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.
OPINION AND ORDER REGARDING POST-TRIAL
CHRISTINA REISS, DISTRICT JUDGE
action, Plaintiffs Donna Browe, Tyler Burgess, Bonnie
Jamieson, Philip Jordan, Lucille Launderville, and the Estate
of Beverly Burgess (collectively, "Plaintiffs")
assert Defendants CTC Corporation ("CTC") and Bruce
Laumeister (collectively, "Defendants") violated
the Employee Retirement Income Security Act of 1974, 29
U.S.C. §§ 1001-1191c ("ERISA").
multi-day bench trial, the court issued Findings of Fact and
Conclusions of Law dated June 22, 2018 (the "6/22/18
Decision"). In its 6/22/18 Decision, the court granted
Plaintiffs thirty days to specify their requested relief on
the counts of their Second Amended Complaint on which they
prevailed. The court granted Defendants thirty days
thereafter to oppose Plaintiffs' request and to specify
the contribution and indemnification they seek from Plaintiff
Launderville. The parties' supplemental briefing was
completed on August 15, 2018.
their Supplemental Post-Trial Memorandum, Plaintiffs respond
to the court's 6/22/18 Decision as follows. First, they
contend that the court erred in making certain findings of
fact and reaching certain conclusions of law, including
failing to find that they asserted claims on behalf of CTCs
1997 deferred compensation plan (the "Plan").
Second, they allege that they are entitled to a payment of
benefits because their benefits are
"nonforfeitable" under ERISA. Third, they assert
the court should find Plaintiff Launderville has no
responsibility to indemnify Defendant Laumeister or to
contribute to any recovery on behalf of the Plan. And fourth,
they allege they are entitled to substantial statutory
penalties against Defendants for their failure to comply with
ERISA's reporting and disclosure requirements.
oppose Plaintiffs' requests, arguing that they have
failed to comply with the court's request for a
specification of the relief they seek on the counts on which
they prevailed and instead essentially seek untimely
reconsideration of the court's 6/22/18 Decision.
Factual and Procedural Background.
adequate time for discovery, the court held a bench trial in
both December of 2017 and March of 2018 at which both parties
focused their efforts towards establishing or negating
whether the Plan was a nonqualified "top hat" plan
under ERISA. They further disputed whether Plaintiff
Launderville was a Plan Administrator and, if so, whether she
was responsible for fiduciary violations of the Plan.
to the court's bench trial, the parties were permitted to
file proposed findings of fact. Both parties submitted
proposals. After trial, the parties were permitted to file
post-trial memoranda which were filed on or before March 26,
2018. The court thus finds that the parties had ample time to
address both factual and legal issues.
Second Amended Complaint describes their claims as follows:
This is an action arising under [ERISA] based on
Defendants' wrongful denial of benefits to the
Plaintiffs, participants and beneficiaries of one "CTC
Deferred Compensation Plan" (the Plan). Rather than
paying Plaintiffs the benefits they were and are owed under
the Plan, Defendants CTC Corporation and Laumeister have,
instead, raided the funds they were charged with holding in
trust, and spent the money for their own purposes. These
Defendants-fiduciaries under the meaning of ERISA-violated
their statutorily prescribed duties by perpetrating this
unlawful scheme. Defendants have also violated ERISA by,
inter alia, maintaining a Plan with multiple illegal
terms, failing to provide accountings to Plaintiffs under the
Plan as required by law, and paying benefits to certain other
Plan participants, but not to the Plaintiffs (ERISA does not
permit cherry picking favored employees to receive benefits,
while forcing others to go without).
(Doc. 105 at 1-2.)
description of the "parties," Plaintiffs are not
identified as asserting claims on the Plan's behalf. The
Second Amended Complaint contains no allegations regarding
vesting or "nonforfeitable" benefits.
Count I of their Second Amended Complaint, Plaintiffs allege
a "Denial of Benefits" claim and assert "[t]he
failure and refusal to provide Plaintiffs the CTC Plan
benefits is a violation of ERISA, 29 U.S.C. §
1132(a)(1)(B)" and "[a]s a result of this failure
and refusal, Plaintiffs . . . have suffered a denial of
benefits and seek to be awarded their benefits with interest
and reasonable attorneys' fees." Id. at
14-15, ¶¶ 80-81. The court decided Count I in
Defendants' favor, concluding that Plaintiffs failed to
establish their entitlement to benefits in accordance with
the Plan's terms.
II seeks a declaratory judgment based upon Defendant
Laumeister's alleged disavowal of any obligations under
the Plan "to provide the Plaintiffs with Plan
benefits" and requests an order to "enforce their
rights under the terms of the Plan and to clarify their
rights to future benefits under the Plan, pursuant to
ERISA[.]" Id. at 16-17, ¶¶ 87, 94.
The court denied this request as part of its 6/22/18 Decision
because Plaintiffs did not qualify for benefits under the
terms of the Plan, but nonetheless granted Plaintiffs a
post-trial opportunity to specify their requested relief in
conjunction with the claims on which they prevailed.
Count III, Plaintiffs allege "Fiduciary
Violations," asserting Defendants must "make good
to the Plan all losses caused by breaches of their fiduciary
duties, to restore to the Plan all profits made through the
use of Plan assets and for all other relief permissible under
ERISA[.]" Id. at 18-19, ¶ 107. In Count
IV, Plaintiffs allege "Additional Fiduciary
Violations" in the form of an "Illegal Plan"
which they claim is a "violation of [Defendant
Laumeister's] fiduciary obligations owed to
Plaintiffs." Id. at 19-20, ¶ 111. They ask
that "all profits of Laumeister and CTC made through use
of Plan assets must be disgorged, in addition to other relief
permissible under ERISA" and further request that
Defendants "make good to the Plan all losses caused by
breaches of their fiduciary duties, [and] to restore to the
Plan all profits made through the use of Plan assets[.]"
(Doc. 105 at 20-21, ¶¶ 113-14.)
Count V, Plaintiffs allege claims of self-dealing, asserting
Defendants "dealt with Plan assets in their own interest
and/or exchanged property or extended credit from Plan assets
for their own use and benefit in violation of ERISA"
and favored "certain other employees [by] paying them
Plan assets instead of the Plaintiffs[.]" Id.
at 21, ¶¶ 118-19. They request Defendants
"make good to the Plan all losses caused by breaches of
their fiduciary duties, which remain unpaid; to restore to
the Plan all profits made through the use of Plan assets and
for all relief permissible under ERISA[.]" Id.
at 22, ¶ 123. In Count VI, Plaintiffs allege Defendants
failed to comply with ERISA's reporting and disclosure
requirements and ask the court to award "$100 per day to
each Plaintiff, from the date of each such violation,
together with all other relief permissible under ERISA."
Id. at 23, ¶ 127.
their Prayer for Relief, Plaintiffs ask the court to order
repayment to the Plan of an amount necessary to make good all
losses to the Plan caused by Defendants' breaches of
their fiduciary duties and to restore all profits made
through Defendants' use of Plan assets.
court granted judgment in Plaintiffs' favor on Counts III
through V, finding that Defendant Laumeister and Plaintiff
Launderville, as Plan Administrators, breached their
fiduciary duties to Plan Participants and beneficiaries. With
regard to Count VI, the court also granted judgment in
Plaintiffs' favor, finding that Defendant Laumeister and
Plaintiff Launderville violated ERISA's reporting and
disclosure requirements. The court granted judgment in
Defendants' favor on the remaining counts and on their
counterclaim seeking a right of contribution and
indemnification from Plaintiff Launderville. The court
"declined to award attorney's fees to either party
at this time." (Doc. 216 at 62.)
at trial Plaintiffs did not address the issue of vesting, did
not testify that they were asserting claims on the Plan's
behalf, identified no profits made by the Plan, and
identified no prejudice or other harm (other than in proving
their claims) which they had allegedly suffered as a result
of noncompliance with ERISA's reporting and disclosure
requirements, the court could not adequately discern the
relief they requested. Their claims appeared targeted solely
to ensuring Plaintiffs received benefits under the Plan
without regard to the rights of other Plan Participants.
Although they admitted they did not qualify for benefits in
accordance with the plain language of the Plan, they did not
address any alternative basis for their receipt.
in turn, asked that Plaintiff Launderville be held liable for
contribution and indemnification, but did not address the
amount or apportionment of liability in the event the court
concluded the Plan was not a "top hat" plan.
parties have now completed their post-trial briefing but
certain supporting evidence for their competing requests
remains absent from the record. The court treats this as a
failure of proof except where it would defeat ERISA's
purposes to do so.
Conclusions of Law and Analysis.
Whether the Court Should Alter its Findings of Fact and
Conclusions of Law.
their Supplemental Post-Trial Memorandum, Plaintiffs
effectively ask the court to amend its 6/22/18 Decision to
include new factual findings and conclusions of law.
Plaintiffs' proposed changes do not alter the court's
conclusion that no Plaintiff established his, her, or its
entitlement to benefits under the terms of the Plan,
even though proof of such compliance, if it existed, was
presumably within their possession, custody, or
terms of a conclusion of law, the court did not err in
finding that Plaintiffs failed to establish entitlement to
benefits under the Plan. Indeed, Plaintiffs tacitly admitted
as much. See Weinreb v. Hosp. for Joint
Diseases Orthopaedic Inst., 404 F.3d 167, 170 (2d Cir.
2005) ("A suit for benefits due under the terms of an
ERISA-governed plan necessarily fails where the participant
does not qualify for those benefits"). The court thus
declines to alter or amend the 6/22/18 Decision in the manner
requested by Plaintiffs.
Plaintiffs' Claims on Behalf of the Plan.
argue that they brought claims on the Plan's behalf and
are entitled to relief on that basis. Although not a model of
clarity, their Second Amended Complaint requests relief on
the Plan's behalf. At trial, however, Plaintiffs did not
testify or claim they were acting as representatives of the
Plan. The court does not treat this as a failure of proof
because to do so would defeat ERISA's purposes.
409(a) of ERISA, Liability for Breach of Fiduciary Duty,
Any person who is a fiduciary with respect to a plan who
breaches any of the responsibilities, obligations, or duties
imposed upon fiduciaries by this subchapter shall be
personally liable to make good to such
plan any losses to the
plan resulting from each such breach, and to
restore to such plan any profits of
such fiduciary which have been made through the use of assets
of the plan by the fiduciary, and shall be subject to such
other equitable or remedial relief as the court may deem
appropriate, including removal of such fiduciary.
29 U.S.C. § 1109(a) (emphasis supplied). "A fair
contextual reading of the statute makes it abundantly clear
that its draftsmen were primarily concerned with the possible
misuse of plan assets, and with remedies that would protect
the entire plan, rather than with the rights of an individual
beneficiary." Mass. Mut. Life Ins. Co. v.
Russell, 473 U.S. 134, 142 (1985). Nonetheless, the
Supreme Court has clarified that "ERISA specifically
provides a remedy for breaches of fiduciary duty with respect
to the interpretation of plan documents and the payment of
claims, . . . one that runs directly to the injured
beneficiary." Varity Corp. v. Howe, 516 U.S.
489, 512 (1996).
6/22/18 Decision, the court found that "Mr. Laumeister
and Ms. Launderville breached their fiduciary duties to the
1997 Plan and to Plan Participants and beneficiaries[.]"
(Doc. 216 at 62.) It invited Plaintiffs to specify their
requested relief. In response, Plaintiffs request, among
other things, that the court "order repayment of the
entire Plan balance, at least $727, 002, under Counts
III-V." (Doc. 217 at 2) (internal quotation marks and
emphasis omitted). Plaintiffs further request the court to
appoint an administrator or receiver to take custody of the
repaid fund assets, invest and manage the funds, and to pay
out vested benefits in accordance with ERISA.
support for their requested relief, Plaintiffs assert that
the court found Exhibit 3 "credible" from which
they derive their request for $727, 002. This overstates the
court's findings of fact in its 6/22/18
Decision. At trial, Plaintiffs' expert witness,
Richard Heaps, testified that he was retained by Plaintiffs
"to take a sum of money from a document and project or
to . . . calculate what that total would be today if it had
been invested in a manner that typical private retirement
funds are invested." (Doc. 196 at 152:22-25.) Mr. Heaps
opined that in September 2017, the balance would have grown
to $727, 002 using an initial amount of $261, 368.14, with
"no additional contributions or withdrawals by
anyone." Id. at 160:12-13. Mr. Heaps conceded
that this assumption of "no additional contributions or
withdrawals by anyone" was inconsistent with the facts
as he understood them. Id. He was aware of
additional contributions and withdrawals in subsequent years,
but he could not identify the precise amount of either. He
also could not determine the manner in which Plan funds were
invested and thus could not predict the actual return on
investment. His additional calculations in Tables 2
and 3 reflected further contributions and withdrawals to the
Plan but were accompanied by the following caveat: "The
Plan did not call for any specific amount of future
contributions. It is unlikely CTC would have continued to do
so given its financial condition. In addition, contributions
would have decreased as employment decreased." (Ex. 26
Heaps was not asked to opine regarding the profits to be
restored to the Plan, the amount of vested benefits in
accordance with ERISA's minimum vesting standards, or the
damages caused by any fiduciary or nondisclosure violations.
To rebut Mr. Heaps's testimony, Defendants introduced the
testimony of expert witness Art Woolf, who reviewed the Plan,
Mr. Heaps's expert opinion, and Exhibit 3. Mr. Woolf
opined that "the plan was very light on specifics in
terms of dollars and things like that. So it was very hard
for me to make a correlation." (Doc. 210 at 7-8.) Mr.
Woolf further pointed out that the Plan reflects none of the
assumptions in Exhibit 3. He noted Mr. Heaps's analysis,
while reflecting actual withdrawals in Tables 2 and 3, did
not project withdrawals paid to Plan participants retiring at
court concluded that Mr. Heaps's Tables 2 and 3 were
inconsistent with the terms of the Plan and the known facts
and essentially disregarded them. See Doc. 216 at
62-63. This left only Table 1 which includes facts and
assumptions inconsistent with the Plan, but which reflects
the Plan fund balance as March 18, 1997. Rather than treat
Plaintiffs' evidence at trial as a failure of proof, the
court uses reliable evidence of record for purposes of
fashioning an award consistent with ERISA.
March 18, 1997 the Plan fund was $261, 388.14 (the "Base
Amount") which must be restored to the Plan. The court
must next determine the extent to which the Plan
Administrators must restore to the Plan any investment gains
thereon. See Donovan v. Bierwirth,754 F.2d 1049,
1056 (2d Cir. 1985) ("One appropriate remedy in cases of
breach of fiduciary duty is the restoration of the trust
beneficiaries to the position they would have occupied but
for the breach of trust") (citing Restatement (Second)
of Trusts § 205(c) (1959) (stating trustee is liable for
"any profit which would have accrued to the trust estate
if there had been no breach of trust")). The court
credits Mr. Heaps's unrebutted expert opinion as to how
the Base Amount would increase or decrease in value if
prudently invested as a private retirement fund. See
Ex. 26 ...