Barboza v. Cal. Ass’n of Prof. Firefighters

Using the common law of trusts, parties do not need to use express language to create a trust between a trustee and a beneficiary.

David Barboza, a retired firefighter, filed an action against the California Association of Professional Firefighters (“CAPF”), alleging that “CAPF had withheld certain long-term disability benefits.” Barboza also initiated a second suit against California Administration Insurance Services, Inc. (“CAISI”), alleging that CAISI violated its fiduciary duties under the Employee Retirement Income Security Act of 1974 (“ERISA”). The district court granted the Barboza’s motion for summary judgment, and the parties appealed. The Ninth Circuit applied the common law of trusts and determined that “a person (legal or natural) must hold legal title to the assets of an employee benefit plan with the intent to deal with these assets solely for the benefit of the members of that plan” pursuant to 29 U.S.C. § 1103. However, the panel rejected the argument that the insurance plan required the phrase “held in trust” in order for there to be a valid trust. Therefore, the panel determined that the insurance plan was a trust, even though it lacked the requisite language that specifically identified it as a trust. In compliance with § 1103, the panel determined that parties do not need to “use express words of trust to plan a document.” The panel additionally reversed the district court decision that CAISI “breached [its] fiduciary duties by engaging in unlawful self-dealing.” Thus the panel found that CAISI did not breach its fiduciary duties to Barboza when it failed to distribute a summary annual report because the plan fit within the definition of “totally unfunded welfare plan.”AFFIRMED in Part, REVERSED in Part, and REMANDED.