FINDINGS OF FACT AND CONCLUSIONS OF LAW
On February 17, 2012, plaintiffs Charan Mellor and Matthew Wilson filed their respective suits against defendants Solomon Entities Defined Benefit Pension Plan, Kenneth A. Solomon ("Solomon defendants"), and Does 1--10, inclusive. Plaintiffs' claims arise out of the allegedly improper payment of pension benefits in accordance with the terms of an ERISA-governed plan. On April 13, 2012, defendants filed a third-party complaint against third-party defendant Liden, Nestle, Soled & Associates, Inc ("Liden"), seeking indemnification for any damages owed to plaintiffs.
On April 5, 2013, the Court held a consolidated bench trial at which all parties appeared. After considering the parties' arguments, the Court finds and concludes as follows.
A. The Parties and the Plan
1. To the extent necessary, each of these findings of fact may be deemed to be a conclusion of law.
2. Plaintiffs Charan Mellor and Matthew Wilson are former employees of The Laboratory of Risk & Safety Analyses, Inc. ("the employer"), which is owned and operated by defendant Kenneth A. Solomon. The employer and Solomon established the Solomon Entities Defined Benefit Pension Plan and Trust ("the Plan") in February 1998 for the benefit of the employer's employees (17).*fn1
3. Liden, Nestle, Soled & Associates ("Liden") administers the Plan on Solomon's behalf. In particular, Judy Soled, an owner of Liden, handled the administration of the Plan.
4. The Plan was amended and restated in its entirety effective February 1, 2002 ("2002 Plan") (17).
5. Section 1.1 of the Plan defines "accrued benefit" as, inter alia, "the retirement benefit a Participant is entitled to receive pursuant to the retirement benefit formula set forth in Section 5.1 . . . ." (22).
6. Section 1.3 of the February 2002 Plan defined "actuarial equivalent" as:
[A] form of benefit differing in time, period, or manner of payment from a specific benefit provided under the Plan but having the same value when computed using Pre-Retirement Table: None; Post-Retirement Table: GATT and Pre-Retirement Interest: 6%; Post-Retirement Interest: 6%. Notwithstanding the foregoing, the mortality table and the interest rate for the purposes of determining an Actuarial Equivalent amount . . . shall be the mortality table and the interest rates specified above or the "Applicable Mortality Table" and the "Applicable Interest Rate" described below, whichever produces the greater benefit (23)
7. The "Applicable Mortality Table" in the 2002 Plan was defined as "the table prescribed by the Secretary of the Treasury. Such table shall be based on the prevailing commissioner's standard table (described in Code Section 807(d)(5)(A)) used to determine reserves for group annuity contracts issued on the date as of which present value is being determined. . . ." (23--24).
8. The "Applicable Interest Rate" was defined in the 2002 Plan as:
[T]he annual rate of interest on 30-year Treasury securities determined as of the first day of the Plan Year during which the Annuity Starting Date occurs. However, except as provided in Regulations, if a Plan amendment (including this amendment and restatement) changes the time for determining the "Applicable Interest Rate" (including an indirect change as a result of a change in the Plan Year), any distribution for which the Annuity Starting Date occurs in the one-year period commencing at the time the Plan amendment is effective (if the amendment is effective on or after the adoption date) must use the interest rate as provided under the terms of the Plan after the effective date of the amendment. . . .If the Plan amendment is adopted retroactively (that is, the amendment is effective prior ti the adoption date), the Plan must use the interest rate determination date resulting in the larger distribution for the period beginning with the effective date and ending one year after the adoption date.
(24). This rate is referred to as the "30-year Treasury Bill rate."
9. Section 1.3 concludes by stating that:
In the event that this Section is amended, the Actuarial Equivalent of a Participant's Accrued Benefit on or after the date of change shall be determined (unless otherwise permitted by law or Regulation) as the greater of (1) the Actuarial Equivalent of the Accrued Benefit as of the date of change computed on the old basis, or (2) the Actuarial Equivalent of the total Accrued Benefit computed on the new basis. (Id.)
10. Liden, in its role as third-party administrator of the Plan, suggested and drafted a written amendment to section 1.3 of the Plan. Solomon signed the amendment into effect on December 4, 2009 ("2009 Amendment").
11. The 2009 Amendment was adopted as a response to the enactment of the Pension Protection act of 2006 ("PPA"), P.L. 109-280, 120 Stat. 1063, which authorized defined benefit plans to modify their actuarial assumptions and permits the use of "segmented rates" in place of the 30-year Treasury Bill rate, (codified at 29 U.S.C. 1055(g)(3)). (171). It is undisputed that the Amendment conforms with the terms of the PPA.
12. This amendment did not restate the amended plan terms. See id. at 1 ("Article I, Section 1.3 shall be amended to add the following. . . ."). This Amendment was made retroactive "to Annuity Starting Dates that occur during or after the first Plan Year that begins in 2008. . . ." (Id.). Each ...