The opinion of the court was delivered by: Oliver W. Wanger United States District Judge
MEMORANDUM DECISION RE PLAINTIFF‟S MOTION FOR SUMMARY JUDGMENT (DOC. 19).
This case concerns disputed pension plan benefits under the Employee Retirement Income Security Act of 1974 ("ERISA").
Plaintiff Thomas L. Anderson ("Plaintiff") moves for summary judgment that:
(1)Plaintiff is entitled to distribution of his account balance under the Defendant Strauss Neibauer & Anderson APC Profit Sharing Plan (the "Plan");
(2)Defendant Douglas L. Neibauer ("Neibauer") breached his fiduciary duty to Plaintiff under the Plan; and
(3)Plaintiff is entitled to attorneys‟ fees and costs incurred in this litigation.
Doc. 21. Defendants filed an opposition. Doc. 29. Plaintiff filed a reply. Doc. 74.
On March 6, 2008, Defendant Strauss Neibauer ("Firm") filed a complaint against Plaintiff in the Superior Court of California, County of Stanislaus. Doc. 32 Ex. 1. The complaint asserted eleven causes of action. The fourth cause of action seeks rescission of (1) a $150,000 bonus paid to Plaintiff and
(2) contributions totaling between $50,000 to $100,000 made to the Plan on Plaintiff‟s behalf. The rescission claim is based upon the following alleged acts of Plaintiff: (a) falsifying SN&A‟s application for a legal malpractice insurance policy, resulting in a denial of coverage; (b) using the firm credit card for unauthorized non-expense items; (c) filing false documents with the San Joaquin County court in DeSantiago v. Hill; and (d) demanding copies of the estate planning documents of Defendant Neibauer while he was hospitalized for a brain tumor from March through April 2007. The complaint alleges that the rescission of Plan contributions is justified by "mistake of fact," i.e., that if SN&A had been aware of Plaintiff‟s conduct, it would have terminated Plaintiff and not made any contributions to the Plan on his behalf. Plaintiff filed a cross-complaint for damages in state court against Defendants Firm and Neibauer on April 9, 2008. Doc. 32 Ex. 3.
On August 17, 2009, Plaintiff filed this federal suit asserting the following ERISA claims:
(1)declaratory relief under 28 U.S.C. § 2201 and ERISA § 502(a)(3) against Defendants;
(2)claim for benefits under ERISA § 502(a)(1)(B) against Defendants Neibauer and the Plan;
(3)breach of fiduciary duty under ERISA §§ 502(a)(2) and 502(a)(3) against Defendants Firm, Neibauer and Total Benefit Services, Inc. ("TBS");
(4)injunctive relief and nondisclosure penalties under ERISA § 502(c)(1) against Defendants Neibauer and TBS; and
(5)equitable and injunctive relief against Defendants Neibauer, Firm, and TBS under ERISA § 502(a)(3).
Defendant TBS was dismissed without prejudice on June 9, 2010. Doc. 18.
On August 6, 2010, Plaintiff filed this motion for summary judgment. Doc. 21. Defendants filed an opposition on September 3, 2010. Doc.29. Plaintiffs filed a reply on October 4, 2010. Doc. 74.
On September 8, 2010, Defendants filed a motion to dismiss, or, in the alternative, stay this case until the conclusion of the pending state court case. Doc. 35. Plaintiff filed an opposition on October 4, 2010. Doc. 73. Defendants filed a reply on October 15, 2010. Doc. 79. On November 5, 2010, the court denied Defendants‟ motion to dismiss or, in the alternative, stay this case. Doc. 87.
The Plan is an "employee pension benefit plan" within the meaning of ERISA § 3(2), 29 U.S.C. § 1002(2). The Plan was established in 1969 and during all times relevant maintained by the employer-sponsor, Strauss Neibauer & Anderson APC ("SN&A"), the predecessor to Defendant Firm. The Plan was established, maintained and operated pursuant to a written plan document, as amended from time to time. SN&A was the Plan sponsor, as that term is defined in ERISA § 3(16)(B)(i), 29 U.S.C. § 1002(16)(B)(i). SN&A employees were eligible to participate in the Plan, subject to Plan terms and conditions.
Participants were given summary plan descriptions ("SPD") from time to time that provided information on Plan terms and conditions, as required by ERISA. An SPD dated January 1, 2007 ("2007 SPD") was in force when Plaintiff‟s entitlement to distribution of his Plan account balance arose.
Article II of the 2007 SPD provides the following general information about the Plan:
SN&A is the Plan administrator;
The Plan is self-administered;
The Plan is funded through a trust; and
The Plan trustees are named as Douglas L. Neibauer and Thomas Anderson.
Article 3 Section 2.3.11 of the Plan defines the triggers for distribution of benefits, including the following:
2.3.11 Distribution Dates. ...
(d) Resignation or Discharge. A Participant who terminates employment by reason of resignation or discharge prior to his Normal Retirement Date, shall be entitled to a distribution of his vested and non-forfeitable Account Balance as soon as administratively feasible following the next Valuation Date.
(e) Plan Termination and Partial Termination. In the event that the Plan terminates, including a termination resulting from a complete discontinuance of contributions, each Participant shall be entitled to his Account Balance as soon as administratively feasible following such termination.
Doc. 25 Ex. A, Bates No. 01431. Article 5 Section 2.5.1 of the Plan also discusses distributions:
2.5.1 Immediate Distributions. . . .A Participant whose employment is terminated on account of resignation or discharge before meeting the eligibility requirements of Normal Retirement may elect to commence distribution of benefits within a reasonable period after the distribution specified in section 2.3.11...
Doc. 25 Ex. A, Bates No. 01437.
A Participant must request distribution of all or part of his/her Plan account by contacting the Plan Administrator, who will provide the proper forms for a benefit claim. Doc. 26 Ex. A, Bates No. 01437.
If a claim is denied, the Plan administrator must provide adequate written notice of the reasons underlying the claim denial within 90 days. Doc. 26 Ex. A, Bates No. 01481.
Plan fiduciaries must meet the standard of conduct set out in the Plan. Article 2 provides in pertinent part: 3.2.1 Standard of Conduct. The duties and responsibilities of the Plan Administrator and the Trustee with respect to the Plan shall be discharged (a) in a non-discriminatory manner; (b) for the exclusive benefit of Participants and their Beneficiaries; (c) by defraying the reasonable expenses of administering the Plan; (d) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; (e) by diversifying the investments of the Plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and (f) in accordance with the documents and instruments governing the Plan insofar as such documents and instruments are consistent with the provisions of the Act. 3.2.10 Finality of Acts or Decisions. Except for the right of a Participant or Beneficiary to appeal the denial of the Plan Administrator or the Trustee made or done in good faith upon any matter within the scope of authority and discretion of the Plan Administrator or the Trustee shall be final and binding upon all persons. In the event of judicial review of actions taken by any Fiduciary within the scope of his duties in accordance with the terms of the Plan and Trust, such actions shall be upheld unless determined to have been arbitrary and capricious.
Doc. 26 Ex. A, Bates No. 01468-01469.
The Plan provides protection to Participants against claims made against Plan accounts or "anti-alienation" protection. Article 12 Section 3.12.8 of the Plan provides in pertinent part: Inalienability. The right of any Participant or his Beneficiary in any distribution hereunder or to any Account shall not be subject to alienation, assignment or transfer, voluntarily or involuntarily, by operation of law or otherwise, except as may be expressly permitted herein. No Participant shall assign, transfer, or dispose of such right nor shall any such right be subjected to attachment, execution, garnishment, sequestration, or other legal, equitable, or other process.
Doc. 26 Ex. A, Bates No. 01487. The 2007 SPD provides:
Protection of benefits: Except for the requirements of a Qualified Domestic Relations Order, your Plan benefits are not subject to claims, indebtedness, execution, garnishment or other similar legal or equitable process. Also, you cannot voluntarily (or involuntarily) assign your benefits under this Plan.
The Plan includes the following language in Article 2 Section 2.2.2: Return of Contributions. Employer Contributions shall be returned to the Employer in the following instances: (a) If the contribution is made by the Employer by mistake of fact, then the contribution shall be returned within one year after its payment upon the Employer‟s written request.
Doc. 25 Ex. A, Bates No. 01427.
Article 12 Section 3.12.1 provides:
No Reversion to Employer. Except as specifically provided in the Plan, no part of the corpus or income of the Trust shall revert to the Employer or be used for, or diverted to purposes other than for the exclusive benefit of Participants and their beneficiaries.
Doc. 26 Ex. A, Bates No. 01486.
Defendant Firm is a California Professional Corporation and is the "plan sponsor" of the Plan. Defendant TBS provided third party administrative services to the Plan. Defendant Neibauer is a Plan ...