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Donndelinger v. Schmidt

February 27, 2009

PAUL W. DONNDELINGER, AN INDIVIDUAL AND JAMES T. HOOVER, AN INDIVIDUAL, PLAINTIFFS,
v.
FRED WEBER SCHMIDT, AN INDIVIDUAL; AND FRED WEBER SCHMIDT, AS TRUSTEE OF THE DOERRING & ASSOCIATES, INC. PROFIT SHARING PLAN., DEFENDANTS.



The opinion of the court was delivered by: Hayes, Judge

ORDER

The matters before the Court are the Application for Default Judgment (#15) and the Motion for Preliminary Injunction (#9) filed by Plaintiffs.

On October 8, 2008, Plaintiffs, participants in the Doerring & Associates, Inc. Profit Sharing Plan, filed a Complaint against Defendant Fred Weber Schmidt for breach of fiduciary duty and to remove trustee under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. Section 1001 et seq. The Complaint alleged that Schmidt, the Trustee of the Doerring & Associates, Inc. Profit Sharing Plan ("the Plan"), engaged in improper conduct in violation of ERISA. The Complaint sought to replace Schmidt as Trustee, an accounting, a determination of damages, and other relief.

On October 10, 2008, this Court denied Plaintiffs motion for a temporary restraining order under Rule 65(b) of the Federal Rules of Civil Procedure without notice to Defendant.

On October 27, 2008, Defendant Schmidt, in his individual capacity and in his capacity as Trustee of the Plan, was personally served with the Summons and Complaint.

Defendant Schmidt did not file an answer to the Complaint, in his individual capacity or in his capacity as Trustee of the Plan, and has not filed any pleadings in the record of this case.

On October 30, 2008, Plaintiffs filed a Motion for Preliminary Injunction requesting that the Court immediately issue a Preliminary Injunction to remove Defendant Schmidt as Trustee and to prevent him from using or removing any Plan assets and from subjecting the Plan to further penalties, interest, sanctions or potential disqualification, and to appoint Plaintiffs as successor co-trustees of the Plan. (Doc. #9-2).

On November 20, 2008, prior to the hearing on the Preliminary Injunction motion,

Plaintiffs filed a Request to Enter Default. (Doc. # 13).

On November 21, 2008, Counsel for Plaintiffs received a telephone message from Schmidt in which Schmidt stated that he had been served with the pleadings and that he would be willing to resign as Trustee of the Plan in order to save attorney fees. Counsel for Plaintiffs called Schmidt that same day. Counsel for Plaintiffs informed Schmidt that an answer had been due by November 17, 2008 and that Plaintiffs had requested an entry of default. Schmidt informed counsel for Plaintiffs that he would be willing to resign as the Trustee. Counsel for Plaintiffs informed Schmidt that Plaintiffs would go forward with the default in order to obtain a court order removing him and appointing Plaintiffs as Successor Co-Trustees. Schmidt indicated to counsel for Plaintiffs that he did not want to incur further attorney fees. (Doc. # 15-2, Declaration of Thomas Monson, page 2).

On November 24, 2008, the Clerk of the Court entered Default. (Doc. # 14).

On December 19, 2008, Plaintiffs filed the request that the Court enter a Default Judgment restraining Fred Weber Schmidt from transferring or using any Plan assets, removing Schmidt as trustee and appointing Plaintiffs as successor co-trustees of the Plan, requiring that Schmidt turn over all documents pertaining to the Plan, requiring that Schmidt provide a full accounting, and providing that the Court retain jurisdiction to enforce the judgment and to determine any further liability. (Doc. #15 at page 2 line 16 to page 4 line 5).

STANDARD OF REVIEW

Federal Rule of Civil Procedure 55(b) provides that judgment by default may be entered by the Court. A district court may consider the following factors in exercising ...


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