Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civil No. 03-cv-01029) District Judge: Honorable Stewart Dalzell
The opinion of the court was delivered by: Rendell, Circuit Judge
Before: SCIRICA, Chief Judge, RENDELL and FISHER, Circuit Judges.
Appellant, Michael Martorana, brought suit against the Board of Trustees of the Steamfitters Local Union 420 Health, Welfare and Pension Fund ("the Board") alleging that the Board improperly denied benefits due to him pursuant to an ERISA plan. The Board then brought a counterclaim alleging that Martorana owed $4100 in back contributions toward the cost of health care coverage from October 1994 to December 1999.
The District Court granted summary judgment in favor of the Board on both Martorana's claim and the Board's counterclaim. The District Court also awarded attorney's fees to the Board for Martorana's claim for increased pension benefits and directed that these fees be paid by way of the Board's withholding no more than $160 per month from Martorana's pension benefits. On appeal, we must decide (1) whether the grant of summary judgment was proper, (2) whether the order assessing fees against Martorana's pension benefits contravenes ERISA and its underlying policies, and (3) whether the award of attorney's fees was proper.
I. Factual and Procedural Background
Martorana joined the Union on July 27, 1972, and worked steadily until he sustained a serious injury while performing work as a Union member on March 21, 1994. He then began to collect Workers' Compensation benefits, which he continued to receive at least through November 2003.
Martorana applied for Social Security disability benefits on November 30, 1995, and the Social Security Administration (SSA) determined that he was eligible for such benefits on December 14, 1997. Although the SSA found that Martorana became disabled on March 21, 1994, it awarded benefits retroactive only to November 1994 because of certain time restrictions imposed by federal law.
In addition to his Workers' Compensation and Social Security benefits, Martorana requested, and received, the Disability Retirement Pension to which he was entitled under the Union's Pension Plan. In the summer of 2000, Martorana first contended that the Board had improperly calculated his disability pension benefits because, when calculating his length of service (upon which the amount of pension is based), it failed to take into account the period during which he received Workers' Compensation. At its July 20, 2000 meeting, the Board rejected Martorana's claim because under the terms of the pension plan "credited hours," but not "contribution hours," accrue during the period when a worker is receiving Workers' Compensation, and the calculation of disability pension benefits depends on one's total contribution hours not one's credited hours. Martorana appealed this decision unsuccessfully to the Board.
While Martorana was making his claim for additional benefits, the Board demanded that Martorana pay $4400 in pastdue healthcare contributions to the Welfare Plan for the medical coverage he had received between October 1994 and December 1999. Martorana argued that the Welfare Plan did not require him to contribute to the plan while he was an "active" participant. The Board pointed out that he could not be an "active" participant in the Welfare Plan while simultaneously receiving benefits under the Pension Plan. When Martorana resisted contributing to the Welfare Plan, the Board refused to pay $300 of his medical claims, and it now concedes that the amount of Martorana's past-due healthcare contributions should be reduced by $300 to $4100.
Martorana initiated this action in The Delaware County Court of Common Pleas, alleging that in calculating his years of service, and in assessing past-due healthcare contributions against him, the Board failed to comply with the terms of the Pension Plan and Welfare Plan, respectively, in violation of ERISA, 29 U.S.C. § 1001, et seq., and requesting declaratory judgment.
The Board removed the case and filed a counterclaim for $4100 in past-due healthcare contributions. On December 22, 2003, the District Court entered an order granting summary judgment in favor of the Board on all claims and thereafter in January 2004 entered a further order granting judgment in favor of the Board for $8,217.08 in attorney's fees and costs based on the Pension Plan claim, stating "[d]efendant may collect the judgment... only by reducing plaintiff's monthly Disability Retirement Pension by an amount not to exceed $160.00 per month." The District Court noted "awarding the attorneys fees and costs incurred in defending ...