United States District Court, D. Vermont
DONNA BROWE, TYLER BURGESS, BONNIE JAMIESON, PHILIP JORDAN, LUCILLE LAUNDERVILLE, and THE ESTATE OF BEVERLY BURGESS, Plaintiffs,
CTC CORPORATION and BRUCE LAUMEISTER, Defendants.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Christina Reiss, District Judge
Donna Browe, Tyler Burgess, Bonnie Jamieson, Philip Jordan,
Lucille Launderville, and the Estate of Beverly Burgess
(collectively, "Plaintiffs") allege that Defendants
CTC Corporation ("CTC") and Bruce Laumeister
(collectively, "Defendants") violated the Employee
Retirement Income Security Act of 1974 ("ERISA"),
29 U.S.C. §§ 1001-1191c, by failing to adequately
fund and by wrongfully denying them benefits under 1990 and
1997 deferred compensation plans (collectively, the
"Plan"). They further allege that Defendants
breached fiduciary duties and reporting and disclosure
obligations owed to them under ERISA.
deny liability and assert that the Plan is a nonqualified
"top hat" plan pursuant to which they have no
further obligations. They further assert that the applicable
statute of limitations bars Plaintiffs' claims. In the
alternative, if they are found liable for Plaintiffs'
claims, pursuant to the counterclaims they have asserted,
they contend that Plaintiff Lucille Launderville should be
held jointly and severally liable and indemnify them for any
ERISA damages awarded against them.
December 6-8, 2017 and March 5-6, 2018, the court conducted a
bench trial. On March 26, 2018, the parties submitted
supplemental briefing, at which time the court took the
matter under advisement.
J. Bernal, Esq. and John D. Stasny, Esq. represent
Plaintiffs. A. Jay Kenlan, Esq. represents Defendants.
Findings of Fact.
upon the preponderance of the evidence, the court makes the
following findings of fact:
of Relevant Records.
court's ability to make findings of fact in this matter
is severely hampered by the destruction of most of CTC's
corporate records and by Plaintiffs' failure to retain
copies of the documents that they rely on for their
many instances, there is a lack of reliable evidence
especially with regard to key issues such as the number of
CTC employees; the number of employees to whom the Plan was
offered; the number of Plan Participants; and the salary and
wages of CTC employees including Plaintiffs.
Plaintiff Donna Browe was employed by CTC from its inception
until on or about November 12, 2012. Ms. Browe began her work
at the company as a "minimum-wage" clerk, and
continued working as a "clerk" in CTC's
accounting department. She became the manager of CTC's
accounting department in approximately 2000. Ms. Browe
voluntarily left the employ of CTC on or about November 12,
2012 for a position at Morris Repair Company in Bennington,
Beverly Burgess was employed by CTC from the time of its
formation in 1980 until approximately 2004. She passed away
on November 29, 2004. Plaintiffs Tyler Burgess and Bonnie
Jamieson are the children of Ms. Burgess and are the sole
beneficiaries of their mother's estate.
Plaintiff Philip Jordan was employed by CTC from its
inception until on or about October 1986 and again from on or
about October 1988 until January 4, 2008. Mr. Jordan worked
initially as a salesman and eventually became the sales
manager for CTC in or around 1997.
Plaintiff Lucille Launderville began her employment with CTC
at its inception. She was initially employed in customer
service and was eventually promoted to, among other
positions, President of CTC, Director, and general
manager/Chief Operating Officer ("COO"). She
resigned from CTC in 2008 for a position at Plasan
Defendant Bruce Laumeister was CTC's sole shareholder,
Chief Executive Officer ("CEO"), and Chairman of
the Board of Directors throughout its existence. He was
CTC's President from 1979 until 2000 and from 2008 until
its dissolution in 2014. He is an experienced business
executive with a bachelor's degree in engineering and a
master's degree in business administration, as well as an
honorary Ph.D. from Southern Vermont College. Prior to
forming CTC, he held executive positions in several major
companies, supervised over three hundred employees, and
managed a multi-million dollar company.
Defendant CTC is a dissolved corporation that ceased doing
business in 2014.
approximately 1979, Mr. Laumeister formed CTC, a
photo-finishing and processing company, for the purpose of
acquiring the assets of Cap Tan, a film developing and photo
processing plant and photographic equipment retail store. In
addition to acquiring Cap Tan's business assets, CTC
hired several Cap Tan employees. When CTC purchased its
assets, Cap Tan was generating approximately $800, 000 in
annual sales and had approximately thirty employees.
From approximately 1979 until 2014, CTC operated a retail
photo-finishing facility and retail store located on Benmont
Avenue in Bennington, Vermont (the "Bennington
facility") from which it serviced walk-in and mail-order
customers under the tradename "Vermont Color Photo
Lab." 11. In addition to its headquarters in Bennington,
CTC operated between twenty-three and twenty-six one-hour
photo labs in Vermont, Connecticut, Massachusetts, New
Hampshire, and New York (the "One-Hour Labs") which
were engaged in developing, processing, and printing film as
well as operating retail stores selling photographic
equipment and supplies.
One-Hour Labs were incorporated in the states in which they
conducted business, filed their own tax returns, and paid
their employees through three corporations which held
separate bank accounts controlled by CTC: VSL Corporation
(New Hampshire) ("VSL"), LWB Corporation
(Massachusetts) ("LWB"), and BRL Corporation
(Vermont and New York) ("BRL").
Although Mr. Laumeister testified that the One-Hour Labs were
CTC's wholly owned subsidiaries and that the One-Hour
Labs' employees should be considered employees of CTC,
Defendants have proffered no evidence to support this claim
beyond Mr. Laumeister's testimony. LWB was not a wholly
owned subsidiary but was instead owned by Mr. Laumeister and
Christopher Belknap, a fact which Mr. Laumeister conceded
avoid liability after a major accident with one of its route
drivers, Mr. Laumeister formed a separate Vermont
corporation, ES Services ("ESS") to employ the
drivers who serviced the One-Hour Labs and the convenience
stores, drugstores, and other customers that offered CTC
photo processing. All of the route drivers were employed
part-time although some drivers worked up to thirty hours per
week. Mr. Laumeister created a chart that indicated that
there were eight part-time route drivers. He, however, also
testified that they had "at least 15 or 16" route
drivers and "16 to 18[, ]" all of whom worked
part-time. (Doc. 209 at 134.) He and his wife owned ESS's
1990, CTC acquired an interest in Weybridge Partners, LP
("Weybridge Partners"), a Vermont limited
partnership that owned and operated an apartment complex in
Middlebury, Vermont. At the time CTC acquired its limited
partnership interest in Weybridge Partners, Mr. Laumeister
was Weybridge Partners' general partner. The residential
housing property owned by Weybridge Partners was a federally
subsidized property that generated significant tax losses.
Approximately ninety-five percent of those losses were
allocated to CTC, allowing CTC to shelter a significant
amount of its income from state and federal taxation.
Starson Services ("Starson") was a corporation
formed prior to CTC and owned by Mr. Laumeister and his wife.
Starson acted as the property manager for Weybridge
Partners' apartment complex, providing services such as
rent assessment and collection, property management and
maintenance, and general, administrative, and accounting
services. Weybridge Partners paid Starson fees for its
property management services. Starson also owned the
photo-finishing equipment and other equipment in the
Bennington facility and leased it to CTC.
records of both Weybridge Partners and Starson appear to have
been destroyed with the CTC records, although the parties did
not address this issue directly.
Launderville claims she was never employed by Starson,
however, she admits she received a bonus check on at least
one occasion from Starson. She testified that the amount in
question was approximately $20, 000. In contrast, Mr.
Laumeister testified that both Mr. Massari and Ms.
Launderville received substantial bonuses from Starson, that
almost half of their compensation was paid by Starson in
certain years, and that they received bonuses in some years
of approximately $50, 000.
2009, Weybridge Partners sold its real property, paid its
creditors, and dissolved.
Between 1980 and around 2000, CTC grew significantly. At its
peak operation, CTC's Bennington facility operated three
and sometimes four shifts per day, depending on the seasonal
volume of the film to be developed and printed. During peak
times, CTC and One-Hour Labs employed additional employees,
typically on a part-time basis.
and Reliability of Mr. Laumeister's Testimony.
Although at times in his testimony Mr. Laumeister
demonstrated an impressive recall of the relevant facts, the
court did not find his testimony wholly reliable or credible
because Mr. Laumeister issued a number of statements under
the penalties of perjury which he now concedes are incorrect.
A. In his declaration dated May 23, 2016 (the "5/23/16
declaration") he averred that: "From 1997 until
about 2000, 1 was the president and chief operating officer
of CTC Corporation." (Doc. 195 at 11.) In
cross-examination, Mr. Laumeister testified that the date
should be "late 1995." Id. This date,
however, conflicts with his testimony that he was president
of CTC from 1979 until 1996. Id. at 7.
B. In his 5/23/16 declaration, Mr. Laumeister stated that:
"In 2000, when I retired to Tucson, Arizona, [Lucille
Launderville] was promoted to president of CTC Corporation
and made a member of the board of directors[.]"
Id. at 12. In his testimony, he admitted that this
was incorrect and averred that the correct year was 1996.
Id. at 12-13. In his February 24, 2017 deposition he
testified: "When she was made president and director, I
think that was about 1990. Maybe later. Maybe as late as
'95, but there's a record of that. I'm sure I
have a copy somewhere." Id. at 16. Elsewhere he
stated that he never actually retired.
C. In his 5/23/16 declaration, he averred that Ms.
Launderville was CEO of CTC in November 2004. In his
testimony, he admitted that that was in error and was a
"typo." (Doc. 195 at 26.)
D. In his testimony, he testified that the Mission Management
& Trust account was opened while Mr. Massari was still
working at CTC. Id. at 53. When confronted with
account documentation, he agreed his testimony was incorrect
and the account in question was opened in 2003 after Mr.
Massari's stroke. Id. at 54.
E. Although he initially testified that both he and Ms.
Launderville made the decision regarding how much Mr. Massari
should receive in deferred compensation, in his deposition he
testified that the decision "probably came down to
me." Id. at 56.
F. Mr. Laumeister testified that Ms. Launderville advised
Hope Leonard that CTC would cease paying her benefits.
Id. at 57 ("Had to be Lucille. I
didn't."). However, in a December 31, 2007 letter he
authored to Ms. Leonard, he advised her that there would be
no further deferred compensation payments.
G. Mr. Laumeister testified that ESS was a wholly owned
subsidiary of CTC but acknowledged that in 1995, his wife,
Elizabeth Small, owned all outstanding ESS stock. He also
inconsistently testified that CTC and Ms. Small owned the
shares in ESS.
H. Although Mr. Laumeister testified that in 1997 the gross
receipts for CTC were approximately five million dollars,
CTC's 1997 corporate income tax return shows gross
receipts of $2.78 million. Mr. Laumeister explained that this
discrepancy reflects his inclusion of the revenue from
the foregoing reasons and in the absence of corroboration by
CTC's business records, the court concludes that Mr.
Laumeister's testimony regarding the number of CTC
employees and specific employees' compensation is not
wholly reliable. Accordingly, all of the facts governing the
number of CTC employees and their compensation remain an
1997, CTC employees Wayne Massari and Ms. Launderville each
received a combined annual compensation with bonuses of
approximately $105, 000.
hourly employees at CTC's Bennington facility were paid
at or slightly above the federal minimum wage.
With the exception of the managers of the Keene, New
Hampshire and Manchester, Vermont locations, managers of
One-Hour Labs were full-time employees who were paid between
$18, 000 and $19, 000 in annual compensation.
Because of the size of the stores and the volume of business,
the managers of the Keene, New Hampshire and Manchester,
Vermont One-Hour Labs were salaried employees who were paid
approximately $24, 000 per year between 1990 and
remaining One-Hour Labs employees were paid at or slightly
above minimum wage and were generally employed part-time.
federal minimum wage on September 1, 1997 was $5.15 for all
covered, non-exempt workers.
Number of CTC Employees.
Defendants assert that CTC employed 196 people at its peak.
Mr. Laumeister testified that this number is based on his
memory and his consideration of the One-Hour Labs. He did not
consult any records in determining this number. He further
testified that by 1997 CTC and its affiliates employed
"between 150 and 180" employees (Doc. 209 at 120),
that, "total employment [was] about 150, including 23
retail stores, with 90 part-time and 20 part-time at CTC
Bennington. That's all on the asterisk in 2005"
(Doc. 195 at 73), and that total employment was
"[s]omewhere around 175 to 185" but "during
... the summer months we actually got up over 200."
(Doc. 209 at 137.) In his interrogatory responses dated
August 10, 2016, he averred: "To the best of my
knowledge, CTC Corporation employed approximately 196 people
each year during the years from about 1990 until about 2006
when . . . CTC Corporation's business began to decline
significantly as a result of the digital photo
revolution." (Doc. 195 at 100.) During his deposition,
he estimated that "CTC Corporation, at its peak,
employed approximately 185 employees." Id. at
101. Julia Case, a former CTC employee, testified that at its
peak there were 186 employees but that this number includes
VSL, LWB, BRL, and ESS employees.
Based upon Mr. Laumeister's review of CTC's tax
returns from 2004 to 2006, he opined that CTC's total
payroll in 1997 was $623, 502. (Doc. 196 at 12.) CTC's
corporate income tax return for 1997 shows: $113, 230 for
compensation of officers; $262, 845 for salaries and wages
(less employment credits); $623, 785 costs of labor; and $31,
547 for employee benefit programs. CTC's total payroll in
1997 was therefore $999, 860. Mr. Laumeister further
testified that in 1997, other than Mr. Massari and Ms.
Launderville, there were eleven Plan Participants with an
average salary of $27, 000, for a total of $297, 000, and
that each of the One-Hour Labs had a full-time manager who
was paid no less than $ 18, 000 per year ($18, 000 x 23 =
$414, 000). Id. at 13. Using the $999, 860 total
payroll and subtracting the compensation of officers ($113,
230), the One-Hour Lab managers ($414, 000), and the Plan
Participants ($297, 000) leaves $175, 630 to pay the
remaining employees during a year in which he testified he
did not "recall that that was ever a problem . . .
[with] sufficient cash flow." Id.
a matter of arithmetic, Mr. Laumeister's estimate of the
number of CTC employees is unsupported by CTC's 1997 tax
return. The remaining payroll of $175, 630 would only be
sufficient to pay 17.05 additional full-time employees at
minimum wage (2, 000 hours x $5.15 = $10, 300 per employee)
or 34.10 part-time employees at minimum wage (1, 000 hours x
$5.15 = $5, 150 per employee). Mr. Laumeister was presented
with these calculations and had no explanation for the
discrepancy between CTC's 1997 tax return and his
estimate of the number of its employees.
Launderville offered an estimate of sixty CTC employees in
the late 1990s. Her testimony also reflects a lack of
court finds there is no reliable evidence of the number of
CTC employees during much of the company's existence.
There is also no reliable record of how many employees worked
full-time versus part-time. The best evidence is that CTC had
no more than sixty full-time employees in 1997.
and Identities of CTC's Corporate Officers and
Massari served as CTC's Treasurer, Chief Financial
Officer ("CFO"), and a Director until he suffered a
stroke in 1999, became disabled, and retired. In his work for
CTC, Mr. Massari was a meticulous, detail-oriented, honest,
competent, and reliable employee.
parties dispute Ms. Launderville's role in CTC. Mr.
Laumeister testified that Ms. Launderville was named a
President and Director of CTC and that press releases
regarding her assumption of the role of President were
disseminated among stakeholders in their industry. He further
testified that her status as CTC's President was
reflected in CTC's corporate filings with the Vermont
Secretary of State. He contends she participated in annual
Board of Directors meetings.
contrast, Ms. Launderville testified that she was President
"in name only" at CTC, was never a member of the
Board of Directors, and never participated in Directors
meetings. (Doc. 196 at 247.) The court does not find her
testimony on this point credible. Although CTC may not have
formally designated its end of the year meetings as meetings
of the Board of Directors, there is credible evidence that
Ms. Launderville attended and participated in those meetings
and played a role in CTC's business decisions. Mr.
Massari prepared and disseminated meeting minutes reflecting
her attendance and participation and provided a copy of those
minutes to Ms. Launderville. Those minutes describe Ms.
Launderville as a Director of CTC as of December 16, 1995. In
addition, the court found credible the testimony of Ms. Case
that Ms. Launderville acted as President of CTC during her
employment there from 1999 until Ms. Launderville's
Launderville has a high school education and was a competent
and dedicated CTC employee and corporate officer.
late 1989 to early 1990, CTC decided to offer certain
employees a deferred compensation plan. It appears that some
form of earlier plan, funded by life insurance purchased by
CTC, may have been offered to a few employees, but no copy of
this plan was introduced and no witness claims to have seen
it. The 1990 and 1997 Plans are thus the only retirement or
deferred compensation plans CTC offered to its employees.
Plaintiffs concede this point in their Proposed Statement of
Undisputed Facts for Trial. (Doc. 164 at 4, ¶ 10.)
Massari drafted the 1990 Plan. Although Mr. Laumeister
contends that Mr. Massari did so with the assistance of
Massachusetts Mutual Insurance Company ("Mass.
Mutual"), he testified inconsistently on this point,
claiming Mass. Mutual did not handle "nonqualified
plans" which is the type of plan he believes Mr. Massari
drafted. Id. at 82. In any event, no evidence was
introduced of the type of assistance, if any, Mass. Mutual
provided. Similarly, although Mr. Laumeister testified at one
point that Peter Holden, Esq. reviewed both the 1990 and 1997
Plans, the court found this testimony uncorroborated and
inconsistent with Mr. Laumeister's testimony that Mr.
Massari drafted both Plans based on his "knowledge of
the tax laws."
Laumeister intended the 1990 Plan to accomplish three
objectives. First, to reward CTC's senior managers for
the performance and growth of the company. Second, to
incentivize CTC's senior managers to remain as employees
of CTC until their retirement at age sixty-five or their
death or disability while in CTC's employ. And third, to
encourage CTC's senior managers to make annual
contributions of a minimum of 3% of their salary to their own
Individual Retirement Accounts.
Laumeister intended the 1990 Plan to be a nonqualified
"top hat" plan that was offered to a select group
of management level, highly compensated employees of CTC so
that it would satisfy the requirements of ERISA.
Defendants' expert witness James Herlihy credibly
testified that he advises that such plans be offered only to
"a small percentage of the total work force" and
"they should be managerial or highly compensated
people." (Doc. 196 at 203.) The 1990 Plan does not state
that it is a "top hat" plan, does not state it is a
"nonqualified plan," and does not refer to ERISA.
relevant part, the 1990 Plan states: "The employer
agrees to contribute an amount sufficient to provide a total
retirement benefit, including social security, and the
participant's personal IRA account, which will
approximately equal each participant's salary at the date
of this Plan." (Doc. 29-1 at 2, ¶ 5.) The Plan
states that CTC's Directors shall be the Plan
Administrators. When CTC adopted the 1990 Plan, Mr.
Laumeister and Mr. Massari were CTC's only Directors.
After Mr. Massari's stroke, Ms. Launderville became a CTC
According to Mr. Laumeister, Ms. Launderville and Mr. Massari
proposed each of the Plan Participants. This testimony
however, was at odds with his further testimony regarding to
whom he decided to offer the Plan. Mr. Laumeister testified
that in selecting Plan Participants, he examined
employees' "job duties and their level of
responsibility in accomplishing their job duties and their
job descriptions and how that contributed to [CTC's]
success in faster turnaround and higher quality." (Doc.
209 at 87.) They needed to be "employees that did not
need to be managed or coddled all the time" and
"knew what they were supposed to do and how they were
going to do it." Id. at 91-92. He also
considered "their employment history before [CTC]"
and with CTC, "what was their personal life like[,
]" where they lived and whether they had "nice
homes" and "good families," and whether
"their kids [got] in big trouble or themselves."
Id. at 95.
Launderville testified that she had no voice and no role in
Plan administration. The court did not find this testimony
credible. As President, a Director, and the COO of CTC, she
had the most knowledge of employee performance and proposed
employees for Plan participation on this basis. She also
participated in Plan administration and was identified as a
Plan Administrator on a cover letter that was disseminated to
Plan Participants. (Plaintiffs' Ex. 14.)
Massari's role in Plan administration appeared to be
confined to managing the financial aspects of the Plan,
attending Board of Directors meetings, and approving Plan
Participants. After Mr. Massari left CTC's employ, there
is no evidence that the remaining Plan Administrators, Mr.
Laumeister and Ms. Launderville, complied with ERISA's
reporting and disclosure requirements.
fund the 1990 Plan, CTC established accounts with Mass.
Mutual into which CTC deposited funds with which it intended
to pay deferred compensation (the "Mass. Mutual
accounts"). In addition, 1990 Plan Participants were
required to establish and fund their own IRA accounts. No.
Plaintiff claims entitlement to deferred compensation under
the 1990 Plan.
1997, Mr. Laumeister had become dissatisfied with the
investment returns generated by investments in the Mass.
Mutual accounts. As a result, CTC terminated its relationship
with Mass. Mutual and adopted a new deferred compensation
plan (the "1997 Plan") that, by its terms,
superseded and replaced the 1990 Plan.
Massari drafted the 1997 Plan, which Mr. Laumeister again
intended to be a "top hat" nonqualified plan. Mr.
Laumeister intended that the 1997 Plan further the same
objectives as the 1990 Plan. The 1997 Plan does not state it
is a "top hat" plan, does not indicate that it is
"nonqualified," and contains no reference to ERISA.
1997 Plan provides in relevant part that it is an
"employer paid fund[, ]" and that CTC "agrees
to contribute funds which will accumulate and be payable in
accordance with Section 6." (Defendants' Ex. B at 1,
¶¶ 2, 5.)
Section 6 of the 1997 Plan states:
BENEFITS UNDER PLAN - The Plan provides for alternative types
of payment as follows:
Deferred Compensation Payments, payable upon the happening of
any of the following events:
1) Retirement of the Participant 2) Death Benefits, payable
when a Participant dies before Deferred Compensation payments
a) death benefit equals market value of a participant's
account, less any insurance payment provided under 2b.
b) employer has also funded, group term life insurance equal
to one time participant's annual salary, for which the
participant has named a beneficiary. (This benefit is in
addition to the one time salary provided with the
participant's group insurance benefit package, and will
be equal to one time the Participant's current annual
Employer and each Participant will execute an agreement in
writing, confirming their assumptions of the obligations set
forth in this Plan and the method of Death Benefits payable.
to all provisions hereof, the Employer agrees to pay Deferred
Compensation Payments, as follows:
In the event of normal, or postponed retirement, and in the
event of disability, to the Participant so qualifying,
payment for 120 consecutive months. ... A monthly payout
amount will be computed, subject to periodic review and
adjustment based on the rate of growth, to [P]lan exhaustion
of the Participant's fund at the final, 120th, payment.
Id. at 2, ¶ 6.
1997 Plan defines the term "retirement" as
"withdrawal from full time active employment at or after
age 65." Id. at 1, ¶ 3(c). The parties
dispute whether this provision requires the employee to
retire from CTC. Other than Plaintiff Browe, no Plaintiff
testified that they understood the 1997 Plan to offer
retirement benefits if they were no longer in CTC's
employ when they retired. See Doc. 209 at 61, 65.
The court does not find Plaintiff Browe's testimony
credible as it is inconsistent with her proposal that Mr.
Laumeister include her in his will because she would not
receive deferred compensation under the Plan. It is also
inconsistent with her own testimony. See Id. at 65
(Browe testimony: "Q. Up until Ms. Launderville
contacted you about this suit did you have any belief or
basis for claiming deferred compensation under the plan? A.
1997 Plan provides that death benefits would "commence
on the first day of the month following the Participant's
death and be payable for 120 consecutive months, or lump sum
at the option of the beneficiary." Id. at 3,
¶ 6. It provides that "[a] Participant may
designate one or more beneficiaries, but any named
beneficiaries must be a member of his/her immediate family,
that is spouse and or children under the age of twenty-one,
of Participant." Id.
1997 Plan further states that:
[Neither] [t]he Employer, nor the plan Administrators make
any guarantee to the Participant, nor the . . .
Participant's beneficiary, as to the market value of the
Participant's account upon retirement or in the event of
disability payments or death benefit payments. The account
balance is not targeted to any preconceived amount nor [is
it] associated to a percentage of the Participant's
salary. The balance of the account will be driven only by the
economic market growth of the funds which the Employer has
funded. The monthly payout amount will be reviewed and
adjusted annually to reflect the growth of the account and to
exhaust the fund balance over the remainder of the 120 month
Under the 1997 Plan, CTC's Board of Directors were Plan
Administrators and were authorized to make "[a]ll
decisions concerning withdrawal, payment, method of payment,
[and] investments of funds[.]" Id. at 1, ¶
4. Participants in the 1997 Plan have the same rights as a
"general creditor of the Employer[, ] . . . and then
solely to the extent of the net value of the
Participant's deferred compensation account."
Id. at 3, ¶ 7.
Pursuant to the 1997 Plan, Plan Administrators were required
to "advise the Participants] of the actual cash value of
their account annually, and at the time of retirement."
Id. at 3, ¶ 6.
1997 Plan prohibits "funding" as follows:
11. PROHIBITION AGAINST FUNDING - If the Employer acquires a
mutual fund, an annuity contract or life insurance policy, or
any other asset in connection with its liabilities hereunder,
neither a Participant nor any beneficiary of the Participant
shall have any right with respect to, or claim against, such
contract, policy or other asset and the Employer shall be
named the owner and beneficiary of any such contract, policy
or other asset. Such contract, policy, or other asset shall
not be held under any trust for the benefit of a Participant
or [beneficiaries] of a Participant or held in any way as
collateral security for the performance of any obligation of
the Employer under the Plan. Any such policy or other asset
shall be, and remain, a general, unpledged, unrestricted
asset of the Employer.
Id. at 4-5, ¶11.
Each employee to whom the 1997 Plan was offered signed an
"Application to Participate in the CTC Corporation
Deferred Compensation Plan" that provided in relevant
To: Plan Administrators
Please be advised that I wish to participate in the Deferred
Compensation Plan. I understand that the company funding of
this Plan is contingent upon my annual contribution of a
minimum of 3% of my base salary to my personal individual
retirement account for each year I participate in the Plan.
I understand that the corporate funding of this Plan and some
provisions have changed from the original Plan document. I
further understand that this Plan supersedes any and all
Deferred Compensation Plan documents provided by CTC
I wish to designate the following beneficiary (or
beneficiaries) in accordance with the articles of the Plan
* * *
I acknowledge receipt of a copy of the Deferred Compensation
Plan agreement and confirm that I have reviewed and
understand all of the terms and conditions thereof.
Signed Home Address Date This document must be signed, dated
and returned to the Employer in order to participate in this
Plan. It is the responsibility of the Participant to notify
the Employer of any intended change in the designated
(Defendants' Ex. C) (the "Plan Application").
Defendants introduced into evidence Exhibit D, which is a
one-page document dated August 20, 1997, signed by Mr.
Massari, and entitled "CTC Deferred Compensation
Plan" which states as follows:
The Assumption for rate of growth used to illustrate your
fund balance is 10%. This is an assumption only, based on
previous growth of this mutual fund. Your account will be
adjusted periodically to reflect the actual growth rate and
fund balance of your account.
Please complete and sign the last page
"Application" and return this to me. I will return
a copy to you for your files.
Please provide evidence of your current active
"IRA" account as required by the Plan Document.
This is not necessary if you are funding your IRA by payroll
Contact me if you have any questions regarding this Plan.
(Defendants' Ex. D.)
Defendants periodically provided the Plan Participants with
account statements showing the amounts held in the Plan,
however, there is no evidence that those reports were
provided with any regularity. Mr. Laumeister does not recall
ever providing a statement, although he believes Mr. Massari
and Ms. Browe may have done so.
Neither Defendants nor Plaintiffs retained copies of Plan
statements with the exception of one "worksheet"
retained by Ms. Launderville and two documents retained by
Launderville credibly testified that she was given the
undated worksheet identified as Plaintiffs' Exhibit 3 by
Mr. Massari. Plaintiffs' Exhibit 3 identifies fifteen
"Retirees": Wayne Massari; Lucille Launderville;
Donald Loseby; Don Hollner; Eileen Bliss; Donna Browe;
Beverly Burgess; Ed Hojnowski; William Elliott; Sharon Fish;
Phil Jordan; Robin Secord; Steve Brown; Garry Pleasant; and
Hope Leonard. The spreadsheet purports to show an
"Initial Investment" for each individual,
"Additional Annual Funding," "Total CTC
Funding," projected retirement years, projected payouts
(annual and monthly), fund balance at the time of retirement,
and fund balance after payout. It indicates that payouts will
occur over 180 months/fifteen years at ten percent growth.
(Plaintiffs' Ex. 3.)
Plaintiffs' Exhibit 3 reflects the following
• Projections "assume" continued corporate
funding of $20, 325.00 15% current payroll per year through
year 2000 (see notes below for additional funding
• Funding will continue as prescribed above, at a rate
of 5% of participants earnings (adjustment for increased
future earnings not reflected in worksheet)
• Growth rate of fund 10%
• Benefits paid out monthly for 15 years
• Benefits amount paid calculated to exhaust fund
balance at the end of fifteen years
• Fund balance continues to grow as benefits are paid,
until exhausted at end of 15 years
• Benefits subject to change relative to actual rate of
fund growth and balance at retirement[.]
Plaintiffs' Exhibit 3 contains notes specific to certain
"Retirees," including the following: "Initial
funding for these new entrants is a dollar amount determined
by Bruce Laumeister, paid from the surrender proceeds of
terminated participants. The balance of the proceeds from
terminated employees was allocated 55% to Lucille
Launderville, and 45% to Wayne Massari, as instructed by
Bruce Laumeisterf.]" Id.
Plaintiffs' Exhibit 3 also contains the following general
• All accounts adjusted to actual mutual discovery
balance at 03-18-97
• Account for Don Hollner closed at 03-18-97, balance of
$4, 582.9 transferred to the account of Donna Browe per
instructions of Bruce Laumeister
• Don Hollner will be considered for plan participation
in 1998, per Bruce Laumeister
• Account established for Garry Pleasant 6-97 per Bruce
Plaintiffs' Exhibit 3 indicates "total CTC
funding" of $261, 368.14 and total CTC funding for
Plaintiffs as follows: Lucille Launderville: $40, 104.75;
Donna Browe: $15, 611.14; Beverly Burgess: $19, 906.23; and
Phil Jordan: $17, 417.30. Assuming a ten percent rate of
growth, "total payouts" of $3, 034, 470 were
projected to be made, including $215, 280 to Ms. Browe; $169,
920 to Ms. Burgess; $269, 280 to Mr. Jordan; and $592, 470 to
Ms. Launderville. Id.
assumption of a fifteen year payout in Plaintiffs'
Exhibit 3 conflicts with the 1997 Plan which reflects a ten
year payout. Although Plaintiffs' Exhibit 3 reflects an
annual percent of payroll annual contribution by CTC, the
1997 Plan does not require this contribution. The amounts set
forth in Plaintiffs' Exhibit 3 conflict with Mr.
Laumeister's testimony that when the 1990 Plan was
replaced by the 1997 Plan approximately $130, 000 to $140,
000 remained in the Mass. Mutual accounts. These funds were
deposited in a CTC account with Mission Management &
Trust Company and in an investment account referred to as the
"Mutual Discovery Account."
Plaintiffs' damages estimate offered by their expert
witness, economist Richard Heaps, is based on the amounts set
forth in Plaintiffs' Exhibit 3. Mr. Heaps opined that
performing the same calculations as set forth in
Plaintiffs' Exhibit 3, he was able to project account
balances for each Plaintiffs deferred compensation account as
of the time of trial.
court finds Plaintiffs' Exhibit 3 "worksheet"
reliable for the following purposes. First, to establish that
Mr. Laumeister was the primary decision-maker with regard to
the 1997 Plan. Second, to reflect account balances adjusted
to reflect "Actual Mutual Discovery Balance at
03-18-97." Third, to confirm that it was a document
generated by Mr. Massari to project how the 1997 Plan might
perform under certain assumptions, several of which are
inconsistent with the 1997 Plan.
addition to Plaintiffs' Exhibit 3, the only other
financial statements related to the Plan and introduced into
evidence were two statements retained by Mr. Laumeister. A
May 1998 statement introduced as Plaintiffs' Exhibit 14
provides a "revised projection" of Ms.
Launderville's retirement account and shows "total
payouts" to Ms. Launderville of $657, 900 upon her
retirement, assuming a ten percent growth rate.
(Plaintiffs' Ex. 14 at 1-2.) Defendants' Exhibit Al
is a statement dated December 23, 2004 that indicates a
balance of $279, 803, above which Mr. Laumeister wrote
"I met with Wayne [Massari] on this. He had data which
agreed with this." (Defendants' Ex. Al at 1.)
Plaintiffs' Exhibit 14 is a statement sent from Mr.
Laumeister to Ms. Launderville with the following cover
Dear Lucille [name handwritten]
Attached is [a] revised projection of your retirement fund as
a participant in the CTC Corporation Deferred Compensation
Plan. A strong stock market has reflected a substantial
growth in your fund balance. While the projection attached
reflects a more conservative 10% market growth, this
projection will be adjusted each year to reflect actual
market conditions. Pursuant to the plan document you have
received, CTC Corporation nor the plan Administrators
guarantee the value of the value of your account upon your
retirement or in the event of your death, payments to your
beneficiaries. The fund balance will be driven only by the
economic market growth of the funds which have been invested.
The fund is currently invested with the Franklin Mutual
Series Class Z Fund.
Your participation in this fund continues to be contingent
upon the terms and conditions expressed in the plan document
which you have received. If you have any questions
about this plan, please direct them to me, Lucille or
Please note that you have been selected to receive benefits
under this plan based on your service to CTC Corporation.
This plan is entirely funded and owned by the employer and
has not been open to all employees. Therefore I ask
that you discuss ...