . . shall be paid
to his Beneficiary in a lump sum . . . .” (Def. Ex. B
¶ 10). Paul was unaware of that amendment for several
years, until he received a letter from Textron employee named
Stephen Fontaine dated July 17, 2015. (Compl. ¶¶
letter included the statement that “if [Paul] were to
pass away, any remaining [amounts owed under the plan would]
be paid to [Lynn] in a lump sum approximately 90 days after
[his] death.” (Id. ¶ 26). Soon afterward,
Paul wrote to Textron requesting a reversal of the decision
to make a lump-sum distribution instead of the annual
payments. (Id. ¶ 27). However, that request,
and his subsequent appeal, were denied. (Id.
Hoffmans brought this suit on September 26, 2017. The
complaint asserts two claims against Textron: Count 1 is a
claim to clarify the Hoffmans' right to the plan benefits
under ERISA § 502(a)(1)(B), and Count 2 seeks equitable
relief under ERISA § 502(a)(3) in the form of an order
directing Textron to reinstate the annual installment-payment
schedule. Textron has moved to dismiss the complaint,